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Sovereign Bank, National Association

Irving, TX · Cert 57787

FDIC · 9 branches

Q2 2017

$1.0BAssets
$789.9MLoans
$813.9MDeposits
$130.0MEquity
Loan mix
57%RE $309.2M42%C&I $229.5M0%Consumer $1.4MQ2 2016Q2 2017
Deposit mix
79%Interest-bearing $646.1M21%Noninterest $167.8MQ2 2016Q2 2017

NIM

3.84%Q2 ’153.99%Q2 ’164.17%Q2 ’17+3%+2%

Non-interest income vs. expense

2.37%Q2 ’152.35%Q2 ’162.30%Q2 ’17+34%+7%

Market Position · Dallas-Fort Worth-Arlington, TX · 2017 SOD (annual) · 0.2% share · #35 of 160 inst. · $0.6B of $264.8B

0.3% Dallas
0.3% Tarrant
0.3% Travis
0.0% Harris

Executive Summary

  • Earnings: ROA of 1.02%, up 26 bps year over year; NIM at 3.55%.
  • Asset quality: problem loans at 1.21% of loans (+121 bps YoY), with net charge-offs at 0.02%.
  • Capital: tier 1 leverage ratio of 12.50%, up 105 bps from a year ago.
  • Funding: loans stand at 97.05% of deposits as of Q2 2017.

Financial Results

Return on Assets (quarter, annualized)

1.02%+26 bps YoY

Net Interest Margin (quarter, annualized)

3.55%+8 bps YoY

Efficiency Ratio (quarter, annualized)

62.36%+40 bps YoY

Tier 1 Leverage Ratio

12.50%+105 bps YoY

Discrete quarter, annualized.

MetricQ2 2016Q3 2016Q4 2016Q1 2017Q2 2017YoY ΔTrend
Earnings
Return on Assets0.77%0.88%0.92%0.79%1.02%+26 bps
Return on Equity6.73%7.74%7.96%6.59%8.16%+143 bps
Net Interest Margin3.47%3.43%3.35%3.38%3.55%+8 bps
Efficiency Ratio61.95%63.03%66.56%64.60%62.36%+40 bps
Non-Interest Burden2.03%2.07%2.18%2.15%2.17%+14 bps
Growth
Asset Growth (YoY)-2.46%-2.74%-3.21%-4.26%-5.90%-344 bps
Loan Growth (YoY)7.96%4.50%5.52%-0.25%-4.94%-1,290 bps
Deposit Growth (YoY)0.57%4.72%7.39%0.12%-0.10%-66 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%1.18%1.21%+121 bps
Net Charge-Offs / Loans-0.03%0.00%1.38%0.00%0.02%+4 bps
Allowance / Loans1.65%1.63%1.26%1.35%1.38%-27 bps
Allowance Coverage of NPLsn/an/an/a1.1x1.1xn/a
Capital
Tier 1 Leverage Ratio11.45%11.62%11.49%11.98%12.50%+105 bps
Total Risk-Based Capital13.40%13.48%13.52%14.29%14.96%+156 bps
Equity / Assets11.37%11.44%11.72%12.42%12.67%+130 bps
Liquidity & Funding
Loans / Deposits101.99%100.02%99.82%97.88%97.05%-494 bps
Liquid Assets / Assets13.50%12.12%10.67%10.74%13.52%+2 bps
CRE / Total Capitaln/an/an/an/an/an/an/a