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= EWEBC to maintain capital for organic growth opportunities. As of 3Q, EWBC’s CET1 ratio was 10.9%. While EWBC isn’t opposed to using excess capital for an acquisition (depending on the market landscape), Mr. Ng prefers to use capital to support organic growth opportunities and the dividend (1.75% div yield). With respect to share repurchase, EWBC seemed less enthusiastic to buy back stock at current valuation levels (2.3x TBV). Fist Hawaiian (FHB), C-2-7, Neutral Positive outlook around the Hawaiian economy. Chairman and CEO Robert Harrison and CFO/Treasurer Michael Ching were optimistic with regards to the outlook for the Hawaiian economy, particularly around tourism trends. While the recent strength of the dollar could impact the inflow of foreign tourists (with Japan and Canada the key foreign markets for HI) to the island, management noted that the potential for an increases in domestic tourism could help offset the pressure from any slowdown due to a stronger USD. ¢ Positioned well for higher rates. With regards to its outlook on the impact of potentially higher interest rates, management noted that it remains asset sensitive with 60% of its loan portfolio floating rate. On the funding side FHB expects the deposit beta to remain low given the competitive dynamics in the Hawaii landscape. Management anticipates that another 25bp increase in the Fed Funds rate in December could have a similar impact on the NIM (+6bp) as it experienced following the previous rate hike in Dec '15. ¢ Cash deployment to securities completed. Management noted that it has completed the liquidity actions that it planned to take from deploying excess cash into its securities portfolio and the full impact of this should be visible in 4Q results. Note the securities portfolio duration is 3.3yrs at the end of 3Q16. Management noted that it prefers to keep $400-500mn at the Fed in cash liquidity. + Continued focus on maintaining dividend payout. In terms of capital management, management reiterated that it would like to maintain a healthy dividend payout. Given that additional capital return from buybacks are limited due to the Fed’s CCAR process (which FHB is subject to given that it is part of a larger holding company owned by BNP), management intends to increase its capital payout to shareholders (via higher dividend and buybacks) over time. Expenses to stay relatively elevated in near term. During the audience poll, when asked about what management should prioritize in 2017, 38% of the investors polled noted that they would like management to manage core expense growth while 31% would like management to increase the dividend payout to over 50% of earnings. Management noted that the efficiency ratio would likely trend around 50%, modestly higher than the 48.5% it reported in 3Q as it incurs additional public company costs ($14.5 — 17mn of expenses), but over time should move back below in the mid-to-high 40s. 18 2016 Future of Financials Conference | 17 November 2016 Bankof America a Merrill Lynch HOUSE_OVERSIGHT_014332