BofA Plans More Job Cuts

Employment at Bank of America dropped by 10,000 from a year ago, the bank reported in its first quarter earnings as it continued to cut costs.

Head count dropped by 3,000 from last quarter, the bank said. Bank of America this quarter entered the second phase of "Project New BAC," its companywide cost-cutting initiative, targeting a $5 billion reduction in spending by the bank by the end of 2014. Some of that will come from job cuts, the bank has said, as it plans to reduce the number of positions at the bank by 30,000 over the next three years.

"As you are well aware, head count drives our operating costs in the end, and we expect to see continued progress in this area going forward," said Chief Executive Brian Moynihan on an earnings call this morning.

Bank of America spokesman Jerry Dubrowski told FINS that as the bank continues working toward the targets set forth in New BAC, the head count reductions could be the result of attrition, layoffs, or not filling open positions.

The current phase of New BAC will be focused on saving money in its commercial banking, global wealth and investment management, world-wide corporate banking, global markets and some support functions. The spokesman could not confirm that future reductions will be limited only in these businesses, as "some of the ideas that came from Phase 1 will take a number of years to implement."

The bank's total head count rests at 278,700, a decrease of 3.5% from a year ago when the bank had 288,900 employees. It is also a loss of approximately 3,000 employees from the prior quarter. Excluding the addition of 10,000 employees in the Legacy Assets and Services division over the year, however, the bank notes that the head count decline was closer to 20,000. To compare, the bank reported a loss of 5,874 employees in the fourth quarter of 2011 and declines of 3,836 over the year.

Staffing levels in the Legacy Assets and Servicing division, which handles mortgage-related activities within Consumer Real Estate Services, increased by 2,500 from the fourth quarter and over 10,000 from a year ago, as the bank added to its ranks of customer-facing employees. The firm also added 4,000 third-party staff members, bringing the bank's total number of third-party employees to 16,000.

Dubrowski said that the staff levels in LAS are likely to decline in the future as the delinquent loans, foreclosures and loan modifications the employees there are processing are resolved. "That business is focused on getting down the number of delinquent loans," Dubrowski said. "As you do that and work through that, you would then need fewer people."

Other staff additions outside of mortgage services are a priority for Bank of America in its areas of expansion. "We added client-facing teammates in selected growth areas of our company," said Moynihan. Some of that growth can be expected in financial advising and small-business banking.

The firm added 300 financial advisers in the first quarter, bringing the total number of FAs at the firm to 17,500 from 15,800 a year earlier. This marks the 11th consecutive quarter the bank has reported an increased number of workers in client-facing positions. During the company's fourth quarter earnings presentation, Bruce Thompson, the firm's chief financial officer, noted that the explosive hiring of FAs that occurred in 2011 would likely slow through 2012.

Bank of America also hired 100 small business bankers in this quarter, bringing the total of small business bankers since the program began to over 700.

The bank had a net reduction of 51 branches in the quarter, part of its plan to get rid of 750 branches in the next several years. "In select instances, we'll consider branch sales in markets where growth potential and size don't meet our goals," Moynihan explained, "and at the same time, we continue to expand in markets with high density for new locations and generate good results."

The firm's overall profit of $653 million was a significant decrease of 68% over the quarter prior, due mostly to significant debt-related expenses. That is compared with a profit of $2.05 billion a year ago. Per-share earnings fell to 3 cents from 17 cents last year at this time, and its revenue declined by 17% to $22.28 billion. Analysts expected revenue of $22.51 billion and earnings of 12 cents per share.

Write to Kelly Eggers at kelly.eggers@dowjones.com