Wednesday, April 1, 1998 | 10:11 a.m.
Bank of America's plans to cut costs in retail banking apparently won't affect the bank in Las Vegas and Clark County, where it's growing along with the booming local economy.
After analysts reported it is on the verge of a major cost-cutting campaign, BofA officials in San Francisco confirmed Tuesday that such a move is a consideration in view of industrywide pressures on operating margins.
BofA, the biggest bank in the West, "hopes to shave as much as $500 million off the expense base by the end of 1999," according to a March 25 report by analyst Carla D'Arista of Friedman, Billings, Ramsey & Co.
The bank hopes to cut 10 to 15 percent of the $3.7 billion portion of expenses that are not devoted to personnel, credit expenses or systems, she said. The focus will be cutting retail (or consumer) banking costs.
The bank has declined to provide specifics on any plans to cut costs or employees and said it does not comment on analyst reports.
"We've made no announcement concerning expense-reduction programs and we don't comment on analysts' reports, but given industrywide pressures on operating margins, an expense reduction is a consideration," the bank said in a brief statement. "We have an excellent track record in expense control and have stated that we must maintain this discipline to achieve our targeted 4 percent spread between revenue growth and expense growth."
In Las Vegas, BofA spokesman Paul Stowell rattled off a list of local branch openings for 1998, noting that Nevada's growing economy probably would prevent any bank cuts from reaching here.
The bank is opening an in-store branch at a Lucky supermarket in Pahrump today and broke ground on a full-service free-standing branch at Craig Road and Clayton Street late last month. The new 4,200-square-foot North Las Vegas branch will have six teller stations and 800 safe deposit boxes.
The Pahrump branch is the third BofA has opened in the state this year and Stowell said four or five more may open before the year ends.
"We continue to do very well here," Stowell said. "It may be a record for us. We're not slowing because we're in a growth market.
Morgan Stanley Dean Witter analyst Nigel Dally forecast Tuesday that BofA should be able to save almost $500 million in annual costs by the end of next year as a result of its "significant retail restructuring initiative."
Credit Suisse First Boston analyst Michael Mayo also recently said BofA expects to cut costs by $300 million to $500 million and should give more details "over the next quarter or two."
BofA is hardly alone in its campaign to cut costs. Five months ago, Citicorp announced plans to centralize operations to save about $750 million. Last month, Chase Manhattan said it would streamline its staff, and J.P. Morgan said it intends to eliminate 5 percent of its work force.
Bank of America has had strong results, but analysts suggest that its Asian nonperforming loans could increase from $900 million at the end of 1997 to $1 billion at the end of the first quarter. In addition, the bank has raised its estimates for dealing with the year 2000 computer conversion problem to $380 million from $300 million.
Two-thirds of analysts have "buy" recommendations on Bank of America, whose stock rose 1 5/8 to 82 5/8 Tuesday, but was down 15/ 16 to 81 11/16 this morning.
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