The BofA Split-Up? Up to 600 Branch Closings (BAC)

To say that Bank of America Corporation (NYSE: BAC) is under pressure remains the understatement of 2011.  The DJIA industrial average component is under attack from every angle.  It is now under attack from within to bring in costs, drive profitability, and to scrap what needs to be scrapped.

A local news report out of Charlotte, North Carolina, which we might discount except for the fact that this is BofA’s headquarter city, is outlining the coming changes at BofA.  The split into two units is the move to a commercial bank and to a consumer bank is underway.  We have no word about any formal break-up as this is still a part of the reorganization efforts underway.  Earlier this week the management shakeup signaled the coming changes.

WCNC showed that as many as 600 branches will be closed.  Please note: WCNC has issued a retraction on its figures regarding any split and noted that this branch count was outlined in March.  WCNC’s retraction further noted: “A CNN newswire service we subscribe to indicated that Bank of America was splitting into two units — consumer and commercial… The CNN report we gave you is not correct, according to a spokesperson from Bank of America… There are no new branches shutting down just the original 600 reported back in March… We apologize for this error.”

This retraction changes nothing by our take.  Our original report already put out that BofA had signaled that its branch count was under review earlier this year, which would also mean that even more layoffs are heading the way of BofA’s ranks.  WCNC may have gotten that count wrong this morning as a ‘recount’ but our take is that regardless of what the bank says that more closures seem likely.  We recently noted that it could be as many as 30,000 jobs in the years ahead.

It was just last week that we outlined ten steps BofA could take that would drive ultimately help to drive the stock back toward $10 and higher through time.  Brian Moynihan must have read it.  He is acting far faster and far more decisively than ever.

While much of the contraction and change will not sound too great for those looking for growth, this is good shrinkage.  The street has said that the bank is too big and the bank is listening.  Now if it can just get states and agencies to let up on the lawsuits and if it can somehow properly quarantine those mortgage issues it can try to start moving in the right direction.  If Brian Moynihan can be successful in this endeavor, he will have steered one of the greatest turnarounds in modern business history.

JON C. OGG