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dependent on what happens with deposit costs. SNV’s current sensitivity analysis assumes a 50-60% deposit beta. = SNV keenly focused on credit. Chief Credit Officer Kevin Howard noted expectations for net charge-offs to naturally tick up as recoveries become less of a benefit and some seasoning in the loan portfolio. Recall during its earnings call, management lowered its FY16 net charge-off range to 10-20bp (3Q: 12bp}. Mr. Howard noted that he would not be surprised if NCOs increased to 15-20bp in 2017 (cons: 12bp) and stay near those levels for the near future. = Management reiterated its intent to continue to deploy excess capital. Although SNV will disclose a more detailed capital plan in January, management expects to continue deploying excess capital via buybacks, M&A and/or organic growth. When asked how management should utilize its excess capital, 56% of the audience polled prefers SNV pursue M&A opportunities (vs. 8% last year). In reaction, Mr. Stelling noted continued interest in strategic acquisitions (like Entaire} but hesitant to execute a large, dilutive transaction. While DTA accretion could allow for continued share repurchase, management may choose to be a bit more opportunistic around buybacks given the run up in the stock. Chart 41: What would you like to see management do with its excess capital? 60% 50% 40% 30% 20% 10% 0% Be even more Increase the dividend Support faster organic Pursue M&A aggressive on payout growth opportunities buybacks Source: BofA Merrill Lynch Global Research = Management is positive but cautious on online lending partnerships. Investors were also relatively split in how they view SNV’s partnerships with online lenders SoFi and GreenSky. The majority (57%) remains cautious on how these loans will perform during a credit cycle. Mr. Stelling agreed; however, he believes these partnerships represent the right vehicle to help the bank grow its retail portfolio to 20-25% of loans (in line with its strategy to transition away from CRE) and achieve its 1.0% ROA target (3Q: 0.88%). Although we note that SNV is being deliberate around growing this book and is targeting these loans to grow to approximately 2- 3% of total loans. 28 2016 Future of Financials Conference | 17 November 2016 Bankof America a Merrill Lynch HOUSE_OVERSIGHT_014342