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Unauthorized redistribution of this report is prohibited. This report is intended for amanda.ens@baml.com 2016 Future of Financials Conference Management and client bullishness implies further upside Price Objective Change Conference tone bullish into 2017 We recently hosted over 90 public and private companies and 700 attendees at our Future of Financials conference, where investor attendance was up an impressive 66% YoY. The tone from management and investors was uniformly bullish, with more generalists attending than we have seen in previous years. Revenue & regulatory upside + positioning = raising POs We are raising our price objectives across most of our names. Three primary reasons why we think there is upside remaining after the recent rally: 1) an improved outlook on both activity levels and interest rates, driving revenue upside; 2) potentially lower regulatory burden, particularly as new supervisory leadership can come with the new administration; and 3) relatively lighter positioning in US financials vs. other sectors. Full house at innovation-focused panels New this year, we hosted expert panels on the evolution of clearing, fixed income market structure, equity market structure, and payments, and how innovation in blockchain, big data, and robo advisory can change the game. Strong panel attendance suggested high interest in these themes, and polling feedback suggests shareholders want banks to make investment spend in innovation a priority -- so long as it is self funded with savings found elsewhere. Banks: Most constructive we've heard in years We are raising our POs for our banks by c11% (see Table 1 page 63). When asked if the election results changed 2017 outlooks, all banks were more enthusiastic about growth. Echoing sentiment from our panel on regulation and M&A, banks were upbeat on the CCAR process potentially evolving post-election. Our top picks out of the conference: WFC (sentiment over retail sales practices clouding EPS sensitivity to improving macro}, C (solid momentum on revenues and capital return), IBKC (moving closer to strategic targets), and EWBC (sentiment post-election appears constructive on regulatory relief). Brokers, Alternatives, and Asset Managers The sentiment around the capital market sector was mostly favorable post the election outcome, given the potential for de-regulation, pro-growth, rising rates, lower tax rates, and increasing activity levels. For the brokers, given mostly favorable 4Q activity trends (more so for trading vs. banking), 1H17 seasonality with easy comps, and potential for de-regulation and lower taxes — we like the outlook, particularly for GS. For the asset managers, despite the move higher post the election on a potential DOL delay/modification and lower tax rates, most expect the DOL to continue in some form and the core trends remain challenging — we remain cautious. For the alternative managers, while we continue to view the structural growth as attractive and a lower corp tax rate could potentially increase the odds of a transition to a C-corp , given the potential for a higher carry tax, rising rates, and de-regulation of banks potentially moderating some of the newer growth areas, we view the outlook as more balanced. Specialty / Consumer finance Companies were generally bullish on the US consumer heading into 2017. AXP presented a fairly upbeat outlook on billings, loan and revenue growth, while cautioning that Discount rate pressures and FX headwinds could impact near-term results. The private tech based lenders were cautiously optimistic that hiccups from earlier this year were behind the sector, while the private payments companies stressed the importance of partnering with incumbent leaders and the need to maintain safety standards. BofA Merrill Lynch does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 78 to 81. Analyst Certification on page 75. Price Objective Basis/Risk on page 64. 11687665 Timestamp: 17 November 2016 06:24AM EST Bankof America Merrill Lynch Equity | 17 November 2016 Corrected United States Banks US Financials MLPF&S Erika Najarian Research Analyst MLPF&S +1 646 855 1584 erika.najarian@baml.com Michael Carrier, CFA Research Analyst MLPF&S +1 646 855 5004 michael.carrier@baml.com Ebrahim H. Poonawala Research Analyst MLPF&S +1 646 743 0490 ebrahim.poonawala@baml.com Kenneth Bruce Research Analyst MLPF&S +1 415 676 3545 kenneth.bruce@baml.com See Team Page for Full List of Contributors HOUSE_OVERSIGHT_014315