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BAC – Charlotte, SC

BAC – Charlotte, SC. Anthony Li Marissa Dyrdahl. Banking Industry Outlook. Improving credit environment Deceleration on cost-cutting – Focus on growth Lower loan-loss provision Increasing adaptation to regulations. Improving Margins ( BofA ).

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BAC – Charlotte, SC

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  1. BAC – Charlotte, SC Anthony Li Marissa Dyrdahl

  2. Banking Industry Outlook • Improving credit environment • Deceleration on cost-cutting – Focus on growth • Lower loan-loss provision • Increasing adaptation to regulations

  3. Improving Margins (BofA)

  4. “Bank of America Corp. posted its strongest annual profit since 2007, driven by lower expenses and growth in key businesses such as consumer lending and wealth management.” BofA earns $3.44 billion in Q4 2013

  5. BofA Highlights • 10% Increase in trading revenue Q4 ’13 – only major U.S. Investment bank to report an increase • Total revenue Increase to 21.7 Billion vs. 18.9 Billion YoY • Interest income rose 4% % noninterest income rose 28% in 4Q2013 - net interest margin increased from 2.35% to 2.56% (as compared to 4Q2012) • Basel III Tier 1 Capital Ratio of 9%; higher than JPM, WFC, C

  6. Relative Stock Performance (‘05-’14)

  7. BofA Undervalued?

  8. Executive Team • CEO/President Brian T. Moynihan • CFO Bruce R. Thompson • Co-COO David C. Darnell • Co-COO Thomas K. Montag • Head of Compliance Gary G. Lynch

  9. NotableAcquisitions $50 Billion - 2008 $4.1 Billion - 2008

  10. Business Segmentation • Consumer and Business Banking • Consumer Real Estate Services • Global Wealth and Investment Management • Global Banking • Global Markets • All Other

  11. Consumer and Business Banking (CBB) Opportunities/Highlights Risks Potential litigation expense Weakness in consumer spending • Low-interest environment • Increase of 6% in credit card spending • Return on average allocated capital increased to 26% Q4 ‘13 from 24% Q4 ‘12 • 3.9M+ credit cards issued in 2013 • Average deposit balances increased 9%

  12. Consumer Real Estate Services (CRES) Opportunities/Highlights Risk Risks Facing FHFA lawsuits Continued losses from legacy portfolios Rising rates • Rises in value of real estate • Decreases in credit losses and noninterest expense • Growth in home loans as housing market improves

  13. Global Wealth and Investment Management Opportunities/Highlights Risks Increases in expenses (largely due to higher volumes) Increase in credit losses within home loan portfolios • Record earnings of $3B in GWIM - major income source diversifier • Pretax margin increased from 21.1% to 26.6% • Asset management fees grew 15% • 18th consecutive quarter for positive fund flows (up 81% from a year ago)

  14. Global Banking Opportunities/Highlights Risks Regulatory risk • BAML maintained #2 position in global investment banking fees (up 9%) • Average loan & lease balances increased 16% • Average deposits grew 7% • Optimistic growth in M&A & leveraged loan markets

  15. Global Markets Opportunities/Highlights Risks Continued increases in provisions for credit losses Potential for further RMBS litigation (increased noninterest expense from $2.6B to $3.3B) • Sales & Trading revenues rose 19% (the only major US investment bank to report an increase) • FI trading revenues increased 16%

  16. Looking Forward • Improving banking environment • Bank of America is undervalued • PEG, NIM increase

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