Maine Bankers Association 2012 CEO Midwinter Meeting “Overview of Industry Conditions”

1. Maine Bankers Association 2012 CEO Midwinter Meeting “Overview of Industry Conditions” February 2, 2012

2. Disclaimer The views expressed in this presentation are those of the presenter and do not necessarily reflect official positions of the FDIC. Some of the information used in the preparation of this presentation was obtained from publicly available sources that are considered reliable. However, the use of this information does not constitute an endorsement of its accuracy by the FDIC. This presentation and comments made are not for attribution, quotation, or distribution.

3. Failures peaked in 2010 and should continue to trend downward Peak Year was 1989 with 534 Failures/Assisted Transactions 1980-1994 - 2,935 Failures/AT Total Assets - $992B Failures during cycle Cumulative – 424 Failures Total Assets - $674B Number of Institutions Source: FDIC (Failures through 2/2/12).

4. The Problem Bank List declined in June for the first time since 2006 Cumulative Failures 844 Problem Banks 399 Cumulative Failures As of 9/30/2011 Problem Banks Source: FDIC

5. Deposit insurance assessments reflect the extent of the stressful banking conditions Total 30.53% Source: September 30, 2011 FDIC Quarterly Banking Profile

6. Total Past-Due Rate (median %) The overall past-due rate has stabilized in ME. Nation Maine Source: FDIC. Data through September 30, 2011.

7. Past-Due Rate (median %) Maine Early-stage past-dues are starting to decline which may signal some improvement 90+ days or nonaccrual 30-89 days Source: FDIC. Data through September 30, 2011.

8. Aggregate Net Charge-offs to Avg Loans% for banks < $10 billion Maine institutions have had a comparatively low loan loss experience during this cycle Nation Maine Source: FDIC. Data reflects YTD net charge-offs through September 30.

9. Approximately 10% of Maine banks have CRE concentrations > 300% of Total Risk Based Capital Source: FDIC. Data as of September 30 for each period.

10. Pretax ROA (median %) Earnings have bounced back in Maine but remain well below pre crisis levels Nation Maine Source: FDIC. Data through September 30, 2011.

11. % of banks reporting profits While earnings are strained, nearly 90% of Maine’s banks were profitable in Q3 Maine Nation Source: FDIC. Data through September 30, 2011.

12. Net Interest Margin (median %) Net interest margins remain under pressure and are likely heading lower ME Commercial Banks ME Savings Banks Source: FDIC. Data through September 30, 2011.

13. Assets Yields are likely to come under continued pressure through 2014 Maine Median Percentage of Assets/Liabilities Repricing in over 3 Years to Earning Assets as of 12/31/08 Assets Liabilities Based on 12/31/08 Call filings. On December 16, 2008, Fed funds were lowered to 0-25 bp.

14. Assets > 5 years to Earning Assets (median %) Long term asset concentrations heighten interest rate risk ME Savings Banks ME Commercial Banks Source: FDIC. Data through September 30, 2011.

15. Assets > 15yrs to Earning Assets (median %) Asset duration has increased during the 2000s to buffer the impact of stressed margins ME Savings Banks Nation Savings ME Commercial Banks Nation Commercial Source: FDIC. Data through September 30, 2011.

16. Net Interest Margin (median %) Net interest margins remain under pressure and are likely heading lower Fed Funds Rate increased 425 bp between 6/30/04 and 8/17/07 ME Commercial Banks ME Savings Banks Source: FDIC. Data through September 30, 2011.

17. Overhead/AA (median %) Overhead has converged as commercial banks trim costs and savings banks diversify ME Commercial Banks ME Savings Banks Source: FDIC. Data through September 30, 2011.

18. Higher Risk Loans to Assets (median %) Savings and commercial banks also have become more similar into of asset mix ME Commercial Banks ME Savings Banks Source: FDIC. Data through September 30, 2011.

19. Maine Banks have strong capital ME Bank Median %** Basel III Proposed %* PCA – “Well Capitalized”% *Includes 2.5% Capital Conservation Buffer for risk based measures *Data as of 9/30/11 – TCE RB is a rough estimate!

20. The DIF has turned positive and on track to achieve minimum target set by Dodd/Frank Dodd/Frank minimum of 1.35 by 9/30/20 Restoration Plan 1.15 by 2018

21. Systemic Resolution Responsibility • Resolution Plan or “Living-will” • U.S. Bankruptcy Code • Holding companies $50 billion or more and nonbank financial companies designated as Systemically Important Financial Institutions (SIFI) • Orderly Liquidation Authority • Alternative to bankruptcy • Strictly prohibits bailouts • Uses FDIC’s traditional resolution powers • Ensures creditors and shareholders appropriately bear the losses

22. Focus on the Future of Community Banks • Critical role in the U.S. economy • Importance to small business community • Role in providing banking to the underserved • FDIC Initiatives • Research evolution of community banking • Evaluation of supervisory practices • Outreach/conference on community banking • Evaluating key challenges facing community banks • Capital • Technology • Staffing challenges • Regulatory burden • Advisory Committee of Community Banks

23. Questions/Other Topics?