EFTA01459637

8 February 2016 US Equity Insights Sharp correction at Financials led by Bear market at Banks Banks are down -25% from their highs in mid 2015, about twice the 13% S&P 500 sell- off. While many investors are scarred by the financial crisis, it's not normal for banks to suffer nearly twice the S&P's decline in corrections. Unless Banks are at the epicenter of trouble (late 1980s, 1994, 1998, and since 2007), their beta is usually only slightly above 1 and not near 2 as recently seen. Inside, we present the performance of Banks around prior market corrections. We realize that Bank indices have more market exposure than history and banks revenue continue to be challenged by persistently low LT yields and less income earnings assets under stricter regulations, but we see S&P Banks at 9x our 2016E EPS as too cheap and still like their payout upside. )( S&P 500 corrections I Sell-off of Banks Relative sell-off of Banks vs. S&P Duration of Diversified Diversified S&P SOD Peak S&P 500 Size of Corrections Regional Diversified Capital Financial Regional Diversified Capital Financial Date Trough Date Corrections (TDs) Banks Banks Markets Services Banks Banks Markets Services 24-Aug-60 25-Oct-GO .9.9% 43 -1.1% -1.1% 0.1 0.1 12-Dec-61 26-Jun-62 -28.0% 135 -303% -26.0% 1.1 0.9 09-Feb-66 07-Oct-66 -22.2% 167 -21.0% -28.6% 0.9 1.3 25-Sep-67 05-Mar-68 -10.1% 110 •5.0% -7.5% 0.5 0.7 29-Noy-68 26-May-70 3& 1% 369 -28.7% -24.4% 0.8 0.7 28-Apr-71 23-Nov-71 -13.9% 146 -10.2% -12.4% 0.7 0.9 11-Jan-73 22-Aug-73 -16.4% 154 -17.6% -11.1% 1.1 0.7 12.Oct-73 03-Oct-74 -44.1% 246 -07.9% -42.8% 1.1 1.0 15-Jul-75 16-Sep-75 -141% 44 -14.1% -22.9% 1.0 1.6 17-Mar-77 06-Mar-78 -14.9% 243 -16.9% -27.7% 1.1 1.9 12-Sep-78 14-Nov-78 -116% 45 -14.6% -12.9% 1.1 1.0 05.Oct-79 07-Nov-79 .10.2% 23 -13.5% -14.7% 1.3 1.4 13-Feb-80 27-Mar-80 -17.1% 30 -17.1% -117% 1.0 0.8 28-Nov-SO 12-Aug-82 -27.1% 430 -36.5% -22.1% 1.3 0.8 10-Oct-83 24-Jul-84 •14.4% 199 -34.7% •32.1% 2.4 2.2 25-Aug-87 04-Dec-87 -33.5% 71 -32.4% -40.7% 1.0 1.2 09-Oct-89 30-Jan-90 -10.2% 78 -24.6% -28.9% 2.4 22 16-Jul-90 11-Oct-90 -19.9% 62 47.2% -46.8% NA -38.7% 2.4 2.4 NA 1.9 07-Oct-97 27.Oct-97 -10.8% 14 -11.1% -11.2% -16.8% -10.7% 1.0 1.0 1.6 1.0 17-Jul-98 31-Aug-98 -19.3% 31 -27.8% -35.7% -55.5% -32.516 1.4 18 22 1.7 16-Jul-99 15-Oct-99 -12.1% 64 -21.9% -24.9% -48.9% -152% 1.8 2.1 4.0 1.3 24-Mar-00 21-Sep-01 -36.8% 373 -22.7% -21.0% -58.2% -33.1% 0.6 0.6 1.6 0.9 04-Jan-02 09-Oct-02 -33.8% 192 NA -28.0% NA NA NA 0.8 NA NA 27-Nov-02 11-Mar-03 -14.7% 69 NA -13.1% NA NA NA 0.9 NA NA 09-Oct-07 09-Mar-09 -56.8% 355 -86.3% -85.0)6 -77.3% -88.0% 1.5 13 1.4 1.6 23-Apr-10 02-Jul-10 -16.0% 49 -28.1% -29.7% -27.4% -28.7% 1.8 1.9 1.7 1.8 29.4pr-11 03.0c1.11 •19.4% 108 .37.2% -32.0% -44.1% •48.5% 1.9 1.6 2.3 2.5 02-Apr-12 01-Jun-12 -9.9% 42 15.1% -12.1% -24.0% 30.5% 1.5 1.2 2.4 3.1 10 21-May-15 20-Jan-16 -12.7% 163 -23.8% .24.2% -28.8% •14.9% 1.9 1.9 2.3 1.2 Avg -20.6% -25.5% .25.3% -42.3% -34.2% 1.3 1.3 2.2 1.7 Avg ex. 1984-90, 1998, 2007-16 -20.3% -19.4% -193% -41.3% -19.9% 1.0 1.0 2.4 1.1 1984-1990, 1998, 2007-2016 -21.2% -35.7% -36.7% -42.9% -403% 1.8 1.9 2.1 2.0 We SAC C and JAW wort civet. a I es DivnIAWCIhnintSI Sewn bean Mew, 20f Anne Man Sam not ban sioserad se Bonn (Dnvemigd &net) Tan* SSP. 04•00Chil Bea Deutsche Bank Securities Inc. Page 19 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0120201 CONFIDENTIAL SDNY_GM_00266385 EFTA01459637