Bank of America Growth Opportunities in Global Consumer & Small Business Banking Liam McGee President, Global Consumer & Small Business Banking Lehman Brothers September 10, 2007
Bank of AmericaGrowth Opportunities in Global Consumer & Small Business Banking
Liam McGeePresident, Global Consumer & Small Business Banking
Lehman BrothersSeptember 10, 2007
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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 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.
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Global Consumer & Small Business Banking
• Continuing track record of growth
• Truly differentiated franchise
• Growth opportunities: Deposits and Consumer Credit
• Understanding the contemporary retail environment
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2004 2005 2006
Revenue
32% 36% 38%
68% 64% 62%
Noninterest IncomeNet Interest Income
Growth Recap
Track Record of Growth
Deposit Households
22.7
24.6
26.1
Dec 2004 Dec 2005 Dec 2006
7% CAGR
Customer Delight
2001 2005 2006
42.5%
49.6%50.3%
17% improvement
2004 2005 2006
Net Income
Footnotes:1-Pro forma with Fleet and MBNA ($ in billions)2-Bankruptcies reform impacted provision expense by $0.6B in 2005 and ($0.9B) in 2006 on a Net Income basis.
$9.1
$11.5
$9.3
11% CAGR
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Momentum Continues: Sales and Balance Growth
2004 2005 2006
CAGR = 13.8%
34.3
41.544.9
Total Sales Units (MM)*
*Pro forma with Fleet and MBNA
Track Record of Growth
2Q07 vs 2Q06
% Growth
Retail deposit balances 1.3 %
Consumer card balances 3.6 %
Home equity balances 24.1 %
Small business credit 37.2 %
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Through…• 5,700+ banking centers• 17,000+ ATMs• 5,000+ affinity relationships • 66% all online bill payers• 63% handhelds reachable
We Are Where Customers Want Us To Be
In our footprint…• 76% of U.S. population• 75% of small businesses
Differentiated Franchise
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Adding 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
Differentiated Franchise
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Unrivaled Distribution System
Customer
5,700 Banking Centers
17,000 ATMs
5,000 Affinity GroupsAlmost 23MM Online Users
2.6B Contacts
Can reach 63% handheld devices
Differentiated Franchise
10 ALL Information full year 2006 – Includes MBNA Customers
And yet…
12.5 million Deposit HHs with a deposit product only
2 million Small Business HHs with one product only
Card customers have $247B of balances with competitors
74% of BAC HHs get their HELOC elsewhere ($176B)
#1HELOC Originations
#1Credit Card Balances
#1
#1
Deposit Balances
Small Business Deposits
Market Share
Deepen Existing Customer Relationships
Growth Opportunities
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$-
$50
$100
$150
$200
2002 2003 2004 2005 2006Debit Purchase Volume
Deposit Success
$ in
bill
ions
**Market Share 13.3%13.9%14.5%14.3%
$ in
bill
ions
16.5%15.7%15.5%15.7%14.7%
Retail Balances * Debit Purchase Volume
26% CAGR
$-
$100
$200
$300
$400
$500
2003 2004 2005 2006-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Retail Balances Deposit Spread
*Retail Balances – Pro forma for Fleet & MBNA & Excludes US trust – Market Share includes BAC footprint only** Market Share estimates as of December for each period. Includes Fleet and MBNA, excludes US Trust.
$463$169
Growth Opportunities
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Consumer Credit: Strength With Room to Grow
32%17% 9%
21% 12%
68%83% 91%
79% 88%
Credit Card Home Equity Mortgage Unsecured Total Credit
On Us Off Us
Total Credit of BAC Customers
$4.3 trillion opportunity within existing deposit customer base
$425B $507B $3,836B $70B $4,837B
Growth Opportunities
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U.S. Card – Focused on Lower Delivery Costs
• Leveraging banking center and Internet channels• Greater convenience, lower cost, higher return
$109 $100 $84 $70
* Actual 2006 cost to acquire by channel was utilized to calculated 2004-2005 estimates shown and are not actual historical values . The value will therefore reflect change in mix only.
16% 12% 11% 9%
5% 8% 12% 16%
21% 19% 13% 10%
41%37%
27%24%
17%24%
37% 41%
2004 2005 2006 2007
FranchiseDirect MailOtherInternetMedia Marketing
*Cost to Acquire
Growth Opportunities
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Delivery channels
Customer credit needs
Credit Solutions Continuum
Relationship-based Common Decision Engine
Banking Centers Mobile BankingE-Commerce Call Centers ATM
Student Loans Credit Card ULOC First Mortgage Home Equity
Growth Opportunities
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Consumer Credit
• Credit losses remain within expected ranges in 2007
• Exited subprime loan origination business in 2001
• Consumer real estate loss ratios remain below industry averages
• Expect card losses to have peaked in 2Q for the year
Growth Opportunities
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Consumer Purchasing Behavior
AwarenessFrom . . . To . . .
Market-GeneratedMedia
Consumer-GeneratedMedia
Contemporary Retail
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Consumer Purchasing Behavior
From . . . To . . .
Consideration
Institutions Social Networks& Communities
Contemporary Retail
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Consumer Purchasing Behavior
From . . . To . . .
Purchase9 to 524/7/365
Shop online, pickup in-store
Company-DefinedOptions
Customer-DefinedOptions
Contemporary Retail