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With regard to growth in the energy book management expects balances to stay relatively flattish as new growth is offset by pay downs and deleveraging. Chart 44: Where do you see TCBI’s provisioning in 2017 relative to 2016? 50% AT% 45% 40% 35% 30% 29% 20% 15% 10% 5% 0% 16% Lower, given the stabilization Flat-to-higher, given credit | Uncertain, as volatility in oil in oil prices which should lead normalization in the rest of the prices could lead to an to reserve reversals book elevated level of provisioning Source: BofA Merrill Lynch Global Research = Mortgage growth to continue despite a downshift in activity: Management was optimistic on the outlook for both its mortgage businesses — warehouse lending and MCA businesses Management expects both these portfolios in aggregate to total 28-33% of average total loan portfolio. Management tried to debunk the perception that the MCA business was cannibalizing its warehouse lending business and noted that two business were complimentary in nature. Moreover, while initially the vast majority of the MCA customers were the ones that TCBI had a relationship on the warehouse lending side, it noted that that number had fallen to 50% and is likely to move lower over the coming quarters. TCBI has a dedicated sales force prospecting for the MCA business. = Next rate hike to give a bigger boost to EPS: Management noted its high asset sensitivity with most of their loans tied to LIBOR and prime and its expectations for an increase in funding costs to remain relatively tempered. With strong demand deposit growth during the year and a $1bn reduction in loans with floors (from $3.1bn to $2bn}, TCBI has become more asset sensitive relative to last year, when a rate hike led to a $4mn increase in spread income. Management expects a Dec rate hike to boost spread income by more than $4mn a quarter. = Remains cautious around CRE lending: Management noted that it intends to grow CRE more slowly as it de-risks the portfolio and until it sees a turn in the cycle. However, management is optimistic on the credit quality of CRE, particularly noting that trends in its Houston real estate portfolio (Houston special mention loans are 1% of Houston CRE) continue to be fairly benign. US Bancorp (USB), B-2-7, Neutral Strong growth outlook across the business spectrum. CEO Richard Davis provided an upbeat view around the outlook for the economy across the business spectrum ranging from small businesses to large corporates and noted that businesses could drive the economic recovery vs the consumer side. 30 2016 Future of Financials Conference | 17 November 2016 Bankof America 2 Merrill Lynch HOUSE_OVERSIGHT_014344