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Chart 42: How do you view SNV’s partnerships with online lenders (SoFi/GreenSky)? 10% 60% 50% 40% 30% 20% 10% 0% Positively. Creates another Cautiously. Unsure how these _ Indifferent. The exposure is avenue for loan growth loans will perform duringa —_ relatively small so does not credit downturn matter either ways Source: BofA Merrill Lynch Global Research Texas Capital Bancshares (TCBI) C-2-9, Neutral Upbeat on business outlook: TCBI’s President & CEO Keith Cargill, CFO & COO Peter Bartholow, CAO Julie Anderson, and CLO Vince Ackerson were relatively upbeat about TCBI’s business outlook. Management expects its mortgage businesses, particularly MCA to be to be a source of strength even if overall mortgage volumes were to slow down due to the rise in interest rates. Management expects to mitigate the negative impact from lower mortgage activity by picking up greater wallet share of existing clients and given the option to bring back to the balance sheet loan participations. Regarding expenses, despite expectations for an uptick in the efficiency ratio over the next couple of quarters management expects to beat its 2016 efficiency guidance (low-to-mid 50s). Chart 43: What would drive you to buy or increase your positioning in TCBI? 50% A4T% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Stronger loan Higher interest Better visibility on A pick-up in bank A pull back in the growth rates the outlook for the M&A activity, stock Texas economy especially in and oil prices Texas Source: BofA Merrill Lynch Global Research = Credit provisioning likely to trend lower In 2017: During an investor poll, nearly half of investors expect credit provisions to be lower in 2017 vs. 2016, based on expectations for stabilization in oil prices. Management expressed comfort that reserve levels should be adequate even if oil prices were to decline to the mid-to- high $30s in the near term (vs. spot WTI prices of $45/bbl today). However, management would need to consider increasing its reserve level if oil falls to the high $20s. Conversely, if oil stabilizes in the high $50s-low S60 levels, management could consider reserve releases. Management stressed on looking at the forward curve when assessing the impact from oil prices on credit costs vs. the spot rate. Bankof America 2 2016 Future of Financials Conference | 17 November 2016 29 Merrill Lynch HOUSE_OVERSIGHT_014343