UNITED
STATES
SECURITES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
NOTICE
OF EXEMPT SOLICITATION
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1.
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Name
of the Registrant:
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BANK OF
AMERICA CORPORATION
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2.
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Name
of the person relying on exemption:
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FINGER
INTERESTS NUMBER ONE, LTD.
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3.
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Address
of person relying on exemption:
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520 Post
Oak Blvd., Suite 750, Houston, TX 77027
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4.
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Written
Materials. Attach written material required to be submitted pursuant to
Rule 14a-6(g)(1).
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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
3
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
4
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
7
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
8
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
9
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
10
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
11
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
15
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
16
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
17
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
20
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
21
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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www.BACPROXYVOTE.com
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www.BACPROXYVOTE.com
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