Financial Overview/Capital/Balance Sheet
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Financial Overview/Capital/Balance Sheet

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	Financial Overview/Capital/Balance Sheet Financial Overview/Capital/Balance Sheet Presentation Transcript

  • Financial Management Joe Price Chief Financial Officer Chan Martin Treasurer
  • Forward Looking Statements This 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 company’s businesses and economic conditions as a whole; 5) changes in the interest rate environment reduce interest margins and impact funding sources; 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. 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. 2
  • Bank of America Financial Management • Generate diverse revenue stream through customer/ client activity • Manage resulting interest rate risk in changing environment • Maintain capital and liquidity strength • Manage capital advantageously 3
  • Financial Strength Earnings Liquidity Capital 4
  • Diverse Revenue Sources 2001 2006 $36B* $74B* 44% 48% 56% 52% Net Interest Income Noninterest Income 5 * GAAP, FTE basis
  • History of Revenue Growth Pro Forma FTE Revenue 80,000 70,000 60,000 7% CAGR $ millions 50,000 40,000 30,000 20,000 4% CAGR 10,000 - 2001 2002 2003 2004 2005 2006 Net Interest Income Noninterest Income 6 * 2001 – 2003 reflect summation of line items from former Fleet, MBNA and Bank of America financial statements. For 2004 – 2005 please refer to the Form 8-K filed April 10, 2006.
  • Noninterest Revenue Diversity – 2006 $38 Billion Noninterest Revenue by Noninterest Revenue by Product/Activity Segment Other Other Equity Gains 6% 5% 8% Investment Global Banking Card Income Corporate & 6% 38% Investment Banking Global Trading 31% Consumer & 8% Small Business Investment & Global 54% Brokerage 12% Mortgage Wealth & Banking Service Investment Income Charges Management 1% 21% 10% 7
  • Where We’ve Come From Held Core NII Trends* vs Market Spread Compression 10,000 350 bps. 8,000 250 bps. Core NII ($Millions) 6,000 150 bps. 4,000 50 bps. 2,000 - (50 bps.) 1Q05 4Q05 4Q04 2Q05 3Q05 1Q06 2Q06 1Q04 3Q04 4Q06 2Q04 3Q06 Combined Core NII 5-Year CMS vs. 3-month Libor 8 *Pro Forma Basis
  • 2006 Revenue Growth Pro Forma FTE Revenue 80,000 2006 70,000 Growth 60,000 18% $ millions 50,000 40,000 30,000 20,000 3% 10,000 - 2001 2002 2003 2004 2005 2006 Net Interest Income Noninterest Income 9 * 2001 – 2003 reflect summation of line items from former Fleet, MBNA and Bank of America financial statements. For 2004 – 2005 please refer to the Form 8-K filed April 10, 2006.
  • How Environment has Changed • Abundant liquidity • Productivity and technology impacts • Innovative financial products • Greater financial transparency • Monetary policy • Term structure of rates 10
  • Interest Rate Risk Management • Interest rate sensitivity • Mortgage balances • Proprietary information 11
  • Positioning Bank of America for Success • Diversity of revenue provides stability through cycles • Focused on growing across enterprise to drive revenue • Manage revenue stream holistically • Achieving results from integrated banking 12
  • Integrated Banking Coming to Life Client Improvement After Dual Coverage Momentum Premier Banking Acceptance Product Mix and Revenue Growth YOY w th % Gr o Revenue +33 Growth Lift CMAS 41% +80% 32% 159% 60% Better Treasury 22% 8% Better Services 41% Better 36% +18% Better Deposits Credit Investment Revenue Business 27% 23% +12% Growth Growth Growth Lending 2005 2006 GWIM Converted Client Referrals • Migrating Premier relationships to GWIM 155,233 48% • Consumer channel diversification 104,879 • Originations distributed through GCIB 2005 2006 13
  • Our Positioning for Tomorrow • Pressure on 2007 NII growth • Strength of businesses sustainable • Value of diverse revenue mix 14
  • Liquidity and Capital Strength
  • Liquidity – Time to Required Funding Time to Required Funding 33 Months Before Market Access is Required 30 27 24 21 18 15 2001 2002 2003 2004 2005 2006 Time to Required Funding Maximum Target Minimum Target 16
  • Diversity of Debt Issuance Long-Term Debt Portfolio 2001 2006 Institutional Non-USD 8% Institutional Non-USD Institutional Retail 34% USD 6% 44% Institutional Retail USD 22% 86% 17
  • Capital Strength and Ratios (in billions, as of 12/31) 2006 2005 Total Assets $1,460 $1,292 Total Shareholders’ Equity $135 $102 Tier 1 Capital Ratio 8.64 % 8.25% Tier 1 Leverage Ratio 6.36 % 5.91% Number Common Shares O/S 4.46 4.00 18
  • Capital Usage
  • Capital Usage $27 Billion Cash Flow Business Acquisitions Growth Strong Balance Share Sheet Repurchases Dividends 20
  • Making Good Capital Decisions Capital Investment Primary Advantage Santander Serfin Enhance multicultural strategy Gain scale in merchant services National Processing business China Construction Tap into tremendous growth of Bank Chinese economy Complete national franchise and Fleet entry into NE wealth markets Become premier payments provider MBNA and leverage products and distribution Enhance capability to serve high-net U.S. Trust worth 21
  • Actively Managing Excess Capital ($ in millions) • Returned more than $80 billion in $80,237 capital since 1998 • Repurchases plus dividends have $44,626 averaged 80% of net income $35,611 Dividends Repurchases 1998 1999 2000 2001 2002 2003 2004 2005 2006 Cumulative Capital returned as % 58 88 84 96 89 91 63 63 91 80 of earnings Tier 1 Tier 1 7.06% 8.64% 22
  • Longer-term Financial Objectives 10% EPS growth to be driven by: • 6% to 9% revenue growth • 2% to 4% operating leverage • Manageable credit costs • Advantageous capital management 23
  • Summary • Generate diverse revenue stream through customer / client activity • Manage resulting interest rate risk in changing environment • Maintain capital and liquidity strength • Manage capital advantageously 24