.

#Fin2209 student

[. @Spring19BACCFO]

@NeuRebeccascafe This is the 2017 menu lmao

[. @Spring19BACCFO]

@ProfLowell #Fin2209 Since BOA is recovering from the financial crisis, I had adopted a more flexible short term financial policy to aid growth. There is a high ratio of current assets to sales and high investments and accounts receivables. This may change in the future.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 Since BOA has the most capital out of all the banks in America, it has less leverage than the others, so it is less profitable. It is unable to buy as many assets as the other banks. However, BOA has been efficiently cutting excess costs every year.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 Bank of America's current assets have almost doubled since 2015. However, its short term investments dropped significantly from 2017 to 2018, back to 2015 levels. Accounts receivables have been steadily increasing over the years.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 BOA continues to return billions to shareholders every year and buy back stock as well as increase dividend payout. In the upcoming years, its stock should be one of the strongest. BOA has cut expenses and has plenty of room to grow in terms of capital

[. @Spring19BACCFO]

@ProfLowell #Fin2209 The bank plans to sell non strategic assets and establish joint ventures, which would reduce the need for capital. BOA has a CET1 ratio of 11.3% so it is very well capitalized. It also has relatively low dividend payouts so it is working on increasing that.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 BOA has raised almost $26 billion of its capital plan: $13.5 bil through issued shares of common stock, $1.8 bil through selling some of its holdings in China Construction Bank, and $5.9 bil from exchanging preferred stock into common stock.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 BOA stock is currently very attractive as its value is only expected to go up along with the company's earnings. Its dividends are in line with it's competitors. W/ substantial gains these past few years, BOA is living back up to its "Dividend Giant" nickname

[. @Spring19BACCFO]

@ProfLowell #Fin2209 Bank of America has a dividend payout ratio of 20%, giving assurance that the dividends are easily covered by its earnings and can be further increased. 2018 was the best payout year so far for BOA investors, much improved since the 2008 crash

[. @Spring19BACCFO]

@ProfLowell #Fin2209 BOA's dividends paid have been steadily increasing since 2013. The number of shares repurchased has also jumped by $20 bil since then. The last reported quarter dividend per share was $0.15, up by 40% from 2018. BOA shows signs of further increasing dividends

[. @Spring19BACCFO]

@ProfLowell #Fin2209 BOA has been attempting to reduce expenses. The balance of preferred dividends is steadily declining. BOA's high D/E ratio contributes to its rapid growth, but it is not quite sustainable. Recently their capital structure has become more conservatively.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 Long term debt financing is an integral part of BOA's capital structure. Debt is an expensive way for a bank to get $ and this led to BOA's crisis in 2008 that required a bailout. Taking on so much debt maintained their excellent D/E ratio but was dangerous.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 BOA has a relatively high D/E ratio at 167.41. This is much higher than most other banks in the industry—it has high financial leverage. However, BOA's ROE is underwhelming compared to its industry's, showing its returns are unable to cover the cost of equity

[. @Spring19BACCFO]

@ProfLowell #Fin2209 High risk loans are usually used to fund highly leveraged buyouts and takeovers. Other companies sold a record $1.71 trillion of such debt to institutional investors the past two years so BOA fell from the top to third behind JPM and Goldman Sachs Group Inc.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 BOA is especially wary of taking risks in emerging markets. The bank's high risk investments started declining after $300 mil in losses due to Steinhoff International Holdings NV. BOA now has lower standing the market for risky corporate loans.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 Compared to other banks in the industry, BOA is a much less risk taking company. Meissner & several other executives have stepped down due to frustration w/ BOA's low tolerance for risk. As new CEO Koder said, they simply "are not prepared to take the risk.”

[. @Spring19BACCFO]

@ProfLowell #Fin2209 BOA's capital budgeting allows for riskier investments to use less leverage than less risky ones. Equity capital is assigned to business units so each business unit has the same cost of equity capital. BOA measures credit, country, market, and business risk.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 BOA uses risk-adjusted return on capital (RAROC) approach for capital budgeting—risk premium assessed by multiplying capital at risk by cost of capital. "The amnt of capital allocated varies w/ contribution of project to the overall volatility of earnings."

[. @Spring19BACCFO]

@ProfLowell #Fin2209 With overall bank IT spending growing every year, BOA is setting the bar with an annual global tech and operations budget of about $16 billion. Compared with competitors JPM ($10.8 bil) and C ($8 bil), BOA is truly striving use new tech to appeal to clients.

[. @Spring19BACCFO]

@ProfLowell #Fin2209 Banks tend to rely heavily on share repurchases to return cash to investors, and as such, BOA has been repurchasing a substantial amount. This allows for increased dividend payout to each shareholder and for a smaller number of shares to be rebought each year