Bank of America Corp. chief executive Brian Moynihan's heavily anticipated speech Monday fell short of the hype, but it was enough to ease tensions.
Investors and analysts wanted concrete signs that the CEO has a winning plan to move past the bank's deep losses and heavy legal problems involving bad residential mortgages. Moynihan provided more specifics about what many had viewed as frustratingly vague cost-cutting plans — and the bank bookended his speech by announcing that it would lay off 30,000 employees from its retail banking operations over the next few years.
It will slash at least $5 billion of its roughly $27 billion of annual retail and consumer banking expenses by 2014, Moynihan said at a financial services conference in New York. A search will start in October for more savings, in corporate and investment banking, he said.
As reported by National Mortgage News, the bank has already closed its wholesale mortgage platform, and recently exited reverse mortgage lending. It is in the process of trying to unload $120 billion of mortgage servicing rights, and is trying to sell its correspondent lending unit as well.
In trading Monday its shares closed up just 1%. On Tuesday its share price (at press time) was flat.
Though Moynihan offered more meat than his question-and-answer session with a Florida hedge fund manager last month, he did not quite deliver on the game-changing plan for the future investors are yearning for.
"It doesn't change my investment conclusion. I'll give Moynihan credit for being proactive. He's being very aggressive in his defense of the company," said Matt McCormick, vice president and portfolio manager at Bahl & Gaynor Inc. in Cincinnati. "Investors should understand this is like trying to turn a battleship."
McCormick's firm does not own Bank of America shares because it mostly invests in dividend-paying stocks. He said Bank of America is far from being able to pay a healthy dividend.