Tomahawk, WI 01/17/2014 (BasicsMedia) – Bank of America Corp (NYSE:BAC) impressed investors with its performance in Q4 as well as full-year 2013. The bank was widely expected to post good results for the quarter, but not as big as they came. The condition in which the bank operates makes its latest success a big story.

The company has come a long way into positing profits. It has put considerable efforts in settling the many legal cases it is facing, raising capital and cutting cost all at the same time. The result of all these has been improving performance since 2010 with 2013 turning out to be the most decorated year in terms of performance since the economic downturn of 2008.

Back in late 2011 the bank initiated Project New BAC, a turnaround action plan that has been at the center of the company’s performance improvement in recent times. Project New BAC is expected to take the company to even greater heights in future.

It is important looking at the company’s growth prospects in view of Project New BAC to see if there are chances for the stock gaining after its meteoric rise in the last 12 months.


The latest gauge of the success of Project New BAC is the recently released Q4 and full-year 2013 metrics. As the action plan spells out, the bank was able to continue its focus on core services, cost reduction and asset sales to boost revenue and bottom line. As a result, Bank of America Corp (NYSE:BAC) posted its best full-year earnings of more than $10 billion since 2007.

The bank also managed to report sharp margin improvements whereby net interest margin rose up from 2.34 percent in the Q2 to 2.55 percent; this marked the second sequential rise.

The improving economic condition has also given the company’s turnaround journey a lift. This could be seen in how the bank managed to set aside small amount of money for bad loans.

Essentially, we can see multiple strength areas in Bank of America Corp (NYSE:BAC) which include improving interest margins, and impressive progress towards cost-reduction goal. These positive trends are expected to continue into the future.

Cutting costs

Bank of America Corp (NYSE:BAC) believes that cutting cost will result in improved earnings even when revenue are depressed due to the economic slowdown as can be seen in areas such as mortgage origination as low interest rates on loans. The progress to this end is unfolding nicely and we can expect the company to meet its $2 billion yearly cost saving before 2015.

Among the many things which the bank is doing to lower its operation burden include job-cuts where it has trimmed workforce by more than 17 percent in three years. The company is also reducing its brick and mortar location while taking operations online and on mobile to reduce operating expenses. The bank has closed about 700 branches over the past three years.

Together with branch closure, Bank of America Corp (NYSE:BAC) is selling off non-core assets in consolidation and cost reduction exercise that should culminate in improved earnings.

Key takeaway

Bank of America Corp (NYSE:BAC) is doing all that is possible to return to solid grounds after that devastating economic downturn. With the ongoing cost reduction, improving margins and rewarding wealth and investment management segment, the stock has a lot of opportunities to lift up in the future. This is going to happen despite the meteoric rise that has been witnessed in the stock already.

That being the case, Bank of America Corp (NYSE:BAC) is a good play for income and value investors.

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