The mortgage overhang, continued weakness in the housing market and legal issues surrounding foreclosures are all combining to delay a payoff from Moynihan’s restructuring of the bank until 2013.
In the interim, the bank is focusing on the growth opportunities it sees in catering to the mass affluent client, said Moynihan, expanding its wealth management business and its capital markets business overseas.
Additionally, the bank is focused on cutting costs, or "balance sheet optimization," as a means of growing earnings, he said. That will mean job cuts in the bank's mortgage unit because new loan creation is slowing.
Depending on where trading revenue in the investment bank stands at the end of the second quarter, cuts could be coming there as well.
"I think the business is performing relatively well," Moynihan said when asked about trading results so far in the second quarter.
Still, he added, with a quarterly trading revenue target of between $3.5 billion to $5 billion, if trading revenue is close to the low end of the range the business needs some "fine tuning"—or in layman’s terms, some job cuts.
When asked about housing prices, which fell to their lowest levels since 2002 in the first quarter of this year, Moynihan said the bank is "well reserved" for any additional weakness in this market. But he expects prices to "bounce around" for a while.
On the negotiations his bank and others are having with 50 state attorneys general concerning a global settlement about the banks' foreclosure practices, Moynihan suggested a settlement is not imminent, and will take longer than some expect.
Credit quality continues to improve, according to Moynihan. The bank still has a way to go in its cards business where loss rates are still in excess of 7 percent, well above the normalized rate of around 4 percent.
The bank's capital levels were also a focus of several questions from the audience.
Moynihan said he does not expect the bank will have to raise additional capital to meet upcoming Basel 3 requirements and a Systemically Important Financial Institution buffer, and instead can build the needed capital through earnings growth.
This past spring, when Bank of America submitted its capital plan to the Federal Reserve, the central bank declined the bank’s request for a modest dividend increase in the second half of the year. The bank can make another request to raise its dividend this year.
When asked if the bank asked again, Moynihan said that in January the bank still had work to do around systems integration and reducing risk, and that is why the Fed refused the bank's first request.
"Stay tuned," he said. "We've learned our lesson about how the process works. When we think it’s done, we'll go back."