Bank of America 2001 Annual Report Download - page 24

Download and view the complete annual report

Please find page 24 of the 2001 Bank of America annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

experience through easy access and efficient, error-free service.
We are using Six Sigma quality and productivity tools to evalu-
ate our processes from start to finish. In 2001, for example, we
moved our client information data to a consistent system that
gives us an enterprise-wide view of our clients’ relationships.
This helps us identify opportunities for providing creative solu-
tions and ideas. We believe these breakthrough improvements
will significantly increase client satisfaction. And we know from
market research that a strong correlation exists between highly
satisfied clients and increases in both market penetration and
lead bank penetration, which can translate into a healthy boost
to the bottom line.
Reducing volatility of earnings through disciplined risk
management and diversification of our revenues. Achieving
our SVA growth goals is dependent upon our ability to aggres-
sively manage risk and reduce the volatility of our earnings.
As a result, we are making some hard but necessary choices
about which clients we will do business with in the future. For
example, we have chosen to decrease our credit exposure in
certain industries that are particularly vulnerable in economic
downturns. We will continue to do business with key players
in those industries, but only with those clients who meet our
new credit standards. Along with a disciplined client selection
process, we have instituted relationship pricing practices that
reward our clients for doing more business with us.
At the same time, we are taking steps to diversify our
revenue mix. Although credit income remains important, we
are increasing our focus on earning revenue from sales of
fee-based products and from deposits and investments. Fee-
based products such as treasury management and investment
banking generate higher SVA in the long term because profit
margins are higher and total capital allocation is significantly
lower than that assigned to credit products.
We already have made substantial headway in
increasing our non-credit revenue. We expect continued growth
in fee-based income between now and 2006; in fact, we see
fee-based revenue as the Commercial segment’s greatest
enhancements to our treasury services that will differentiate
us from our competitors.
Expanding existing relationships – earning our clients’
trust and becoming their lead bank, or primary financial
provider. Our leading market share provides tremendous
opportunity to expand client relationships and acquire primary
bank status. Toward that end, we are implementing disciplined
client selection, client segmentation and cross-sell processes.
We are focused on creating solutions and adding value for
our clients through treasury management, investment bank-
ing and investment services. Finally, we are refining the way
we measure the value of our client relationships, with
emphasis on shareholder valued added (SVA).
Improving the quality of our service is critical to
expanding existing relationships and acquiring new clients.
Our goal is to provide clients with a world-class banking
22
We are reducing the volatility of earnings through disciplined
risk management
and diversification of our revenues, with a focus on fee-based income.
OUR LEAD BANK RELATIONSHIP with MedCath Corporation demon-
strates our ability to develop trusted, long-term relationships and to
deliver value through our industry expertise and the total resources
of Bank of America.
Based in Charlotte, N.C., MedCath owns a growing number of
heart hospitals and provides cardiovascular care services in diagnostic
and therapeutic centers. Until 2001, our relationship with MedCath
included revolving lines of credit, syndications, deposits, investments,
treasury management and personal wealth management.
Last year, we helped MedCath devise a new capital structure that
involved new public equity and senior debt to strengthen the balance
sheet and fund future growth. In July, based on our expertise in equity and
capital markets, particularly in the health care industry, we earned the
right to take MedCath public and close on a $220 million senior debt facil-
ity to refinance and fund three existing and four new hospitals. We served
as joint bookrunner on both deals and helped our client position itself to
become the leading cardiovascular care service provider in the nation.
Developing
Lead Bank
Relationships