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Wassim Zhani
Bank of America
Dr David Robinson
Final Project Part I: BANK OF AMERICA

Bank of America

Introduction of the Bank

Bank of America is a bank holding company, which provides a full range of banking and
financial services and products in more than 28 million households and 2 million businesses in
the U.S. and internationally. Its main areas of the market cover the entire United States, after the
recent merger with FleetBoston Financial Corporation, as well as selected international markets.
Banking operations are divided into the following main business segments: consumer and
commercial banks.

Services and Customers of the Bank

Consumer and Commercial Banking provides a wide range of products and services for
individuals, small businesses and midsize companies through the delivery channels, which
include about 4,277 banking centers and 13,241 ATMs in 21 states and the District of Columbia.
The segment provides specialized services, such as the emergence and maintenance of mortgage
issuance of credit cards, student lending, and some insurance services, commercial lending,
services and cash management (Bonadio, 1994).
Asset Management includes private banking (financial solutions for wealthy clients),
management of capital (stocks, bonds, cash and alternative investments), and investment services
(full service and discount brokerage services). Investment Banking and Global Corporate provide
capital raising products, government agencies, cash management, financial institutions, leasing
and financial advisory services to international and domestic corporations, capital markets and
trade finance.

The Size/Scale of the Organization

The total sales of the Bank of America are $134,194.0. The number of employees in the
Bank of America is 288,000. According to the report of 2010, the Bank of America is the 5th
largest organization in America in the view of the total revenues and is also the second largest
non-oil company in United States after Wal-Mart. The Bank of America has a total of 6,000
locations all over the United States and also has 300 branches abroad. In accordance with the
2010 annual report, the Bank has branches all over the 50 states, in the Columbia District and in
more than 40 countries abroad(Bonadio, 1994).

Bank of America Corporation Income Statement

Dec 10 Dec 09 Dec 08

Revenue 134,194.0 150,450.0 113,106.0

Cost of Goods Sold -- -- --

Gross Profit 134,194.0 150,450.0 113,106.0

Gross Profit Margin -- -- --

SG&A Expense 57,294.0 52,372.0 20,739.0

Depreciation & Amortization 1,731.0 1,978.0 3,319.0

Operating Income -- -- --

Operating Margin --% --% --%

Nonoperating Income -- -- --

Nonoperating Expenses -- -- --

Income Before Taxes (1,323.0) 4,360.0 --

Income Taxes 915.0 (1,916.0) 420.0

Net Income After Taxes (2,238.0) 6,276.0 (420.0)

Continuing Operations (2,238.0) 6,276.0 4,008.0

Discontinued Operations -- -- --

Total Operations (2,238.0) 6,276.0 4,008.0

Total Net Income (2,238.0) 6,276.0 4,008.0

Net Profit Margin -1.7% 4.2% 3.5%

Diluted EPS from Total Net Income (0.37) (0.29) 0.55

Dividends per Share 0.04 0.04 2.24

All amounts in millions of US Dollars except per share amounts.

Demographic Forces
Demographics factors are hard to predict. Age is one of the factors that can be predicted
easily. This factor of age affects various aspects at the operation of Bank of America such as
interest rate, economic growth, asset prices, housing, inflation and government spending. The
estimates of age of the population show that the emerging market of the bank would have young
and growing population. Moreover, the aging of the baby boomers would force Bank of America
to reconsider the rate of interest. As they would be aging and would get closer to their retirement
ages they would need more loans so they will be facing more difficulties in paying back the loan.
As well as the emerging market of young population would need loans for house as they move
ahead in their lives to settle down so they have to consider the interest rate for them as well
(James & Bessie, 1954).

Task Environment
The task environment includes distributors, suppliers, competitors, customers etc.

The main competitors of the Bank of America are Citigroup, Inc., JPMorgan Chase &
Co. and Wells Fargo & Company.

Direct Competitor Comparison


Cap. Market Cap: 101.33 billion 112.09 billion 158.87 billion 143.76 billion N/A

Employees: 288 000 260 000 242 929 270 200 N/A

Growth. Qtr. sales

4.10% -1.30% 16.40% 12.40% 0.00%

Revenue (ttm): 82.68 billion 61.18 billion 89.45 billion 71.35 billion N/A

Gross Margin N/A N/A N/A N/A 0.00%



EBITDA (ttm): N/A N/A N/A N/A N/A

Operating Margin
15.29% 19.80% 39.01% 33.91% 0.00%

Net Income (ttm): -4.46 Bn 9.30 billion 17.93 billion 12.83 billion N/A

EPS (ttm): -0.47 3.06 4.50 2.43 N/A

E (ttm): N/A 12.55 8.88 11.19 N/A

PEG (5 yr
-7.18 0.60 0.93 0.77 N/A

P / S (ttm): 1.23 1.86 1.79 2.02 N/A

C = Citigroup, Inc..

JPM = JPMorgan Chase & Co.

WFC Wells Fargo & Company =

Industry = Regional - Mid-Atlantic Banks

There are many product and service suppliers in the banking industry. For instance, there
are a number of capital suppliers and these suppliers do not possess a strong bargaining power. It
is important to note that in the banking industry specialized, knowledgeable and talented staff is
required. Bank of America possesses the strength of competent employees. For Bank of America
the main supplier is Federal Reserve.

General Environment and Its Forces

Elements of the general environment affect the operation of an organization in more than
one ways. Technology and socio-cultural forces cause a great deal of impact on the performance
of the organization. In todays era no company can operate lucratively without embracing the
phenomenon of technology. Bank of America adopted the various technological advancements.
Today is the era of mobile phones. In order to meet this change Bank of America launched the
services of mobile banking.
The success of Bank of Americas mobile banking is getting success and frequent press
releases and posts can be considered as the proof of their success. American bankers and The
Wall Street Journal are discussing the success of the mobile banking of Bank of America. The
bank possesses 29 million customers who use online banking. Out of these 29 online users, 2
millions are using mobile banking. Mobile banking offers features through which customers can
transfer their funds, pay bills, review the balance of their account, they can find the location of
the nearest ATM and banking centers (James & Bessie, 1954).
Today Bank of America retains 2 million mobile banking users; however there are total 4
million people who use mobile banking. It is the constant analysis of the Bank of America of the
general environment that they realized the importance of latest technology and embraced the idea
of mobile banking so well that they possesses half of the customers who use mobile banking.

With the latest and further advancements in the features of mobile phones Bank of America
should keep update their features and services otherwise their competitors would take advantage
of this technology.
As far as political impacts are concerned the current position of economic downfalls and
government interventions are not showing positive signs. The interventions of the government
aided in easing the matters but still the mistrust that is going on among various financial
institutions is present to a greater extent. On the basis of these conditions it can be said that it
would take almost two to three quarters to get the things back to the normality. So, CDO and the
exposure to sub-prime factors are very challenging for the Bank of America when it comes to
asset write offs and charges.


Bonadio, A. (1994), A.P. Giannini: Banker of America, Berkeley, California: University of

California Press.
James, M. & Bessie, J. (1954), Biography of a Bank: The Story of Bank of America N.T &S.A,
New York: Harper and Brothers.