Summative Assessment 3: Global Expansion Report
miliner9113
BankofAmericastrategicplan.docx
References
04 April 2011
04 April 2011
1
Bank of America
Strategic Management Plan
April 17, 2014
Shane Theriault
Pierre-Oliver Lachance Garik Theriault
Sierra Daigle
Overview
04 April 2011
2
Company Overview
· Company History
· Existing Strategies
· Existing Mission and Vision Proposed Mission and Vision External Assessment
· Industry Analysis
· Organizational Chart
· Divisional Analysis
· Opportunities and Threats
· EFE Matrix
· CPM Matrix
Internal Assessment
· Organizational Structure
· Strengths and Weaknesses
· Financial Condition
· IFE Matrix
Strategy Formulation
· SWOT Matrix
· IE Matrix
· Space Matrix
· Grand Strategy Matrix
· BCG Matrix
· Matrix Analysis
· QSPM Matrix
Strategy Selection
· Strategy
· EPS/EBIT
· Projected Financials
· Foreseeable Problems
Evaluation
· Balanced Score Card
Company Update
Company History – Bank of Italy
04 April 2011
· 1904 – Bank of Italy was founded in San Francisco by Amadeo Giannini for
immigrants who were denied service at other banks
· 1906 – San Francisco earthquake
· 1922 – Giannini established the Bank of America and Italy by buying Banca dell'Italia Meridionale
· 1927 – Giannini consolidated the 101 branches of the Bank of Italy with the 175 branches of the Liberty Bank of America to create the Bank of Italy National Trust & Savings Association
· 1928 – He merged with Bank of America, Los Angeles to become the largest banking institution in the US
· 1930 – Bank of Italy was renamed BankAmerica Corp. with Gianni and Orra E. Monnette as co-chairs
Company History Cont.
04 April 2011
BankAmerica Corp.
· 1953 – Clayton Antitrust Act & Bank Holding Company Act forced the
separation of BoA and Transamerica Corporation, an insurance subsidiary
· 1953 – Banking regulators also force out of state activities into a new company, First Interstate Bancorp, later acquired by Wells Fargo and Company in 1996.
· 1958 – Creation of BankAmericard (Later to be names Visa)
· 1983 - Acquisition of Seafirst Corporation of Seattle, Washington, and its wholly owned banking subsidiary, Seattle-First National Bank
· 1992 – Acquired Security Pacific Corporation and its subsidiary Security Pacific National Bank in California and other banks in Arizona, Idaho, Oregon, and Washington which was the largest bank acquisition in history
· 1992 - BankAmerica expanded into Nevada by acquiring Valley Bank of Nevada
· 1994 - BankAmerica acquired the Continental Illinois National Bank and Trust Co.
· 1997 - BankAmerica acquired Robertson Stephens, a San Francisco-based
investment bank specializing in high technology
· 1998 - BankAmerica was
04 April 2011
Company History Cont.
Bank of America
acquired by NationsBank of Charlotte in what was
the largest bank acquisition in history at that time. The merged bank took the better-known name of Bank of America
· 2004 - Bank of America announced it would purchase Boston-based bank FleetBoston Financial
· 2005 - Bank of America announced it would purchase credit card giant MBNA
· 2006 - Bank of America and Banco Itaú entered into an acquisition agreement
through which Itaú agreed to acquire BankBoston's operations in Brazil
· 2006 - Bank of America announced the purchase of The United States Trust Company for $3.3 billion, from the Charles Schwab Corporation
· 2007 - Bank of America acquires LaSalle Bank Corporation from Netherlands's ABN AMRO Bank N.V.
· 2008 - Bank of America announced that it would buy Countrywide Financial for $4.1 billion
· 2008 - Bank of America announced it’s intention to purchase Merrill Lynch & Co., Inc. who was within days of collapse
· Get Lean
· Increase Global Excess Liquidity Sources by $442 billion to $378
· Reduced risk-weighted assets by $171 billion to $1.28 trillion
· “A Strong Company Begins with a Strong Balance Sheet”
· “[Focus] on selling non-core assets, increasing capital ratios, building liquidity and
reducing risk”
· Right the mortgage Crisis Risk
· “Our goal is to set a tone and create a risk management culture in which every employee is empowered to raise an issue or express a concern.”
· Become “customer focused”
· “[be] responsive to the needs of customers and clients — providing the products and services they want, when, how and where they want them”
Current Strategies
04 April 2011
6
Vision Statement
Our vision is for Bank of America to be the World’s finest financial services company. We think that this is an appropriate and achievable goal.
Mission statement
We built Bank of America to meet the full range of financial needs for people, businesses, and institutional investors; to attract the best employees to serve our customers and clients; to support the communities where we do business; and to create long-term value for our shareholders. Todays Bank of America is a financial services leader serving customers and clients worldwide. We help them to see and act on opportunities to achieve their goals by delivering value, convenience, expertise, and innovation.
Existing Vision and Mission Statement
04 April 2011
7
Our vision is for Bank of America to be the World’s finest
financial services company.
Proposed Vision Statement
04 April 2011
8
Proposed Mission statement
04 April 2011
We built Bank of America to meet the full range of financial needs(2) for people, businesses, and institutional investors(1); to attract the best employees (9)to serve our customers and clients; to support the communities where we do business(8); and to create long-term value for our shareholders(5). Bank of America is a financial services leader serving customers and clients worldwide(3). We help them to see and act on opportunities to achieve their goals(6) by delivering value, convenience, expertise(7), and innovation(4).
1.Customers 2.Products or services 3.Markets 4.Technology
5. Concern for survival, growth, and profitability
6. Philosophy 7.Self-concept
8.Concern for public image 9.Concern for employees
10
External Audit
04 April 2011
10
Industry Analysis
04 April 2011
11
Bank of
America Citigroup
JP Morgan Chase
Wells Fargo
|
# of employees |
288K |
260K |
242K |
270K |
|
% operating Margin |
15.29 |
19.8 |
39.01 |
33.91 |
|
$ Net Income |
1,446 |
9.30B |
17.93B |
12.83B |
|
$ EPS |
.01 |
3.06 |
4.5 |
2.43 |
|
# branches |
5700 |
|
|
9000 |
|
# Shares outs |
10.5B |
2.92 |
3.97 |
5.29B |
1. Smartphones will reach more than 2.5 billion users by 2015
2. According to industry sources, mobile banking users worldwide will reach 530 million by 2013, up from just over 300 million in 2011
3. The US banks sector grew by 11.3% in 2010 to reach a value of $11,713.2 billion
4. Projected increase of population in the United States of 82% from 2005 to 2050
5. consolidation of the financial services sector provides potential for company acquisitions
6. Expansion into the global market
7. President Obama unveiled a stimulus plan totaling 447 Billion
Opportunities
04 April 2011
12
· Mortgage rates hit record low: 30-year fixed nears 4%
· Stock price dropped over 50% since 2008
· The number of bank failures increased from 25 in 2008 to 92 in 2011.
· The cost to businesses worldwide adds up to a staggering $221 billion each year.
· Consumer defaults on credit cards, mortgages, etc.
· The possibility of the Federal Reserve increasing interest rates.
· Dodd-Frank Act was signed into law on July could have significant impact on the US banking industry
· Potential for United States economic relapse
Threats
04 April 2011
13
EFE Matrix
04 April 2011
|
External Factor Evaluation Matrix (EFE) Opportunities |
Weight |
Rating |
Weighted Score |
|
|
1. |
Smartphones will reach more than 2.5 billion users by 2015 |
0.09 |
3 |
0.27 |
|
2. |
According to industry sources, mobile banking users worldwide |
0.07 |
3 |
0.21 |
|
|
will reach 530 million by 2013, up from just over 300 million in |
|
|
|
|
|
2011 |
|
|
|
|
3. |
The US banks sector grew by 11.3% in 2010 to reach a value of |
0.07 |
4 |
0.28 |
|
|
$11,713.2 billion |
|
|
|
|
4. |
Projected increase of population in the United States of 82% |
0.05 |
4 |
0.20 |
|
|
from 2005 to 2050 |
|
|
|
|
5. |
consolidation of the financial services sector provides potential |
0.06 |
2 |
0.12 |
|
|
for company acqusitions |
|
|
|
|
6. |
Expansion into the global market |
0.09 |
3 |
0.27 |
|
7. |
President Obama unveiled a stimulus plan totaling 447 Billion |
0.06 |
3 |
0.18 |
|
Threats |
Weight |
Rating |
Weighted Score |
|
|
1. |
Mortgage rates hit record low: 30-year fixed nears 4% |
0.09 |
3 |
0.27 |
|
2. |
Stock price droped over 50% since 2008 |
0.07 |
2 |
0.14 |
|
3. |
The number of bank failures increased from 25 in 2008 to 92 in 2011. |
0.06 |
3 |
0.18 |
|
4. |
The cost to businesses worldwide adds up to a staggering $221 billion each year. |
0.06 |
4 |
0.24 |
|
5. |
Consumer defaults on credit cards, mortgages, etc. |
0.05 |
2 |
0.10 |
|
6. |
The possibility of the Federal Reserve increasing interest rates. |
0.06 |
3 |
0.18 |
|
7. |
Dodd-Frank Act was signed into law on Julycould have significant impact on the US banking industry |
0.05 |
3 |
0.15 |
|
8. |
Potential for United States economic relapse |
0.07 |
2 |
0.14 |
|
|
TOTALS |
1.00 |
|
2.93 |
14
CPM
04 April 2011
15
Internal Audit
04 April 2011
16
Chairman
CEO, Brian
T Moynihan
Organizational Structure
04 April 2011
17
Global Technology and Operations Executive, Catherine
P. Bessant
Co-Chief Operating Officer, David C. Darnell
Global Strategy and Marketing Officer, Anne M. Finucane
Corporate General Auditor, Christine
P. Katziff
Chief Risk Officer, Terry P. Laughlin
Global General Counsel, Head of Compliance & Regulatory Relations, Gary G. Lynch
Co-Chief Operating Officer, Thomas K.
Montag
Global Head of Human Resource s, Andrea
B. Smith
Legacy Asset Servicing Executive, Ron D. Strurzeng ger
Chief Financial Officer, Bruce R. Thompson
Divisional Analysis
04 April 2011
18
Financial Information:
04 April 2011
Income Statement
20
Financial Information:
04 April 2011
Balance Sheet
21
Financial Information:
04 April 2011
Cash Flow
22
Ratio Analysis
04 April 2011
|
|
2010 |
2011 |
|
Liquidity Ratios |
|
|
|
Current Ratio |
0.66 |
0.64 |
|
Quick Ratio |
0.66 |
0.64 |
|
Leverage Ratios |
|
|
|
Debt-to-Total Assets Ratio |
0.19 |
0.18 |
|
Debt-to-equity Ratio |
1.9 |
1.65 |
|
Long-term debt-to-equity Ratio |
0.56 |
0.52 |
|
Key Ratios |
|
|
|
Return on equity |
-0.009 |
0.006 |
|
Return on assets |
-0.0009 |
0.0006 |
|
Loan to deposit ratio |
0.93 |
0.89 |
|
Total Capital |
15.77 |
16.75 |
|
Tier 1 leverage |
7.21 |
7.53 |
|
Efficiency Ratio |
74.61 |
85.01 |
Financial Information:
24
Company Worth
04 April 2011
|
|
|
|
|
|
Bank of America |
|
|
|
|
|
|
|
Company Worth Analysis |
|
|
|
Stockholders' Equity $229,095,000,000 Net Income x 5 $7,230,000,000 (Share Price/EPS) x Net Income $803,976,000,000 Number of Shares Outstanding x Share Price $56,395,080,000 Method Average $274,174,020,000 |
|
|
|
|
|
|
|
JP Morgan Chase |
|
|
|
|
|
|
|
Company Worth Analysis |
|
|
|
Stockholders' Equity $183,573,000,000 Net Income x 5 $94,880,000,000 (Share Price/EPS) x Net Income $140,837,500,000 Number of Shares Outstanding x Share Price $125,442,275,000 Method Average $136,183,193,750 |
1. Bank of America serves clients in more than 150 countries and has a
relationship with 99% of U.S. Fortune 500 companies
2. 21 in the Global 500. Bank of America Corp.
3. BOA serves approximately 55 million consumers, clients and small businesses around the world, doing business with one out of every two households in the U.S
4. BOA has approximately 5,700 banking centers and approximately 17,750 ATMs
5. The company’s new Merrill Edge account enables customers to manage their banking and investing activities through an integrated platform.
6. BOA lowered their long-term debt by $76 billion in 2011.
7. Revenue diversification is helping the company to serve a large customer base, as well as helping it to offset volatility in its revenue streams
8. Decreased Non-preforming loans by 5 billion in 2011
Strengths
04 April 2011
25
1. International markets only account for approximately 10% of the bank's
revenue.
2. BOA efficiency ratio has increased over 10% in the last year to 85.59% 3. EPS of -0.37 in 2010 and 0.01 in 2011
4. Net income loss of 2.2 billion in 2010
5. BoA’s revenues have been declining since 2009 at a compounded annual change rate of 12% to $93,454 million in 2011
6. The representations and warranties provision in 2011 included $8.6 billion related to the BNY Mellon Settlement and $7.0 billion related to other exposures.
7. Bank of America has a ACSI index rating of 68
Weaknesses
04 April 2011
26
|
Internal Factor Evaluation Matrix (IFE) Strengths |
Weight |
Rating |
Weighted Score |
|
|
1. |
Bank of America serves clients in more than 150 countries and has a relationship with 99% of U.S. Fortune 500 companies |
0.10 |
3 |
0.30 |
|
2. |
21 in the Global 500. Bank of America Corp. |
0.04 |
3 |
0.12 |
|
3. |
BOA serves approximately 55 million consumers, clients and small businesses around the world, doing business with one out of every two households in the U.S |
0.07 |
4 |
0.28 |
|
4. |
BOA has approximately 5,700 banking centers and approximately 17,750 ATMs |
0.09 |
4 |
0.36 |
|
5. |
The company’s new Merrill Edge account enables customers to manage their banking and investing activities through an integrated platform. |
0.05 |
3 |
0.15 |
|
6. |
BOA lowered their long-term debt by $76 billion in 2011. |
0.05 |
3 |
0.15 |
|
7. |
Revernue diversification is helping the company to serve a large customer base, as well as helping it to offset volatility in its revenue streams |
0.06 |
4 |
0.24 |
|
8. |
Decreased Non-preforming loans by 5 billion in 2011 |
0.05 |
4 |
0.20 |
|
Weaknesses |
Weight |
Rating |
Weighted Score |
|
|
1. |
International markets only account for approximately 10% of the bank's revenue. |
0.09 |
2 |
0.18 |
|
2. |
BOA efficiency ratio has increased over 10% in the last year to 85.59% |
0.06 |
2 |
0.12 |
|
3. |
EPS of -0.37 in 2010 and 0.01 in 2011 |
0.06 |
2 |
0.12 |
|
4. |
Net income loss of 2.2 billion in 2010 |
0.07 |
2 |
0.14 |
|
5. |
BoA’s revenues have been declining since 2009 at a compounded annual change rate of 12% to $93,454 million in 2011 |
0.10 |
1 |
0.10 |
|
6. |
The representations and warranties provision in 2011 included $8.6 billion related to the BNY Mellon Settlement and $7.0 billion related to other exposures. |
0.05 |
2 |
0.10 |
|
7. |
Bank of America has a ACSI index rating of 68 |
0.06 |
2 |
0.12 |
|
|
TOTALS |
1.00 |
|
2.68 |
IFE Matrix
04 April 2011
27
Strategy Formulation
04 April 2011
28
04 April 2011
1 Increase positive presence in Social Media (S1 S3, O1, O2, O3, O7)
2 Increase marketing by 50% (S1, S2, S3, S4, O1, O2, O3, O4)
3 Increase marketing to mobile users (S1, S3, S4, O1, O2, O3, O4)
SO Strategies
1 Increase number of ATMs (S1, S3, S4, T4)
ST Strategies
1 Increase customer service training (W2, W7, O1, O2, O4)
2 Develop consumer banking applications (W7 O1, O2, O3, O7) 3 Continue expansion into global market (W1, W5, O2, O5)
WO Strategies
1 Continue to sell non-core assets (W1, W5, T2, T3, T4, T8)
WT Strategies
SWOT Matrix
29
04 April 2011
· Market development
· Market penetration
· Product development
· Related diversification
Space Matrix
30
The IFE Total Weighted Scores
04 April 2011
IE Matrix
4.0
3.0
Strong Average Weak 3.0 2.0
2
· Backward, Forward, horizontal penetration
· Market penetration
1.0
· Market development
· Product development
1 5
4
2.0 6
3
1.0
1 Deposits
2 Card Services
Consumer Real Estate
Net Income
1,192
5,788
% 5.68%
27.59%
Revenue % IFE EFE
12,689 13.46% 3.23 2.64
18,143 19.25% 3.04 3.26
|
3 Services |
(19,529) |
- |
(3,154) |
-3.35% |
2.25 |
1.87 |
|
4 Global Commercial Banking |
4,402 |
20.99% |
10,553 |
11.20% |
2.96 |
2.45 |
5 Global Banking & Markets Global Wealth & Investment
6 Management
7 All Other Total
Adjusted Total*
2,967 14.15% 23,618 25.06% 2.88 2.16
1,635 7.79% 17,376 18.44% 2.74 2.51
4,991 23.79% 15,021 15.94%
1,446 100.00% 94,246 100.00%
20,975
31
* Does not include Real Estate Services
04 April 2011
· Market development
· Market penetration
· Product development
· Horizontal integration
· Divestiture
· Liquidation
Grand Strategy Matrix
32
04 April 2011
|
|
Net Income |
% |
Revenue |
% |
Relative Market Share |
Growth |
||||
|
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
1,192 |
|
5.68% |
12,689 |
13.46% |
|
|
57% |
|
-30% |
|
Card Services |
|
|
|
|
|
|
|
|
|
|
|
|
5,788 |
|
27.59% |
18,143 |
19.25% |
|
|
1 |
|
-10% |
|
Consumer Real |
|
|
|
|
|
|
|
|
|
|
|
Estate Services |
(19,529) |
|
- |
(3,154) |
-3.35% |
|
|
63% |
|
-20% |
|
Global Commercial |
|
|
|
|
|
|
|
|
|
|
|
Banking |
4,402 |
|
20.99% |
10,553 |
11.20% |
|
|
1 |
|
3% |
|
Global Banking & |
|
|
|
|
|
|
|
|
|
|
|
Markets |
2,967 |
|
14.15% |
23,618 |
25.06% |
|
|
44% |
|
-13% |
|
Global Wealth & |
|
|
|
|
|
|
|
|
|
|
|
Investment |
|
|
|
|
|
|
|
|
|
|
|
Management |
1,635 |
|
7.79% |
17,376 |
18.44% |
|
|
52% |
|
-14% |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
4,991 |
|
23.79% |
15,021 |
15.94% |
|
n/a |
|
n/a |
|
|
Total |
1,446 |
1 |
|
94,246 |
|
1 |
|
|
|
|
|
Adjusted Total* |
20975 |
* Does not include Real Estate Services
BCG Matrix
34
04 April 2011
High
High
· Product Development
· Diversification
· Divestiture
|
· Backward, Forward, horizontal penetration · Market penetration · Market development · Product development |
Relative Market Share Medium Low |
|
|
|
|
|
|
Industry Sales Medium Growth Rate
Low |
4 |
|
|
|
2 6
3 1 |
5 |
· Retrenchment
· Divestiture
· Liquidation
04 April 2011
|
Alternative Strategies |
IE |
SPACE |
GRAND |
BCG |
COUNT |
|
Forward Integration |
X |
|
|
x |
2 |
|
Backward Integration |
X |
|
|
x |
2 |
|
Horizontal Integration |
X |
|
X |
x |
3 |
|
Market Penetration |
X |
X |
X |
x |
4 |
|
Market Development |
X |
X |
X |
x |
4 |
|
Product Development |
X |
X |
X |
X |
4 |
|
Related Diversification |
|
X |
|
X |
2 |
|
Unrelated Diversification |
|
|
|
X |
1 |
|
Retrenchment |
|
|
|
X |
1 |
|
Divestiture |
|
|
X |
X |
2 |
|
Liquidation |
|
|
X |
X |
2 |
Matrix Analysis
35
Possible Strategies
04 April 2011
· Market Penetration
· SO2 - Increase global marketing by 50% over 3 years
· SO3 - Increase marketing to mobile users
· ST1 - Increase number of ATMs
· Market Development
· WO3 - Continue expansion into global market
· Product Development
· WO2 - Develop consumer banking applications
36
04 April 2011
|
Increase Global Develop consumer Marketing by banking applications 50% over 3 years Opportunities Weight AS TAS AS TAS |
||||||
|
1. |
Smartphones will reach more than 2.5 billion users by 2015 |
0.09 |
2 |
0.18 |
4 |
0.36 |
|
2. |
According to industry sources, mobile banking users worldwide will reach 530 million by 2013, up from just over 300 million in 2011 |
0.07 |
3 |
0.21 |
4 |
0.28 |
|
3. |
The US banks sector grew by 11.3% in 2010 to reach a value of $11,713.2 billion |
0.07 |
1 |
0.07 |
2 |
0.14 |
|
4. |
Projected increase of population in the United States of 82% from 2005 to 2050 |
0.05 |
4 |
0.20 |
2 |
0.10 |
|
5. |
consolidation of the financial services sector provides potential for company acqusitions |
0.06 |
- |
- |
- |
- |
|
6. |
Expansion into the global market |
0.09 |
4 |
0.36 |
3 |
0.27 |
|
7. |
President Obama unveiled a stimulus plan totaling 447 Billion |
0.06 |
4 |
0.24 |
2 |
0.12 |
|
Threats |
Weight |
AS |
TAS |
AS |
TAS |
|
|
1. |
Mortgage rates hit record low: 30-year fixed nears 4% |
0.09 |
- |
- |
- |
- |
|
2. |
Stock price droped over 50% since 2008 |
0.07 |
2 |
0.14 |
3 |
0.21 |
|
3. |
The number of bank failures increased from 25 in 2008 to 92 in 2011. |
0.06 |
- |
- |
- |
- |
|
4. |
The cost to businesses worldwide adds up to a staggering $221 billion each year. |
0.06 |
2 |
0.12 |
4 |
0.24 |
|
5. |
Consumer defaults on credit cards, mortgages, etc. |
0.05 |
2 |
0.10 |
3 |
0.15 |
|
6. |
The possibility of the Federal Reserve increasing interest rates. |
0.06 |
- |
- |
- |
- |
|
7. |
Dodd-Frank Act was signed into law on Julycould have significant impact on the US banking industry |
0.05 |
3 |
0.15 |
1 |
0.05 |
|
8. |
Potential for United States economic relapse |
0.07 |
- |
- |
- |
- |
QSPM
37
04 April 2011
|
Increase Global Marketing Develop consumer By 50% over 3 banking applications years Strengths Weight AS TAS AS TAS |
||||||
|
1. |
Bank of America serves clients in more than 150 countries and has a relationship with 99% of U.S. Fortune 500 companies |
0.10 |
4 |
0.40 |
3 |
0.30 |
|
2. |
21 in the Global 500. Bank of America Corp. |
0.04 |
- |
- |
- |
- |
|
3. |
BOA serves approximately 55 million consumers, clients and small |
|
|
|
|
|
|
|
businesses around the world, doing business with one out of every two households in the U.S |
0.07 |
3 |
0.21 |
4 |
0.28 |
|
4. |
BOA has approximately 5,700 banking centers and approximately 17,750 ATMs |
0.09 |
4 |
0.36 |
2 |
0.18 |
|
5. |
The company’s new Merrill Edge account enables customers to manage |
|
|
|
|
|
|
|
their banking and investing activities through an integrated platform. |
0.05 |
2 |
0.10 |
4 |
0.20 |
|
6. |
BOA lowered their long-term debt by $76 billion in 2011. |
0.05 |
- |
- |
- |
- |
|
7. |
Revernue diversification is helping the company to serve a large customer |
|
|
|
|
|
|
|
base, as well as helping it to offset volatility in its revenue streams |
0.06 |
2 |
0.12 |
3 |
0.18 |
|
8. |
Decreased Non-preforming loans by 5 billion in 2011 |
0.05 |
0 |
0.00 |
0 |
0.00 |
|
Weaknesses |
Weight |
AS |
TAS |
AS |
TAS |
|
|
1. |
International markets only account for approximately 10% of the bank's revenue. |
0.09 |
3 |
0.27 |
2 |
0.18 |
|
2. |
BOA effeciency ratio has increased over 10% in the last year to 85.59% |
0.06 |
3 |
0.18 |
2 |
0.12 |
|
3. |
EPS of -0.37 in 2010 and 0.01 in 2011 |
0.06 |
- |
- |
- |
- |
|
4. |
Net income loss of 2.2 billion in 2010 |
0.07 |
- |
- |
- |
- |
|
5. |
BoA’s revenues have been declining since 2009 at a compounded annual change rate of 12% to $93,454 million in 2011 |
0.10 |
4 |
0.40 |
2 |
0.20 |
|
6. |
The representations and warranties provision in 2011 included $8.6 billion related to the BNY Mellon Settlement and $7.0 billion related to other exposures. |
0.05 |
- |
- |
- |
- |
|
7. |
Bank of America has a ACSI index rating of 68 |
0.06 |
3 |
0.18 |
2 |
0.12 |
|
|
TOTALS |
|
|
3.99 |
|
3.68 |
Strategy Selection
04 April 2011
39
· First Year
· Increase marketing by 25% in 2012
· Have marketing costs of $2.75 billion by end of year
· Second Year
· Increase marketing by 10% in 2013
· Have marketing costs of $3 billion.
· Third Year
· Increase marketing by 10% in 2014
· Have marketing costs of $3.3 billion by end of 2014
3 Year Strategy & Annual Objectives
04 April 2011
40
· Increase Global Marketing by 25%
· Current Marketing: $2.2 Billion
· 25% increase is $550 Million
· Total Marketing will be $2.75 Billion
Year 1 Costs
04 April 2011
41
Projected Financials:
Income Statement
04 April 2011
|
Bank of America |
|
|
|
|
Projected Income Statement (in millions) |
2010 |
2011 |
2012 |
|
Net interest income |
52,693 |
45,588 |
45,588 |
|
Noninterest income |
58697 |
48838 |
53722 Increase by 10% |
|
Total revenue, net |
|
|
|
|
of interest expense |
111,390 |
94,426 |
99,310 |
|
Provision for credit losses |
28435 |
13410 |
13410 Same |
|
Good will impairment |
12,400 |
3,184 |
- |
|
All other noninterest expense |
70708 |
77090 |
81627 CGS + 550Million |
|
Income (loss before income taxes |
-153 |
742 |
4,273 |
|
Income tax expense (benefit) |
2085 |
-704 |
1733 Averaged |
|
Net income (loss) |
-2,238 |
1,446 |
2,540 |
|
Preferred stock dividends |
1357 |
1361 |
1361 Same |
|
Net income (loss) applicable to common |
-3,595 |
85 |
1,179 |
|
shareholders |
|
|
|
42
Projected Financials:
Balance Sheet
04 April 2011
|
Bank of America |
|
|
|
|
|
Projected Balance Sheet (in millions) |
2010 |
2011 |
2012 Assumptions |
|
|
Assets: |
|
|
|
|
|
Federal funds sold and securities borrowed |
|
|
|
|
|
or purchased under agreements to resell |
209616 |
211183 |
211183 Same |
|
|
Trading account assets |
194671 |
169319 |
169319 * |
|
|
Debt securities |
338054 |
311416 |
311416 * |
|
|
Loans and leases |
940440 |
926200 |
927479 Increase to balance |
|
|
Allowance for loan and lease losses |
-41885 |
-33783 |
-33783 Same |
|
|
All other assets |
624013 |
544711 |
544711 * |
|
|
Total Assets |
2264909 |
2129046 |
2130325 |
|
|
Liabilities: |
|
|
|
|
|
Deposits |
1010430 |
1033041 |
1033041 * |
|
|
Federal funds purchased and securities |
|
|
|
|
|
loaned or sold under agreements to |
|
|
|
|
|
repurchase |
245359 |
214964 |
214964 * |
|
|
Trading account liabilities |
71985 |
60508 |
60508 * |
|
|
Commercial paper and other short-term |
|
|
|
|
|
borrowings |
59962 |
35698 |
35698 * |
|
|
Long-term debt |
448431 |
372265 |
372265 * |
|
|
All other liabilities |
200494 |
182569 |
182569 * |
|
|
Total liabilities |
2036661 |
1899045 |
1899045 |
|
|
Share holders' equity |
228248 |
230101 |
231,280 Increased by net income- |
|
|
Total liabilities and shareholders' equity |
2264909 |
2129146 |
2130325 prefered dividends |
43
Strategic Evaluation
04 April 2011
44
Balance Score Card
04 April 2011
|
Area of Objectives |
Measure or Target |
Time Expectation |
Primary Responsibility |
|
Customers 1 Satisfaction |
|
|
|
|
|
Customer Survey results |
Yearly |
Marketing Department |
|
2 Brand Identity |
Industry Reports |
Yearly |
Marketing Department |
|
Employees 1 Quality and service training |
|
|
|
|
|
On site and webinars |
Yearly |
COO |
|
2 Employee Satisfaction |
Survey |
Yearly |
Human resources |
|
Business Ethics/Natural Environment 1 Ethics Training |
|
|
|
|
|
# of ethics training sessions |
Yearly |
Human resources |
|
Financial 1 Revenues |
|
|
|
|
|
50% increase each year |
Quarterly |
CFO |
|
2 Ratio analysis |
better than Industry Avg, |
Yearly |
CFO |
45
Company Update
04 April 2011
46
· Bank of America cut around 16,000 jobs in a quicker fashion by the end of 2012 as revenue continued to decline because of new regulations and a slow economy. This put a plan one year ahead of time to eliminate 30,000 jobs under a cost-cutting program, called Project New BAC
· stock doubled in value in 2012
· In 2012, they extended $19.1 billion in total credit to small businesses, customers, local communities and nonprofits. They provided $22 million in grants to fund critical needs, and another $22 million for housing. And they announced a new 10-year, $50 billion goal to help improve the environment.
· On September 28, 2012, Bank of America settled the class action lawsuit over
the Merrill Lynch acquisition and will pay $2.43 billion.
· dropped to 66th on global 500 in 2013
· In September 2013, Bank of America sold its remaining stake in the China Construction Bank for as much as $1.5 billion, marking the firm's full exit from the country.
Questions
04 April 2011
48
· Bank of America Corp. (2014). Merger History. Retrieved from Bank of
America: http://message.bankofamerica.com/heritage/#/merger-history
· Bank of America Corporation. (2012). 2011 Annual Report. Charlotte.
· David, F. R. (2013). Bank of America Corporation - 2011. In F. R. David, Strategic Management; A competitive Advantage Approach (pp. 143-148). Florence: Pearson.
· MBA Lectures. (2010, 12 09). SWOT Analysis of Bank of America. Retrieved from MBA Lectures: http://mba-lectures.com/marketing/swot-analysis- marketing/1155/swot-analysis-of-bank-of-america.html
· Our Team. (2014). Retrieved from Bank of America: http://about.bankofamerica.com/en-us/our-story/our- team.html#fbid=tptoqen5nEc
· SWOT analysis of Bank of America Corporation. (2011). Retrieved from MarketingMix: http://marketingmix.org/swot-analysis-of-bank-of-america- corporation/
· Yahoo! Finance. (2014). Bank of America Corporation (BAC). Retrieved from Yahoo! Finance: http://finance.yahoo.com/q?s=BAC
49
