Post on 03-Jan-2016
Bank of America Corp. (BAC)
David Nest and Ajay Singh
Wednesday, December 6, 2006
Corporate Profile
Bank of America is one of the world's largest financial institutions.
It was founded in 1874 and is headquartered in Charlotte, North Carolina
No. 1 overall Small Business Administration (SBA) lender in the United States
Operates in 31 countries
Top US Credit Card Issuers (3Q 06)
0 20 40 60 80 100 120 140 160
Bank of America
JP Morgan Chase
Citigroup
Capital One
American Express
Discover
$ in Billions
BAC Competitors and Industry Comparison
Stock BAC C WB WFC Industry Avg.
Market Cap:
240.25B 242.64B 85.54B 118.94B 20.77B
QuarterlyRev. Growth (yoy):
30.70% 2.70% 5.10% 5.80% 19.60%
Revenue (ttm):
63.14B 79.78B 27.31B 32.65B 7.25B
Net Income (ttm):
19.44B 21.03B 6.98B 8.23B 1.65B
P/E (ttm): 12.32 10.63 11.97 14.56 13.23
EPS (ttm): 4.344 4.646 4.519 2.420 2.92
Price/Book (mrq):
1.82 2.09 1.67 2.65 2.17
Competitors
BAC Passes C To become largest U.S. Bank By Market Cap
Reinvesting Money In The Business, Spent 3.3B on Schwab's Private Banking Business (US Trust)
Great Dividend Yield, Above Industry Avg.
Solid Revenue growth compared to peers
Recent News
12/1/2006: Alvaro de Molina announced his intentions to resign from CFO position. Joe Price will take over de Molina’s position on January 1, 2007.
11/27/2006: BAC signs a 5 year deal as the official bank for NASCAR.
11/20/2006: BAC announced to buy U.S. Trust, the Wealth Mgt Subsidiary of Charles Schwab for a $3.3B cash deal.
10/11/06: BAC announces free online equity trades
9/11/06: BAC acquires HealthLogic Systems Corp.
7/26/06: BAC increases quarterly dividend by 12%
Major Institutions and Shareholders
1,376 Institutions currently hold shares of BACBarclays Global Investors UK Holdings Ltd
FMR CORPORATION (FIDELITY MANAGEMENT & RESEARCH CORP)
JP MORGAN CHASE & COMPANY
Major Mutual Fund Holders:Vangaurd 500 Index Fund
Washington Mutual Investors Fund
Fidelity Growth & Income Portfolio
Major Institutions and Shareholders
Two Sides of the Story:Positive
Diverse product line and geographic presence
Acquisition of MBNA
Net interest margin to remain relatively stable
Negative
Significant credit quality deterioration
Potential surge in bankruptcy filings
Unlikely to make future M&A’s
CFO resigns
According to our valuation, the 12 month price target for BAC should be $62.50
Volatility : Low (Beta round 0.47)Institutional Ownership around 60%Good Divided: Current Yield 4.19% compared to an Industry
average of 3.7%
As of today, BAC closed at 52.69