This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bank of America May Sell 'Lazier' Assets

NEW YORK ( TheStreet) -- Bank of America (BAC - Get Report) is ready to reverse a decades-long strategy of growth, honing in on the most profitable members of its massive customer base rather than adding new customers through acquisitions.

In fact, CEO Brian Moynihan said on Wednesday that the bank is looking to sell off more of its "lazier" assets. Bank of America plans to replace that income by drawing more from the sweet profit nectar of healthy middle-market consumers, and fast-growth areas outside the United States.

"That's the operating model: Serve consumers, companies, investors, user franchise, and get the most out of the middle," the recently-crowned CEO told investors at a financial services industry conference sponsored by Citigroup (C).

He characterized Bank of America's former business model as "a sales machine" that "measure[d] success on the number of products sold," often resulting in "too many products sold to customers which weren't working for them."

As a reflection of the change in philosophy, the firm recently changed its unpopular overdraft policy. Instead of allowing customers to overdraft their checking accounts using debit cards to purchase small items, then charging them a hefty fee, Bank of America will not allow the transaction to go through. Moynihan put it simply, by saying "the $35 cup of coffee" will be no more.

But Moynihan said the bank isn't giving up on fees -- it will be shifting them to other areas, including, perhaps, general deposits. That means all customers stand to get charged smaller monthly fees to make up for the big chunks of revenue that were coming from irresponsible Starbucks patrons.

At the same time, Bank of America is focused on whittling down the cost of those deposits. Over the past two years, it has brought down expenses to 2.29% of deposits from 2.57% by gently prodding customers to use self-service channels such as ATMs and online banking.

Those channels make up 70% of customer transactions now, vs. 62% in 2007. Over the past year customer deposits at the ATM have risen from one in four to one in three. Moynihan's goal is to raise ATM deposits by 67% this year, a strategy put in place last year when B of A started printing checks on ATM receipts and came out with a marketing push for more online and ATM transactions.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.01 -0.28%
AAPL $92.20 -1.10%
FB $118.64 0.70%
GOOG $706.33 0.70%
TSLA $213.28 0.83%


Chart of I:DJI
DOW 17,646.88 -13.83 -0.08%
S&P 500 2,043.76 -6.87 -0.34%
NASDAQ 4,691.0830 -26.0110 -0.55%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs