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Bank of America

Banker's Briefs

Adam Rust's picture

Posted April 30, 2010

On Tuesday, BankTalk slammed the recent surge in Pacific Capital shares (see "Is there a Bubble at Pacific Capital?).  Pacific Capital has soared from less than $1 to over $4 this year.  On Wednesday, Pacific Capital shares closed at $4.07.  On Thursday morning, they opened at $1.98, and today they are trading at about $1.85. The game-changing news: Pacific Capital accepted a massive stock-diluting investment from Texas financier Gerald Ford. Ford will now own 91 percent of PCBC, providing that shareholders (including the Treasury Department) approve the sale.

Week Ahead: Advocates Roll on Bank of America

Adam Rust's picture

Posted April 23, 2010

Bank of America's shareholder meeting on Wednesday promises to attract plenty of attention from advocacy groups.

The North Carolina AFL-CIO is probably the largest group to organize in opposition to B of A. They are joined by the Community Reinvestment Association of North Carolina and NC United Power, as well as by others.

NC United Power is an affiliation of 24 religious groups. They are acting in coordination with the Industrial Areas Foundation. Last year, NC United Power took a stand against usury. They remain committed to putting a ceiling on interest rates. No less an expert than Moses

Don't Let Bank of America Fool You

Adam Rust's picture

Posted March 16, 2010

Bank of America might have taken the lead on reducing fees on overdrafts, but that doesn't mean that they are without their issues.  The nation's largest bank is still gorging on fee income, and they are still paying most of their income out to their investors.

Bank of America canceled overdraft charges this week for some of the instances when a customer overdraws their account with their debit card.  This is not a small feat, particularly at a time when banks are struggling to remain solvent.

It would be another thing altogether to infer that Bank of America was going to wean itself off of fee income and return to the days of making money by making loans. In 2009, Bank of America recorded non-interest income of more than $62.5 billion. That is quite a lot - indeed, it represents an increase of more than 120 percent from 2008. Bank of America turned on the fee spigot. In 2008, fee income constituted only $28.4 billion. That was consistent with 2007, when fee income was $28.9 billion.  Fee income represents the ways that banks make money outside of charging interest. They make interest on loans.  This includes more than $8.4 billion in service charges on domestic deposits alone.

Rich people aren't paying those fees.  The bank actually gave money back to its venture capital customers, albeit only $2.5 million. The year before, venture capital customers paid $27 million in fees.  Elsewhere, the rich were still doing fine by Bank of America. BAC paid out $4.8 billion in dividends.  That amounted to 77.5 percent of all dividend income! Oh, wait, that's pretty much par for the course.  BAC has been paying out most of its income to its investors for years. Nothing changed in 2009.

A lot of people have been concerned about salaries at Bank of America. Funny thing - their lackluster performance in 2009 didn't seem to influence how well everyone was paid.  The average employee at Bank of America was paid $111,000 in 2009.  In 2008? "Just" $77,000.

Bank of America did decide to stop charging overdraft fees when consumers go into the red on their debit cards. It's an

Bank of America's Small Business Lending: Small

Adam Rust's picture

Posted December 7, 2009

There is a saying among old reporters (and old crusty ink-stained wretches) about the need to verify what people say before you accept it as truth.  "If your mother says she loves you, check it out."

So, when a bank makes a point of saying that they are the best in the entire country at something as important as small business, it is worth double-checking.  Bank of America likes to talk up their small business lending.

The truth is a bit different.  For one, Bank of America's small business lending focuses not on secure long-term capital, but instead through revolving credit.  Bank of America purchased MBNA in 2005.  They renamed this as FIA Card Services.  In 2007, FIA accounted for 78 percent of all small business lending (by dollars) to firms

Banks Raising Fees on Checking

Adam Rust's picture

Posted November 12, 2009

Unbelievable.

Citibank announced this morning that it will charge customers a $7.50 bank fee for any month when the balance on their Access or EZ checking account falls below $1,500.

Of course, what is even more upsetting is that Citibank is hardly an outlier.  If anything, they are just the latest bank to follow a new trend.  NBC reports that 54 percent of banks have raised fees on their checking accounts in the last year.  Bank of America, for example, just raised the monthly fee on its checking accounts by $3. Bank of America's no frills MyAccess checking is touted as a service fee-free account with no minimum balance.  If you make your way to the third page of disclosures, though, you will see that it has an $8.95 monthly maintenance fee if you don't keep $1,500 in the account without direct deposit.  So, it is true - no service fee.  Perhaps the fact

Comment on Bank of America and Countrywide

Adam R.'s picture

Posted May 15, 2009

Today (Friday, May 15th) is the last day to comment on the proposed re-organization of Bank of America, specifically with how it introduces Countrywide into is larger corporate framework.

The address for comment is:

regs.comments@federalreserve.gov

The comments are due by 5 pm, EST.

Comments should focus on how the re-organization will accommodate the needs of the public.  Its an important opportunity, and while the regulatory invitation is not specific in what will be reorganized, it is safe to bet that it involves Countrywide and perhaps First Franklin (a subprime lending operation owned by National City and later by Merrill Lynch).

Why so much Optimism about the Banks?

Adam R.'s picture

Posted May 11, 2009

In spite of the fact that there are numerous signs about the return of our economy, there are also plenty of signs that we are not out of the woods.

My last points suggested that some anecdotal events (home sales in my neighborhood, the new work enjoyed by my contractor) point to a recovery.

Then again, its hard to ignore the macro picture.

State coffers, unable to print money in order to escape problems, tell the real story.

Bank of America Lags in Small Business Lending

Adam R.'s picture

Posted April 27, 2009

You may have heard claims by Bank of America's about its stature in small business lending:

"With our scale and depth of resources, Bank of America offers small business owners unparalleled access to solutions to help run their businesses smoother, more profitably and with greater access to a wider business network." -- Mark Hogan, BAC Small Business Banking

True enough, BAC is the largest Small Business Administration Lender, measured by aggregate statistics for the entire country.  In fiscal year 2007, Bank of America made more than 10,000 SBA (7) a loans for a sum of more than $300 million.

Yet another look reveals that this position is really a product of the size of their business.  This is an mile-wide, inch-deep kind of commitment.

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