During its latest analyst meeting, Bank of America (NYSE:BAC) highlighted the value of its brand and distribution network, and described how it would use these assets to create shareholder value going forward. This franchise was built over the years through many acquisitions, including the recent purchases of Countrywide Financial and Merrill Lynch.
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Bank of America believes that it has established the preeminent banking franchise available to serve consumer and business customers in the United States.
Bank of America has built up its retail distribution network over the years mostly through acquisitions, and the bank now has 5,800 branches and 18,000 ATMs for its customers to use. After the purchase of Merrill Lynch and Countrywide Financial, the bank has 5,300 mortgage officers and nearly 16,000 financial advisers serving 1.5 million clients with $90 billion in assets.
Wells Fargo (NYSE:WFC) competes with bank of America in many of its markets, and has 12,000 ATMs available for its customers. Other large banks also made acquisitions during the financial crisis as they saw an inexpensive way to add to operations. JP Morgan (NYSE:JPM) purchased Bear Stearns in 2008 after receiving financing and guarantees from the Federal Reserve Bank of New York.
On the commercial side, Bank of America has nearly 350,000 business customers with more than $200 billion in loans outstanding. Bank of America also offers an extensive array of investment banking services to larger corporations.
Bank of America plans to use this franchise to serve three different customer groups: consumers, businesses and institutional investors. The company believes that this customer focus will lead to higher revenues in the long run as it will help to retain customers.
Bank of America found that its attrition rate for retail customers that have two or more products with the bank averages only 1%. This compares to a 12.5% attrition rate for retail customers with only one product with the bank.
Bank of America also pledged no further acquisitions and will focus its efforts on execution as its recent acquisitions become fully integrated into the company. The bank also sees an opportunity to grow its non-U.S. revenues, as it has only 13% of its revenues outside the United States. This is fairly low compared to many of its peers. In 2010, Citigroup (NYSE:C) had 44% of its managed revenues from what the bank considers to be emerging markets.
Bank of America believes that its brand, vast distribution network and multiple product lines will help differentiate the bank from its competitors. The recent acquisitions of Countrywide Financial and Merrill Lynch were the last acquisitions needed to fill out the company's offerings. (For related reading, take a look at Analyzing A Bank's Financial Statements.)
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