Slide 1: First Quarter 2008 Review
First Quarter 2008 Review April 17, 2008 Speakers: Henry Meyer Jeff Weeden
Slide 2: Forward-Looking Statement Disclosure
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 FORWARD-LOOKING STATEMENT DISCLOSURE This presentation contains forward-looking statements, including statements about our financial condition, results of operations, earnings outlook, asset quality trends and profitability. Forward- looking statement
Slide 3: Strategic Update
Strategic Update Executing on strategic actions announced in 4Q07: Building loan loss reserve Addressing homebuilder segment Managing expenses Actions taken to reduce volatility in HFS portfolio Commercial Real Estate Education Loans Successful integration of U.S.B. Holding Co.
Slide 4: Financial Summary-1Q08 vs. 1Q07
Financial Summary-1Q08 vs. 1Q07 (1) Continuing Operations exclude the results of the Champion Mortgage finance business, which has been accounted for as a discontinued operation. Results from Continuing Operations (1) EPS ROE NIM Average Earning Assets Asset Quality - Net Charge-offs - NPLs $0.54 vs
Slide 5: Net Interest Margin (TE)-Continuing Ops.
Net Interest Margin (TE)-Continuing Ops. 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 Net Interest Income 689 692 716 722 726 726 744 700 706 712 750 704 Net Interest Spread 0.0319 0.0309 0.0306 0.0305 0.0296 0.0285 0.0285 0.027 0.0262 0.0252 0.0275 0.0265 Net Interest Margin 0.0367 0
Slide 6: Noninterest Income-Continuing Ops.
Noninterest Income-Continuing Ops. $ in millions
Slide 7: Noninterest Expense-Continuing Ops.
Noninterest Expense-Continuing Ops. $ in millions
Slide 8: Average Loans-Continuing Ops.
2003 2004 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 Average Loan Growth Adjusted for Union State Bank Acquisition 0.063 0.084 Average Loan Growth from Prior Year -0.0156 -0.0349 0.0815 0.0613 0.0483 0.054 0.0539 0.0516 0.034 0.0234 0.02157 0.03834 0.063 0.1065 $ in billions Commerc
Slide 9: Average Core Deposits-Continuing Ops.
$ in billions 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 CD's 11.3 11.5 11.7 11.9 12.063 12.047 11.5 11.455 12.8 Average Core Deposit Growth Adjusted for Union State Bank Acquisition -0.01 0.00596 Average Core Deposit Growth Adjusted for McDonald Divestiture 0.0571 0.013 0.01 0.034 0.0222 0.0202 A
Slide 10: Asset Quality
Asset Quality $in millions Net C/O to Average Loans from Continuing Operations Nonperforming Loans to EOP Loans Nonperforming Assets to EOP Loans + OREO Allowance to Total Loans to Nonperforming Loans Change 1208 vs. 1008 4Q07 1007 4007 _ 1007 $ 121 119 44 $ 2 7 0.67 % 067 % 0.27 % S$ 1,054 687 254
Slide 11: Capital Ratios
Capital Ratios 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 Total Risk-based Capital 0.1191 0.1208 0.1213 0.1243 0.122 0.1215 0.1176 0.1138 0.119 Tangible Equity to Tangible Assets 0.0671 0.0668 0.0681 0.0701 0.0704 0.0697 0.0687 0.0658 0.0685 Peer-Tangible Equity to Tangible Assets 0.0586 0.0571 0.
Slide 12: 2008 Outlook
2008 Outlook Net Interest Margin 3.30% range Loan Growth Low- to mid-single digit range Core Deposit Growth Low single digit range Net Charge-Offs Expenses Effective Tax Rate (TE) 65 - 90 basis point range Low single digit range Approximately 32% TE = Taxable Equivalent
Slide 13: Appendix
Appendix
Slide 14: Community Banking
Community Banking Great Lakes Core Deposits: 35% Commercial Loans: 34% Home Equity Loans: 31% Northwest Core Deposits: 23% Commercial Loans: 29% Home Equity Loans: 28% Rocky Mountains Core Deposits: 9% Commercial Loans: 14% Home Equity Loans: 13% Northeast Core Deposits: 33% Commercial Loans: 23% Ho
Slide 15: National Banking-Continuing Ops. Financial Summary
National Banking-Continuing Ops. Financial Summary TE = Taxable Equivalent N/M = Not Meaningful N/A = Not Applicable $ in millions
Slide 16: National Banking Line of Business Summary
National Banking Line of Business Summary $ in millions TE = Taxable Equivalent N/M = Not Meaningful N/A = Not Applicable
Slide 17: National Banking Line of Business Summary
National Banking Line of Business Summary $ in millions TE = Taxable Equivalent N/M = Not Meaningful N/A = Not Applicable
Slide 18: Community Banking Financial Summary
Financial Summary $ in millions TE = Taxable Equivalent N/A = Not Applicable Community Banking
Slide 19: Community Banking Line of Business Summary
Community Banking Line of Business Summary $ in millions TE = Taxable Equivalent N/M = Not Meaningful N/A = Not Applicable
Slide 20: Average Loan Breakdown Continuing Operations
Average Loan Breakdown $ in millions Continuing Operations
Slide 21: Commercial Portfolio-Credit Size
Commercial Portfolio*-Credit Size <$5 $5 to $15 $15 to $25 > $25 Outstanding 0.4416 0.2854 0.1281 0.1447 Commitments 0.3526 0.2382 0.1359 0.2732 # of Obligations 0.9844 0.0106 0.0027 0.0023 $ in millions Outstanding Commitments # of Obligations March 31, 2008 *Excludes commercial lease financing bal
Slide 22: Net Charge-Offs to Average Loans
Net Charge-Offs to Average Loans 2004 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 KEY 0.0074 0.0032 0.0032 0.0102 0.0024 0.0022 0.0026 0.0033 0.0027 0.0032 0.0035 0.0067 0.0067 0.0057 0.0026 0.0022 Peer Median S&P Regional & Diversified Bank Indices 0.0034 0.0025 0.0027 0.0029 0.0024
Slide 23: Net Charge-Offs to Average Loans: Consumer and Commercial
Net Charge-Offs to Average Loans Consumer (1) Commercial 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 Consumer/Comml Loans 0.0023 0.0016 0.0019 0.0015 0.0012 0.0023 0.0028 0.002 0.0029 0.003 0.0067 0.0055 '0 0.0054 0.0056 0.0
Slide 24: Nonperforming Assets to Loans + OREO
$ in millions 2003 2004 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 NPAs to Loans + OREO 0.0126 0.006 0.0052 0.006 0.0046 0.0048 0.0046 0.005 0.0041 0.0054 0.0057 0.0083 0.0108 0.0146 Peer Median S&P Regional & Diversified Bank Indices 0.0043 0.0044 0.0044 0.0046 0.005 0.0049 0.0054
Slide 25: Allowance to NPLs
Allowance to NPLs 2003 2004 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 KEY 2.03 3.69 3.7671 3.04 3.49 3.27 3.43 4.23 4.39 3.72 3.42 1.92 1.75 1.23 Peer Median S&P Regional & Diversified Bank Indices 2.38 3.14 3.37 3.38 3.56 3.76 3.26 3.24 2.9 2.41 2.1 1.83 1.71
Slide 26: Allowance to Period-End Loans
Allowance to Period-End Loans 2003 2004 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 KEY 0.0235 0.018 0.017 0.0167 0.0145 0.0144 0.0142 0.0144 0.0143 0.0144 0.0142 0.0138 0.0169 0.017 Peer Median S&P Regional & Diversified Bank Indices 0.0141 0.0121 0.0118 0.0121 0.0113 0.0109 0.0107
Slide 27: Commercial Real Estate Loans
Commercial Real Estate Loans March 31, 2008 $ in millions N/M = Not Meaningful
Slide 28: Commercial Real Estate Residential Properties
Commercial Real Estate Residential Properties: $3.4 Billion $1.2 B $0.3 B $0.4 B $0.2 B $0.9 B $0.4 B $0.7 B $0.6 B
Slide 29: Commercial Real Estate Servicing
2000 2001 2002 2003 2004 2005 1Q06 2Q06 3Q06 4Q06 2006 1Q07 2Q07 3Q07 4Q07 1Q08 Servicing Portfolio 8.3 11 19.8 22.4 34.1 73.7 76.1 78.4 81.8 93.6 93.6 108.3 121.4 136.2 134.9 130.6 Average Escrow Deposits 0.125 0.303 0.411 0.558 0.832 1.23 2.135 2.386 2.494 3.053 2.52 3.279 3.924 4.57 4.3 4.1 Comme
Slide 30: Home Equity Loans
Home Equity Loans * Period End Balance $ in millions March 31, 2008