Bank of America - ?· 2 Forward Looking Statements This presentation contains forward-looking statements,…

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  • Bank of America

    Joe Price Chief Financial Officer

    Merrill Lynch Financial Services ConferenceNovember 13, 2007

  • 2

    Forward Looking StatementsThis presentation contains forward-looking statements, including statements about the financial conditions, results of operations and earnings outlook of Bank of America Corporation. The forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include, among others, the following: 1) projected business increases following process changes and other investments are lower than expected; 2) competitive pressure among financial services companies increases significantly; 3) general economic conditions are less favorable than expected; 4) political conditions including the threat of future terrorist activity and related actions by the United States abroad may adversely affect the companys businesses and economic conditions as a whole; 5) changes in the interest rate environment and market liquidity reduce interest margins, impact funding sources and effect the ability to originate and distribute financial products in the primary and secondary markets; 6) changes in foreign exchange rates increases exposure; 7) changes in market rates and prices may adversely impact the value of financial products; 8) legislation or regulatory environments, requirements or changes adversely affect the businesses in which the company is engaged; 9) changes in accounting standards, rules or interpretations, 10) litigation liabilities, including costs, expenses, settlements and judgments, may adversely affect the company or its businesses; 11) mergers and acquisitions and their integration into the company; and 12) decisions to downsize, sell or close units or otherwise change the business mix of any of the company. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Bank of America does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made. For further information regarding Bank of America Corporation, please read the Bank of America reports filed with the SEC and available at www.sec.gov.

  • 3

    Bank of America Today

    Strong Balance Sheet

    Diversified Earnings

    MarketLeadership

    Customer Convenience

  • 4

    A Diverse Business Mix

    Nine Months 2007 Earnings - $14.7 Billion

    Global Wealth &Investment Management

    12%

    Global Consumer & Small Business Banking

    51%Global Corporate &Investment Banking

    22%

    Other15%

  • 5

    Bank of America Differentiating Factors

    Ubiquitous franchiseVast customer base

    Unparalleled customer convenience

    Market and product leadership positions

    Information and innovation

    Demonstrated ability to executeLeverage franchise capabilities

    Provide innovative customer solutions

    Superior integration expertise

    Opportunities for continued organic growthRetail banking penetration

    Capturing the wealth opportunity

    Commercial banking client expansion

  • 6

    Global Consumer & Small Business BankingNine Months 2007 Earnings - $7.6 Billion

    Other/ALM0%

    Deposits53%Card

    Services41%

    Consumer Real

    Estate6%

    Growth Opportunities Deposits and debit businesses

    Unsecured consumer credit, including card

    Payments business integration

    Consumer real estate

    Strengths #1 deposit market share

    #1 card services in US and UK

    #1 small business lender

    Largest delivery network

    GCSB results presents on a managed basis

  • 7

    Added Density in Important Markets

    Chicago Market BAC LaSalle Combined

    Banking centers 56 141 197

    ATMs 231 450 681

    LaSalle

    Michigan Market Detroit Other Michigan

    Banking centers 160 110 270

    ATMs 632 418 1,050

  • 8

    Global Corporate & Investment BankingNine Months 2007 Earnings - $3.3 Billion

    Other/ALM-7%

    Business Lending

    44%Capital Markets

    14%

    Treasury Services

    49%

    Growth Opportunities Business banking product penetration

    Electronic payments

    International presence and treasury services

    Middle market investment banking

    Strengths #1 Middle market lender

    Top 3 US fixed income capital markets

    Leading treasury services provider

  • 9

    Global Wealth & Investment ManagementNine Months 2007 Earnings - $1.8 Billion

    Other/ALM5%

    Premier Banking &

    Investments56%

    US Trust20%

    Columbia Management

    19%

    Growth Opportunities Mass affluent expansion

    Private bank

    Columbia Management AUM growth

    Strengths #1 Mass affluent services provider (Premier Banking)

    19th largest US asset manager (Columbia)

    Largest US Private Bank ( US Trust)

  • 10 FTE basis; excludes merger & restructuring charges

    Effectively Managing Costs

    2005

    Efficiency Ratio

    50%

    54%

    52%53%

    2000 2001 2002 2003 2004

    47%

    2006

    50% target

    54%

    52%

    48%

    2007YTD

  • Fourth Quarter Events

    China Construction Bank investment

    Sale of Marsico Capital Management

    Visa settlement and IPO

    Capital markets dislocations

  • Leveraged loan and high yield pipelines stabilizing Minor exposure to covenant-lite B, second lien or subordinated positions Funded exposures from 9/30 clearing within marks and caps U.S. markets stabilizing faster than European markets

    Exposure to collateralized debt obligations $15.5 billion ($12.8 billion net) in super senior liquidity support

    $9.8 billion net, backed principally by subprime securities

    $5.2 billion ($2.4 billion net) in super senior securities exposure $1.9 billion net, backed principally by subprime securities

    $1.0 billion in CDO pipeline warehouse $400 million net, backed principally by subprime securities

    Leveraged Lending and CDOs

  • 13

    Asset Quality Trends

    Managed net credit loss ratio 1.27% in 3Q, down 4 basis points from 2Q Held net charge-offs relatively unchanged at .80%

    Increasing reserves for growth and weakening in housing Reflects seasoning and higher loss expectations in targeted growth

    portfolios, particularly small business and home equity Building commercial reserves for homebuilder exposures

    Consumer card losses tracking as expected Managed consumer credit card net loss rate down to 4.67% from 5.02% in 2Q. 30 day delinquencies to 5.24% from 5.08% in 2Q. 90 day delinquencies to 2.48% from 2.55% in 2Q.

    Growth in Small Business lending drove commercial losses in 3Q Excluding small business, commercial losses near historic lows of 0.05% in

    3Q, unchanged from 2Q Carefully watching homebuilder and related exposures

  • Performance of Targeted Growth Portfolios

    Avg balances in billions. Other $ changes in millions

    97% of home equity customers have at least one other product with Bank of America Average CLTV 68% with an average refreshed FICO of 721; 83% of portfolio less than 90% LTV More than 95% of portfolio generated through branch originations

    Deterioration driven by 2005 and 2006 vintages with risk expansion Instituted more judgmental procedures in underwriting and collections Increased required number of years in business for lending

    Losses for 2007 peaked at 5.02% in 2Q07 and dropped as expected in 3Q07 Average refreshed FICO of 687; average originated FICO of 738 Losses expected to trend toward previously announced 5-5.5% range in 2008 or later

    3Q07 3Q07 annualized NPAs 30+ Avg. bal. net c/o ratio % of loans Past due

    Managed credit card 172.0 4.67% N/A 5.24%$ change from 3Q06 7.9 276 722 BP change from 3Q06 5% 44 bps 14 bps

    Home equity 98.6 0.20% 0.76% 1.01%$ change from 3Q06 18.5 39 556 492 BP change from 3Q06 23% 14 bps 51 bps 37 bps

    Small business 16.0 5.89% 0.59% 5.07%$ change from 3Q06 3.5 138 45 419 BP change from 3Q06 28% 273 bps 18 bps 187 bps

  • 15

    BusinessGrowth

    Capital Usage

    Strong Balance Sheet

    Share Repurchases

    Acquisitions

    Dividends

    $27 Billion Cash Flow

  • 16

    $37,022

    $52,601

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    9M07

    Cum

    ulat

    ive

    Actively Managing Excess Capital

    Returned $90 billion in capital since 1998 Repurchases plus dividends have

    averaged 78% of net income

    ($ in millions)

    Tier 1 7.06%

    Tier 1 8.22%

    Dividends Repurchases

    $89,623

    Capital returned as a % of earnings 58% 88% 84% 96% 89% 91% 63% 63% 91% 64% 78%

  • 17

    $2.12

    1977 2006

    13% annu

    alized grow

    th

    30 Consecutive Years of Dividend Increases

    Dividend Yield5.8%

    Yield based on annualized dividend and price as of 11/09/07

    Current dividend rate of $.64 per share ($2.56 annually)

  • 18

    Long-term Financial Objectives

    10% EPS growth to be driven by:

    6% to 9% revenue growth

    2% to 4% operating leverage

    Manageable credit costs

    Advantageous ca

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