11

Stock Presentation Stock Presentation

Financial SectorFinancial Sector

Roger ChanRoger Chan

Chris CurtinChris Curtin

Jack LuJack Lu

22

Sector AnalysisSector Analysis

Our RecommendationOur Recommendation: Maintain weighting : Maintain weighting (approximately 1.67% above S&P)(approximately 1.67% above S&P)

Class DecisionClass Decision: Reduce weighting to S&P : Reduce weighting to S&P (approximately 2% reduction) (approximately 2% reduction)

ReasoningReasoning: Fear of a sub-prime meltdown, : Fear of a sub-prime meltdown, an impending economic downturn, and an impending economic downturn, and over-exposure in the SIM portfolioover-exposure in the SIM portfolio

33

Current Sector WeightingCurrent Sector Weighting

Financial Sector as a part of the . . .Financial Sector as a part of the . . .

SIMSIM 21.52 %21.52 %

S&P 500S&P 500 19.64 %19.64 %

OverweightOverweight 1.88 % 1.88 %

as of 8/3/07as of 8/3/07

44

Current HoldingsCurrent Holdings Berkshire Hathaway (BRK.A)Berkshire Hathaway (BRK.A) 6.00 % 6.00 %

• Property and casualty insuranceProperty and casualty insurance Bank of America (BAC)Bank of America (BAC) 5.50 % 5.50 %

• Money center bankMoney center bank JP Morgan Chase (JPM)JP Morgan Chase (JPM) 4.73 % 4.73 %

• Money center bankMoney center bank Goldman Sachs (GS)Goldman Sachs (GS) 3.54 % 3.54 %

• Investment brokerageInvestment brokerage Citigroup (C)Citigroup (C) 1.75 % 1.75 %

• Money center bankMoney center bank

21.52 21.52 %%

55

RecommendationsRecommendations

Sell Sell allall JPM ~ 4.75 % JPM ~ 4.75 %• Weakest of the three money center banksWeakest of the three money center banks

Sell Sell somesome BAC ~ 2.00 % BAC ~ 2.00 %• Fairly valued, but more potential sub-prime riskFairly valued, but more potential sub-prime risk

Buy Buy moremore C ~ 1.75 % C ~ 1.75 %• Fairly valued, well positioned, strong stock in sectorFairly valued, well positioned, strong stock in sector

Buy Buy somesome SFI ~ 2.00 % SFI ~ 2.00 %• Not a MCB, undervalued, low sub-prime risk exposureNot a MCB, undervalued, low sub-prime risk exposure

Keep Keep all Brk-A & GSall Brk-A & GS ~ 9.9 % ~ 9.9 %

66

General StrategyGeneral Strategy Reduce Sector Weight by 2 %Reduce Sector Weight by 2 %

• As determined last presentationAs determined last presentation

1.1. Reduce Money Center Bank ExposureReduce Money Center Bank Exposure

• Three similar MCB’s, constituting 12 % of the SIMThree similar MCB’s, constituting 12 % of the SIM

2.2. Concentrate on Favorite MCB(s)Concentrate on Favorite MCB(s)

• At least one of the three has to be weakerAt least one of the three has to be weaker

3.3. Diversify within the SectorDiversify within the Sector

• Too much domestic MCB, little foreign banking, no REITToo much domestic MCB, little foreign banking, no REIT

4.4. Avoid Risks from Sub-Prime CrisisAvoid Risks from Sub-Prime Crisis

• Don’t sell just to buy back into the crisisDon’t sell just to buy back into the crisis

77

Current HoldingsCurrent Holdings Property and casualty insuranceProperty and casualty insurance 6.00 % 6.00 %

• Berkshire Hathaway (BRK.A)Berkshire Hathaway (BRK.A)

Money center banksMoney center banks 12.00 %12.00 %• Bank of America (BAC)Bank of America (BAC)• JP Morgan Chase (JPM)JP Morgan Chase (JPM)• Citigroup (C)Citigroup (C)

Investment brokerageInvestment brokerage 3.50 % 3.50 %• Goldman Sachs (GS)Goldman Sachs (GS)

21.50 %21.50 %

88

1. Reduce Money Center Bank Exposure1. Reduce Money Center Bank Exposure

Bank of America (BAC)Bank of America (BAC) 5.50 %5.50 %• Pros: Pros: size (#1 credit cards, #1 on-line banking)size (#1 credit cards, #1 on-line banking)• Cons: Cons: sub-prime, expansion to date via M&Asub-prime, expansion to date via M&A

JP Morgan Chase (JPM)JP Morgan Chase (JPM) 4.73 %4.73 %• Pros: Pros: credit cards, broad customer basecredit cards, broad customer base• Cons: Cons: sub-prime, inefficiency of M&Asub-prime, inefficiency of M&A

Citigroup (C)Citigroup (C) 1.75 %1.75 %• Pros: Pros: size, diversity, foreign exposuresize, diversity, foreign exposure• Cons: Cons: sub-prime, economy (investment banking)sub-prime, economy (investment banking)

99

Money Center BanksMoney Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est.)(est.)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

1010

Money Center BanksMoney Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est.)(est.)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

1111

Citigroup (C)Citigroup (C)Citigroup

59.56

53.27 52.31

47.2444.03 43.57

40.35

20.00

30.00

40.00

50.00

60.00

70.00

80.00

CAE DDM 200-D Current PV-08 PV-07 PV-08A

1212

Bank of America (BAC)Bank of America (BAC)Bank of America

58.47

50.4447.78 46.82 45.68

41.0739.15

20.00

30.00

40.00

50.00

60.00

70.00

80.00

CAE 200-D Current PV-07 PV-08 PV-08A DDM

1313

JP Morgan Chase (JPM)JP Morgan Chase (JPM)J P Morgan Chase

57.88

49.84

44.81 44.5942.56

35.16

24.72

20.00

30.00

40.00

50.00

60.00

70.00

80.00

CAE 200-D PV-07 Current PV-08 DDM PV-08A

1414

Money Center BanksMoney Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est)(est)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

1515

Money Center BanksMoney Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est.)(est.)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

1616

1. Reduce Money Center Bank Exposure1. Reduce Money Center Bank Exposure

So . . .So . . .

Reduce MCB’s from 12% to 7% . . . Reduce MCB’s from 12% to 7% . . .

OldOld ActionAction NewNewCC 1.75% + 1.75% = 1.75% + 1.75% = 3.5 %3.5 %

BACBAC 5.50% - 2.00% =5.50% - 2.00% = 3.5 %3.5 %

JPMJPM 4.75%4.75% - 4.75% = - 4.75% = 0 % 0 %

Total 12.0 %Total 12.0 % 7.0 %7.0 %

1717

General StrategyGeneral Strategy Reduce Sector Weight by 2 %Reduce Sector Weight by 2 %

• As determined last presentationAs determined last presentation

Reduce Money Center Bank ExposureReduce Money Center Bank Exposure

• Three similar MCB’s facing, constituting 12 % of the SIMThree similar MCB’s facing, constituting 12 % of the SIM

2.2. Concentrate on Favorite MCB(s)Concentrate on Favorite MCB(s)

• At least one of the three has to be weakerAt least one of the three has to be weaker

3.3. Diversify within the SectorDiversify within the Sector

• Too much domestic MCB, little foreign banking, no REITToo much domestic MCB, little foreign banking, no REIT

4.4. Avoid Risks from Sub-Prime CrisisAvoid Risks from Sub-Prime Crisis

• Don’t sell just to buy back into the crisisDon’t sell just to buy back into the crisis

1818

2. Concentrate on Favorite MCB(s)2. Concentrate on Favorite MCB(s)

Eliminate more JPM than necessary to Eliminate more JPM than necessary to reduce 2.0% and allow room to diversifyreduce 2.0% and allow room to diversify

Add to C, as the favored MCBAdd to C, as the favored MCB

Reduce BAC, to put in line with CReduce BAC, to put in line with C

1919

General StrategyGeneral Strategy Reduce Sector Weight by 2 %Reduce Sector Weight by 2 %

• As determined last presentationAs determined last presentation

Reduce Money Center Bank ExposureReduce Money Center Bank Exposure

• Three similar MCB’s facing, constituting 12 % of the SIMThree similar MCB’s facing, constituting 12 % of the SIM

Concentrate on Favorite MCB(s)Concentrate on Favorite MCB(s)

• At least one of the three has to be weakerAt least one of the three has to be weaker

3.3. Diversify within the SectorDiversify within the Sector

• Too much domestic MCB, little foreign banking, no REITToo much domestic MCB, little foreign banking, no REIT

4.4. Avoid Risks from Sub-Prime CrisisAvoid Risks from Sub-Prime Crisis

• Don’t sell just to buy back into the crisisDon’t sell just to buy back into the crisis

2020

3. Diversify within the Sector3. Diversify within the Sector

Add 2.0% = iStar Financial, Inc. (SFI)Add 2.0% = iStar Financial, Inc. (SFI)• Primary business is lending and corporate tenant leasing Primary business is lending and corporate tenant leasing • Web-site: Web-site: http://www.istarfinancial.com/home.htmlhttp://www.istarfinancial.com/home.html• Part REIT and part financial servicesPart REIT and part financial services• Business is high-end commercial real estate financingBusiness is high-end commercial real estate financing• But, it pays dividends like a REIT (i.e., taxed like a REIT)But, it pays dividends like a REIT (i.e., taxed like a REIT)

• Market Cap: Market Cap: $4.45 B (mid-cap; $1 - $10 B)$4.45 B (mid-cap; $1 - $10 B)• Shares outstanding: Shares outstanding: 128.2 M128.2 M• Average volume: Average volume: 1.2 M/day 1.2 M/day

• Beaten down by the sub-prime crisis, even though its not a Beaten down by the sub-prime crisis, even though its not a sub-prime player and has little sub-prime exposuresub-prime player and has little sub-prime exposure

2121

Compare to Money Center BanksCompare to Money Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est.)(est.)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

SFISFI $34.74$34.74 $34.74 $34.74 – –

$83.24$83.24

NANA 6 % 6 % (4%)(4%)

8.87 %8.87 % 76.1 %76.1 % 6.67%6.67% 1515

2222

iStar Financial, Inc. (SFI)iStar Financial, Inc. (SFI)J P Mor gan Chase

83.24

46.63

41.59 41.48 40.96

34.74 34.74

20.00

30.00

40.00

50.00

60.00

70.00

80.00

DDM 200-D P V-08A P V-07 P V-08 CAE Cur r ent

2323

Money Center BanksMoney Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est.)(est.)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

SFISFI $34.74$34.74 $34.74 $34.74 – –

$83.24$83.24

NANA 6 % 6 % (4%)(4%)

8.87 %8.87 % 76.1 %76.1 % 6.67%6.67% 1515

2424

Money Center BanksMoney Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est.)(est.)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

SFISFI $34.74$34.74 $34.74 $34.74 – –

$83.24$83.24

NANA 6 % 6 % (4%)(4%)

8.87 %8.87 % 76.1 %76.1 % 6.67%6.67% 1515

2525

Money Center BanksMoney Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est.)(est.)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

SFISFI $34.74$34.74 $34.74 $34.74 – –

$83.24$83.24

NANA 6 % 6 % (4%)(4%)

8.87 %8.87 % 76.1 %76.1 % 6.67%6.67% 1515

2626

Money Center BanksMoney Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est.)(est.)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

SFISFI $34.74$34.74 $34.74 $34.74 – –

$83.24$83.24

NANA 6 % 6 % (4%)(4%)

8.87 %8.87 % 76.1 %76.1 % 6.67%6.67% 1515

2727

Money Center BanksMoney Center BanksStockStock Current Current

Price Price (8/3/07)(8/3/07)

Price-Price-target target RangeRange

U/D U/D RatioRatio

Loan Loan Loss, Loss, as a % as a % of EBTof EBT

Div. Div. YieldYield

Inst. Inst. OwnerOwner

LT LT GrowthGrowth (est.)(est.)

P/EP/E

CC $47.24$47.24 $40.35 $40.35 - -

$59.56$59.56

1.81.8 20 % 20 % (28%)(28%)

4.15 %4.15 % 65.4 %65.4 % 6.69%6.69% 1010

BACBAC $47.78$47.78 $39.15 $39.15 - -

$58.47$58.47

1.21.2 16 % 16 % (26%)(26%)

4.44 %4.44 % 60.3 %60.3 % 4.99%4.99% 1010

JPMJPM $44.59$44.59 $24.72 $24.72 - -

$57.88$57.88

0.70.7 17 % 17 % (59%)(59%)

3.05 %3.05 % 68.8 %68.8 % 6.51%6.51% 1010

SFISFI $34.74$34.74 $34.74 $34.74 – –

$83.24$83.24

NANA 6 % 6 % (4%)(4%)

8.87 %8.87 % 76.1 %76.1 % 6.67%6.67% 1515

2828

SFI’s StorySFI’s StoryMarket Psychology:Market Psychology:

Price has been falling in concert with sub-Price has been falling in concert with sub-prime residential lenders, due to the prime residential lenders, due to the overall sub-prime risk.overall sub-prime risk.

Fell further when REIT sector was Fell further when REIT sector was downgraded in June, on fears of a slowing downgraded in June, on fears of a slowing economy, increasing interest rates, lack economy, increasing interest rates, lack of investor confidence, and prospect of of investor confidence, and prospect of decreasing dividend yields.decreasing dividend yields.

2929

S&P 500 Index (3-year)S&P 500 Index (3-year)

3030

Financial Sector (3-year)Financial Sector (3-year)

3131

MCB’s = e.g., JPM (3-year)MCB’s = e.g., JPM (3-year)

3232

iStar Financial (3-year)iStar Financial (3-year)

3333

SFI’s StorySFI’s StoryMarket Psychology:Market Psychology:

Price has been falling in concert with sub-Price has been falling in concert with sub-prime residential lenders, due to the prime residential lenders, due to the overall sub-prime risk.overall sub-prime risk.

Fell further when REIT sector was Fell further when REIT sector was downgraded in June, on fears of downgraded in June, on fears of 1. a slowing economy, 1. a slowing economy, 2. increasing interest rates, 2. increasing interest rates, 3. lack of investor confidence, and3. lack of investor confidence, and4. prospect of decreasing dividend yields.4. prospect of decreasing dividend yields.

3434

DeeboDeebo

3535

iStar Financial (3-year)iStar Financial (3-year)

3636

SFI’s StorySFI’s Story

““iStar Financial is one of those guilt-by-iStar Financial is one of those guilt-by-association companies.”association companies.”

““[T]he company has very different risk [T]he company has very different risk exposures from those of subprime exposures from those of subprime residential lenders such as residential lenders such as CountrywideCountrywide and and American Home MortgageAmerican Home Mortgage.”.”

-- Emil Lee, TheMotleyFool.com-- Emil Lee, TheMotleyFool.com (July 31, (July 31,

2007)2007)

3737

SFI’s StorySFI’s Story More conservative lender, and uses less leverageMore conservative lender, and uses less leverage

D/ED/E iStar (SFI)iStar (SFI) 2.93 2.93

Countywide (CFC)Countywide (CFC) 5.40 5.40

American Home Mort. (AHM)American Home Mort. (AHM) 8.96 8.96

Annaly Capital Management (NLY) Annaly Capital Management (NLY) 11.2411.24

Redwood Trust Inc. (RWT)Redwood Trust Inc. (RWT) 12.9112.91

Has not increased reserve for potential loan Has not increased reserve for potential loan losses this year (still anticipating 6%)losses this year (still anticipating 6%)

3838

SFI’s StorySFI’s Story May 22, 2007May 22, 2007 Acquired Acquired Fremont GeneralFremont General’s ’s

commercial real estate division for $1.9 B commercial real estate division for $1.9 B (immediately changed compensation structure (immediately changed compensation structure from volume-based to profitability-based)from volume-based to profitability-based)

July 2, 2007July 2, 2007 Announced an increased dividend Announced an increased dividend = 5% increase on dividend 5 years in a row= 5% increase on dividend 5 years in a row

July 31, 2007July 31, 2007 increased 2007 earnings increased 2007 earnings expectations from $2.74 to $2.90 per shareexpectations from $2.74 to $2.90 per share

August 1, 2007August 1, 2007 Reactivated stock repurchase Reactivated stock repurchase program, up to 2.7 M shares (open market)program, up to 2.7 M shares (open market)

Current PriceCurrent Price $18.31 (35%) off 52-week high $18.31 (35%) off 52-week high

3939

General StrategyGeneral Strategy Reduce Sector Weight by 2 %Reduce Sector Weight by 2 %

• As determined last presentationAs determined last presentation

Reduce Money Center Bank ExposureReduce Money Center Bank Exposure

• Three similar MCB’s facing, constituting 12 % of the SIMThree similar MCB’s facing, constituting 12 % of the SIM

Concentrate on Favorite MCB(s)Concentrate on Favorite MCB(s)

• At least one of the three has to be weakerAt least one of the three has to be weaker

Diversify within the SectorDiversify within the Sector

• Too much domestic MCB, little foreign banking, no REITToo much domestic MCB, little foreign banking, no REIT

Avoid Risks from Sub-Prime CrisisAvoid Risks from Sub-Prime Crisis

• Don’t sell just to buy back into the crisisDon’t sell just to buy back into the crisis

4040

RecommendationsRecommendations

Sell Sell allall JPM ~ 4.75 % JPM ~ 4.75 %• Weakest of the three money center banksWeakest of the three money center banks

Sell Sell somesome BAC ~ 2.00 % BAC ~ 2.00 %• Fairly valued, but more potential sub-prime riskFairly valued, but more potential sub-prime risk

Buy Buy moremore C ~ 1.75 % C ~ 1.75 %• Fairly valued, well positioned, strong stock in sectorFairly valued, well positioned, strong stock in sector

Buy Buy somesome SFI ~ 2.00 % SFI ~ 2.00 %• Not a MCB, undervalued, low sub-prime risk exposureNot a MCB, undervalued, low sub-prime risk exposure

4141

Proposed HoldingsProposed Holdings OldOld NewNew

Berkshire Hathaway (BRK.A)Berkshire Hathaway (BRK.A) 6.00%6.00% 6.00% 6.00%• Property and casualty insuranceProperty and casualty insurance

Bank of America (BAC)Bank of America (BAC) 5.50%5.50% 3.50% 3.50%• Money center bankMoney center bank

JP Morgan Chase (JPM)JP Morgan Chase (JPM) 4.75 % 0%4.75 % 0%• Money center bankMoney center bank

Goldman Sachs (GS)Goldman Sachs (GS) 3.50 % 3.50%3.50 % 3.50%• Investment brokerageInvestment brokerage

Citigroup (C)Citigroup (C) 1.75 % 3.50%1.75 % 3.50%• Money center bankMoney center bank

iStar Financial, Inc. (SFI)iStar Financial, Inc. (SFI) 0 % 0 % 2.00%2.00%• Credit servicesCredit services

21.50 % 21.50 % 19.50%19.50%

4242

QuestionsQuestions

4343

Bank of AmericaBank of America

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

BANK OF AMERICA CORPORATION (BAC)PRICE 47.00 DATE 08-03-2007PRICE 47.00 DATE 08-03-2007StockVal®

1818

2020

2222

2424

2626

2929

3232

3535

3838

4242

4747

5151

56

62

68

The Ohio State UniversityFisher College of Business

Price Change % Diff SP5

1-Day -1.63 1.03

1-Week -0.86 0.91

4-Weeks -4.37 1.99

QTD -3.87 0.81

YTD -11.97 -13.01

2006 15.69 2.07

2005 -1.79 -4.79

2004 16.85 7.85 FYE Dec 2006 EPS 4.71

First Call Data 2007 2008 2009

Mean Estimate 4.91 5.27 5.88Change +4% +7% +12%

High 5.04 5.60 6.03

Low 4.80 5.00 5.80

Total 17 18 3

# Up 15 2 1

# Down 3 6 2

House Estimate

PE Ratio 9.6 8.9 8.0

Revenues ($Mil)

Market Value ($Mil) 208,536

Shares Out (Mil) 4,436.9

Volume 60-Day Avg (Th) 21,341

Volume 60-Day Avg ($M) 1003.0

Dividend Estimate 2.56

Payout Ratio 52%

Retention Rate 48%

Dividend Yield 5.45%

Data Page # 1

4444

4545

CitigroupCitigroup

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

CITIGROUP INCORPORATED (C)PRICE 45.72 DATE 08-03-2007PRICE 45.72 DATE 08-03-2007StockVal®

1313

1515

1717

1919

22222424

28283131

3636

4040

4646

5252

59

67

76

The Ohio State UniversityFisher College of Business

Price Change % Diff SP5

1-Day -3.22 -0.56

1-Week -2.66 -0.89

4-Weeks -11.57 -5.20

QTD -10.86 -6.18

YTD -17.92 -18.96

2006 14.77 1.15

2005 0.73 -2.27

2004 -0.74 -9.74 FYE Dec 2006 EPS 4.14

First Call Data 2007 2008 2009

Mean Estimate 4.57 5.09 5.65Change +10% +12% +11%

High 4.66 5.26 6.01

Low 4.45 4.82 5.35

Total 15 20 4

# Up 15 7 0

# Down 1 1 1

House Estimate

PE Ratio 10.0 9.0 8.1

Revenues ($Mil)

Market Value ($Mil) 227,439

Shares Out (Mil) 4,974.6

Volume 60-Day Avg (Th) 27,988

Volume 60-Day Avg ($M) 1279.6

Dividend Estimate 2.16

Payout Ratio 47%

Retention Rate 53%

Dividend Yield 4.72%

Data Page # 1

4646

4747

JP Morgan ChaseJP Morgan Chase

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

JP MORGAN CHASE & COMPANY (JPM)PRICE 43.65 DATE 08-03-2007PRICE 43.65 DATE 08-03-2007StockVal®

1414

1616

1818

21212323

2727

3030

3434

3939

4545

5151

5858

66

75

85

The Ohio State UniversityFisher College of Business

Price Change % Diff SP5

1-Day -2.11 0.55

1-Week -1.31 0.46

4-Weeks -10.86 -4.50

QTD -9.91 -5.23

YTD -9.63 -10.67

2006 21.69 8.07

2005 1.74 -1.26

2004 6.21 -2.79 FYE Dec 2006 EPS 3.81

First Call Data 2007 2008 2009

Mean Estimate 4.70 4.91 5.40Change +23% +4% +10%

High 4.80 5.25 5.79

Low 4.45 4.55 5.12

Total 16 20 5

# Up 15 12 3

# Down 2 4 0

House Estimate

PE Ratio 9.3 8.9 8.1

Revenues ($Mil)

Market Value ($Mil) 148,345

Shares Out (Mil) 3,398.5

Volume 60-Day Avg (Th) 18,607

Volume 60-Day Avg ($M) 812.2

Dividend Estimate 1.52

Payout Ratio 32%

Retention Rate 68%

Dividend Yield 3.48%

Data Page # 1

4848

4949

iStar FinancialiStar Financial

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

ISTAR FINANCIAL INCORPORATED (SFI)PRICE 34.74 DATE 08-03-2007PRICE 34.74 DATE 08-03-2007StockVal®

1010

1212

14141616

2020

2424

28283232

3838

4646

5454

6464

76

92

108

The Ohio State UniversityFisher College of Business

Price Change % Diff SP5

1-Day -4.46 -1.80

1-Week -7.26 -5.49

4-Weeks -24.71 -18.34

QTD -21.63 -16.96

YTD -27.35 -28.39

2006 34.14 20.52

2005 -21.23 -24.23

2004 16.35 7.36 FYE Dec 2006 EPS 2.64

First Call Data 2007 2008 2009

Mean Estimate 4.09 4.51 4.83Change +55% +10% +7%

High 4.20 4.75 5.05

Low 3.91 4.30 4.50

Total 10 10 3

# Up 8 5 2

# Down 0 1 0

House Estimate

PE Ratio 8.5 7.7 7.2

Revenues ($Mil) 1,129

Market Value ($Mil) 4,453

Shares Out (Mil) 128.2

Volume 60-Day Avg (Th) 1,271

Volume 60-Day Avg ($M) 44.2

Dividend Estimate 3.30

Payout Ratio 81%

Retention Rate 19%

Dividend Yield 9.50%

Data Page # 1

5050

5151

Berkshire Hathaway (BRK-A)Berkshire Hathaway (BRK-A)Hold: Upside potential – 4.08% ($114,382/share)Hold: Upside potential – 4.08% ($114,382/share)

Insurance Outlook in 2007Insurance Outlook in 2007 Slower premium growthSlower premium growth Weak pricingWeak pricing Underwriting becomes less profitableUnderwriting becomes less profitable No exposure to subprime mortgageNo exposure to subprime mortgage

Berkshire’s Source of growthBerkshire’s Source of growth Non-insurance businessNon-insurance business Investment incomeInvestment income

5252

Goldman Sachs (GS)Goldman Sachs (GS)Hold: Realize a significant loss (21%) if sell GS nowHold: Realize a significant loss (21%) if sell GS now

Stock is undervaluedStock is undervalued DCFDCF ComparablesComparables Analyst ReportAnalyst Report

Positive Economic outlook in 2008Positive Economic outlook in 2008

GS will recover from recent stock slumpGS will recover from recent stock slump Well diversified businessWell diversified business

5353

StockVal®GOLDMAN SACHS GROUP INC (GS) Price 179.681997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

PRICE / SALES RELATIVE TO S&P FINANCIALS SECTOR COMPOSITE ADJ (SP-40) M-Wtd0.04

0.05

0.06

0.07

0.08

0.09

0.10

0.11

0.12

0.13

HI 0.12 LO 0.04 ME 0.08 CU 0.04

05-07-199908-03-2007

PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P FINANCIALS SECTOR COMPOSITE ADJ (SP-40) M-Wtd0.4

0.6

0.8

1.0

1.2

1.4

1.6

HI 1.55 LO 0.48 ME 0.86 CU 0.81

05-07-199908-03-2007

5454

Goldman Sachs (GS)Goldman Sachs (GS)StockVal®GOLDMAN SACHS GROUP INC (GS) Price 179.68

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

PRICE / SALES RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

HI 1.40 LO 0.55 ME 0.95 CU 0.77

05-07-199908-03-2007

PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

HI 1.00 LO 0.33 ME 0.63 CU 0.58

05-07-199908-03-2007

5555

5656

S&P 500 Index (3-year)S&P 500 Index (3-year)

5757

Citigroup (3-year)Citigroup (3-year)

5858

Bank of America (3-year)Bank of America (3-year)

5959

JP Morgan Chase (3-year)JP Morgan Chase (3-year)

6060

iStar Financial (3-year)iStar Financial (3-year)

6161

Berkshire Hathaway (3-year)Berkshire Hathaway (3-year)

6262

Goldman Sachs (3-year)Goldman Sachs (3-year)

6363

Countrywide (3-year)Countrywide (3-year)