Commercial & Ag Lending Conference 2017

Commercial & Ag Lending Conference 2017 The Future of Lending: Leading Through Change Factors Driving Regional Lending Growth

Steve Cochrane Managing Director

Tight Labor Markets in Tech Areas & Midwest Unemployment rate, %, Jun 2017

U.S.=4.4 5.0 Sources: BLS, Moody’s Analytics Factors Driving Regional Lending Growth

Strongest Growth in South; Tech Slows in West Employment growth by wage cohort, % change yr ago, Jun 2017 2.5 Low

Mid

High

2.0 1.5 1.0 0.5 0.0 Northeast

Midwest

South

West

Sources: BLS, BEA, Moody’s Analytics Factors Driving Regional Lending Growth

Small Business Delinquencies Push Lower… Credit trades delinquent for small business*, % 8 7 30 DPD

6

60 DPD

90 DPD

91+ DPD

5 4 3 * < 100 employees

2 1 0 15

16

17

Sources: Experian, Moody’s Analytics Factors Driving Regional Lending Growth

…With Delinquencies Down Across Industries 91+ DPD, %, for small business 15 Agriculture Manufacturing Retail

12

Mining/Energy Transportation Services

Construction Wholesale

9 6 3 0 15

16

17

Sources: Experian, Moody’s Analytics Factors Driving Regional Lending Growth

…Diminished Only by Commodity Cycle Small businesses 90 DPD, % change yr ago, 2017Q2

-81.59 to -14.47 -14.48 to -3.98 -3.99 to 4.00 4.10 to 33.60 Sources: Experian, Moody’s Analytics Factors Driving Regional Lending Growth

CRE Transactions Begin to Backtrack $ volume sold, sum of states, chained 2009$ bil 500 400

* - extrapolated from 1H 2017

Retail Industrial Office Apartment

300 200 100 0 02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17*

Sources: Real Capital Analytics, Moody’s Analytics Factors Driving Regional Lending Growth

Tech Jobs Mostly in West and Northeast High-tech jobs, % share of total employment, 2016

8.0 to 27.2 4.8 to