Bank & Financial Institution Modeling Quick Reference Projecting Financial Statements for a Bank.

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1 Commercial Bank Balance Sheet: Assets: + Cash & Deposits with Banks + Federal Funds Sold + Securities and/or Securities Borrowed + Trading Assets + Gross Loans Allowance for Loan Losses = Net Loans + Accrued Interest & Accounts Receivable + Premises & Equipment + Goodwill + Mortgage Servicing Rights + Other Intangible Assets + Other Assets = Total Assets How to Project Balance Sheet Line Items: % of Deposits on Liabilities Side Balancer; Increase if Assets < Liabilities & SE % Growth Rate or % Deposits % Growth Rate Project Loan Portfolio or Simple % Growth Rate Add Provisions for CLs, Subtract Net Charge-Offs Add CapEx, Subtract D&A Add MSR Origination, Subtract IS Mort. Fees & Inc. Subtract Scheduled Amortization % Growth Rate or % Deposits Liabilities: + Deposits + Federal Funds Purchased + Commercial Paper & Short-Term Borrowing + Trading Liabilities + Accounts Payable & Other Liabilities + Beneficial Interests / Other + Long-Term Debt = Total Liabilities Balancer; Increase if Liabilities & SE < Assets % Trading Assets or Simple Growth % Shareholders Equity (SE): + Preferred Stock + Common Stock + Additional Paid-In Capital + Treasury Stock + Accumulated Other Comprehensive Income + Retained Earnings = Total Liabilities + SE Add Issuances, Subtract Redemptions Add Stock Issuances & Stock-Based Comp. Subtract Stock Repurchases Add Misc. Items and FX Effects Add Net Income, Subtract All Dividends

2 Assets: Interest-Earning Assets, Interest-Bearing Liabilities & Net Interest Income: + Deposits with Banks + Federal Funds Sold + Securities and/or Securities Borrowed + Trading Assets Debt Only + Gross Loans + Other Interest-Earning Assets = Total Interest-Earning Assets How to Project IEA, IBL & Net Interest Income: % Total Trading Assets % Other Assets Liabilities: + Interest-Bearing Deposits + Federal Funds Purchased + Commercial Paper + Other Borrowings & Liabilities + Beneficial Interests + Long-Term Debt = Total Interest-Bearing Liabilities % Total Deposits % Other Borrowings, AP, & Other Liabilities + Average Interest on IEA + Average Interest on IBL = Interest Rate Spread Add Interest Spread to Average Interest on IBL Use Equity Research / Keep in Same Range Use Equity Research / Keep in Same Range + Interest Income Interest Expense = Net Interest Income IEA Interest * AVERAGE (Beginning and Ending IEA) IBL Interest * AVERAGE (Beginning and Ending IBL)

3 Commercial Bank Income Statement: Non-Interest Revenue: + Investment Banking Fees + Principal Transactions + Securities Gains / (Losses) + Lending and Deposit Fees + Asset Management + Mortgage Fees & Income + Credit Card Income + Other Income = Total Non-Interest Revenue How to Project Income Statement Line Items: % Growth Rate % Trading Assets or % Trading Liabilities % (Gross Loans + Deposits) % Assets Under Supervision or % Growth % Mortgage & Home Equity Loans % Credit Card Loans % Growth Rate or + Interest Income Interest Expense = Net Interest Income Flows in from IEA / IBL Projections Flows in from IEA / IBL Projections Total Net Revenue Provision for Credit Losses Non-Interest Expenses = Pre-Tax Income % Net Revenue; Link Amortization to Schedule Taxes + Extraordinary Gains / Discontinued Ops. = Net Income Preferred Stock Dividends = Net Income to Common Assume Effective Tax Rate Based on Historical Data Assume $0 in Projected Periods % Preferred Stock or Basic Shares = Basic EPS Link to Dividend / Stock Schedule (Circular) * Dividend Payout Ratio = Dividends Per Common Share Link to Tier 1 / Tier 1 Common Requirements and Work Backwards to Calculate Dividends

4 Commercial Bank Cash Flow Statement: Cash Flow from Operations: + Net Income + Provision for Credit Losses + Depreciation + Amortization of Intangibles + Stock-Based Compensation + Deferred Income Taxes Increase in Securities on BS + Net Change in Current Assets / Liabilities = Cash Flow from Operations (CFO) How to Project Cash Flow Statement Line Items: Projected in Company s Filings Assume $0 or Use Book / Cash Tax Schedule ; Review Company Filings for Exact Items to List Here Cash Flow from Investing: Increase in Deposits with Banks Increase in Federal Funds Sold (Increase in Gross Loans) Net Charge-Offs + Proceeds from Sales & Maturities Capital Expenditures = Cash Flow from Investing (CFI) & LLR Schedule Cash Flow from Financing: + Increase in Deposits + Increase in Federal Funds Purchased + Increase in Commercial Paper & ST Borrowing + Increase in Beneficial Interests + Increase in Long-Term Debt + Common Stock Issued / (Repurchased) + Preferred Stock Issued / (Redeemed) Common and Preferred Dividends = Cash Flow from Financing (CFF) Tied to Tier 1 Capital; Use Dividend / Stock Schedule Tied to Tier 1 Capital; Use Dividend / Stock Schedule + Exchange Rate Effects (FX) Net Change in Cash = CFO + CFI + CFF + FX (Equals BS Ending Cash But Does NOT Flow In)

5 Commercial Bank Dividends & Stock Schedule: + Available Tier 1 Common Minimum Tier 1 Common Required = Capital Avail. for Dividends / Repurchases How to Project Dividend & Stock Line Items: = Last Year Common Equity + NI to Common + FX Effect + SBC + Stock Issuances Goodwill, Intangibles & Other Tier 1 Adjustments Risk-Weighted Assets * Minimum Tier 1 Common = MAX(Avail. Tier 1 Comm. Min. Tier 1 Comm., 0) Basic EPS * Dividend Payout Ratio = Dividends Per Share * Basic Shares = Potential Common Dividends Assume Constant or Match Historical Ratios Allowed Common Dividends = MIN(Capital Avail., Potential Common Dividends) Capital Available for Stock Repurchases Stock Repurchases Planned Allowed Stock Repurchases Capital Avail. Allowed Common Dividends Use Equity Research or =MIN(Capital Avail. for Repurchases, Rep. Planned) Basic Shares Diluted EPS * Trailing P/E Multiple = Implied Future Stock Price Old Basic Shares + Net Change in Basic Shares Decline Each Year from Last Historical P/E # Shares Repurchased + # Shares Issued = Net Change in # Basic Shares Allowed Stock Repurchases / Future Stock Price Stock Issuances from CFS / Future Stock Price + Dilution from Options / Warrants + Dilution from Restricted Stock Units = Net Dilution Use TSM with Option / Warrant Counts, Exercise Prices, and Implied Future Stock Prices Diluted Shares Outstanding Basic Shares + Net Dilution