New Branch Model Helps Bank Of America's Growth

| About: Bank of (BAC)

During the Occupy movements, Bank of America (NYSE:BAC) was portrayed as the bad guy. It wasn't alone - protesters cast stones, sometimes literally, at many financial institutions.

But Bank of America drew extra attention when it rolled out a plan to charge customers a monthly fee for debit cards, a practice the bank had been encouraging customers to use for years.

After an outcry from not just unsatisfied customers but the whole community, the plan was reversed. Around that time, it also made the risky moves of purchasing two ailing companies - Merrill Lynch and Countrywide.

Since then, CEO Brian Moynihan has taken steps to not only improve the bank's financial status but its perception to current and future customers.

Two years ago, he launched a significant cost-cutting measure, trimming 11 percent of the workforce to create a leaner, but not necessarily meaner, institution. The company has been actively involved in settlement negotiations from its role in the mortgage collapse.

Bank of America is also pushing forward with other customer- and investor-friendly efforts, such as a new model of personal banking, which is helping the country's largest lender in terms of assets look solid to investors as it enters the third quarter.

Though it was de-listed from the Dow Jones blue chip index last month, shares continue to sell well - in the $14 range since summer and sometimes peaking into the $15 range. It has posted about a 20 percent increase overall for 2013.

The Street recently said the company isn't just looking good, but good enough to get investors "drooling."

The strong buy recommendation was based on factors like the cost-cutting efforts (31,000 jobs), reducing other debt, and a greater attention to quality products and processes.

Another action that could have positive implications for future growth was unveiled Oct. 1: express banking centers.

Billed as "the new generation of banking," these locations will include more flexible schedules than standard branches, plus more technology. Though there are more automated choices, the locations will also be staffed with associates able to walk customers through the new transaction process.

Yahoo! Finance reported that Express Banking customers will also be able to access enhanced ATMs with Teller Assist. The devices will perform basic procedures like deposits, withdrawals and balance inquiries, but can also print statements, accept different forms of ID, cash checks and more.

Even better, customers who need help can push a button and an American representative will help them, a customer service option that never existed except for branch ATMs during normal business hours.

The first Express Branch opened in Manhattan, and five more are planned in the Northeast. More may be available in 2014.

Another move that is encouraging to investors was completing the purchase of Merrill Lynch. Though this acquisition was in the works since 2009, everything was formalized Oct. 1.

Bank of America will now be the parent company, and Merrill Lynch will be a subsidiary, reported Bloomberg. Bank of America will assume all of its commitments and obligations. Now, the companies will no longer have to file separate regulatory disclosures.

With the restructuring due to the Merrill Lynch purchase, the company is trying to close the books on some of its past challenges and factors affecting its balance sheet, including a proposed $8.5 billion settlement with the U.S. Justice Department over security losses in the mortgage crisis; and a recent $32 million settlement over allegations it made harassing automatic debt collection calls to customers' cell phones.

Bank of America denied the allegations but agreed to pay to avoid future legal costs.

Things aren't entirely rosy.

For instance, the new branch model does sound innovative but sometimes these upgrades in technology may be challenging for longtime, loyal customers to absorb.

And though The Street article with the strong buy message was encouraging, it did point out that the company's core revenue dropped 3 percent in the second quarter, mostly due to a dip in refinancing activity. A chunk of its cuts came from the mortgage division, a financial area that's still shaky at most institutions.

The State of New York also has expressed concern that the lending procedures for Bank of America and Wells Fargo (NYSE:WFC) haven't changed significantly, although both institutions promised to improve communication, especially with customers having problems repaying loans. Bank of America promised to improve.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.