investment thesis - cfa institute...investment thesis: recommendation: buy current price: $15.30...

Investment Thesis:

Recommendation:Buy

Current Price:$15.30 (2/17/2017)

Target Price:$18.85 (+23%)

• Illusory Dividend Yield, Substantial Dividend Income

• Pristine Credit and Asset Quality

• Improving ROAE and ROAA year-over-year

• Efficiency Ratio

• Loan Portfolio Poised to do Well in Rising-Rate Environment

• Asymmetric Risk Profile, Optionality

Market Capitalization2.09BShares Outstanding137.98MRegression Beta0.55Below 52-Week High-10.21%50-Day Moving Average16.01200-Day Moving Average14.71Short Ratio11.00Forward P/E23.5

Industry Overview & Valuation DriversUndervalued Residential Lender well-positioned for rising rate environment, regulatory rollback

• Industry Growth

• Economic Growth

• Interest Rate Behavior

Industry Overview: Regulatory EnvironmentUndervalued Residential Lender well-positioned for rising rate environment, regulatory rollback

• Regulatory Shake-Up

• Durbin Amendment (Dodd-Frank Law)

• Financial CHOICE Act

Agency Position Status

Treasury Department Treasury Secretary Presidential appointment (Steven Mnuchin)

Federal Reserve Board (FRB) Chair Chair Yellen’s term expires in February 2018

Federal Deposit Insurance Corporation (FDIC) Chair Chairman Gruenberg’s term expires in November 2017

Office of the Comptroller of the Currency (OCC) Comptroller of the Currency Comptroller Curry’s term expires in March 2017

Consumer Financial Protection Bureau (CFPB) Director Director Cordray’s term expires in July 2018

Securities and Exchange Commission (SEC) Chair Chair White will resign in January 2017Commodity Futures Trading Commission (CFTC) Chair Chairman Massad’s term expires in April 2017

Company OverviewUndervalued Residential Lender well-positioned for rising rate environment, regulatory rollback

• Regional residential savings and loans bank

• Thrift-conversion and reorganization

• Initial Public Offering in 2010

Source of Revenues Source of Funds

Interest-Earning Assets: 3.27%Interest-Bearing Liabilities: 1.30%

Risk Considerations

Identifiable Operating & Investment Risk Profile

Prob

abili

ty

High

Moderate

Low

Discontinued Daily Leverage

Interest Rate Risk Mgmt.

Interest Rate Curve Flattens

Interest Rates Normalize

Competition from E-Lenders

Financial CHOICE Act

Management Retires

Increasing Credit Risk

Corporate Tax Rates Cut

Chg. In Agency Leadership

Technological obsolescence

Slowing US Economy

Acquisition of Another Bank

Interest Rates Historic Lows

Cyber Security Breach Home Sales Decline Additional

Regulation

Minor Moderate Major

Impact to Profitability

Financial Analysis

$10B Threshold Implications• Actual Asset Levels Vs. Average Levels• Sound Credit Quality of Assets• Judicious Interest Rate Risk Management

8.00

9.00

10.00

11.00

2012 2013 2014 2015 2016

Tot

al A

sset

s

Regulatory Threshold Total Assets

Average Credit Score at Origination

Financial Analysis

Net Interest Margin• Improving “Spread” Income

• Cost of Funds• Daily Leverage Strategy• Balance Sheet Leverage Strategies

Optimal Efficiency Levels• Operating Expense Management• Homogenous Loan Structures• Minimal Net Charge-Offs

Financial Analysis

Interpreting Capital Levels• Dividend Longevity• Increasing Acquisition Attractiveness• Book Value vs. Tangible Book Value• Tier 1 and Risk Based Capital

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

Tier1Leverageratio

CET1Capitalratio

Tier1Capitalratio

TotalCapitalratio

Minimum

WellCapitalized

CapitolFederal

Amount PerShare Amount PerShare Amount PerShare Amount PerShare Amount PerShareRegularquarterlydividendspaid

QuarterendedMarch31 12,145 0.075 11,023 0.075 10,513 0.075 11,592 0.085 11,305 0.085QuarterendedJune30 11,883 0.075 10,796 0.075 10,399 0.075 11,585 0.085 11,314 0.085

QuarterendedSeptember30 11,402 0.075 70,703 0.075 10,318 0.075 11,385 0.085 11,323 0.085QuarterendedDecember31 11,223 0.075 10,754 0.075 10,226 0.075 11,303 0.085 11,363 0.085

True-updividendspaid 26,585 0.18 25,815 0.18 35,450 0.26 33,248 0.25 38,835 0.29EarningsDividend 0.48 0.48 0.56 0.59 0.63

TrueBluedividendspaid(CapitalDistribution) 76,494 0.52 35,710 0.25 34,663 0.25 33,924 0.25 33,274 0.25Calendaryear-to-datedividendspaid 149,732 1.00 164,801 0.73 111,569 0.81 113,037 0.84 117,414 0.88

EarningsDividend,%oftotaldividend 48.00% 65.75% 69.14% 70.24% 71.59%

2012 2013 2014 2015 2016

Valuation: Comparable Method

Comparable Method• Peer Group

• Washington Fed• Third Federal• Northwest Savings• Columbia Banking

Updated 2/15/2017 5-yr AverageOperating Name Ticker Share Price Market Cap (B) Price/Earnings Price/Book Price/TBV Dividend Yield Buyback Yield Payout Ratio

1)Washington Federal Inc. WAFD $34.10 3,045 18.33 1.53 1.79 1.95% 3.32% 26.10%

2)Third Federal Savings & Loan TFSL $17.46 4,949 60.21 2.95 3.32 1.70% 2.66% 102.54%

3)Northwest Savings Bank NWBI $17.59 1,789 42.90 1.55 2.15 3.93% 1.91% 91.74%

4)Columbia Banking System Inc COLB $40.84 2,371 23.25 1.86 2.71 1.89% 0.05% 33.63%

Average $27.50 3,038 36.17 1.97 2.49 2.37% 1.98% 63.50%

Capitol Federal Financial, Inc. CFFN $15.19 2,097 24.48 1.53 1.69 5.79% 4.71% 151.04%

CFFN Implied Share Prices: $22.45 $19.58 $22.46 Average: $21.50% difference: 47.8% 28.9% 47.9% Average: 41.5%

Selection Criteria:• Similar levels of Excess Capital• Active Dividend• Federal Home Loan Bank membership• Total Assets near $10 Billion• Saving & Loans, not Commercial Banks

Valuation

Recommendation:Buy

Current Price:$15.30 (2/17/2017)


$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

7.00% 6.50% 6.00% 5.50% 5.00% CostofEquity

Gordon Growth Model

0DivGrowth

1%DivGrowth

2%DivGrowth

3%DivGrowth

Cost Of Equity

Low High

Risk Free Rate 2.5% 2.5%

Beta 0.49 0.82

Market Risk Premium 5.3% 5.3%

5.1% 6.9%

Round 5.0% 7.0%

Dividend Discount Model

Current Price• 0-1% div growth

Our Price• 1%-2% div growth

Income Growth• 1.8% last 3 years

Valuation

Recommendation:Buy

Current Price:$15.30 (2/17/2017)


Excess Return Model

Current Price• Avg. 8% ROE based on price

Our Price• Avg. 10% ROE base price

Avg. of US Banks ROE• 9.07% (per St. Louis Fed)

$5.00

$10.00

$15.00

$20.00

$25.00

6.00% 7.00% 8.00% 9.00% 10.00%

Return On Equity

Price per ROE

7% COE 6% COE 5% COE

Previous Return on Equity

2014 2015 2016 Avg. Inc.

ROE 4.9% 5.1% 5.7% 8.2%

Estimated Return on Equity

2017 2018 2019 2020 2021

ROE 5.9% 8.9% 9.4% 10.3% 10.7%

Valuation – Recent Events• 11/8/2016 – Presidential Election• 12/14/2016 – Fed Raises Rates 25bp• 12/28/2016 – Stock Hits All Time High ($16.92)• 1/27/2017 – Reported EPS of $0.15 vs. Consensus EPS Forecast of $.16; buying opportunity

TrumpElectedPresident

FedRaisesRates

High

MissedEPS

$15.29

Decreased Regulations / Lower Compliance Costs• “Compliance Costs estimated at 3%-6% of Total Non-Interest

Expense”

• Paid $112M dividends in 2016, at most increases dividend from $.84 to $.85 per share.

Valuation: Factors (Post Election)

Post election biggest factors1. Decreased regulations2. Potential corporate tax cut

3% 6%

Estimated Compliance Costs $2,829,150 $5,658,300

25% Cut $2,121,862 $4,243,725

Savings Per Year $707,287 $1,414,575

Corporate Tax Cuts• Average Tax Rate = 32.2% last 3 years• Potential Tax Cuts from 35% to 25%, 20%, or 15%• Tax Cuts to 25% = $7.96m or 10% increase to 2016 Income• Tax Cuts to 15% = $20.154m or 24% increase to 2016 Income

Effects on DDM/Excess Return Valuation*If maintain current 100% payout (Base Case – 6% COE)

Corporate Tax Change25% 20% 15%

DDM +$1.98 +$3.36 +$4.74Excess Return +$2.03 +$3.46 +$4.92

020000400006000080000

100000120000

Current 25% Tax 15% Tax Net

Inco

me

*in

thou

sand

s

Tax Cut Affect on 2016 Income

Valuation: Factors (Other)

Other Factors3. Acceleration of Fed rate rises4. Balance Sheet Shift5. Potential for Future Acquisitions

-30.0% -20.0% -10.0% 0.0%

10.0% 20.0% 30.0%

One to Four Family

Commercial Loans

Consumer Loans

Investments FHLB Stock

Rat

e

Use of Funds

Past Quarter Past Year

Potential Fed Rate HikesFed has left the door open for 3 potential rate hikes in 2017.

0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00%

Actual Q1 Q2 Q3 Q4

Balance Sheet Shift

Potential For Future Acquisition

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Deposits Borrowings + Repurchase Agreements

Source of Funds

2014

2015

2016

8.009.0010.0011.0012.0013.0014.00

2012 2013 2014 2015 2016 2017Tot

al A

sset

s(in

bill

ions

)Regulatory Threshold Total Assets

• Break Even = 13B - 14B in assets

Acquisition Characteristics• Similar Culture and Credit Risk

appetite• Commercial Deposit Focused

Summary & ConclusionBear Case• No corporate tax cuts• Interest rates spike • Loan growth slows• Deposits slow as customers want higher yields• No change in regulations

Base Case• Corporate tax rate cut to 25%• Interest Rates follow predicted rise• Loan growth continues at current pace• Deposits increase at current pace• Slow decrease of regulations

Bull Case• Corporate tax cut to 15%• Interest rates slowly tick up• Higher yielding commercial loans rapidly grow• Rapid increase in deposits changes cost of funds• Elimination of 10B threshold

$15.29

Appendix• Financial Statements• Loan Portfolio• Mortgage-Backed Securities• Dividends• Key Ratios• IBISWorld Reports (Industry)• IBISWorld Reports (Financials)• Capital Requirements• Comparable Criteria• Cost of Equity• Precedent Transaction

• Mergers• Excess Return• Recommendation Slide• Industry Overview Slide• Company Overview Slide• Risk Matrix Slide• Financial Analysis Slide• Valuation: Comps• Valuation GGM DDM Slide• Valuation: Excess Return Slide

Appendix: Financial Statements (1 of 3)

Back to Appendix

Statement of Cash Flow2014 2015 2016 2017 (est) 2018 (est) 2019 (est) 2020 (est) 2021 (est)

Cash Flow from Operating Activities:Net income 77,694 78,093 83,494 82,344 104,522 110,439 115,050 120,657 Adj. to reconcile N.I. to net cash provided by Operating Activities:FHLB stock dividends (6,555) (12,556) (12,252) (11,633) (11,596) (11,573) (11,546) (11,496)Provision for credit losses 1,409 771 (750) - 890 921 948 972 Originations of loans receivable held-for-sale ("LHFS") (1,325) - - - - - - -Proceeds from sales of LHFS 1,998 - - - - - - -Amortization and accretion of premiums and discounts on securities 6,053 5,649 5,342 5,342 5,342 5,342 5,342 5,342 Depreciation and amortization of premises and equipment 6,316 6,844 7,141 7,381 7,338 7,413 7,537 7,626 Amortization of deferred amounts related to FHLB advances, net 6,139 4,196 1,868 1,868 1,868 1,868 1,868 1,868 Common stock committed to be released for allocation - ESOP 2,014 2,036 2,174 1,995 1,952 1,910 1,869 1,829 Stock-based compensation 2,134 2,086 1,121 1,103 1,401 1,480 1,542 1,617 Provision for deferred income taxes 2,106 3,201 470 478 426 450 469 492 Changes in:Other assets, net 1,606 3,878 1,807 1,807 1,826 1,845 1,875 1,898 Income taxes payable/receivable 382 (1,374) 1,381 - - - - -Accounts payable and accrued expenses (8,184) (6,840) (3,008) (2,344) - - -Net cash provided by operating activities $91,787 $86,609 $84,956 $87,677 $111,625 $120,094 $124,953 $130,804Cash Flow from Investing Activities:Purchase of AFS securities (120,817) (149,937) (99,927) (100,000) (100,000) (100,000) (100,000) (100,000)Purchase of HTM securities (168,830) (54,133) (144,392) (145,000) (145,000) (145,000) (145,000) (145,000)Proceeds from calls, maturities and principal reductions of AFS securities 349,210 234,794 326,814 175,081 164,390 155,222 147,359 147,359 Proceeds from calls, maturities and principal reductions of HTM securities 328,433 330,054 309,328 223,659 218,039 212,820 207,974 207,974 Proceeds from the redemption of FHLB stock 22,387 265,929 382,450 364,915 362,306 362,240 362,256 362,256 Purchase of FHLB stock (100,356) (190,862) (329,625) (347,160) (349,769) (349,835) (349,819) (349,819)Net increase in loans receivable (280,105) (398,307) (336,056) (373,539) (318,708) (262,298) (235,338) (204,830)Purchase of premises and equipment (7,227) (12,022) (14,854) (5,895) (4,792) (6,127) (6,682) (6,298)Proceeds from sale of other real estate owned ("OREO") 4,875 5,987 4,973 5,278 5,278 5,278 5,278 5,278 Purchase of BOLI - (50,000) - - (50,000) - (50,000) -Proceeds from BOLI death benefit 405 - 783 - - - - -

Net cash provided by (used in) investing activities $27,975 -$18,497 $99,494 -$202,661 -$218,256 -$127,699 -$163,972 -$83,081Cash Flow from Financing Activities:Dividends paid (138,172) (114,162) (111,767) (107,757) (133,644) (137,896) (140,203) (143,416)Net change in deposits 43,826 177,248 331,498 154,921 159,568 164,355 169,286 174,364 Proceeds from borrowings 2,944,577 7,575,100 8,000,100 8,000,100 8,000,100 8,000,100 8,000,100 8,000,100 Repayments on borrowings (2,194,577) (7,695,100) (8,900,100) (8,052,048) (8,007,480) (8,004,557) (8,005,246) (8,010,029)Change in advance payments by borrowers for taxes and insurance 713 3,713 825 1,750 1,750 1,750 1,750 1,750 Payment of FHLB prepayment penalties - (3,352) - - - - - -Repurchase of common stock (79,633) (50,034) - - - - - -Stock options exercised 458 267 4,070 1,598 1,576 2,001 2,114 2,202 Excess tax benefits from stock options - - 56 - - - - -Net cash (used in) provided by financing activities $577,192 -$106,320 -$675,318 -$1,436 $21,871 $25,753 $27,801 $24,972NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $696,954 -$38,208 -$490,868 -$116,420 -$84,760 $18,148 -$11,218 $72,695Beginning of year $113,886 $810,840 $772,632 $281,764 $165,344 $80,584 $98,732 $87,514End of year $810,840 $772,632 $281,764 $165,344 $80,584 $98,732 $87,514 $160,210

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONIncome tax payments 34,969 35,849 36,483 Interest payments 100,581 103,784 106,182


Back to Appendix

Balance Sheet2014 2015 2016 2017 (est) 2018 (est) 2019 (est) 2020 (est) 2021 (est)

Cash and cash equivalents 810,840 772,632 281,764 165,344 80,584 98,732 87,514 160,210 Securities:

Available-for-sale ("AFS") 840,790 758,171 527,301 452,220 387,830 332,608 285,248 244,633 Held-to-maturity ("HTM") 1,552,699 1,271,122 1,100,874 1,022,215 949,176 881,356 818,382 759,908

Loans receivable 6,242,397 6,634,470 6,966,564 7,340,103 7,658,811 7,921,108 8,156,447 8,361,277 Allowance for credit losses "ACL" (9,227) (9,443) (8,540) (9,060) (9,434) (9,804) (10,181) (10,578)Federal Home Loan Bank Topeka ("FHLB") stock, at cost 213,054 150,543 109,970 104,415 104,079 103,874 103,638 103,186 Premises and equipment, net 70,530 75,810 83,221 83,838 83,352 84,200 85,604 86,624 Income taxes receivable, net - 1,071 - - - - - -Other assets 143,945 189,785 206,093 206,331 206,331 206,331 206,331 206,331

Total Assets $9,865,028 $9,844,161 $9,267,247 $9,365,407 $9,460,728 $9,618,405 $9,732,982 $9,911,590Liabilities:Deposits 4,655,272 4,832,520 5,164,018 5,318,939 5,478,507 5,642,862 5,812,148 5,986,512 FHLB borrowings 3,369,677 3,270,521 2,372,389 2,320,341 2,312,861 2,308,304 2,303,058 2,293,029 Repurchase agreements 220,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 Advance payments by borrowers for taxes and insurance 58,105 61,818 62,643 62,643 62,643 62,643 62,643 62,643 Income taxes payable, net 368 - 310 - 300 - 300 -Deferred income tax liabilities, net 22,367 26,391 25,374 24,594 25,811 22,995 24,297 25,311 Accounts payable and accrued expenses 46,357 36,685 49,549 46,541 44,197 44,197 44,197 44,197

Total Liabilities $8,372,146 $8,427,935 $7,874,283 $7,973,058 $8,124,319 $8,281,001 $8,446,643 $8,611,693Stockholders' Equity:Preferred stock - - -Common stock 1,410 1,371 1,375 1,379 1,375 1,375 1,375 1,375 Additional paid-in capital 1,180,732 1,151,041 1,156,855 1,188,758 1,169,538 1,200,381 1,176,332 1,214,913

Unearned compensation, Employee Stock Ownership Plan ("ESOP") (42,951) (41,299) (39,647) (39,235) (49,632) (52,442) (54,631) (57,294)Retained earnings 346,705 296,739 268,466 236,846 207,724 180,266 155,114 132,355 Accumulated other comprehensive income ("AOCI"), net of tax 6,986 8,374 5,915 4,601 7,405 7,824 8,151 8,548

Total stockholders' Equity $1,492,882 $1,416,226 $1,392,964 $1,392,349 $1,336,410 $1,337,404 $1,286,340 $1,299,897

Total Liabilities & Stockholders' Equity $9,865,028 $9,844,161 $9,267,247 $9,365,407 $9,460,729 $9,618,405 $9,732,982 $9,911,5892014 2015 2016 2017(est) 2018(est) 2019(est) 2020(est) 2021(est)

Loans receivable 6,242,397 6,634,470 6,966,564 7,340,103 7,658,811 7,921,108 8,156,447 8,361,277 6.28% 5.01% 5.80% 5.32% 4.97% 3.96% 3.25%

Deposits $4,655,272 $4,832,520 $5,164,018 $5,318,939 $5,478,507 $5,642,862 $5,812,148 $5,986,5123.81% 6.86% 5.46% 5.03% 3.05% 3.05% 3.05%


Back to Appendix

Income Statement2014 2015 2016 2017 (est) 2018 (est) 2019 (est) 2020 (est) 2021 (est)

Interest and Dividend Income:Loans receivable $229,944 $235,500 $243,311 $257,839 $277,138 $295,317 $312,558 $329,014Mortgage-backed securities ("MBS") $45,300 $36,647 $29,794 $30,998 $31,146 $29,574 $28,002 $26,431FHLB stock $6,555 $12,556 $12,252 $11,633 $11,596 $11,573 $11,546 $11,496Cash and cash equivalents $1,062 $5,477 $9,831 $9,831 $9,831 $9,831 $9,831 $9,831Investment securities $7,385 $7,182 $5,925 $5,925 $5,925 $5,925 $5,925 $5,925

Total interest and dividend income $290,246 $297,362 $301,113 $316,227 $335,636 $352,220 $367,863 $382,697Interest Expense:FHLB borrowings $63,217 $67,797 $65,091 $67,376 $68,218 $70,311 $72,481 $72,316Deposits $32,604 $33,119 $37,859 $47,870 $49,307 $56,429 $63,934 $71,838Repurchase agreements $10,282 $6,678 $5,981 $6,012 $6,012 $6,012 $6,012 $6,012

Total interest expense $106,103 $107,594 $108,931 $121,258 $123,537 $132,752 $142,426 $150,166Net Interest Income $184,143 $189,768 $192,182 $194,968 $212,099 $219,469 $225,437 $232,531Provision for Credit Losses $1,409 $771 -$750 $0 $890 $921 $948 $972

N.I.I. after provision for Credit Loss $182,734 $188,997 $192,932 $194,968 $211,209 $218,548 $224,489 $231,559Non-Interest Income:Retail fees and charges $14,937 $14,897 $14,835 $14,836 $14,937 $14,937 $14,937 $14,937Income from bank-owned life insurance ("BOLI") $1,993 $1,150 $3,420 $2,092 $2,188 $2,188 $2,188 $2,188Other non-interest income $6,025 $5,093 $5,057 $4,144 $5,057 $5,057 $5,057 $5,057

Total non-interest income $22,955 $21,140 $23,312 $21,072 $22,182 $22,182 $22,182 $22,182Non-Interest Expense:Salaries and employee benefits $43,757 $43,309 $42,378 $41,467 $40,576 $39,703 $38,850 $38,015Occupancy, net $10,268 $9,944 $10,576 $11,336 $11,456 $11,573 $11,766 $11,906Information technology and communications $9,429 $10,360 $10,540 $10,651 $10,764 $10,873 $11,054 $11,186Regulatory and outside services $5,572 $5,347 $5,645 $5,704 $5,533 $5,367 $5,206 $5,050Deposit and loan transaction costs $5,329 $5,417 $5,585 $5,644 $5,704 $5,762 $5,858 $5,927Federal insurance premium $4,536 $5,495 $5,076 $5,129 $5,184 $5,236 $5,324 $5,387Advertising and promotional $4,195 $4,547 $4,609 $4,657 $4,707 $4,755 $4,834 $4,892Low income housing partnerships $2,416 $4,572 $3,872 $3,913 $3,954 $3,994 $4,061 $4,109Office supplies and related expense $2,096 $2,088 $2,640 $2,668 $2,696 $2,724 $2,769 $2,802Other non-interest expense $2,939 $3,290 $3,384 $3,420 $3,456 $3,491 $3,549 $3,592

Total non-interest expense $90,537 $94,369 $94,305 $94,589 $94,029 $93,478 $93,271 $92,866Income Before Income Tax-Expense $115,152 $115,768 $121,939 $121,451 $139,362 $147,252 $153,400 $160,876Income Tax Expense $37,458 $37,675 $38,445 $39,108 $34,840.55 $36,812.92 $38,350.08 $40,218.95

Net Income $77,694 $78,093 $83,494 $82,344 $104,522 $110,439 $115,050 $120,657Changes in unrealized holding gains on AFS securities -$110 $545 -$965 $0 $0 $0 $0 $0

Taxes $171 -$843 $1,494 $0 $0 $0 $0 $0Other comprehensive income (loss), net of tax -$281 $1,388 -$2,459 $0 $0 $0 $0 $0

Comprehensive income $77,413 $79,481 $81,035 $82,344 $104,522 $110,439 $115,050 $120,6572014 2015 2016 2017(est) 2018(est) 2019(est) 2020(est) 2021(est)

Shares issued and outstanding 140,951 137,107 137,486 137,486 137,486 137,486 137,486 137,486 Average number of basic shares outstanding 139,440 135,384 133,045 133,045 133,045 133,045 133,045 133,045

Basic earnings per share ("EPS") $0.5512 $0.5696 $0.6073 $0.5989 $0.7602 $0.8033 $0.8368 $0.8776

Appendix: Loan Portfolio (1 of 6)

Back to Appendix

2015 2016 2017 (est) 2018 (est) 2019 (est) 2020 (est) 2021 (est)Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio

Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount RateReal Estate LoansOriginated 4,010,424 3.84% 4,005,615 3.74% 4,095,119 3.80% 4,177,021 3.90% 4,260,562 4.00% 4,345,773 4.10% 4,432,689 4.20%Correspondent Purchased 1,846,210 3.52% 2,206,072 3.50% 2,539,378 3.48% 2,800,049 3.58% 3,003,304 3.68% 3,156,966 3.78% 3,267,852 3.88%Bulk Purchased 485,682 2.25% 416,653 2.23% 352,065 2.24% 302,027 2.34% 259,100 2.44% 222,275 2.54% 190,683 2.64%Construction 29,552 3.64% 39,430 3.45% 37,459 3.44% 41,204 3.54% 45,325 3.64% 49,857 3.74% 54,843 3.84%Total Real Estate 6,371,868 3.56% 6,667,770 3.56% 7,024,020 3.60% 7,320,302 3.71% 7,568,291 3.82% 7,774,871 3.92% 7,946,067 4.03%CommercialPermanent 109,314 4.15% 110,768 4.16% 104,323 4.15% 106,409 4.25% 108,538 4.35% 110,708 4.45% 112,923 4.55%Construction 11,523 3.82% 43,375 4.13% 76,254 4.10% 91,505 4.20% 109,806 4.30% 131,767 4.40% 158,120 4.50%Total Commercial 120,837 4.12% 154,143 4.15% 180,577 4.13% 197,914 4.23% 218,343 4.32% 242,475 4.42% 271,043 4.52%Consumer LoansHome Equity 125,844 5.01% 123,345 5.01% 122,378 4.99% 124,826 5.09% 126,698 5.19% 128,598 5.29% 130,527 5.39%Other 4,179 4.21% 4,264 4.21% 4,213 4.19% 4,234 4.29% 4,255 4.39% 4,277 4.49% 4,298 4.59%Total Consumer Loans 130,023 4.99% 127,609 4.99% 126,591 4.96% 129,060 5.06% 130,953 5.16% 132,875 5.26% 134,825 5.36%Total Loans Receivable 6,622,728 3.66% 6,949,522 3.60% 7,331,188 3.58% 7,647,275 3.66% 7,917,587 3.66% 8,150,221 3.66% 8,351,935 3.66%

7,331,043 7,648,629 7,921,108 8,156,447 8,361,277 Less:ACL 9443 8,540.00 9,059.54 9,434.14 9,804.09 10,181.34 10,577.58 Discounts/unearned loan fees 24213 26,238.12 26,238.12 26,238.12 26,238.12 26,238.12 Premiumns/deferred costs (35,955) (41,975) (44,172.18) (44,172.18) (44,172.18) (44,172.18) (44,172.18)Total loans receivable 6,625,027 6,958,024 7,322,168 7,640,129 7,912,979 8,148,694 8,353,920 Interest:Originated 154,000.28 3.84% 149,810.00 3.74% 155,614.52 3.80% 162,903.83 3.90% 170,422.47 4.00% 178,176.69 4.10% 186,172.92 4.20%Correspondent Purchased 64,986.59 3.52% 77,212.52 3.50% 88,370.34 3.48% 100,241.76 3.58% 110,521.57 3.68% 119,333.32 3.78% 126,792.66 3.88%Bulk Purchased 10,927.85 2.25% 9,291.36 2.23% 7,886.26 2.24% 7,067.43 2.34% 6,322.05 2.44% 5,645.78 2.54% 5,034.04 2.64%Construction 1,075.69 3.64% 1,360.34 3.45% 1,288.57 3.44% 1,458.63 3.54% 1,649.82 3.64% 1,864.66 3.74% 2,105.97 3.84%Total Interest 230,990 3.56% 237,674 3.56% 253,160 3.60% 271,672 3.71% 288,916 3.82% 305,020 3.92% 320,106 4.03%CommercialPermanent 4,536.53 4.15% 4,607.95 4.16% 4,329.40 4.15% 4,522.40 4.25% 4,721.39 4.35% 4,926.52 4.45% 5,137.98 4.55%Construction 440.18 3.82% 1,791.39 4.13% 3,126.41 4.10% 3,843.20 4.20% 4,721.65 4.30% 5,797.74 4.40% 7,115.41 4.50%Total Commercial 4,977 4.12% 6,399 4.15% 7,456 4.13% 8,366 4.23% 9,443 4.32% 10,724 4.42% 12,253 4.52%Consumer LoansHome Equity 6,304.78 5.01% 6,179.58 5.01% 6,106.66 4.99% 6,353.62 5.09% 6,575.62 5.19% 6,802.86 5.29% 7,035.43 5.39%Other 175.94 4.21% 179.51 4.21% 176.52 4.19% 181.64 4.29% 4.39% 192.02 4.49% 197.27 4.59%Total Consumer 6,481 4.99% 6,359 4.99% 6,283 4.96% 6,535 5.06% 6,762 5.16% 6,995 5.26% 7,233 5.36%Total Interest Receivable 233,005 3.66% 241,893 3.60% 257,839 3.66% 277,138 3.66% 295,317 3.66% 312,558 3.66% 329,014 3.66%


Back to Appendix

2015 2016 2017 (est) 2018 (est) 2019 (est) 2020 (est) 2021 (est)ACL Rate ACL Rate ACL Rate ACL Rate ACL Rate ACL Rate

Real Estate LoansOriginated 3,892.00 0.000972 3,979 0.000972 4,059 0.000972 4,140 0.000972 4,223 0.000972 4,307 0.000971636Correspondent Purchased 2102 0.000953 2,420 0.000953 2,668 0.000953 2,862 0.000953 3,008 0.000953 3,114 0.000952825Bulk Purchased 1065 0.002556 900 0.002556 772 0.002556 662 0.002556 568 0.002556 487 0.002556084Construction 36 0.000913 34 0.000913 38 0.000913 41 0.000913 46 0.000913 50 0.00091301CommercialPermanent 774 0.006988 729 0.006988 744 0.006988 758 0.006988 774 0.006988 789 0.006987578Construction 434 0.010006 763 0.010006 916 0.010006 1,099 0.010006 1,318 0.010006 1,582 0.010005764Total Consumer LoansHome Equity 187 0.001516 186 0.001516 189 0.001516 192 0.001516 195 0.001516 198 0.001516073Other 50 0.011726 49 0.011726 50 0.011726 50 0.011726 50 0.011726 50 0.011726079Total Total ALC 8,540.00 9,059.54 9,434.14 9,804.09 10,181.34 10,577.58

ALC


Back to Appendix

Loan Growth Rates

2016 2017 2018 2019 2020 2021Average Inc

Per YearReal Estate LoansOriginated -0.12% 2.23% 2.00% 2.00% 2.00% 2.00% 2.05%

Correspondent Purchased 19.49% 15.11% 10.27% 7.26% 5.12% 3.51% 8.25%

Bulk Purchased -14.21% -15.50% -14.21% -14.21% -14.21% -14.21% -14.47%Construction 33.43% -5.00% 10.00% 10.00% 10.00% 10.00% 7.00%CommercialPermanent 1.33% -5.82% 2.00% 2.00% 2.00% 2.00% 0.44%

Construction 276.42% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%Consumer LoansHome Equity -1.99% -1.99% 2.00% 1.50% 1.50% 1.50% 0.90%Other 2.03% 2.03% 0.50% 0.50% 0.50% 0.50% 0.81%Total Loan Growth 4.93% 5.5% 4.3% 3.5% 2.9% 2.5% 3.75%

Interest Rates

2016 2017 2018 2019 2020 2021 Average Int RateReal Estate LoansOriginated 3.74% 3.80% 3.90% 4.00% 4.10% 4.20% 4.00%

Correspondent Purchased 3.50% 3.48% 3.58% 3.68% 3.78% 3.88% 3.68%Bulk Purchased 2.23% 2.24% 2.34% 2.44% 2.54% 2.64% 2.44%Construction 3.45% 3.44% 3.54% 3.64% 3.74% 3.84% 3.64%

3.56% 3.60% 3.71% 3.82% 3.92% 4.03%CommercialPermanent 4.16% 4.15% 4.25% 4.35% 4.45% 4.55% 4.35%Construction 4.13% 4.10% 4.20% 4.30% 4.40% 4.50% 4.30%

4.15% 4.13% 4.23% 4.32% 4.42% 4.52% 4.33%Consumer LoansHome Equity 5.01% 4.99% 5.09% 5.19% 5.29% 5.39% 5.19%Other 4.21% 4.19% 4.29% 4.39% 4.49% 4.59% 4.39%

3.60% 4.96% 5.06% 5.16% 5.26% 5.36% 5.16%


Back to Appendix

Originations and Refinances2014 2015 2016 2017 (est) 2018 (est) 2019 (est) 2020 (est) 2021 (est)

New Loans New Loans New Loans New Loans New Loans New Loans New Loans New LoansAmount Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate

Beginning balance 6,011,799 3.82% 6,237,518 3.76% 6,622,728 3.66% 6,949,522 7,322,168 7,640,129 7,912,979 8,148,694 Originations and refinancesFixed-rate:

One-to-four-family 376,660 ? 594,406 ? 465,013 ? 474,313 ? 483,800 ? 493,476 ? 503,345 ? 513,412 ?Commercial real estate 7,050 ? 7,498 ? 136,277 ? 139,003 ? 141,783 ? 144,618 ? 147,511 ? 150,461 ?

Home Equity 2,863 6.16% 3,670 6.10% 4,247 5.71% 4,332 5.71% 4,419 5.71% 4,507 5.71% 4,597 5.71% 4,689 5.71%Other 1,141 7.44% 769 8.07% 828 8.73% 845 8.73% 861 8.73% 879 8.73% 896 8.73% 914 8.73%

OriginatedRefinanced by Bank customers

Fixed 387,714 4.00% 606,343 3.60% 606,365 3.52% 618,492 3.52% 630,862 3.52% 643,479 3.52% 656,349 3.52% 669,476 3.52%Adjustable-rate:

One- to four-family 107,659 ? 102,662 ? 92,874 ? 86,497 ? 80,557 ? 75,026 ? 69,874 ? 65,076 ?Commercial real estate - 0% - 0% - 0% - 0% - 0% - 0% - 0% - 0%

Home equity 70,066 4.64% 69,975 4.58% 71,013 4.65% 71,013 4.65% 71,013 4.65% 71,013 4.65% 71,013 4.65% 71,013 4.65%Other 1,469 3.17% 1,537 3.11% 2,652 3.36% 3.36% 2,652 3.36% 2,652 3.36% 2,652 3.36% 2,652 3.36%

Adjustable 179,194 3.74% 174,174 3.62% 166,539 3.65% 160,162 3.65% 154,222 3.65% 148,691 3.65% 143,539 3.65% 138,741 3.65%

Fixed 387,714 4.00% 606,343 3.60% 606,365 3.59% 618,492 3.52% 630,862 3.52% 643,479 3.52% 656,349 3.52% 669,476 3.52%Adjustable 179,194 3.74% 174,174 3.44% 166,539 3.52% 160,162 3.65% 154,222 3.65% 148,691 3.65% 143,539 3.65% 138,741 3.65%

Total Originations and Refinances 566,908 780,517 772,904 778,654 785,084 792,170 799,888 808,217


Back to Appendix

Purchases and Participations2014 2015 2016 2017 (est) 2018 (est) 2019 (est) 2020 (est) 2021 (est)


Beginning balance 6,011,799 3.82% 6,237,518 3.76% 6,622,728 3.66% 6,949,522 7,322,168 7,640,129 7,912,979 8,148,694 Purchases and participationsFixed-rate:

Correspondent - one- to four-family 366,599 3.95% 525,946 3.59% 567,014 3.56% 567,014 3.56% 567,014 3.56% 567,014 3.56% 567,014 3.56% 567,014 3.56%

Participations - commercial real estate 43,950 3.81% 25,082 3.79% 153,239 3.94% 153,239 3.94% 153,239 3.94% 153,239 3.94% 153,239 3.94% 153,239 3.94%

Total fixed-rate purchased/participations 410,549 3.93% 551,028 3.60% 720,253 3.64% 720,253 3.64% 720,253 3.64% 720,253 3.64% 720,253 3.64% 720,253 3.64%Adjustable-rate:

Correspondent - one- to four-family 148,876 3.09% 125,095 2.96% 95,803 2.90% 95,803 2.90% 95,803 2.90% 95,803 2.90% 95,803 2.90% 95,803 2.90%

Participations - commercial real estate 14,358 4.34% 35,236 4.25% 47,876 4.29% 47,876 4.29% 47,876 4.29% 47,876 4.29% 47,876 4.29% 47,876 4.29%

Total adjustable-rate purchased/participations 163,234 3.20% 160,331 3.25% 143,679 3.36% 143,679 3.36% 143,679 3.36% 143,679 3.36% 143,679 3.36% 143,679 3.36%Total purchased/participation loans 573,783 3.72% 711,359 3.52% 863,932 3.60% 863,932 3.60% 863,932 3.60% 863,932 3.60% 863,932 3.60% 863,932 3.60%


Back to Appendix

Total Loans2014 2015 2016 2017 est 2018 est 2019 est 2020 est 2021 est


Beginning Balance 6,011,7993.82% 6,237,518 3.76% 6,622,728 3.66% 6,949,522 7,322,168 7,640,129 7,912,979 8,148,694 Total New Loans 1,140,691 1,491,876 1,636,836 3.57% 1,642,586 1,649,016 1,656,102 1,663,820 1,672,149 Change in undisbursed loan funds (38,564) (142,027) (142,027) (142,027) (142,027) (142,027) (142,027)

Repayments (857,573)(1,061,868

)(1,164,000

)(1,132,772.09

) (1,193,513.46)(1,245,341.10

)(1,289,815.50

)(1,328,237.09

)Principal charge-offs, net (1,004) (555) (153) (153) (153) (153) (153) (153)Other (4,394) (5,679) (3,862) (3,862) (3,862) (3,862) (3,862) (3,862)Ending balance 6,289,519 3.76% 6,622,728 3.66% 6,949,522 3.60% 7,313,294 7,631,630 7,904,849 8,140,941 8,346,564

Repayments as % of Beginning Balance -14.3% -17.0% -17.6% -16.3% -16.3% -16.3% -16.3% -16.3%

Less:ACL 9,443 8,540 9,059.54 9,434.14 9,804.09 10,181.34 10,577.58 Discounts/unearned loan fees 24,213 24,933 26,238.12 26,238.12 26,238.12 26,238.12 26,238.12 Premiums/deferred costs (35,955) (41,975) (44,172.18) (44,172.18) (44,172.18) (44,172.18) (44,172.18)

6,625,027 6,958,024 7,322,168 7,640,129 7,912,979 8,148,694 8,353,920

Appendix: Mortgage-Backed Securities (1 of 1)

Back to Appendix

2016 2017 2018 2019 2020 2021

AFSCarrying Value % of TotalInterest

Carrying Value Yield Interest





GSE debentures 347,038.00 65.81% 3,990.94 271,957.00 1.18% 3,209.09 191,467.75 1.18% 2,259.32 110,978.50 1.18% 1,309.55 30,489.25 1.18% 359.77 (50,000.00)1.18% (590.00)MBS 178,507.00 33.85% 5,712.22 178,507.00 3.20% 5,712.22 173,008.25 3.20% 5,536.26 167,509.50 3.20% 5,360.30 162,010.75 3.20% 5,184.34 156,512.00 3.20% 5,008.38 TRUPs 1,756.00 0.33% 37.05 1,756.00 2.11% 37.05 1,756.00 2.11% 1,756.00 1,756.00 2.11% 1,756.00 1,756.00 2.11% 1,756.00 1,756.00 2.11% 1,756.00 Munis 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -

527,301.00 9,740.21 452,220.00 8,958.37 366,232.00 9,551.58 280,244.00 8,425.85 194,256.00 7,300.12 108,268.00 6,174.38 HTM

MBS 1,067,571.00 96.97%21,564.93 1,067,571.00 2.02% 21,564.93 1,050,132.00 2.02% 21,212.67 1,032,693.00 2.02% 20,860.40 1,015,254.00 2.02% 20,508.13 997,815.00 2.02% 20,155.86

Municipal Bonds 33,303.00 3.03% 562.82 28,107.00 1.69% 475.01 22,569.00 1.69% 381.42 17,031.00 1.69% 287.82 11,493.00 1.69% 194.23 5,955.00 1.69% 100.64

1,100,874.00 22,127.75 1,095,678.00 22,039.94 1,072,701.00 21,594.08 1,049,724.00 21,148.22 1,026,747.00 20,702.36 1,003,770.00 20,256.50

1,628,175.00 31,867.97 1,547,898.00 30,998.31 1,438,933.00 31,145.67 1,329,968.00 29,574.07 1,221,003.00 28,002.48 1,112,038.00 26,430.89

1 year or less More than 1 to 5 yearsMore than 5 to 10 years Over 10 years Total Securities

AFSCarrying Value Yield Carrying Value Yield Carrying Value Yield

Carrying Value Yield

Carrying Value Yield

GSE debentures 25,081.00 0.84% 321,957.00 1.18% 0.00% 0.00% 347,038.00 1.15%MBS 0.00% 21,995.00 4.74% 23,311.00 4.54% 133,201.00 2.75% 178,507.00 3.20%TRUPs 0.00% 0.00% 0.00% 1,756.00 2.11% 1,756.00 2.11%

25,081.00 0.84% 343,952.00 1.40% 23,311.00 4.54% 134,957.00 2.71% 527,301.00 1.83%HTM

MBS 0.00% 69,756.00 2.71% 388,995.00 2.02% 608,820.00 1.95% 1,067,571.00 2.02%Municipal Bonds 5,196.00 2.00% 22,152.00 1.62% 5,955.00 1.69% 0.00% 33,303.00 1.69%

5,196.00 2.00% 91,908.00 2.45% 394,950.00 2.02% 608,820.00 1.95% 1,100,874.00 2.01%30,277.00 1.04% 435,860.00 1.62% 418,261.00 2.16% 743,777.00 2.09% 1,628,175.00 1.95%

Appendix: Dividends (1 of 1)

Back to Appendix

2016 2017(est) 2018(est) 2019(est) 2020(est) 2021(est)Net Income 83,494.00 82,343.53 104,521.64 110,438.76 115,050.25 120,656.84 Payout Ratio Decrease RatePayout Rate 133.86% 130.86% 127.86% 124.86% 121.86% 118.86% 3.0%Dividend 111,767.00 107,756.64 133,643.79 137,896.39 140,202.90 143,415.51

TTM 2016-09 2015-09 2014-09 2013-09 2012-09 2011-09 2010-09 2009-09 2008-09 2007-09Revenue USD Mil 215 215 211 207 201 209 194 204 205 164 130Gross Margin %Operating Income USD Mil 122 122 116 115 106 116 57 105 105 80 53Operating Margin % 56.6 56.6 54.9 55.6 52.4 55.5 29.6 51.7 51.3 48.8 40.6Net Income USD Mil 83 83 78 78 69 75 38 68 66 51 32Earnings Per Share USD 0.63 0.63 0.58 0.56 0.48 0.47 0.24 0.41 0.4 0.31 0.19Dividends USD 0.34 0.34 0.33 0.3 0.3 0.3 0.36 0.88 0.88 0.88 0.88Payout Ratio % * 53.9 54.8 55.2 57.6 61.2 65.2 148.9 215.1 219.8 285.7 408.2Shares Mil 133 133 135 139 145 158 163 166 166 165 165Book Value Per Share * USD 10.1 10.04 10.41 10.63 10.99 11.79 11.58 5.74 5.61 5.2 5.18Operating Cash Flow USD Mil 85 85 87 92 102 106 66 59 191 82 447Cap Spending USD Mil -15 -15 -12 -7 -19 -13 -13 -8 -13 -9 -5Free Cash Flow USD Mil 70 70 75 85 83 94 53 51 178 73 442Free Cash Flow Per Share * USD 0.53 0.57 0.57 0.61 0.56 0.33 0.31 1.07 0.44 2.73

Appendix: Key Ratios (1 of 6)

Back to Appendix

Financials


Back to Appendix

ProfitabilityMargins % of Sales TTM 2016-09 2015-09 2014-09 2013-09 2012-09 2011-09 2010-09 2009-09 2008-09 2007-09Revenue 100 100 100 100 100 100 100 100 100 100 100COGSGross MarginSG&A 32.9 32.9 33.73 33.6 36.42 31.31 34.22 35.15 36.86 29.49 34.96R&DOther 10.87 10.87 11.01 10.12 11.7 12.24 34.08 8.84 8.75 20.44 24.65Operating Margin 56.59 56.59 54.89 55.6 52.4 55.47 29.6 51.66 51.27 48.82 40.57Net Int Inc & Other 0.35 0.35 -0.37 -0.68 0.53 -0.98 -2.1 -4.35 -3.11 -1.25 0.17EBT Margin 56.59 56.59 54.89 55.6 52.4 55.47 29.6 51.66 51.27 48.82 40.57

Profitability TTM 2016-09 2015-09 2014-09 2013-09 2012-09 2011-09 2010-09 2009-09 2008-09 2007-09Tax Rate % 31.53 31.53 32.54 32.53 34.32 35.76 33.04 35.61 36.99 36.43 38.96Net Margin % 38.71 38.71 36.97 37.43 34.42 35.63 19.82 33.26 32.3 31.03 24.77Asset Turnover (Average) 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02Return on Assets % 0.87 0.87 0.79 0.81 0.75 0.79 0.43 0.8 0.81 0.65 0.41Financial Leverage (Average) 6.65 6.65 6.95 6.6 5.63 5.19 4.87 8.82 8.93 9.25 8.85Return on Equity % 5.94 5.94 5.36 4.96 4.03 3.98 2.65 7.13 7.32 5.86 3.73

Latest Qtr 2016-09 2015-09 2014-09 2013-09 2012-09 2011-09 2010-09 2009-09 2008-09 2007-09Revenue %Year over Year 0.04 2.17 1.84 2.8 -3.67 7.94 -5.02 -0.61 25 25.91 -14.373-Year Average 2.27 0.29 2.25 -0.41 0.63 5.67 16.08 10.46 -2.88 -2.295-Year Average 2.15 0.67 0.18 4.17 9.9 4.93 2.62 7.99 0.79 -9.5910-Year Average 3.53 1.64 4.01 2.47 -0.32 0.37 1.09 2.73 26.82Operating Income %Year over Year 7.36 5.33 0.53 9.08 -8.99 102.26 -45.57 0.13 31.28 51.5 -32.783-Year Average 4.92 -0.07 26.16 0.06 3.3 -10.56 25.81 10.16 -8.725-Year Average 16.28 1.9 1.82 5.66 17 -6.13 -1.23 -18.4910-Year Average 4.48 0.95 2.16 -2.34 -7.37 -1.36 4.23Net Income %Year over Year 6.92 0.51 12.05 -6.94 94.03 -43.39 2.33 30.11 57.77 -32.883-Year Average 6.39 1.58 26.48 0.73 3.97 -9 28.07 11.28 -7.825-Year Average 16.8 2.86 3.22 6.36 18.2 -4.41 0.84 -0.42 -18.4610-Year Average 5.67 1.84 2.91 -1.83 -6.81 -1.17 4.45 -0.58EPS %Year over Year 6.67 8.62 3.57 16.67 2.13 95.83 -41.58 2.2 30 59.09 -33.333-Year Average 9.49 7.26 32.64 5.32 5.35 -8.1 28.33 11.3 -7.695-Year Average 21.29 7.14 6.85 9.19 19.31 -3.82 0.88 -0.56 -18.4510-Year Average 8.01 3.96 4.2 -1.36 -5.82 0.33 8.84


Back to Appendix

Growth


Back to Appendix

Cash FlowTTM 2016-09 2015-09 2014-09 2013-09 2012-09 2011-09 2010-09 2009-09 2008-09 2007-09

Operating Cash Flow Growth % YOY -191 -564 -977 -425Free Cash Flow Growth % YOY -601 194 403Cap Ex as a % of Sales 6.89 6.89 5.7 3.49 9.32 6.03 6.58 4.01 6.36 5.31 3.55Free Cash Flow/Sales % 32.53 32.53 35.36 40.83 41.18 44.77 27.38 24.99 86.57 44.46 339.01Free Cash Flow/Net Income 0.84 0.84 0.96 1.09 1.2 1.26 1.38 0.75 2.68 1.43 13.69

Liquidity & Financial HealthLatest Qtr 2016-09 2015-09 2014-09 2013-09 2012-09 2011-09 2010-09 2009-09 2008-09 2007-09

Current RatioQuick RatioFinancial Leverage 6.65 6.65 6.95 6.6 5.63 5.19 4.87 8.82 8.93 9.25 8.85Debt/Equity 1.7 1.7 2.31 2.26 1.54 1.6 1.49 3.14 3.3 3.63 3.21


Back to Appendix

Financial HealthBalance Sheet Items (in %) Latest Qtr 2016-09 2015-09 2014-09 2013-09 2012-09 2011-09 2010-09 2009-09 2008-09 2007-09Cash & Short-Term Investments 3.04 3.04 7.85 8.22 1.24 1.51 1.28 0.77 0.49 1.08 2.12Accounts Receivable 0.01 0.26 0.28 0.31 0.36 0.39 0.42 0.55InventoryOther Current AssetsTotal Current AssetsNet PP&E 0.9 0.9 0.77 0.71 0.76 0.62 0.51 0.49 0.45 0.37 0.35Intangibles 0.07Other Long-Term AssetsTotal Assets 100 100 100 100 100 100 100 100 100 100 100Accounts Payable 0.01 0.02 0.07 0.53 0.63Short-Term DebtTaxes Payable 0.01 0.02 0.07Accrued LiabilitiesOther Short-Term LiabilitiesTotal Current LiabilitiesLong-Term Debt 25.6 25.6 33.22 34.16 27.36 30.87 30.63 35.55 36.96 39.24 36.29Other Long-Term LiabilitiesTotal Liabilities 84.97 84.97 85.61 84.87 82.23 80.74 79.48 88.67 88.8 89.18 88.7Total Stockholders' Equity 15.03 15.03 14.39 15.13 17.77 19.26 20.52 11.33 11.2 10.82 11.3Total Liabilities & Equity 100 100 100 100 100 100 100 100 100 100 100


Back to Appendix

EfficiencyTTM 2016-09 2015-09 2014-09 2013-09 2012-09 2011-09 2010-09 2009-09 2008-09 2007-09

Days Sales OutstandingDays InventoryPayables PeriodCash Conversion CycleReceivables TurnoverInventory TurnoverFixed Assets Turnover 2.71 2.71 2.88 2.94 3.15 3.94 4.32 5.17 6.07 5.81 4.91Asset Turnover 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Appendix: IBISWorld Reports – Industry (1 of 3)

Back to Appendix

Industry DataYear Revenue ($M) Industry Value

Added ($M) Establishments Enterprises Employment Exports Imports Wages ($M) Domestic Demand 30-Year Conv. Mortgage Rate (%)

2008 74,315.20 18,231.40 15,601 1,237 243,876-- -- 13,830.50 N/A 62009 56,104.60 19,641.60 14,172 1,179 216,358-- -- 13,034.70 N/A 52010 52,646.10 18,517.40 13,621 1,153 191,799-- -- 11,334.60 N/A 4.72011 47,287.50 16,346.40 13,163 1,123 181,908-- -- 10,231.50 N/A 4.52012 40,504.70 15,913.90 13,131 1,061 179,284-- -- 10,590.30 N/A 3.72013 37,609.60 15,823.30 12,529 975 172,836-- -- 10,811.70 N/A 42014 42,429.80 15,229.70 12,290 955 149,016-- -- 9,292.70 N/A 4.22015 45,703.10 15,385.70 12,516 967 140,649-- -- 9,090.50 N/A 3.92016 45,931.20 15,425.80 12,445 959 139,514-- -- 9,045.30 N/A 3.82017 48,993.90 16,388.90 12,587 966 144,102-- -- 9,464.20 N/A 4.22018 50,039.60 16,693.40 12,595 964 144,390-- -- 9,539.90 N/A 4.32019 49,892.00 16,618.90 12,435 950 142,682-- -- 9,441.20 N/A 4.32020 49,294.80 16,394.10 12,288 937 139,803-- -- 9,254.90 N/A 4.32021 49,319.50 16,375.00 12,101 922 138,323-- -- 9,178.00 N/A 4.32022 48,172.60 15,977.40 11,895 906 134,576-- -- 8,915.00 N/A 4.3

Sector Rank 24/31 23/31 17/31 23/31 14/31 N/A N/A 18/31 N/A N/AEconomy Rank 224/1546 199/1546 400/1546 853/1546 295/1546 N/A N/A 201/1546 N/A N/A


Back to Appendix

Annual ChangeYear Revenue

(%)Industry Value

Added (%)Establishments

(%)Enterprises

(%)Employment

(%) Exports (%) Imports (%)Wages (%) Domestic Demand (%)

30-Year Conv. Mortgage Rate (%)

2009 -24.5 7.7 -9.2 -4.7 -11.3 N/A N/A -5.8 N/A -16.52010 -6.2 -5.7 -3.9 -2.2 -11.4 N/A N/A -13 N/A -72011 -10.2 -11.7 -3.4 -2.6 -5.2 N/A N/A -9.7 N/A -52012 -14.3 -2.6 -0.2 -5.5 -1.4 N/A N/A 3.5 N/A -182013 -7.1 -0.6 -4.6 -8.1 -3.6 N/A N/A 2.1 N/A 8.92014 12.8 -3.8 -1.9 -2.1 -13.8 N/A N/A -14 N/A 4.72015 7.7 1 1.8 1.3 -5.6 N/A N/A -2.2 N/A -7.72016 0.5 0.3 -0.6 -0.8 -0.8 N/A N/A -0.5 N/A -0.32017 6.7 6.2 1.1 0.7 3.3 N/A N/A 4.6 N/A 8.12018 2.1 1.9 0.1 -0.2 0.2 N/A N/A 0.8 N/A 3.62019 -0.3 -0.4 -1.3 -1.5 -1.2 N/A N/A -1 N/A 0.22020 -1.2 -1.4 -1.2 -1.4 -2 N/A N/A -2 N/A -0.72021 0.1 -0.1 -1.5 -1.6 -1.1 N/A N/A -0.8 N/A 0.52022 -2.30 -2.40 -2 -1.7 -3 N/A N/A -2.90 N/A 0

Sector Rank 3/31 8/31 17/31 16/31 9/31 N/A N/A 6/31 N/A N/AEconomy Rank 147/1546 178/1546 795/1546 841/1546 329/1546 N/A N/A 241/1546 N/A N/A


Back to Appendix

Key RatiosYear IVA/Revenue

(%) Imports/Demand (%) Exports/Revenue (%) Revenue per Employee ($000) Wages/Revenue (%) Employees per Est. Average Wage ($) Share of the

Economy (%)

2008 24.53 N/A N/A 304.73 18.61 15.63 56,711.20 0.122009 35.01 N/A N/A 259.31 23.23 15.27 60,245.98 0.142010 35.17 N/A N/A 274.49 21.53 14.08 59,096.24 0.132011 34.57 N/A N/A 259.95 21.64 13.82 56,245.46 0.112012 39.29 N/A N/A 225.92 26.15 13.65 59,069.97 0.12013 42.07 N/A N/A 217.6 28.75 13.79 62,554.68 0.12014 35.89 N/A N/A 284.73 21.9 12.12 62,360.42 0.12015 33.66 N/A N/A 324.94 19.89 11.24 64,632.52 0.092016 33.58 N/A N/A 329.22 19.69 11.21 64,834.35 0.092017 33.45 N/A N/A 339.99 19.32 11.45 65,677.09 0.12018 33.36 N/A N/A 346.56 19.06 11.46 66,070.36 0.12019 33.31 N/A N/A 349.67 18.92 11.47 66,169.52 0.092020 33.26 N/A N/A 352.6 18.77 11.38 66,199.58 0.092021 33.2 N/A N/A 356.55 18.61 11.43 66,351.94 0.092022 33.17 N/A N/A 357.96 18.51 11.31 66245.10 0.09

Sector Rank 19/31 N/A N/A 25/31 13/31 13/31 26/31 23/31

Economy Rank 704/1546 N/A N/A 646/1546 740/1546 821/1546 428/1546 199/1546

Appendix: IBISWorld Reports – Financials (1 of 3)

Back to Appendix

Key RatiosApr 2015-Mar 2016 by company revenue

Apr 2012-Mar 2013

Apr 2013-Mar 2014

Apr 2014-Mar2015

Apr 2015-Mar2016

Small (<$10m)

Medium ($10-50m)

Large ((>$50m)

Liquidity RatiosCurrent Ratio 1.4 1.4 1.4 1.3 1.6 1.2 1.2Quick Ratio 1.2 1.2 1.3 1.2 1.4 1 0.9Sales / Receivables (Trade Receivables Turnover) 8.6 8.7 4 8.9 4.6 10.2 14.4Days' Receivables 42.4 42 91.3 41 79.3 35.8 25.3Cost of Sales/Inventory Turnover) N/A N/A N/A N/A N/A N/A N/ADays' Inventory N/A N/A N/A N/A N/A N/A N/ACost of Sales / Payables (Payable Turnover) N/A N/A N/A N/A N/A N/A N/ADays' Payables N/A N/A N/A N/A N/A N/A N/ASales / Working Capital 2 2.1 1.8 2.4 1.5 3.3 5.3Coverage RatiosEarnings Before Interest & Taxes (EBIT) / Interest 3.8 3.4 3.2 3.7 3.3 3.8 5Net Profit + Dep. Depletion. Amort. / Current Maturities LT Debt 3.9 2.8 3.5 5.6 0.9 17 N/ALeverage RatiosFixed Assets / Net Worth N/A N/A N/A N/A N/A N/A 0.1Debt / Net Worth 3.4 2.7 2.9 3.3 2.4 4.3 4.8Tangible Net Worth 27.8 31.8 31.2 27.9 30.4 25.4 19.5


Back to Appendix


Apr 2012-Mar 2013 Apr 2013-Mar 2014 Apr 2014-Mar2015 Apr 2015-Mar2016 Small (<$10m) Medium ($10-50m) Large ((>$50m)Operating RatiosProfit before Taxes / Net worth, % 25.8 21.6 17.5 21 15.9 24.7 45.6Profit before Taxes / Total Assets, % 5.5 5.1 4.2 4.7 4.1 5 7.8Sales / Net Fixed Assets 52.7 51.8 46.3 57.2 69.1 50.7 44.5Sales / Total Assets (Asset Turnover) 0.4 0.4 0.3 0.4 0.3 0.4 0.6Cash Flow & Debt Service Ratios (% of sales)Cash from Trading N/A N/A N/A N/A N/A N/A N/ACash after Operations 15.4 31.7 12.8 16 23.4 8.3 14.2Net Cash after Operations 14.2 30.9 11.2 13.9 20.6 6.4 12.5Cash after Debt Amortization -3.2 7.2 -5 -0.2 0.2 -2.7 3.8Debt Service P&I Coverage 1.2 3.1 0.8 1.1 1.2 0.8 2.6Interest Coverage (Operating Cash) 1.6 4.1 1.2 1.8 2 0.9 2.7


Back to Appendix


Apr 2012-Mar 2013 Apr 2013-Mar 2014 Apr 2014-Mar2015 Apr 2015-Mar2016 Small (<$10m) Medium ($10-50m) Large ((>$50m)Assets, %Cash & Equivalents 16 15.4 14.9 14.9 17 11.3 14.3Trade Receivables (net) 37.8 37.2 40.7 37.1 37.9 37.1 30.7Inventory 13.4 13.6 12.7 13.1 8 20.9 18.1All Other Current Assets 9.4 7.5 8.2 10.5 8.5 12.9 15.4Total Current Assets 76.6 73.6 76.5 75.6 71.4 82.3 78.5Fixed Assets (net) 7.2 6.4 7 6.4 8.1 4 4.4Intangibles (net) 2.3 2.6 2.2 2.3 2.1 2 5.4All Other Non-Current Assets 13.9 17.3 14.2 15.7 18.4 11.8 11.7Total Assets 100 100 100 100 100 100 100Total Assets ($m) 45,971.00 43,045.30 49,879.20 58,190.60 12,202.20 30,344.10 15,644.40Liabilities, %Notes Payable-Short Term 36.3 33.2 36.4 35.9 31.9 43.2 35.9Current Maturities L/T/D 2 2.1 1.9 2.5 2.6 2.4 2.6Trade Payables 3.6 2.5 2.4 4.3 2.5 6.3 9.3Income Taxes Payable 0.1 0.2 0.2 0.2 0.1 0.2 0.5All Other Current Liabilities 9.2 9.2 8.3 8.1 7.2 8.5 12.6Total Current Liabilities 51.2 47.3 49.1 51.1 44.3 60.7 60.9Long Term Debt 10.4 11.2 10.6 12.6 16.2 7.6 8Deferred Taxes 0.2 0.2 0.1 0.2 0.1 0.2 0.8All Other Non-Current Liabilities 8.2 7 6.8 5.9 6.9 4.1 5.4Net Worth 30.1 34.4 33.4 30.2 32.5 27.4 24.9Total Liabilities & Net Worth ($m) 45,971.00 43,045.30 49,879.20 58,190.60 12,202.20 30,344.10 15,644.40Maximum Number of Statements Used 1,275 1,162 1,242 1,286 756 423 107

Appendix: Capital Requirements (1 of 2)

Back to Appendix

Key Ratios9/30/2016 Actual For Capital Adequacy(Minimum) Well Capitalized

Amount Ratio Amount Ratio Amount RatioTier 1 Leverage ratio 1,387,049.00 12.3% 452,248.00 4.0% 565,424.00 5.0%CET1 Capital ratio 1,387,049.00 32.0% 195,094.00 4.5% 281,783.00 6.5%Tier 1 Capital ratio 1,387,049.00 32.0% 260,126.00 6.0% 346,809.00 8.0%Total Capital ratio 1,395,589.00 32.2% 346,835.00 8.0% 433,512.00 10.0%

2016 2017 (est) 2018 (est) 2019 (est) 2020 (est) 2021 (est)Risk Weighted Assets 4,335,274.00 4,499,628.51 4,653,739.02 4,778,599.24 4,890,628.16 4,987,473.07 Quarterly Average Assets 11,307,340.00 11,405,499.78 11,500,821.38 11,658,498.48 11,773,075.41 11,951,682.89

2,040,093.00

From Balance SheetTier 1 Capital

Total Capital

Common stock 1,375 1,375

Additional paid-in capital 1,156,855 1,156,855

Unearned compensation, ESOP (39,647) (39,647)

Retained earnings 268,466 268,466

ACL 8,500

Total Tier 1 Capital 1,387,049 1,395,549

Appendix: Capital Requirements (2 of 2)

Back to Appendix

Key RatiosEstimates 2017 (est) 2018 (est) 2019 (est) 2020 (est) 2021 (est)Tier 1 Leverage Ratio 1,387,748.00 12.3% 1,329,004.91 11.7% 1,329,580.55 11.4% 1,278,189.14 10.9% 1,291,349.18 10.8%

Minimum 456,219.99 4.0% 460,032.86 4.0% 466,339.94 4.0% 470,923.02 4.0% 478,067.32 4.0%Well Capitalized 570,274.99 5.0% 575,041.07 5.0% 582,924.92 5.0% 588,653.77 5.0% 597,584.14 5.0%

CET1 Capital Ratio 1,387,748.00 32.0% 1,329,004.91 29.5% 1,329,580.55 27.8% 1,278,189.14 26.1% 1,291,349.18 25.9%Minimum 202,483.28 4.5% 209,418.26 4.5% 215,036.97 4.5% 220,078.27 4.5% 224,436.29 4.5%

Well Capitalized 292,475.85 6.5% 302,493.04 6.5% 310,608.95 6.5% 317,890.83 6.5% 324,185.75 6.5%Tier 1 Capital Ratio 1,387,748.00 32.0% 1,329,004.91 29.5% 1,329,580.55 27.8% 1,278,189.14 26.1% 1,291,349.18 25.9%

Minimum 269,977.71 6.0% 279,224.34 6.0% 286,715.95 6.0% 293,437.69 6.0% 299,248.38 6.0%Well Capitalized 359,970.28 8.0% 372,299.12 8.0% 382,287.94 8.0% 391,250.25 8.0% 398,997.85 8.0%

Total Capital Ratio 1,396,248 32.2% 1,337,505 29.7% 1,338,081 28.0% 1,286,689 26.3% 1,299,849 26.1%Minimum 359,970.28 8.0% 372,299.12 8.0% 382,287.94 8.0% 391,250.25 8.0% 398,997.85 8.0%

Well Capitalized 449,962.85 10.0% 465,373.90 10.0% 477,859.92 10.0% 489,062.82 10.0% 498,747.31 10.0%

Appendix: Comparable Criteria (1 of 2)

Back to Appendix

Each of the 4 peers identified as best-fit cases for CFFN were chosen based on all having met the following criteria:

Saving & Loans, not Commercial Banks• Thrifts like CFFN hold loan portfolios that are typically dominated by residential RE. To qualify as a thrift charter in the eyes of regulators and the

Federal Home Loan Bank, these depository institutions must have 65% of its assets in “qualified thrift investments”. These assets can include mixes of SFR RE mortgages, multifamily RE mortgages, and MBS which gives some leeway to the type of loans extended by each S&L.

Total Assets near $10 Billion• Our sample peer group includes two S&L institutions just under $10 billion in assets, as is this case with CFFN, and two additional S&Ls who have

crossed over the $10 Billion in assets mark.

Federal Home Loan Bank membership• Each of the 4 peers analyzed are qualifying members of the FHLB. In exchange for receiving FHLB advances at or near comparable treasury rates,

these members must own a portion of FHLB stock and remain recognized as a qualified thrift charter.

Active Dividend• Each of the 4 peers are dividend paying stocks with an average dividend yield of 2.37% compared to CFFN’s fallacious 2.22% dividend advertised on

Bloomberg. It is noteworthy that no identifiable S&L firms with similar capital structure to CFFN pay biannual special dividends on a regular basis that result in a regular payout ratio of 100%+.

Similar levels of Excess Capital• It is critically important to look at relative capital levels when comparing Price/Book Value multiples to ensure that an apples-to-apples comparison is

being made because most investors are unwilling to pay a premium for a bank’s ‘excess equity’. The peer group identified holds excess capital twice the required minimum set forth by regulatory authorities with an average Tier 1 Leverage ratio of 12.0%.

Appendix: Comparable Criteria (2 of 2)

Back to Appendix

ReturnonAverageAssets(ROAA) 2012 2013 2014 2015 2016 Equity-to-AssetRatio 2012 2013 2014 2015 2016WAFD 1.07% 1.19% 1.13% 1.09% 1.11% WAFD 15.2% 14.8% 13.4% 13.4% 13.3%TFSL 0.10% 0.50% 0.57% 0.57% 0.65% TFSL 16.0% 16.4% 16.3% 14.1% 13.6%

NWBI 0.79% 0.84% 0.79% 0.73% 0.55% NWBI 14.2% 14.7% 13.7% 13.0% 12.2%COLB 0.96% 0.92% 1.09% 1.14% 1.13% COLB 15.8% 14.9% 14.9% 14.4% 13.6%

PeerAverage 0.73% 0.86% 0.90% 0.88% 0.86% Average 15.3% 15.2% 14.5% 13.7% 13.2%CFFN 0.79% 0.75% 0.85% 0.83% 0.88% CFFN 19.3% 17.8% 15.1% 14.4% 15.0%

ReturnonAverageEquity(ROAE) 2012 2013 2014 2015 2016 Bank-Tier1LeverageRatio 2012 2013 2014 2015 2016WAFD 7.26% 7.90% 8.05% 8.16% 8.35% WAFD 12.5% 12.0% 11.3% 11.7% 11.5%TFSL 0.64% 3.05% 3.52% 4.04% 4.73% TFSL 13.3% 14.2% 13.5% 12.8% 11.7%


PeerAverage 4.86% 5.74% 6.16% 6.41% 6.41% Average 12.3% 12.0% 11.6% 11.2% 10.3%CFFN 3.93% 4.14% 4.97% 5.13% 5.78% CFFN 14.6% 14.8% 13.2% 12.6% 12.3%

NetInterestMargin(NIM) 2012 2013 2014 2015 2016 Loan-to-DepositRatio 2012 2013 2014 2015 2016WAFD 3.18% 3.17% 3.05% 3.08% 3.11% WAFD 94% 86% 77% 81% 90%TFSL 2.39% 2.46% 2.42% 2.17% 2.23% TFSL 114% 119% 123% 135% 141%

NWBI 3.63% 3.51% 3.47% 3.49% 3.73% NWBI 98% 101% 105% 108% 95%COLB 5.77% 5.16% 4.76% 4.35% 4.12% COLB 72% 76% 77% 78% 78%

PeerAverage 3.74% 3.58% 3.43% 3.27% 3.30% Average 94% 96% 96% 101% 101%CFFN 2.01% 1.97% 2.07% 2.07% 2.10% CFFN 123% 129% 134% 137% 135%

LoanLossRatio(NCOs/Avg.Loans) 2012 2013 2014 2015 2016 AverageBorrowings/Deposits 2012 2013 2014 2015 2016WAFD 0.87% 0.23% -0.18% -0.06% -0.14% WAFD 31.2% 21.4% 19.4% 17.8% 19.3%TFSL 1.54% 0.44% 0.29% 0.06% 0.02% TFSL 5.4% 8.8% 11.3% 27.9% 27.4%


Average 0.84% 0.32% 0.18% 0.10% 0.06% Average 13.24% 11.78% 11.92% 15.50% 14.06%CFFN 0.12% 0.02% 0.02% 0.01% 0.00% CFFN 63.6% 61.4% 77.1% 71.8% 49.8%

EfficiencyRatio 2012 2013 2014 2015 2016WAFD 34.54% 40.85% 46.76% 49.54% 50.39%TFSL 59.67% 59.81% 59.82% 63.86% 61.28%

NWBI 63.86% 64.99% 67.44% 66.98% 64.78%COLB 69.17% 70.87% 63.33% 62.12% 60.04%

PeerAverage 56.81% 59.13% 59.34% 60.62% 59.12%CFFN 43.55% 48.13% 43.72% 44.74% 43.76%

ProfitabilityRatios(byFYE) BalanceSheetRatios(byFYE)

Appendix: Cost of Equity

Cost Of EquityLow High

Risk Free Rate 2.51% 2.51%Beta 0.49 0.82Market Risk Premium 5.30% 5.30%

5.11% 6.86%Round 5.00% 7.00%

Risk Free Rate = 10yr TreasuryBeta = Pulled from multiple sources (Yahoo, Bloomberg, industry averages, etc.) Market Risk Premium = 2016 premium based on research by Pablo Fernandez

Historical Market Risk Profile

Category# Firms Beta Peer Beta Avg. Volume

Investment Banks 45 1.08 WAFD 1.14 461,748Large Money Center

Banks 10 0.86 TFSL 0.4 185,009

Financial Svcs. (Non-bank ) 258 0.65 NWBI 0.62 590,495

Regional Bank 645 0.47 COLB 1.2 400,148

Avg. 0.84 409,350

CFFN 0.55 707,524Industry data provided is as of January 2017, as provided by NYU Stern website, credit A. Damodaran. Peer data credit Morningstar.

Where Derived?

Back to Appendix

Appendix: Precedent Transactions

Acquirer Target Announced AcquiredDeal

Value(M) Price per shareDeal Equity Value to

Net IncomeBranch Banking and Trust Company National Penn Bank 08/17/2015 04/01/2016 $ 1,822.69 $ 13.00 17.57 Busey Bank Pulaski Bank National Association 12/03/2015 05/02/2016 $ 217.67 $ 17.46 15.41 Wesbanco Bank Your Community Bank 05/03/2016 09/09/2016 $ 212.94 $ 39.05 14.16 Great Western Bank Home Federal Bank 11/30/2015 05/16/2016 $ 139.49 $ 19.77 24.62 Bank of the Ozarks C1 11/09/2015 07/21/2016 $ 402.52 $ 25.00 28.22 Yadkin Bank NewBridge Bank 10/13/2015 03/01/2016 $ 449.42 $ 11.40 22.92 Pinnacle Bank Avenue Bank 01/28/2016 07/01/2016 $ 206.78 $ 20.03 29.74 Towne Bank Monarch Bank 12/17/2015 06/24/2016 $ 220.21 $ 18.57 17.35 Univest Bank and Trust Fox Chase Bank 12/08/2015 07/01/2016 $ 251.99 $ 21.00 25.53

AVERAGES $ 435.97 $ 20.59 21.72 Net Income 83.30 Implied Equity 1,809.65 Shares 133.05 Implied Price $ 13.60 Implied High $ 18.62 Implied Low $ 8.87

WhyDidn’tUse

• UsedMergersthathadbeencompleted• Thingshavechangedsincemergerswentthrough• FinancialSectorjumped17%sinceelection(perBloomberg)• CapitolFederalstrongerbanksacquired(demandshighermultiples)

Back to Appendix

Appendix: Mergers

Acquirer Target Premium week Premium 4 week

Branch Banking and Trust Company National Penn Bank 18.8% 13.0%Busey Bank Pulaski Bank National Association 8.1% 15.2%Wesbanco Bank Your Community Bank 18.4% 23.2%Great Western Bank Home Federal Bank 22.5% 22.7%Bank of the Ozarks C1 19.5% 26.6%Yadkin Bank NewBridge Bank 32.4% 34.5%Pinnacle Bank Avenue Bank 51.1% 39.4%Towne Bank Monarch Bank 45.7% 43.2%Univest Bank and Trust Fox Chase Bank 14.2% 19.5%

Average Premium 25.6% 26.4%Capitol Federal Price $15.30 $15.30

Implied Price $19.22 $19.33Implied Low $16.54 $17.30Implied High $23.11 $21.91

Back to Appendix

Appendix: Excess Return

Back to Appendix

investment thesis - cfa institute...investment thesis: recommendation: buy current price: $15.30...

Documents