BAC – Charlotte, SCAnthony Li

Marissa Dyrdahl

Banking Industry Outlook

• Improving credit environment

• Deceleration on cost-cutting – Focus on growth

• Lower loan-loss provision

• Increasing adaptation to regulations

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

Net Interest Margin

Wells Fargo U.S. BancorpCitigroup JPMorganBank of America

Improving Margins (BofA)

“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

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

Relative Stock Performance (‘05-’14)

BofA Undervalued?

Industry BAC C GS JPM WFC MS UBS HSBC DB CS

Trailing P/E (ttm, intraday): 0 18.12 11.04 10.65 12.66 11.7 21.29 217.91 12.16N/A 16.58

PEG Ratio (5 yr expected): 1.31 0.6 0.5 1.97 1.58 1.21 0.48N/A 0.95 1.4 1.27

Return on Assets (ttm): 0.5% 0.7%N/A 0.8% 1.5%N/A 0.1% 0.7% 0.0% 0.4%

Return on Equity (ttm): 4.9% 7.0% 10.4% 8.6% 13.5% 5.4% 1.1% 9.9% -0.9% 7.5%

Profit Margin (ttm): 13.4% 20.2% 23.5% 18.6% 26.9% 9.3% 1.1% 26.0% -1.7% 12.0%

Operating Margin (ttm): 29.0% 20.2% 28.9% 37.1% 27.6% 43.1% 26.6% 7.0% 39.9% 19.4% 20.0%

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

Notable Acquisitions

$50 Billion - 2008

$4.1 Billion - 2008

Business Segmentation

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

Consumer and Business Banking (CBB)

Opportunities/Highlights• 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%

Risks• Potential litigation expense

• Weakness in consumer spending

Consumer Real Estate Services (CRES)

Opportunities/Highlights• Rises in value of real estate• Decreases in credit losses and

noninterest expense• Growth in home loans as

housing market improves

Risk Risks• Facing FHFA lawsuits• Continued losses from legacy

portfolios • Rising rates

Global Wealth and Investment Management

Opportunities/Highlights• 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)

Risks• Increases in expenses (largely

due to higher volumes)• Increase in credit losses within

home loan portfolios

Global Banking

Opportunities/Highlights• 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

Risks• Regulatory risk

Global Markets

Opportunities/Highlights• Sales & Trading revenues rose

19% (the only major US investment bank to report an increase)• FI trading revenues increased

16%

Risks• Continued increases in

provisions for credit losses• Potential for further RMBS

litigation (increased noninterest expense from $2.6B to $3.3B)

Looking Forward

• Improving banking environment

• Bank of America is undervalued• PEG, NIM increase