1. 1 Maine Bankers Association 2012 CEO Midwinter Meeting “Overview of Industry Conditions” February 2, 2012

2. 2 Disclaimer The views expressed in this presentation are those of the presenter and do not necessarily reflect official positions of the FDIC. Some of the information used in the preparation of this presentation was obtained from publicly available sources that are considered reliable. However, the use of this information does not constitute an endorsement of its accuracy by the FDIC. This presentation and comments made are not for attribution, quotation, or distribution.

3. 3 Number of Institutions Peak Year was 1989 with 534 Failures/Assisted Transactions 1980-1994 - 2,935 Failures/AT Total Assets - $992B Failures during cycle Cumulative – 424 Failures Total Assets - $674B Failures peaked in 2010 and should continue to trend downward Source: FDIC (Failures through 2/2/12).

4. 4 844 Problem Banks 399 Cumulative Failures As of 9/30/2011 The Problem Bank List declined in June for the first time since 2006 Problem Banks Cumulative Failures Source: FDIC

5. 5 Deposit insurance assessments reflect the extent of the stressful banking conditions Source: September 30, 2011 FDIC Quarterly Banking Profile Total 30.53%

6. 6 Source: FDIC. Data through September 30, 2011. The overall past-due rate has stabilized in ME. Total Past-Due Rate (median %) Maine Nation

7. 7 Source: FDIC. Data through September 30, 2011. Early-stage past-dues are starting to decline which may signal some improvement Past-Due Rate (median %) 30-89 days 90+ days or nonaccrual Maine

8. 8 Source: FDIC. Data reflects YTD net charge-offs through September 30. Maine institutions have had a comparatively low loan loss experience during this cycle Aggregate Net Charge-offs to Avg Loans% for banks < $10 billion Nation Maine

9. 9 Approximately 10% of Maine banks have CRE concentrations > 300% of Total Risk Based Capital Source: FDIC. Data as of September 30 for each period.

10. 10 Source: FDIC. Data through September 30, 2011. Earnings have bounced back in Maine but remain well below pre crisis levels Pretax ROA (median %) Maine Nation

11. 11 Source: FDIC. Data through September 30, 2011. While earnings are strained, nearly 90% of Maine’s banks were profitable in Q3 % of banks reporting profits Maine Nation

12. 12 Source: FDIC. Data through September 30, 2011. Net interest margins remain under pressure and are likely heading lower Net Interest Margin (median %) ME Commercial Banks ME Savings Banks

13. 13 Assets Yields are likely to come under continued pressure through 2014 Maine Median Percentage of Assets/Liabilities Repricing in over 3 Years to Earning Assets as of 12/31/08 Based on 12/31/08 Call filings. On December 16, 2008, Fed funds were lowered to 0-25 bp. Assets Liabilities

14. 14 Source: FDIC. Data through September 30, 2011. Long term asset concentrations heighten interest rate risk Assets > 5 years to Earning Assets (median %) ME Savings Banks ME Commercial Banks

15. 15 Source: FDIC. Data through September 30, 2011. Asset duration has increased during the 2000s to buffer the impact of stressed margins Assets > 15yrs to Earning Assets (median %) ME Savings Banks ME Commercial Banks Nation Savings Nation Commercial

16. 16 Source: FDIC. Data through September 30, 2011. Net interest margins remain under pressure and are likely heading lower Net Interest Margin (median %) ME Commercial Banks ME Savings Banks Fed Funds Rate increased 425 bp between 6/30/04 and 8/17/07

17. 17 Source: FDIC. Data through September 30, 2011. Overhead has converged as commercial banks trim costs and savings banks diversify Overhead/AA (median %) ME Commercial Banks ME Savings Banks

18. 18 Source: FDIC. Data through September 30, 2011. Savings and commercial banks also have become more similar into of asset mix Higher Risk Loans to Assets (median %) ME Commercial Banks ME Savings Banks

19. 19 Maine Banks have strong capital *Includes 2.5% Capital Conservation Buffer for risk based measures PCA – “Well Capitalized”% ME Bank Median %** Basel III Proposed %* *Data as of 9/30/11 – TCE RB is a rough estimate!

20. 20 The DIF has turned positive and on track to achieve minimum target set by Dodd/Frank Restoration Plan 1.15 by 2018 Dodd/Frank minimum of 1.35 by 9/30/20

21. 21 Systemic Resolution Responsibility Resolution Plan or “Living-will” –U.S. Bankruptcy Code –Holding companies $50 billion or more and nonbank financial companies designated as Systemically Important Financial Institutions (SIFI) Orderly Liquidation Authority –Alternative to bankruptcy –Strictly prohibits bailouts –Uses FDIC’s traditional resolution powers –Ensures creditors and shareholders appropriately bear the losses

22. 22 Focus on the Future of Community Banks Critical role in the U.S. economy –Importance to small business community –Role in providing banking to the underserved FDIC Initiatives –Research evolution of community banking –Evaluation of supervisory practices –Outreach/conference on community banking –Evaluating key challenges facing community banks Capital Technology Staffing challenges Regulatory burden Advisory Committee of Community Banks

23. 23 Questions/Other Topics?