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FINGER
INTERESTS, LTD.
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Vote AGAINST re-election
of
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Kenneth D. Lewis -
Chairman and CEO
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Vote AGAINST re-election
of
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O. Temple Sloan, Jr. –
Lead director, Chair Compensation Committee, Chair Executive Committee,
Corporate Governance Committee
Member
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Vote AGAINST re-election
of
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Jackie M. Ward – Chair
Asset Quality Committee
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/s/
Jerry E. Finger
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/s/
Jonathon S. Finger
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Jerry
E. Finger
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Jonathan
S. Finger
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1)
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Management and Board Pursued
Risky and Overpriced Acquisitions – Management and the Board are
focused on size, footprint and market share, regardless of the impact on
shareholder value. They have pursued acquisitions that are
overpriced and assumed credit and other risks that are not consistent with
maintaining and building shareholder
value.
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a)
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Merrill
Lynch Offer price per share = 60% premium to prior closing share price in
unstable and declining stock markets, in the face
of:
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i)
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Pending
failure of Lehman; (ii) Frozen Credit Markets; (iii) Funding Uncertainty
for Broker Dealer Firms
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2)
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Management
and the Board Assumed Massive Credit Risk Through
Acquisitions
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a)
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Countrywide
Risk - Acquired $26.4 BN pay option ARMs, $2.4 BN Sub Prime Loans, $33.4
BN Home Equity / 2nd
lien loans, $15 BN level 3 assets for a total of $77.2BN or 1.6x tangible
common equity at 6/30/08. The worsening of credit trends at
acquisition date, plus huge litigation risk of 5 lawsuits filed by state
attorneys general regarding CFC lending
practices.
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b)
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Merrill
Lynch – Acquired $39.9BN of risk assets, including Leveraged Loans,
commercial real estate, CDO’s, Credit default swaps with monocline
exposure and other investments totaling 85% of tangible common equity at
9/30/08.
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3)
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Management
and the Board Failed to Disclose Information to Shareholders Regarding
Losses at Merrill Lynch, resulting in Possible Securities Law
Violations
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a)
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Despite
having knowledge of $13.3BN of losses at Merrill by end of November,
management and board elected not to inform shareholders of losses before
shareholder vote on December 5th. See
WSJ article 2/5/09.
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b)
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BAC’s
chief accounting officer, Neil Cotty was directly involved in Merrill’s Q4
2008 write-downs, and had full access to Merrill’s financial information
and books. BAC disclosed nothing regarding Merrill loses until
1/16/09. See Financial Times article,
3/20/09.
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c)
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Failed
to amend proxy statement prior to shareholder vote. Failed to
disclose to shareholders the additional TARP funds requested from
government on December 15th to facilitate acquisition of
Merrill. This was a material change in deal terms that was not
disclosed to shareholders.
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d)
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47%
of weighted average shares trade from 12/15/08 to 1/16/09 when TARP and
Merrill losses are disclosed, creating potential liability for
directors.
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4)
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Management
and Board had Prior Knowledge of Merrill bonus payments through merger
agreement side letter, credibility
weakened
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a)
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Ken
Lewis and the board initially disavowed any knowledge of size and timing
of Merrill bonuses. Irrespective of the merit of awarding such
bonuses, testimony in NY AG Cuomo’s investigation casts serious doubt
regarding management’s account of events. Management integrity
is a key factor to maintain the confidence of investors and securities
analysts.
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5)
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Management
and Board have Caused Permanent Destruction of Shareholder
Value
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a)
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The
Merrill Lynch transaction, even prior to the disclosure of 4th
quarter losses, was, by our calculation, dilutive from an earnings per
share basis as a result of the 1.4bn BAC shares issued to acquire Merrill
Lynch. Based on the number of shares issued, Merrill would need
to earn $9.7BN pretax to not be dilutive to E.P.S. In 2006,
Merrill earned $9.8BN pretax, including $7.2 BN in trading revenues, all
of which has subsequently been charged-off as
losses.
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b)
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Tangible
Book Value per share has fallen as a result of goodwill created by
overpriced acquisitions and poor capital management. Tangible
Book Value, excluding mortgage servicing rights fell from $11.38 per share
at 12/31/03 to $7.08 per share at 12/31/08, pro forma for the acquisition
of Merrill.
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