UNITED STATES
SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
NOTICE OF EXEMPT SOLICITATION
| 1. | Name of the Registrant: |
BANK OF AMERICA CORPORATION
| 2. | Name of the person relying on exemption: |
FINGER INTERESTS NUMBER ONE, LTD.
| 3. | Address of person relying on exemption: |
520 Post Oak Blvd., Suite 750, Houston, TX 77027
| 4. | Written Materials. Attach written material required to be submitted pursuant to Rule 14a-6(g)(1). |
Dear Shareholder:
We have modified the Powerpoint Presentation on our website, www.bacProxyVote.com. The updated Powerpoint Presentation is attached, and incorporates many of the slides that were in different sections of our website. Also, we believe the graphs at the end of the Powerpoint presentation are of particular significance.
We continue to urge you to VOTE AGAINST three directors that are standing for re-election at the Annual Meeting of Bank of America on April 29, 2009:
Vote AGAINST the election of KENNETH D. LEWIS to the board of directors
Vote AGAINST the election of O. TEMPLE SLOAN, JR. to the board of directors
Vote AGAINST the election of JACKIE M. WARD to the board of directors
SLIDESHOW PRESENTATION TO FELLOW
SHAREHOLDERS
SHAREHOLDERS
UPDATED MARCH 25, 2009
www.BACPROXYVOTE.com
Table of Contents
— Our Thesis / Our Goals Pages 3-4
— The Case For Change Page 5
— Risky & Overpriced Acquisitions Pages 6-11
— Credit Risk Assumed through Acquisitions Pages 12-14
— Concealed Information on Merrill Acqusition Pages 15-16
— Securities Law Questions Pages 17-19
— Our Goals Page 20
— Actions taken to Date Page 21
— Appendix - Graphs (important)
÷ Permanent Destruction of Shareholder Value Pages 22-25
www.BACPROXYVOTE.com
2
Our Thesis
— Management has embarked on a program of premium
priced and high risk acquisitions, with the consent and
support of the board of directors.
priced and high risk acquisitions, with the consent and
support of the board of directors.
— Misguided Emphasis on size, market share and “footprint”
rather than Tangible Book Value, Return on Equity,
Earnings Per Share and Protecting Shareholder Value.
rather than Tangible Book Value, Return on Equity,
Earnings Per Share and Protecting Shareholder Value.
— These actions by management and the board have caused
shareholder dilution that will result in the Permanent
Destruction of Shareholder Value.
shareholder dilution that will result in the Permanent
Destruction of Shareholder Value.
— Thus, the Board has failed in its primary duty to
shareholders to protect and preserve shareholder value.
shareholders to protect and preserve shareholder value.
www.BACPROXYVOTE.com
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Our Goals
— We are long-term holders of 1.1 MM shares of BAC stock since 1996.
We want to improve the Company and its governance.
We want to improve the Company and its governance.
— We are focused on Accountability to shareholders. This board
collectively failed to function properly as a decision making body that
was responsible for protecting the interests of shareholders, first and
foremost.
collectively failed to function properly as a decision making body that
was responsible for protecting the interests of shareholders, first and
foremost.
— We are seeking to change the culture of corporate governance at the
Company, so that the board of directors oversees management more
firmly and fulfills its duty to shareholders.
Company, so that the board of directors oversees management more
firmly and fulfills its duty to shareholders.
— For the April 29 Annual Meeting, we recommend shareholders:
¡ Vote “Against” 3 directors - Ken Lewis, Temple Sloan, Jackie Ward
(Item 1)
¡ Vote to Separate Chairman & CEO position (Item 8)
¡ Vote to Limit Executive Compensation (Items 3, 5, 11)
www.BACPROXYVOTE.com
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The Case for Change
• Risky and Overpriced Acquisitions
• Assumption of Massive Credit risk Through Acquisitions
• We believe Management & Board Concealed Information
from Shareholders About Losses at Merrill Lynch prior to
December 5th merger vote
from Shareholders About Losses at Merrill Lynch prior to
December 5th merger vote
• Possible Violations of Securities Laws regarding disclosure
of Material Information related to new TARP Funds and
Merrill Q4 losses
of Material Information related to new TARP Funds and
Merrill Q4 losses
• Prior knowledge regarding significant bonus payments to
Merrill executives
Merrill executives
• The above actions have resulted in Permanent Destruction
of Shareholder Value
of Shareholder Value
www.BACPROXYVOTE.com
5
Risky and Overpriced Acquistions
— LaSalle Acquistion
— Countrywide Acquisition
— Merrill Lynch Acquisition
www.BACPROXYVOTE.com
6
LaSalle Acquisition
— Full Price Paid
¡ 20.3x LTM Earnings
¡ Cash Acquisition - no common equity issued in transaction
¡ Over $11 BN of Goodwill created by Transaction
¡ Tangible Book Value Dropped by $3.5BN due to goodwill
created + lack of common equity issued
created + lack of common equity issued
¡ Tangible Common Equity / Assets fell from 3.5% at 9/30/07 to
2.99% at 12/31/07
2.99% at 12/31/07
¡ Poorly Executed Transaction
÷ Assumption of Large Commercial Loan Book
÷ Multiple Management Defections / Lost Clients
¡ Thus, Dilutive to Shareholders
www.BACPROXYVOTE.com
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Countrywide Acquisition
— Unknown Litigation Risk / Costs Prior to Close
¡ 5 States Attorney General Suits Prior to Closing
¡ At least 6 Subsequent AG Suits
¡ October 2008 Agreement with 11 Attorneys General to modify
$8.4Billion in Loans, 400,000 borrowers
$8.4Billion in Loans, 400,000 borrowers
¡ $220Million Reserved for Settlements to Date
— Very Negative Impact to Tangible Capital Ratios
¡ Tangible Common Equity drops from $46.6BN at 6/30/08 to
$24.8BN at 9/30/08 due to $4.1 BN increase in goodwill and
$16 BN increase in “other intangibles” (including mtg. serv. rights)
$24.8BN at 9/30/08 due to $4.1 BN increase in goodwill and
$16 BN increase in “other intangibles” (including mtg. serv. rights)
¡ Tangible Common Equity ratio drops from 4.62% of total
assets at 6/30/08 to 2.6% of total assets at 9/30/08
assets at 6/30/08 to 2.6% of total assets at 9/30/08
www.BACPROXYVOTE.com
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Merrill Lynch Acquisition #1
— Inability to do Due Diligence
¡ Less than 48 hours of negotiations and Due Diligence
¡ If due diligence was attempted, it was inadequate and faulty
¡ Offer price per share = 60% premium to prior closing share
price in unstable and declining stock markets
price in unstable and declining stock markets
÷ Pending failure of Lehman
÷ Frozen Credit Markets
÷ Funding Uncertainty for Broker Dealer Firms
¡ Significant Credit Risk Assets Acquired, and yet:
÷ Did they have time & expertise to evaluate assets and risks?
÷ Did they properly assess their ability to hedge risks assumed?
www.BACPROXYVOTE.com
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Merrill Lynch Acquisition#2
— Before factoring in unexpected Q4 writedowns, our calculations
show this acquisition to be permanently dilutive to shareholders
show this acquisition to be permanently dilutive to shareholders
¡ 1.4 Billion new shares issued to MER shareholders
¡ Required Pretax Earnings of $9.7 BN to be non-dilutive to Earnings
Per Share for Bank of America stockholders
Per Share for Bank of America stockholders
¡ MER pretax earnings at “artificial peak” in 2006 = $9.8 BN,
including $7.2 BN of non-recurring “Trading Revenues” related to
Asset Backed Securities Operations, all of which (and more) has been
subsequently written off as losses
including $7.2 BN of non-recurring “Trading Revenues” related to
Asset Backed Securities Operations, all of which (and more) has been
subsequently written off as losses
¡ MER Profits appear highly dependent upon capital markets activity
requiring capital at risk, i.e. proprietary trading, securitizations, etc.
(volatile, low multiple stream of earnings)
requiring capital at risk, i.e. proprietary trading, securitizations, etc.
(volatile, low multiple stream of earnings)
¡ Planned $7 + billion of cost savings often result in declining revenues
¡ Added cost of retaining best producers
www.BACPROXYVOTE.com
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Merrill Lynch Acquisition#3
— True Cost of MER Deal (our calculation):
¡ BAC Stock issued to Merrill shareholders $19.4 BN
¡ Merrill Preferred Stock Assumed $ 9.7 BN
¡ Drop in BAC Stock ($33=>$22 x 5 bn shrs) $55 BN
÷ (1 day after announcement of deal)
¡ Cost of Retention Bonuses Paid to MER Brokers $ 3.7 BN
¡ Cost of New Gov’t TARP Money (new pfd stock @ 8%) $20 BN
¡ After tax cost of MER 4th Qtr Asset Write Downs / Loss $15.5 BN
¡ Disputed Merrill Bonuses - Thain / Cuomo $ 3.6 BN
¡ Purchase of Gov’t Asset Protection (TARP) $4 BN
¡ TARP insured future MER Losses (75% x deductible) $15 BN
÷ Total Cost $146 BN
¡ True Cost per MER share $104 / share
— Drop in BAC Market Capitalization Since Deal $145 BN
www.BACPROXYVOTE.com
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Credit Risk Assumed Through Acquisitions
— Countrywide Acquisition
— Merrill Lynch Acquisition
www.BACPROXYVOTE.com
Countrywide - Credit Risk Assumed
— Acquired Unknown Credit Risks to Balance Sheet
¡ Pay Option Arm Loans (negative amortization) $26.4 BN
¡ Sub Prime Loans $2.4 BN
¡ Home Equity + 2nd Lien Loans $33.4 BN
¡ Level 3 Derivative Assets Acquired - Excluding
Mortgage Servicing Rights $15 BN
¡ Total of $77.2 BN in assets listed above EXCEED 1.6x Tangible
Book Value ($46.6BN at 6/30/08) before acquisition
Book Value ($46.6BN at 6/30/08) before acquisition
— Worsening Credit Trends at Acquisition Date
¡ Charge offs rose by over 700% for six months ended 6/30/08 as
compared to prior year
compared to prior year
¡ $750 MM Additional Charges in Q4 2008 for asset quality
deterioration (after purchase accounting adjustments)
deterioration (after purchase accounting adjustments)
www.BACPROXYVOTE.com
Merrill Lynch Credit Risk Assumed
— (dollars in BN)
— Transitory Leveraged Lending $5.65
— Commercial Real Estate $9.7
— First Republic - Real Estate $3.1
— Unhedged Super Senior ABS CDO $0.8
— Hedged Super Senior ABS CDO $1.0
— CDS with Monoline Guarantors On US & non
US ABS CDO’s $9.2
— Investment Portfolio $10.4
¡ Sum of Credit Risk Assumed $39.9
¡ Equal to 85% of tangible capital at 9/30/08
Source: BAC investor presentations
www.BACPROXYVOTE.com
Concealed Information on Merrill Lynch Losses #1
— WSJ reports on Merrill losses in 2/5/09 article:
¡ In Merrill Deal, U.S. Played Hardball, By Dan Fitzpatrick
¡ http://online.wsj.com/article/SB123379687205650255.html
— Financial Times reports that Bank of America
involved in determining Merrill Q4 Losses
involved in determining Merrill Q4 Losses
¡ Bank of America directly linked to Merrill's final
writedown, By Greg Farrell in New York, Published: March 20 2009
writedown, By Greg Farrell in New York, Published: March 20 2009
¡ http://www.ft.com/cms/s/0/ca0e8f8c-14ee-11de-8cd1-0000779fd2ac.html
www.BACPROXYVOTE.com
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Concealed Information on Merrill Lynch Losses #2
— Failure to Disclose Material Information to Shareholders
¡ October & November 2008 were two of the worst months in fixed income
and credit market history
and credit market history
¡ On November 12, Henry Paulson announces TARP will not buy assets, asset
prices go into freefall
prices go into freefall
¡ Losses in Merrill portfolio would have been evident well before December
5th, 2008 shareholder vote to approve merger
5th, 2008 shareholder vote to approve merger
¡ Wall Street Journal article dated 2/5/09 details timing of losses in Merrill
Portfolio (see article)
Portfolio (see article)
¡ Bank of America had a full team of accountants at Merrill’s offices reviewing
the portfolio marks daily starting in September
the portfolio marks daily starting in September
¡ Ken Lewis claims losses not evident until Dec. 15th. Credit and fixed income
markets improved during December
markets improved during December
¡ BAC & Board do not disclose losses until 1/16/09. 47% of shares trade in the
period 12/15/08 to 1/16/09. Creates significant legal exposure to BAC.
period 12/15/08 to 1/16/09. Creates significant legal exposure to BAC.
www.BACPROXYVOTE.com
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Securities Law Questions
— Failure to Amend Proxy Statement prior to 12/5 vote
— Use of TARP Funds to Complete Acquisition is a
material change in transaction terms. Should have
been resubmitted to shareholders for approval
material change in transaction terms. Should have
been resubmitted to shareholders for approval
— 47% of shares trade during period between 12/17 and
1/16/09 without disclosure of Merrill losses and
accepting more TARP funds
1/16/09 without disclosure of Merrill losses and
accepting more TARP funds
www.BACPROXYVOTE.com
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Securities Law Questions
Failure to Disclose Material Information
Failure to Disclose Material Information
— Finger Interests has alleged in a class action lawsuit
that certain officers and directors failed to disclose
material information to shareholders.
that certain officers and directors failed to disclose
material information to shareholders.
¡ Management and the board of directors withheld material
information that would have affected stockholders’ decisions
to buy, hold or sell their shares of Bank of America common
stock.
information that would have affected stockholders’ decisions
to buy, hold or sell their shares of Bank of America common
stock.
¡ Management and the board of directors filed an inaccurate
proxy statement dated October 31, 2008, and failed, either by
omission or affirmative act, to amend the proxy statement to
reflect material changes in the financial condition of Merrill
Lynch.
proxy statement dated October 31, 2008, and failed, either by
omission or affirmative act, to amend the proxy statement to
reflect material changes in the financial condition of Merrill
Lynch.
¡ A copy of the lawsuit is under the “Our Lawsuit” tab.
www.BACPROXYVOTE.com
Securities Law Questions #2
Failure to Disclose Material Information
Failure to Disclose Material Information
— We have been advised by counsel that such omissions by certain
officers and directors may be a violation of the disclosure
requirements under section 14 (a) of the Exchange Act and SEC rule
14(a)-9(a).
officers and directors may be a violation of the disclosure
requirements under section 14 (a) of the Exchange Act and SEC rule
14(a)-9(a).
— We believe the decision by the board to not amend the merger proxy
statement dated October 31, 2008 was also a failure of board to fulfill
its fiduciary duty to protect the interests of shareholders.
statement dated October 31, 2008 was also a failure of board to fulfill
its fiduciary duty to protect the interests of shareholders.
— We further believe this failure by the board is generally reflective of
the board’s willingness to acquiesce to management’s wishes with
respect to acquisitions and other matters of great significance to the
interests of shareholders.
the board’s willingness to acquiesce to management’s wishes with
respect to acquisitions and other matters of great significance to the
interests of shareholders.
— As such, we urge shareholders to vote for change.
www.BACPROXYVOTE.com
Our Goals
— Change in Governance
¡ Vote “Against” election of Three Directors (Item 1)
÷ Ken Lewis - Current Chairman / CEO, architect of Countrywide
and Merrill Deals
and Merrill Deals
÷ Temple Sloan - Lead Director
÷ Jackie Ward - Chair, Asset Quality Committee
¡ Separate Chairman and CEO - New Chairman/Lead Director
willing to Protect Shareholders and Challenge Management (item 8)
willing to Protect Shareholders and Challenge Management (item 8)
¡ Tie Compensation to Long Term Share Performance (Items 3,5,11)
— Change Culture
¡ Greater Focus on Building Shareholder Value
¡ Greater Focus on Risk - Reward Analysis in use of Capital
¡ Promote Greater Transparency and Disclosure
www.BACPROXYVOTE.com
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Actions to Date
— Legal Action
¡ Filed Class Action Lawsuit regarding Securities Law issues
¡ Initial Contacts with Regulatory Agencies
— Launched Campaign to Communicate with
Shareholders
Shareholders
¡ Web site - www.bacProxyVote.com
¡ Exempt Solicitation Filing with Securities Exchange Commission
÷ http://idea.sec.gov/Archives/edgar/data/70858/000095013409005879/d66927px14a6g.htm
¡ Public Relations Firm
¡ Initial Contact with Regulatory Bodies
¡ Targeting Proxy Voting Services
¡ Communications with Significant Shareholders
www.BACPROXYVOTE.com
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Appendix - Graphs
Permanent Destruction of Shareholder
Value
Value
÷ Graph of Tangible Book Value Per Share
÷ Graph Reported Net Income vs Change in Goodwill
vs Change in Tangible Common Equity
vs Change in Tangible Common Equity
÷ Graph Ratio of Tangible Common Equity +
Allowance for Loan Loss / Total Assets
Allowance for Loan Loss / Total Assets
www.BACPROXYVOTE.com
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