Exhibit (c)(2)
| Fairness Opinion Presentation to the Committee of Designated Independent Directors and the Board of Directors Regarding: November 18, 2006 Confidential Project ACADIA New York – Atlanta - Boston - Chicago - San Francisco SANDLER O’NEILL + PARTNERS, L.P. |
| This presentation, and the oral or video presentation that supplements it, have been developed by and are proprietary to Sandler O’Neill & Partners, L.P. and were prepared exclusively for the benefit and internal use of the recipient. Neither the printed presentation nor the oral or video presentation that supplements it, nor any of their contents, may be reproduced, distributed or used for any other purpose without the prior written consent of Sandler O’Neill & Partners, L.P. The analyses contained herein rely upon information obtained from the recipient or from public sources, the accuracy of which has not been verified, and cannot be assured, by Sandler O’Neill & Partners, L.P. Moreover, many of the projections and financial analyses herein are based on estimated financial performance prepared by or in consultation with the recipient and are intended only to suggest reasonable ranges of results. Finally, the printed presentation is incomplete without the oral or video presentation that supplements it. Sandler O’Neill & Partners, L.P. prohibits employees from offering, directly or indirectly, favorable research, a specific rating or a specific price target, or offering or threatening to change research, a rating or a price target to a company as consideration or inducement for the receipt of business or compensation. The Firm also prohibits research analysts from being compensated for their involvement in, or based upon, specific investment banking transactions. Sandler O’Neill & Partners, L.P. is a limited partnership, the sole general partner of which is Sandler O’Neill & Partners Corp., a New York corporation. Sandler O’Neill & Partners, L.P. is a registered broker-dealer and a member of the National Association of Securities Dealers, Inc. Sandler O’Neill Mortgage Finance L.P. is an indirect wholly-owned subsidiary of Sandler O’Neill & Partners Corp. This material is protected under applicable copyright laws and does not carry any rights of publication or disclosure. GENERAL INFORMATION AND LIMITATIONS |
| Table of Contents I. Transaction Overview II. PINE Franchise Overview III. Comparable Deal Analysis IV. Discounted Cash Flow V. MAPLE Capital Position |
| I. Transaction Overview |
| Consideration: $32.33 per share for shares not held by MAPLE and its affiliates Aggregate transaction value of approximately $3.2 billion100% cash Receipt of PINE shareholder approval, including a majority of the shares not held by MAPLE All reps and warranties of PINE being true and accurate at closing First quarter of 2007 Closing Conditions: Terms of the Proposed Transaction Transaction Overview Anticipated Closing: |
| II. PINE Franchise Overview |
| PINE Valuation Update Historical Financial Statements ($US in millions) 2002 2003 2004 2005 Q3 ‘05 Q3 ‘06 2002-2005 Q3 ‘05 -Q3 ‘06 Earnings & Profitability Net Interest Income $785 $833 $927 $998 $249 $301 8.3% 20.9% Provision for Credit Losses 44 42 40 17 6 14 (27.1%) 150.1% Non-Interest Income 279 333 354 401 103 128 12.8% 24.2% Non-Interest Expense 559 633 715 828 211 280 14.0% 32.9% Net Income (GAAP) 299 351 305 274 89 86 (2.8%) (3.0%) Cash Operating Earnings - - - 439 110 117 NA 6.8% Per Share Data Diluted Earnings per Share $1.99 $2.15 $1.75 $1.55 $0.51 $0.38 (8.0%) (25.5%) Cash Operating Earnings per Share - - - 2.48 0.63 0.51 NA (19.0%) Dividends per Share 0.58 0.70 0.79 0.84 0.22 0.22 13.1% 0.0% Book Value per Share 13.70 15.54 17.71 37.34 37.23 36.21 39.7% (2.7%) Tangible Book Value per Share1 9.21 8.45 9.91 8.81 8.50 7.84 (1.5%) (7.8%) Balance Sheet Total Assets $23,419 $26,454 $28,688 $32,095 $31,815 $39,917 11.1% 25.5% Total Securities 6,641 7,106 6,816 4,484 4,479 2,557 (12.3%) (42.9%) Net Loans 13,976 16,155 18,402 19,928 19,789 25,472 12.6% 28.7% Deposits 15,665 17,901 19,228 20,273 20,623 27,491 9.0% 33.3% Intangible Assets 695 1,163 1,416 5,216 5,246 6,786 95.8% 29.4% Total Equity 2,063 2,521 3,176 6,484 6,464 8,267 46.5% 27.9% Tangible Equity1 1,368 1,357 1,778 1,530 1,476 1,790 3.8% 21.3% Selected Ratios Return on Average Equity 16.25% 14.51% 10.63% 4.60% 5.48% 4.19% Return on Average Tangible Equity 23.10 26.72 20.11 29.04 35.85 31.50 Return on Average Assets 1.39 1.37 1.08 0.87 1.12 0.86 Efficiency Ratio 51.9 53.3 54.9 51.4 50.69 55.50 TCE/ TA 6.02 5.37 6.45 4.72 4.58 4.47 Tier 1 Ratio 9.66 8.96 9.96 8.63 8.53 8.16 1 For 2002 and 2003, tangible book value equals total shareholders equity less goodwill and intangible assets. For 2004, 2005, Q3 2005, and Q3 2006 periods, the deferred tax liability on intangibles is added back in the calculations. Source: Company Documents, SNL Financial |
| Reconciliation of Earnings and Tangible Book Value Earnings PINE reports and forecasts, and many analysts estimate, cash operating earnings, net of tax. This figure excludes amortization of transaction-related intangibles, including those from the MAPLE transaction; merger and restructuring costs and other non-core adjustments, all net of tax benefits. To reconcile this amount to GAAP requires the deduction of amortization expense and other adjustments, net of tax. Peer companies typically report GAAP net income, which is also the basis of analyst estimates. In this presentation, we will look at three earnings figures: Cash operating earnings, net of tax GAAP net income adding back the amortization expense related to the MAPLE transaction only GAAP net income Tangible Book Value The convention for US banks is to calculate Tangible Book Value as total equity less all intangible assets. We understand that MAPLE calculates this amount by netting against the intangible the deferred tax liabilities; PINE also reports Tangible Book Value in this manner. In this presentation we will look at Tangible Book Value as reported by PINE and adjusted to the US convention. PINE Franchise Overview |
| Cash Operating EPS vs. GAAP EPS Tangible Book Value Reconciliation PINE Franchise Overview Reconciliation of Earnings and Tangible Book Value Cash Operating Merger & Restructuring Cash GAAP Earnings, Amortization Push-Down Consolidation & Other Tax Net of GAAP Diluted Operating EPS Excl. GAAP ($ in 000s) Net of Tax of Intangibles Amortization Costs Costs Effect Tax Net Income Shares EPS Pushdown EPS LTM 9/30/06 $469,016 $40,548 $106,944 $52,965 $48,029 ($91,016) $157,470 $311,258 210,687 $2.24 $1.78 $1.47 FY 2006E $477,000 $52,317 $103,755 $56,929 $3,018 ($80,618) $135,401 $341,599 224,500 $2.12 $1.80 $1.52 FY 2007E $502,500 $53,125 $82,475 $8,000 $0 ($55,942) $87,658 $414,842 242,600 $2.07 $1.92 $1.71 Adjustments Total Adjustments Reported Adjusted Shareholders’ Deferred Tangible Tangible Equity- Other Tax Liability Tangible Outstanding Book Value Book Value ($ in 000s) Under GAAP Goodwill Intangibles on Intangibles Equity1 Shares Per Share2 Per Share3 September 30, 2006 $8,266,711 ($6,017,406) ($768,893) $309,828 $1,790,240 228,276 $7.84 $6.49 1 Tangible Equity equals Total Shareholders Equity less goodwill and intangibles plus deferred tax liability on intangibles. 2 Reported Tangible Book Value Per Share equals Total Shareholders Equity less goodwill and intangibles plus deferred tax liability on intangibles divided by shares outstanding. 3 Adjusted Tangible Book Value Per Share equals Total Shareholders Equity less goodwill and intangibles divided by shares outstanding. Source: PINE management, Public Documents |
| Three Year Stock Price Performance of PINE Three Year Stock Performance Source: Annual reports, SNL Financial 8/25/2004: Announces deal to sell majority interest to MAPLE 7/1/2005: Announces acquisition of GARDEN 4/13/2006: Announces acquisition of GARDEN II 3/1/2005: Deal with MAPLE closes 5/16/2005: Announces push-down accounting would be required for MAPLE transaction. 10/23/2006: Announces CEO succession plans PINE Franchise Overview $24.00$28.00$32.00$36.00$40.00Nov-03Apr-04Sep-04Feb-05Jul-05Dec-05May-06Oct-06 |
| Comparative Stock Performance Comparative Stock Price Performance PINE Franchise Overview 1-Year 3-Year Change (%) Change (%) PINE 2.7% -4.3% Comparable Group Composite includes: PNC, KEY, MTB, MI, SOV, SNV, CMA, ZION, UB, CBSS, CBH, HBAN, and FHN Source: SNL Financial, FactSet 85%90%95%100%105%110%115%120%125%130%Nov-03Mar-04Aug-04Dec-04May-05Sep-05Feb-06Jun-06Nov-06PINENasdaq BankComparable Group CompositeS&P Bank |
| PINE Valuation Update PINE Comparable Group Analysis Tangible Percent of Equity/ Price/ Price/ Price/ Price/ 5 Year Market Stock 52 Week Total Tangible LTM LTM LTM Tangible LTM Est. EPS Est. EPS Growth Name Cap. ($) Price ($) High (%) Assets ($) Assets (%) ROAA (%) ROAE (%) ROTE (%) BV (%) EPS (x) 2006 (x) 2007 (x) Est. (%) PNC Financial Services Group 20,396 69.42 93.8 98,436 7.55 2.76 29.72 31.891 285 8.0 13.7 12.4 9.4 KeyCorp 14,857 36.89 96.3 96,155 6.81 1.29 15.77 19.411 230 12.6 12.5 12.1 7.3 M&T Bank Corp. 13,453 121.55 97.3 56,373 5.59 1.50 13.97 30.30 453 16.7 16.5 15.3 9.3 Marshall & Ilsley Corp. 11,918 46.77 95.3 55,483 5.24 1.56 14.82 31.72 435 15.0 14.6 13.3 9.8 Sovereign Bancorp Inc. 11,888 24.99 98.0 90,410 3.78 0.59 6.41 17.45 370 25.0 17.1 16.7 8.4 Synovus Financial Corp. 9,744 30.00 99.8 31,345 9.25 2.01 18.12 22.59 344 16.6 16.1 15.0 12.4 Comerica Inc. 9,400 59.18 98.5 58,474 8.57 1.44 15.61 16.31 188 12.1 12.2 11.8 7.0 Zions Bancorp. 8,477 79.37 93.1 45,778 5.92 1.35 13.52 25.87 327 14.8 14.3 13.0 10.0 UnionBanCal Corp. 8,260 58.86 82.0 52,013 8.09 1.70 18.41 20.90 198 10.3 12.3 12.8 6.7 Compass Bancshares Inc. 7,371 56.84 94.8 33,957 6.06 1.39 18.09 24.22 327 16.5 16.1 14.8 9.5 Commerce Bancorp Inc. 6,591 35.22 85.5 43,304 5.95 0.70 11.73 14.101 257 23.6 21.6 19.0 14.7 Huntington Bancshares Inc. 5,896 24.78 99.8 35,662 7.13 1.38 16.83 20.48 236 12.4 13.6 13.1 6.0 First Horizon National Corp. 4,975 39.97 92.8 40,076 5.45 1.28 20.81 24.88 230 10.4 14.7 14.3 8.2 HIGH 99.8 98,436 9.25 2.76 29.72 30.30 453 25.0 21.6 19.0 14.7 LOW 82.0 31,345 3.78 0.59 6.41 16.31 188 8.0 12.2 11.8 6.0 MEAN 94.4 56,728 6.57 1.46 16.45 22.56 299 14.9 15.0 14.1 9.1 MEDIAN 95.3 52,013 6.06 1.39 15.77 22.59 285 14.8 14.6 13.3 9.3 PINE (Cash Operating) 6,914 30.35 96.7 39,917 4.47 0.82 4.09 29.43 387 13.5 14.2 2 14.2 2 8.9 Pricing data as of November 17, 2006; Dollars in millions, except per share data 1 Data as of LTM June 30, 2006 2 Based on consensus estimates of $2.13 and $2.14 per share for 2006 and 2007, respectively Source: SNL Financial, Bloomberg |
| % Change 7/05 1/06 7/06 9/06 10/06 7/05 to 10/06 2006 $2.75 $2.51 1 $2.28 $2.24 $2.12 (22.9%) 2007 $2.90 $2.65 $2.44 $2.28 $2.07 (28.6%) 2006E 2007E Management Earnings Estimates Management Estimates 1 Median First Call estimates Source: Company Documents PINE Franchise Overview |
| Street Perspectives on PINE - Analyst Estimates (Cash / Operating Earnings Basis) Source: SNL Financial, Bloomberg, Research Reports PINE Franchise Overview Date Firm Analyst Rec. Type of Estimate 2006E 2007E Growth 11/17/2006 BMO Capital Markets L.Chan Market Perform Not Avail. $2.14 $2.10 -1.9% 11/6/2006 Ryan Beck & Co. A.Davis Underperform Cash Op. $2.13 $2.20 3.3% 10/30/2006 A.G. Edwards Inc. D.George Hold Cash $2.13 $2.13 0.0% 10/26/2006 Bear, Stearns & Company S.DiMartino Peer Perform Cash Op. $2.13 $2.16 1.4% 10/26/2006 Cohen Bros. & Company L.Calfo Hold Not Avail. $2.13 $2.07 -2.8% 10/26/2006 Keefe Bruyette & Woods Inc. J.Shaw Market Perform Not Avail. $2.13 $2.15 0.9% 10/26/2006 Friedman Billings Ramsey & Co. L.Hunsicker Market Perform Cash Op. $2.13 $2.12 -0.5% 10/26/2006 RBC Capital Markets J.Ackor Sector Perform Cash Op. $2.13 $2.12 -0.5% 10/25/2006 Merrill Lynch & Co. H.Wolf Sell Not Avail. $2.13 $2.10 -1.4% 10/25/2006 Sandler O’Neill + Partners M.Fitzgibbon Sell Cash $2.12 $2.18 2.8% 10/23/2006 C. L. King & Associates K.Timmons Accumulate Not Avail. $2.20 $2.25 2.3% 09/25/2006 Morgan Stanley P.Delaney Underweight Cash Op. $2.14 $2.20 2.8% MEDIAN $2.13 $2.14 0.5% PINE Management Cash Operating Projections $2.12 $2.07 -2.4% # of Estimates Analysts Low High Median 2006E 12 $2.12 $2.20 $2.13 2007E 12 $2.07 $2.25 $2.14 |
| Price to Forward EPS Price to Forward EPS PINE Franchise Overview Comparable Group Composite includes: PNC, KEY, MTB, MI, SOV, SNV, CMA, ZION, UB, CBSS, CBH, HBAN, and FHN Source: SNL Financial, FactSet 7/1/2005: Announces acquisition of GARDEN 4/13/2006: Announces acquisition of GARDEN II 5/16/2005: Announces push-down accounting would be required for MAPLE transaction 8/25/2004: Announces deal to sell majority interest to MAPLE 3/1/2005: Deal with MAPLE closes 10/23/2006: Announces CEO succession plans 9.0x10.0x11.0x12.0x13.0x14.0x15.0xNov-03Apr-04Aug-04Dec-04May-05Sep-05Feb-06Jun-06Nov-06PINEComparable Group Composite High 14.2x Low 9.8x Median 11.4x Current 14.2x Price to Forward EPS |
| III. Comparable Deal Analysis |
| Precedent Bank Transaction Analysis Source: SNL Financial, Company documents Comparable Deal Analysis Deal Value Greater Than $1 Billion Transactions Since January 1, 2004 Number of Transactions = 17 Deal Deal Deal Deal Tan. Bk Deal Price/ Deal Price/ Price/ Price/ Price/ Premium/ Seller Price Annc. Value 4-Qtr Estimated Estimated Tan. Bk Core Dep. 2 Day Before Acquiror Seller St Date $(M) Consideration EPS(x) EPS Yr 1(x) EPS Yr 2(x) (%) (%) Annc.(%) PNC Financial Services Group Mercantile Bankshares Corp. MD 10/8/06 6,028 Mixed 20.3 19.9 18.7 378 43.0 27.8 Citizens Banking Corp. Republic Bancorp Inc. MI 6/26/06 1,034 Mixed 15.0 15.2 14.5 254 25.5 29.0 Banco Bilbao Vizcaya Argent SA Texas Regional Bancshares Inc. TX 6/12/06 2,165 Cash 24.3 22.5 20.5 485 43.3 14.1 Regions Financial Corp. AmSouth Bancorp. AL 5/24/06 10,060 Common Stock 13.7 13.4 12.4 296 21.9 (0.4) Capital One Financial Corp. North Fork Bancorp. NY 3/12/06 14,568 Mixed 15.5 16.2 14.6 490 34.5 23.6 PINE GARDEN NJ 7/11/05 1,899 Mixed 15.1 15.7 14.6 447 27.3 17.5 Zions Bancorp. Amegy Bancorp Inc. TX 7/5/05 1,710 Mixed 23.6 21.6 18.7 408 30.8 4.4 Capital One Financial Corp. Hibernia Corp. LA 3/7/05 4,977 Mixed 15.3 15.3 14.9 280 23.3 17.7 MAPLE PINE ME 8/25/04 3,818 Mixed 18.3 17.2 15.6 478 31.1 27.7 Fifth Third Bancorp First Natl Bkshs of FL FL 8/2/04 1,530 Common Stock 42.1 NA NA 663 42.0 41.7 Wachovia Corp. SouthTrust Corp. AL 6/20/04 14,365 Common Stock 19.6 18.4 16.7 373 38.8 20.5 SunTrust Banks Inc. National Commerce Finl Corp. TN 5/7/04 7,433 Mixed 20.8 18.8 16.3 451 48.3 21.3 Royal Bank of Scotland Group Charter One Financial OH 5/4/04 10,527 Cash 19.2 15.2 13.9 354 31.2 33.4 BNP Paribas Group Community First Bankshares ND 3/15/04 1,217 Cash 16.5 15.7 NA 450 24.4 15.2 National City Corp. Provident Financial Group Inc. OH 2/16/04 2,134 Mixed 21.1 16.8 15.4 246 21.9 15.9 Regions Financial Corp. Union Planters Corp. TN 1/22/04 6,001 Common Stock 12.4 11.9 12.3 274 17.9 0.8 J.P. Morgan Chase & Co. Bank One Corp. IL 1/14/04 58,783 Common Stock 17.3 15.2 NA 285 28.4 15.3 High 42.1 22.5 20.5 663 48.3 41.7 Low 12.4 11.9 12.3 246 17.9 (0.4) Mean 19.4 16.8 15.6 389 31.4 19.1 Median 18.3 16.0 15.2 378 30.8 17.7 Transaction Information |
| Transaction Multiples Notes: 1 Based on approximately 98 million shares owned by the public plus outstanding options. MAPLE currently owns approximately 130 million shares of PINE, which represent a 56.98% ownership stake. 2 Tangible book value per share as reported by PINE, including the impact of deferred tax liability on intangibles. 3 Tangible book value per share calculated as total equity less goodwill and intangibles divided by shares outstanding. 4Assumes $2.8 billion of core deposits at 9/30/06. Comparable Deal Analysis ($ in millions, except per share data) Comparable Transactions PINE Basis Transaction Median Deal Value Per Share $32.33 Aggregate Deal Value1 $3,232 Premium to Market Price: November 17, 2006 $30.35 6.5% 17.7% Price to LTM EPS: GAAP $1.47 22.0x 18.3x GAAP Excluding Pushdown $1.78 18.2x Cash Operating $2.24 14.4x Price to 2006E EPS: GAAP $1.52 21.2x 16.0x GAAP Excluding Pushdown $1.80 17.9x Cash Operating $2.12 15.2x Price to 2007E EPS: GAAP $1.71 18.9x 15.2x GAAP Excluding Pushdown $1.92 16.9x Cash Operating $2.07 15.6x Price to Tangible Book: As Reported2 $7.84 412% 378% Excluding Def Tax Liability3 $6.49 498% Premium to Core Deposits 24.1% 30.8% |
| Precedent Buy-In Transactions1 1 All buy-in transactions in the U.S. since January 2000 with a deal value between $500 million and $10 billion with 15-80% of shares acquired in transaction and resultant ownership of 90-100%. 2 Represents percent of total shares acquired. 3 Market premium based on last date before announcement of transaction or intent to pursue transaction. Source: SDC Comparable Deal Analysis Date Announced Acquiror Name Target Name Value of Transaction ($mil) % of Shares Acquired2 % of Shares Owned Post Transaction Premium 4 Weeks Prior to Ann. Date3 06/05/06 Investor Group Trizec Properties Inc 2,884 61.9 100.0 16.1 02/06/06 Lafarge SA Lafarge North America 2,995 50.2 100.0 39.7 12/20/05 Sprint Nextel Corp Nextel Partners Inc 7,591 68.7 100.0 13.0 10/28/05 Maple Leaf Heritage Invest Hudsons Bay Co 754 61.5 100.0 11.3 09/01/05 Novartis AG Chiron Corp 6,214 57.8 100.0 31.5 09/01/05 IYG Holding Co 7-Eleven Inc 1,301 23.1 91.5 14.1 03/09/05 Noranda Inc Falconbridge Ltd 2,519 41.2 100.0 29.3 02/21/05 Novartis AG Eon Labs Inc 933 32.5 100.0 23.5 10/25/04 Magna International Inc Tesma International Inc 570 56.2 100.0 26.1 08/02/04 Cox Enterprises Inc Cox Communications Inc 8,390 37.8 100.0 25.2 04/10/03 USA Interactive Hotels.com 1,237 32.0 100.0 28.0 03/19/03 DuPont DuPont Canada Inc 1,064 24.0 100.0 14.0 05/31/02 USA Interactive Expedia Inc 3,636 38.8 100.0 22.2 05/31/02 USA Interactive Ticketmaster 841 34.5 100.0 (28.1) 02/15/02 Xcel Energy Inc NRG Energy Inc 673 25.7 100.0 (4.1) 11/06/01 Security Capital Group Inc Storage USA Inc 1,644 57.0 100.0 6.1 06/06/01 Liberty Mutual Insurance Co Liberty Financial Cos Inc 536 30.0 100.0 40.4 05/07/01 BNP Paribas SA BancWest Corp,Honolulu,HI 2,480 55.0 100.0 46.3 02/20/01 Investor Group Springs Industries Inc 875 59.0 100.0 33.3 02/15/01 Westfield America Trust Westfield America Inc 1,051 22.5 100.0 14.5 01/25/01 Sodexho Alliance SA Sodexho Marriott Services Inc 1,145 52.7 100.0 49.7 12/22/00 Court Square Capital Ltd Delco Remy International Inc 653 66.7 100.0 34.5 11/13/00 Investor Group CB Richard Ellis Services Inc 603 62.0 100.0 30.6 09/07/00 Etablissements Delhaize Freres Delhaize America Inc 1,825 58.0 100.0 19.3 08/14/00 News Corp Ltd United Television Inc 790 55.3 100.0 14.0 08/14/00 News Corp Ltd BHC Communications Inc 888 23.9 100.0 10.0 02/14/00 Healtheon Web MD Carelnsite 1,884 31.0 100.0 (3.4) High 49.7 Low (28.1) Mean 20.6 Median 22.2 Banking Buy-In Transactions 05/07/01 BNP Paribas SA BancWest Corp 2,480 55.0 100.0 46.3 09/12/88 Allied Irish Banks PLC First Maryland Bancorp 365 51.1 100.0 60.2 07/15/87 HSBC Marine Midland Banks 752 48.0 100.0 60.0 |
| IV. Discounted Cash Flow Analysis |
| Discounted Cash Flow Analysis PINE Management cash operating estimates (USD) of $2.07 utilized for 2007; subsequent years grown at 5% During the base years of the projected period (thru 2010), GAAP earnings utilized in DCF The terminal value is based upon estimated cash operating earnings Earnings estimates used for the analysis are shown below: Balance sheet grown at 3% in 2007 and 7% in subsequent years Discount rate calculated as follows: Peer group median beta of 0.94 x the equity risk premium of 6.80% (60 year) + 10-year risk free rate of 4.60% = 10.99% Key Assumptions EPS Estimates GAAP Cash Operating Q4 2006 $0.38 $0.51 2007 $1.71 $2.07 2008 $1.90 $2.17 2009 $2.05 $2.28 2010 $2.20 $2.40 |
| 1 Includes projected impact of GARDEN II transaction- approximately $400 million of intangibles, $405 million of additional equity and $1.7 billion of additional assets. 2 Terminal value based upon cash operating earnings. Discounted Cash Flow Analysis Sensitivity Analysis (13.3x Terminal Multiple)Standalone NPV9.0%10.0%11.0%12.0%13.0% 5.00%$28.36$27.34$26.38$25.46$24.57Earnings6.00%$29.35$28.30$27.30$26.34$25.43Growth7.00%$30.37$29.28$28.24$27.25$26.318.00%$31.42$30.29$29.22$28.19$27.219.00%$32.49$31.33$30.21$29.15$28.13Discount Rate Key Assumptions Asset Growth Rate (2007) 3.0% Opportunity Cost of Excess Cash 5.0% Asset Growth Rate (2008 and beyond) 7.0% Dividend Payout Ratio 50.0% Discount Rate 10.99% Terminal Multiple 13.3x Target TCE/TA 5.0% Operating Earnings Growth Rate after 2007 5.0% Tax rate 39.0% Historical and projected financial information Quarter Current ended $ in millions, except per share data 9/30/06 12/31/06 20071 2008 2009 2010 2011 Balance Sheet Data Assets $39,917 $40,416 $43,329 $46,362 $49,607 $53,079 Intangibles $6,786 $6,747 $7,006 $6,896 $6,803 $6,726 Common Equity $8,267 $8,430 $8,822 $8,869 $8,943 $9,043 Tangible Common Equity / Tangible Assets 4.47% 5.00% 5.00% 5.00% 5.00% 5.00% GAAP Net Income $87 $415 $461 $498 $535 $611 2 Capital to fund tangible asset growth ($164) $14 ($53) ($86) ($117) Terminal Value $8,124 Excess Cash Flows ($77) $429 $408 $412 $8,542 Sensitivity Analysis (5.0% Earnings Growth) Standalone NPV 9.0% 10.0% 11.0% 12.0% 13.0% 11.0x $24.34 $23.48 $22.66 $21.88 $21.13 Terminal 12.0x $26.09 $25.16 $24.28 $23.43 $22.63 Multiple 13.0x $27.83 $26.84 $25.89 $24.99 $24.12 14.0x $29.58 $28.52 $27.51 $26.54 $25.62 15.0x $31.32 $30.20 $29.12 $28.10 $27.12 Discount Rate Year ended December 31, |
| Discounted Cash Flow Analysis 1 Terminal value based upon cash operating earnings. Historical and projected financial information Quarter Current ended $ in millions, except per share data 9/30/06 12/31/06 2007 2008 2009 2010 2011 Income statement GAAP net income $87 $415 $461 $498 $535 $611 1 After-tax (charge)/benefit for excess equity $0 ($6) ($11) ($17) ($22) Pro forma GAAP net income $87 $415 $455 $486 $518 $589 Equity account Beginning common equity balance $8,267 $8,430 $8,822 $8,869 $8,943 $9,043 Net income $87 $415 $455 $486 $518 $589 Core dividends & share repurchases ($44) ($207) ($230) ($249) ($267) ($305) Excess dividends/capital to fund growth $120 ($221) ($178) ($163) ($151) ($160) Additional equity related to GARDEN II Transaction $405 $0 $0 $0 $0 Ending common equity balance $8,267 $8,430 $8,822 $8,869 $8,943 $9,043 $9,166 Base case common equity $8,310 $8,923 $9,153 $9,402 $9,669 $9,975 Cumulative excess equity ($120) $101 $284 $459 $626 $808 Total assets at period end $39,917 $40,416 $43,329 $46,362 $49,607 $53,079 $56,795 Intangibles at period end $6,786 $6,747 $7,006 $6,896 $6,803 $6,726 $6,660 Tangible assets at period end $33,131 $33,669 $36,323 $39,466 $42,804 $46,354 $50,135 Tangible common equity / assets 4.47% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Average diluted shares (mm) 229.1 242.6 242.6 242.6 242.6 242.6 Year ended December 31, |
| V. MAPLE Capital Position |
| MAPLE Capital Position Senior debt ratings: Aa3/A+/AA- Market cap: US$42.6 billion Total cash and investment securities: US$114 billion 1 Amount of subordinated debt that MAPLE plans to raise between announcement and closing. MAPLE Acquisition US Dollars in millions 7/31/2006 Adjustments Proforma Tier 1 Capital Common Shareholders’ Equity $16,797 $16,797 Less: Dealer Holding of Common Shares (40) (40) Qualifying Non-Controlling Interests in Subsidiaries 2,109 ($2,109) 0 Qualifying Preferred Shares Grandfathered 790 790 Other 376 376 Innovative Capital Trust Securities 1,105 1,105 Less: Goodwill and Intangibles in Excess of 5% Limit (6,266) (1,123) (7,389) Total Tier 1 Capital 14,871 (3,232) 11,639 Tier 2 Capital Subordinated Notes and Debentures 6,112 3,100 1 9,212 Less: Amortization of Subordinated Notes and Debentures (181) (181) General Allowance for Credit Losses 1,006 1,006 Total Tier 2 Capital 6,937 3,100 10,037 Investment in Unconsolidated Subs / Substantial Investments (5,593) (5,593) First Loss Protection (28) (28) Total Capital $16,187 $16,055 Tangible Common Equity Common Shareholders’ Equity $16,797 $16,797 Qualifying Non-Controlling Interest in Subsidiaries 2,109 ($2,109) 0 Less: Goodwill and Net Intangible Assets (7,715) ($1,123) (8,838) Tangible Common Equity $11,191 ($3,232) $7,959 Risk Weighted Assets $122,992 $122,992 Capital Ratios Tier 1 Capital 12.09% 9.46% Total Capital 13.16% 13.05% Tangible Common Equity as a Percentage of Risk Weighted Assets 9.10% 6.47% |
