KEITH T. BANKS
President
U.S. Trust
Bank of America Private Wealth Management
(Photo by Grant Delin)

This year is off to a solid start for the financial markets, which have been responding to positive news on the economy. While this is encouraging, and it is true that the economy is moving forward in its repair process, we’re not expecting any market rallies to continue unimpeded this year, given ongoing political, policy and economic uncertainties. We believe we’ll gain greater clarity on the policy front this year, and election uncertainties are, of course, temporary, but the financial markets are likely to remain volatile for some time to come.

Bank of America continues to make steady progress in this uncertain environment. In the most recent quarter, the bank reported positive net income of $2 billion, compared with a net loss of $1.2 billion in the year-ago period. Full-year 2011 numbers tell a similarly encouraging story: Our net income, Tier 1 common equity ratio and other important measures of the firm’s financial health have improved substantially. In addition, last year the firm helped to support the economy by extending $557 billion in credit and raising $644 billion in capital on behalf of our clients.

Seizing opportunity in this challenging environment means responding to current market conditions while actively managing your investment portfolios and remaining focused on achieving your long-term goals. More specifically, we are working to achieve a more effective risk balance, making portfolios less sensitive to market swings while allowing cash flow and yield-oriented strategies to drive total return. We have adopted a more defensive tactical stance, emphasizing portfolio protection by removing market risk and lowering cyclical exposure when the markets are moving up. At the same time, we are prepared to use volatile market episodes to help improve portfolio yield through thoughtful rebalancing to more fundamental-driven strategies. From a long-term strategic standpoint, we are continuing to position portfolios to take advantage of opportunities related to global rebalancing.

At times like these, we work to ensure that we are providing you with our current thinking, analysis and recommendations about the events of the day via publications like Capital Acumen, webcasts, client calls with our experts, and one-on-one phone calls and meetings with advisors. The equally important flip side of communicating with you is keeping abreast of what you are thinking. (Please see “We’re Listening” for a discussion of client input and its impact on our strategic initiatives.) With this issue of Capital Acumen, we are introducing a new mailbox, capitalacumen@ustrust.com. Please let us know what’s on your mind and the topics you would like us to address in Capital Acumen. We welcome your insights and suggestions.

Keith T. Banks
President
U.S. Trust, Bank of America Private Wealth Management