Bank of America Corp., the largest U.S. lender by assets, said the reassignment of salespeople to modify mortgages for struggling borrowers may pressure revenue.
“We have recently moved a couple more thousand people from our sales side, our centralized sales group, over to our servicing areas,” Chief Executive Officer Brian T. Moynihan said at an investor conference today in New York. “In addition, we continue to hire externally. Thereby we have elevated costs in this platform. These costs will stay elevated for the next several quarters and may impact our market-share momentum.”
Bank of America modified about 25,000 mortgages in October, a 52 percent increase from the previous month, the Charlotte, North Carolina-based company said Nov. 18. A U.S. unemployment rate near 10 percent is forcing borrowers to miss payments, and regulators pressured lenders to minimize foreclosures.
“If the borrower qualifies for either a private modification or a government modification, then we complete that,” Moynihan said. When that’s not possible, the bank forecloses. “All of this work is requiring more associates, more teammates,” he said.
Bank of America, with 284,000 full-time workers at the end of 2009, employed more than 26,000 “helping customers who are delinquent,” Barbara Desoer, president of the firm’s home-loan and insurance unit, said at a Nov. 16 congressional hearing.
“We’re completing permanent modifications at a rate of no one else in the industry,” Moynihan said.
The company will also add employees in its wealth management and corporate investment banking units, while reducing headcount in technology and operations, he said.
Bank of America posted three unprofitable quarters since the beginning of 2009 as new regulations pressured fee income and borrowers fell behind on loans. The company, which cut its quarterly dividend to a penny a share in 2009, will boost the payout “as fast as we can,” Moynihan, 51, said today.
Asked if he could increase the payout next year, Moynihan responded, “I don’t see anything that would stop us.”
The lender slipped 6 cents to $11.58 at 10:44 a.m. in New York Stock Exchange composite trading. The company has dropped about 23 percent this year.