Todd Maclin, Chase Commercial Banking CEO

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• Todd Maclin, Chase Commercial Banking CEO

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Defining the U.S. Middle Market
Middle Market Companies by Size1

• Generally, private companies
• Annual sales of 10-500MM
• Long-standing banking relationships
• Approximately 15-20 do business internationally
• Bank is most important capital provider, a
  trusted advisor
• Fragmented banking segment in the U.S.
• US Commerce Department (2004)3
• 97 of all US exporters were small and
  medium-sized enterprises (SME)
• 29 of US merchandise exports from SMEs went to
  NAFTA countries

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Source Dun and Bradstreet Based on annual sales
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Middle Market is an important segment for Chase

• 30,000 Middle Market customers across a 15-state
  footprint
• 1 US bank in LC issuance
• Banking relationship with 41 of MM companies in
  our footprint
• Serving over 2,000 foreign subsidiaries of our US
  Middle Market clients
• More USD clearing than any other bank

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Awards Recognition
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• 1 Large Middle Market Lender 1
• 1 Asset-Based Lender 1
• 2 Traditional Middle Market Lender 1

• Awarded EX-IMs 2007 Small Business Lender of the
  Year
• First bank to use the new FastTrack program
  (enhanced version of the WCGP)
• A Top Working Capital Guaranty Program (WCGP)
  lender in the country

• JPMC Best Trade Services Provider

1 Loan Pricing Corp 3/31/07
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Global Capabilities Differentiate Banks
You make me look like a much larger
multinational company to my customers
Wisconsin based Chase Middle Market Client
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• Middle Market companies must compete in the
  international marketplace
• Reduce cost and increase sales
• Changing geographic fulfillment requirements of
  customers
• Chase had invested in bankers across the globe
  dedicated to MM companies
• 60 different countries and currencies

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Global Environment for Middle Market Companies

• In order to succeed, Middle Market companies
  must address

• Establishing global partnerships

Heightening compliance responsibility
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Specific international banking requirements
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Banks serving MM international needs
New state Integrated Banking Services
In the past
Many U.S. Banks are now addressing international

• Extend US banking relationships overseas
• Effectively service global clients and supply
  chain partners
• Efficient processes
• Provide valuable global insight

• Unfamiliar with the international landscape
• Lack of accurate information
• Paper and time-intensive processes
• Domestic focus

• International presence and knowledge
• Ability to set-up accounts and arrange financing
  overseas
• Migration to paperless and streamed processes
• Global focus

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Middle Market customers need their banks to
provide integrated banking services and
international expertise
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Heightening Compliance Responsibility

• Anti-Money Laundering
• Patriot Act
• Sarbanes Oxley

Middle Market Company Challenges
Failure to Comply

• Difficult to obtain detailed information about
  international customers/ clients
• Numerous and ever-changing regulatory environment
• Cross border banking issues

• Reputation Risk
• Operating Risk
• Fraud
• Business disruption/failure
• Lose export privileges

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US Middle Market companies have a wide range of
complexity in their banking needs overseas
Arranging Banking Services for Overseas Activities
MULTINATIONALS
International Business ()
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M I D D L E M A R K E T
Frequent Intl Sales
Regularly Paying and Receiving in Same Currency
Overseas Operations in Multiple Currencies
Occasional Intl Sales
Multinational Corporations Managing Centralized
Global Treasury Functions
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Arranging Banking Services for Overseas Activities
Trade Finance Supply Chain Mgt
Capital Raising
Bank
Investment and Liquidity
Cash Management
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Foreign Exchange
Interest Rate Risk Management
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Arranging Banking Services for Overseas Sourcing

• Major trend Middle Market companies are
  increasingly accepting open account terms
• Impact for Middle Market companies
• Understand their customer's evolving supply chain
• Customized banking solutions and capital support
  to address a global environment

OLD STATE
NEW STATE
BIG BOX RETAILER/ LARGE FIRM
OPEN ACCOUNT-INVOICE BASED
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BANK (Issues LC)
MIDDLE MARKET COMPANY
MIDDLE MARKET COMPANY
BANK (Issues LC)
SUPPLIER
SUPPLIER
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Meeting the Needs of Middle Market Companies
Banks must have
To ..

• Serve Middle Market companies diverse needs
• Assist Middle Market companies in understanding
  key challenges
• Remain competitive
• Help clients optimize their business
• Stay on the forefront of new technologies
• Help clients manage regulatory responsibility

• Global Presence Feet on the ground
• Integrated trade finance/ supply chain management
  
• Best in class products
• Experienced international team
• Understand and scale to Middle Market needs
• Global supply chain focus
• Expertise in compliance and information logistics

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