Bank of America May Sell 'Lazier' Assets

"That saves a lot of money," Moynihan said, though he didn't indicate how much.

Rochdale Securities analyst Richard Bove, who has in the past criticized Moynihan for not developing and articulating a coherent business plan, was impressed by the strategy he outlined on Wednesday. He agrees that Bank of America has a lot of customers who aren't all that profitable, and drag on other earnings through servicing costs.

"Shrinking down to a more profitable base is the way to go," said Bove, who has a buy rating on the stock.

Investors, too, appeared bullish on Moynihan's long-awaited strategy, pushing the stock to close above the $17 barrier for the first time in nearly five months. Bank of America stock is up 4.5% over the past week, part of a financial-stock rally that has sent some stocks, like Citigroup, American International Group(AIG), Fannie Mae(FNM) and Freddie Mac(FRE), soaring. Year-to-date, Bank of America's stock was now up 13.6% based on Wednesday's finish at $17.11, and the shares were called still higher in premarket action, recently changing hands at 17.15 with volume above 1.8 million.

Moynihan did, however, give investors an idea of where he sees "normalized" earnings landing once the recession has passed: $10 billion to $13 billion in quarterly pre-tax, pre-provision income, "even adjusting out some of the one-time stuff." That's quite a ways from the $6 billion in operating earnings -- or $2.2 billion loss attributable to common shareholders -- that Bank of America posted in 2009.

The CEO also predicted that, with a significant amount of cash and little balance sheet demand, Bank of America will return to dividends and stock repurchases as soon as it can.

However, Moynihan was realistic about the timeframe for strong earnings performance. As a firm heavily weighted in U.S. consumers, he acknowledged that near-term results will continue to be driven by economic growth and still-bleak credit conditions.

"We're going to reflect the economy," he said.

When an audience member asked when, specifically, Moynihan foresaw a return to "normalized" earnings, he quipped: "Sometime in the future. How about that?"

-- Written by Lauren Tara LaCapra in New York

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