1. FINANCIAL SECTOR Kaleigh Theurer

2. DEFINITION  Category of stocks containing firms that provide financial services to commercial and retail customers.  This sector includes  Banks  Investment funds  Insurance companies  Real estate

3. FACTS  Financial services perform best in low interest rate environments  Generate revenue from mortgages and loans, which gain value as interest rates drop  When the business cycle is in an upswing, the financial sector benefits from additional investments  Improved economy means more capital projects and increased personal investing  This leads to a larger number of loans

4. PAST PERFORMANCE

5. Stocks to watch Capital One Financial Berkshire Hathaway Lloyds Banking Group Aegon

6. CAPITAL ONE  Undervalued because loan growth in automotive and commercial lending is not being considered  High density markets like NYC and Washington DC  Firm’s credit quality is underappreciated  Non performing loans represents on 1.5% of total loans  Still a top 5 credit card issuer  Funding is not an issue  Completed $83 billion in online deposits from ING’s US operations (CapitalOne 360) in 2012  Increased liquidity