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« Continued investments in regulatory costs despite potential regulatory relief. On the topic of regulation, management noted that it is still too early to know what type of regulatory relief banks of USB’s size may receive so management has not slowed down any of its investments in regulatory costs. ¢ Long term 13.5- 16.5% ROE target unchanged. Despite the outlook for higher rates, management noted that it was not going to change the range at this point of time but noted that USB could reach the top end sooner than later if its outlook proves accurate. « Risk management compliance expenses sustaining at this level. Management noted that while compliance related expenses could trend lower following the new administration, it will continue to invest and the impact will likely not be meaningful. - Interms of innovation projects, 86% of those polled noted that it should invest In innovations projects that are self-funded. Davis noted that given the importance of innovation, it would not just self-fund those expenses and would look to spend money for long term benefits. In terms of its P2P initiative with Zelle, Davis was optimistic around its growth. - Interms of potential M&A, management noted that it would look for in market opportunities and double down where it has scale. Chart 45: What do you consider to be the most important catalyst for large-cap banks in 2017? 60% 50% 40% 30% 20% 10% 0% Rising interest | Revenue growth Further Stronger return of Less overhang rates that’s not interest realignment of capital to from regulatory rate driven cost structures shareholders and litigation challenges Source: BofA Merrill Lynch Global Research Bankof America iar Merrill Lynch 2016 Future of Financials Conference | 17 November 2016 31 HOUSE_OVERSIGHT_014345