...Bank of America 2010 Annual Report Maggie Ballantyne Professor Adams Accounting 100 2/26/2012 Bank of America December 31, 2010 Abstract This paper analyzes Bank of America’s 2010 annual report. It discusses the main sections, key factors influencing the financial performance, the company’s primary assets, and how the management characterizes the internal controls of the company. A company’s annual report shows its stockholders the corporation’s financial statements and a summary of the operations over a twelve month time period. I chose Bank of America’s 2010 annual report for this paper. There are a few key sections that when analyzing an annual report you want to mainly focus on, and those main sections include, the auditor’s report, financial statements, the managers discussion, and notes to the financial statements. Each section will be discussed in this paper along with an analysis of the key factors that influenced the company’s financial performance, the company’s primary assets, and an explanation of how the management characterizes the internal control environment of the company. First, I want to analyze the financial statements, such as the income statement and the balance sheet. During 2010 Bank of America bought a mortgage company and a global card service company which caused the corporation to take a net income loss for the financial year. On the income statement, the home loans portion of the corporation had a loss of 8.9 billion dollars while...
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...Executive Summary Bank of America serves a large amount of the U.S. population and provides a wide array of services to meet their customers needs. The organization has faced many problems since it’s collapse in 2008-2009 and is working to rebuild healthy customer relationships through marketing efforts and free mobile banking. While mobile banking provides a convenience for consumers, it can be expensive for the organization. Thus, Bank of America must decide whether or not it would like to advance with technology or keep their progress to a minimum. It would be wise for the organization to keep up with technology and provide services to the consumer that they may be able to find elsewhere. Bank of America must prove that they are a dependable organization and worthy of the consumers business in order to remain a top organization in their industry. Identification of the strategic issues and problems: Bank of America has been a top financial organization for some time with services such as retail banking, investment banking, and opportunities for small businesses. With the evolution of the smartphone and consumers constantly on the go the demand for mobile banking has increased excessively. Consumers would like the convenience of checking their balance while being able to transfer funds on quick notice. The underlying issues and problems that Bank of America faces are two fold. First, the organization needs to decide whether to continue advancing...
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...1. What are the core business processes (i.e. high level; major business and financial services) performed at Bank of America as part of its product and service offerings? Core Bank of America Business Process: Activities within the Core Process people management • recruiting • performance management • staff development • payroll • benefits administration financial management • general ledger • accounts payable • accounts receivable • reporting and compliance • cash management • asset management Investment management • add as many rows as required…… 2. List the sequential, descriptive steps required in a typical ATM transaction (your choice), such as drawing out cash or transferring funds from one account to another. Be sure to include those steps executed by local ATM system itself as well as those done by information systems housed within the Bank’s centralized data center. Use this table to organize your responses. Steps by Customer Steps by ATM System Steps by other Banking Systems Inserting preferred Debit/Credit card into card slot Collecting 3. Why do the core processes at the Bank of America require centralized information systems? a. . b. . c. . d. . e. add as many bullets as required. 4. What information is generated as part of ATM business processes and how are they employed within the Bank to transact, to manage, and to innovate (i.e. contribute to the Bank’s competitive advantage)? . Transactional Uses...
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...Chase, Wells Fargo drop debit fees, BofA to adjust NEW YORK — Chase and Wells Fargo are joining the list of banks that won't be charging customers to use their debit cards, as the backlash over Bank of America's planned $5 monthly fee continues. The retail banking arm of JPMorgan Chase & Co. will stop charging $3-per-month fees for using debit cards when its current pilot in Wisconsin and Georgia is completed in November, a source with knowledge of the bank's plans told The Associated Press. The individual asked not to be identified because the bank has not officially announced the program will not go forward. Chase, which operates in 23 states, began its test in February. And it's not alone in rethinking its actions. Wells Fargo & Co. began a similar pilot in five states on Oct. 14, testing a flat $3 fee for using debit for purchases. On Friday it also announced that it is cancelling its test program. Other banks already have more widespread fee policies. SunTrust Banks charges $5 a month for debit cards used to make purchases, and Regions Financial Corp. charges $4. But it was Bank of America Corp.'s plan to start charging $5 per month that lit the issue on fire. The Charlotte, N.C.-based bank last month said it will begin assessing the fee in 2012. Banks are justifying the fees by stating that they need to recoup revenue lost to new regulations that limit the fees they can collect from retailers for handling debit card transactions. But the new fees sparked a...
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...STOCK VALUATION – Bank of America & JP Morgan Chase The 1997 Asian financial crisis made several economic concepts clear: (1) a nation's financial sector is a critical aspect of its macroeconomic stability; and (2) financial systems are important for maintaining order in the international financial sector. Some experts have stated that the 2014 outlook of the global economy is very positive. However, these same experts also clarified their statements, making it clear that risks are still present. There is a prognosis that there will be volatility in 2014. The implementation of financial market reform policies has been good, but these markets have not yet reached the level where reforms need to be. Therefore, a major reform in the financial sector is now necessary in all parts of the world. Haruhiko Kuroda, Bank of Japan Governor, said that the Japanese economy is doing well; this is due to the fiscal stimulus, monetary easing and structural reforms. He believes that a 2% interest rate is achievable in 2 years. He is optimistic, because the United States (US) economy will grow and Europe is recovering. That is a good sign that economies will grow and accelerate. But he also talked about the fact that there are some possible risks ahead. (Huroda, 2014) Wolfgang Schäuble, Federal Minister of Finance of Germany, stated that the euro is becoming more stable every day. He also said that the Eurozone performed much better than expected. Finally, he said that the...
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...Manage information system Yung-Hsun Hung Due date: 10.10.2012 1. What benefits does mobile banking provide to consumers? Why haven’t more many consumers adopted mobile banking yet? The first benefit the mobile banking offers is that you can use the bank service at any time. When you are traveling, you may not have access to a bank of ATM machine. However, if you have a cell phone, you may be able to set up mobile access for your bank account so that you can check your balance and transfer funds while on the road. Account security is another key benefit for mobile banking. While you are making transactions in business trip, you can also check your bank account on your cell phone for unauthorized transactions. To avoid that when you are getting home from a long trip, you discover that may have been a victim of fraud. Paying bills are the third feature of benefit. In current working environment, people are busy at work during the weekday, and therefore they may not have chance to handle their bills. Mobile banking offers a platform to access your bank account to pay your bills, such as utilities, credit card payments, and auto insurance. The last feature of benefit is that mobile banking offer complete security. People may wonder that what if cell phone is lost or have been stolen, the mobile banking will not as attractive as it should be. Thus, mobile banking encrypts your information, and adds more security on your account, which the service must be...
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...Bank of America: Mobile Banking (Abridged) time. In May 2007, BofA launched mobile banking, which allowed customers to Starcom supported these digital efforts of BofA. Bank of America (BofA) was founded in 1904, known as Bank of Italy at that in the online and mobile banking business. Mobile Product Development and The launch of this app was a success and it garnered millions of subscribers. Now however hesitant to add more features, as they fear it will make the app complex access the bank through a mobile application (or app) on their smartphones and through mobile web on their phone’s browser. It is now at number one position the business managers want to cash in on this success by building more functionality to facilitate growth of other businesses. The strategic team is which in turn could affect user experience and is thus a huge risk. Competitors like Citi are though already in this business and have provided their users with BofA are downfall of financial service industry due to the great depression. Since spending which has narrowed due to this depression. In addition to this, the concern among the users and data access costs involved in use of mobile banking. To overcome these challenges, BofA need to focus on improving customer satisfaction and building brand loyalty. BofA relies majorly on retail banking business, they thrive on consumer costs of developing the app are very high due to the complexities involved in latest smartphones and their operating...
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...The global economy began a deep decline in December 2007. This economic downturn is referred to as the “Great Recession”. The United States government appointed a 10 member Financial Crisis Inquiry Commission to investigate the source of the recession (1). One of the key issues discovered was the failure of corporate governance and financial regulations (1). Initial finding of the investigation prompted US Congress to overhaul financial policies. These laws, Dodd-Frank Street Reform and Consumer Protection Act, C.A.R.D. Act, Durbin Amendment and others, have generated a loss in revenue for financial institutions. For instance, it is estimated that Dodd-Frank will reduce the fees merchants pay for customers who swipe debit cards by $16 billion each year (2). HBDC bank card business lost $9.9 billion in revenues due to issues related to Dodd-Frank (3). The decline in profits required HBDC to revamp business practices. HBDC decided to transform the way they conducted business. Instead of having a dependence on penalty fees, they opted to focus on a customer relationship platform, Platinum Privileges (9). The plan was to reward customers for bringing HBDC more business (6). Platinum Privileges provides rewards and fewer fees to customers that invest and maintain more $50,000 into HBDC bank (7). HBDC bank believes that Mass Affluent customers will provide an opportunity to recoup a portion of the lost fee revenues. Research proves that MA customers can generate four...
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...Statement BofA launched mobile banking in May2007, to allow customer to access the bank through mobile application and through mobile web on their phone browser. In less than three years BofA had around 4 million mobile banking customers at an adoption rates five to eight times that of the online banking. Because of this success, the line-of-business managers like mortgages and credit cards were asking for more upgrades to leverage the mobile platform. This request created a dilemma for the BofA management as adding more feature to the existing app will make the bank’s mobile app more complex. This complexity could slow down the performance of the app and negatively affect user experience. The management also noted that this kind complexity has led to some high-profile failures in the marketplace. Also, it was unclear if the users were ready to sign up and use these added features like mortgage service or credit card on their mobile phones. The other option the management was considering is, create multiple apps to target different target groups. But to follow this option the management has to reprioritize critical bank technical resources from other important business areas, such as online and ATM. These were the factors that the management needs to take into consideration while coming up with a solution. Strategic Situation Facing Management The U.S financial industry was fragmented, with thousands of banks offering retail and wholesale banking services. BofA is the largest...
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...Case 2: ATLANTIC HOME LOAN Marjorie Marques Management Control Systems Mr. Stephen Del Vecchio January 24, 2014 1. The devices (control) used by Al Fiorini before he went back to school were: * To find a person who should execute his work in the company Atlantic Home Loan (AHL). It is a personnel/cultural control in my opinion because Al decided to delegate his work to a person who had the same thoughts that labor matters. For this reason, Al chose Joe Anastasia because Joe was an employee of the AHL with a lot experience in financial matters. Therefore, Al decided to make a verbal agreement of partnership with Joe. However, Al realized just a few days before going to school in Los Angeles, to be chosen by Joe Anastasia for his partnership was a bad idea because Joe had an alcohol problem and it began to influence Joe’s attendance at work. * Al decided to choose an action control when he talked with Joe about this problem, and Al communicated his rules, policies, procedures and codes of conduct. However, this control had no results expected, and then Alex decided to break the verbal agreement of partnership with Joe. Therefore, Al paid money and broke the verbal agreement of partnership with Joe. The devices (control) used by Al Fiorini after he went back to school were: * Al needed to choose another person in place of Joe. Al found a person named Wilbur Washington. I think it is a personnel/cultural control because, again, Al decided to delegate his...
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...consumers to open new accounts. The product works like this: Every time you buy something with a BofA Visa debit card, the bank rounds up your purchase to the nearest dollar and transfers the difference from your checking into your savings account. It also matches 100% of transfers for the first three months, and 5% of the annual total, up to $250 a year. Since the launch, 2.5 million customers have signed up for Keep the Change. Over 700,000 have opened new checking accounts and 1 million have signed on for new savings accounts. THE RESEARCH How did Bank of America create Keep the Change? In the spring of 2004, it hired an innovation and design research firm in Palo Alto, Calif., to help conceive of and conduct ethnographic research on boomer-age women with children. The goal was to discover how to get this consumer segment to open new checking and savings accounts. For the next two months, a team of five BofA researchers and four researchers from a West Coast consulting firm visited Atlanta, Baltimore, and San Francisco. They observed a dozen families and interviewed people on the streets. They watched people at home as they paid and balanced their checkbooks. They tagged along with mothers as they shopped at Costco, dined at Johnny Rockets, and made deposits in drive-through tellers. Ray Chinn, senior V.P. for new product introduction, along with Faith Tucker, another BofA senior V.P., saw two themes emerge from the research....
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...Chapter 6: 1. SOX has introduced sweeping changes in the name of enforcing corporate ethnics. Is it really a “fair” piece of legislation? Explain your answer. In my opinion, it is not a really a “fair” piece of legislation. In 2002, the passage of Sarbanes-Oxley heralded sweeping reforms affecting the content and preparation of disclosure documents by public companies. As part of the reforms, the legislation requires companies to disclose the fundamental business values by which the senior management of companies operates. SOX is widely credited for strengthening at least two major areas of investor protection: (1) CEO and CFO responsibility and accountability for all financial disclosures and related controls; and (2) increased professionalism and engagement on the part of corporate audit committees. Yet some continue to question its overall value, citing, as an example, its failure to prevent the situations that led to the financial crisis of 2008. One of the most controversial aspects of SOX Act is Section 404, which requires company management to provide assertions of effective internal control over financial reporting and for the company's independent audit firm to attest to those assertions. Congress has been repeatedly pressured to ease this requirement, which it did with the Jumpstart Our Business Startups Act (JOBS Act), passed by Congress and signed by President Obama April 5, 2012. The JOBS Act contained a provision that eliminated the SOX Section 404...
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...continually innovate their product and service offering to stay competitive and profitable. This situation has been exacerbated by increase consumer access to information, consumer quest for individuality, better product/service and better pricing. In the case of Bank of America (BoFA), such issues become very important during the global recession of 2007 and thereafter with its decision to embark on mobile banking. Strategic issues and problems The introduction of mobile banking by Bank of America was necessitated by the global recession which dwindled its retail section as customers increased the use of their money at the bank, with and the banks losses in other areas of the bank’s operations due to miscalculated acquisitions and bad lending practices (Gupta & Herman, 2010, p. 3). Mobile banking was one of management’s strategic approaches to rejuvenate the bank’s financial fortunes, maintain or increase its customer base and remain profitable. Management must make a decision on how to package the mobile banking program to the market considering cost and coverage to differentiate itself among competitors, and benefit from the various profit opportunities offered by mobile banking. The strategic issues facing BofA are the consideration of the extent mobile banking coverage, type of mobile system to use, timeline for the implementation and the combination of the mobile banking with the other channel mix and programs of the banks to create a balance effort. The major problems are the...
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...Bank of America's foray into mobile banking is more than a gimmick, and its iPhone application is more than just a reason to issue a press release. Underlying all of the marketer's moves into mobile services and marketing is a key insight: Give people more control over their banking on their own terms, and you'll win their loyalty. BofA is one of a small but growing group of marketers that have figured out that mobile marketing isn't about advertising. That's not to say mobile advertising will play no part, but that mobile, like most things digital, is not a channel so much as a way consumers live their lives and, consequently, a way marketers have to conduct their business. The biggest U.S. bank launched its mobile website in 2007, becoming one of the first major U.S. banks to invest in the platform, to position it to take advantage of the next frontier: mobile transactions. BofA was the first to launch an iPhone banking application, today the handset's most-downloaded financial app. With more than 2 million of its 59 million customers using its mobile banking application, Bank of America can lay claim to having the highest adoption rate of mobile-banking usage among its competitors. Between 8% and 10% of the bank's mobile-banking customers are new to the bank, suggesting that mobile was an influence in their decision to choose the bank. The payoff has made a "material impact on customer satisfaction," said Douglas Brown, senior VP-mobile product development, declining to...
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...1. What benefits does mobile banking provide to consumers? Why haven’t more many consumers adopted mobile banking yet? The first benefit the mobile banking offers is that you can use the bank service at any time. When you are traveling, you may not have access to a bank of ATM machine. However, if you have a cell phone, you may be able to set up mobile access for your bank account so that you can check your balance and transfer funds while on the road. Account security is another key benefit for mobile banking. While you are making transactions in business trip, you can also check your bank account on your cell phone for unauthorized transactions. To avoid that when you are getting home from a long trip, you discover that may have been a victim of fraud. Paying bills are the third feature of benefit. In current working environment, people are busy at work during the weekday, and therefore they may not have chance to handle their bills. Mobile banking offers a platform to access your bank account to pay your bills, such as utilities, credit card payments, and auto insurance. The last feature of benefit is that mobile banking offer complete security. People may wonder that what if cell phone is lost or have been stolen, the mobile banking will not as attractive as it should be. Thus, mobile banking encrypts your information, and adds more security on your account, which the service must be set up from a computer. Moreover, the phone can only store limited personal...
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