NW Growth Financing ConferenceThe Thawing of the Credit Markets:

Is Your Company Freezer Burnt?Moderator: Curtis Fraser, Chase

Glenn Burroughs, PNC Business CreditThomas Cleveland, Access Business Finance

Raymond Yager, Fifth Third Bank

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SPONSORED SYNDICATED LOAN MARKET2Q2010

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Sponsored issuance increased 281% year-over-year and 78% over 1Q10 to $11.7 billion.

However, the 1Q10 mini-revival in dividend deals and even a few repricings stalled in June as the loan market cooled. Leaving sponsors to focus on sponsor-to-sponsor trades.

Through June, sponsor-to-sponsor deals totaled $10.5 billion, or 39% of overall activity, the highest share on record.

Sponsored Volume 2Q10

Source: S&P

Source: LPC

Middle Market Sponsored Volume

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Source: S&P

Middle Market Sponsored - Leverage

The leverage multiples for middle market transactions are now in the 3.00x-3.50x range on a senior basis and 4.50x to 5.00x on a total basis.

This increase has been driven by a myriad of factors : More liquidity in the market; Still tepid “actual” deal flow; Improved visibility in financial projections from sellers; Lower anticipated defaults in lender portfolios resulting in a more accommodating stance from credit

committees; A reversion to mimicking the broadly syndicated market for structure; and The desire to put an early dent in 2010 budgets.

Avg. Debt/EBITDA Ratio for Sponsored Middle-Market Transactions

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Avg. Spread of Sponsored Transactions 1997- 2Q10

Lenders are still expecting sponsors to contribute at least 30-40% equity to capital structures.

The volatility in the loan market has led to increased pricing over 1Q10 levels with pricing in the L+500-550 bps range with 1.75-2.0% LIBOR floors and 98 OID’s.

Source: S&P

Note: Middle Market issuers defined as issuers with EBITDA < $50mm.

464.06

Middle Market Sponsored - Pricing

481.25

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Note: Middle Market issuers defined as issuers with EBITDA < $50mm.

Pro Forma Credit Statistics of Sponsored Middle-Market Transactions

EBITDA is adjusted for cost savings and synergiesData excludes Media and Telecom prior to 2002

Source: S&P

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Source: S&P Note: Middle Market issuers defined as issuers with EBITDA < $50mm.

Middle Market Sponsored Volume by Industry – 1H10

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Source: S&P Note: Middle Market issuers defined as issuers with EBITDA < $50mm.

Middle Market Sponsored Volume by Purpose – 1H10

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Source: S&P

Dividend Financing

Dividend financing has been a major theme this year as private equity firms tap the now liquid debt markets to harvest gains.

Through June 30th, issuers have placed $10.5 billion (total) and $8.8 billion (sponsored) of loans and bonds to back dividends payments, versus just $8.0 billion (total) in all of 2009.

2010’s class of dividends have been relatively conservative so far, with rating agencies and accounts generally skeptical of equity extraction.

The average post-dividend leverage multiple for 2010 deals is 4.3x.

2010 dividends have allowed PE firms to recoup 76% of their original investment, on average (although barely half of 2006’s 147%).

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OVERVIEW OF FIFTH THIRD - SFG

11

SFG Middle Market View

Senior Leverage:

3.00x - 3.50x Total Leverage

4.25x - 5.00x Minimum Equity Contribution

35%-40% Senior Pricing (L + bps)

475 – 525 Floors (bps)

150 – 200 Closing Fees (unrated deals)

1.50%-2.00% Amortization (unrated deals)

5%+ p.a. Excess Cashflow Recapture

50-75% Tenors

5 years Delayed Draw Term Loans

Yes Covenant Package

Leverage + FCCR Financial Covenant Cushions

20% Full Underwrites

Yes Market Flex Language

Economics

This is Fifth Third’s view of middle market transactions today.

12

Comparable Transactions

Bank Failures- S& L Crisis vs. todaySource: FDIC

S&L Crisis• 1,409 banks failed between 1989 and 1993• Cost of the crisis $160.1 billion

Today• 2008 bank failures – 25• 2009 bank failures – 140• As of July 16, 2010 – 105• Troubled banks – 700 +• Net charge offs

– 2006 - $ 27.0bil– 2007 - $ 44.1bil– 2008 - $ 100.4bil– 2009 - $ 187.4bil– Q1 2010 - $52.4bil

Asset ValuesSource: GoIndustry DoveBid

• Semiconductor and PCB industries - In a current state of growth with high demand for high grade good quality equipment. Lead times for new equipment is forcing buyers to the secondary market.

• Transportation- Alternate fuels have not really hit this market in a big way. Hybrids are expensive and may be difficult without government supported tax breaks. California new laws will create problems in this sector as conversion to less polluting engines is expensive. Other states will follow.

• Bio-Pharmaceuticals- Steady and strong with consolidation in R&D. This is an industry that quickly obsoletes older equipment when testing and research are through.

• Plastics-Injection molding is the largest sector in this industry with extrusion and blow molding the smaller sectors. Performance is estimated to be up for 2010 from 2009 for Injection, and dropping somewhat for extrusion and blow molding.

• Current conditions - There is an uptake in the market. Lower inventories have created the move up in manufacturing. The question is, whether it is sustainable and for how long. Many companies have cleaned up their bottom lines and are working with fewer people. Bottom line, we need to invest in manufacturing goods the world wants to buy.

Machinery & Equipment Value Trends

Pharmaceutical / Personal Care Products Chemicals Food & Beverage Metalworking Plastics Printing / Bindery

Used Equipment Pricing: STABLE

Used Equipment Pricing:STABLE

Used Equipment Pricing:STABLE

Used Equipment Pricing:STABLE

Used Equipment Pricing:STABLE

Used Equipment Pricing:STABLE

Used Equipment Trade: UP

Used Equipment Trade: STABLE

Used Equipment Trade: STABLE

Used Equipment Trade: UP

Used Equipment Trade: UP

Used Equipment Trade: STABLE

Used Equipment Value Trend:

STABLE

Used Equipment Value Trend: STABLE

Used Equipment Value Trend: STABLE

Used Equipment Value Trend: STABLE

Used Equipment Value Trend:

UP

Used Equipment Value Trend: DOWN

Heavy Mobile Equipment Appraisals

Agriculture Boiler / Compressor /Generator

Construction Crane Rail / Intermodal Truck & Trailer

Used Equipment Pricing:UP

Used Equipment Pricing:

UP

Used Equipment Pricing:STABLE

Used Equipment Pricing:STABLE

Used Equipment Pricing:DOWN

Used Equipment Pricing:

UP

Used Equipment Trade: UP

Used Equipment Trade: UP

Used Equipment Trade: STABLE

Used Equipment Trade: DOWN

Used Equipment Trade: STABLE

Used Equipment Trade: STABLE

Used Equipment Value Trend: UP

Used Equipment Value Trend: UP

Used Equipment Value Trend: STABLE

Used Equipment Value Trend: STABLE

Used Equipment Value Trend:

UP

Used Equipment Value Trend:

UP

Great American GroupMachinery & Equipment

Above data based on Great American Group’s liquidation activities in addition to consultations with our network of commodity-specific advisors. Participants compared used equipment values and level of trade observed in Q2 2010 as compared with Q1 and projected value trends into Q3.

Dodd-Frank Wall Street Reform and Consumer Protection Act

Implications

– Require in excess of 243 new rule makings by 11 different federal agencies.– Expect 5,000 pages on new regulations. Promises to generate historic levels of

red tape.– No expiration date on powers.– Creates environment of regulatory uncertainty and deter lending in the near

term and increase the cost of credit.– Eliminates the use of Trust Preferred Securities by Bank Holding Companies to

raise Tier 1 Capital- higher level of capital will be required.– Derivatives more costly impacting producers of commodities and food.

Provide permanent bailout authority to FDIC

– Alters the use of the FDIC from a traditional deposit insurance that guarantees the same deal for every bank to a tax you pay the government and the government decides which bank it wants to replace.

– Increases the cost of non-deposit funding and the static saving for smaller banks disappears. Affects the pricing and availability of home loans.

– Insurance premiums will increase due to higher insurance limits and no limit on the size of the FDIC fund.

– Trust the same regulators that Failed the last time.

New 10 member Financial Stability Oversight Council and a new Bureau of Consumer Affairs

– Expect a destabilized financial system by stifling innovative products while failing to detect dangers posed by existing ones.

– Increase in credit costs for consumers and businesses tighter credit markets as fewer loans will be granted.

– New disclosure and reporting requirement adding to the compliance costs.

– Banks forces to invest in lawyers and lobbyists to keep up with the law.

– Assumes that policy makers are able to predict financial crisis.

Fat Cat Banker

Fannie and Freddie Forever

– Lack of Government sponsor enterprise reform makes the bill an inadequate response to the 2008 financial crisis.

– Hundreds of provisions unrelated to the original mission and fails to address the major cause of the mortgage meltdown.

– According to the Wall Street Journal- it weakens the US economy and reduces economic growth.

– Ignores the role of loose monetary policy in driving the housing bubble.