B of A Will Close 120 Branches in State in ’97

Bank of America, further adapting to consumers’ rapidly changing banking habits, said Thursday that it plans to close 120 branch offices in California as part of a global restructuring of the bank that also will eliminate 3,700 jobs.

The closures, set for next year, amount to 9% of Bank of America’s 1,400 retail outlets. But the San Francisco-based bank said it plans to simultaneously open an additional 200 mini-branches inside supermarkets.

The employment cuts, meanwhile, represent 4% of the bank’s worldwide work force of 92,700 people, and many of the job losses will be part of an overhaul of Bank of America’s corporate banking operations in Europe and Japan.

The number of employees to be actually laid off will depend on how many can be placed elsewhere in the company, Bank of America said.

The branch closures by Bank of America--the nation’s third-largest commercial bank by assets and the biggest in California--reflect the steady migration of consumers away from traditional brick-and-mortar branches to more convenient banking outlets such as automated teller machines, supermarket mini-branches and services available via telephone and home computer.

To be sure, that migration has been occurring for several years at banks and thrifts nationwide. But the changes are accelerating as consumers become more comfortable with banking outside of a conventional branch office.

“The evolution of the industry is picking up the pace quite dramatically,” said Steven Schroll, an analyst at the investment firm Piper Jaffray Inc. in Minneapolis.

Bank of America, the primary unit of BankAmerica Corp., also has competitive reasons for wanting to keep its services as convenient as possible.

Its archrival in California, Wells Fargo Bank, is known for aggressively using technology to simplify services and is now making a big push to place more mini-branches and ATMs in the state. By purchasing another major California player, First Interstate Bank, earlier this year, Wells Fargo increased the pressure on Bank of America.

Bank of America spokesman Peter Magnani discounted the competitive threat, saying, “We chart our own course.” But he said Bank of America’s customers “are telling us to provide as many channels as we possibly can. Then we let them choose how they want to bank.”

Those customers are increasingly opting not to step foot in a branch. Bank of America said retail customers now conduct 70% of their basic bank transactions outside of a branch, whether it be withdrawing cash, making a deposit, checking an account balance or even applying for a loan.

The shift is a sea change for Bank of America, which rose to prominence after World War II by building hundreds of branches in California so that customers could have their bank around the corner.

Today, however, those buildings and their staffs often represent excessive costs for a bank that can deliver the same services more cheaply via an ATM or grocery store outlet.

Bank of America’s moves also represent the first major steps by David A. Coulter, who took over as the bank’s chief executive last year, to maintain the bank’s edge in California’s consumer banking market.

In a statement, Coulter said he wanted to take the actions while the bank is healthy, because “the likelihood of placing [dislocated] employees in other positions is better in good circumstances.”

BankAmerica--with total assets of $243 billion--reported a profit in the first nine months of this year of $2.1 billion, up 9% from a year earlier. Earnings from consumer banking alone also rose 9%, to $952 million.

The bank’s return on average assets--a key gauge of banking profitability--has been a strong 1.2% over the past year, second only to Citicorp among the major U.S. banks, according to the research firm Market Guide Inc.

But Bank of America has weaknesses, including some of its corporate banking efforts in Europe and Japan, and the bank said its restructuring plan also calls for reducing staff and otherwise streamlining those operations.

Overall, the restructuring will force BankAmerica to take an after-tax charge of about $165 million against its earnings for this year’s fourth quarter, the company said.

In response, BankAmerica’s stock fell $3.25 a share to close at $94 in New York Stock Exchange composite trading.