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Price objective basis & risk AllianceBernstein (AB) Our $25 price objective is based on 13x target P/E on our '17E, a discount vs our target for asset managers as a group, based on improving but inconsistent flows and limited active equity exposure as well as the MLP structure which means less liquidity, though a high distribution. Upside/downside risks to our price objective are market appreciation/depreciation, similar to other asset managers, underperformance, and an unpredictable yield since it is based on earnings rather than fixed. Because Alliance is an MLP, total potential return includes a variable distribution based on earnings. Amer Express (AXP) Our $74 price objective reflects a 13x PE multiple to our 2017 EPS estimate. Given the elevated uncertainty, we expect AXP will trade near the low end of its historical valuation range, which averages 12x-16x. This multiple reflects our view of solid loan growth and better billings, offset by increased risks of rising credit and marketing costs. We think the market will view AXP through a more credit card lens in the near-term, which also supports a multiple at the low end of the historical range. Upside risks to our PO are stronger than expected macroeconomic conditions, accelerating consumer and business spending, lack of disruptions in capital markets, or a decreasing regulatory burden. Downside potential could come from weaker than expected macroeconomic conditions and renewed recessionary pressure, softer consumer and business spending, disruptions in capital markets, or an increasing regulatory burden. Ares Management (ARES) Our price objective (PO) for Ares is $18, which implies a target price-to-ENI (P/ENI or P/E) multiple of 11x our 2017 ENI estimate. Our price objective is based on our sum-of- the-parts (SOTP) analysis. Our SOTP analysis includes the following components: a target multiple on fee related earnings (15x - in line with or a premium to asset manager multiples given healthy growth and sticky assets), book value for the balance sheet investments and accrued carry, and a discounted value on the performance fee upside over a cycle (1.3x MOIC). Based on this method, we value the fee related earnings at $13/unit, the balance sheet (principal investments and accrued carry) at $4/unit, and the discounted value of future carry income and investment income at $1/unit, which equates to a total value of $18. Risks to our PO: a weak macro and capital markets backdrop, potential changes in tax laws related to carried interest and partnerships, legal and political risk, increased regulation, credit market disruptions, poor performance, weak fundraising, expansion risk, key person and talent risk, competition, a unique corporate structure that limits unitholder control, and lock ups. Associated Banc-Corp (ASB) We use an equal weighted three-factor valuation framework (P/E, P/TBV, DCF) to arrive at our $20 price objective and assign a 1.4x multiple to 3Q17E TBV and a 14.9x 2017 P/E multiple, in-line with smid-cap peers due to their near median return profile. Our DCF assumes a two-stage cost of capital of 10% and a terminal growth rate of 5%. The upside risk to our price objective is a less onerous residential RE cycle. Downside risks are a double dip in housing prices, deteriorating energy portfolio and falling rental income for commercial properties. Banc of California (BANC) To arrive at our $15.50 price objective, we have employed a three-factor valuation methodology that incorporates target P/E, target P/TBV and a DCF model. For our P/E analysis, we use a 14x earnings multiple on BANC’'s 2017E core earnings below peer BankofAmerica <2” 64 2016 Future of Financials Conference | 17 November 2016 Merrill Lynch HOUSE_OVERSIGHT_014378