School of Business Commercial Real Estate Conference March 6, 2012

1. School of BusinessCommercial Real Estate Conference March 6, 2012 The End of Extend and Pretend A Look at the Recent CRE Loan Experience of Connecticut’s Community Banks Martin J. Geitz, President & CEO

2. Agenda • Community Bank Profile • Market Conditions • Commercial Real Estate Loan Exposure • Loan Quality Trends • Conclusions

3. Profile of Connecticut’s Community Banks

4. Statistical Profile • 46 community banks headquartered in Connecticut • Often the largest bank in their home town • Connecticut community bank deposit market share: approximately 22% • 31 community banks’ data available for this analysis • Total Assets $23.0 billion • Total Loans $16.6 billion • Total Deposits $17.8 billion • Community banks account for over 50% of small business loans in US

5. CRE Experience • CRE loans are significant balance sheet concentrations for many banks • Concentrations have declined slowly since 2009 peak • Loan quality indicators are still elevated • Expect continued impact of workouts: loan write-downs, foreclosures, distressed sales

6. CRE Market Trends

7. Commercial Real Estate U.S. Price Trends

8. U.S. Home Prices Trends

9. U.S. New Home Sales

10. U.S. Housing Starts

11. CT Housing Permits

12. Community Bank CRE Loan Concentrations

13. Total CRE Loans / Total Loans Percentage Data from FDIC UBPR Reports

14. Total CRE Loans / Total Loans Number of CT Community Banks in each tier

15. Total CRE Loans / Total LoansMedian Percentage

16. Non-Owner Occupied CRE / Total Loans Percentage

17. Non-Owner Occupied CRE / Total LoansMedian Percentage

18. Owner Occupied Non-farm Non-residential CRE Loans / Average Loans Percentage

19. Owner Occupied Non-farm Non-residential CRE Loans / Average LoansMedian Percentage

20. Median Comparison Percentage

21. CRE Construction and Development Loans / Total Loans Percentage

22. CRE Construction and Development Loans / Total LoansMedian Percentage

23. 1 to 4 Family Construction Loans / Total Loans Percentage

24. 1 to 4 Family Construction Loans / Total LoansMedian Percentage

25. Total CRE Loans / Capital Percentage

26. Total CRE Loans / Capital Number of CT Community Banks in each tier

27. Total CRE Loans / CapitalMedian Percentage

28. Non-Owner Occupied CRE Loans / Capital Percentage

29. Non-Owner Occupied CRE Loans / CapitalMedian Percentage

30. Community Bank CRE Loan Quality

31. Delinquency Trends • Loan delinquencies typically forecast loan workouts and, ultimately, charge-offs • Delinquencies plateauing for many CT community banks • Delinquencies remain high for commercial real estate loans

32. All Loans 90+ Days Past Due Percentage

33. All Loans 90+ Days Past DueMedian Percentage

34. 1 to 4 Family Construction Loans 90+ Days Past Due Percentage

35. 1 to 4 Family Construction Loans 90+ Days Past DueMedian Percentage

36. Real Estate Loans 90+ Days Past Due Percentage

37. Real Estate Loans 90+ Days Past DueMedian Percentage

38. Construction & Land Development Loans 90+ Days Past Due Percentage

39. Construction & Land Development Loans 90+ Days Past DueMedian Percentage

40. Final Thoughts

41. FDIC Overall Loan Delinquency Trend

42. FDIC CRE Loan Delinquency Trend

43. Conclusions • CT community bank CRE exposure has not declined significantly, though C&D loan exposure is down • CRE delinquencies appear to be leveling off – but is it a trend? • Weak economic growth offers little reason to expect quick improvement in community bank CRE loan conditions

44. School of BusinessCommercial Real Estate Conference November 1, 2011 Thanks