Bank Of America Remains NJ's Favorite

The Record ( — Wednesday, November 18, 2015


Maybe it should be called the Teflon Bank.

Consider: Bank of America, the country's second-largest financial institution by assets, and the top lender in New Jersey by deposits, has paid more than $50 billion in well-publicized fines and settlements since 2009, more than any other U.S. bank, mostly because of bad mortgage loans. Bank customer satisfaction surveys consistently place the company at or near the bottom of the rankings. What's more, Bank of America closed hundreds of branches around the country in recent years to cut costs, including about 70 in New Jersey.

But none of that seems to stick in the minds of customers. The deposits and debit-card swipes keep coming, especially in New Jersey, whose marketplace Bank of America entered about 10 years ago with its acquisition of FleetBoston Financial. The Charlotte, N.C.-based financial behemoth remains by far the top deposit holder in the state, and a major private employer in New Jersey, with a payroll of about 10,000.

In the past four years, the bank has added to its New Jersey market-share dominance, according to the latest Federal Deposit Insurance Corp. data, peccadilloes notwithstanding, and despite no shortage of competition.

The bank held $48.5 billion in New Jersey deposits as of June 30, and its deposit market share inched up to 16.03 percent from 15.92 percent since mid-2011, tops in the state ahead of Wells Fargo and TD Bank.

Size is important when it comes to attracting and retaining deposits, said Bob Doherty, Bank of America's regional president for New Jersey. In addition to its 277 retail bank branches, the bank's reach is attributable in part to having small, medium and large business banking divisions, and two prominent wealth management subsidiaries in the state — U.S. Trust and Merrill Lynch. "We really touch a lot of customers," Doherty said. "One of every three commercial entities in the state is doing business with us."

"They have incredible name recognition and a huge branch system, and if people pick banks based on familiarity, they will pick them," said Phyllis Salowe-Kaye, executive director of the consumer watchdog and housing group New Jersey Citizen Action. "They have products and services that are competitive with large and small banks," she said.

The group used to be a vocal critic of the bank for its reluctance to enter into a formal community reinvestment agreement with NJCA. In recent years, however, the bank has generated goodwill and added to its customer base by providing financial support to community and arts organizations in New Jersey, Salowe-Kaye said.

Nationally, "you are seeing it grow deposits but not as much as Wells Fargo and JPMorgan," said Christopher Mutascio, a banking analyst at Keefe Bruyette & Woods. He said Bank of America benefits by being almost everywhere and having competitive consumer technology.

"If I'm in New Jersey and have a second home in North Carolina or Florida or on the West Coast, I can be with Bank of America," he said. "Its online bank is actually quite good and has a pretty good reputation for ease of use," Mutascio said. "And they are trying to move the ship in terms of consumer relations."

The New Jersey branch closings, which in Bergen County included the shutting of branches in Hackensack, Fort Lee and Edgewater, have not resulted in significant deposit runoff, Doherty said. The bank has many branches in close proximity, which made it easier to move a customer's account, without causing a backlash.

Another factor working in Bank of America's favor is that switching banks is a hassle consumers like to avoid.

"Our biggest competitor is inertia," said Domenick Cama, chief operating officer of fast-growing Investors Bank, one of Bank of America's regional rivals in New Jersey. "It's difficult for people to move their accounts, even when they are not happy with the service."

Switching banks means having to get employers to change where they send direct-deposited paychecks. It also means having to set up and learn a new online bill payment system, and changing automatic payment instructions, Cama said.

Investors Bank was able, however, to get Jersey City's City Council to move its municipal accounts to Investors Bank when the Short Hills-based lender earlier this year took over a branch in the city's Hub shopping center on Martin Luther King Jr. Drive that Bank of America had abandoned.

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