Goldman Sachs (GS)

SYM/EXCH

Decision Making Just Got More Difficult

Rating Target Price Normalized Earnings
Current
Sell $120.00 $21.00

Wednesday, June 08, 2011 Richard X. Bove 813.909.1111

rbove@rochdalesecurities.com

Previous
Sell $120.00 $21.00

Highlights
It is becoming increasingly apparent that a terrible wrong may have been done to Goldman Sachs. Evidence is now mounting that the company did not have $00.00 short position ate crucial time under study and that the a net Senate Committee may have misread the numbers. It is also becoming apparent that Mr. Blankfein did not misrepresent to the Senate Committee because Goldman was not net short at the time the firm was accused of misrepresenting its position. However, it is also becoming apparent that the company is facing a relatively bleak second quarter and that its secular outlook has been weakened. The earnings estimates for the company have been reduced as follows: a) the 2011 estimate has been cut from $13.66 per share to $11.75 per share; b) the 2012 00.0% has been reduced to $17.72 per share from $18.07 per estimate share; and c) the 2013 estimate has been reduced to $19.76 per share from $19.99 per share. How does one weigh these two conflicting pieces of information? It now looks likely that the entities investigating the company may resolve their searches without charging the company of any misdeeds. This is likely to sway investor sentiment toward the firm. On the other hand it also seems likely that the earnings estimates being made for this company for the second quarter and year are much too high. Volumes on the major exchanges have been quite weak all this quarter. The 00.0% data from the Federal Reserve of New York indicates that while trading in corporates has held up, activity in the rates market has plummeted, and the MBS market continues to weaken. Commodity prices have fallen and activity has declined. Commodity option trading on the New York Board of Trade has plummeted since March. Volatility in the currency markets has also come down. Trading in currency futures has plummeted. On a longer term basis, the industry is now feeling the pressure from a weakening economy and increased government pressure. It is evident that there will be a systemically important financial institution (SIFI) buffer. Plus, there are more rules coming that will crimp trading activity. M&A activity could also slow if the economic outlook does not improve. Companies are likely to become cautious once again. Thus, as Goldman emerges from its government problems, it now faces economic issues that may cause difficulty with the stock. Any decision on the rating will be deferred until other analysts adjust their estimates on the company and the political entities begin withdrawing their attacks.

Stock Data (03/11) Current Price $131.59 $129.50 $175.34 52 Week Low/High Est. 2011 Rev Per Share/P:RPS $69.06 1.91x Est. 2011 EPS/PE $11.75 11.2x $128.32 1.03x Book Value/Price:Book Tangible BV/Price:TBV $118.63 1.11x Dividend/Yield $1.40 1.1% Shares Out/Mkt. Cap (mil) 583 $76,717 Income Statement (mil)/ Percent of Revenue (03/11) Investment Banking $1,269 10.7% Principal Transactions $2,612 22.0% Market Making $4,462 37.5% $1,019 8.6% Commissions & Fees Investment Management $1,174 9.9% Net Interest Income $1,358 11.4% $11,894 100.0% Operating Revenues Personnel Costs $5,233 44.0% All Other Expenses $2,621 22.0% $4,040 34.0% Pretax Income Balance Sheet (mil)/Percent of Assets (03/11) $42,683 4.6% Cash Segregated cash & securities $53,512 5.7% $162,094 17.4% Fed Funds & Repos $184,217 19.7% Securities Borrowed Receivables $87,619 9.4% Trading assets $374,806 40.2% $28,358 3.1% Other Assets $933,289 100.0% Short-Term Debt $53,746 5.8% $38,727 4.1% Deposits Trading $150,998 16.2% Repos $165,475 17.7% $49,136 5.3% Other Securities
Payables Other Liabilities Long Term Debt Preferred Stock Common Equity Est. Tangible Common Equity $193,396 $35,549 $173,793 $3,100 $69,369 $64,131 20.7% 3.8% 18.6% 0.3% 7.4% 6.9%

3-Year RPS CAGR

3-Year EPS CAGR

Key Ratios (03/11)

(11.4%) (19.4%) 12.8% 15.8% 0.29%

Note: The tables in this report have been prepared by Rochdale Securities from sources believed to be accurate. However, accuracy cannot be guaranteed. Mar Jun Sep Dec Year Previous Consensus 2010 $5.59 $0.78 $2.98 $3.79 $13.18 $13.18 $13.18 10.0x 2011 $1.56 $2.84 $3.39 $3.96 $11.75 $13.66 $14.64 P/E Multiple

2012 $4.32 $4.57 $4.34 $4.49 $17.72 $18.07 $19.17 7.4x

2013 $4.84 $4.97 $4.90 $5.06 $19.76 $19.99 $21.36 6.7x

Tier One Common

Return on Equity Return on Assets

Source: Trade Station

11.2x

2011 Rochdale Securities LLC. All rights reserved. PLEASE SEE IMPORTANT DISCLOSURE AND ANALYST CERTIFICATION LOCATED AT THE END OF THIS REPORT.

Wednesday, June 08, 2011

Rochdale Securities LLC 750 E. Main St., 7th Floor Stamford, CT 06902 Main 203.274.9100

Management Dan Crowley President djc@rochdalesecurities.com 203.274.9101 Kevin Cassidy Senior Vice President Chief Operating Officer kjc@rochdalesecurities.com 203.274.9116 Trading Kris Talgo Senior Vice President Trading Co-Head klt@rochdalesecurities.com 203.274.9125 Merger Arbitrage and Special Situations Barry D. Kaplan Merger Arbitrage and Special Situations bdk@rochdalesecurities.com 203.274.9121 Hal Tunick Senior Vice President Trading Co-Head ht@rochdalesecurities.com 203.274.9124

Financial Analyst Richard X. Bove Vice President Equity Research Financial Sector rbove@rochdalesecurities.com 813.909.1111 Institutional Sales Keith Arnott jka@rochdalesecurities.com 732.758.6981 Patrick Burke prb@rochdalesecurities.com 203.274.9127 Niall Morrissey nmm@rochdalesecurities.com 203.274.9130 Hal Tunick ht@rochdalesecurities.com 203.274.9124 Trey Bauer tbauer@rochdalesecurities.com 203.274.9137 Pete Doehla pkd@rochdalesecurities.com 203.274.9128 Richie Oddo ro@rochdalesecurities.com 732.758.6988 Jeff Wicker jdw@rochdalesecurities.com 925.253.1030

Richard Bennett rbw@rochdalesecurities.com 732.758.6982 Allen Jordan anj@rochdalesecurities.com 203.274.9120 John Ratkoski jratkoski@rochdalesecurities.com 732.758.6986

Joseph Bove jab@rochdalesecurities.com 813.963.2999 David Miller dmiller@rochdalesecurities.com 203.274.9131 Kristen Talgo klt@rochdalesecurities.com 203.274.9125

2011 Rochdale Securities LLC. All rights reserved. PLEASE SEE IMPORTANT DISCLOSURE AND ANALYST CERTIFICATION LOCATED AT THE END OF THIS REPORT.

Wednesday, June 08, 2011

ROCHDALE SECURITIES - DISCLOSURE INFORMATION Rochdale Securities LLC ("Rochdale") is an institutional brokerage firm that does not make a market in equity securities and does not engage in investment banking. Rochdale and its affiliates, including its principals, may own securities of the companies which are subject of this report but do not own 1% or more of any class of common equity securities of any subject company. The information and opinions presented in this report are provided for informational purposes only and are not to be used or considered as an offer or solicitation of an offer to buy or sell securities or other financial instruments. Rochdale has not taken any steps to ensure that the securities referred to in this report are suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about any such investment. Information and opinions presented in this report have been obtained or derived from sources believed by Rochdale to be reliable, but Rochdale makes no representation as to their accuracy, timeliness or completeness. Rochdale accepts no liability for loss arising from the use of the information presented in this report. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information and opinions contained in this report reflect a judgment at its original date of publication by Rochdale and are subject to change without notice. Rochdale may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views and analytical methods of the analysts who prepared them and Rochdale is under no obligation to insure that such other reports are brought to the attention of any recipient of this report. This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Rochdale to any registration or licensing requirement within such jurisdiction. All material presented in this report is the property of Rochdale and is under copyright to Rochdale. This report may not be reproduced, distributed or published by any person for any purpose without the prior express written consent of Rochdale. RR RATINGS DISTRIBUTION RATINGS FOR STOCKS BUY 23 HOLD 48 Buy Company has demonstrated that it is a value creating concern; the SELL 29 return on capital (as adjusted) exceeds its cost of capital. Stock is currently trading in a range that does not exceed its intrinsic value. Stock ANALYST CERTIFICATION is expected to out-perform the market over the next twelve months. I do not hold any securities of the company covered by this report. Hold/Neutral Company either is not creating value (i.e., its costs exceeds its return on capital) or it is trading at a price equal to or in excess of its I certify that with respect to each security or issuer that I covered in this intrinsic value. Expectation is at best stock will perform in-line with market. report; (1) all of the views expressed accurately reflect my personal views If not currently held, stock should be avoided. about those securities or issuers; and (2) no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations Sell Company's cost of capital exceeds its return on capital; and the or views expressed by me in this research report. company has no intrinsic value or is trading at a significant premium to its intrinsic value. Expect stock to under-perform the market over next twelve -- Richard X. Bove months.

HISTORICAL RATINGS

PRICE
$250.00 $200.00 $150.00 $100.00 $50.00 $0.00 03/24/2009 04/13/2009 04/14/2009 06/02/2009 07/07/2009

TARGET

07/28/2009

08/19/2009

10/15/2009

11/11/2009

12/21/2009

02/05/2010

03/02/2010

03/30/2010

04/16/2010

04/24/2010

06/04/2010

07/18/2010

07/29/2010

08/20/2010

09/08/2010

09/22/2010

12/20/2010

11/27/2009

05/11/2010

11/15/2010

01/18/2011

02/09/2011

03/16/2011

03/25/2011

04/19/2011

05/12/2011

05/24/2011

06/08/2011

DATE

RATING N N N N B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B N N S S S S S

2011 Rochdale Securities LLC. All rights reserved. PLEASE SEE IMPORTANT DISCLOSURE AND ANALYST CERTIFICATION LOCATED AT THE END OF THIS REPORT.