This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
BAC $15.31 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs