1 April 25, 2017

2 Results from the Paperwork Reduction ActPotential Changes in Regulation and Tax Rate Tax Rate Municipal Bond Market Considerations Potential Hedge Accounting Changes Premium Amortization of Callable Debt

3 Questions and CommentsRegulatory Capital Treatment of Discount TruPs or Sub Debt in M&A: Is there a regulatory reference for using the discount book/carrying value for inclusion in Tier 1 capital? Or is one to use the par amount despite the lower carrying value on the close date? Example – Bank A is buying Bank B. For purchase accounting, they are marking the outstanding trust preferreds (issued) of Bank B to 60 cents on the dollar. If the TruPs are $10mm notional, the carrying value for those issued TruPs post-acquisition is $6mm. Do the TruPs count as $6mm or $10mm for inclusion in Tier 1 capital? Loan Commitment Risk Weight (CCF): For mortgage commitments in our mortgage pipeline, where would these be risk-weighted for purposes of RC-R? Or are they risk weighted at all? Is it treated as any other unfunded commitments based on maturity and unconditionally cancelable? Does the fact that it’s a residential mortgage commitment make any difference in the treatment?

4 Questions and Comments (con’t)Questions for the FDIC: Is there a trigger in the call report for proper or improper phase-ins of items like Current DTAs from Net Op Loss & Tax Credit? We noticed some institutions have too much, or, not enough phase-in (choosing 40% vs. 60% or 100% vs. 60%) HVCRE: # of banks over 100% and doing it wrong, is there a way to trigger in the call report? Impact of Tax Policies: The proposed cut to corporate tax rates will reduce Deferred Tax Assets on the balance sheets of banks. The impact could be significant for many supervised institutions with dozens of banks dipping below generally accepted capital standards S Corp: The OCC supports raising S Corp # of investors from 100 to 200, would FDIC get behind this? There are 1,300 FDIC supervised S Corp Banks. Also, lower taxes on S Corp investors & higher # of members could motivate more investors to enter S Corps and more S Corps in De Novo process, will this be a good thing? Client Feedback and Thoughts: The 300% CRE concentration level is on many client minds. Anecdotally, clients have mentioned their motivation for compliance is driven more by M&A flexibility. Not getting deals approved because they are over the 300% threshold when combined is motivating clients to more closely monitor this ratio. This M&A approval measure seems effective, whether intentional or unintentional. We had a client nearing $10B in assets say that they were planning for the $10B Dodd-Frank/Durbin limitation to increase, in the short term, to $50B. They are choosing to not spend much time and money preparing for $10B until there is some clarity. You have already stated your support for raising the limit, how have you been responding to banks near $10B if this is their thought?

5 Results from the Paperwork Reduction ActOverview: The Federal Financial Institutions Examination Council (FFIEC) released a report on March 30, 2017 under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). This act, which was put in place in 1996, requires member agencies to conduct a joint review of their regulations every 10 years and consider whether any of those regulations are outdated, unnecessary, or unduly burdensome. The most recent installment contains actions and proposals aimed at reducing and simplifying regulation. In anticipation of this document, regulated institutions submitted 230 written comments and oral comments to the FFIEC. The EGRPRA report summarizes the comments received, highlights the major issues raised therein, and catalogues the FFIEC, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency’s (OCC) responses. The following article aims to summarize those regulations for which action will take place, has taken place, and will likely not change in the near term.

6 Planned Actions to Reduce and Simplify RegulationThe Joint Agencies plan to take the following actions aimed at simplifying the capital rules. Some of the below items are being considered: Replace complex treatment of high volatility commercial real estate exposures with a more straightforward treatment for most acquisition, development, or construction loans Simplify current regulatory capital treatment for mortgage servicing assets, timing difference deferred tax assets, and holdings of regulatory capital instruments issued by financial instruments Simplify current limitations on minority interests in regulatory capital In addition to the capital rules, the Joint Agencies also proposed the below: Increasing the threshold for requiring an appraisal on commercial real estate loans from $250,000 to $400,000 and issuing additional guidance on Regulation O (which limits lending to executive officers, directors, or principal shareholder of the financial institution). Supporting legislative efforts to increase the Dodd Frank annual stress test threshold from $10 billion to $50 billion A series of Call Report revisions (some of which took effect on September 30, 2016) which will take effect March 31, 2017 Integrating OCC national bank and Federal Savings Association rules In addition to the Joint Agency proposals, the OCC also supports the below: A legislative amendment that increases the number of allowable shareholders from 100 to 200 for subchapter S corporations (the OCC does not possess the authority to make the change themselves) The removal of the residency requirements for board members. Current regulation requires that a majority of directors of a national bank must have resided in the state, territory, or district in which the bank is located, or within 100 miles of the bank, for at least one year immediately preceding their election and during their continuance in office A legislative proposal that banks with total consolidated assets of $10 billion or less be exempt from the Volcker rule (the OCC does not possess the authority to make the change themselves)

7 Actions That Have Already Been Taken to Reduce and Simplify RegulationThe FFIEC started the report with an overview of what has been done recently to upgrade, reduce, and simplify regulation. Some highlights include: Reducing the regulatory reporting requirements with the introduction of a community bank Call Report for institutions with domestic offices only and less than $1 billion in total assets Raising the asset threshold for certain financial institutions qualifying for an 18-month examination cycle with an “outstanding” or “good” composite condition from less than $500 million in total assets to less than $1 billion in total assets; this includes BSA exams Raising the asset threshold of the Small Bank Holding Company Policy Statement from less than $500 million in total consolidated assets to less than $1 billion in total consolidated assets and expanding the application of the policy statement to Savings and Loan Holding Companies (the policy statement facilitates the transfer of ownership of small community banks and savings associations by allowing their holding companies to operate with higher levels of debt than would normally be permitted) A lengthened time frame between on-site consumer compliance and Community Reinvestment Act (CRA) examinations for many community banks with less than $1 billion in total consolidated assets The FFIEC added flexibility with respect to required assumptions for Dodd-Frank Act-required company-run stress tests and extended the time that savings and loan holding companies have to perform and report test results. The change in the rule allows these covered companies to also incorporate their own capital action assumptions into their stress tests. Further, the FFIEC delayed the application of the company-run stress test requirements to savings and loan holding companies until January 1, 2017.

8 Actions That Have Already Been Taken (con’t)The OCC also included items they have improved recently. Some highlights include: Eliminating approximately 125 outdated or duplicative OCC guidance documents and updated and/or revising approximately 22 OCC guidance documents Publishing a number of guidance documents to assist banks in their capital planning efforts, such as: Capital Planning: Guidance for Evaluating Capital Planning and Adequacy, and the New Capital Rule Quick Reference Guide for Community Banks The FDIC also included some items they have improved recently. Some highlights include: Reducing the supervisory burden on de novo institutions, dropping from seven years to three years the period of enhanced supervisory monitoring of newly insured depository institutions Reducing the examination frequency for the compliance and CRA examinations of de novo institutions which had required annual on-site presence for a period of five years (now reduced to three years) Revising the frequency schedule for small banks (those with assets of $250 million or less) with favorable compliance ratings and Satisfactory CRA ratings to be examined every 60 to 72 months (previously months) for joint compliance and CRA examinations, and every 30 to 36 months for compliance only examinations Rescinding 16 rules that were transferred from the Office of Thrift Supervision (OTS), eliminating duplicative rulemakings and updating related FDIC rules as appropriate The FDIC also gave clarification on certain requests from S-corporation institutions to pay dividends to their shareholders to cover taxes on their pass-through share of bank earnings when those dividends are otherwise not permitted under the new capital rules. The FDIC told banks that unless there were significant safety and soundness issues, they would generally approve those requests for well-rated banks.

9 Items That May Not Change, or Cannot Be Changed by Regulatory BodiesThe requirement for official appraisals on 1-4 family residential properties is required under Title XI. The minimum threshold property value for these appraisals is $250,000. Though many commenters want to increase this level (which was set in 1994), the agencies have no plans for increasing the threshold. The current Bank Secrecy Act (BSA) sets a $10,000 threshold for a Currency Transaction Report (CTR). This threshold has been in place since 1970 and has the inflation adjusted buying power of approximately $65,000 in However, the CTR threshold cannot be addressed through the EGRPRA process because changing this threshold would require an amendment to the Financial Crimes Enforcement Network (FinCEN) regulation. The agencies do not support making changes to the Prompt Corrective Action (PCA) requirements at this time. The PCA framework outlines which actions the regulatory body can take relative to the institution’s capital levels, from restricting growth to placing the financial institution in to receivership. The Electronic Fund Transfer Act, which was added by the Dodd-Frank Act, established standards for fees paid on debit cards. The FFIEC clarified that a prepaid card that provides access to the funds underlying the card is not eligible for the fee exemption because such a prepaid card would function nearly in the same manner as a debit card. They have no plans for changing the status of prepaid cards following this clarification. Currently, the agencies are not planning to make revisions to the treatment of ALLL in regulatory capital calculations. However, the agencies are closely monitoring the implementation of the Financial Accounting Standards Board’s (FASB) recently published Current Expected Credit Loss (CECL) which revises the measurement of the ALLL but is not required to be adopted before 2020.

10 Results from the Paperwork Reduction ActPotential Changes in Regulation and Tax Rate Tax Rate Municipal Bond Market Considerations Potential Hedge Accounting Changes Premium Amortization of Callable Debt

11 Potential Changes in Regulation and Tax RateNumber of FDIC Insured banks in each asset category impacted by potential regulatory and corporate tax rate changes: Source: SNL as of 2016Y, includes all Commercial Banks that are FDIC Supervised

12 Potential Changes in Regulation and Tax RatePotential Corporate Tax Reform - Net Deferred Tax Assets and Capital in each asset category at 20% Corporate Tax Rate for FDIC Insured Banks: Source: SNL as of 2016Y, includes all Commercial Banks that are FDIC Supervised

13 Potential Changes in Regulation and Tax RatePotential Corporate Tax Reform - Net Deferred Tax Assets and Capital in each asset category at 15% Corporate Tax Rate for FDIC Insured Banks: Source: SNL as of 2016Y, includes all Commercial Banks that are FDIC Supervised

14 Potential Changes in Regulation and Tax RatePotential Corporate Tax Reform – Amount of Capital “Leaving the System” at incremental tax rates for FDIC Insured Banks: Source: SNL as of 2016Y, includes all Commercial Banks that are FDIC Supervised

15 Results from the Paperwork Reduction ActPotential Changes in Regulation and Tax Rate Tax Rate Municipal Bond Market Considerations Potential Hedge Accounting Changes Premium Amortization of Callable Debt

16 Municipal Book Yield: Impact of Federal Tax Rate ChangeSource: Stifel, ZM Financial Systems. Static pricing provided as of 12/31/2016 Assumes 0.75% Cost of Funds and a 20% TEFRA disallowance on Bank Qualified holdings

17 Alternatives to Tax-Exempt Municipals: Agency CMBSIf the proposed tax reforms are enacted within the president’s first term, the expected TEY advantage of municipals evaporates – and the magnitude is skewed to the downside Stifel recommends selling Tax-Exempt Municipals and purchasing Agency CMBS, which offers a number of benefits over municipal securities: Because Agency CMBS carries the same agency guarantee as FNMA / FHLMC MBS, most any counterparty will accept it as collateral – potentially freeing up borrowing capacity Agency CMBS is free from the headline risk – and associated changes in valuation – present in certain pockets of the municipal market Investing in Agency CMBS over municipals relieves the investor of the need to perform initial and ongoing due diligence regarding the creditworthiness of the underlying borrower(s) The guarantee in Agency CMBS garners a 20% risk weight, meaning holders of revenue bonds may be able to reduce the risk weighting on their securities holdings The Agency CMBS market is deep with strong liquidity, and may afford an opportunity to “clean up” line items for more efficient portfolio management Average 7 Year Municipal Taxable Equivalent Yield vs. Agency CMBS Approximate yields on Agency CMBS products provide as of 1/23/2017

18 Municipal Debt Market and Tax Reform: Relative Value Trends

19 Results from the Paperwork Reduction ActPotential Changes in Regulation and Tax Rate Tax Rate Municipal Bond Market Considerations Potential Hedge Accounting Changes Premium Amortization of Callable Debt

20 Potential Hedge Accounting Changes = Greater Ease of HedgingOn September 8, 2016, the FASB issued the exposure draft “Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities”, with comments due November 22, 2016. Since publication and receipt of comments, the FASB has held a series of Board Meetings to discuss feedback and make further tentative decisions ahead of finalization of the new guidance. Timeline of Recent FASB Board Meetings Source:

21 Decisions Reached on Fair Value Hedges of Interest Rate Risk1,2Market Yield Test When calculating the change in fair value of the hedged item in a fair value hedge of interest rate risk, an entity would have the choice to use either the cash flows associated with the benchmark interest rate or the full contractual coupon cash flows if, at hedge inception, the market yield of the hedged item is greater than the benchmark rate. If, at hedge inception, the market yield is less than the benchmark rate, the total contractual coupon cash flows must be used (the “market yield” test). At the March 8, 2017 Board meeting, the Board decided to exclude the market yield test from the final Update. The result of this decision is that entities would be able to choose to use the total contractual coupon cash flows or the benchmark rate component cash flows determined at hedge inception for all fair value hedges of interest rate risk. Hedges of Callable Debt For prepayable financial instruments, an entity may consider only how changes in the benchmark interest rate affect a decision to settle a debt instrument before its scheduled maturity in calculating the change in the fair value of the hedged item attributable to interest rate risk Partial Term Fair Value Hedges An entity may measure the hedged item in a partial-term fair value hedge of interest rate risk by assuming the hedged item has a term that reflects only the designated cash flows being hedged As of April 4, 2017 Source:

22 Decisions Reached on Fair Value Hedges of Interest Rate Risk1,2“Last of Layer” Approach for Fair Value Hedges of IRR of Prepayable Assets The Board decided to incorporate the last of layer approach into the current hedge accounting project for fair value hedges of interest rate risk of prepayable assets. The last of layer approach would allow an entity to designate as the hedged item the last dollar amount of either a prepayable asset or a closed portfolio of prepayable assets. An entity would be able to assume that if prepayments occur, they are first applicable to the portion of the prepayable asset or to a closed portfolio of prepayable assets that is not part of the designated hedged layer. On each hedge effectiveness assessment date, an entity would use its expected performance of the asset(s) to determine if the amount remaining at hedge maturity is still expected to exceed or be equal to the last of layer. In combination with the Board’s previous decisions on partial term and benchmark coupon cash flow designations, an entity also would be able to apply the “similar assets” test to the closed portfolio qualitatively and only at inception of the hedging relationship. As of April 4, 2017 Source:

23 Hedges of Callable DebtBoard decision: Allow an entity to focus on changes in the value of a prepay option solely as it relates to changes in the designated benchmark interest rate.  What it means: Using interest rate swaps to convert callable fixed-rate debt to float proves quite challenging given the ineffectiveness that arises under the existing rules. The requirement to consider all of the factors that might lead an entity to prepay the debt (interest rate, credit spreads, and other factors) creates this issue. For example, a municipal debenture could carry a call option. In order to hedge that debenture, one could attempt to build a hedge relationship with an interest rate swap that also carried a mirror image call option. However, the options will not behave identically or said differently, the option values do not behave identically. This divergence in option value changes specifically occurs as municipal spreads change. If municipal spreads were to tighten significantly yet swap rates remained unchanged, this would make a call trigger more likely on the municipal debenture. In contrast, with swap rates unchanged, the option within the swap would have little to no change in value. Therein lies the issue with this type of hedging relationship currently and why the Board and staff sough to revise the concept. The Board’s tentative decision to allow one to only consider the effect of changes in the value of the call option as it relates to changes in the benchmark interest rate would help one achieve an effective hedge when swapping callable fixed rate municipal securities to floating by entering into a pay-fixed/receive float interest rate swap with a mirrored call option.

24 Partial Term Fair Value HedgesBoard decision: Allow an entity to apply the same term of the hedging instrument (i.e. swap) to the hedged item in a partial-term fair value hedge. What it means: While current rules allow an entity to hedge a specific percentage of the change in value of the hedged item, a partial term hedge (e.g., hedging the first 5 years of a 10-year fixed-rate bond) is not allowed under current rules. This has frustrated many institutions looking to convert legacy, or new issue, fixed rate instruments to a coupon structure that more closely aligns with their subjective rate view or overall risk position. For example, certain financial institutions that recently issued subordinated debt have expressed interest in altering the coupon structure post issuance. They might issue 10 year fixed debt, yet with to have the first 2 or 3 years floating (at a lower, cheaper coupon). This strategy isn’t feasible under the current rule set; however, the tentative board decision yesterday regarding this would allow for such a hedge under the new framework. This will provide much more flexibility for those wishing to create a “floating- to-fixed” debt instrument.

25 Example: Hedging Non-Callable and Callable MunicipalsThe grid below illustrates the process of hedging tax exempt municipal debentures with an interest rate swap. For debentures with embedded call options, the option is mirrored within the swap. If the bond is called away, the institution would exercise the option on the swap. These spreads over 3 Mo LIBOR are relatively attractive when contrasted to other floater instruments, especially when one considers the risk weight of a general obligation at 20% versus a common 100% or higher risk weight for similar floating durations and comparable yields. Below illustrates full term hedging (to maturity) for a AA-rated BQ series Full Term Hedges of Callable and Noncallable Munis Structure Tenor Coupon Price YTW Tax Exempt (Unhedged) TEY (Unhedged) Swapped Spread to 3mL (bps) Swapped TEY (Hedged) Swapped DM (Taxable Equiv.) (bps) Kicker DM (Taxable Equiv.) (bps) Spot Start 5Y 3.00% 107.20 1.50 2.31 96 1.48 33 10Y 106.68 2.25 3.46 63 2.33 117 Spot Start NC10 15Y 103.06 2.75 4.23 19 2.63 147 181 20Y 99.26 3.05 4.69 -10 2.74 158 25Y 3.25% 100.00 3.25 5.00 -4 2.87 171 30Y 97.19 3.40 5.23 -17 2.90 175 Indicative levels as of 4/10/17

26 Time Series of Swapped Discount MarginsThe chart below illustrates the taxable equivalent discount margins available at issuance on Texas PSF issuance from January 2016 – current1 Data points represent average discount margins over the week for the specific tenors (rounded to the nearest tenor), with linear interpolation where there is no data available for a given tenor

27 Floater Landscape Source: Bloomberg, Yield Book & StifelPriced as of 3/8/17

28 Example: “Last of Layer” ApproachThe charts below illustrate the projected remaining balance on new issue MBS under various interest rate scenarios Projected Remaining Balance: 30y 4% MBS Projected Remaining Balance: 15y 3.5% MBS By utilizing both the newly proposed “last of layer” approach along with partial term fair value hedging, one can swap a percentage of notional mortgage exposure to a targeted duration point The hedge is sized conservatively according to expected collateral performance to a given hedge maturity point Illustrative Swap Structures Tenor Pay Fixed1 Rec Float Initial Carry 3y 1.71% 1mL (0.99%) -73bps 5y 1.95% -96bps 7y 2.11% -112bps Indicative levels as of 4/10/17

29 Example: Brokered CD Issuance Swapped to FloatThe grid below illustrates the process of swapping fixed rate callable brokered CD issuances to floating with an interest rate swap. For debentures with embedded call options, the option is mirrored within the swap. This sub 1 Mo LIBOR funding is relatively attractive when contrasted to other sources of wholesale funding, especially when one considers that this would funding instrument would not require collateralization. Below, we illustrate swapping 5 yr non-call 1 yr brokered CD issuance to floating: Given that the hedge accounting rule changes will allow an entity to focus on changes in the value of a prepay option solely as it relates to changes in the designated benchmark interest rate, this will provide the ability to create the funding structure illustrated above with clean hedge accounting. Note: since brokered CD issuances include a death put, one must be mindful of the impact of death puts over the passage of time. Full Term Hedge of Callable Brokered CD Issuance Structure Tenor Fixed Coupon Floating Swap Rate Annualized Brokered CD Issuance Fee Net Funding Cost 5nc1 5Y 2.00% 1 Mo LIBOR % 0.14% 1 Mo LIBOR – 0.01% (0.76%)2 Indicative levels as of 2/7/17 1 Mo LIBOR = 0.77% as of 2/7/17

30 Results from the Paperwork Reduction ActPotential Changes in Regulation and Tax Rate Tax Rate Municipal Bond Market Considerations Potential Hedge Accounting Changes Premium Amortization of Callable Debt

31 Amortization of Callable Securities: Changes to Current RuleFASB issued an Accounting Standards Update on March 30, 2017 that proposed the further refinement of ASC and ASC pertaining to the accounting methodology for the amortization of callable securities. As the rule currently stands, depositories are required to amortize premiums on callable debt securities to contractual maturity of the instrument, rather than the earliest call date. This can result in a one-time negative earnings event if a premium callable debt security has a call feature that is exercised well in advance of its maturity date. The update would require premiums on callable debt securities to be amortized to the earliest call date. This represents a reversal of the current rule, and would effectively remove the potential for an immediate charge-off upon the exercised call option. The change is to be implemented using a modified retrospective approach that employs a one-time “catch-up” adjustment to retained earnings. This accounting methodology better aligns with market conventions and economic reality, as investors generally view callable debt on a “Yield to Worst” basis, in which a callable security is run to the cash flow date that offers the lowest possible return potential. The guidance states that the amendments are effective for public business entities for fiscal years beginning after December 15, For all other entities, the amendments are effective for fiscal years beginning after December 15, Early adoption is permitted. Adapted from Stifel Fixed Income Strategy Article: Amortization of Callable Securities: Exposure Draft Release Provides Clarity, Financial Institutions Strategy, October 5, 2016

32 Amortization of Callable Securities: Sectors ImpactedWhile amortizing premiums to maturity allows for realization of a greater Book Yield prior to call dates, it can lead to substantial premium risk once those call dates are reached. In the new issue Agency sector, this is generally not a relevant issue, as most new issues are sold at par. However, this could create some concerns in secondary market trading. Within the Bank Qualified Municipal Sector, more than 60% of new issues come to market at premium dollar prices, approximately 19% of issuance in 2016 has come at a dollar price of $110 or greater, as illustrated below: Adapted from Stifel Fixed Income Strategy Article: Amortization of Callable Securities: Exposure Draft Release Provides Clarity, Financial Institutions Strategy, October 5, 2016

33 Amortization of Callable Securities: Balance Sheet ImpactsIn order to illustrate the application of the new rule, we provide an sample callable debt security that assumes a 15 year maturity, a call feature starting in 10 years, a 3% coupon, and a purchase price of $110. Table 1 and Table 2 below illustrate the accounting for these securities when amortizing the premium to both the earliest call date and to maturity. Table 1: Amortize to Earliest Call Table 2: Amortize to Maturity The modified retrospective approach that FASB has suggested for implementation brings the balance sheet to the exact same place as it would have been had premiums been amortized to the first call date via a one-time catch-up entry to retained earnings. However, the catch-up entry in real time is experienced as an abrupt adjustment to capital ratios. In Table 2 at time t=10 (first call date), a call would result in immediate amortization of 3.7 points of remaining premium under current GAAP. This effect is what the exposure draft seeks to remedy. Adapted from Stifel Fixed Income Strategy Article: Amortization of Callable Securities: Exposure Draft Release Provides Clarity, Financial Institutions Strategy, October 5, 2016

34 Disclosures The information contained herein has been prepared from sources believed reliable but is not guaranteed by Stifel and is not a complete summary or statement of all available data, nor is it to be construed as an offer to buy or sell any securities referred to herein. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of investors. Employees of Stifel or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed within. No investments or services mentioned are available to “private customers” in the European Economic Area or to anyone in Canada other than a “Designated Institution”. Stifel and/or its employees involved in the preparation or the issuance of this communication may have positions in the securities or options of the issuer/s discussed or recommended herein. Securities identified herein are subject to availability and changes in price. Stifel is a multi-disciplined financial services firm that regularly seeks investment banking assignments and compensation from issuers for services including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as a placement agent in private transactions. Moreover, Stifel and its affiliates and their respective shareholders, directors, officers and/or employees, may from time to time have long or short positions in such securities or in options or other derivative instruments based thereon. Readers of this report should assume that Stifel or one of its affiliates is seeking or will seek investment banking and/or other business relationships with the issuer or issuers, or borrower or borrowers, mentioned in this report. Stifel’s Fixed Income Capital Markets research and strategy analysts (“FICM Analysts”) are not compensated directly or indirectly based on specific investment banking services transactions with the borrower or borrowers mentioned in this report or on FICM Analyst specific recommendations or views (whether or not contained in this or any other Stifel report), nor are FICM Analysts supervised by Stifel investment banking personnel; FICM Analysts receive compensation, however, based on the profitability of both Stifel (which includes investment banking) and Stifel’s Fixed Income Capital Markets. The views, if any, expressed by FICM Analysts herein accurately reflect their personal professional views about subject securities and borrowers. For additional information on investment risks (including, but not limited to, market risks, credit ratings and specific securities provisions), contact your Stifel Nicolaus financial advisor or salesperson. High yield fixed income securities, or fixed income securities that don’t have credit ratings from nationally recognized statistical rating organizations, may be subject to greater fluctuations in price and greater risk of loss of income and principal, due to greater potential default risk by the associated borrowers than fixed income securities that have investment grade credit ratings from the nationally recognized statistical rating organizations. Yields appearing on the Portfolio Holdings Report and Portfolio Inventory Report are Yield to Worst (YTW). (YTW is the lowest Internal Rate of Return based on calculation of yield to call for all possible call dates and the yield to maturity. For additional information on investment risks (including but not limited to, market/credit risks, credit ratings and specific securities provisions), contacts your Stifel Fixed Income representative. © 2017 Stifel, Nicolaus & Company, Incorporated, One South Street, Baltimore, MD All rights reserved.