In order to use its resources more efficiently following a business restructuring, Bank of America Corp. (BAC) is planning to retrench 50 employees in the Tampa area by the end of August 2010. The news was reported by the Charlotte Business Journal.
These job cuts will translate into a cost reduction for BofA in the Tampa area.
According to BofA’s notice filed with the Florida Agency for Workforce Innovation, these 50 employees are primarily employed in an administrative office in Tampa. However, BofA will offer outplacement services and other assistance to the affected workers.
Though the number of employees to be retrenched is almost negligible with respect to the size and total employee strength of BofA, the action demonstrates BofA’s conscious attention on the cost of its operations following the downturn it experienced during the height of the financial crisis.
BofA, the largest U.S. bank based on assets and deposits, has about 4,000 employees in the Tampa Bay area.
BofA is scheduled to release its second quarter 2010 financial results on July 16, 2010. The Zacks Consensus Estimate for the second quarter is earnings of 23 cents per share.
BofA’s first quarter 2010 earnings came in at 28 cents per share, substantially ahead of the Zacks Consensus Estimate of 9 cents. However, this compares unfavorably with the earnings of 44 cents in the prior-year quarter.
Strong capital market activity and lower provision for credit losses were the primary factors that helped BofA bounce back to profitability after incurring significant losses for the last couple of quarters.
The market turmoil was more harmful to BofA than its peers except Citigroup (C). However, BofA concluded its biggest acquisitions in this period. Following the Countrywide acquisition in 2008, the company acquired Merrill Lynch almost during the height of the financial crisis last year.
Though there remain concerns related to BofA’s inconsistent credit quality and net interest yield compression, we anticipate continued synergies from its large scale operations and balance sheet restructuring. As such, we have a Neutral stance on the shares.