FINANCIAL ANALYSIS

Financial Analysis: Bank of America and Bank of New York Mellon Corp



Financial Analysis: Bank of America and Bank of New York Mellon Corp

Business Summary

Bank of America is a bank and financial holding company. Through its banking and nonbanking subsidiaries throughout the U.S and in selected international markets, Co. provides banking, investing, asset management and other financial and risk management. Products and services through six segments: Deposits, Global Card Services, Home Loans and Insurance, Global Commercial Banking, Global Banking and Markets, and Global Wealth and Investment Management. As of Dec 31 2010, Co. served its customers via. 5,900 banking centers, 18,000 automated teller machines, call centers and online and mobile banking platforms. At such date, Co. had total assets of $ 2.26 trillion and deposits of $ 1.01 trillion. Number of Shareholders are 247,064.

Weak Tier ratio

At the end of the fiscal year 2010, BNY's Tier 1 ratio was recorded lower than its key competitors. Tier 1 ratio is the capital adequacy ratio that allows the banks to absorb losses without being required to cease trading. The Tier 1 ratio of BNY was at 8.2% in 2010 as against 8.4% in 2009. The ratio is lower than its competitors including Wells Fargo & Company (9 %) and Bank of America (8.6 %). A lower Tier 1 puts the company's operations at a greater risk (than its competitors) in the event of a financial crisis

Cost inefficiency

The cost to income ratio of the BNY is higher than its competitors. The cost to income ratio of the BNY was recorded at 68.5% in fiscal 2009, higher than its competitor Bank of America Corporation (48.7 %) and Citigroup (59.4%) for the same period. Moreover, the company's cost to income ratio increased from 57.2% in 2004 to 68.5% in fiscal year 2009. The BNY's inefficient cost management may have an adverse effect on the profits and shareholder's value.

Growth in the wealth management business

BNY undertook initiatives to expand its wealth management services including opening an office in Boston. Additionally BNY also launched investment services for high-net-worth individuals (individuals with investments of at least $ 1 million). High-net-worth wealth globally has been witnessing strong growth in the past few years. Bank of New York also has a tremendous wealth management presence in the tri-state area (New York, New Jersey, and Connecticut) while Mellon Financial has a strong wealth management presence in mid-Atlantic, the Northeast, the West Coast, the Florida area and, Pittsburgh.

Horizontal Analysis

Bank of America

Last Year

Current Year

$ (Change)

Percentage (Change)

Cash

108,427

121,339

12912

129.12

Total Current Assets

329531

327747

-1784

-17.84

Total Assets

2,264,909

2,223,299

-41610

-416.1

Total Current Liabilities

141250

71109

-70141

-701.41

Total Liabilities

2,036,661

1,991,855

-44806

-448.06

Total Share Holder Equity

228,248

231,444

3196

31.96

Number of shares outstanding

10,085.155

8,650.244

-1434.911

-14.34911

Net Revenues

110,220

119,643

9423

94.23

Gross Profit margin

0.99104

0.9812

-0.00984

-9.84E-05

Operating Expenses

68888

63992

-4896

-48.96

Operating Margin

0.625004536

0.534857869

-0.090146668

-0.00090147

Interest Expense

21,166

37,602

16436

164.36

Net Income

-2238

6276

8514

85.14

Earnings Per Share

-0.22191032

0.725528667

0.94743899

0.00947439

Gross Profit

109233

117403

8170

81.7

Bank of New York Mellon Corp

Last Year

Current Year

$ (Change)

Percentage (Change)

Cash

3,675,000

3,732,000

57000

570

Total Current Assets

9951000

59781000

49830000

498300

Total Assets

247,259,000

212,224,000

-35035000

-350350

Total Current Liabilities

31312000

2,450,000

-28862000

-288620

Total Liabilities

214,102,000

183,221,000

-30881000

-308810

Total Share Holder Equity

33,065,000

29,003,000

-4062000

-40620

Number of shares outstanding

1,241,530.195

1,207,834.714

-33695.481

-336.95481

Net Revenues

10,724,000

4,772,000

-5952000

-59520

Gross Profit margin

0.978552779

0.933361274

-0.045191505

-0.00045192

Operating Expenses

210,000

397,000

187000

1870

Operating Margin

0.019582245

0.08319363

0.063611384

0.000636114

Interest Expense

608,000

592,000

-16000

-160

Net Income

2,581,000

-1083000

-3664000

-36640

Earnings Per Share

2.078886209

-0.896645863

-2.975532072

-0.02975532

Gross Profit

10,494,000

4454000

-6040000

-60400

Trend Analysis

Bank of America

2010

2009

2008

Cash

108,427

121,339

32,857

Total Current Assets

329531

327747

201949

Total Assets

2,264,909

2,223,299

1,817,943

Total Current Liabilities

141250

71109

81274

Total Liabilities

2,036,661

1,991,855

1,640,891

Total Share Holder Equity

228,248

231,444

177,052

Number of shares outstanding

10,085.155

8,650.244

5,017.436

Net Revenues

110,220

119,643

72,782

Gross Profit margin

0.99104

0.9812

1.0288

Operating Expenses

68888

63992

40594

Operating Margin

0.625

0.5348

0.557747795

Interest Expense

21,166

37,602

41,951

Net Income

-2238

6276

4008

Earnings Per ...