#1CIBC PRIVATE WEALTH MAXIMIZING INVESTMENT RETURNS IN A LOW INTEREST RATE ENVIRONMENT Geoffrey Pennal, FCSI Investment Advisor CIBC MFOA Reimagine Your Future.. MUNICIPAL FINANCE OFFICERS ASSOCIATION @ Foster Innovation and Agility OF ONTARIO Portfolio Manager (416) 594-8686 [email protected]#2What we do We Specialize in Helping Municipalities Manage their Investments in a Prudent, Innovative, Conservative Manner. CIBC CONFIDENTIAL#3How do we do it? CIBC We provide customized investment ideas and support -Non- Discretionary We provide active portfolio management - Discretionary We help with Investment Policy Statement (IPS) construction, review and updates We strive to constantly educate ourselves, you and your stakeholders CONFIDENTIAL 2#4CIBC Our Story QiE CIBC is a market leader in providing investment support to Municipalities across Ontario I've been in the investment field for 20 years at CIBC Wood Gundy for 15 I was actively involved in charitable work when I was growing up, loved helping people 88M When I started my career moving to the Not for Profit and Public Sector space was natural CONFIDENTIAL Live in Toronto with my wife and 2 kids, love travelling and camping all over the province with my Family 3#5Our Team CIBC Geoffrey Pennal Portfolio Manager and Investment Advisor Lead a team of 4 people and specialize in fixed income investing for municipalities. Jennifer Parney Executive Director, Wealth Solutions Group Fixed income expertise across a wide variety of products. Matt Wallace Executive Director, Wealth Solutions Group Provides customized, structured debt solutions for the firm's clients. CONFIDENTIAL 4#6Why do Client's Choose Us Expertise Fixed income investing is our specialty First to market with new ideas Education Municipal Act experts Pride ourselves on helping our clients learn about investing Makes us and our clients stronger and that helps our Province Regularly speak to stakeholders and present at events like these Relationships Many advisors focus on bond expertise, we like to think we focus on you and your organization You're a steward of your Municipalities' capital – that means we are too. The depth of relationships throughout the entire bank commercial banking, DCM CIBC CONFIDENTIAL 5#7Who do we work with? Everyone. CIBC Large Ontario Municipality Works with several advisors Has a relatively sophisticated investment plan and developed their own IPS Uses CIBC fixed income and economic research to plan their investments Looks to us to for customized investment ideas for them based on their views and internal strategy Smaller Ontario Municipality New to investing Looking for straight forward ideas to improve their rate of return over their bank deposit rate We assisted in building their IPS and provided them with access to third party GIC investments and improved their investment performance. CONFIDENTIAL 90 6#8CIBC CIBC WEALTH SOLUTIONS GROUP CIBC Capital Markets#910 Year Government of Canada Historic Yields 12.00% 11.00% 10.00% 9.00% 8.00% Canadian 7.00% Historical 10 6.00% Year Yields 5.00% www 4.00% 3.00% 2.00% ויי///// 1.00% 0.00% 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 CIBC CONFIDENTIAL 8#10Economic Review: The Data Growth Canadian GDP dipped in Q2 to 1.1% vs. the 2.5% gain that had been expected The dip was the first quarterly contraction since the first wave of Covid last year and begins Q3 on soft footing Revisions were to blame as the economy was weaker than previously suggested by Stats Canada ✓ The sizeable decline a surprise driven by contractions in energy and motor vehicle shipments 006° Despite the rebound in job growth, it seems like GDP hasn't kept up and now we are about to enter a fourth wave that will test the economy again CIBC CONFIDENTIAL 5 0 -5 -10 Output Gap (% of Potential GDP) US Canada -15 2019 2020 2021 2022 2023 9#11Economic Review: The Data Employment Canada saw August employment up 90k level, Canada remains a long way While just 0.8% off its pre-pandemic from fully healed -1 -2 Hours worked remained 2.6% below pre-Covid levels -3 -4 The unemployment rate fell to 7.1% from 7.5% which is the lowest level since the pandemic began, however participation declined CIBC British Columbia % change in employment since February 2020 וויויייוי Alberta Saskatchewan Manitoba Ontario Quebec CONFIDENTIAL New Brunswick Nova Scotia Prince Edward Island Newfoundland & Labrador 64 62 60 889 58 Employment-to-population ratio (%) Canada US 56 54- 52- 50 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 10 10#12Economic Review: The Data Inflation August CPI headline beat expectations at +0.2% (4.1% y/y) 105 104 Prices were up in seven of eight categories so massive breadth. The BoC Core Common rose one tick to 1.8% 103 102 101 100 99 Homeowner replacement rose at the fastest pace in 30 years These numbers will matter to the Bank as they work to determine if inflationary pressures are transitory CIBC CONFIDENTIAL 98 Consumer prices (Feburary 2020 = 100) Jul-21 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Canada - CPI US - PCE 2% Inflation Jan-21 Apr-21 11#13Economic Review The Bank of Canada The Bank of Canada kept the overnight interest rate at 0.25% at its September 8th meeting The Bank acknowledged that growth appears weaker than it had previously assumed although it noted that the contraction in Q2 was "largely" due to weakness in exports stemming from supply chain disruptions The BOC continued to assess recent strength in inflation as "transitory" and noted that medium term inflation expectations remain "well anchored" 2.5 2 1.5 1 0.5 0 CIBC CONFIDENTIAL Canadian Historical Yield Curves 3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 20Y 30Y 1Y Prior 6M Prior Sep-21 Source: Bloomberg, as of 14-September-2021 12#14CIBC Group Poll: When is the BOC going to increase interest rates? First half This year of 2022 Second half of 2022 Never 13#15CIBC Economics: Interest Rate Forecasts Canadian interest rates (end of period) 2021 2021 2022 2022 2022 2022 2023 2023 Variable (%) 8-Sep Dec Mar Jun Sep Dec Jun Dec Overnight Targe Rate 0.25 0.25 0.25 0.25 0.25 0.50 1.00 1.25 98-Day Treasury Bills 0.15 0.20 0.25 0.25 0.25 0.50 0.90 1.15 2-Year Gov't Bonds 10-Year Gov't Bonds 30-Year Gov't Bonds Canada US T-Bill Spread 0.40 0.50 0.55 0.60 0.75 1.00 1.25 1.65 1.23 1.50 1.60 1.70 1.75 2.00 2.15 2.50 1.78 2.00 1.90 1.95 2.10 2.25 2.50 2.50 0.11 0.10 0.10 0.10 -0.10 0.15 0.00 -0.30 - Canada US 10-Year Bond Spread -0.14 -0.05 -0.10 -0.10 -0.25 -0.15 -0.20 0.00 Canada Yield Curve (10-Year - 2-Year) 0.82 1.00 1.05 1.10 1.00 1.00 0.90 0.85 US interest rates (end of period) 2021 2021 2022 2022 2022 2022 2023 2023 Variable (%) 8-Sep Dec Mar Jun Sep Dec Jun Dec Federal Funds Rate 0.125 0.125 0.125 0.125 0.375 0.375 0.875 1.375 91-Day Treasury Bills 0.04 0.10 0.15 0.15 0.35 0.35 0.90 1.45 2-Year Gov't Note 0.22 0.30 0.40 0.50 0.80 1.00 1.45 1.80 10-Year Gov't Note 1.37 1.55 1.70 1.80 2.00 2.15 2.35 2.50 30-Year Gov't Note 1.99 2.10 2.30 2.45 2.55 2.60 2.70 2.75 US Yield Curve (10-Year - 2 Year) 1.15 1.25 1.30 1.30 1.20 1.15 0.90 0.70 Source: CIBC Economics, as of 08-September-2021 CIBC CONFIDENTIAL 14 14#16CIBC Rate Linked Structured Notes - Key Features: Capital Preservation 100% principal protection at maturity Enhanced Income and Growth Potential Notes can be designed to generate minimum guaranteed returns, enhancing income or long-term growth potential depending on investor needs Stability Notes are senior notes that are direct unsecured liabilities of CIBC ranking Pari passu with all other unsecured and unsubordinated debt of CIBC. While the notes are not specifically rated by a rating agency, the class of this debt with a term to maturity of one year or more has been rated AAL by DBRS, A2 by Moody's and BBB+ by S&P Gool EG- Diversification Notes can be linked to a variety of benchmark interest rates to further diversify portfolios and complement long-term plans Customization Notes can be tailored to express a view on a particular term, benchmark or shape of the yield curve S&P Liquidity May be liquidated prior to maturity in a daily secondary market CONFIDENTIAL 15#17Rate Structured Notes: Common Structures CIBC Fixed to Float Notes provide a fixed coupon in the first year. For all subsequent years, the coupon would be equal to a benchmark interest rate subject to a maximum coupon rate. Fixed Period Coupon - Coupon Cap Benchmark Rate Cap Mhall Issuer Currency Term Fixed Term CIBC CAD 5 years -1 Year, 1.82% Fixed Coupon -2-5 years, 3m BA Rate subject to 2.00% cap CIBC Accrual Notes have an initial term to maturity of 1 year and are extendible annually at the option of CIBC to a maximum term to maturity of 10 years. The Notes provide a guaranteed coupon that accrues annually and is paid out once when the Notes are called or are matured. Investors are compensated for the lack of cash flow during the term of the Notes through a higher coupon rate. Compounding Accrual Note: guaranteed coupon that compounds annually and is paid out once when the Notes are called or are matured. √% Linear Accrual Note: guaranteed coupon that increases linearly every year and is paid out once when the Notes are called or are matured. Issuer Currency Term CIBC CAD 10 years Coupon Frequency Semi- Annually Callable Annually All pricing indicative. Clients must ensure that any investment in CIBC Notes has been properly authorized and is consistent with investment policy and permitted under applicable regulations CIBC CONFIDENTIAL 16#18Rate Structured Notes: StepUp Callable Notes CIBC Fixed to Float Notes have an initial term to maturity of 1 year and are extendible annually at the option of CIBC to a maximum term to maturity of 10 years. The Notes provide a guaranteed coupon that steps up annually when the Notes are extended. Key Features Provide investors with a guaranteed annual coupon that "steps-up" annually Coupon Rate Illustration and Indicative Pricing 2.40% 2.30% 2.20% 2.10% 2.00% Callable annually at the Issuer's Notes offer a yield "pick-up" when option compared to bonds of a similar term 100% principal protection at maturity 1.90% 1.80% 0 1 2 3 4 5 Year 6 7 8 9 10 Client Positioning Suitable for investors looking for the certainty of a fixed coupon but who are willing to potentially extend term in order to achieve a spread over traditional bonds trading in the market 10 Year StepUp Callable Notes Term Coupon Note Return Year 1 1.92% 1.92% Year 2 1.97% 1.94% Year 3 2.02% 1.97% Year 4 2.07% 1.99% Year 5 2.12% 2.02% Year 6 2.17% 2.04% Issuer CIBC Currency CAD Term 10 years Coupon Frequency Semi-Annually Callable Year 7 2.22% 2.07% Year 8 2.27% 2.09% Annually Year 9 2.32% 2.12% Year 10 2.37% 2.14% CIBC CONFIDENTIAL 17 17#19Rate Structured Notes: The Art of the Possible CIBC Range Notes have a term to maturity of 5 years. The Notes provide a guaranteed coupon for the first year of the term. In all subsequent years, the Notes only provide a coupon of if the benchmark rate is greater than a certain threshold. 2.4% 1.6% 0.8% 0.0% Coupon Benchmark Rate Coupon in Years 2-5 Issuer Currency Term Coupon in Year 1 CIBC CAD 5 years 1.75% -Threshold 1.75% provided that the benchmark rate is greater than 1.75% on the valuation date jen Coupon Benchmark Frequency Quarterly 10-year CMS Rate CIBC Bond Bear Notes provide a fixed coupon in the first year. For all subsequent years, the coupon is calculated according to a pre-defined formula 4.0% 3.2% 2.4% 1.6% 0.8% 0.0% Coupon Benchmark Rate Issuer Currency Term Coupon in Year 1 CIBC CAD 5 years 1.75% Coupon in Years 2-5 1.50% x (benchmark rate - 1.75%), 0 igi Coupon Benchmark Frequency Quarterly 10-year CMS Rate CIBC CONFIDENTIAL 18#20CIBC CIBC CUSTOMIZED DEPOSIT NOTE SOLUTIONS CIBC Capital Markets CONFIDENTIAL - ACCREDITED INVESTORS ONLY - FOR DISCUSSION PURPOSES ONLY - DO NOT COPY OR DISTRIBUTE#21Group Poll QUESTION 1 Which of the following common asset classes in North America has outperformed the others over the last 3, 5, 10 and 15 years? a) Cash b) Bonds c) Equities QUESTION 2 If the performance is so robust, why are equities restricted under the Municipal Act? a) Market volatility/risk of loss b) Lower ranking than bonds on the issuer's balance sheet c) Both a) and b) ? CIBC CONFIDENTIAL 20 20#22CIBC Structured Solutions CIBC Industry Expertise CIBC issued its first customized Deposit Note in 1994 and has originated more than $64 billion in Structured Products to date CIBC has the longest running secondary market for Structured Notes in Canada Team of industry experts with a global footprint - team of 20+ professionals with strong presence in the U.S. and the U.K. Commitment to provide innovative and customized solutions to provide access to new investment opportunities "Goals based" investment approach Frequently first to market with new structures CIBC Industry Achievements GlobalCapital GlobalCapital 2014 Canadian Derivatives House of the Year 2015 Canadian Derivatives House of the Year GlobalCapital 2016 Canadian Derivatives House of the Year GlobalCapital 2017 Canadian Derivatives House of the Year mtn-i о 2019 and 2020 Canadian Issuer of the Year CIBC CONFIDENTIAL 21 21#23Eligible Investments for CIBC Municipal Accounts About CIBC Deposit Note Solutions • • CIBC has extensive experience working with municipalities and other institutional investors, providing customized Deposit Note solutions to meet unique investment goals and objectives Key features of CIBC Deposit Notes include: Customized CIBC Deposit Notes Rank Equal to Other CIBC Deposit Liabilities, and are qualified instruments within the Municipal Act* Capital Preservation 100% principal protection at maturity, senior debt obligation of CIBC Diversification Can be linked to a variety of asset classes, including equities and equity indices Enhanced Income and Growth Potential Can be designed to generate minimum guaranteed returns and/or long-term growth potential Asset/Liability Matching Ensure the availability of sufficient capital to meet future funding obligations over defined time horizons *Municipalities must ensure that any investment in CIBC Deposit Notes have been properly authorized, is consistent with investment policy and is permitted under applicable regulations CIBC SEI FF:1 Liquidity Can be liquidated prior to maturity in a daily secondary market CONFIDENTIAL 22 22#24Highlighted Recent Transactions Municipality (Alberta) Municipality (Ontario) Not-for-Profit Education (Ontario) Municipality (Ontario) Family Office (British Columbia) Municipality (Ontario) Municipality (Ontario) Municipality (Ontario) C$30,000,000 C$25,000,000 C$15,000,000 C$7,000,000 C$10,000,000 C$25,000,000 Principal Protected Notes Principal Protected Notes Principal Protected Notes Principal Protected Notes PPN+ Discount Note Principal Protected Notes August 2021 April 2021 2021 2018 2018 2018 Not-for-Profit (Ontario) Municipality (Quebec) Family Office (Ontario) Not-for-Profit Education (Ontario) US$12,000,000 C$10,000,000 Principal Protected Notes C$127,000,000 Principal Protected Notes 2017 Not-for-Profit Healthcare (Ontario) Family Office (Alberta) Trust (Alberta) C$450,000,000 C$1,000,000 US$25,000,000 C$20,000,000 C$15,000,000 PPNs and Fixed Income Principal Protected Notes Term Stock Loan Principal at Risk Notes Principal Protected Notes Equity Monetization CIBC 2016 2016 2016 2016 November 2015 CONFIDENTIAL 2017 C$55,900,000 Term Stock Loan 2016 2017 23 23#25CIBC $100 Investment How PPNs Are Structured Option strategy to generate returns payable by terms of offering plus issuance costs Participation in the performance of the underlying asset portfolio according to the terms of the offering Variable Interest return, based on the performance of the underlying asset portfolio Cost of zero-coupon bond maturing at par at note's maturity =% Zero-coupon Bond grows to $100 at maturity Initial Purchase Note Term CONFIDENTIAL 100% return of Principal H& At Maturity $100 Investment 24#26Laddered Strategy Involving Principal Protected Deposit Notes Term Reference Asset Principal Protection Participation Rate Maximum Return 3 years Canadian Large Cap Index Basket** 100% 100% 8.00% 5 years Canadian Large Cap Index Basket 100% 100% 52% 5 years Canadian Large Cap Index Basket 100% 89% No Maximum 7 years Canadian Large Cap Index Basket 100% 200% 58% 7 years Canadian Large Cap Index Basket 100% 144% No Maximum **The Reference Asset in the indicative pricings above consists of an equal weight basket of the following Canadian large-cap indices: 1. Solactive Canada Bank 30 AR Index 2. Solactive Canada Insurance AR Index 3. Solactive Canada Pipelines AR Index 4. Solactive Canada Telecommunications AR Index The reference asset in the following illustrative pages consists of the largest capitalization stocks in these 4 sectors (3 stocks each, 12 total), not the Solactive indices themselves. This is done to provide a general representation of the sectors in the actual Reference Asset basket. The Solactive indices themselves do not have a long enough price history to run this analysis effectively. Past performance is not indicative of future performance. CIBC CONFIDENTIAL 25#27CIBC Principal Protected Notes Reference Asset Equally weighted basket: Telus, BCE Inc, Rogers Communications, Enbridge, Pembina Pipeline, TransCanada, Manulife, Sunlife, Power Corporation, Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia Hypothetical Examples Underlying Return Note Return at Maturity Bullish Example +10.00% +8.00% Moderate +5.00% +5.00% Example Bearish -10.00% 0.00% Example Term/Currency 3 years / CAD 1 HYPOTHETICAL EXAMPLE 過 Variable Return at Maturity 100.00% participation in the positive price return of the Reference Asset over the term of the Notes Principal Protection 100% principal protection at maturity Max. Payout 8.00% Historical Note Returns (May 29, 2003 July 6, 2021)1 The 3.0-year historical average note return was +6.40% representing a compounded annual return of +2.09% Historically, investor capital was always preserved, and they would have achieved positive returns 82.73% of the time Historical Hypothetical Note Return Distribution 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% <0% =0% >0% and <=10% >10% and <=20% >20% 'The Historical Note Returns were calculated by CIBC Capital Markets using daily closing prices for the Reference Asset available on Bloomberg. Hypothetical 3.0-year Notes were issued daily from May 29, 2003 until July 6, 2021 such that the last Note would have matured July 6, 2021. Historical price performance of the Reference Asset does not predict future price performance of the Reference Asset or the amount of interest, if any, that may be payable on the Notes. The historical price performance was measured over defined periods and takes into consideration the specified maximum return. Returns calculated over other periods or referencing different maximum returns would have produced different results. CIBC CONFIDENTIAL 26 26#282 HYPOTHETICAL EXAMPLE CIBC Principal Protected Notes Reference Asset Equally weighted basket: Telus, BCE Inc, Rogers Communications, Enbridge, Pembina Pipeline, TransCanada, Manulife, Sunlife, Power Corporation, Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia Term/Currency 7 years / CAD ② Variable Return at Maturity 144.00% participation in the positive price return of the Reference Asset over the term of the Notes Principal Protection 100% principal protection at maturity Hypothetical Examples Underlying Return Note Return at Maturity Bullish Example +70.00% +100.80% Moderate +35.00% +50.40% Example Bearish -10.00% 0.00% Example Historical Note Returns (May 29, 2003 July 6, 2021)1 The 7.0-year historical average note return was +89.24% representing a compounded annual return of +9.54% Historical Hypothetical Note Return Distribution 120% • Historically, investor capital was always preserved, and they would have achieved positive returns 99.94% of the time 100% 80% 60% 40% 20% 0% <0% -0% >0% and <=10% >10% and <=20% >20% 'The Historical Note Returns were calculated by CIBC Capital Markets using daily closing prices for the Reference Asset available on Bloomberg. Hypothetical 7.0-year Notes were issued daily from May 29, 2003 until July 6, 2021 such that the last Note would have matured July 6, 2021. Historical price performance of the Reference Asset does not predict future price performance of the Reference Asset or the amount of interest, if any, that may be payable on the Notes. The historical price performance was measured over defined periods and takes into consideration the specified maximum return. Returns calculated over other periods or referencing different maximum returns would have produced different results. CIBC CONFIDENTIAL 27 27#29CIBC PPN - Single Call Participation 3 HYPOTHETICAL EXAMPLE Reference Asset Equally weighted basket: Telus, BCE Inc, Rogers Communications, Enbridge, Pembina Pipeline, TransCanada, Manulife, Sunlife, Power Corporation, Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia Term/Currency 7 years / CAD Contingent Coupon Contingent coupon received if the index is ≥ 0.00% on the fifth anniversary date. 1st 2nd 3rd 4th: 5th: 6th: 7th: 23.0% w Auto-Call Level CIBC will automatically call the Notes on the fifth anniversary date if the Reference Index Return is greater than or equal to 0%, returning 100% of principal in addition to the coupon. Variable Return at Maturity 100.00% participation in the positive price return of the Reference Asset over the term of the Notes Principal Protection 100% principal protection at maturity Historical Hypothetical Note Return Distribution 100% 99% Historical Note Returns (May 29, 2003 - July 6, 2021)1 . Since inception, the Note was called 99.37% of the time on the first call date • Since inception, the average duration of the note was 5.01 years • Since inception, investors would have only received their Principal back (with no return) 0.00% of the time • Since inception, the notes that were not called returned an average of 42.79% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% 0% 0% 0% 0% 1% 0% 0% 1.00yr 2.00yr 3.00yr 4.00yr 5.00yr 6.00yr 7.00yr Breach Principal Only 1The Historical Note Returns were calculated by CIBC Capital Markets using daily closing prices for the Reference Asset available on Bloomberg. Hypothetical 7.0-year Notes were issued daily from March 23, 2000 until September 13, 2021 such that the last Note would have matured September 13, 2021. Historical price performance of the Reference Asset does not predict future price performance of the Reference Asset or the amount of interest, if any, that may be payable on the Notes. The historical price performance was measured over defined periods and performance over other periods would have produced different results. CIBC CONFIDENTIAL 28#30CIBC PPN - Single Call Participation Graphical Illustration Scenario 1 On the 5th Valuation Date, the Reference Index Level is greater than 0%, and the Notes are autocalled Hypothetical Examples Coupon Return 30% 23% 20% 10% 0% -10% -10% 0% 10% 20% 30% Index Return Valuation Date Index Return Coupon Principal Returned? 1 -10% 1% 23.00% Yes Valuation Date Index Return Coupon Principal Returned? 1 -10% 2 -20% CIBC 3 7 -7% 13% 13.00% Yes Scenario 2 The Notes are not called on the 5th Valuation Date. Investors receive 100% participation in the positive price return of the Reference Asset at maturity Coupon Return 3 HYPOTHETICAL EXAMPLE - CONTINUED 30% 20% 10% 0% -10% -10% 0% 10% 20% 30% Index Return • On the 5th Valuation Date, the Reference Index Level is greater than 0%. The Notes are autocalled and the investors receive Variable Return of 23% • On the final Valuation Date, the Reference Index Level is above 0% of the initial level, and the full principal amount is returned + 100% participation in the positive price return of the Reference Asset at maturity The above example demonstrate how the Contingent Coupons and Note Return will be calculated and are included for illustration purposes only. The performances of the Reference Index used to illustrate the calculation of Contingent Coupons and the Note Return at maturity are hypothetical and are not estimates or forecasts of future performances or the amount payable at maturity. The actual performance of the Reference Index will be different from this example and the differences may be material. CONFIDENTIAL 29#31CIBC Conclusion We are Municipal investment specialists providing conservative, innovative and prudent investment solutions and support Industry leading ideas and research to improve your investment returns Education of our clients, their stakeholders and ourselves is paramount We are a teammate to help you and your organization navigate the investment world CONFIDENTIAL $E 30 30#32Appendix 1: Introduction Of New Debt Structures - NVCC & Bail-In The Department of Finance Canada introduced new debt structures for financial institutions, two of which have replaced typical Canadian bank debt instruments - Non- Viable Contingent Capital (NVCC) and the more recent introduction of Bail-in bonds The main attribute of these two types of securities is that they contain a contractual clause in which they can be converted into common equity in a scenario where a bank is determined by The Office of the Superintendent of Financial Institutions (OSFI) to be non-viable and in need of additional capital In addition, bail-in bonds will replace existing unsecured senior debt (often referred to as deposit notes), which currently rank senior to other forms of bank debt and are some of the most widely held bonds by Canadian investors Higher Seniority Lower Seniority Legacy Senior Debt (Deposit Notes) Bail-In Senior Debt Tier 2 Securities NVCC Legacy Sub Debt Sub Debt AT1 Securities Common Equity NVCC Preferred Shares CIBC CONFIDENTIAL 31 34#33CIBC Appendix 1: How Bail-In Is Expected To Work When OSFI deems a bank has ceased to or may be about to cease to continue to be viable, it may trigger temporary takeover of the bank and carry out the bail-in conversion of NVCC capital and bail-in debt to common equity • At bail-in, all NVCC instruments would be fully converted to common equity based on pre-determined conversion ratios Portion of the bail-in debt that would be converted to common equity as well as the conversion ratio would be determined by the authorities on a case-by-case basis 1. Pre-Loss Balance Sheet Other Senior Loss 2. Loss Event 3. Post Bail-in Liabilities Other Senior Liabilities Bail-in Debt Bail-in Debt NVCC Sub Debt Assets Assets Assets NVCC Sub Debt NVCC Preferred Equity NVCC Preferred Equity Common Equity Common Equity CONFIDENTIAL Other Senior Liabilities Bail-in Debt Common Equity 32 32#34. CIBC Appendix 2: The Municipal Act Deposit receipts, deposit notes, certificates of deposit, if issued, guaranteed or endorsed by a bank or loan or trust corporation with terms > 2 years Bonds, debentures, promissory notes or other evidence of indebtedness if issued or guaranteed by a bank or loan or trust corporation with terms > 2 years Canadian corporate bonds with terms > 1 year • "A (low)" or higher by DBRS Bonds, debentures, promissory notes or other evidence of indebtedness if issued or guaranteed by a bank or loan or trust corporation with terms < 2 years • • "AA (low)" or higher by DBRS "AA-" or higher by Fitch • "Aa3" or higher by Moody's • "AA-" or higher by S&P • • . "A-" or higher by Fitch "A3" or higher by Moody's "A-" or higher by S&P CONFIDENTIAL Note - no change, but no rating requirement for deposit receipts, deposit notes, certificates of deposit, principal and interest fully repaid < 2 years after investment made, if receipt, note, certificate or instrument was issued, guaranteed or endorsed by a bank or loan or trust corporation 33 33#35Important Information This document is intended only for the use of the accredited investor individuals to whom it is presented. It contains information that is privileged, confidential and proprietary. Any distribution, reproduction or other use of this document by an unauthorized recipient without the prior consent of CIBC World Markets is strictly prohibited. The terms of the notes for the different Investor Situations provided in this presentation are indicative only and represent the general terms on which those notes could be offered based on market conditions prevailing at the time this presentation was prepared. The terms on which an actual note could be offered to an investor may be different. Clients must evaluate the financial, market, legal, regulatory, credit, tax and accounting risks and consequences and must consult with an independent tax advisor before entering into any transaction, or purchasing any instrument, involving a financial derivative. Clients should undertake their own evaluation of the risks and consequences of a transaction independently of CIBC. The information contained in these materials does not constitute an offer to sell or the solicitation of an offer to purchase, and is not intended to constitute a "report, statement or opinion of an expert" for purposes of the securities legislation of any province or territory of Canada. These materials are confidential and are intended solely for your benefit and for your internal use only and may not be reproduced, disseminated, quoted from or referred to in whole or in part at any time, in any manner or for any purpose, without obtaining the prior written consent of CIBC World Markets Inc. ("CIBC") in each specific instance. CIBC World Markets Inc. ("CIBC") is a wholly-owned subsidiary of Canadian Imperial Bank of Commerce and part of Canadian Imperial Bank of Commerce's wholesale banking arm which also includes other affiliates including CIBC World Markets Corp. CIBC World Markets plc, CIBC World Markets Securities Ireland Limited, CIBC Australia Limited and CIBC World Markets (Japan) Inc. CIBC Private Wealth Management" consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. ("CAM"); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. ("WMI"). CIBC Private Banking provides solutions from CIBC Investor Services Inc. ("ISI"), CAM and credit products. CIBC Private Wealth Management services are available to qualified individuals. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc. This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. CIBC World Markets Inc. 2021. CIBC CONFIDENTIAL 34