EFTA01780900

From: Richard Kahn < Sent: Thursday, April 14, 2016 5:55 PM To: jeffrey E. Subject: Fwd: Bank of America: 1Q16 First Pass: Tight Expenses Drive an In-Line Quarter you own 7500 shares at 13.44 in gratitude morgan stanley =ccount stock now at 14.07 at 1:54pm Richard Kahn HBRK Associates Inc. Begin forwarded message: From: =/b>"Morgan Stanley" Subject: =/b>Bank of America: =Q16 First Pass: Tight Expenses Drive an In-Line Quarter Date: =/b>April 14, 2016 at 9:09:40 AM =DT To: =/b>< , Reply-To: =/b>< > Wealth management Subscription Notification: April 14 EFTA_R1_00099754 EFTA01780900 Bank of =merica: 1Q16 First Pass: Tight Expenses Drive an In-Line =uarter Betsy L. Graseck, CFA — =organ Stanley April 14, 2016 1:07 PM GMT 1Q16 Earnings: BAC reported 1Q16 EPS of =0.21. Operating EPS ex DVA of $0.20 vs. MS ests of $0.23 and consensus =f $0.21. Miss was entirely from higher FAS 91 non-cash mark to market, =iven the —50bps decline in the 10yr in 1Q16.Core expenses (ex =itigation, legacy asset servicing costs, seasonally elevated payroll =osts) declined $300M q/q to $12.58, well below consensus and even lower =han us. We have been pounding the table that BAC is an expense story =nd are routinely beaten back by comments that BAC needs to invest more =nd will never drop their improving efficiencies to the bottom line. =his is BAC's 4th straight quarter where core expenses are coming in =ignificantly below $138. Expect the stock will start to reflect this =xecution on expense managementStock likely trades up today on expense =anagement Our forward EPS likely flat given the in-line quarter =Positives: Core expenses of $12.58 vs. MSe $12.6BLAS costs down $70M =/q to $729M, in-line with our estimates.Mortgage production volumes of =16.48 vs. MSe $14.38. Equities down less than expected at 11% y/y vs. =Se -25%.... FICC in-line at -17% y/y vs. MSe of -15%Negatives: =IM of 2.05% missed MSe 2.14%, but entirely on the higher FAS 91 charge =f $1.2B vs. our $0.5B estimate.IB missed: down 23% y/y vs. MSe -14%, =CM down 46%, M&A down 19%, DCM was down 14%. Questions for the =all: Living Will response, LAS cost save target for 2016, path to 1% =OA, consumer spending/borrowing trends, competition from banks =artnering with marketplace lenders, strategy for real-time payments =launched in early March), CCAR reform, trajectory of incremental =uybacks in 1H16, relocation of Thong Nguyen to West Coast, NPR on =ingle-Counterparty Credit Limits.Conference Call: Today at 8:30am ET. =ial-in: Domestic: 877-200-4456. Conference ID: 79795. Click here =o see the full report. This alert is sent =rom: Andrew Atlas You received this because you asked =o be alerted to: BANK OF AMERICA CORPORATION Please contact your FA if you want to unsubscribe from the =lerts. Disclosures: Please see the full report for risks, disclosures and =ther important information. Important disclosures regarding the relationship between the companies =hat are referenced in Morgan Stanley research and Morgan Stanley Wealth =anagement research are available on the Morgan Stanley Wealth =anagement disclosure website at https://www.morganstanley.com/online/researchdisclosures. 2 EFTA_R1_00099755 EFTA01780901 Morgan Stanley Wealth Management Not Acting as Municipal =dvisor Morgan Stanley Wealth Management is not acting as a =unicipal advisor to any municipal entity or obligated person within the =eaning of Section 158 of the Securities Exchange Act (the "Municipal =dvisor Rule") and the opinions or views contained herein are not =ntended to be, and do not constitute, advice within the meaning of the =unicipal Advisor Rule. Copyright The copyright in materials provided by Morgan Stanley is =wned by Morgan Stanley & Co. LLC. Morgan Stanley Wealth Management =s the trade name of Morgan Stanley Smith Barney LLC, a registered =roker-dealer in the United States. © 2016 Morgan Stanley Smith =arney LIC. Member SIPC. .z. 3 EFTA_R1_00099756 EFTA01780902