Following a meeting with Thompson, KBW analyst Christopher Mutascio on Sunday in a note to clients wrote that Bank of America's "Management expects Legacy Asset Servicing costs to fall from $2.3 billion in 2Q13 to below $2.0 billion per quarter by 4Q13." The fourth-quarter estimate is lower than the $2.1 billion Thompson estimated during Bank of America's second-quarter earnings call on July 17.
Legacy Asset Servicing (LAS) refers to the servicing of problem mortgage loans and maintenance of repossessed real estate, with the "Legacy" mainly being that of Bank of America's ill-timed and ill-fated purchase of Countrywide Financial in 2008.
"From there, management expects the quarterly run rate to fall to $1.0 billion by 4Q14 and normalize to $500 million per quarter by 4Q15," Mutascio added. "So, between 2Q13 and 4Q15, management expects Legacy Asset Servicing costs to decrease $7.2 billion on an annualized basis."Those are remarkable figures. While the cost savings will mainly consist of depressing rounds of layoffs, it is important to point out that the LAS staff has ballooned in order for Bank of America to work through an epic number of nonperforming mortgage loans. CEO Brian Moynihan's "Project New BAC" efficiency program was initiated in 2011, with a goal of lowering the company's annual expenses by $8 billion. According to Mutascio, "Management expects to hit
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