Bank of America Strategic Management Plan

1. Bank of America Strategic Management Plan April 17, 2014 Shane Theriault Pierre-Oliver Lachance Garik Theriault Sierra Daigle

2. Overview 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

3. Company History – Bank of Italy • 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

4. Company History Cont.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

5. Company History Cont.Bank of America • 1998 - BankAmerica was 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

6. Current Strategies • 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”

7. Existing Vision and Mission Statement 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.

8. Proposed Vision Statement Our vision is for Bank of America to be the World’s finest financial services company.

9. Proposed Mission statement 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). Customers Products or services Markets Technology Concern for survival, growth, and profitability Philosophy Self-concept Concern for public image Concern for employees

10. External Audit

11. Industry Analysis

12. Opportunities • Smartphones will reach more than 2.5 billion users by 2015 • According to industry sources, mobile banking users worldwide will reach 530 million by 2013, up from just over 300 million in 2011 • The US banks sector grew by 11.3% in 2010 to reach a value of $11,713.2 billion • Projected increase of population in the United States of 82% from 2005 to 2050 • consolidation of the financial services sector provides potential for company acquisitions • Expansion into the global market • President Obama unveiled a stimulus plan totaling 447 Billion

13. Threats • 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

14. EFE Matrix

15. CPM

16. Internal Audit

17. Organizational Structure Chairman CEO, Brian T Moynihan 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 Resources, Andrea B. Smith Legacy Asset Servicing Executive, Ron D. Strurzengger Chief Financial Officer, Bruce R. Thompson

18. Divisional Analysis

19. Divisional Analysis

20. Financial Information:Income Statement

21. Financial Information:Balance Sheet

22. Financial Information:Cash Flow

23. Financial Information:Ratio Analysis

24. Financial Information:Company Worth

25. Strengths • Bank of America serves clients in more than 150 countries and has a relationship with 99% of U.S. Fortune 500 companies • 21 in the Global 500. Bank of America Corp. • 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 • BOA has approximately 5,700 banking centers and approximately 17,750 ATMs • The company’s new Merrill Edge account enables customers to manage their banking and investing activities through an integrated platform. • BOA lowered their long-term debt by $76 billion in 2011. • Revenue diversification is helping the company to serve a large customer base, as well as helping it to offset volatility in its revenue streams • Decreased Non-preforming loans by 5 billion in 2011

26. Weaknesses • International markets only account for approximately 10% of the bank's revenue. • BOA efficiency ratio has increased over 10% in the last year to 85.59% • EPS of -0.37 in 2010 and 0.01 in 2011 • Net income loss of 2.2 billion in 2010 • BoA’s revenues have been declining since 2009 at a compounded annual change rate of 12% to $93,454 million in 2011 • 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. • Bank of America has a ACSI index rating of 68

27. IFE Matrix

28. Strategy Formulation

29. SWOT Matrix

30. Space Matrix • Market development • Market penetration • Product development • Related diversification

31. 4 1 2 5 6 IE Matrix • Backward, Forward, horizontal penetration • Market penetration • Market development • Product development 3

32. Grand Strategy Matrix • Market development • Market penetration • Product development • Horizontal integration • Divestiture • Liquidation

33. BCG Matrix

34. BCG Matrix • Backward, Forward, horizontal penetration • Market penetration • Market development • Product development 4 2 6 5 1 3 • Retrenchment • Divestiture • Liquidation • Product Development • Diversification • Divestiture

35. Matrix Analysis

36. Possible Strategies • 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

37. QSPM

38. QSPM

39. Strategy Selection

40. 3 Year Strategy & Annual Objectives • 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

41. Year 1 Costs • Increase Global Marketing by 25% • Current Marketing: $2.2 Billion • 25% increase is $550 Million • Total Marketing will be $2.75 Billion

42. Projected Financials:Income Statement

43. Projected Financials:Balance Sheet

44. Strategic Evaluation

45. Balance Score Card

46. Company Update

47. Company Update • 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.

48. Questions

49. References • 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