Strategic Analysis and Case Study of Bank of the West

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Strategic Analysis and Case Study
By: Joe McWilliams

Brief Overview
Bank of the West (BOW) is a financial institution headquartered in the state of California. BOW opened its doors in 1874 under the name Farmers National Gold Bank and was one of the first ten banks nationwide authorized to issue paper currency backed by gold reserves. In 1979 the bank changed its name to Bank of the West with the desire to grow and provide their style of relationship banking outside of the Bay Area. In 1980 BOW became affiliated with BNP Paribas, which is one of the world’s six highest rated banks. Increasing the bank’s capital even more, BOW’s holding company BancWest Corporation became a wholly-owned subsidiary of BNP Paribas. Over the past ten years BOW has grown rapidly due to organic growth and strategic acquisitions, including the acquisition of Commercial Federal Bank, of Omaha, in 2005. Currently, BOW has customers in all fifty states and operates more than 700 branch banking and commercial office locations in 19 states. BOW credits its prudent credit underwriting, its diversified loan portfolio, and careful risk management for growing to more the $62 billion in assets, making it one of the nation’s largest banks. Internal Analysis

Bank of the West’s capital structure seems to be improving since the financial crisis. Total liabilities and equity was just over 57.5 million for 2010. Total liabilities consisted of 47 million of that number. BOW liabilities consist mostly of deposits made by consumers. They also entail long-term debt, pension benefits, short-term borrowing, the purchase of federal funds, and acceptances outstanding. As far as equity is concerned it involves common stock, paid-in capital, retained earnings, and noncontrolling interest. After five consecutive quarters of negative profits, BOW amassed a successful 2010. BOW achieved four consecutive quarters of rising profitability and a full-year profit of $185 million, including net income of $69 million in the fourth quarter alone. Over the course of 2010 core deposits rose more than 11 percent. In addition revenues increased by 6 percent, net interest income was up more than 4 percent, and non-interest income increased 10 percent. Furthermore, BOW’s mortgage banking division surpassed $2 billion in annual originations for the first time in December 2010. BOW contains many physical assets. These include cash, interest bearing deposits from other banks, trading assets, real estate, equipment, and loans held for sale. Intangible assets are present as well including; goodwill, leases, and insurance. Bank of the West employs over 11,000 employees in over 19 states. The company uses its personal intranet to keep employees up to date on BOW and banking industry news. In addition, BOW utilizes its intranet to provide training to its employees through a site called ((((((())))) Their intranet also keeps employees up to date on federal regulations and laws. Core Competencies and Distinctive Competencies

The core competency of Bank of the West is its customer service. The company prides itself on this aspect and trains its employees to excel in this facet of banking. Due to BOW’s emphasis on customer service they have accumulated several prestigious awards over the last 10 years from the likes of J.D. Power and Associates and Greenwich Associates. The bank has also hired an outside partner to assist in improving customer satisfaction. This outside company is in charge of calling BOW customers and determines if they would be advocates for the bank. External Analysis

Competitors/Strategic Group
Although there are many local banks and commercial banks spread throughout the United States the main competitors for BOW are; Bank of America, Wells Fargo Bank, and US Bank. Critical Success Factors

The following is a list of critical success factors for Bank of the West: * Financial Strength
* Product Differentiation
* Low Costs
* Customer...
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