netrashetty
Netra Shetty
Bank of America Corporation (NYSE: BAC) is a financial services company, the largest bank holding company in the United States, by assets, and the second largest bank by market capitalization.[4][5][6][7] Bank of America serves clients in more than 150 countries and has a relationship with 99% of the U.S. Fortune 500 companies and 83% of the Fortune Global 500. The company is a member of the Federal Deposit Insurance Corporation (FDIC) and a component of both the S&P 500 Index and the Dow Jones Industrial Average.[8][9][10]
As of 2010, Bank of America is the 5th largest company in the United States by total revenue,[11] as well as the second largest non-oil company in the U.S. (after Wal-Mart). In 2010, Forbes listed Bank of America as the 3rd "best" large company in the world.[12]
The bank's 2008 acquisition of Merrill Lynch made Bank of America the world's largest wealth manager and a major player in the investment banking industry.[13]
The company holds 12.2% of all U.S. deposits, as of August 2009,[14] and is one of the Big Four Banks of the United States, along with Citigroup, JP Morgan Chase and Wells Fargo — its main competitors
Latest Full Context Quarter Ending Date
2010/09
EBIT Margin
18.1%
EBITDA Margin
10.2%
Pre-Tax Profit Margin
0.6%
Interest Coverage
1.0
Leverage Ratio
11.0
Asset Turnover
0.1
Revenue to Assets
0.1
Return on Invested Capital
-0.2%
Return on Assets
-0.1%
Debt/Common Equity Ratio
2.25
Price/Book Ratio (Price/Equity)
0.68
Book Value per Share
$21.06
Total Debt/ Equity
2.56
Long-Term Debt to Total Capital
0.68
Cash Flow per Share
$-0.72
Free Cash Flow per Share
$10.89
Tangible Book Value per Share
$11.29
Price/Cash Flow Ratio
-19.9
Price/Free Cash Flow Ratio
1.3
Price/Tangible Book Ratio
1.27
Most recent data
5-Year Averages
Return on Equity
8.9%
Return on Assets
0.7%
Return on Invested Capital
3.2%
Pre-Tax Profit Margin
14.7%
Post-Tax Profit Margin
10.7%
Net Profit Margin (Total Operations)
7.3%
Debt/Equity Ratio
1.62
Total Debt/Equity Ratio
2.58
PERIOD ENDING 09/2010 06/2010 03/2010 12/2009
Income Statement
Loans 12,485,000 12,887,000 13,475,000 11,405,000
Investment Securities 2,605,000 2,917,000 3,116,000 2,859,000
Other Interest Income 1,037,000 1,062,000 1,097,000 1,333,000
Fed. Funds Sold/Purchased 441,000 457,000 448,000 327,000
Trading Account Securities 1,641,000 1,808,000 1,743,000 1,721,000
Total Money Market Investments 2,082,000 2,265,000 2,191,000 2,048,000
Total Interest Income 18,209,000 19,131,000 19,879,000 17,645,000
Deposits 950,000 1,031,000 1,122,000 1,472,000
Short Term Debt 1,483,000 1,618,000 1,478,000 2,733,000
Long Term Debt 3,341,000 3,582,000 3,530,000 3,365,000
Other Interest Expense * * * (1,484,000)
Total Interest Expense 5,774,000 6,231,000 6,130,000 6,086,000
Net Interest Income (Expense) 12,435,000 12,900,000 13,749,000 11,559,000
Provision for Loan Loss 5,396,000 8,105,000 9,805,000 10,110,000
Service Charge on Deposit Accounts 2,212,000 2,576,000 2,566,000 2,756,000
Other Service Charges 2,415,000 2,023,000 1,976,000 1,768,000
Security Transactions 883,000 1,264,000 5,970,000 1,039,000
Investment Banking Profit 5,850,000 5,211,000 5,765,000 6,262,000
Other Non-Interest Income 3,028,000 5,305,000 2,544,000 2,334,000
Total Non-Interest Income 14,388,000 16,379,000 18,821,000 14,159,000
Salaries and Employee Benefits 13,052,000 13,372,000 14,019,000 12,268,000
Net Occupancy Expense 1,769,000 1,795,000 1,785,000 1,939,000
Promotions and Advertising 497,000 495,000 487,000 443,000
Other Non-Interest Expense 22,719,000 2,099,000 2,005,000 2,268,000
Total Non-Interest Expense 38,037,000 17,761,000 18,296,000 16,918,000
Income Taxes 1,387,000 672,000 1,207,000 (1,225,000)
Income, Restructuring and M&A (421,000) (508,000) (521,000) (533,000)
Other Special Charges 11,119,000 890,000 441,000 424,000
Special Income/Charges 10,698,000 382,000 (80,000) (109,000)
All numbers in thousands
Net Income from Continuing Operations (7,299,000) 3,123,000 3,182,000 (194,000)
Net Income from Total Operations (7,299,000) 3,123,000 3,182,000 (194,000)
Total Net Income (7,299,000) 3,123,000 3,182,000 (194,000)
Normalized Income (17,997,000) 2,741,000 3,262,000 (85,000)
Net Income Available for Common (7,647,000) 2,783,000 2,834,000 (5,196,000)
Preferred Dividends 348,000 340,000 348,000 5,002,000
Revenues Year-to-Date 106,795,000 74,210,000 38,700,000 153,286,000
Income Year-to-Date fr. Total Ops. (994,000) 6,305,000 3,182,000 6,276,000
* = Data not available
Balance Sheet Overview
At December 31, 2005, Total Assets were $1.3 trillion, an increase of $181.4 billion, or 16 percent, from December 31, 2004. Average Total Assets in 2005 increased $225.3 billion, or 22 percent, from 2004. Growth in Total Assets (both period end and average balances) in 2005 was attributable to increases in various line items primarily driven by an increase in trading-related activity due to the strategic growth initiative, growth in the ALM portfolio and growth in Loans and Leases. Average Total Assets also increased due to the impact of the FleetBoston Merger.
At December 31, 2005, Total Liabilities were $1.2 trillion, an increase of $180.1 billion, or 18 percent, from December 31, 2004. Average Total Liabilities in 2005 increased $210.2 billion, or 22 percent, from 2004. Growth in Total Liabilities (both period end and average balances) in 2005 was primarily due to increases in trading-related liabilities due to the strategic growth initiative, increase in wholesale funding and organic growth in core deposits. Average Total Liabilities also increased due to the impact of the FleetBoston Merger.
Federal Funds Sold and Securities Purchased under Agreements to Resell
The Federal Funds Sold and Securities Purchased under Agreements to Resell average balance increased $40.2 billion to $169.1 billion in 2005 from activities in the trading businesses as a result of expanded trading activities related to the strategic initiative and to meet a variety of customers’ needs.
Trading Account Assets
Our Trading Account Assets consist primarily of fixed income securities (including government and corporate debt), equity and convertible instruments. The average balance increased $28.9 billion to $133.5 billion in 2005, which was due to growth in client-driven market-making activities in interest rate, credit and equity products, and an increase in proprietary trading activities. For additional information, see Market Risk Management.
Securities
AFS Securities include fixed income securities such as mortgage-backed securities, foreign debt, asset-backed securities, municipal debt, equity instruments, U.S. Government agencies and corporate debt. We use the AFS portfolio primarily to manage interest rate risk, liquidity risk and regulatory capital, and to take advantage of market conditions that create more economically attractive returns on these investments. The average balance in the AFS portfolio grew by $70.0 billion from 2004 primarily due to the reinvestment of available liquidity and as part of our ALM strategy. For additional information, see Market Risk Management.
Loans and Leases, Net of Allowance for Loan and Lease Losses
Average Loans and Leases, net of allowance for loan and lease losses, were $528.8 billion in 2005, an increase of 14 percent from 2004. The increase of $40.0 billion in the consumer loan and lease portfolio and $24.6 billion in the commercial loan and lease portfolio was primarily due to organic loan growth. Average Loans and Leases, net of allowance for loan and lease losses, also increased due to the impact of the FleetBoston Merger. For a more detailed discussion of the loan portfolio and the allowance for credit losses, see Credit Risk Management, and Note 7 and Note 8 of the Consolidated Financial Statements.
Deposits
Average Deposits increased $80.9 billion to $632.4 billion in 2005 compared to 2004 due to a $46.3 billion increase in average domestic interest-bearing deposits and a $24.1 billion increase in average noninterest-bearing deposits primarily due to organic growth including the impact of FleetBoston. We categorize our deposits as core or market-based deposits. Core deposits are generally customer-based and represent a stable, low-cost funding source that usually reacts more slowly to interest rate changes than market-based deposits. Core deposits include savings, NOW and money market accounts, consumer CDs and IRAs, and noninterest-bearing deposits. Core deposits exclude negotiable CDs, public funds, other domestic time deposits and foreign interest-bearing deposits. Average core deposits increased $69.5 billion to $563.6 billion in 2005, a 14 percent increase from the prior year. The increase was distributed between consumer CDs, noninterest-bearing deposits, NOW and money market deposits, and savings. Average market-based deposit funding increased $11.4 billion to $68.8 billion in 2005 compared to 2004. The increase was primarily due to a $10.5 billion increase in foreign interest-bearing deposits.
Federal Funds Purchased and Securities Sold under Agreements to Repurchase
The Federal Funds Purchased and Securities Sold under Agreements to Repurchase average balance increased $65.5 billion to $230.8 billion in 2005 as a result of expanded trading activities related to the strategic initiative and investor client activities.
Trading Account Liabilities
Our Trading Account Liabilities consist primarily of short positions in fixed income securities (including government and corporate debt), equity and convertible instruments. The average balance increased $22.4 billion to $57.7 billion in 2005, which was due to growth in client-driven market-making activities in interest rate, credit and equity products, and an increase in proprietary trading activities. For additional information, see Market Risk Management.
Commercial Paper and Other Short-term Borrowings
Commercial Paper and Other Short-term Borrowings provide a funding source to supplement Deposits in our ALM strategy. The average balance increased $33.3 billion to $95.7 billion in 2005 due to funding needs associated with the growth of core asset portfolios, primarily Loans and Leases, and AFS Securities.
Table 2 Five-Year Summary of Selected Financial Data(1)
(Dollars in millions, except per share information) 2005
2004
(Restated)
2003
(Restated)
2002
(Restated)
2001
(Restated)
Income statement
Net interest income
$ 30,737 $ 27,960 $ 20,505 $ 20,117 $ 19,904
Noninterest income
25,354 21,005 17,329 14,874 15,863
Total revenue
56,091 48,965 37,834 34,991 35,767
Provision for credit losses
4,014 2,769 2,839 3,697 4,287
Gains on sales of debt securities
1,084 1,724 941 630 475
Noninterest expense
28,681 27,012 20,155 18,445 20,709
Income before income taxes
24,480 20,908 15,781 13,479 11,246
Income tax expense
8,015 6,961 5,019 3,926 3,747
Net income
16,465 13,947 10,762 9,553 7,499
Average common shares issued and outstanding
(in thousands)
4,008,688 3,758,507 2,973,407 3,040,085 3,189,914
Average diluted common shares issued and outstanding
(in thousands)
4,068,140 3,823,943 3,030,356 3,130,935 3,251,308
Performance ratios
Return on average assets
1.30% 1.34% 1.44% 1.46% 1.16%
Return on average common shareholders’ equity
16.51 16.47 21.50 19.96 15.42
Return on average tangible common shareholders’ equity(2)
34.03 32.59 29.20 27.53 23.51
Total ending equity to total ending assets
7.86 9.03 6.76 7.92 7.92
Total average equity to total average assets
7.86 8.12 6.69 7.33 7.55
Dividend payout
46.61 46.31 39.76 38.79 48.40
Per common share data
Earnings
$ 4.10 $ 3.71 $ 3.62 $ 3.14 $ 2.35
Diluted earnings
4.04 3.64 3.55 3.05 2.30
Dividends paid
1.90 1.70 1.44 1.22 1.14
Book value
25.32 24.70 16.86 17.04 15.63
Average balance sheet
Total loans and leases
$ 537,218 $ 472,617 $ 356,220 $ 336,820 $ 365,447
Total assets
1,269,892 1,044,631 749,104 653,732 644,887
Total deposits
632,432 551,559 406,233 371,479 362,653
Long-term debt
97,709 92,303 67,077 65,550 69,621
Common shareholders’ equity
99,590 84,584 50,035 47,837 48,610
Total shareholders’ equity
99,861 84,815 50,091 47,898 48,678
Capital ratios (at year end)
Risk-based capital:
Tier 1
8.25% 8.20% 8.02% 8.41% 8.44%
Total
11.08 11.73 12.05 12.63 12.81
Leverage
5.91 5.89 5.86 6.44 6.67
Market price per share of common stock
Closing
$ 46.15 $ 46.99 $ 40.22 $ 34.79 $ 31.48
High closing
47.08 47.44 41.77 38.45 32.50
Low closing
41.57 38.96 32.82 27.08 23.38
Footnote (1) As a result of the adoption of SFAS 142 on January 1, 2002, we no longer amortize Goodwill. Goodwill amortization expense was $662 million in 2001.
Footnote (2) Return on average tangible common shareholders’ equity equals net income available to common shareholders plus amortization of intangibles, divided by average common shareholders’ equity less goodwill, core deposit intangibles and other intangibles.
Bank of America Corporation (NYSE:BAC) is the world's largest holding bank company in terms of 2009 assets and total revenue. Through its numerous subsidiaries, the Charlotte, North Carolina-based bank offers a full range of financial and non-financial services in three principal divisions: Global Consumer and Small Business Banking, Global Corporate and Investment Banking, and Global Wealth and Investment Management. The firm has a strong geographical presence in all 50 U.S. states and the District of Columbia, as well as in 44 foreign countries, and serves over 55 million consumer and small business clients.
The 2007 collapse of the subprime lending industry, as well as the subsequent contraction in credit markets, put negative pressures on the company's core banking and mortgage businesses. BAC received $45 billion in government loans under the Troubled Assets Relief Program (TARP), which it has used to back loans and mortgages.[1] In early December 2009, Bank of America was approved to and repaid all of its $45b TARP loans. This repayment removes the bank from TARP regulation and also expensive dividend payments that had to be paid to the US Treasury. In total, TARP cost BofA $2.7B in cash dividends but places the bank ahead of rivals such as Citigroup which have yet to repay the loans.[2]
On September 15, 2008, Bank of America agreed to acquire Merrill Lynch after Merrill Lynch suffered large losses from subprime lending. [3] However, Bank of America's total size and the risky assets it acquired from Merrill Lynch put the bank at significant risk.
Business Overview
Headquartered in Charlotte, North Carolina, Bank of America Corporation was incorporated in 2000 as part of the merger of BankAmerica Corporation with NationsBank Corporation. Through its three business segments--Global Consumer and Small Business Banking, Global Corporate and Investment Banking, and Global Wealth and Investment Management--the company provides a diversified range of banking and non-banking financial services in 50 states, the District of Columbia, and 44 foreign countries. Through a long history of mergers and acquisitions and aggressive expansion, Bank of America's reach covers more than 75% of the U.S. population and 44% of the country’s wealthy households for a total of over 55 million consumer and small business relationships. The company services many of these accounts through its 700 retail banking offices, more than 17,000 ATMs and its growing online channel (over 21 million active on-line users). Bank of America reported a $1B loss for the third quarter ended 2009 and a $5.2B loss for the forth quarter ended 2009. The large losses were caused by continued high default rates on loans and Bank of America's repayment of the US Treasury TARP loans. These large writedowns came as other banks began to record strong profits again as the financial sector began to recover from the financial crisis.[4][5]
On December 31, 2008, Bank of America acquired Merrill Lynch (MER) for $1.6 billion in BAC common stock. The deal came after Merrill became insolvent due to the 2007 Credit Crunch and losses in Subprime lending. The combination of the two firms pushes Bank of America's assets past $2 trillion.[6]
Business Segments
Bank of America's operations are divided into 6 separate segments: Global Card Services, Global Banking, Global Markets, Global Wealth & Investment Management, Home Loans & Insurance, and Deposits.
Global Card Services(24% of 2009 Revenue; -87% of 2009 Net Income)[7]
Card Services offers a wide range of products, including U.S. Consumer and Business Card, Unsecured Lending, Merchant Services and International Card Businesses. The recent MBNA merger added a variety of co-branded and affinity credit cards to the corporation's product line and made Bank of America the leading issuer of credit cards through endorsed marketing. Card Services generates revenue through a variety of means, including servicing fees, cash advance fees, late fees, interchange income, and interest income.
Global Banking (19% of 2009 Revenue; 49% of 2009 Net Income)[7]
Global Banking has traditionally been one of Bank of America's weakest divisions. Global ’s products and services are delivered from three primary businesses: Business Lending, Capital Markets and Advisory Services, and Treasury Services, and are provided to clients through a global team of client relationship managers and product partners.
The investment bank has historically revolved around loan syndication, a legacy of Bank of America's commercial lending business. BAC made a big push into the top tier of U.S. investment banks with its September 2008 acquisition of Merrill Lynch (MER), the third-largest after Goldman Sachs Group (GS) and Morgan Stanley (MS).
Business Lending: Products include commercial and corporate bank loans and commitment facilities which cover business banking clients, middle market commercial clients and large multinational corporate clients. Real estate lending products are issued primarily to public and private developers, homebuilders and commercial real estate firms. The corporation also issues indirect consumer loans which offer financing through automotive, marine, motorcycle and recreational vehicle dealerships across the U.S. The bank offers leasing and asset-based lending products.
Treasury Services: Products and services include treasury management, trade finance, foreign exchange, short-term credit facilities and short-term investing options for multinationals, middle-market companies, correspondent banks, commercial real estate firms and governments.
Global Markets(17% of 2009 Revenue; 114% of 2009 Net Income[7]
This division provides support to institutional investor clients in their investing and trading activities. Commercial and corporate issuer clients receive debt and equity underwriting and distribution capabilities, merger-related advisory services and risk management solutions via interest rate, equity, credit and commodity derivatives, foreign exchange, fixed income and mortgage-related products.
Global Wealth and Investment Management (15% of 2009 Revenue; 43% of 2009 Net Income)[7]
Although Global Wealth and Investment Management is Bank of America's smallest segment, accounting for a little more than $7.8 billion (10%) of 2008 revenues, it could be the corporation's biggest growth driver in the future.[8] Only 10% of Bank of America's estimated 8 million affluent customers currently use its wealth-management products, suggesting a possibility of cross-selling or up-selling opportunities. However, the worsening economic conditions in 2008 have prevented this segment from expanding as compared to past years.
Within Global Wealth and Investment Management, the corporation manages the wealth of high net-worth individuals and institutional customers through three primary businesses: The Private Bank, Columbia Management (Columbia), and Premier Banking and Investments (PB&I). Collectively, this division had total assets under management of over $523 billion as of the end of 2008. This is lower than the $644 billion under management in the previous year, and is largely due to a drop in the value of the assets.
It has also pushed to expand tools for more complex trades. For example, Bank of America released in mid 2010 a pairs algorithm trading system. This bet allows a mutual fund, hedge fund, pension, or other institution to place a bet on the relative direction of two stocks. This allows the customer to invest in the market without knowing the direction of the market, but while knowing the relative strength of two stocks.[9]
Home Loans & Insurance (14% of 2009 Revenue; -60% of 2009 Net Income)[7]
In 2008, Bank of America provides mortgage services to its clients via its over 6,139 banking centers, sales account executives in nearly 1000 locations, telephone and online access, and a partnership with more than 6,500 mortgage brokers in all 50 states. The mortgage business includes the origination, fulfillment, sale and servicing of first mortgage loan products. Servicing activities primarily include collecting cash for principal, interest and escrow payments from borrowers, and accounting for and remitting principal and interest payments to investors and escrow payments to third parties. Servicing income includes ancillary income derived in connection with these activities such as late fees. The Mortgage, Home Equity and Insurance Services product offerings for home purchase and refinancing needs include fixed and adjustable rate loans.
Deposits (11% of 2009 Revenue; 41% of 2009 Net Income)[7]
Deposits products include traditional savings accounts, money market savings accounts, CDs and IRAs, checking accounts, and debit cards. The bank's ubiquitous geographic presence and key mergers like the MBNA merger have consistently ranked Bank of America as the largest holder of deposits in the nation. Deposits provides a relatively stable source of funding and liquidity, allowing the company to earn net interest spread revenues from investing this liquidity in earning assets through lending and Asset Liability Management (ALM) activities. Through deposits, the bank also receives various account fees such as non-sufficient fund fees, overdraft charges and account service fees, and interchange fees from debit cards.
Trends & Forces
Government regulation risk
The Dodd-Frank financial services regulation as well as the Basel III capital requirements will impact Bank of America's operations. These regulations prevent banks from engaging in behavioral which results in "material exposure to high-risk assets or high-risk trading strategies." While the exact meaning of the law is left to US regulators to decide, it does prevent companies like Bank of America from engaging in proprietary trading or owning large stakes in private equity or venture capital funds. [10]
Bank of America has announced that it will likely reduce its stake in the asset manger BlackRock (BLK). BAC currently owns 34% of the company. Bank of America will have to restructure or sell large sections of its investment management operations in order to comply with the regulation.[11] The new regulation is aimed at all banks which are listed as a holding bank and accept standard deposits.
With respect to potential future regulations: In November, Julian Assange from Wikileaks announced that he had documents on a large US bank he would be releasing in 2011. If these documents are about Bank of America, they might reveal actions the bank took during the financial crisis which merit legal action or further regulation.[12]
Exposure to lending/credit risks
A number of Bank of America's products expose it to credit risk, including loans, leases and lending commitments, derivatives, trading account assets and assets held-for-sale. As one of the nation’s largest lenders, Bank of America relies heavily on accurately predicting how well its customers will repay their loans. The corporation must constantly weigh ongoing economic factors and should they overestimate its customers' ability to repay loans, the bank's overall performance will suffer.
Exposure to market conditions
Interest rates over time
Bank of America is directly and indirectly affected by market conditions. For example, changes in interest rates could adversely affect net interest margin — the difference between the yield the bank earns on assets and the interest rate it pays for deposits and other sources of funding — which could in turn affect earnings. Market risks include fluctuations in interest and currency exchange rates, and equity and futures prices. Such risks affect loans, deposits, securities, short-term borrowings, long-term debt, trading account assets and liabilities, and derivatives.
Bank of America, Wachovia, Citigroup and Washington Mutual derive a large percentage of their income from net interest margin and are hurt by increasing interest rates. As interest rates rise, banks are forced to pay higher rates on deposits and other interest bearing accounts. Meanwhile consumer demand for mortgages and other loan products diminishes as borrowing becomes more expensive. The combination of these two effects reduces both the volume of loans and the profitability of each loan. Rising interest rates also have the potential to increase a bank's defaults as holders of adjustable rate mortgages find themselves unable to meet their obligations. This is especially true of subprime borrowers. Bank of America was involved in the subprime lending collapse in 2007; however, a fairly diverse business model and growing investment banking activity propelled the company to sizable growth through the second quarter of 2007 and somewhat limited the negative effects of the subprime collapse.
Reliance on mergers & acquisitions
Bank of America Corporation has relied heavily on mergers and acquisitions to become the behemoth it is today: the leading issuer of credit cards through endorsed marketing and largest holder of deposits nationwide. Mergers and acquisitions such as FleetBoston and MBNA are designed to cut costs and increase market share, but can sometimes eliminate key employees or departments and fail to predict new found costs or risks.
Since the bank has maximized its legal market share of U.S. deposits, the company may turn to other means of growing its business, such as expanding its credit card services through acquisitions like MBNA and drawing more customers to its Global Wealth and Investment Management division.
BAC plans to acquire Merrill Lynch (MER) for approximately $20B. Until the offer, Merrill Lynch neared bankruptcy after owning over $40B in sub-prime tainted bonds. In December 2008, Merrill Lynch hired John A. Thain to head the company - a man termed "Mr. Fixit" after saving the New York Stock Exchange. The success of this acquisition and its future, will heavily impact Bank of America's future. [13]
General economic/political environment sensitivity
Given the company's concentration of business in the U.S., its earnings are particularly affected by downturns and upswings in the U.S. economy. For example, in an economic downturn, it is likely that more customers will fail to fulfill their loans and other obligations to the bank. Short-term and long-term interest rates, inflation, variations in monetary supply, fluctuations in both debt and equity capital markets, and the strength of the United States economy and the local economies in which the corporation operates would also affect its earnings.
Rising geopolitical conflict, such as acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, could also affect business and economic conditions in the United States and abroad. Economic booms increase earnings for Bank of America as people have more money to deposit, purchase credit cards, invest, and repay loans.
Competition
Bank of America competes across each of its three main business segments, and is the largest company in the U.S.-focused Global Consumer and Small Business Banking segment. The company continues to be the leading issuer of credit cards through endorsed marketing and largest holder of deposits nationwide. Internationally, Bank of America has significant room for improvement, with its US market share being 6 times greater than its non-US market share.
Bank of America also ranks second among the big US banks in terms of assets and third in terms of revenue.
2009 data Assets ($B)[14] Revenue ($B)
Bank of America $2,300 $113
J P Morgan Chase (JPM) $2,000 $101
Citigroup (C) $1,800 $106
Wells Fargo (WFC) $1,200 $51.7
Bank of America is the largest deposit holder in the U.S. by market share, a position that the firm has held for years. Its merger with Countrywide Financial (CFC) has allowed it maintain its dominance over the Wells Fargo - Wachovia (WB) merger.
Domestic Deposit Market Share (%)
2004 2005 2006 2007 2008[15]
Bank of America (BAC) 10.07 10.36 9.54 10 11.33
Wells Fargo (WFC) 4.90 4.64 5.20 4.2 10.33
J P Morgan Chase (JPM) 4.18 7.07 7.47 7.4 9.85
As of 2010, Bank of America is the 5th largest company in the United States by total revenue,[11] as well as the second largest non-oil company in the U.S. (after Wal-Mart). In 2010, Forbes listed Bank of America as the 3rd "best" large company in the world.[12]
The bank's 2008 acquisition of Merrill Lynch made Bank of America the world's largest wealth manager and a major player in the investment banking industry.[13]
The company holds 12.2% of all U.S. deposits, as of August 2009,[14] and is one of the Big Four Banks of the United States, along with Citigroup, JP Morgan Chase and Wells Fargo — its main competitors
Latest Full Context Quarter Ending Date
2010/09
EBIT Margin
18.1%
EBITDA Margin
10.2%
Pre-Tax Profit Margin
0.6%
Interest Coverage
1.0
Leverage Ratio
11.0
Asset Turnover
0.1
Revenue to Assets
0.1
Return on Invested Capital
-0.2%
Return on Assets
-0.1%
Debt/Common Equity Ratio
2.25
Price/Book Ratio (Price/Equity)
0.68
Book Value per Share
$21.06
Total Debt/ Equity
2.56
Long-Term Debt to Total Capital
0.68
Cash Flow per Share
$-0.72
Free Cash Flow per Share
$10.89
Tangible Book Value per Share
$11.29
Price/Cash Flow Ratio
-19.9
Price/Free Cash Flow Ratio
1.3
Price/Tangible Book Ratio
1.27
Most recent data
5-Year Averages
Return on Equity
8.9%
Return on Assets
0.7%
Return on Invested Capital
3.2%
Pre-Tax Profit Margin
14.7%
Post-Tax Profit Margin
10.7%
Net Profit Margin (Total Operations)
7.3%
Debt/Equity Ratio
1.62
Total Debt/Equity Ratio
2.58
PERIOD ENDING 09/2010 06/2010 03/2010 12/2009
Income Statement
Loans 12,485,000 12,887,000 13,475,000 11,405,000
Investment Securities 2,605,000 2,917,000 3,116,000 2,859,000
Other Interest Income 1,037,000 1,062,000 1,097,000 1,333,000
Fed. Funds Sold/Purchased 441,000 457,000 448,000 327,000
Trading Account Securities 1,641,000 1,808,000 1,743,000 1,721,000
Total Money Market Investments 2,082,000 2,265,000 2,191,000 2,048,000
Total Interest Income 18,209,000 19,131,000 19,879,000 17,645,000
Deposits 950,000 1,031,000 1,122,000 1,472,000
Short Term Debt 1,483,000 1,618,000 1,478,000 2,733,000
Long Term Debt 3,341,000 3,582,000 3,530,000 3,365,000
Other Interest Expense * * * (1,484,000)
Total Interest Expense 5,774,000 6,231,000 6,130,000 6,086,000
Net Interest Income (Expense) 12,435,000 12,900,000 13,749,000 11,559,000
Provision for Loan Loss 5,396,000 8,105,000 9,805,000 10,110,000
Service Charge on Deposit Accounts 2,212,000 2,576,000 2,566,000 2,756,000
Other Service Charges 2,415,000 2,023,000 1,976,000 1,768,000
Security Transactions 883,000 1,264,000 5,970,000 1,039,000
Investment Banking Profit 5,850,000 5,211,000 5,765,000 6,262,000
Other Non-Interest Income 3,028,000 5,305,000 2,544,000 2,334,000
Total Non-Interest Income 14,388,000 16,379,000 18,821,000 14,159,000
Salaries and Employee Benefits 13,052,000 13,372,000 14,019,000 12,268,000
Net Occupancy Expense 1,769,000 1,795,000 1,785,000 1,939,000
Promotions and Advertising 497,000 495,000 487,000 443,000
Other Non-Interest Expense 22,719,000 2,099,000 2,005,000 2,268,000
Total Non-Interest Expense 38,037,000 17,761,000 18,296,000 16,918,000
Income Taxes 1,387,000 672,000 1,207,000 (1,225,000)
Income, Restructuring and M&A (421,000) (508,000) (521,000) (533,000)
Other Special Charges 11,119,000 890,000 441,000 424,000
Special Income/Charges 10,698,000 382,000 (80,000) (109,000)
All numbers in thousands
Net Income from Continuing Operations (7,299,000) 3,123,000 3,182,000 (194,000)
Net Income from Total Operations (7,299,000) 3,123,000 3,182,000 (194,000)
Total Net Income (7,299,000) 3,123,000 3,182,000 (194,000)
Normalized Income (17,997,000) 2,741,000 3,262,000 (85,000)
Net Income Available for Common (7,647,000) 2,783,000 2,834,000 (5,196,000)
Preferred Dividends 348,000 340,000 348,000 5,002,000
Revenues Year-to-Date 106,795,000 74,210,000 38,700,000 153,286,000
Income Year-to-Date fr. Total Ops. (994,000) 6,305,000 3,182,000 6,276,000
* = Data not available
Balance Sheet Overview
At December 31, 2005, Total Assets were $1.3 trillion, an increase of $181.4 billion, or 16 percent, from December 31, 2004. Average Total Assets in 2005 increased $225.3 billion, or 22 percent, from 2004. Growth in Total Assets (both period end and average balances) in 2005 was attributable to increases in various line items primarily driven by an increase in trading-related activity due to the strategic growth initiative, growth in the ALM portfolio and growth in Loans and Leases. Average Total Assets also increased due to the impact of the FleetBoston Merger.
At December 31, 2005, Total Liabilities were $1.2 trillion, an increase of $180.1 billion, or 18 percent, from December 31, 2004. Average Total Liabilities in 2005 increased $210.2 billion, or 22 percent, from 2004. Growth in Total Liabilities (both period end and average balances) in 2005 was primarily due to increases in trading-related liabilities due to the strategic growth initiative, increase in wholesale funding and organic growth in core deposits. Average Total Liabilities also increased due to the impact of the FleetBoston Merger.
Federal Funds Sold and Securities Purchased under Agreements to Resell
The Federal Funds Sold and Securities Purchased under Agreements to Resell average balance increased $40.2 billion to $169.1 billion in 2005 from activities in the trading businesses as a result of expanded trading activities related to the strategic initiative and to meet a variety of customers’ needs.
Trading Account Assets
Our Trading Account Assets consist primarily of fixed income securities (including government and corporate debt), equity and convertible instruments. The average balance increased $28.9 billion to $133.5 billion in 2005, which was due to growth in client-driven market-making activities in interest rate, credit and equity products, and an increase in proprietary trading activities. For additional information, see Market Risk Management.
Securities
AFS Securities include fixed income securities such as mortgage-backed securities, foreign debt, asset-backed securities, municipal debt, equity instruments, U.S. Government agencies and corporate debt. We use the AFS portfolio primarily to manage interest rate risk, liquidity risk and regulatory capital, and to take advantage of market conditions that create more economically attractive returns on these investments. The average balance in the AFS portfolio grew by $70.0 billion from 2004 primarily due to the reinvestment of available liquidity and as part of our ALM strategy. For additional information, see Market Risk Management.
Loans and Leases, Net of Allowance for Loan and Lease Losses
Average Loans and Leases, net of allowance for loan and lease losses, were $528.8 billion in 2005, an increase of 14 percent from 2004. The increase of $40.0 billion in the consumer loan and lease portfolio and $24.6 billion in the commercial loan and lease portfolio was primarily due to organic loan growth. Average Loans and Leases, net of allowance for loan and lease losses, also increased due to the impact of the FleetBoston Merger. For a more detailed discussion of the loan portfolio and the allowance for credit losses, see Credit Risk Management, and Note 7 and Note 8 of the Consolidated Financial Statements.
Deposits
Average Deposits increased $80.9 billion to $632.4 billion in 2005 compared to 2004 due to a $46.3 billion increase in average domestic interest-bearing deposits and a $24.1 billion increase in average noninterest-bearing deposits primarily due to organic growth including the impact of FleetBoston. We categorize our deposits as core or market-based deposits. Core deposits are generally customer-based and represent a stable, low-cost funding source that usually reacts more slowly to interest rate changes than market-based deposits. Core deposits include savings, NOW and money market accounts, consumer CDs and IRAs, and noninterest-bearing deposits. Core deposits exclude negotiable CDs, public funds, other domestic time deposits and foreign interest-bearing deposits. Average core deposits increased $69.5 billion to $563.6 billion in 2005, a 14 percent increase from the prior year. The increase was distributed between consumer CDs, noninterest-bearing deposits, NOW and money market deposits, and savings. Average market-based deposit funding increased $11.4 billion to $68.8 billion in 2005 compared to 2004. The increase was primarily due to a $10.5 billion increase in foreign interest-bearing deposits.
Federal Funds Purchased and Securities Sold under Agreements to Repurchase
The Federal Funds Purchased and Securities Sold under Agreements to Repurchase average balance increased $65.5 billion to $230.8 billion in 2005 as a result of expanded trading activities related to the strategic initiative and investor client activities.
Trading Account Liabilities
Our Trading Account Liabilities consist primarily of short positions in fixed income securities (including government and corporate debt), equity and convertible instruments. The average balance increased $22.4 billion to $57.7 billion in 2005, which was due to growth in client-driven market-making activities in interest rate, credit and equity products, and an increase in proprietary trading activities. For additional information, see Market Risk Management.
Commercial Paper and Other Short-term Borrowings
Commercial Paper and Other Short-term Borrowings provide a funding source to supplement Deposits in our ALM strategy. The average balance increased $33.3 billion to $95.7 billion in 2005 due to funding needs associated with the growth of core asset portfolios, primarily Loans and Leases, and AFS Securities.
Table 2 Five-Year Summary of Selected Financial Data(1)
(Dollars in millions, except per share information) 2005
2004
(Restated)
2003
(Restated)
2002
(Restated)
2001
(Restated)
Income statement
Net interest income
$ 30,737 $ 27,960 $ 20,505 $ 20,117 $ 19,904
Noninterest income
25,354 21,005 17,329 14,874 15,863
Total revenue
56,091 48,965 37,834 34,991 35,767
Provision for credit losses
4,014 2,769 2,839 3,697 4,287
Gains on sales of debt securities
1,084 1,724 941 630 475
Noninterest expense
28,681 27,012 20,155 18,445 20,709
Income before income taxes
24,480 20,908 15,781 13,479 11,246
Income tax expense
8,015 6,961 5,019 3,926 3,747
Net income
16,465 13,947 10,762 9,553 7,499
Average common shares issued and outstanding
(in thousands)
4,008,688 3,758,507 2,973,407 3,040,085 3,189,914
Average diluted common shares issued and outstanding
(in thousands)
4,068,140 3,823,943 3,030,356 3,130,935 3,251,308
Performance ratios
Return on average assets
1.30% 1.34% 1.44% 1.46% 1.16%
Return on average common shareholders’ equity
16.51 16.47 21.50 19.96 15.42
Return on average tangible common shareholders’ equity(2)
34.03 32.59 29.20 27.53 23.51
Total ending equity to total ending assets
7.86 9.03 6.76 7.92 7.92
Total average equity to total average assets
7.86 8.12 6.69 7.33 7.55
Dividend payout
46.61 46.31 39.76 38.79 48.40
Per common share data
Earnings
$ 4.10 $ 3.71 $ 3.62 $ 3.14 $ 2.35
Diluted earnings
4.04 3.64 3.55 3.05 2.30
Dividends paid
1.90 1.70 1.44 1.22 1.14
Book value
25.32 24.70 16.86 17.04 15.63
Average balance sheet
Total loans and leases
$ 537,218 $ 472,617 $ 356,220 $ 336,820 $ 365,447
Total assets
1,269,892 1,044,631 749,104 653,732 644,887
Total deposits
632,432 551,559 406,233 371,479 362,653
Long-term debt
97,709 92,303 67,077 65,550 69,621
Common shareholders’ equity
99,590 84,584 50,035 47,837 48,610
Total shareholders’ equity
99,861 84,815 50,091 47,898 48,678
Capital ratios (at year end)
Risk-based capital:
Tier 1
8.25% 8.20% 8.02% 8.41% 8.44%
Total
11.08 11.73 12.05 12.63 12.81
Leverage
5.91 5.89 5.86 6.44 6.67
Market price per share of common stock
Closing
$ 46.15 $ 46.99 $ 40.22 $ 34.79 $ 31.48
High closing
47.08 47.44 41.77 38.45 32.50
Low closing
41.57 38.96 32.82 27.08 23.38
Footnote (1) As a result of the adoption of SFAS 142 on January 1, 2002, we no longer amortize Goodwill. Goodwill amortization expense was $662 million in 2001.
Footnote (2) Return on average tangible common shareholders’ equity equals net income available to common shareholders plus amortization of intangibles, divided by average common shareholders’ equity less goodwill, core deposit intangibles and other intangibles.
Bank of America Corporation (NYSE:BAC) is the world's largest holding bank company in terms of 2009 assets and total revenue. Through its numerous subsidiaries, the Charlotte, North Carolina-based bank offers a full range of financial and non-financial services in three principal divisions: Global Consumer and Small Business Banking, Global Corporate and Investment Banking, and Global Wealth and Investment Management. The firm has a strong geographical presence in all 50 U.S. states and the District of Columbia, as well as in 44 foreign countries, and serves over 55 million consumer and small business clients.
The 2007 collapse of the subprime lending industry, as well as the subsequent contraction in credit markets, put negative pressures on the company's core banking and mortgage businesses. BAC received $45 billion in government loans under the Troubled Assets Relief Program (TARP), which it has used to back loans and mortgages.[1] In early December 2009, Bank of America was approved to and repaid all of its $45b TARP loans. This repayment removes the bank from TARP regulation and also expensive dividend payments that had to be paid to the US Treasury. In total, TARP cost BofA $2.7B in cash dividends but places the bank ahead of rivals such as Citigroup which have yet to repay the loans.[2]
On September 15, 2008, Bank of America agreed to acquire Merrill Lynch after Merrill Lynch suffered large losses from subprime lending. [3] However, Bank of America's total size and the risky assets it acquired from Merrill Lynch put the bank at significant risk.
Business Overview
Headquartered in Charlotte, North Carolina, Bank of America Corporation was incorporated in 2000 as part of the merger of BankAmerica Corporation with NationsBank Corporation. Through its three business segments--Global Consumer and Small Business Banking, Global Corporate and Investment Banking, and Global Wealth and Investment Management--the company provides a diversified range of banking and non-banking financial services in 50 states, the District of Columbia, and 44 foreign countries. Through a long history of mergers and acquisitions and aggressive expansion, Bank of America's reach covers more than 75% of the U.S. population and 44% of the country’s wealthy households for a total of over 55 million consumer and small business relationships. The company services many of these accounts through its 700 retail banking offices, more than 17,000 ATMs and its growing online channel (over 21 million active on-line users). Bank of America reported a $1B loss for the third quarter ended 2009 and a $5.2B loss for the forth quarter ended 2009. The large losses were caused by continued high default rates on loans and Bank of America's repayment of the US Treasury TARP loans. These large writedowns came as other banks began to record strong profits again as the financial sector began to recover from the financial crisis.[4][5]
On December 31, 2008, Bank of America acquired Merrill Lynch (MER) for $1.6 billion in BAC common stock. The deal came after Merrill became insolvent due to the 2007 Credit Crunch and losses in Subprime lending. The combination of the two firms pushes Bank of America's assets past $2 trillion.[6]
Business Segments
Bank of America's operations are divided into 6 separate segments: Global Card Services, Global Banking, Global Markets, Global Wealth & Investment Management, Home Loans & Insurance, and Deposits.
Global Card Services(24% of 2009 Revenue; -87% of 2009 Net Income)[7]
Card Services offers a wide range of products, including U.S. Consumer and Business Card, Unsecured Lending, Merchant Services and International Card Businesses. The recent MBNA merger added a variety of co-branded and affinity credit cards to the corporation's product line and made Bank of America the leading issuer of credit cards through endorsed marketing. Card Services generates revenue through a variety of means, including servicing fees, cash advance fees, late fees, interchange income, and interest income.
Global Banking (19% of 2009 Revenue; 49% of 2009 Net Income)[7]
Global Banking has traditionally been one of Bank of America's weakest divisions. Global ’s products and services are delivered from three primary businesses: Business Lending, Capital Markets and Advisory Services, and Treasury Services, and are provided to clients through a global team of client relationship managers and product partners.
The investment bank has historically revolved around loan syndication, a legacy of Bank of America's commercial lending business. BAC made a big push into the top tier of U.S. investment banks with its September 2008 acquisition of Merrill Lynch (MER), the third-largest after Goldman Sachs Group (GS) and Morgan Stanley (MS).
Business Lending: Products include commercial and corporate bank loans and commitment facilities which cover business banking clients, middle market commercial clients and large multinational corporate clients. Real estate lending products are issued primarily to public and private developers, homebuilders and commercial real estate firms. The corporation also issues indirect consumer loans which offer financing through automotive, marine, motorcycle and recreational vehicle dealerships across the U.S. The bank offers leasing and asset-based lending products.
Treasury Services: Products and services include treasury management, trade finance, foreign exchange, short-term credit facilities and short-term investing options for multinationals, middle-market companies, correspondent banks, commercial real estate firms and governments.
Global Markets(17% of 2009 Revenue; 114% of 2009 Net Income[7]
This division provides support to institutional investor clients in their investing and trading activities. Commercial and corporate issuer clients receive debt and equity underwriting and distribution capabilities, merger-related advisory services and risk management solutions via interest rate, equity, credit and commodity derivatives, foreign exchange, fixed income and mortgage-related products.
Global Wealth and Investment Management (15% of 2009 Revenue; 43% of 2009 Net Income)[7]
Although Global Wealth and Investment Management is Bank of America's smallest segment, accounting for a little more than $7.8 billion (10%) of 2008 revenues, it could be the corporation's biggest growth driver in the future.[8] Only 10% of Bank of America's estimated 8 million affluent customers currently use its wealth-management products, suggesting a possibility of cross-selling or up-selling opportunities. However, the worsening economic conditions in 2008 have prevented this segment from expanding as compared to past years.
Within Global Wealth and Investment Management, the corporation manages the wealth of high net-worth individuals and institutional customers through three primary businesses: The Private Bank, Columbia Management (Columbia), and Premier Banking and Investments (PB&I). Collectively, this division had total assets under management of over $523 billion as of the end of 2008. This is lower than the $644 billion under management in the previous year, and is largely due to a drop in the value of the assets.
It has also pushed to expand tools for more complex trades. For example, Bank of America released in mid 2010 a pairs algorithm trading system. This bet allows a mutual fund, hedge fund, pension, or other institution to place a bet on the relative direction of two stocks. This allows the customer to invest in the market without knowing the direction of the market, but while knowing the relative strength of two stocks.[9]
Home Loans & Insurance (14% of 2009 Revenue; -60% of 2009 Net Income)[7]
In 2008, Bank of America provides mortgage services to its clients via its over 6,139 banking centers, sales account executives in nearly 1000 locations, telephone and online access, and a partnership with more than 6,500 mortgage brokers in all 50 states. The mortgage business includes the origination, fulfillment, sale and servicing of first mortgage loan products. Servicing activities primarily include collecting cash for principal, interest and escrow payments from borrowers, and accounting for and remitting principal and interest payments to investors and escrow payments to third parties. Servicing income includes ancillary income derived in connection with these activities such as late fees. The Mortgage, Home Equity and Insurance Services product offerings for home purchase and refinancing needs include fixed and adjustable rate loans.
Deposits (11% of 2009 Revenue; 41% of 2009 Net Income)[7]
Deposits products include traditional savings accounts, money market savings accounts, CDs and IRAs, checking accounts, and debit cards. The bank's ubiquitous geographic presence and key mergers like the MBNA merger have consistently ranked Bank of America as the largest holder of deposits in the nation. Deposits provides a relatively stable source of funding and liquidity, allowing the company to earn net interest spread revenues from investing this liquidity in earning assets through lending and Asset Liability Management (ALM) activities. Through deposits, the bank also receives various account fees such as non-sufficient fund fees, overdraft charges and account service fees, and interchange fees from debit cards.
Trends & Forces
Government regulation risk
The Dodd-Frank financial services regulation as well as the Basel III capital requirements will impact Bank of America's operations. These regulations prevent banks from engaging in behavioral which results in "material exposure to high-risk assets or high-risk trading strategies." While the exact meaning of the law is left to US regulators to decide, it does prevent companies like Bank of America from engaging in proprietary trading or owning large stakes in private equity or venture capital funds. [10]
Bank of America has announced that it will likely reduce its stake in the asset manger BlackRock (BLK). BAC currently owns 34% of the company. Bank of America will have to restructure or sell large sections of its investment management operations in order to comply with the regulation.[11] The new regulation is aimed at all banks which are listed as a holding bank and accept standard deposits.
With respect to potential future regulations: In November, Julian Assange from Wikileaks announced that he had documents on a large US bank he would be releasing in 2011. If these documents are about Bank of America, they might reveal actions the bank took during the financial crisis which merit legal action or further regulation.[12]
Exposure to lending/credit risks
A number of Bank of America's products expose it to credit risk, including loans, leases and lending commitments, derivatives, trading account assets and assets held-for-sale. As one of the nation’s largest lenders, Bank of America relies heavily on accurately predicting how well its customers will repay their loans. The corporation must constantly weigh ongoing economic factors and should they overestimate its customers' ability to repay loans, the bank's overall performance will suffer.
Exposure to market conditions
Interest rates over time
Bank of America is directly and indirectly affected by market conditions. For example, changes in interest rates could adversely affect net interest margin — the difference between the yield the bank earns on assets and the interest rate it pays for deposits and other sources of funding — which could in turn affect earnings. Market risks include fluctuations in interest and currency exchange rates, and equity and futures prices. Such risks affect loans, deposits, securities, short-term borrowings, long-term debt, trading account assets and liabilities, and derivatives.
Bank of America, Wachovia, Citigroup and Washington Mutual derive a large percentage of their income from net interest margin and are hurt by increasing interest rates. As interest rates rise, banks are forced to pay higher rates on deposits and other interest bearing accounts. Meanwhile consumer demand for mortgages and other loan products diminishes as borrowing becomes more expensive. The combination of these two effects reduces both the volume of loans and the profitability of each loan. Rising interest rates also have the potential to increase a bank's defaults as holders of adjustable rate mortgages find themselves unable to meet their obligations. This is especially true of subprime borrowers. Bank of America was involved in the subprime lending collapse in 2007; however, a fairly diverse business model and growing investment banking activity propelled the company to sizable growth through the second quarter of 2007 and somewhat limited the negative effects of the subprime collapse.
Reliance on mergers & acquisitions
Bank of America Corporation has relied heavily on mergers and acquisitions to become the behemoth it is today: the leading issuer of credit cards through endorsed marketing and largest holder of deposits nationwide. Mergers and acquisitions such as FleetBoston and MBNA are designed to cut costs and increase market share, but can sometimes eliminate key employees or departments and fail to predict new found costs or risks.
Since the bank has maximized its legal market share of U.S. deposits, the company may turn to other means of growing its business, such as expanding its credit card services through acquisitions like MBNA and drawing more customers to its Global Wealth and Investment Management division.
BAC plans to acquire Merrill Lynch (MER) for approximately $20B. Until the offer, Merrill Lynch neared bankruptcy after owning over $40B in sub-prime tainted bonds. In December 2008, Merrill Lynch hired John A. Thain to head the company - a man termed "Mr. Fixit" after saving the New York Stock Exchange. The success of this acquisition and its future, will heavily impact Bank of America's future. [13]
General economic/political environment sensitivity
Given the company's concentration of business in the U.S., its earnings are particularly affected by downturns and upswings in the U.S. economy. For example, in an economic downturn, it is likely that more customers will fail to fulfill their loans and other obligations to the bank. Short-term and long-term interest rates, inflation, variations in monetary supply, fluctuations in both debt and equity capital markets, and the strength of the United States economy and the local economies in which the corporation operates would also affect its earnings.
Rising geopolitical conflict, such as acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, could also affect business and economic conditions in the United States and abroad. Economic booms increase earnings for Bank of America as people have more money to deposit, purchase credit cards, invest, and repay loans.
Competition
Bank of America competes across each of its three main business segments, and is the largest company in the U.S.-focused Global Consumer and Small Business Banking segment. The company continues to be the leading issuer of credit cards through endorsed marketing and largest holder of deposits nationwide. Internationally, Bank of America has significant room for improvement, with its US market share being 6 times greater than its non-US market share.
Bank of America also ranks second among the big US banks in terms of assets and third in terms of revenue.
2009 data Assets ($B)[14] Revenue ($B)
Bank of America $2,300 $113
J P Morgan Chase (JPM) $2,000 $101
Citigroup (C) $1,800 $106
Wells Fargo (WFC) $1,200 $51.7
Bank of America is the largest deposit holder in the U.S. by market share, a position that the firm has held for years. Its merger with Countrywide Financial (CFC) has allowed it maintain its dominance over the Wells Fargo - Wachovia (WB) merger.
Domestic Deposit Market Share (%)
2004 2005 2006 2007 2008[15]
Bank of America (BAC) 10.07 10.36 9.54 10 11.33
Wells Fargo (WFC) 4.90 4.64 5.20 4.2 10.33
J P Morgan Chase (JPM) 4.18 7.07 7.47 7.4 9.85