SUNTRUST BANK HIGHER EDUCATION INDUSTRY UPDATE - MARCH 25, 2015

SunTrust Bank Higher
Education Industry Update

         March 25, 2015

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SunTrust Bank Higher Education Industry Update

Brian L. Williams, Senior Vice President

Patricia S. Campbell, Senior Vice President

Dawn Weaver, First Vice President

Presentation Date

Rating Agency Outlook

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2015 Rating Agency Outlook – US Colleges & Universities

                         Rating Agency Outlooks

       Moody’s             Standard & Poor’s              Fitch

      Negative                  Negative                  Stable

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Major Themes among rating agencies

 Net Tuition Revenue pressure

 Enrollment Challenges

 Prudent Expense Management

 Endowment Returns Improve

 Management is Key

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Net Tuition Revenue Pressure

 Limited top line revenue opportunities
      Issues surrounding affordability

 Enrollment challenges
      Increased competition for students
      Declining number of high school graduates

 Allocation of Financial Aid funds
      When to increase/decrease institutional aid

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Prudent Expense Management

 Student demands increasing institutional costs
    – Newer, more modern facilities
    – Amenities
    – Increased student services

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Improving Endowment Returns

 Fiscal 2014

               15.5%
 3-year net return

               9.0%
 5-year net return

               11.7%
 10-year net return

               7.1%

8   Source: 2014 NACUBO-Commonfund Study of Endowments (Net of Fees)

Management Is Key

 Nimble management will be key in challenging industry landscape.
 Considerable turnover is expected in next 5 years among business officers.
      – 40% of chief business officers plan on retirement as next move
      – 37% of them expect to retire within four years
      – Average age of CFO 56 years

9   Source: insidehighered.com

SunTrust Observations

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SunTrust Observations

Watchful eye on TN Promise and its impact

Increased emphasis on institutional liquidity

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SunTrust Observations

Increased use of financial aid to drive enrollment growth

Heightened attention to retention rates

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SunTrust Observations

Be willing to think differently……

     •   Technology

     •   Programs

     •   Delivery

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SunTrust Observations

     Attractive Debt Markets for Borrowers

          Tax Exempt Public                  Tax Exempt Privately
               Bonds                             Held Bonds

                                   Attractive
                                  Debt Markets

                                             Taxable/Tax Exempt
        Taxable Bank Loans
                                                   Leases

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SunTrust Contacts

Brian L. Williams, Senior Vice President

Brian.l.williams@suntrust.com

615-748-5120

Patricia S. Campbell, Senior Vice President

Pat.campbell@suntrust.com

615-748-5521

Dawn Weaver, First Vice President

Dawn.weaver@suntrust.com

615-748-4649

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Important Disclosures

This presentation is for informational purposes only and is being furnished on a confidential basis. By accepting this infor mation, the recipient agrees that it will use the information
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STRH is providing the information contained in this document for discussion purposes only in anticipation of serving as a sec urities underwriter or structuring agent to a Borrower.
STRH has financial and other interests that differ from those of the Borrower. STRH is not acting as a municipal advisor, fin ancial advisor or fiduciary to the Borrower or any other
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© 2015 SunTrust Robinson Humphrey, Inc., member, FINRA and SIPC. SunTrust Robinson Humphrey is a federally registered service mark of SunTrust Banks, Inc.

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