North American Development Bank Financial Report Héctor Camacho Chief Financial Officer Board of Directors Meeting May 14, 2015
Simplified Balance Sheet As of March 31, 2015 $1,800 Assets US$1,612 Million Liabilities US$1,612 Million Millions $1,500 $1,200 $900 $600 $300 Investments $414 Loans $1,198 Debt $1,063 Paid-in capital $405 $0 $95 Reserved RE $18 $31 DRE URE DRE = Designated retained earnings; URE = Undesignated retained earnings 2 2
Simplified Income Statement As of March 31, 2015 $14.0 Income US$12.9 Million Expenses US$7.2 Million $12.0 $10.0 $1.3 Investments Millions $8.0 $6.0 $4.0 $2.0 Loans $10.3 Debt $3.4 Operating $3.1 $0.0 $1.3 Other $0.7 Programs Net Income US$5.7 Million 3 3
Simplified Balance Sheet Pro Forma 2015-2019 Assets 3,000 USD Million 2,500 2,000 1,500 1,000 500 443 1,186 619 689 374 373 373 1,390 1,553 1,698 1,823 1,940 - FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Outstanding Loans Cash & Investments 4 4
Simplified Balance Sheet Pro Forma 2015-2019 Liabilities & Equity 3,000 2,500 2,000 USD Million 1,500 1,000 1,055 1,205 1,355 1,805 1,605 1,955 500-543 550 558 564 568 575 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Equity* Short & Long-Term Debt * Equity = Paid-in capital + Undesignated retained earnings + Reserves 5 5
Financial Indicators Pro Forma 2015-2019 220% 200% Usable Equity * / Total Loans 180% 160% AAA - AA 140% 120% 100% 80% 60% 40% 20% 0% AA - A+ A - BBB+ 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Observed Pro Forma + $450M Paid-in Capital * Usable equity = Paid-in capital plus undesignated and reserved retained earnings 6 6
Financial Indicators Pro Forma 2015-2019 Debt / Usable Equity* 900% 800% 700% 600% B+ - C BBB - BB+ 500% 400% 300% 200% 100% 0% A - BBB+ AA - A+ AAA - AA 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Observed Pro Forma + $450M Paid-in Capital * Usable equity = Paid-in capital plus undesignated and reserved retained earnings 7 7
Income Statements Pro Forma 2015-2019 70 60 50 USD Million 40 30 20 10 - FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Total Income Total Expenses* Net Income * Includes interest expense, administrative expenses, allowance for loan losses and program activities 8 8
Income Statements Pro Forma 2015-2019 80 70 60 USD Million 50 40 30 20 10 - Income Expense Income Expense Income Expense Income Expense Income Expense Income Expense FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Income Expense Loan Income Interest expenses Admin expenses Investment Income Program activities Allowance for loan losses 9 9
Operating Expenses Pro Forma 2015-2019 Administrative Expenses / Outstanding Loans 0.870% 0.865% 0.865% 0.861% 0.860% 0.858% 0.857% 0.859% 0.855% 0.852% 0.850% 0.845% FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 10 10
Loan Portfolio As of March 31, 2015 Outstanding Loan Portfolio USD $1,198 Million Interest Rate Type Customer Type Fixed 37% Variable 63% Public-Private 8% Private 66% Public 26% 11 11
Loan Portfolio Single Obligor Limit As of March 31, 2015 Top Ten Borrowers for Committed Loan and Loans Expected to be Committed 99.9 149.8 OBLIGOR City of El Paso SunPeak 57.1 62.4 Municipio Hermosillo 64.6 Ventika Wind 70.0 Ventika II Wind 70.0 Municipio Nvo. Laredo 75.8 State of Nuevo Leon 76.9 Los Vientos 1B 98.0* Los Vientos 1A 98.7* Ocotillo 106.7* 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 APPROVED * Loans approved under SOL valid as of May 9, 2013 (15% $173.9 million) MILLIONS OF USD Current Limits 12 12
Assets As of March 31, 2015 Investment Portfolio Distribution US$359.80 Million Security Type Portfolio Limits 1 Portfolio Holdings U.S. Treasury Securities 25.0% 33.4% United Mexican State (UMS) 30.0% 17.0% U.S. Agency Securities 45.0% 20.1% U.S. Agency Mortgage-backed Securities 15.0% 0.0% Taxable Municipals 25.0% 0.8% Other Permissible Securities 2 35.0% 28.7% Total 100.0% 1 Minimum level for U.S. Treasury securities; maximum level for all other sectors. 2 Other Permissible Securities include corporate bonds (22.4%), corporate asset-backed securities (3.5%), commercial paper (2.2%), and certificates of deposit (0.6%). Book Yield : 1.41% Market Yield : 0.92% 13 13
Investment Allocation As of March 31, 2015 $160 Portfolio Holdings by Maturity $140 $120 $100 Millions $80 $60 $40 $20 $- 1 Year 2 Years 3 Years 5 Years Average Maturity: 2.04 years Duration: 1.88 years U.S. Treasury Sec. U.S. Agency Sec. Mortgage-Backed Sec. United Mexican States (UMS) Taxable Municipal Other Permissible Sec. 14 14
Debt Issuances and Borrowings As of April 30, 2015 Date Amount (US$ millions) Bond Issuances Maturity Coupon Yield Swap L3m spread* February 11, 2010 $250 2020 4.38% 4.41% 78.9 October 26, 2012 250 2022 2.40% 2.44% 70.3 December 18, 2012** 180 2022 2.40% 2.64% 105.5 December 18, 2012 50 2030 3.30% 3.30% 98.8 October 10, 2013 300 2018 2.30% 2.34% 89.1 April 30, 2015*** 129 2025 0.25% 0.19% 74.1 Total $1,159 Average Cost of Borrowing 84.1 * All-in spread over 3-month LIBOR ** Reopening of the October 26, 2012 bond issuance *** Swiss Franc Bonds (CHF) Date Other Borrowings Amount (US$ millions) Maturity Coupon February 11, 2010 33.0 2024 1.90% 15 15
Swiss Franc Debt Issuance April 9, 2015 Euroweek article about NADB s inaugural CHF issuance: North American SSA wows Swiss Market North American Development Bank (NADB) attracted strong demand from Swiss investors for its first ever foray outside the dollar market Books were closed within 30 minutes, more than three times oversubscribed, a rarity in Switzerland where deals are usually sized to demand. Thanks to the high demand, pricing was at the tight end of guidance of 5bp-7bp over mid-swaps. 16 16
Liabilities Long-term Debt Market Yield at May 4, 2015 4.50% 4.00% 3.50% 3.00% NADB UMS Bid Yields 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Libor Swap 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years Tenor (years) 3.4 4.8 7.5 15.6 NADB 1.73% 2.24% 2.75% 3.68% UMS 1.98% 2.47% 3.26% 3.93% Spread -0.25% -0.23% -0.51% -0.25% Tenor (years) 3.4 4.8 7.5 15.6 NADB 1.73% 2.24% 2.75% 3.68% LIBOR Swap 1.30% 1.61% 2.02% 2.48% Spread 0.42% 0.62% 0.74% 1.20% LIBOR swap and UMS are interpolated based on NADB tenors. 17 17
2014 Liquidity Report As of March 31, 2015 US$ Millions 500 450 400 350 300 250 200 150 100 50-367.4 288.2 361.4 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Liquidity at month-end* Minimum Liquidity Level (147.7 Million) Cap Liquidity Level (2.5x) Loan Cash Flow Projection *Held-to-maturity investments are not included in the calculation of liquidity requirements. 18 18
Asset & Liability Management As of March 31, 2015 Interest Rate Risk Maturity Gap Millions $600 $500 $400 $300 $200 $100 $0 ($100) ($200) ($300) ($400) ($500) ($600) 1 Year 2 Years 3 Years 5 Years 8 Years 10 Years + 10 years Investments Loans Long Term Debt GAP In USD millions 1 Year 2 Years 3 Years 5 Years 8 Years 10 Years + 10 years GAP 274.2 91.7 101.0 (319.6) (222.4) 119.2 528.1 19 19
Asset & Liability Management As of March 31, 2015 Interest Rate Risk Repricing Gap Millions $1,200 $1,000 $800 $600 $400 $200 $0 ($200) ($400) ($600) ($800) ($1,000) 1 Year 2 Years 3 Years 5 Years 8 Years 10 Years + 10 years Investments Loans Long Term Debt GAP In USD millions 1 Year 2 Years 3 Years 5 Years 8 Years 10 Years + 10 years GAP 39.0 71.5 76.0 124.3 104.9 40.5 116.0 20 20
Counterparty Risk As of March 31, 2015 Derivative Counterparties Credit Rating US$ million Counterparty S&P Moody's FITCH Counterparty NADB Mark To Rating Outlook Rating Outlook Rating Outlook Threshold Threshold Market 1 Bank of America NA A Stable A2 Stable A Negative $20.0 $50.0 ($7.0) Banobras SNC BBB+ Stable A3 Stable BBB+ Stable 20.0 20.0 2.7 BNP Paribas SA A+ Negative A1 Negative A+ Stable 10.0 25.0 (7.7) Deutsche Bank AG A Negative A3 Negative A+ Negative 10.0 50.0 35.0 Credit Suisse Intl A Negative A1 Negative A Stable 15.0 20.0 Credit Agricole A Negative A2 Positive A Stable 25.0 50.0 1 From NADB s position 21 21