ubs financial services conference
TRANSCRIPT
Bank of America Growing Relationships
Liam McGeePresidentGlobal Consumer & Small Business Banking
UBS Financial Services ConferenceMay 16, 2006
2
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.
3
The Focus Today
• Who we are
• How we run the business
• Proven results
• How we will grow
4
Bank of America – A Diverse Business Mix
1Q06 Earnings of $5.0 Billion
Global Wealth &Investment Management
12%
Global Consumer & Small Business Banking
54%
Global Corporate &Investment Banking
32%
Other2%
Global Consumer & Small Business Banking
Who We Are
6
America’s Most Convenient Financial Solutions Company
Bank of America stores
In our footprint…• 76% of U.S. population
• 93% of Hispanic households
• 86% of Asians
• 77% of African-Americans
• 75% of small businesses
Serving 54 million consumer & small business households
Through…
• 5,786 banking centers
• 16,716 ATMs
• Number 1 online bank
• 5,000+ affinity relationships
Who We Are
7
Leading Market Share
No. 1 Retail deposits 13.5 %
34.6 %
4Q05 Market Share
No. 5 First mortgage 3.3 %
No. 1 Home equity 8.4 %
No. 1 Online Banking
58.6 %No. 1 Online Bill Pay
22.4 %No. 1 Small Business Banking
21.5 %No. 1 Credit Card
No. 1 Debit Card* 15.5 %
*2004 Total Purchase volume, The Nilson Report
No. 2 Merchant Services 16.0 %
Who We Are
8
Geographic Diversity
Bank of America stores
Northeast
17%
Northeast
17%
Southeast
24%
Southeast
24%
West
22%
West
22%
Southwest
16%
Southwest
16%
Community Banking
13%
Community Banking
13%
Out of Footprint
8%
Out of Footprint
8%
Represents legacy BAC only distribution of earnings
1Q06 Earnings of $2.7 billion
Who We Are
Proven Results
10
Increased Profitability($ in billions)
Proven Results
Revenue
$8.8$9.4
$10.2
$8.0
$10.0
$12.0
1Q2004 1Q2005 1Q2006
8% growth
Net Income
$1.9$2.4 $2.7
$0.0
$1.0
$2.0
$3.0
$4.0
1Q2004 1Q2005 1Q2006
19% growth
Pro forma with Fleet, MBNA
Efficiency Ratio
55%
50%
46%
40%
50%
60%
1Q2004 1Q2005 1Q2006
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Sales Growth
Proven Results
Net New Checking Accounts
443,000
1,192,000
2,063,0002,300,000
2002 2003 2004 2005
Net New Savings Accounts
(275,000)
652,000
1,852,000
2,594,000
2002 2003 2004 2005
Home Equity Production in billions
30.038.0
61.072.0
2002 2003 2004 2005
New Store/Online Consumer Credit Cards
1,250,0001,565,000
1,784,000
2,916,000
2002 2003 2004 2005
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Proven Results
Customer Delight
20052001 2002 2003 2004
41%
49.5%
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Growing Quality Customer Relationships
Proven Results
Excluding MBNA
Total Household Growth(Pro Forma with Fleet – in millions)
17% Growth
33
39
2002 2003 2004 2005
Multi-product Household Growth
9% Growth
41%
45%
4Q04 1Q05 2Q05 3Q05 4Q05
How We Run The Business
15
Integrated Operating Model
Product Distribution
• Banking centers
• e-Commerce
• Mortgage salesforce
• Affinity groups
• ATM channel
• Phone channel
• Card
• Deposits
• Mortgage, HELOC,consumer loans
• Insurance
• Investments
• Small Businessproducts
How We Run The Business
16
Competitive Differentiators
• National franchise strategy
• Extensive knowledge from an unparalleled customer base
• Integrated operating model
• Enabling us to anticipate customer needs and…
Innovate
How We Run The Business
17
Innovation in Products and Services
Risk-free CD
How We Run The Business
How We Will Grow
19
Growth Opportunities
• Market optimization
• Online banking
• Channel diversification
• Mass Market Small Business
• Credit card
• Affinity banking
• Home equity
How We Will Grow
20
Optimizing Market Opportunities
1 HH penetration equal to HHs with BAC deposit acct. divided by number of HHs in market that hold a deposit acct
2 Sales Performance = Sales Opportunity / BAC Branch Share
Checking Sales Performance 2
2.02.4
1.9
2.7
1.72.2
1.82.2
2.82.3 2.1
2.5
1.8
1.3
2.2
LA
Seat
tle
San
Fran
Miam
i
Bost
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Phoe
nix
San
Dieg
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Dalla
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Atla
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Balti
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Hous
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Phill
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Chica
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How We Will Grow
Relative HH Market Share Penetration 159% 55% 52% 51% 46%40% 39% 39% 38% 38% 37%
31%22%
7%2%
LA
Seat
tle
San
Fran
Mia
mi
Bost
on
Phoe
nix
San
Dieg
o
Dalla
s
Atla
nta
DC
Balti
mor
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Hous
ton NY
Phill
y
Chic
ago
21
Online Banking Growth
• Among top 30 most-visited U.S. Web sites• #1 among financial institutions• 1.76 billion site visits annually
How We Will Grow
* 1Q06 includes MBNA
4.06.6 7.4
9.53.2
5.87.3
10.1
Q4 2003 Q4 2004 Q4 2005 Q1 2006
19.6 Million Online Banking Active Users
Bill Pay users
7.2
12.414.7
19.6*
10.1 Million Online Bill Pay Users
59.6%
Bank of AmericaAll Other
Online Bill Pay Market Share
22
Incremental Online Customer Relationship Value*
DepositBalances
LoanBalances
Profitability
Why Online Banking Is Important
*Three years after going online, combined access-onlyand bill pay customers
How We Will Grow
15%
28% 27%
23
Diversifying Distribution and Lowering Costs
How We Will Grow
Channel Diversification
29.5MM32.3MM
36.5MM
Product Sales Mix % by Channel(Units MM)
13.4%9.6% 13.6%
14.1%
7.7% 11.9%
67.8%
68.4%
65.7%
4.7%
14.3%
8.9%
0
4
8
12
16
20
24
28
32
36
40
44
48
2004 2005 2006E
Direct Mail
Banking Center
E-Commerce
Other$30
$140
$50
Credit Card Origination Costs$113 $98 $78Avg. cost
10% 10%16%
2% 7%
8%22%
34%
52%
65%
49%
24%
2004 2005 1Q06
24
Mass Market Small Business Growth
Customers & ProspectsBank of America Small Business
Customer Penetration
How We Will Grow
Mass Market SBs in footprint – 22.0 MM
Mass Market SBs Prospects 17.1 MM
SBs Banking w/ BAC – 4.9 MM
22.4% Penetration
18.2%20.8%
22.4%
2003 2004 2005
25
Small Business Product Sales(Thousands)
473
578
1Q05 1Q06
Deposit Products Credit Products Online Merchant
Sales Growth in Mass Market Small Business Products
• Total Sales – 22% Growth
• Business Credit – 79%
• Online Banking – 67%
• Business Checking – 20%
• Loans – 15%
• Deposits – 12%
How We Will Grow
22% Growth22% Growth
26
$1.0$1.2
1Q2005 1Q2006
$0.3
$0.4
1Q2005 1Q2006
Driving Top Line and Bottom Line Growth
How We Will Grow
19% Growth 41% Growth
Revenue Net Income
$ in billions
Mass Market Small Business
27
7%
22.4%
BAC Small BusinessCredit Market Share
BAC Small BusinessCustomer Penetration
Mass Market Small Business Credit Opportunity
How We Will Grow
Growing credit share to match market penetration
=Additional $20 Billion
in balances
28
Card Services Opportunity
• Card Services transition on target
• Drive sales growth through all channels
• Strong early results with affinity card sales
• Leverage MBNA marketing, judgmental lending & collections best practices
• International credit card portfolio
How We Will Grow
29
Top U.S. Credit Card Issuer - 20051
$153 $139$114
$73$54 $44
Bank ofAmerica
JPMorganChase
Citigroup AmericanExpress
CapitalOne
Discover
1 Source: $ in BB; Nilson Report, 50 Largest Bank Credit Issuers in the US – 2005; company reports (excludes private label)2 Source: Company reports * JP Morgan Chase growth rate excludes impact of Sears Canada acquisition
4.5%3.5%
1.8%
-2.7%-3.7%
Bank ofAmerica
JP MorganChase*
CapitalOne
Discover Citigroup
Leading Industry Growth - 20052
Credit Card: Leading Position and Performance
How We Will Grow
scov tigro
30
Leadership in Affinity Relationships
• More than 5,000 organizations endorse our products including:
– 1,400 professional organizations
– 900 colleges and universities
– 600 sports related organizations
How We Will Grow
31
Online• More than 300 affinity cards now offered on bankofamerica.com• 1Q06 results – 3x more than expected growth
Banking Center Pilot• Banking Center applications more than double expected volume• 1Q06 sales in pilot program – 2x more than expected growth
Next Steps• Mid-summer national banking center rollout
Affinity Sales Early Success
How We Will Grow
32
Affinity Banking
How We Will Grow
Propensity to accept multiple endorsed productsPropensity to accept multiple endorsed products
• Affinity and Business Partners
– 81% endorse 2 or more products
– 68% endorse 3 or more products
• Members
– 20% use multiple endorsed products
33
Engine for Growth: Affinity Banking
Bank of America Retail Products and Distribution
NewAffinity Banking Model+ =
How We Will Grow
MBNA Affinity Relationships
34
Home Equity Leader With Room To Grow
Growing 8.4% market share to 13.5% (matching retail deposits share)
How We Will Grow
$27
$44$58
$71
2002 2003 2004 2005
Home Equity Balances($in billions)
#1
$43 billion in incremental balances=
35
Leading Intermediary in Customer Cash Flow Cycle
How We Will Grow
Companies
Consumers
Merchants
• #1 Online banking
• #1 Online billpay
• #1 home equity lender
• #1 business lender
• #2 merchant processor
Bank of America
• #1 check processor
• #1 debit card
• #1 credit cards
• #1 ATM network
• #1 Cash processor
• #1 Cash Management bank
36
Credit Solutions Continuum
How We Will Grow
Customer credit needs
Relationship-based Common Decision Engine
Unsecured Lines
SecuredCredit Card
Small BusinessLending
Unsecured Credit Card
FirstMortgage
Home Equity
37
In Summary
• Uniquely positioned national franchise
• Diverse base of earnings
• Strong track record
• Leveraging our competitive differentiators
• Focused on best growth opportunities
