Slide 1: Second Quarter 2008 Review
Second Quarter 2008 Review July 22, 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 Our costs are well controlled. Our fee revenue is strong. Our reserves are strong. We remain well capitalized.
Slide 4: Financial Summary - 2Q08 vs. 2Q07
Financial Summary-2Q08 vs. 2Q07 Results from Continuing Operations (1) (1) Continuing Operations exclude the results of the Champion Mortgage finance business, which has been accounted for as a discontinued operation. (2) Excludes charges recorded during the second quarter of 2008 in connection with
Slide 5: Adjusted 2Q08 Income Statement
Adjusted 2Q08 Income Statement $ in millions (1) Details the 2Q08 charges recorded in connection with the adverse federal court ruling on the tax treatment of a service contract lease transaction (2) EPS may not foot due to rounding TE = Taxable Equivalent
Slide 6: Net Interest Margin (TE) - Continuing Ops.
Net Interest Margin (TE)-Continuing Ops. 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Net Interest Income 689 692 716 722 726 726 744 700 706 712 750 738.4 738 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 0.0281 0.0288 Net Intere
Slide 7: Noninterest Income - Continuing Ops.
Noninterest Income-Continuing Ops. $ in millions
Slide 8: Noninterest Expense - Continuing Ops.
Noninterest Expense-Continuing Ops. $ in millions
Slide 9: Average Loans - Continuing Ops.
2003 2004 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 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 0.1569 $ in bill
Slide 10: Average Core Deposits - Continuing Ops.
$ in billions 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 CD's 11.3 11.5 11.7 11.9 12.063 12.047 11.5 11.455 12.8 12.7 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 0.022
Slide 11: 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 2008 vs. 2008 1008 2007 1008 2007 $524 121 53 $ 403 $ 471 2.75 % 0.67 % 0.32 % $814 1,054 2
Slide 12: Credit Quality by Portfolio - 2Q08
Credit Quality by Portfolio - 2Q08 $ in millions * Net charge-off amounts annualized in calculation Note: Totals may not foot due to rounding * *
Slide 13: Commercial Real Estate Loans June 30, 2008
Commercial Real Estate Loans June 30, 2008 $ in millions (1) Segment NPLs are taken as a percentage of total Key NPLs. Total Key NPLs were $814 million at 06/30/2008. (2) Nonresidential land and development loans (3) NPLs, 90+ Days Past Due, and 30-89 Days Past Due are taken as a percentage of the r
Slide 14: Commercial Real Estate Residential Properties: $2.7 Billion
Commercial Real Estate Residential Properties: $2.7 Billion
Slide 15: Capital Ratios
Peer Median 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Tangible Equity to Tangible Assets 0.0671 0.0668 0.0681 0.0701 0.0704 0.0697 0.0687 0.0658 0.0685 0.0698 Peer-Tangible Equity to Tangible Assets 0.0586 0.0571 0.0623 0.0652 0.0608 0.057 0.057 0.0559 0.0568 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q
Slide 16: 2nd Half 2008 Outlook
2nd Half 2008 Outlook Net Interest Margin 3.15% - 3.20% range Loan Growth Flat to down Core Deposit Growth Low single digit range Net Charge-Offs Expenses Effective Tax Rate (TE) 1.20% - 1.60% annualized Low single digit range Approximately 34% ^ 36%. This estimate includes an accrual of approximate
Slide 17: Appendix
Appendix
Slide 18: Geographically Diverse Community Banking
Geographically Diverse Community Banking Great Lakes Core Deposits: 34% Commercial Loans: 31% Home Equity Loans: 30% Northwest Core Deposits: 23% Commercial Loans: 27% Home Equity Loans: 28% Rocky Mountains Core Deposits: 8% Commercial Loans: 13% Home Equity Loans: 13% Northeast Core Deposits: 31% C
Slide 19: Community Banking Financial Summary
Financial Summary TE = Taxable Equivalent N/M = Not Meaningful N/A = Not Applicable Community Banking $ in millions
Slide 20: 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 21: National Banking Financial Summary
National Banking-Continuing Ops. Financial Summary $ in millions TE = Taxable Equivalent N/M = Not Meaningful N/A = Not Applicable
Slide 22: 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 23: 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 24: Commercial Real Estate Servicing
2000 2001 2002 2003 2004 2005 1Q06 2Q06 3Q06 4Q06 2006 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Servicing Portfolio 8.3 11 19.8 22.4 34.1 73.7 76.1 78.4 81.8 93.6 93.6 108.3 121.4 136.2 134.9 130.6 128.9 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.
Slide 25: Average Loan Breakdown Continuing Operations
Average Loan Breakdown $ in millions Continuing Operations
Slide 26: Home Equity Loans
Home Equity Loans * Period End Balance, $ in millions June 30, 2008
Slide 27: 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 2Q08 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 0.0275 0.0057 0.0026 0.0022 Peer Median S&P Regional & Diversified Bank Indices 0.0034 0.0025 0.0027 0
Slide 28: Nonperforming Asset Trends
$ in millions Peer Median S&P Regional & Diversified Bank Indices NPAs to Loans + OREO + Other NPAs CRE-Construction CRE-Coml. Mort. C&I Consumer Held for Sale OREO + Other $4 35 105 135 1 28 $37 36 62 88 56 50 $10 48 60 97 3 55 $10 44 101 99 3 96 $23 41 117 95 4 98 $228 41 124 105 6 66 $415 41 112