Financials Stock Presentation

1. Financials Stock Presentation Mike Rainey Mitch Salsbery Mike Shaver Maddie Shirk

2. Sector Review • Current Market Cap: $7.60 T • Second largest sector • S&P 500 1Y Return: 14.5% • Financials 1Y Return: 12.37%

3. SIM Current Standing overweight on target on target on target on target

4. Overview • Founded as Wells, Fargo & Co. in 1852 in San Francisco, California • Third largest bank in the U.S. by assets • Operates in three business segments • Community Banking • Wholesale Banking • Wealth Management • Internal scandal that resulted in 3.5 MM fake accounts created without customer approval

5. Macro Environment and Drivers • Increasing federal interest rates • High economic strength and consumer confidence • Sustained strength of the housing market • Regulations and political influences • Total asset cap at $2T

6. Financial Analysis and Valuation WFC Target Price: $62.45 Potential Upside: 11.7%

7. Financial Analysis and Valuation Terminal Discount Rate: 11.5% Terminal FCF Growth: 3.0% Current Price: $55.89 Implied Price: $69.28 Implied Upside: 24.0%

8. Recommendation • Predicted removal of asset cap sometime in next 6-12 months • Growth and price will return to pre-cap conditions • Preference to BUY, but… • Constraints of SIM require holdings to be no greater than 5% • So, SELL to 5% (reduce holding by 39 bps) Risks include delay of asset cap removal or additional scandal detail complications

9. Overview • Two Primary Business Segments • Global Consumer Banking • Institutional Clients Group • 4th largest US bank • World’s largest issuer of credit cards • Largest International vs comps • 30% off shore

10. Revenue Breakdowns: • 28% institutional brokerage business • 27% consumer finance • 20% banking • 15% institutional trust • 10% wealth management

11. One Year Growth

12. Macro Environment and Drivers • Regulations and Geopolitical Issues • Increasing Interest Rates • Housing Market • Interest income outpacing interest expense • Technology Investment • Aiming to increase ease of use for products • Buyback program • Aggressive program aimed at 10% within 1 yr

13. Financial Analysis and Valuation

14. DCF Term Discount Rate = 12% Term FCF Growth = 2% Current Price = $67.00 Valuation: $79.06 Upside = 18.0%

15. Financial Analysis and Valuation

16. Recommendation • SELL ALL due to comps • High Risk versus peers • Beta • Daily Risk • International Concerns • Upside of 14.5%

17. Overview • 5 primary business segments separated by region • Provides Life insurance, annuities, Retirement and income solutions, and employee benefits programs • Largest life insurer in terms of policies in force • Lacks a competitive advantage but maintains large market share • Growth comes primarily from acquisitions into foreign markets

18. Macro Environment and Drivers • Increasing interest rates • International growth prospects from acquisitions • Simplification with spin off of Brighthouse Financial • Share repurchases and increasing dividends • Undervalued due to accounting errors

19. Financial Analysis and Valuation

20. Financial Analysis and Valuation Discount Rate = 10% Terminal FCF growth = 1.50% Current Price = $43.76 Implied price = $52.55 Potential Upside = 20.1%

21. Recommendation • Recommendation: BUY • 20.1% potential upside • Increasing dividend yield and share repurchases • Risks related to internal accounting weaknesses

22. Overview • “American Express Company is a global services company that offers charge and credit services (primarily through issuance of charge or credit cards) that connect consumers and businesses, provides marketing data and insights to merchants, and operates loyalty/rewards programs to enhance customer satisfaction.” • What does this mean? • Earns revenues two main ways: • Billed revenue: merchant fees and card fees • Interest income • Four main business segments: • Global Consumer Services: US Consumer Services (USCS) and International Consumer & Network Services (ICNS) • Global Commercial Services (GCS) • Global Merchant Services (GMS) • Competitive Advantages • “Closed Loop” Network • “Spend Centric” Model

23. Macro Environment and Drivers ● Unemployment and consumer confidence ● Global markets ● Ability to leverage their network data

24. Financial Analysis and Valuation ● Revenue and Earnings drivers ○ Current state: ■ Continued growth in global markets ■ Lower effective tax rate due to Tax Act ■ Leader in member spending per card ■ Data network – value to merchants and card members ○ Recent news: ■ Co-branding with Amazon for small businesses ■ Share buy back program and higher dividend payout ■ US Supreme Court ruling

25. Financial Analysis and Valuation

26. Financial Analysis and Valuation

27. Financial Analysis and Valuation

28. Recommendation • Recommendation: SELL based on comps • 16.6% upside • Growth potential outside of original DCF model • Need to leverage competitive advantages

29. Overview • Four sectors: • investment banking • institutional client services • investing and lending • investment management. • 2018 Q2: 40% Increase in profit

30. One Year Growth

31. Macro Environment and Drivers • High EPS did not lead to price increase (stock down 1.7% since) • 5.98 realized vs 4.88 expected • Concerns of balance sheet quality - cut expenses • Decreased market volatility helps drive consistency • Trading segment missed targets - it’s largest driver • Inflation may negatively impact investing

32. Absolute Valuation Financial Analysis and Valuation

33. Financial Analysis and Valuation DCF: 11% Term Discount Rate 3% Term FCF Growth Current Price = $231.69 Implied Value = $279.33 Upside = 20.6%

34. Recommendation • Recommendation: BUY • 20.6% upside per DCF • Risk related to exposure to capital markets • Regulatory risks

35. Overview • Consumer financial services company • Largest provider of private label credit cards in the U.S. based on receivables and purchase volume • Three business segments - Retail Card, Payment Solutions, and CareCredit • Launched as a spin off from GE Capital during their IPO in 2014

36. Macro Environment and Drivers • Strength of the retail market • Receivables growth of 7% in 2017 • Increasing interest rates • Strong partnerships with large retailers • 19 years+ average relationship • Provide partners with customer data • No transaction fees to retailers • Tax benefit as a US based company

37. Financial Analysis and Valuation SYF Target Price: $50.41 Potential Upside: 49.90%

38. Financial Analysis and Valuation Terminal Discount Rate: 11.5 % Terminal FCF Growth: 3.0% Current Price: $33.63 Implied Price: $47.25 Implied Upside: 40.5%

39. Recommendation • Recommendation: BUY • 40.5% Projected Upside • Risks related to quality of credit taken on

40. Decisions Summary