Important Considerations & Key Steps When Buying a Bank in a Foreign Market

BUYER: Qatar National Bank Established on June 6, 1964 as the country’s first domestically owned commercial bank Headquartered in Doha, State of Qatar QNB and its subsidiaries operate in 31 countries spanning across 3 continents (Asia, Europe, Africa) employing more than 29,000 people Largest Bank in Qatar and #1 Financial Institution in the Middle East and Africa Management’s objective: To become a globally known bank by the year 2030. Qatar National Bank was established on June 6, 1964 as the country’s first domestically owned commercial bank. It had 35 employees in its first year and was headquartered in Qatar’s capital city, Doha. Today, QNB and its subsidiaries operate in 31 countries spanning across 3 continents with over 29,000 employees. It remains the largest bank in Qatar and the #1 financial institution in the Middle East and Africa. Their overall strategy in the long term is to become a globally known bank by the year 2030.

BUYER: QNB Products & Services Wholesale, Commercial and SME Banking Global trade services Corporate advisory services Retail Banking Focused on first-class customer experience Innovative and user-friendly internet and mobile banking services Asset and Wealth Management Specialized in institutional and high-net worth individuals International Business 37% of bank’s net profits derived internationally Adaptable to compliance and regulations in many countries QNB offers several products and services through its subsidiaries throughout the world. Wholesale, Commercial, and SME banking are important aspects of their operations. QNB has positioned itself in the market to provide access to emerging markets and top-rated institutions. -Their retail banking sector is focused on providing a high level of customer service. To further enhance the customer experience, they have invested a lot of time and money into creating innovative and user-friendly internet and mobile banking services. -Their asset and wealth management services specializes institutional and high-net worth individuals -A major growth area for QNB is their international business sector which consists of 37% of the bank’s net profits. Since they operate in several highly regulated economies, they have become easily adaptable to various compliance and regulation standards.

BUYER: QNB Financial Performance The financial indicators you see here demonstrate the strength of QNB. In 2018, total assets grew over 6% from the previous year. Loans and deposits grew by 5% and 5% consecutively. The growth in deposits was supported by a continued focus on diversifying their funding base over geographical regions. Profitability has continued to grow at 5.5% year over year since 2016. A key focus of QNB is to expand internationally and maintain sustainable growth and profitability.

KEY CONSIDERATIONS: Market United States Accelerate International Presence Exposing the bank to the United States, Canada, and Central & South American markets Exponential Growth Potential Entering the US market would give tremendous growth potential opportunity to QNB Service existing customers The United States has at least $10 million people of Middle Eastern descent Diversification of Risk QNB is primarily located in the Middle East and Africa where there is a lot of exposure to country risk Diversifying into the US would help to mitigate this exposure There are a few key considerations in our decision to expand internationally into the United States market. The long-term goal for QNB is to become a globally recognized bank by the year 2030. Expansion into the U.S. would accelerate their international presence giving access to not only the United States, but Canada, and the Central and South American markets as well. -Growing QNB’s international presence into the US would bring tremendous growth potential opportunity. -Another consideration for QNB when looking to expand internationally is to further its reach to its existing customer base. The United States would be a natural market for this as there is a large population of Middle Eastern ancestry. -With most of QNB presence locating in the Middle East and Africa, their is a lot of exposure to country risk. Diversifying their bank into the US market would help to mitigate the exposure to this.

KEY CONSIDERATIONS: Target Bank Emigrant Bank

KEY CONSIDERATIONS: Target Bank Emigrant Bank: Profile - Timeline Founded in 1950 by 18 members of the Irish Emigrant Society with the goal of serving the needs of the immigrant community in New York. Soon after became the 7th largest in the country with 1.3M in assets. Major construction loan provider for main city landmarks, St. Patrick Cathedral, Central Park. In 1986 the Milstein family saved the bank during a financial crises. Today the bank is privately owned by the Milstein family. Howard Milstein is Chairman, President & Chief Executive Officer of Emigrant Bank. In July 2012 the banks sold 30 branches to Apple Bank for Savings was announced, two branches were retained in Manhattan and Westchester, New York.

KEY CONSIDERATIONS: Target Bank Emigrant Bank: Profile - Timeline As of 2019, the bank has two locations, Westchester (upstate NY) and Manhattan. Other Business Lines: Emigrant Mortgage Company: Specializes in creative financing solutions for residential properties. Emigrant Funding Corp.: Specializing in first mortgage financing for most types of owner-occupied and investor-owned commercial real estate. Emigrant Business Credit Corp. (EBCC): Provides innovative senior debt solutions to companies. Emigrant Financial Services (EFS): A service of Essex National Securities and Emigrant Agency, Inc. offers investment products and life insurance from top-rated mutual fund and insurance companies. Emigrant Capital: A $150 million private investment firm that makes direct investments in private companies. Emigrant Bank Fine Art Finance: It’s sole business is to provide art financing.

KEY CONSIDERATIONS: Target Bank Emigrant Bank: Financials Expanded online presence in 2005 with Emigrant Direct & BancoFortuna.com

KEY CONSIDERATIONS: Entry Mode Recommend Acquisition Not a Major Buyout, but an Strategic Alliance that will provide a significant capital injection and possibilities for expansion.

KEY CONSIDERATIONS: Financials Purchase of Ownership and Capital Injection Proposal: 1X Book Value for 60% stake ownership. Management Agreement: Milstein keeps significant autonomy, but QNB will plan new strategies along with Chairman to assure the future vision of the bank is aligned

Weakness & Strengths Strengths Weaknesses Expansion of international presence Rapid growth due to location Potential synergy allows Emigrant Bank to grow into a large bank by increasing its assets QNB has successfully acquired several banks and financial institutions   Weaknesses Target institution has been established for many years Corporate tax rate is 10% in Qatar and 21% in US Kristie Mercado

References https://www.fdic.gov/bank/individual/failed/banklist.html https://www5.fdic.gov/idasp/advSearchLanding.asp https://www.qnb.com/cs/Satellite/QNBQatar/en_QA/InvestorRelations/enAnnualReports