Growth Opportunities in Global Wealth & Investment Management. Brian Moynihan President Global Wealth & Investment Management

Transcription

1 Growth Opportunities in Global Wealth & Investment Management Brian Moynihan President Global Wealth & Investment Management

2 Global Wealth & Investment Management is a division of Bank of America Corporation. Banc of America Investment Services, Inc., The Private Bank of Bank of America and Columbia Management are all affiliates within Global Wealth & Investment Management. Premier Banking & Investments TM is offered through Bank of America Premier Banking and Banc of America Investment Services, Inc. Banking products are provided by Bank of America, N.A., member FDIC. Investment products: Banc of America Investment Services, Inc. is a registered broker-dealer, member NASD and SIPC, and a nonbank subsidiary of Bank of America, N.A. The Private Bank is a unit of Bank of America, N.A. Columbia Management is the primary investment management division of Bank of America Corporation. Columbia Management entities furnish investment management services and advise institutional and mutual fund portfolios. The Consulting Services Group is a division of Banc of America Investment Advisors, Inc. (BAIA). BAIA is an SEC-registered investment adviser and wholly-owned subsidiary of Bank of America, N.A. Ser Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed 2

3 Global Wealth & Investment Management: Takeaways We are a large and profitable competitor in attractive businesses and markets Our competitive position and integrated model provides strong growth opportunities Our best and most efficient way to grow is to leverage the strength of our franchise We are capturing those growth opportunities, but there is much more ahead of us, and we are continuing to invest aggressively to capture it 3

4 A Sizeable and Profitable Competitor 2006 ($B) Percent change Revenue 1 $ Net income Assets under mgt Total client assets Average loans Average deposits (1.9) Efficiency ratio 51.5% (0.8) Return on equity 23.2% 0.7 Associates 13, Includes $851MM deposit NII on migrated balances 2 Includes $48.4B of cumulative migrated average balances since 2004

5 2006 Revenue Mix and Operating Margins Total Revenue by LOB Total Revenue by Product Columbia Management 20% Other 5% Premier Banking & Investments 1 All Other Income 6% Brokerage Loan NII 13% Income 8% 48% Asset Mgt Fees 36% Deposit NII 34% The Private Bank 27% Residual and Other NII 3% Line of Business 2006 Revenue 2006 Pre-tax margin Premier Banking & Investments $3.7B % The Private Bank $2.1B 41.8% Columbia Management $1.5B 34.5% 5 1 Premier Banking & Investments revenue shown as internally managed, including impact of migration from Consumer Banking.

6 Peer Comparison: Profitability 4Q06 Pre-tax Earnings of Major Competitors $956 $759 $649 $625 $520 $361 $249 $242 BAC MER JPM C WB MS AMP NTRS Pre-Tax Margin 48% 23% 33% 23% 27% 17% 16% 31% 6 Competitors listed include their respective GWIM-like businesses, based on Bank of America analysis of publicly available earnings reports. Pro forma results reflect adjustments for significant acquisitions along with other one-time items, and eliminate SFAS 123R stock option expenses where necessary.

7 Trends in Asset Management Asset Management Fees ($MM) Assets Under Management ($B) CAGR 11% CAGR 14% Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 7

8 Trends in Loan, Deposit and Liquidity Balances Loans ($B) Deposits ($B) CAGR 14% CAGR 1% Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Total BAC Liquidity 1 Balance ($B) CAGR 2% Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q Total liquidity balance includes deposits and Columbia retail money market funds

9 Trends in Brokerage Transactional/Fee-Based Revenue Brokerage Revenue ($MM) 4% $617 $593 Net New Self Directed Accounts (000) (0.2) (12.7) 1Q06 2Q06 3Q06 4Q Assets Under Management for all Fee-based Solutions and Accounts for Periods Ending 12/31 ($B) Accounts Assets (accounts) , ,000 60, ,000 20,

10 Our Go-to-market Model Mass Market Mass Affluent Wealthy Very Wealthy Mid-Market Institutions Large Institutions INVESTABLE ASSETS To $100K $100K - $3MM $3MM - $50MM $50MM Plus To $250MM $250MM Plus NEED Banking, Borrowing, Saving Integrated Banking & Investments Wealth & Legacy Planning Family Office, Investment Consulting Investment & Distribution Policy, Trustee Services Asset Management Excellence PRODUCTS Deposits,Loans Straightforward Investment Products Insurance Plus Integrated Banking and Investment Securities Brokerage Simple Trust Plus Complex Trust Alternative investments Specialty Asset Management Plus Alternative asset mgt products Philanthropic and Foundation Services PTMS / PIMS Foundation, Charitable Giving Trustee Services Investment Consulting Retirement Administration Mutual Funds Liquidity Strategies Separate Accounts CHANNEL Consumer Banking Premier Banking & Investments The Private Bank Family Wealth Advisors Philanthropic Management Retirement Solutions Columbia Management 10

11 Growth Opportunities Affluent households own 77% of personal investable assets in U.S., growing 26% (or 4x rate of U.S. population) from We are growing Premier Banking & Investments into the leading franchise in the underserved mass affluent market. Wealthy households own 15% of personal investable assets in U.S., growing 36% (or 6x rate of U.S. population) from With current capabilities and addition of U.S. Trust, we create the largest private banking franchise in this fragmented market. Columbia Management is well positioned on strong investment performance and strong retail/institutional distribution Columbia Management is focused on taking greater share. 11

12 Leveraging the Strength of our Franchise 8MM affluent customer relationships Nearly 300,000 wealthy customer relationships Relationships with 30,000 middle market institutions Relationships with 80% of companies with pension assets of $200MM 12

13 Partnerships for Growth: Converted Client Referrals Why: Best way to solve our clients needs Deepening relationships with existing clients represents best opportunity for profitable growth Leverages strength of our franchise by generating referrals for all lines of business Converted Client Referrals 155,233 48% 104,879 What s involved: Goals and incentives in all lines of business 46 local markets with GWIM leader Personal and institutional client teams drive teamwork across lines of business in each market Integrated client management process

14 Investing Aggressively in Growth People Training Technology Marketing U.S. Trust acquisition 14

15 Growth Opportunities in Premier Banking & Investments Pat Phillips President, Premier Banking & Investments 15

16 Premier Banking & Investments: Key Takeaways Bank of America has invested heavily in a scaled model that satisfies affluent clients banking & investing needs The business produces strong growth and profit, and deepens customer relationships We will grow through increased productivity, sales force expansion and by leveraging the strength of our franchise 16

17 Mass Affluent Segment Who They Are What They Want Share of U.S. personal investable assets High Net Worth Consumer 9% Advice 15% Convenience 77% Mass Affluent Respect Total personal investable assets : $17.5T 17 Source:: IXI Xillionaires

18 How we Serve our Affluent Clients in PB&I Dedicated Teams of Client Managers and Financial Advisors 4,400 professionals based in local markets nationwide Priority service Premier Relationship Center BAI Investment Centers 1,200 professionals Convenience 5,800 stores, 17,000 ATMs No. 1 Online Banking Leading Online Brokerage Relationship and Targeted Pricing Mortgages CD Rates Money Market $0 Online Equity Trades 18

19 Our Size, Scale and Market Position 4Q06 client balances Average deposits of $96.5B Average loans of $32.1B Total client brokerage assets of $187.7B Fee based assets of $18.6B Market position Unique service model No. 1 affluent deposit market share Highly rated online brokerage platform Integration with Consumer Banking 8MM Qualified Bank of America Customers Relationships With Mass Affluent Households 1.4MM Premier Only or Investments Only Premier Brokerage 246K Premier Banking & Investments Combined Product penetration 50% of Premier Banking & Investments customers obtain their first mortgage through Bank of America 74% of Premier Banking & Investments customers obtain their home equity line / loan through Bank of America Approximately 1/3 of Premier Banking clients have an account with Banc of America Investment Services, Inc. 19

20 Improvement Achieved After Client Migration to PB&I 159% 8% 60% Better Better 22% Better Better Deposits Credit Growth Investment Growth Revenue Growth 20 PB&I Test and Control Study of Premier Banking clients vs. similar Premier-eligible households that remain in Consumer Banking; results based on two year period from April 2004 to July 2006

21 Delivering Growth Through Deeper Relationships PB&I Client Balances 1 ($B) CAGR 15% 285 PB&I Client Average Loan Balances 1 ($B) Deposits MM MF Other Brokerage % Q04 4Q05 4Q06 4Q05 4Q06 Premier Households with Brokerage Relationship 10% 223K 246K 21 1 Includes impact from Consumer migration 12/31/05 12/31/06

22 and Increased Financial Advisor Productivity Premier Banking & Investments Investments Revenue Loans & Deposits Referred to Bankers by Financial Advisors 12% $805 MM CAGR 51% $7.1 B $720 MM $3.1 B $4.2 B Recurring Revenue as a Percentage of Investments Revenue 27% 40% 49% Fee Based Assets Under Management ($B) CAGR 46%

23 Growth Initiatives Increased client contact leads to greater client delight Improved productivity Better use of technology Improved client selection Continued focus on partnerships Expanded sales force 23

24 Percent of PB&I markets with organic deposit growth Two-Month Moving Average During % 60% 50% 40% 30% 20% 10% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 24

25 Growth Initiatives: Expand the Sales Force 4, ,048 1,175 5,940 5,581 5, , ,946 1,954 2,134 1, ,812 2,126 2,345 2,624 Premier Relationship Center Investment Center Financial Advisors CRC Client Managers Premier Client Managers

26 Premier Banking & Investments: Key Takeaways Bank of America has invested heavily in a scaled model that satisfies affluent clients banking & investing needs The business produces strong growth and profit, and deepens customer relationships We will grow through increased productivity, sales force expansion and by leveraging the strength of our franchise 26

27 Growth Opportunities in Private Wealth Management Brian Moynihan President Global Wealth & Investment Management 27

28 Private Wealth Management: Key Takeaways The Private Bank of Bank of America is positioned for stronger growth The business becomes an even more powerful competitor combined with U.S. Trust We will grow the business by leveraging the franchise and through more disciplined relationship management 28

29 Wealthy Segment Share of U.S. Personal Investable Assets High Net Worth Consumer 15% 9% 77% Mass Affluent Total personal investable assets: $17.5Trillion 1 Unique needs: Wealthy clients want access to more specialized and customized solutions 60% have relationships with at least five providers but all want a primary advisor Business owners have accumulated wealth faster than industry has adapted to serving them 29 1 Source: IXI Xillionaires

30 Combining Strengths to Form Leading Wealth Manager The New Private Wealth Management at Bank of America 118,000 client relationships 2,500 ultra wealthy client relationships $270 billion in assets under management $6B in alternative investments $16B in specialty asset management No. 1 private bank and No. 5 wealth manager* leadership across products, services offices in 32 states, including CA, CT, MA, NY strong brand awareness enormous growth potential Pending legal closing. The proposed acquisition is subject to regulatory approval and, until such acquisition is consummated, U.S. Trust Corporation and Bank of America Corporation will remain separate and competing parties. 30 *Private Bank ranking reflects SEC Filings, Company 10Qs. Wealth Managers ranked by assets, based on individual clients with accounts of $1MM or more, in Barron s June 30, 2006.

31 Our Size, Scale and Market Penetration Client balances (2006) Average deposits of $18.9B Average loans of $31.2B Assets under management of $171.8B Brokerage assets of $28.3B BAC Relationships With Wealthy Households 669, , ,000 Products and services Trust and wealth transfer services Liquidity management Comprehensive investments Credit expertise Specialty asset management Philanthropic services Family Wealth Advisors Facets of Life analysis Market position Largest private banking footprint in the U.S. with more than 150 locations Leading private bank lender Leading manager of oil and gas properties No. 1 trust provider in the U.S. No. 1 in foundation assets among U.S. banks No. 1 manager of farm and ranch acreage Total HNW in BAC Footprint BAC HNW Clients PB Relationships 31

32 Improving Performance Before the Merger Loans ($B) CAGR 5%Deposits ($B) Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Assets Under Management ($B) AUM Net Flows ($B) CAGR 3% (3.2) (1.6) (4.9) 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q

33 Growth Initiatives Increase sales capacity Enhance client experience and improve productivity Sales People 2,077 2,051 1,934 Client Management Process Integrated desktop tool Private Bank Relationship Center Deposits and liquidity Alternative investments Client Delight (Top 2 Box Delight) 40% 50% Wealth transfer / business owners Focused markets (exit International)

34 Private Wealth Management: Key Takeaways The Private Bank of Bank of America is positioned for stronger growth The business becomes an even more powerful competitor combined with U.S. Trust We will grow the business by leveraging the franchise and through more disciplined relationship management 34

35 Growth Opportunities in Asset Management Keith Banks President, Columbia Management 35

36 Asset Management: Key Takeaways Columbia Management is well positioned given its scale, breadth of products and strong investment performance We will take share across asset classes by capitalizing on strong performance and more intensive distribution efforts We will compete to win a greater share from Bank of America s institutional clients Our strategic focus is on alternatives, international and retirement solutions to drive longer term growth 36

37 Columbia Management Assets under management: $543B (as of 12/31/06) 1 26th largest asset manager globally 2 15 th largest U.S. based asset manager 2 8 th largest U.S. mutual fund family 3 Total Assets Under Management ($B) Columbia Management and Affiliates CAGR 10% 6 th largest global money fund manager $543 AUM By Client Segment (As of 12/31/06) 28% High Net Worth 27% Retail $ $ % Institutional Columbia Management and its affiliates ("Columbia Management") :Columbia Management and its affiliates comprise the wealth and investment management division of Bank of America Corporation. As of September 30, 2006, Columbia Management and its affiliates managed assets of $517 billion. Columbia Management and its affiliates managed assets consists of assets under the discretionary management of the three registered investment advisors, Columbia Management Advisors, LLC ($331.4 billion), Columbia Wanger Asset Management, L.P. ($30.3 billion) and Marsico Capital Management, LLC ($76.3 billion); the Bank of America Private Bank; Banc of America Investment Services, Inc.; Banc of America Investment Advisors, Inc.; Bank of America Capital Advisors, LLC, and Premier Banking & Investments. 2 Ranked by worldwide AUM as of 12/31/05, according to Pension & Investments, 5/29/06 3 Source: Strategic Insight, 12/31/06; 4) Source: imoneynet,12/31/ Equity Fixed Income Money Mkt/ Other

38 Integration Highlights Reduced number of retail mutual funds by more than 30% Consolidated 6 fixed-income product centers into 2 Consolidated core vendors providing services Returned more than $200 million in savings to mutual fund shareholders through reduced expense ratios, since

39 Investment Performance in Fixed-Income and Money Market Percentile Rankings for Taxable Fixed-Income & Money Market Funds based on 3-Year Performance Taxable Fixed-Income Funds Money Market Funds 38 th percentile 16 th percentile Columbia Taxable Fixed-Income Funds combined average ranking: 38.5th percentile when compared to industry competitors. Source: Columbia Management based on Morningstar data. Mutual Fund complexes with at least $3 B in assets and 5 taxable fixed income funds. Rankings include taxable fixed income funds thru 12/31/06 Columbia Money Market Funds combined average ranking: 16th percentile when compared to industry competitors. Source: imoneynet; Money Fund Complexes with at least $10 B in assets and 7 money market funds with similar investment categories as Columbia Management (account performance is simple weighted) thru 11/30/06 39

40 Stronger Performance, Stronger Sales Intermediary Net Sales ($B) 3-year CAGR 194% $13.8 $10.3 Institutional Short Term Net Sales ($B) $10.2 $ $ Intermediary sales rank of 173 wholesale complexes 1 1. American Funds 2. Franklin Templeton Investments 3. Oppenheimer Funds, Inc. 4. State Street Global Advisors 5. Columbia Management Institutional Long Term Net Sales ($B) ($8.6) ($0.6) Ranked by 2006 LT and ETF AUM, source: FRC

41 How we Realize Additional Growth Equity get our fair share across breadth of product portfolio Fixed Income take it to a higher level and grow assets Cash build upon our considerable strength Plus, greater penetration of Bank of America institutional franchise 41

42 Increase Share With Existing Bank of America Clients U.S. corporations with pension assets of $200MM or more hold $2.9T in assets 80% are Bank of America clients Columbia Management share is < 3% 42

43 How We Realize the Opportunity Hired new head of distribution Rebuilding the sales team Broadening consultant advisory team Aligning ourselves with Client Management Process in GCIB 43

44 Columbia Management Long Term Strategic Initiatives Alternatives International Retirement 44

45 Asset Management: Key Takeaways Columbia Management is well positioned given its scale, breadth of products and strong investment performance We will take share across asset classes by capitalizing on strong performance and more intensive distribution efforts We will compete to win a greater share from Bank of America s institutional clients Our strategic focus is on alternatives, international and retirement solutions to drive longer term growth 45

46 Global Wealth & Investment Management: Summary We are a large and profitable competitor in attractive businesses and markets Our competitive position and integrated model provides strong growth opportunities Our best and most efficient way to grow is to leverage the strength of our franchise We are capturing those growth opportunities, but there is much more ahead of us, and we are continuing to invest aggressively to capture it 46