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Bank of America Corp. reshuffled top retail bank executives yet again this week, according to an internal memo obtained by American Banker.
October 21 -
The following is a copy of an internal memo from Bank of America chief operating officer David Darnell obtained by American Banker.
October 21 -
The bank has little choice but to shrink itself through asset sales and layoffs, but the process is slow, demoralizing and no answer to future growth.
October 18 -
Bank of America's Montag and Darnell received broad power to downsize the company. They don't plan to blow it up, but will ramp up selective sales of servicing rights, equity stakes in other businesses and undervalued assets.
September 8 -
Depending on whose numbers you use, Bank of America Corp.'s share of the residential mortgage market has either stagnated or dropped over the past five years while other top lenders' shares grew dramatically.
February 9
For Matt Vernon, Bank of America Corp.'s top home loan sales executive, the impetus behind its latest management shake-up boils down to a single number — 86%.
That's the share of B of A's retail banking customers who bought a home or refinanced this year with another lender. Capturing more of those people is a new priority for the country's second-largest bank.
"Instead of going after market share, we're looking at customer share," Vernon says. "We have 58 million household customers and year-to-date we've captured 14% of that opportunity."
B of A's co-chief operating officer, David Darnell, announced the reorganization last week. The old home loan division was broken into pieces to serve a "customer-centered strategy."
Mortgage loan officers, small business specialists and investment specialists were corralled under one "specialty sales" division, with the goal of driving more sales to customers who have an existing relationship with B of A. Vernon now reports to Dean Athanasia, the new head of preferred and small business banking. (Athanasia was previously head of the banking and direct investment division.)
"You have a mortgage loan officer looking for opportunities whether it's in investments or cards or small business," says Vernon, who previously reported to Barbara Desoer. Her title remains president of Bank of America Home Loans, but she no longer has any specific areas of focus beyond integrating the mortgage businesses into new areas of the bank. Under the realignment, B of A's consumer businesses are now organized under sales, products and enterprise divisions.
"We're tearing down the traditional silos in our operating platform and aligning ourselves around customers and customer opportunities," Vernon says.
B of A is hoping the realignment will be a game-changer that helps to increase sales and profits in home loans. The company is still hemorrhaging billions of dollars on bad residential mortgages even as the bank shrinks itself through asset sales and layoffs. Instead of chasing market share, it is trying to do more with less by courting existing customers.
In the third quarter B of A, once the nation's largest residential mortgage lender, dropped to third place. It also ceded the title of largest bank by assets to JPMorgan Chase & Co.
B of A plans to announce a reward program for existing customers who get a mortgage or refinance through the bank, Vernon says. It wants to show that it recognizes "the relationship they have today and reward them for the mortgage transaction and introduce them to our teammates for relationship-deepening."
Mortgage loan officers will determine if their customers need a small business loan or investment advice and then hand off those referrals to their sales counterparts now working in the same division. It's the kind of cross-selling that B of A's main competitor in mortgages, Wells Fargo & Co., has been focused on for years. Yet Vernon says the changes were not about cross-selling per se.
"It's not about selling as many products as possible to the customer but about giving them the opportunity to work with us and no one else," he says.
The changes may give industry watchers a bit of déjà vu. More than six years ago, Floyd Robinson, then-president of B of A's consumer real estate division, said he was disappointed with cross-selling results because only 6% of existing customers at the time were getting mortgages from B of A. This was three years before B of A became the largest home lender by acquiring Countrywide Financial.
"It's become clear to me that what I'd like to do, and I think what the company certainly would support us in doing, is to focus on the growth opportunities that we have in front of us as a part of Bank of America," Robinson said in 2005.
While the numbers have improved in the years since then, B of A has new challenges to overcome today. A new $5 monthly fee for debit cards has angered many customers, and consumer advocates (including Illinois Senator Dick Durbin) have openly encouraged them to move their accounts to credit unions and community banks from B of A. In this environment, "deepening the relationship" could prove to be a taller order than in the past.
The latest reorganization "begins to tap into the power of the enterprise and the 58 million households that we have and that [loan officers] never see," Vernon says. "Now we need to take that simplicity and execute it."
