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've seen in previous years. When asked how they would describe their portfolio positioning in financial stocks, 60% of the investors polled noted that they are either slightly overweight or very overweight the sector (see Chart 1). Chart 1: How would you describe your portfolio positioning in financial stocks, excluding insurance and REITs? 40% 37% 35% 30% 25% 23% 20% ° sera 15% 15% 9% 10% 5% 0% Very overweight Slightly overweight Neutral Slightly Very underweight underweight Source: BofA Merrill Lynch Global Research 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 its self funded with savings found elsewhere. 68% of those polled across multiple company presentations believed that institutions should invest in innovation projects but be mindful of self-funding (see Chart 2). Chart 2: Chart 2: As a shareholder, what statement most closely aligns with your view on how traditional financial institutions should allocate investment spending on innovation? 80% 68% 70% ° 60% 50% 40% te} 30% tei 20% te} 10% di 0% Investment spending on Given the revenue Institutions should focus on innovation should be top ~— environment, institutions should improving the bottom line and priority invest in innovation projects but delay innovation projects be mindful of self-funding Source: BofA Merrill Lynch Global Research 2 2016 Future of