Bank of America Corp (BAC): Three Things It Must Do Before Next Year

It’s common knowledge that Bank of America Corp (NYSE:BAC) doubled its stock value last year and achieved several milestones — such as putting many stewing lawsuits behind it, plumping its capital cushion, and reducing the number of delinquent mortgages on its books.

Much work needs to be done, however, and it’s not difficult to come up with several things that Bank of America Corp (NYSE:BAC) would do well to concentrate on this year. Here are three really big issues that I feel the bank should try to put to bed before the end of 2013.

Earnings must grow
This is a bit of a sore spot for Bank of America Corp (NYSE:BAC), particularly because of its retraction from the mortgage market after Countrywide blew up. As peers Wells Fargo & Co (NYSE:WFC) and JPMorgan Chase & Co. (NYSE:JPM) can attest, the mortgage business has been booming, and they have profited handsomely, unlike Bank of America Corp (NYSE:BAC).

CEO Brian Moynihan has had this issue on his mind for some time. Back in 2011, he predicted that the bank would be producing pre-tax earnings in the $35 to $40 billion range once things got back on an even keel. That was quite a call, considering the fact that the bank only saw $32 billion in the go-go days of 2006. Last year, Bank of America Corp (NYSE:BAC) had pre-tax income of $4.19 billion, so there’s obviously quite a bit of ground to cover.

But, fear not. Mr. Moynihan is right now rallying the troops, nudging them to step up the earnings pace, perhaps pushing his executives to increase cross-selling — something at which rival Wells Fargo (NYSE:WFC) excels.

Improvements are needed in its mortgage-servicing division
Bank of America has never had a great reputation for customer service, and it’s even worse when it comes to servicing mortgage loans. The bank has the lion’s share of complaints in this regard, thanks to Countrywide. The bank is working hard to put these issues in the past, and it has given nearly one-quarter of its aggrieved customers some relief, more than any other big bank. Nevertheless, B of A should speed up this process if it is humanly possible, since this particular problem weighs the heaviest on its image.

B of A should settle with MBIA Inc. (NYSE:MBI)
As I’ve noted before, this issue, which should be minor in the scheme of things, has been blown all out of proportion. Bank of America’s strange refusal to settle this old problem with the much-smaller mortgage insurer MBIA Inc. (NYSE:MBI) has turned into a slapping contest, making B of A look somewhat like a bully.