Discussion Topics My background and approach

The housing recovery

Bank stock outlook

Distribution network challenges

Consolidation

Customer switching activity

Second Curve Capital Today Investing since 2000

Manage 2 hedge fund and 1 levered long fund families (7 individual funds)

$300mm in capital with 200 partners including 9 bank holding companies and many past and current financial executives

Distinguished advisory board

Corporate Partners

Advisory BoardJacqueline Corbelli, Founder, Chairman and CEO, BrightLine

Richard Daniel, Former CFO, Bankers Trust and Freddie Mac

Richard Davis, CEO, U.S. Bancorp

Doug Freeman, Former CEO, NetBank

Robert Kelly, Chairman, Canada Mortgage and Housing Corp.

Richard Lehmann, Former Vice Chairman, Bank One

John B. McCoy, Retired CEO, Bank One

Carlos Rodriguez-Pastor, Chairman, Banco Internacional del Peru SAA

Cecil Sewell, Former CEO, RBC Centura Banks

General Thoughts about Investing

Multiple approaches

Investors vs traders spectrum

Opposing Sides of the Investment Spectrum

Traders Investors

Second Curve PartnersSCP$3,463,982

S5FINL$875,874

SPX $1,183,531

FN: Rider 1

Rolling Period a/o 7/31/13 FN SCP % S5FINL % SPX %

1 Yr 74.2 39.7 22.2

3 Yr 138.1 39.4 53.0

5 Yr 663.8 -4.7 33.0

10 Yr 137.0 -19.8 70.1

Since Inception 246.4 -12.4 18.4

Net Performance Since Inception Through July 31st 2013 FN

The above table represents NET rolling period returns for a partner that has been invested in SCP since inception.

The Housing Recovery

The Housing Recovery

Excess supply has been eliminated

Inventory of Unsold Existing Houses

Source: Stan Shipley, “ISI Quick Takes on Existing Home Sales: Home Buying on the Upswing” 9/19/12, ISI Group

The Housing Recovery Excess supply has been eliminated

Pent up demand returning

ISI – U.S. Existing Houses Sales

Source: ISI Daily Economic Report 6/28/13

Jun 5.53 e

Correlation of Births and Housing Starts With 18-Year Lag

Source: Zelman & Associates, CDC

Historical Relationship Between Changes in Population and Changes in HH FormationSince 1959. Thousands, 5-yr trailing annual average

Source: Thomas J. Lee, “Housing Food Chain IV” 8/29/12, North America Equity Research, J.P. Morgan, Census Bureau, CDC

Household Formation (annual average)Thousands

Source: Thomas J. Lee, “Housing Food Chain IV” 8/29/12, North America Equity Research, J.P. Morgan, Census Bureau

ISI – Homebuilders Sales Survey0=Weak 100=Strong 4Wk. Avg.

Aug 9: 59.5

Source: ISI Daily Economic Report 8/7/13

Homebuilding Survey Overall Market Score

0-100 Scale

July 2013 Market Conditions21% improving55% stable24% deteriorating

Source: Zelman & Associates Homebuilding Survey 8/12/13

Annual Pace of Single-Family Housing Starts Per U.S. Household (%)

Source: Tobias Levkovich, Monday Morning Musings, Citi Research, June 17th 2013; Haver Analytics and Citi Research

The Housing Recovery Excess supply has been eliminated

Pent up demand returning

Prices are rising

ISI – U.S. Existing House Price

Source: ISI Daily Economic Report 7/23/13

SA by ISI Jun $200.2

ISI – U.S. 30 Year Mortgage Rate

Aug 1: 4.46%

Source: ISI Daily Economic Report 8/2/13

ISI – U.S. 30-Year Fixed Mortgage Rate (LT)

Source: ISI Daily Economic Report 6/26/13

Jun 25 4.58%

ISI - U.S. Housing Affordability Index

Source: ISI Daily Economic Report 7/8/13

SA by ISI Jun 148.7 e

ISI – House Prices Don’t Have Much of a Fit with Mortgage Rates

Source: ISI Daily Economic Report 5/29/13

The Housing Recovery Supply has been reduced

Pent up demand returning

Prices are rising

Demographics will add to the cycle

Homeownership Rate by Age Group (%) 1995 to 2020E

Forecast holds homeownership rates for each age group constant at 2011 levels through estimated 2020

Source: Thomas J. Lee, “Housing Food Chain IV” 8/29/12, North America Equity Research, J.P. Morgan, Census Bureau

Incremental Units of Housing Needed by 20172012 to 2017

Source: Thomas J. Lee, “Housing Food Chain IV” 8/29/12, North America Equity Research, J.P. Morgan, Census Bureau

US Homeownership Rate (%)From 1995 to 2020E. Holding homeownership rate for individual age groups constant at 2011 levels

Source: Thomas J. Lee, “Housing Food Chain IV” 8/29/12, North America Equity Research, J.P. Morgan, Census Bureau

Zelman & Associates Housing Start Forecasts

Source: Zelman & Associates, “The Bank Charter”, 5/28/2013; Census Bureau, Zelman & Associates analysis

Private Fixed Investment & Personal Consumption of Durable Goods as % of GDP

Source: Thomas J. Lee, “YE S&P 500 Target of 1775”, North America Equity Research, J.P. Morgan, August 2013

What are the Components of Durable Goods?

Source: Thomas J. Lee, “YE S&P 500 Target of 1775”, North America Equity Research, J.P. Morgan, August 2013

Only 4 Times Since 1950 Have These “4” Been Rising in Sync

Source: Thomas J. Lee, “YE S&P 500 Target of 1775”, North America Equity Research, J.P. Morgan, Bloomberg and BEA August 2013

Bank Stock Outlook

Bank Stock Outlook

Credit-driven earnings recovery coming to an end

Financial Sector Profits Rebound

Source: BCA Research; U.S Equity Strategy; Special Report, 7/15/2013

Quarterly Net Income

Source: FDIC Quarterly Banking Profile; First Quarter 2013, All FDIC-Insured Institutions

2009 - 2013

Quarterly Return on Assets (ROA), Annualized

Source: FDIC Quarterly Banking Profile; First Quarter 2013, All FDIC-Insured Institutions

2004 - 2013

Quarterly Return on Equity (ROE), Annualized

Source: FDIC Quarterly Banking Profile; First Quarter 2013, All FDIC-Insured Institutions

2004 - 2013

Aggregate Loan Loss ProvisionsIncludes all public banks between $1bil - $50bil

Source: John E. McDonald, CFA; Bernstein Research, SNL, Bernstein Analysis; 5/28/2013

Loan Loss Reserves as a Percentage of Net Loans

Source: John E. McDonald, CFA; Bernstein Research, FDIC, Bernstein Analysis; 5/16/2013

Provision Rates Tend to Fall Below “Normal” Following a Recession

Bank Stock Outlook Credit-driven earnings recovery coming to an end

Revenue growth will remain weak due to margin pressure and weak loan demand

Excess Deposits Over Loans

Source: FDIC Historical Statistics On Banking

Smaller Banks’ Average Loan-to-Deposit Ratio The Past 7 ½ Years

Source: Christopher Marinac, “The Weekly Musings”, FIG Partners Research, SNL Financial LC, FDIC call report filings 8/12/13

ISI – U.S. Bank Total Loans Adjusted for FASB Accounting Change 4 Wk. Avg. Y/Y % Jul 10 2.6%

Source: ISI Daily Economic Report 7/23/13

Total Loan Growth Compares Unfavorably to Previous Recoveries

Source: Keith Horowitz, CFA; Josh Levin, CFA; “Bank Stocks 2013”; Citi Research, Fed H.8 Loan Data as of 7/5/13

Credit Deleveraging Trends

Source: Keith Horowitz, CFA; Josh Levin, CFA; “Bank Stocks 2013” , Citi Research estimates, Haver Analytics, Flow of Funds data as of 1Q13. Total US Credit Excludes US Government and Financial borrowing.

US Credit is running ~160% of GDP vs. recent peak of ~180% and L/T median of 100%

Revolving Consumer Credit and Home Equity Growth

Source: Bernstein Research; Federal Reserve, Bernstein estimates and analysis

ISI

Source: ISI Daily Economic Report 6/19/13

Bank Stock Outlook Credit-driven earnings recovery coming to an end

Revenue growth will remain weak due to margin pressure and weak loan demand

Expense control is critical

Favorable impact from capital actions (dividends, share repurchases and acquisitions) will accelerate

Historical Payout Ratios, 1999-2013E (Median Bank)

Source: Jason M. Goldberg, “U.S. Large-Cap & Mid-Cap Banks 2013 Outlook” 1/2/13, Barclays, SNL Financial LC

2013 Estimated Payout Ratios

Source: Jason M. Goldberg, “U.S. Large-Cap & Mid-Cap Banks 2013 Outlook” 1/2/13, Barclays

Estimated Future Level

Bank Stock Outlook Credit-driven earnings recovery coming to an end

Revenue growth will remain weak due to margin pressure and weak loan demand

Expense control is critical

Favorable impact from capital actions (dividends, share repurchases and acquisitions) will accelerate

Valuations still attractive but need to be selective

Equity Prices Have Caught Up With Earnings

Source: BCA Research; U.S Equity Strategy; Special Report, 7/15/2013

Price to Tangible Book Value All Banks Over $750mm

Source: SNL; SCC

Source: John E. McDonald, CFA; Bernstein Research, CRSP, FactSet, Bernstein Analysis; 6/18/2013

35 Year Relative Price to Earnings Ratio for U.S. Banks

90s Rally Took Off In 1995

Source: Erika Penala, “Halftime Report” 6/26/13; U.S. Banks, Bank of America Merill Lynch Global Research