Industry Surveys

Banking

December 6, 2007

Erik Oja CURRENT ENVIRONMENT..................................................................1

Credit quality continues to decline
Banks Analyst Review of recent results
Regulatory and legal issues
Banking industry outlook

INDUSTRY PROFILE...............................................................................6
US bank industry consolidation continues
Mergers raise industry concentration
INDUSTRY TRENDS ..................................................................................7
Consolidation likely to resume in long term
US banking system remains healthy
Consumer bankruptcies tumble after bankruptcy reform in 2005
Customer service and convenience remain a focus for banks
HOW THE INDUSTRY OPERATES ..............................................................13
Business type
Bank assets
Contacts:
Bank liabilities
Interest rate risks
Inquiries & Regulation: the Fed’s influence
Client Support Interest rates: a factor in profits
800.523.4534 Infrastructure and operating costs
clientsupport@ Competitive strategies: retail and commercial
standardandpoors.com KEY INDUSTRY RATIOS AND STATISTICS ....................................................19
HOW TO ANALYZE A BANK....................................................................20
Sales Profitability measures
800.221.5277 Measures of financial condition
Analyzing a hypothetical Bank
roger_walsh@
standardandpoors.com
GLOSSARY .............................................................................................27
Media INDUSTRY REFERENCES.....................................................................29
Michael Privitera
212.438.6679 COMPARATIVE COMPANY ANALYSIS ..............................................32
michael_privitera@
standardandpoors.com

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Standard & Poor’s Industry Surveys
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VOLUME 175, NO. 49, SECTION 1

THIS ISSUE OF INDUSTRY SURVEYS INCLUDES 2 SECTIONS.
 C URRENT E NVIRONMENT

Credit quality continues to decline

Despite the recent Federal Reserve rate cuts, nomic trends have affected the credit quality
the aftershocks from the midsummer credit of the banking industry.
crunch and the housing slowdown continue Much of the increases in nonperforming
to reverberate throughout the banking indus- loans stem from credit trends reverting to
try, hurting lending margins, loan growth, historical levels, from the unusually good
and credit quality. So far, the rate cuts have levels of mid-2006. At June 30, 2007, non-
not helped lending margins, as banks are performing loans rose to 0.90% of total
finding that they need to keep deposit rates loans, industrywide, up from 0.70% a year
high in order to attract funds. Cautiousness earlier, according to the Federal Deposit In-
among lenders has constrained loan growth. surance Corporation (FDIC). However, the
Credit quality has suffered, and many large 0.70% level is considered by the FDIC to be
banks announced large loan loss provisions a historical low, and many banks have con-
and writedowns of security holdings in the sidered the lows of June 30, 2006, to have
third quarter of 2007. Investors are still try- been an anomaly.
ing to assess how the subprime crisis, the In their earnings reports for the third
housing market slowdown, and current eco- quarter of 2007, several major regional
banks reported even greater increases in their
TOP 25 EARNERS IN BANKING — 2006
levels of nonperforming loans, suggesting
(Ranked by 2006 net income) that the industrywide level of nonperforming
PROFITABILITY RATIOS (%)
loans may climb well above 0.90% by the
NET INCOME RETURN RETURN
(MIL. $) ON ASSETS ON EQUITY time the FDIC compiles and releases the
COMPANY 2005 2006 2005 2006 2005 2006 third-quarter industry statistics. In addition,
1. Citigroup Inc. 19,806 21,249 1.33 1.25 17.98 18.41
2. Bank of America 16,465 21,133 1.37 1.53 16.39 18.07 loan delinquencies, which are the best leading
3. J.P. Morgan Chase 8,483 13,649 0.72 1.07 7.98 12.25 indicators of future levels of nonperforming
4. Wells Fargo 7,671 8,482 1.69 1.76 19.53 19.59 loans, have risen sharply at many banks —
5. Wachovia 6,429 7,745 1.27 1.26 13.55 13.21
even at banks which have historically main-
6. US Bancorp 4,489 4,751 2.22 2.19 22.66 23.35 tained strong credit quality ratios.
7. PNC Financial Services 1,325 2,595 1.54 2.68 16.51 26.81 Regional banks usually focus on commer-
8. National City Corp. 1,985 2,300 1.41 1.63 15.61 16.90
9. SunTrust Banks 1,987 2,117 1.17 1.17 12.09 12.33 cial lines of credit and construction lending;
10. BB&T Corp. 1,654 1,528 1.58 1.33 15.03 13.36 they often shy away from residential mort-
gage lending, instead focusing on consumer
11. Regions Financial 1,001 1,353 1.18 1.19 9.37 8.64
12. KeyCorp 1,129 1,193 1.23 1.29 15.34 15.59 home-equity loans, as well as auto and ma-
13. Fifth Third Bancorp 1,549 1,184 1.55 1.15 16.87 12.17 rine loans. However, the steep rise in home
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

14. State Street Corp. 945 1,096 0.98 1.07 15.09 16.10 foreclosures is expected to have both direct
15. M&T Bank 782 839 1.45 1.50 13.48 13.81
and indirect effects on these banks’ credit qual-
16. Marshall & Ilsley 727 808 1.68 1.58 17.00 14.93 ity ratios. The primary evidence of this is the
17. Comerica 861 782 1.64 1.41 16.93 15.30 effects that declining credit trends have had,
18. Synovus Financial 516 617 1.96 2.07 18.48 18.53
19. Zions Bancorp. 480 583 1.29 1.29 13.66 12.90 almost equally, on commercial and residential
20. Huntington Bancshares 412 461 1.26 1.35 16.18 16.56 loan portfolios since the beginning of 2007.
As adjustable rate mortgages (ARMs) re-
21. Compass Bancshares 402 460 1.36 1.42 18.72 18.20
22. Associated Banc-Corp. 320 317 1.50 1.47 14.75 13.86 set to higher rates, increasing numbers of
23. Commerce Bancorp 283 299 0.82 0.71 14.24 11.71 homeowners are unable to afford the costs of
24. Colonial Bancgroup 229 266 1.13 1.20 13.72 13.32 their homes. Falling home prices, especially
25. First Horizon National 441 251 1.33 0.67 20.27 10.51
in the regions that had the highest utilization
Source: Standard & Poor’s Compustat. of ARMs, are precluding these homeowners
from simply refinancing to a lower or fixed

1
 rate. Foreclosure filings reached a record of
635,000 in the three months of August, Sep-
tember, and October 2007 — approximately
double the level of a year earlier — as finan-
cially strapped homeowners defaulted on
their loans.
Review of recent results
Following steep market declines in August
2007, and fueled by concerns about the sub-
prime mortgage industry, the Federal Reserve
announced on August 17 that it would be
cutting the discount rate to 5.75%, from
6.25%. This 50-basis-point cut was twice
the size that most market observers had ex-
pected, and it served as the Fed’s declaration
that it would provide enough liquidity to
prevent any further worsening of the mid-
summer credit crunch that had investors,
bank executives, and regulators fearing that
one or more large financial institutions
would fail.
The Fed’s decision on September 18, 2007,
to cut the federal funds rate by 50 basis points
(to 4.75%) came as a surprise to many mar-
ket observers, who had expected a series of
25-basis-point cuts, beginning with the Sep-
tember Fed meeting. However, the minutes
from that meeting indicated that the Fed re-
frained from language that might have height-
ened concern that the US economy would
contract and that a decline in inflation would
probably be sustained, potentially opening
the way for additional rate cuts. In addition,
the Fed’s additional 25-basis-point rate cut
on October 31, when analyzed in conjunction
with the Fed’s comments on the potential
for further rate cuts, seemed to preclude
further rate cuts in 2007, a negative for
banking stocks.
While the most immediate liquidity and
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
funding needs of banks and the securities
markets were addressed by the recent rate
cuts, the US banking industry continues to
face both high funding costs and soft loan
growth — issues that are attributable to the
shape of the yield curve and the health of the
US economy, respectively.
Additional Federal Reserve rate cuts may
be costly, in terms of the effect on the ex-
change rate of the US dollar with respect to
the currencies of our major trading partners,
which in turn may make foreign goods more
expensive. This could lead to a resurgence of
2
US inflation, which would probably lead to
the suspension of further rate cuts.
The prime rate is currently benchmarked
at a level of 300 basis points above the federal
funds rate target of 4.50%. Since much of
commercial lending is done at the prime rate,
the Fed rate cuts will also have the effect of
reducing the yields that banks receive on
many of their loans.
Yield curve affects margins and net interest
income
The shape and steepness of the yield
curve is the major determinant of banks’
lending margins and net interest income. In
addition, about 60% of banking industry
revenues typically result from the yield
curve–based business of borrowing and
lending. The banking industry struggled for
most of 2006 and 2007 with a flat to in-
verted yield curve, in which the longer-
term rates remained stubbornly low. In
mid-June 2007, the market rate on the 10-
year Treasury note peaked at 5.32%, lead-
ing many investors to celebrate the return
of a normally inclined yield curve. These
hopes were soon dashed by a rapid decline
in the market rate on the 10-year note, as
investors used it as a “flight to quality”
investment harbor in the midst of the
credit storms of midsummer.
According to the FDIC, net interest mar-
gins (NIMs) for the industry, as a whole,
bottomed out at 3.31%, at December 31,
2006, having fallen from 3.38% at Septem-
ber 30, 2006, and 3.46% at June 30, 2006.
In 2007, NIMs have stabilized, improving
slightly to 3.32% at March 31, 2007, and
improving yet again to 3.34% at June 30,
2007. However, based on a the September
30, 2007 earnings reports, we expect a five-
to nine-basis-point NIM compression, due to
stubbornly high funding costs.
The current industrywide level of the
NIM is relatively low — certainly in compar-
ison with the period of 2002 to 2004, when
the federal funds rate target was 1.00%, a
level considered by many market observers
to have been artificially low. Even when
compared with a longer historical period, to-
day’s NIMs are low and, together with com-
ments from many bank management teams,
suggest an industrywide stagnation. This
trend is lasting long enough to make many
banks eager to combine with each other, and
thus drive earnings growth by reducing non-
interest expenses.
During 2007, many banks have been
forced to write down the mark-to-market
values of loans and securities held for sale,
resulting in reductions to net income. Some
banks have held back from sales of securities
when they estimated they would not be able
to get the prices that they wanted, thus re-
sulting in declines in noninterest income.
Year over year, earnings for the group in
2007 decreased a median of –1.5% in the
first quarter, –0.3% in the second quarter,
and –2.5% in the third quarter; for the first
three quarters of 2007 combined, earnings
were down 3.0% for the group, versus the
comparable period a year earlier. Net interest
income was flat, and noninterest expenses
and loan loss provisioning expenses were
higher; results were bolstered by strong fee
income.
Banking industry stock performance
The S&P Regional Banks index fell
24.3% in 2007 through November 19, with
most of the decline having occurred in July
and November. Although share prices gener-
ally held up in the first and second quarters,
when the index fell 1.7% and 1.6%, respec-
tively, the index fell 8.2% in the third quar-
ter and 14.5% in the fourth quarter through
November 19. With the turmoil of 2007, we
estimate that the valuation of the industry
has declined to a median of 11.0 times Stan-
dard & Poor’s earnings estimates for 2008 —
down from more than 14 times a year ago.
Economic outlook as it applies to banks
Despite the strong economic results gener-
ated so far this year, we are concerned that
the US economy may tip into a recession if the
downturn in housing extends to other sec-
tors, if rising energy prices result in a major
decline in consumer spending, or if overseas
growth stalls and cuts demand for US prod-
ucts. A recession would hurt almost all as-
pects of banking operations, starting with
credit quality and extending to loan growth,
fee income, and lending margins.
The latest economic releases have been
stronger than expected. US gross domestic
product (GDP) increased 3.9% in the sec-
ond quarter of 2007 (at annualized rates),
and the unemployment rate held steady in
October at 4.7%. Payrolls increased
166,000 in October, following increases of
96,000 in September, and 93,000 in August.
At the same time, measures of inflation
have indicated that prices remain stable. The
consumer price index increased 0.3% in Sep-
tember, and was 2.8% higher than at Sep-
tember 2006. The producer price index
increased 1.1% in September, following a
1.4% decrease in August and a 0.6% increase
in July.
Standard & Poor’s sees housing, consumer
spending, and trade as being the three major
determinants of whether the US economy
will slow into a recession (defined as two
consecutive quarters of negative GDP growth).
Furthermore, we see the decline in the
housing market as being mostly offset by
increases in foreign trade, as measured
by improvements in the trade deficit. In our
view, that leaves consumer spending as the
deciding factor of whether or not the US
economy will experience a recession.
Foreign trade has done well this year. The
year-long slide in the exchange rate of the US
dollar versus major currencies has allowed
the prices of US-made aircraft, autos, and in-
formation technology goods to become more
competitive. At the same time, US consumers
are happy to see that in many instances for-
eign producers have been unwilling to lose
US market share, and so have held the line
on prices charged in the US. Standard & Poor’s
thinks that the decline of the US trade deficit
to $405 billion in the first half of 2007 helped
the US economy offset the declines in hous-
ing prices.
However, future trends in consumer
spending will depend on energy prices and
housing costs, both of which are emitting
warning signs. Even though consumer spend-
ing increased at 3.0% in the third quarter of
2007, up from a 1.4% gain in the second
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
quarter, consumers may cut back on retail
spending as energy costs continue to in-
crease. Standard & Poor’s thinks that the
strength in payrolls and employment so far
have mitigated the effect of energy costs.
Therefore, we think that trends in employ-
ment will drive consumer spending.
Because of the likelihood of a slowdown
in consumer spending, Standard & Poor’s
is currently estimating the probability of a
US recession at 40%. As this Survey was
going to press in mid-November 2007,
Standard & Poor’s was projecting US GDP
3
 growth to slow to 2.1% in 2007, and 1.9%
in 2008 (versus 3.1% in 2005 and 2.9% in
2006), before picking up to 2.9% in 2009.
Regulatory and legal issues
The banking industry’s most significant
victory of the last several years was the
Bankruptcy Abuse Prevention and Consumer
Protection Act, signed into law by President
Bush in April 2005 and enacted in October
2005. This law made it more difficult for
consumers to entirely discharge their debts,
by forcing them to file for Chapter 13 rather
than Chapter 7, which is a full discharge of
debts. This law applies a means test, based
on the median income of the state of resi-
dence, to determine whether a Chapter 7
bankruptcy filing is allowed.
The strict means testing of the bankruptcy
law has already been relaxed by the US De-
partment of Justice for victims of natural dis-
asters, such as Hurricane Katrina. With the
elections in November 2006 leading to a
transfer of power in the House and Senate in
January 2007, the bankruptcy law has come
under increasing attack. Senate Banking
Committee chairman Senator Chris Dodd
(D-CT) announced in the summer of 2007
that he will introduce legislation to repeal
portions of this law. Other narrower bills are
aimed at giving bankruptcy judges more
discretion in deciding who is eligible for
Chapter 7 and more leeway to change the
terms of mortgages.
Related closely to this is the broad issue
of subprime mortgage reform. Some Democ-
COMMERCIAL AND INDUSTRIAL LOANS
(Domestic banks, in billions of dollars, seasonally adjusted)
(Billions of dollars)
Small banks as % of total (right scale)
1,200
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
Small banks (left scale)
Large banks (left scale)
1,000
800
600
400
200
0 30
2004 2005 2006
Source: Federal Reserve Board.
4
ratic senators have called for the federal
government to offer funding to help troubled
borrowers avoid losing their homes, but they
have not yet introduced legislation. In Sep-
tember 2007, House Financial Services
Committee chairman Representative Barney
Frank (D-MA) introduced legislation in the
House of Representatives aimed at toughen-
ing standards for mortgage underwriting and
lending practices.
Credit card usage is also related to these
issues, with headline stories detailing some of
the more lurid personal examples of credit
card over-the-limit charges, universal default
provisions, and hard-to-understand interest
rate hikes. Calls have come from consumer
advocates for an updating of Regulation Z,
the Truth in Lending Act, which is imple-
mented by the Federal Reserve. In September
2007, the Office of the Comptroller of the
Currency (OCC), a bureau of the US Depart-
ment of the Treasury, urged the banking in-
dustry to improve business practices —
warning that otherwise lawmakers will do
this for the OCC.
In addition to the regulatory and legisla-
tive issues facing the banking industry, there
are legal challenges. The most recent and
prominent case, which was argued in front
of the US Supreme Court in early October
2007, is Stoneridge v. Scientific Atlanta. A
judgment in favor of plaintiff Stoneridge
could expand legal liability to third parties,
such as banks and other financial institu-
tions, for aiding and abetting a company
found to be engaged in fraud. (A decision on
the case is expected in the spring of 2008.)
Currently, under the Private Securities Litiga-
tion Reform Act of 1995 and the Sarbanes-
Oxley Act of 2002, only the US Securities
(Percent of total) and Exchange Commission can initiate law-
36 suits for third-party liability.
35
Banking industry outlook
34
We recently lowered our fundamental out-
33 look for the regional banks sub-industry to
negative, from neutral, due to our concerns
32
about current trends in credit quality, lending
31
margins, and fee income growth, and our ex-
pectations for 2008. While credit quality and
lending margin issues have been well known
2007
for some time now, we think that the recent
disruptions to the capital markets have been
an additional negative factor affecting the in-
MORTGAGE ORIGINATIONS
(In billions of dollars)

1,400
Total
1,200

1,000
Refinancing Originations
800
Purchasing Originations
600

400

200

0
1991 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 2007

Source: Mortgage Bankers Association.

dustry’s cost of capital, trading income, and

mortgage banking activities. We think that
regional banks will continue to struggle with
these issues in the remainder of 2007 and
into 2008.
Although US regional banks have, for the
most part, reported continuing economic ex-
pansion in their service territories, even banks
with the highest credit quality will not be ful-
ly immune from indirect effects of housing
price declines in their lending markets, in our
view. Industrywide levels of nonperforming
loans have increased from the historical lows
achieved in mid-2006, and we expect further
increases through 2008, which may necessi-
tate additional loan loss provisioning.
In addition, most regional banks continue
to experience difficulties in funding their
loan portfolios, despite the recent rate cuts.
We think that most banks are finding that
they need to keep deposit rates high in order
to attract funds, and this has resulted in net
interest margin compression in each quarter
of 2007. We expect margin compression to
ease, but we do not foresee expansion until
at least mid-2008. We also are forecasting
that growth of loan loss provisioning will
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

outstrip any net interest margin expansion in

2008. Furthermore, we think that the pace
and premiums of takeovers may be slowing,
thus neutralizing the best upside catalyst to
bank share prices. ■

5
 I NDUSTRY P ROFILE

US bank industry consolidation

continues
Compared with the banking systems of most
developed countries, the US industry is high-
ly fragmented. Thousands of smaller players
try to compete with industry leaders in terms
of pricing and service. However, deregulation —
combined with banks’ drive to expand mar-
ket share, enhance geographic coverage, in-
crease the number of products and services
offered, and improve efficiency — has led to
significant consolidation since the early 1980s.
Consolidation activity increased in 1994 and
1995, when 518 banks and 514 banks, respec-
tively, announced merger agreements. The peak
year for merger announcements was 1998,
when 545 mergers were planned. Subsequently,
however, some of the more aggressive acquirers
encountered problems with their mergers, while
other firms became less eager to pay premium
prices in order to make a deal. In the more re-
cent period of 2001 to 2006, an average of 277
banks per year announced merger agreements.
In 2007 to date, 229 banks have announced
mergers — an annualized rate of 275, which is
in line with recent historical trends.

25 LARGEST US BANKING COMPANIES

(In millions of dollars, ranked by September 30, 2007, market capitalization)

MARKET CAPITALIZATION 3Q 2007 % CHG. FROM TOTAL ASSETS

12/31/2005 12/31/2006 9/30/2007 12/31/2005 12/31/2006 6/30/2006 6/30/2007 % CHG.
1. Citigroup Inc. 245,512 273,691 232,162 (5.4) (15.2) 1,626,551 2,220,866 36.5
2. Bank of America 185,342 239,758 223,066 20.4 (7.0) 1,445,193 1,534,359 6.2
3. J.P. Morgan Chase & Co. 138,878 167,551 155,050 11.6 (7.5) 1,328,001 1,458,042 9.8
4. Wells Fargo 105,067 120,049 119,058 13.3 (0.8) 499,516 539,865 8.1
5. Wachovia Corp 82,116 114,542 95,436 16.2 (16.7) 553,614 719,922 30.0
6. U.S. Bancorp 54,291 63,617 56,161 3.4 (11.7) 213,405 222,530 4.3
7. State Street Corp. 18,179 22,395 26,549 46.0 18.5 102,536 112,268 9.5
8. SunTrust Banks 26,296 29,907 26,431 0.5 (11.6) 181,143 180,314 (0.5)
9. PNC Financial Services Group 18,069 21,754 23,574 30.5 8.4 94,914 125,651 32.4
10. BB&T Corp 22,728 23,763 22,270 (2.0) (6.3) 116,284 127,577 9.7
11. Regions Financial 15,643 27,300 20,752 32.7 (24.0) 86,063 137,622 59.9
12. Fifth Third Bancorp 20,929 22,842 18,134 (13.4) (20.6) 106,111 101,390 (4.4)
13. Natl City Corp 20,789 23,092 16,059 (22.8) (30.5) 141,486 140,636 (0.6)
14. KeyCorp 13,428 15,272 12,621 (6.0) (17.4) 94,794 94,076 (0.8)
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

15. Marshall & Ilsley 10,131 12,590 11,680 15.3 (7.2) 54,419 58,298 7.1
16. M&T Bank 12,254 13,519 11,088 (9.5) (18.0) 56,507 57,869 2.4
17. Synovus Financial 8,435 10,019 9,353 10.9 (6.6) 30,527 33,221 8.8
18. Comerica Inc 9,381 9,322 7,847 (16.4) (15.8) 57,080 58,570 2.6
19. Commerce Bancorp 5,975 6,614 7,479 25.2 13.1 43,436 48,176 10.9
20. Zions Bancorp 7,893 8,817 7,387 (6.4) (16.2) 45,142 48,691 7.9
21. Huntington Bancshares 5,420 5,586 6,213 14.6 11.2 36,266 36,421 0.4
22. Associated Banc-Corp 4,442 4,545 3,761 (15.3) (17.3) 21,128 20,849 (1.3)
23. City National Corp 3,561 3,388 3,402 (4.5) 0.4 14,477 15,796 9.1
24. First Horizon Natl 4,844 5,200 3,365 (30.5) (35.3) 37,469 38,394 2.5
25. TCF Financial Corp 3,630 3,590 3,324 (8.4) (7.4) 14,198 14,978 5.5
Note: Data has not been restated to reflect mergers.
Source: Standard & Poor’s Compustat.

6
 The Federal Deposit Insurance Corp.
(FDIC) reports a continuous decline in the
number of commercial banks it has insured:
from 14,628 in 1975, to 14,500 in 1984, to
10,451 in 1994, to 7,630 in 2004, to 7,527
in 2005, to 7,402 in 2006, and to 7,350 at
June 30, 2007.
At June 30, 2007, 14 FDIC-insured do-
mestic commercial banks in the United States
had assets of more than $100 billion each;
their aggregate assets totaled $5.90 trillion,
or 56.7% of industry assets of $10.411 tril-
lion, according to Highline Data, a financial
information and research firm, and the FDIC.
The five largest US bank holding companies,
ranked by assets at June 30, were Citigroup
Inc. ($2.22 trillion), Bank of America Corp.
($1.53 trillion), JPMorgan Chase & Co. ($1.46
trillion), Wachovia Corp. ($720 billion), and
Wells Fargo & Co. ($540 billion).
Ninety-five commercial banks (including
the 12 banks previously mentioned) had as-
sets of more than $10 billion each at June
30, 2007; their aggregate assets were $8.19
trillion, equal to 78.7% of total industry
assets. Furthermore, 557 commercial banks
each had assets of more than $1 billion (to-
taling approximately 90.3% of industry
assets). By comparison, in 1994, 392 banks
each had assets of more than $1 billion,
representing 75.0% of total 1994 commer-
cial banking assets of $4.01 trillion, accord-
ing to the FDIC.
Mergers raise industry concentration
As a result of consolidation, a few behe-
moth players now dominate some major
banking segments. For example, in lending,
the 10 largest US commercial banks (ranked
by total net loans and leases not held for
sale) control 37% of the market. In retail
banking, the 10 largest banks (ranked by de-
posits) hold about 42% of deposits. Consoli-
dation has allowed banks to take advantage
of scale opportunities and to earn healthy
shareholder returns from larger portfolios.
Service levels for customers tend to increase
as banks devote more resources to specialty
businesses. Marketing costs also can be
spread over a large cost base. We believe
that, as long as substantial market share does
not wind up in the hands of only one or
two players — which would limit competi-
tion — companies and customers alike will
benefit from the scale advantages that have
resulted from increased concentration.
INDUSTRY TRENDS
Among the important and interrelated bank-
ing industry trends covered in this section are
consolidation, credit quality patterns, customer
convenience initiatives, and regulatory change.
Consolidation likely to resume in
long term
Although less favorable industry conditions
and declining stock prices led to a reduced
pace of merger activity from 2000 to 2002,
consolidation has picked up since 2003 and
remains one of the industry’s most notewor-
thy trends. In the late 1980s, against a back-
drop of concerns about banks’ credit quality,
mergers and acquisitions (M&A) became
common, as strong banks took over weak or
failing institutions. M&A activity accelerated
in the 1990s before slowing in recent years.
Consolidation may continue over the long
term, as banks move to compete more effi-
ciently in a less regulated environment.
Between 1996 and mid-1998, favorable
stock prices and excess capital levels gave ac-
quiring banks the means to make purchases
without unduly diluting near-term earnings.
Sellers found the environment favorable as
well, since they were able to command pre-
mium prices. However, from mid-1998
through mid-2002, bank stocks witnessed a
more difficult deal environment, which re-
duced bank merger activity.
US banks have achieved remarkable
growth in assets since 1989, primarily re-
flecting the nearly two decades of economic
prosperity since then. Consolidation has fur-
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
ther boosted asset growth for individual
banks. In 1989, the 12,709 reporting FDIC-
insured commercial banks had aggregate as-
sets of $3.3 trillion, an average of roughly
$260 million per bank. By the end of 2006,
the number of reporting commercial banks
had fallen to 7,350 (a 42% decline since
1989); total assets, however, had increased to
$10.41 trillion, or an average of $1.4 billion
per bank (an average annual gain of 10.2%).
The fourth quarter of 2004 marked the
first time that the number of all FDIC-
insured depository institutions dropped
7
 MERGER MULTIPLES
AGGREGATE AVERAGE MEDIAN
DEAL VALUE AVERAGE MEDIAN PRICE/BOOK PRICE/BOOK NUMBER
YEAR (MIL.$) P/E RATIO P/E RATIO RATIO RATIO OF DEALS
2007* 63,762.5 25.8 22.5 2.3 2.1 240
R2006 114,551.2 23.3 20.4 2.6 2.2 293
2005 71,272.4 25.3 21.9 2.2 2.0 274
2004 129,804.0 24.7 21.1 2.1 2.1 286
2003 72,779.2 23.8 20.0 2.0 1.9 286
2002 17,152.7 23.8 18.3 1.8 1.7 234
2001 40,341.6 21.9 17.0 1.7 1.6 291
2000 94,047.5 18.8 16.2 1.8 1.7 336
1999 70,035.1 23.0 20.3 2.1 2.0 410
1998 274,436.7 23.1 20.9 2.4 2.4 545
1997 89,783.8 21.6 18.4 2.0 1.9 498
1996 33,421.9 19.2 16.1 1.8 1.7 482
1995 63,630.2 17.2 15.1 1.7 1.6 514

*Through October. R-Revised.

Source: Highline Data.

below 9,000, to 8,681 at year-end 2006.
Structural changes among FDIC-insured
banks in the first half of 2007 also included
the issuance of 89 new bank charters, com-
pared with 191 in 2006, 179 in 2005, 128 in
2004, 119 in 2003, and 91 in 2002.
Standard & Poor’s believes that long-term
consolidation will continue to improve effi-
ciency, boost sustainable profits, and help
banks to withstand heated competition from
other financial services providers, both do-
mestic and international. If stock market
conditions remain relatively strong, we ex-
pect that more small- and medium-sized re-
gional banks (those with assets of less than
$20 billion) will continue to be absorbed by
larger domestic or foreign banks.
Motives for merging
The primary factor favoring further con-
solidation is competition, which has inten-
sified pressure on banks to expand market
share, increase geographic presence and di-
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
overlapping service territories can cut the
combined banks’ costs by 20% or more.
Normally, if the integration process goes
smoothly, only a small portion of the ac-
quired bank’s business is lost to competitors
when branch offices are sold or closed. Of-
ten, branches are sold to satisfy antitrust reg-
ulators or because a bank does not want to
be in a certain area.
Other benefits of consolidation include
expanded delivery networks and product
diversification. We believe that, for con-
sumers, consolidation stands to bring lower
banking costs, broader products, and
greater convenience.
The promise of greater efficiency has gen-
erated an “acquire or be acquired” mentality
among bank managers. For a bank to remain
independent, it must maintain strong earn-
ings and an above-average growth rate.
Inducing efficiency
By reducing operating costs, consolidation

versification, improve efficiency, and offer
a broader range of financial products. Con-
solidation can help banks to fend off com-
petition from other commercial banks as
well as from nonbank providers of finan-
cial services.
Banks contend that they become financially
stronger following a merger because they can
reduce the acquired bank’s noninterest (oper-
ating) costs. Savings are especially noticeable
in intramarket deals, in which duplication of
bank infrastructure is high. Combining back-
office operations and closing branches in
has helped the banking industry become
more efficient. The relatively low US infla-
tion rate has helped banks exercise tight con-
trol over expense items, particularly salaries
and other personnel-related costs. Restruc-
turings that involved workforce reductions
and branch consolidations were common
among large banks in the mid- to late 1990s.
Efficiency, however, cannot come at the
expense of customer satisfaction. Banks run
the risk of losing customers if their efforts to
cut costs lead to perceived reductions in ser-
vice levels. To satisfy both fiscal and quality

8
requirements, technological improvements
have helped banks control expenses while
providing better service. Electronic banking
through telephones, automated teller ma-
chines (ATMs), and the Internet improve cus-
tomer service by offering 24-hour banking
capabilities at convenient locations. The
costs of completing such transactions remain
well below the more labor-intensive opera-
tions at bank branches.
Banks’ concerted efforts to control their
expense levels in recent periods have shown
up in their efficiency ratios. The efficiency
ratio is defined as the ratio of noninterest ex-
pense to total revenues; the lower the effi-
ciency ratio, the better. In the early 1990s,
the banking industry strove for an efficiency
ratio of about 60%. By the late 1990s, the
most efficient banks were achieving ratios in
the low- to mid-50% range. The average effi-
ciency ratio for all FDIC-insured banks was
slightly more than 57.0%, on an annualized
basis, in the first six months of 2007.
The efficiency ratio is often related to the
size of a bank. In the first half of 2007, the
largest banks (those with more than $10 bil-
lion in assets) maintained an average efficien-
cy ratio of 55.5%. Banks with $1 billon to
$10 billion in assets had efficiency ratios of
58.4% in this same period. Smaller banks
(assets of $100 million to $1 billion) had ef-
ficiency ratios of nearly 65.0%, while banks
with less than $100 million in assets had effi-
ciency ratios of 74.7%.
The efficiency ratio tracks closely with the
level of fee income–generating businesses that a
bank has. The banking industry generated
about 42.5% of revenues from noninterest in-
come in the first half of 2007. Banks that gener-
ate a lower percentage of their revenues from
fee income, such as those that do not offer bro-
kerage services, insurance, or credit cards, often
have efficiency ratios significantly lower than
the industry average of 57.0% — as low as the
mid-30% range. Likewise, banks with signifi-
cant levels of customer services, such as seven-
day-per-week branch hours, waivers of ATM
and other fees, and free coin counting machines,
may have efficiency ratios nearing 75%. In-
vestors should examine more closely those
banks that have a relatively low percentage of
revenues from fee income, without a corre-
sponding reduction in their efficiency ratios.
These banks may have inefficiencies in their cost
structures, which may hamper their profitability.
Merger strategies vary
Among straight banking acquisitions, most
have been intramarket deals rather than
mergers between players operating in differ-
ent geographic territories. This reflects the
stock market’s preference for combinations
that offer clear and realistic cost-saving bene-
fits. In addition, many investors are averse to
acquisitions that dilute earnings, especially if
any shortfall cannot be recovered in a rea-
sonably short time.
As eligible merger partners dwindled in
the late 1990s, acquisition trends changed.
Notably, out-of-market deals became more
frequent. In some large acquisitions, such as
the 1998 deals between First Union Corp.
(now Wachovia Corp.) and First Fidelity, and
between BankAmerica and NationsBank
Corp., banks bought into new geographic
markets. A bank may adopt such a strategy
if it cannot find a suitable intramarket merg-
er partner, or if a certain geographic service
territory is growing faster than its own.
At that time, the industry began to favor
acquisitions of nonbank financial institu-
tions, which had something to offer other
than traditional retail branch networks.
Banks appeared to be more willing than
before to acquire customer bases for high-
margin lines (such as credit cards) or for
businesses that give them a national brand-
name presence. The trend toward diversifica-
tion may have been dampened in 2001 and
2002 by tighter regulation, weakness in capi-
tal markets, and credit quality concerns. In
recent years, the industry has seen a number
of spin-offs and divestitures as banks have
returned to a focus on core lending opera-
tions. Looking forward, however, we expect
that banks seeking external growth may fo-
cus on wealth management companies and
consumer finance companies.
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
Trends in activity relate to stock prices
The rising stock prices that boosted ac-
quirers’ war chests between 1996 and mid-
1998 inflated the cost of takeovers. In 1995,
the median bank was acquired for 1.6 times
book value, according to Highline Data. As
bank stocks peaked in 1998, the median price
was 2.4 times book, and acquisitions began
to look less attractive. Conversely, lower
stock prices in 2001 and 2002 lowered the
price tags of potential acquisitions, but the
trend also reduced acquirers’ purchasing
9
 TOP ANNOUNCED BANK MERGERS — 2006-2007
(As of October 11, 2007; ranked by deal value)
COMPLETION DEAL
ANNOUNCED DATE/ VALUE
BUYER TARGET DATE STATUS (MIL.$)
1. Mellon Financial Corporation Bank of New York Company Inc. 12/4/2006 7/1/2007 29,054.6
2. Wachovia Corporation Golden West Financial Corp. 5/7/2006 10/2/2006 25,500.8
3. Bank of America Corporation LaSalle Bank Corp. 4/23/2007 10/1/2007 16,000.0
4. Capital One Financial Corp. North Fork Bancorporation 3/12/2006 11/30/2006 15,132.8
5. Regions Financial Corporation AmSouth Bancorporation 5/25/2006 11/4/2006 10,001.2
6. Banco Bilbao Vizcaya Argentaria Compass Bancshares, Inc. 2/16/2007 9/7/2007 9,713.6
7. TD Bank Financial Group Commerce Bancorp, Inc. 10/2/2007 Pending 8,684.5
8. PNC Financial Services Group Mercantile Bankshares Corp. 10/9/2006 3/2/2007 5,990.3
9. State Street Corporation Investors Financial Services 2/5/2007 7/2/2007 4,493.6
10. Huntington Bancshares Inc. Sky Financial Group, Inc. 12/20/2006 7/1/2007 3,578.6
11. J.P. Morgan Chase & Company Bank of New York 4/8/2006 10/2/2006 3,100.0
12. Banco Bilbao Vizcaya Argentaria Texas Regional Bancshares 6/12/2006 11/10/2006 2,159.8
13. National City Corporation MAF Bancorp, Inc. 5/1/2007 9/1/2007 1,911.7
14. Merrill Lynch & Co First Republic Bank 1/29/2007 Pending 1,779.5
15. People's United Financial Inc. Chittenden Corporation 6/27/2007 Pending 1,759.7
16. Royal Bank of Canada Alabama National BanCorporation 9/6/2007 Pending 1,641.6
17. Wells Fargo & Company Greater Bay Bancorp 5/4/2007 10/1/2007 1,474.5
18. National City Corporation Harbor Florida Bancshares, Inc. 7/11/2006 11/30/2006 1,107.9
19. Fifth Third Bancorp First Charter Corporation 8/16/2007 Pending 1,088.6
20. Citizens Banking Corporation Republic Bancorp, Inc. 6/27/2006 12/29/2006 1,053.5
21. National City Corporation Fidelity Bankshares, Inc. 7/27/2006 1/5/2007 1,032.7
22. Washington Mutual, Inc. Commercial Capital Bancorp, Inc. 4/23/2006 10/2/2006 951.4
23. Rabobank Nederland Mid-State Bancshares 11/2/2006 5/1/2007 848.6
24. Susquehanna Bancshares, Inc. Community Banks, Inc. 5/1/2007 Pending 832.2
25. CapitalSource Inc. TierOne Corporation 5/17/2007 Pending 651.9
Source: Highline Data.

power. In 2001 and 2002, acquisition prices
dropped back to around 1.6 times book value.
According to Highline Data, the total pur-
chase price of announced and completed
bank acquisitions was $40.3 billion in
2001, $17.2 billion in 2002, $72.8 billion
in 2003, $129.8 billion in 2004, $71.3 bil-
lion in 2005, and $114.7 billion in 2006. For
the first three quarters of 2007, the total of
all announced purchase prices was $63.5 bil-
lion; the largest of these transactions was less
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
in 2000, and 606 in 1995. The number of
banks involved in deals per year has been rel-
atively steady since the start of 2002, with a
low of 275 in 2003 and a high of 342 in
2006. The dollar volume of merger activity,
however, has increased since the end of 2004,
due to the large size of several recent deals.
US banking system remains healthy
The banking industry is financially strong.

than $10 billion, and only three transactions
were worth more than $2 billion. Median ac-
quisition prices increased in 2003, 2004, and
2005 to about 1.9, 2.0, and 2.0 times book
value, respectively, and to 2.2 times book in
2006. (See the “Top announced bank merg-
ers” table for deals in 2006 and 2007.)
In the first three quarters of 2007, 201
FDIC-insured institutions were absorbed
through mergers or other consolidation
moves, compared with 342 mergers or consol-
idations in 2006, 315 in 2005, 322 in 2004,
275 in 2003, 297 in 2002, 357 in 2001, 453
This is evidenced by several major indicators,
such as the number of problem banks, bank
failures, the loan delinquency rate, the level
of charge-offs, and loan loss reserves. Addi-
tional measures of industry financial strength
are the percentage of banks that are not prof-
itable, industry net income growth, return on
equity (ROE), and the equity to capital ratio.
As of June 30, 2007, the FDIC classified
61 insured institutions, with combined assets
of $23.1 billion, as “problem institutions” —
those having financial, operational, or man-
agerial weaknesses that threaten their viabili-

10
 ty. Although this figure is above the low level
of 50 institutions at December 31, 2006, it is
down substantially from 2002, when the figure
stood at 136. To place these recent figures in
a historical context, at year-end 1991, 1,426
banks with $819 billion in assets were classi-
fied as problem institutions.
The decline in the total number of US
banks in the late 1980s and early 1990s re-
flected not only industry mergers but also a
relatively high level of bank failures. The an-
nual total of closings and assistance transac-
tions, otherwise known as bank failures,
peaked at 534 in 1989, according to FDIC
statistics. The number of failures rapidly de-
clined after 1992, to a level of only one in
1997. Only in 2002 did the number of fail-
ures exceed 10, and in 2005 and 2006, there
were no failures. So far, in 2007, there has
been one failure. There were no bank failures
from June 25, 2004, to February 2, 2007 —
a record-setting length of time, according to
the FDIC.
The percentage of noncurrent loans stood
at 0.90% at June 30, 2007, up from 0.83%
at March 31, 2007, 0.78% at December 31,
2006, and 0.70% at June 30, 2006 (the all-
time low), according to the FDIC. These lev-
els are all down significantly from the peak
levels reached in 1991, when the industry-
wide level of noncurrent loans as a percent-
age of total loans was above 6.0%.
The level of net charge-offs as a percent-
age of loans and leases is another indication
that lending credit quality remains high by
historical standards. A net charge-off is the
sum of an uncollectible loan, minus any re-
coveries of collateral, divided by average
LOAN QUALITY — ALL COMMERCIAL BANKS
(All items as a percentage of total loans and leases)
6 2006, net income totaled $128.6 billion, up
Nonperforming assets
5
4 Another measure of industry profitability
Loss reserves
3
2
Provision for loan losses
1 down from 12.34% in the full year 2006,
Net charge-offs
0
1989 91 93 95 97 99 01 03
*Through June.
Source: Federal Deposit Insurance Corporation.
loans and leases. In the first half of 2007, net
charge-offs were 0.34%, down from 0.45%
in the year-earlier period.
The level of loan loss reserves is reduced
by charge-offs and must be replenished by
loan loss provisions, which, in turn, reduce
net income. Some key indicators of banking
industry health are the level of loan loss re-
serves as a percentage of total loans and leas-
es, and as a percentage of nonperforming
loans. Although total industry reserves of
$81.2 billion have increased 4.6% since De-
cember 31, 2006, and 4.2% since June 30,
2006, we are concerned that reserves are
low, as a percentage of total loans and leases.
At June 30, 2007, this figure stood at 1.09%,
slightly above the low of 1.07% at December
31, 2006, which was a 30-year low, accord-
ing to the FDIC. Reserves as a percentage
of nonperforming loans and leases declined
to 121% as of June 30, 2007, down from
159% a year earlier; this may require addi-
tional loan loss provisioning, which could
affect industry profitability.
Although the industry is healthy, accord-
ing to the measures of bank failures and
noncurrent loans, we are concerned about a
recent increase in the percentage of banks
that are not profitable, which could possibly
foreshadow an increase in future bank fail-
ures. Through June 30, 2007, the percentage
of banks that were not profitable rose to
9.39%, up from 7.88% at December 31,
2006, and 6.81% a year earlier.
Net income for all FDIC-insured commer-
cial banks totaled $72.7 billion in the first
half of 2007, down 2.9% from $74.8 billion
in the year-earlier period, as net interest
income growth of 3.7% and noninterest in-
come growth of 5.5% were more than offset
by a 5.2% increase in noninterest expense. In
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
12.5% from $114.3 in 2005. Net income has
grown 11.6% annually since 1989.
that bears watching is the recent decline in
return on equity (ROE). In the six months
ended June 30, 2007, ROE for the industry
dropped to 11.49%, on an annualized basis,
which in turn was slightly down from 12.46%
05 2007* in 2005. Up from a mid-single-digits level in
the late 1980s, ROE fluctuated between
12.0% and 15.0% from 1992 to 2006. The
decline in ROE seen in 2007 is related to
11
 higher noninterest expenses and loan loss
provisioning reported by many banks in the
first half of 2007.
The equity to capital ratio is another indi-
cator of bank balance sheet strength. This ra-
tio has steadily increased since 1987, when it
was approximately 6.0% for the industry, to
a level of 10.5% at the end of 2006. Most
recently, at June 30, 2007, the equity to capi-
tal ratio stood at 10.27%.
Consumer bankruptcies tumble after
bankruptcy reform in 2005
Consumer bankruptcies had risen from
the late 1990s through 2005 and that trend
had concerned us. There was a surge in
bankruptcies in 2005 that resulted from
consumers rushing to file before the Bank-
ruptcy Abuse Prevention and Consumer
Protection Act of 2005 that took effect in
mid-October 2005.
A major provision of the 2005 bankrupt-
cy law — a provision that affects the bank-
ing industry — is the needs-based bankruptcy
test. For all filers with incomes above the
state median, the test determines if a filer
will file Chapter 7 bankruptcy or Chapter
13. Under Chapter 7, debts are discharged
by liquidation of assets; under Chapter 13,
the filer repays the lesser of either $10,000
or 25% (but no less than $6,000) of unse-
cured nonpriority debt (e.g., credit card debt)
over a five-year period.
The bankruptcy law limits the amount of
real estate assets that a borrower can shelter
from creditors, bars the discharge of certain
educational loans and credit incurred to pay
state or local taxes, and broadens the cate-
gories of retirement funds sheltered from
creditors. We believe that the 2005 bank-
ruptcy law will be beneficial to the banking
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
industry in the long term by reducing the
number of Chapter 7 filings and by increas-
ing the likelihood of recovery and the
amount of funds recovered.
According to the Administrative Office
of the US Courts, which provides support to
the federal judiciary branch, consumer
bankruptcy filings reached 2.04 million dur-
ing 2005, up 30% from 2004 and up 25%
from the previous record of 1.625 million in
2003. In 2006, consumer bankruptcy filings
sank to 597,965, well below the average
prior to the enactment of the 2005 bank-
12
ruptcy law. Consumer bankruptcy filings
continue to represent a growing percentage
of total bankruptcy filings — they accounted
for 96.8% of total filings in 2006. By con-
trast, consumers made 86.8% of total filings
in 1980.
Whatever its cause, the recent bankruptcy
boom’s cost to creditors — and to financially
responsible debtors — was significant. Al-
though bankruptcy laws are designed to help
consumers, the tidal wave of filings also hurt
them in a number of ways. For instance,
lenders often pass much of the cost of bank-
ruptcies on to consumers in the form of higher
fees and interest charges. In essence, borrowers
end up footing the bill for those bankruptcies.
Second, the higher rates of bankruptcy may
discourage lenders from making loans to
“marginal” borrowers: individuals who bare-
ly qualify for credit based on income. Thus,
many low-income families may find it more
difficult and costly to obtain credit.
Customer service and convenience
remain a focus for banks
Customer service and convenience have
taken on a new importance in the banking
industry. Many banks now offer extended
hours, prime locations, customer-friendly
products, Internet banking, reduced fees,
and faster, more personalized customer ser-
vice. In the highly competitive environment
of major metropolitan areas, it is increas-
ingly important for banks to differentiate
themselves. There has been a growing trend
toward extending branch hours and offer-
ing good customer service. Several banks
now waive ATM fees and offer more inter-
action between customers and associates.
Several banks use the customer-associate in-
teraction to offer cross-selling opportunities
for additional products and services (e.g.,
insurance).
Much of this competition has been
brought on by several key players offering
above-average service and establishing them-
selves in new markets at a rapid rate, mainly
through de novo branch building. (De novo
branches are built from scratch, rather than
acquired through mergers and acquisitions.)
These branches tend to have prime locations,
with several additional offices within reason-
able proximity. Several banks have also start-
ed determining their expansion plans based
on the existing customer base. For example,
several banks with locations in New England
have expanded into Florida; they know that
many past customers have retired to Florida,
and some current customers have vacation
homes there. In addition, Florida has a
rapidly growing population, making it even
more attractive.
New regulations raising costs
For the past several years, the US banking
industry has focused on regulatory issues,
such as the corporate governance provisions
of the Sarbanes-Oxley Act (enacted in 2002)
and the banking-related parts of the USA Pa-
triot Act (enacted in 2001). These provisions
are now beginning to have an impact. Small-
er community banks have contended that it
is difficult for them to comply with certain
Sarbanes-Oxley provisions, such as the re-
quirement that audit committees be com-
posed entirely of independent directors and
that companies have a “financial expert” on
the board of directors. The provisions of the
USA Patriot Act require increased invest-
ments in technology, though many in the in-
dustry have questioned the effectiveness of
these investments in preventing the funding
of terrorist groups or activities.
New regulations are driving banks to a
new level of accuracy and disclosure in a
number of other reporting areas. The Basel
Committee on Banking Supervision, an
agency of the Bank for International Settle-
ments, released its framework for new inter-
national capital standards — known as the
Basel II Capital Accord — in June 2004. The
rules will govern how much capital banks
will be required to hold.
US regulators were expected to issue com-
pliance requirements for US banks in 2007,
with implementation expected by year-end
2007, but there have been several delays; it is
now uncertain when this will happen. When
the Basel II Capital Accord goes into effect,
all top US banks must be in compliance,
with risk management systems in place to
align their risk measurement and risk capi-
tal with their regulatory capital. Under Basel
II, banking companies will be required to ac-
curately report transaction positions, marked
to the market, almost daily. Achieving com-
pliance appears to be a complicated process
that will demand significant technical and
organizational changes.
HOW THE INDUSTRY OPERATES
Commercial banks serve as intermediaries
between customers who save money and
customers who borrow it. Their principal
activities are collecting deposits and disburs-
ing loans.
Individual commercial banks may di-
verge widely in terms of markets served
and earnings sources, as we discuss in this
section. Other industry concerns that we
consider are: costs related to obtaining and
maintaining adequate funding sources; the
inherent risks in financing at a given inter-
est rate; Federal Reserve policies and their
effect on interest rates; and competitive in-
fluences on the retail (consumer) and com-
mercial strategies of regional and money
center banks.
Business type
Although mergers and the consolidation
of business activities have blurred the lines of
distinction in recent years, there are two
main categories of banks: money centers
and regionals. Money center banks tend to
be located in major US financial centers
and are typically involved in international
lending and foreign currency operations.
Regional banks tend to be located in one
or a few geographic areas or states, where
their lending and deposit activities are gen-
erally focused.
The merger of several large regional banks
in the late 1980s spurred the creation of a
new type of regional bank, the so-called
super-regional. Such banks operate across
many states or geographic areas and can be
national in scope.
The Federal Deposit Insurance Corpora-
tion (FDIC) classifies all banks according to
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
the geographic regions in which they operate.
The six regions, identified by their major
banking centers, are New York, Atlanta,
Chicago, San Francisco, Dallas, and Kansas
City. As of June 30, 2007, 7,350 commercial
banks operated in the United States, with to-
tal assets of $10.41 trillion. New York had
564 banks (with $1.61 trillion in assets); At-
lanta, 1,070 banks ($2.73 trillion); Chicago,
1,490 banks ($2.68 trillion); San Francisco,
703 banks ($1.957 trillion); Dallas, 1,628
banks ($565 billion); and Kansas City,
1,895 banks ($872 billion).
13
 Bank assets
A commercial bank’s earnings are derived
from a variety of sources. These sources, or
“earning assets,” include loans (commercial,
consumer, and real estate) and securities (in-
vestment and trading account).
Loans
According to FDIC statistics, aggregate
loans outstanding were valued at $7.47 tril-
lion on June 30, 2007. Loans secured by real
estate accounted for 62% of that sum, fol-
lowed by commercial and industrial (C&I)
loans (17%), consumer loans (13%), and
other loans (8%).
Commercial and residential real estate
loans, secured by customers’ property, are
generally long-term installment mortgages.
Prime residential mortgages generate a pre-
dictable cash flow and are usually the least
risky type of loan. Commercial real estate
and interim construction loans are medium-
term loans that generate high yields but also
can carry high risks.
C&I loans come in many variations, rang-
ing from variable rate lines of credit, up to
15-year fixed-rate loans, and may be either
secured or unsecured. Often the lowest yield-
ing of a bank’s loans, C&I loans usually in-
clude compensating balance requirements,
commitment fees, or both, although these re-
quirements are becoming less common in to-
day’s intensely competitive environment.
Processing costs are relatively low for C&I
loans, and pricing (i.e., interest rates and
fees) is flexible.
Consumer loans, comprising installment
and credit card lending, are usually medium-
term in maturity, with predictable principal
and interest payments that reliably generate
cash flow. Credit risk and processing costs
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
are generally higher than for business loans,
and yields are subject to usury ceilings in
some states.
Securities
Banks purchase securities as investments,
with some 95% of their securities portfolios
typically invested in fixed-income securities.
A fixed-income security’s value depends on
the interest rate it carries, and the security’s
value fluctuates with the market level of in-
terest rates. Securities may be taxable (such
as US government bonds and other securi-
14
ties) or tax-exempt (such as state and local
government securities). The maturities of
these financial instruments vary widely.
Banks purchase securities as a means of
earning interest on assets while maintaining
the liquidity they need to meet deposit with-
drawals or to satisfy sudden increases in loan
demand. In addition, securities diversify a
bank’s risk, improve the overall quality of its
earning assets portfolio, and help the bank
manage interest rate risk.
Investment securities are an important
source of a bank’s earnings, particularly
when lending is weak but funds for investing
are plentiful. US banks are major partici-
pants in the bond market. Municipal bonds
generally have longer terms and less liquidity
than US government and Treasury bonds,
but their tax-exempt feature is attractive in
that it reduces taxable income.
Trading account securities are interest-
bearing securities held primarily for realizing
capital gains. Because their trading perfor-
mance is strongly affected by interest rate
trends, they carry a high risk. According to
the FDIC, banks had aggregate securities of
$1.977 trillion at June 30, 2007, and $1.980
trillion at December 31, 2006, up from
$1.893 trillion at year-end 2005.
Bank liabilities
A bank’s principal liabilities consist of de-
posits, debt, and shareholders’ equity. Deposits
include consumer demand and time deposits,
corporate demand and time deposits, foreign
deposits and borrowings, and negotiable cer-
tificates of deposit (jumbo CDs, usually sold
in denominations of $100,000 or more).
Debt includes federal funds and other short-
term borrowings (such as commercial paper),
as well as long-term debt.
Consumer savings plans with commercial
banks consist of demand deposits (such as
checking accounts) and time deposits (nego-
tiable order of withdrawal accounts and six-
month money market certificates). These
sources of funds, which usually account for
about 70% of bank liabilities, have histori-
cally proven to be stable and important for
banks. The interest rates that they command
vary with overall money market interest rates
or the duration of the time deposit, and they
must be competitive in order to attract and
keep depositors.
 Low deposit interest rates (in the range of
2% to 4%) resulted in minimal deposit growth
at a low-single-digit annual pace in the late
1990s, as consumers sought investments with
higher rates of return, such as mutual funds.
The stock market’s malaise in 2001 and
2002 led to a “flight to safety,” with more
investment dollars going into bank accounts.
Although equity markets have regained
strength since then, deposits have continued
to grow at a high-single-digits pace, most
likely attracted by increasing rates. Accord-
ing to the FDIC, deposits held in domestic
offices (US offices of all banks, whether
foreign or domestic) grew 7.9% in 2001,
7.6% in 2002, 6.2% in 2003, 10.6% in
2004, 8.8% in 2005, 9.6% in 2006, and
2.7% in the six months ended June 30, 2007.
Interest rate risks
Assets and liabilities can mature or be
repriced in periods ranging from overnight to
30 years. Most of them, however, mature in
less than one year, and few extend beyond
five years. Interest rate risk occurs when a li-
ability matures or is repriced at a time that is
not synchronized with the asset that it is
funding.
As a rule, banks do not match assets and
liabilities on a one-to-one basis. Instead, as-
sets and liabilities are grouped together into
specific time frames, such as overnight, 30
days, 90 days, one year, and the like. Thus,
within a given period, banks can determine
their interest rate sensitivity.
If more of its liabilities than assets reach
maturity or are repriced, a bank is said to be
liability-sensitive or to have a negative gap. If
more assets mature than liabilities, the bank
is said to be asset-sensitive, or to have a posi-
tive gap. If a bank’s assets and liabilities are
evenly matched, it is said to be balanced. In a
period of falling interest rates, a bank with
a negative gap (liability-sensitive) will see net
interest margins widen. Conversely, a bank
with a positive gap (asset-sensitive) will bene-
fit during a period of rising rates.
The banking industry’s concern with limit-
ing its interest rate risk has grown since
1979, when bank policy changes by the Fed-
eral Reserve resulted in high and extremely
volatile interest rates. As a result, most bank
loans now come with variable rates. Conse-
quently, much of the interest rate risk has
been shifted from the lender to the borrower.
On the funding side, many of the debts, de-
posits, and preferred stock dividends also
carry variable rates, which shifts some risk
back to the bank.
Because techniques for managing assets
and liabilities have become highly sophisti-
cated, banks are generally well hedged
against interest rate risks. For example, inter-
est rate hedging (with futures, options, and
swaps) and the use of “Macaulay duration”
matching (which involves balancing liabilities
and assets) have been widely adopted.
Regulation: the Fed’s influence
Unlike the capital market, which deals in
long-term investments, such as stocks and
bonds, the money market is the arena in
which banks, corporations, and US govern-
ment securities dealers can lend or borrow
funds for short periods (one day to one
year). As a major player in this arena, the
Federal Reserve has a great deal of influence
over the amount of funds available in the
banking system on a day-to-day basis.
The Fed has three methods of adjusting
the money supply. One is by conducting
open-market operations, such as buying and
selling Treasury bills. By virtue of the laws of
supply and demand, this method has a direct
impact on the rate charged for federal funds
(reserves loaned by one bank to another, typ-
ically overnight, to cover a shortfall in reserve
requirements or to profit from excess reserves).
Open-market operations also influence the
interest rate structure of the economy as a
whole, albeit indirectly.
By reducing the amount of Treasury bills
it sells and thus decreasing supply, the Fed
can cause the federal funds rate to rise. Rising
interest rates curtail demand for borrowing
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
by increasing the cost of funds. In addition,
when the money supply is restricted, banks
must rely more heavily on expensive pur-
chased funds. Banks must then become more
selective in their lending and perhaps even
raise their prime rate (the interest rate on
loans to large creditworthy corporations).
A second way for the Fed to control the
money supply is by raising or lowering the
discount rate, which is the interest rate that
the Fed charges member banks for loans us-
ing government securities as collateral. Small
changes in the discount rate can send signals
15
 to the bond markets regarding Federal Re-
serve monetary policy, thus influencing mar-
ket interest rates.
The Fed’s third means of controlling the
money supply is to raise or lower banks’
reserve requirements on deposits. Far more
powerful than open-market operations, this
method is rarely used. Raising reserve re-
quirements reduces banks’ ability to extend
loans, thus tightening money supply.
The Fed most recently changed reserve re-
quirements in February 1992, when it tried
to stimulate bank lending by lowering the re-
serve requirement — on checking, negotiable
order of withdrawal (NOW), and other
transaction accounts — from 12% to 10%.
The Fed’s action in 1992 marked the first
change in reserve requirements on these
kinds of accounts since 1980.
Since the Volcker era began in 1979, the
Fed has been lauded for controlling price
inflation. It is important to note, however,
that the Fed’s control over the market is not
absolute, and that monetary policy does not
always achieve the desired effect. For exam-
ple, a tightening in monetary policy is gen-
erally intended to reduce demand for bank
credit. However, it can initially increase de-
mand for two reasons. Many creditworthy
customers substitute short-term borrowings
for long-term debt in the hope of obtaining
better terms on permanent financing later.
In addition, because customers tend to bor-
row in advance of actual needs (to ensure
that they have adequate funds at their dis-
posal), they may actually increase their bor-
rowing when rates initially rise to avoid
even higher costs later.
Glass-Steagall repeal opens doors
In November 1999, the US Congress
passed the Gramm-Leach-Bliley (GLB) Act,
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
also known as the Gramm-Leach-Bliley Fi-
nancial Services Modernization Act, which
effectively repealed the Glass-Steagall Act.
Approved in 1933 at the height of the Great
Depression, Glass-Steagall authorized deposit
insurance and restricted banks’ ability to en-
gage in debt and securities underwriting in
an effort to protect bank depositors.
A 1987 revision to the Glass-Steagall Act
allowed commercial banks to engage in spe-
cific securities activities, subject to limita-
tions. Specifically, the provision authorized
banks to earn up to 5% of their revenues
16
(raised to 10% in 1989 and 25% in 1996)
from securities underwriting by letting bank
holding companies establish separate units
for that purpose. Concurrent with the 1987
revision, investment banks were permitted to
enter commercial banks’ traditional turf by
offering such services as check writing.
GLB created a new kind of financial hold-
ing company that is permitted to expand into
a variety of business activities related to fi-
nancial services. These activities include the
underwriting and selling of insurance and se-
curities, commercial and merchant banking,
investing in and development of real estate,
and other complementary activities. (As be-
fore, however, holding companies are re-
stricted from having interests in enterprises
that are nonfinancial in nature.) GLB also al-
lows affiliations between banks and insur-
ance underwriters and prohibits state actions
that prevent bank-affiliated firms from sell-
ing insurance on an equal basis with other
insurance agents.
An existing bank holding company can
become a financial holding company, provid-
ed that its depository institutions are well
capitalized (as described in this Survey’s
“How to Analyze a Bank” section) and well
managed, and that those institutions have re-
ceived a rating of at least “satisfactory” from
the most recent Community Reinvestment
Act examination.
As a result of the repeal of Glass-Steagall,
commercial banks have pushed their way
into the fields of investment management,
mutual funds, insurance, municipal finance,
and corporate investment banking. Such ac-
tivities provide diversified sources of nonin-
terest income for commercial banks. The
repeal also opened traditional banking ac-
tivities to competition from other financial
institutions.
The Community Reinvestment Act
Congress enacted the Community Rein-
vestment Act (CRA) in 1977 to encourage
federally insured banks and thrifts to help
meet the credit needs of their entire commu-
nity, including low- and moderate-income
neighborhoods, consistent with safe and sound
operations. The CRA requires each federal
bank regulatory agency to assess each feder-
ally insured institution’s record of compliance.
The four federal bank regulatory agencies
responsible for enforcing the CRA include
 the FDIC, the Federal Reserve System, the
Office of the Comptroller of the Currency,
and the Office of Thrift Supervision.
In 1995, CRA regulations were substan-
tially revised to put greater emphasis on per-
formance as opposed to process, and to
establish different evaluation tests for differ-
ent kinds of institutions: large institutions,
small institutions, and wholesale and limited-
purpose institutions. Streamlined procedures
with an emphasis on lending were adopted
for small institutions, while large banks are
evaluated under a three-part lending, service,
and investment test. Wholesale and limited-
purpose banks are evaluated under a com-
munity development test.
Assessing new opportunities
As noted earlier, many restrictions on
banks imposed by the original Glass-Steagall
Act had already been whittled away, so GLB
simply brought an old law up to date with
economic reality. The reform has not led to a
rash of mergers between companies in the
three major businesses concerned (commercial
banking, insurance, and investment banking),
though many banks have diversified into new
business areas.
Some of the new businesses in which
banks are now permitted to invest, most no-
tably insurance, are not viewed as particular-
ly enticing. For example, Citigroup Inc. was
formed in October 1998 through the merger
of a bank (Citicorp) and an insurance com-
pany (Travelers Group), which would not
have been permitted under the old law.
However, Travelers was involved in several
businesses other than insurance — most im-
portantly, investment banking, through its
MONEY RATES VS. LOAN RATES
(In percent)
12
Prime loan rate
10
8 banks derive most of their profits from net
6
4 rowed funds), interest rates influence how
2
Certificates of deposit
0 income divided by its average earning assets)
1989 91 93 95 97 99 01 03 05
Source: Federal Reserve Board.
Salomon Smith Barney subsidiary. Indeed, in
August 2002, Citigroup spun off Travelers’
property-casualty business.
Banks may be tempted to purchase an in-
surance operation to become more vertically
integrated, or to add an insurance company’s
sizable investment portfolio to its own. How-
ever, many insurance lines, such as property-
casualty, are actually quite volatile and
potentially high in risk, and their investment
returns can be lower than those of tradition-
al banking businesses.
Compared with property-casualty, life in-
surance would seem to be a better fit with
banks’ appetite for risk and return. Further-
more, banks do have some potential synergies
with insurance companies: notably, banks’
large distribution networks and broad cus-
tomer lists create opportunities for the cross-
selling of products and services. Many banks
have become active agents of insurance com-
panies by selling annuities and other insur-
ance products.
The industry has seen some melding of
corporate banking and investment banking
and brokerage operations, including the
merger of the retail brokerage forces of Wa-
chovia and Prudential Financial Inc. in July
2003. However, issues surrounding the inde-
pendence of stock research, allocation of ini-
tial public offerings, and unique financing
arrangements got a number of larger diversi-
fied banks into some trouble and caused a
widespread loss of investor confidence. Fol-
lowing Senate hearings in 2002 and actions
by the Securities and Exchange Commission
and other regulators, these incidents have led
to greater regulatory oversight and may have
deterred commercial banks’ forays into invest-
ment banking activities, at least temporarily.
Interest rates: a factor in profits
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
The outlook for interest rates has impor-
tant implications for bank profits. Because
interest income (the interest income received
on loans minus the interest expense for bor-
much money a bank can make.
Net interest margin (a bank’s net interest
2007
is a common measure of a bank’s profitabili-
ty. Net interest margins widen or narrow de-
pending on the direction of interest rates, the
17
 SPREAD BETWEEN SHORT-TERM /LONG-TERM YIELDS
(In percent)
8 adjust to such fluctuations. In theory, banks
7
10-year Treasury bond
6 (loans and investments) and liabilities (de-
5 posits and borrowings) so that rates earned
4 and rates paid move more or less in tandem,
3 3-month Treasury bill
Yield spread
2
1
0
(1)
1997 98 99 00 01 02 03
Source: Federal Reserve Board.
mix of funding sources underlying the loans,
and the duration (or time period until expi-
ration) of the investment portfolio.
Falling interest rates have a positive effect
on banks for several reasons. They can make
net interest margins expand, at least in the
short term; while banks are still earning a
higher-than-market yield on loans, the cost
of funds goes down more quickly in response
to the lower rates. Second, declining rates en-
hance the value of a bank’s fixed-rate invest-
ment portfolio, since fixed rate bonds
become more valuable as prevailing rates
drop. Furthermore, falling rates lower the
cost of credit, which often stimulates loan
demand and reduces delinquency rates.
Of course, rate decreases do not affect all
banks equally. Liability-sensitive banks —
those that rely more heavily on borrowed
funds than on customer deposits to fund loan
growth — typically reap greater benefits.
In the broadest sense, banks are inherently
asset-sensitive because they derive a signifi-
cant portion of their funding from essentially
free sources, such as equity issues or demand
deposits. This is especially true of the smaller
regional banks that focus on garnering retail
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
(consumer) deposits and that have limited
access to the purchased money markets. Un-
less they work to reduce their asset sensitivity,
they tend to do better in periods of rising
interest rates.
Money center banks, however, rely heavily
on borrowed funds, and have a small retail
deposit base relative to their asset size. Thus,
they tend to be liability-sensitive and their
lending operations benefit most during peri-
ods of falling rates.
Fluctuations in interest rates, while impor-
tant, do not have an absolute influence over
18
the net interest margins of commercial
banks, primarily because banks are able to
can match the maturities of their assets
while net interest margins remain relatively
stable. In addition, banks can make use of
hedging techniques to reduce their sensitivity
to interest rates. In practice, however, banks
04 05 06 2007 generally deviate from a perfectly balanced
position.
Infrastructure and operating costs
Banks’ physical capital requirements
mainly include constructing and maintaining
branch offices (which are either owned or
leased), and buying and maintaining comput-
ers and other machines used in the course of
providing services. Banks try to economize
their infrastructure costs by having branch
locations within similar geographic regions.
As in most industries, other large cost
components consist of salary and benefits,
supplies, and insurance. Most expense line
items tend to rise over time with inflation.
In recent years, the low inflationary envi-
ronment has allowed banks to restrain
cost increases. In addition, technological
improvements — including the introduction
of online banking and automated teller ma-
chines (ATMs) — have provided for the re-
placement of certain labor-intensive functions
with computers or other forms of automa-
tion, allowing increased productivity and a
related improvement in the salary and bene-
fits cost structure. Separately, mergers and
internal consolidation measures have led to
substantial gains in overall efficiency.
Competitive strategies: retail and
commercial
Most banks in the United States are small
entities competing in limited markets for local
business. Often, these banks — which have
retail as well as commercial operations —
must compete for retail business against
money center banks and large regional banks
operating in their territories.
Retail banking, because it seeks to attract
individual consumers, remains a service-
oriented business. Today’s banks are increas-
ingly investing in new technology to make
banking more pleasant and convenient for
customers. ATMs, drive-through windows,
and home banking services via phone or
personal computer are all ways in which
banks have attempted to improve the cus-
tomer experience.
Competition has heated up in the retail
market as some banks have expanded and
achieved economies of scale through acqui-
sitions. Interstate banks have the servicing
advantages of larger ATM networks and
more product offerings, such as mutual
funds, insurance, and a variety of loan
products.
Industry competition has intensified as the
consolidation wave has swept into every cor-
ner of the financial services industry. Consol-
idation has forced banks to rethink their
corporate strategies in many areas, including
geographic expansion, pricing of products
and services, and efficiency optimization.
Merged companies often set lofty perfor-
mance goals for themselves to attain im-
proved earnings growth, better returns on
assets and equity, and enhanced efficiency
levels. Such improvements also raise the level
of competition.
Increasingly, commercial banks must com-
pete for retail business against other types of
financial institutions, such as credit card
companies and other specialized consumer
lending organizations. Some banks have even
turned to buying these institutions to acquire
their large customer bases, strong marketing
skills, and efficiency levels.
KEY INDUSTRY
RATIOS AND STATISTICS

Interest rates. Interest rates are the key
macroeconomic indicators affecting banks.
For this reason, the banking world is highly
concerned with Federal Reserve policy and
its influence on interest rates. Bank analysts
watch both short- and long-term rates, as
well as the relationship between the short
and long markets, which can be graphed as
the “yield curve.”
Short-term rates, generally represented by
the discount rate (the rate charged by Federal
Reserve banks when they extend credit to de-
pository institutions) or by the federal funds
rate (the rate charged among commercial
banks for overnight lending), are subject to
Federal Reserve Board policy targets. Strong
economic conditions and/or employment ac-
tivity — which can generate shortages in
both labor and goods, and fuel inflation —
may lead the Fed to raise interest rates.
Although long-term rates (as represented
by the yield on 10-year bonds) are subject to
the same economic factors that influence
short-term rates, they are controlled by mar-
ket forces rather than by the Federal Reserve
Board. Because market forces make them re-
act more swiftly to daily economic develop-
ments, changes in long-term rates often
precede those in short-term rates, and thus
can be viewed as a leading indicator.
When long-term rates decline but short-
term rates do not, it may mean that econom-
ic growth is falling or that unemployment is
rising. In these circumstances, the Fed may
decide to lower interest rates to stimulate the
economy. Conversely, when long-term rates
have risen but short-term rates have not, the
Fed may raise interest rates.
Interest rates can be followed in various
financial publications, including the business
sections of many newspapers. The Federal
Reserve reduced the federal funds rate 13
times from 2001 to 2003. After the seven-
teenth straight 25-basis-point increase in
June 2006, the federal funds rate was 5.25%.
Following rate cuts on September 18 and
October 31, 2007, the federal funds rate
stood at 4.50%. The yield on the 10-year
note was 4.27% on November 8, 2007,
down from a high of 5.22% in July and
from 4.71% on December 31, 2006 — and
still low on an historical basis. Previous year-
end yields were 4.24% in 2004, 4.27% in
2003, 5.12% in 2000, and 6.43% in 1996.

Gross domestic product (GDP). Re-
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
ported quarterly by the US Department of
Commerce, GDP is the market value of all
goods and services produced by labor and
capital in the United States. As the broad-
est measure of aggregate economic activity,
it is an important macroeconomic indicator
for banks. Growth in the economy is mea-
sured by changes in inflation-adjusted (or
real) GDP.
When the economy is strong, businesses
want to borrow to fund expansion. Simi-
larly, when job markets are favorable and
consumer confidence is up, demand for
19
 consumer credit increases. Conversely, eco-
nomic slowdowns tend to reduce credit de-
mand. In addition, shortfalls in corporate
profits and personal income can hurt credit
quality.
In the early phases of an economic cycle,
increased business activity tends to stimulate
the financial markets, providing opportunities
for banks to increase their earnings. The
equation is not simple, however. Rapid
growth in the economy can eventually drive
up interest rates, as credit demand pushes up
the cost of credit. In addition, if the Federal
Reserve, which watches GDP closely, per-
ceives that the economy is overheating, it
will raise interest rates to restrain inflation.
Conversely, it will consider reducing rates if
inflation is slowing.
As the US economy rebounded from a re-
cession in 2001, real GDP growth was 3.1%
in 2003, 4.2% in 2004, and 3.2% in 2005.
As of mid-November 2007, Standard &
Poor’s was projecting real GDP growth of
2.1% in 2007 and 1.9% in 2008.
HOW TO ANALYZE A BANK
When evaluating a bank, an analyst
should consider both its profitability and
its financial condition. Taken alone, short-
term profit trends can be misleading. For
example, if a bank achieves loan growth by
engaging in excessively risky lending, it
may be vulnerable to developments that
would hurt its earnings or even threaten its
survival over time.
It is important to note that the accounting
systems of financial institutions are different
from those of most other corporations. To
judge a particular institution’s earnings and
financial security, an analyst must use several
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
measures. Such measures are most useful
when trends are examined over various peri-
ods and compared with data from similar
banks.
Every bank makes trade-offs between the
profitability level it is striving to achieve and
the risks it is willing to take. When banks of
similar size and business profile are com-
pared, a wide deviation from the norm on
any one indicator can signal possible prob-
lems or advantages. Before drawing conclu-
sions, however, it is important to pinpoint
the reasons for the deviation.
20
Profitability measures
◆ Return on assets (ROA). A comprehen-
sive measure of bank profitability is ROA —
a bank’s net income divided by its average
total assets during a given period. A trend of
rising ROA is generally positive, provided it
is not the result of excessive risk-taking.
Because banks are highly leveraged, they
tend to have low ROAs, relative to other in-
dustries. Historically, most banks have had
ROAs within a range of 0.60% to 1.50%.
Regional banks often have a higher-yielding
loan portfolio; because of this, over the long
term, they are more apt to have ROAs in the
upper part of the range.
In the three months ended June 30, 2007,
the industry’s average ROA, annualized, was
1.21%, down from 1.34% in the second
quarter of 2006, according to the Federal
Deposit Insurance Corp. (FDIC). For 2006,
the average ROA was 1.28%, down slightly
from 1.30% in 2005. In the second quarter
of 2007, average ROA was 1.33% for com-
mercial lenders, down from 1.39% in the
quarter a year earlier, and 1.79% for con-
sumer lenders, up from 1.40%.
◆ Return on equity (ROE). Another mea-
sure of profitability, usually considered in
conjunction with ROA, is return on equity. A
bank’s ROE is calculated by dividing net in-
come by average shareholders’ equity.
Because shareholders’ equity normally backs
only a small fraction (usually 5% to 10%)
of a bank’s assets, ROE is much larger than
ROA — typically, ranging from 10% to 25%.
In the second quarter of 2007, the industry’s
average ROE was 11.49%, compared with
12.97% a year earlier.
Banks that rely heavily on deposits and
borrowings to support assets, rather than on
stockholders’ equity, tend to have higher
ROEs. An unusually high ROE versus ROA
can indicate that the bank’s equity base is
too small compared with its debt; this high
leverage may limit its ability to borrow further.
◆ Yield on earning assets (YEA). Because
banks can achieve a given profit level in a
variety of ways, the components affecting net
income must be considered when evaluating
the quality of earnings. Interest-earning
assets — loans, short-term money market
investments, lease financings, and taxable
INCOME DATA — FDIC COMMERCIAL BANKS obtaining such deposits and other borrowed
(In billions of dollars) money significantly affects bank profits. COF
FULL YEAR FIRST HALF % CHANGE
is calculated by dividing the total interest
ITEM 2005 2006 2006 2007 FULL FIRST expense on the funds a bank uses to support
YEAR HALF
earning assets by the total average level of
Total interest income 434.5 547.9 260.4 300.4 26.1 15.4
Total interest expense 165.1 263.0 117.9 151.2 59.3 28.2 funds employed in that way.
Net interest income 269.4 284.9 142.4 149.1 5.8 4.7 COF varies with the general level of inter-
Provision for loan losses 26.6 25.4 11.0 17.7 (4.6) 61.6 est rates and is affected by the make-up of
Noninterest income 201.3 217.6 111.1 118.1 8.1 6.3 the bank’s liabilities. The greater the propor-
Noninterest expense 276.3 290.2 146.4 155.5 5.0 6.2
tion of a bank’s non–interest-bearing demand
Securities gains, net (0.2) (1.3) (0.8) 0.3 NM NM
Applicable income taxes 53.9 59.6 31.4 30.2 10.7 (3.8) accounts, low interest-rate savings accounts,
Extraordinary gains, net 0.2 2.6 0.4 (0.8) 998.3 NM and equity, the lower its COF will be. Conse-
Net income 114.0 128.6 64.5 63.3 12.8 (1.8) quently, retail-oriented banks that derive a
Net operating income 113.9 126.9 64.6 64.0 11.4 (1.0) higher proportion of their funds from con-
NM-Not meaningful. sumer deposit accounts tend to have lower
Source: Federal Deposit Insurance Corporation.
COFs than wholesale banks that purchase
most of their funds in the form of federal
and nontaxable investment securities — are fund borrowings, certificates of deposit that
the principal source of most banks’ interest have higher interest rates, and debt issuances.
income. According to the FDIC, the average US
The YEA is calculated by dividing interest commercial bank had a COF of 3.51% in
income on earning assets by the average the second quarter of 2007, compared with
value of these assets during the same peri- 3.12% in the second quarter of 2006, re-
od. Because some investment securities are flecting an overall increase in interest rates.
tax-exempt, the interest income side of the For full-year 2006, the average COF was
ratio usually is calculated on a tax-equivalent 3.14%, compared with 2.24% in 2005 — a
basis to account for the added value of non- 90-basis-point increase, which was larger
taxable income. (This is done by subtracting than the 72-basis-point increase of the aver-
the tax rate from 1.0, then dividing nontax- age YEA. This led to a general narrowing
able income by that figure.) of the average net interest spread and net
Because it reflects general interest-rate lev- interest margin.
els, the YEA can fluctuate considerably over
time. If a bank’s YEA is high relative to those ◆ Net interest margin (NIM). The NIM is
of other banks, it may indicate a high-risk calculated by dividing the tax-equivalent net
portfolio of earning assets, particularly high- interest income by average earning assets.
risk loans. If it is substantially lower than (Tax-equivalent net interest income is calcu-
those of other banks, it may indicate that the lated by subtracting interest expense from
bank’s portfolio has several “problem loans” tax-equivalent interest income.)
that are yielding less than they should. Alter- A NIM of less than 3% is generally con-
natively, it may simply show that the bank sidered low; more than 5% is very high. This
has overly conservative lending policies. range is only a rough guideline, however, be-
According to the FDIC, the average US cause NIM can vary with the particular busi-
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

commercial bank had a YEA of 6.85% in the
second quarter of 2007, up from 6.57% a
year earlier, reflecting an overall increase in
interest rates. For full-year 2006, the average
YEA was 6.45%, compared with 5.73% in
2005 — a 72-basis-point increase. Consumer
lenders earned the highest YEA (8.84%) in
2006, followed by commercial lenders (6.73%)
and mortgage lenders (5.82%).
◆ Cost of funding earning assets (COF).
The “raw material” that banks use to pro-
duce income is earning assets, and the cost of
ness mix of individual banks. The NIM tends
to be higher at small retail banks, credit card
banks, and consumer lenders than at large
wholesale banks, international banks, and
mortgage lenders.
A widening NIM is a sign of successful
management of assets and liabilities, while a
narrowing NIM indicates a profit squeeze.
According to the FDIC, the industry’s aver-
age NIM was 3.34% in the second quarter
of 2007, down from 3.46% a year earlier.
For full-year 2006, the average NIM was
3.31%, down from 3.49% in 2005.

21
 BALANCE SHEET — FDIC-INSURED COMMERCIAL BANKS
(In billions of dollars)

DEC. 31 JUN. 30 YR-TO-YR % CHANGE*

ITEM 2005 2006 2006 2007 DEC. JUN.
Total assets 9,039 10,091 9,605 10,411 11.6 8.4
Loans and leases
Real estate loans 2,987 3,432 3,170 3,504 14.9 10.5
Comm'l & industrial loans 1,020 1,139 1,089 1,221 11.7 12.1
Loans to individuals 837 858 827 875 2.5 5.8
Farm loans 51 54 53 55 5.1 5.5
Other loans & leases 488 500 522 509 2.3 (2.6)
LESS: Unearned income 3 2 2 3 (22.9) 30.3
Total loans & leases 5,380 5,981 5,659 6,161 11.2 8.9
LESS: Reserves for losses 69 69 69 72 0.6 4.1
Net loans & leases 5,311 5,912 5,590 6,089 11.3 8.9
Securities 1,572 1,666 1,649 1,633 5.9 (0.9)
Other real estate owned 3 5 4 6 45.0 47.3
Goodwill & other intangibles 303 358 346 379 18.3 9.8
All other assets 1,850 2,150 2,017 2,303 16.2 14.2
Total liabilities & capital 9,039 10,091 9,605 10,411 11.6 8.4
Noninterest-bearing deposits 1,204 1,217 1,191 1,184 1.1 (0.6)
Interest-bearing deposits 4,869 5,515 5,192 5,682 13.3 9.4
Other borrowed funds 1,540 1,711 1,680 1,850 11.1 10.1
Subordinated debt 122 150 133 161 22.5 21.5
All other liabilities 391 468 437 485 19.5 10.9
Equity capital 912 1,030 972 1,050 12.9 8.0
*Based on unrounded data.
Source: Federal Deposit Insurance Corporation.

◆ Provision for loan losses. The provision
for loan losses should be considered along
with the NIM when evaluating the quality
of a bank’s financial performance. The pro-
vision, which appears on the income statement,
is a quarterly charge taken against earnings;
the charge then goes into a cumulative re-
serve to cover possible loan losses. (The loss
reserve is a balance sheet item that is dis-
cussed later in this section under the heading
“Measures of financial condition.”)
The provision’s size as a percentage of
total loans reflects the success or failure
of the bank’s credit evaluation procedures
and the risk inherent in the bank’s loan port-
folio. Over the short term, risky, high-interest
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
raise the provision for loan losses; they gen-
erally keep it at high levels until well after an
economic recovery has begun.
Although Financial Accounting Standards
(FAS 5, “Accounting for Contingencies,” and
FAS 114, “Accounting by Creditors for Im-
pairment of a Loan”) govern loan loss provi-
sioning, a bank’s managers can exercise some
discretion in establishing the provision for
loan losses. Hence, this provision should be
examined in conjunction with the bank’s re-
serve for loan losses, charge-off experience,
and level of nonperforming loans, to see
whether management is making adequate
provisions or is simply using the charge to
manipulate reported earnings. According to

loans may boost a bank’s YEA and, hence,
its NIM. However, when a bank makes a
greater number of high-risk loans, it needs to
increase its provision for loan losses in the
long term.
For any given bank, the provision for loan
losses rises over time to reflect growing loan
portfolios and increases in the dollar level of
charge-offs; however, the provision for loan
losses can vary greatly from quarter to quar-
ter and from year to year. In recessionary
times, when corporate clients find it hard to
service their debts, bank managers usually
the FDIC, provisions for loan losses for com-
mercial banks totaled $11.4 billion in the
second quarter of 2007, up 75% from $6.5
billion a year earlier. For full-year 2006, loan
loss provisioning of $29.3 billion was down
slightly from $29.7 billion in 2005, reflecting
benign credit conditions.
◆ Noninterest income. Noninterest in-
come includes service charges on deposit ac-
counts, along with trust, mortgage banking,
insurance commissions, and other fees. Addi-
tionally, gains or losses from securities trans-

22
actions, once reported separately, have been
included under noninterest income since 1982.
The proportion of noninterest income to
total income has risen for a number of
banks. For most banks, noninterest income
now constitutes more than 30% of total rev-
enues (total interest income plus noninterest
income). In the second quarter of 2007, the
industry ratio was 43.4%, up from 42.1% a
year earlier. In general, large banks tend to
have a greater proportion of their total in-
come attributable to non–interest-bearing
sources than do smaller banks. This reflects
large banks’ involvement in currency and
bond trading, trust services, mortgage bank-
ing, capital markets activities, corporate fi-
nance, credit cards, and other fee-based
financial services.
◆ Noninterest expenses and the efficiency
ratio. Noninterest expenses represent all ex-
penses incurred in operations, including such
items as personnel and occupancy costs. To
calculate the efficiency ratio, add back fore-
closure and repossession expenses, amortiza-
tion of intangibles, and impairment of goodwill
to noninterest expenses; then divide that fig-
ure by total revenues (calculated by adding
tax equivalent net interest income and nonin-
terest income). A rough approximation can
be achieved by dividing noninterest expenses
by total revenues; however, it would be pru-
dent to check the expenses that normally are
added back to ensure that they are not un-
usually large in the period being evaluated. A
high or rising efficiency ratio can signal inef-
ficient operations, or it might reflect heavy
technology spending or restructuring charges.
The typical range is 55% to 65%.
The industry’s efficiency ratios — 56.5%
in the second quarter of 2007, and 56.0% in
the year-earlier period — have improved. For
full-year 2006, the average efficiency ratio
was 56.8%, compared with 57.2% in 2005,
reflecting cost-cutting efforts enacted at most
banks. Size and scale also play a major role
in efficiency ratios; in the second quarter of
2007, small banks (those with less than $100
million in assets) had a relatively high aver-
age efficiency ratio of 74.6%. Medium sized
banks (assets ranging from $100 million to
$1 billion) had average efficiency ratios of
64.2%, larger banks (assets of $1 billion to
$10 billion) had average efficiency ratios of
58.6%. The largest banks (assets greater
than $10 billion) had the best efficiency
ratios, averaging 54.9%.
In general, banks that gather many of their
funds from retail customers tend to have higher
ratios of noninterest expenses to income than
do those that purchase most of their funds.
This reflects the costs involved in maintaining
branches and servicing retail accounts.
Measures of financial condition
◆ Reserve for loan losses. To protect
themselves from possible default by loan cus-
tomers at some point in the future, banks are
required to maintain a reserve for loan loss-
es. This reserve appears on a bank’s balance
sheet as a contra account, or a net reduction,
to loans outstanding. It is a set-aside that is
built by the provision for loan losses (discussed
earlier) and reduced by net charge-offs (dis-
cussed later in this section). The reserve re-
flects management’s judgment regarding the
quality of its loan portfolio. For the outside
analyst, the value of this measure is that it
provides a way to judge the quality of the
loan portfolio and whether the bank’s officers
are adequately managing it. According to the
FDIC, total industry reserves amounted to
1.08% at June 30, 2007, slightly up from the
all-time low of 1.07% of total loans and
leases at December 31, 2006, but down from
1.10% at June 30, 2006, and from 1.15% at
year-end 2005.
The adequacy of a bank’s reserve for loan
losses should be judged in relation to the val-
ue of its problem loans and net charge-offs.
Ratios at the higher end of the range usually
indicate that a bank has a very high level of
problem loans, such as nonperforming com-
mercial real estate. However, if a bank has a
reserve considerably lower than banks of
similar size with comparable loan portfolios,
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
it may indicate a lack of management pru-
dence or a reluctance to reduce reported
earnings — which, in turn, could signal
another whole set of potential problems.
Over time (and assuming the volume of
loans outstanding remains steady), the provi-
sion for loan losses, which appears in the in-
come statement, must at least equal the level
of net charge-offs in order to maintain the
reserve for loan losses at a given proportion
of total loans. If the provision for loan losses
does not rise to compensate for higher net
charge-offs, management may be manipulat-
23
 ing reported earnings by running down the
reserve or the credit quality of the company’s
loan portfolio may be improving.
According to the FDIC, as of December
31, 2006, the industry had built a reserve for
loan losses totaling $81.2 billion, up from
$77.9 billion a year earlier. However, due to
loan growth in full-year 2006 and the first
half of 2007, reserves as a percentage of non-
current loans and leases declined in 2007
to 130.0% at June 30, down from 136.8%
at December 31, 2006, and from 155.0% at
December 31, 2005.
◆ Net charge-offs. Net charge-offs consist
of gross charge-offs netted against gross re-
coveries. Gross charge-offs represent impair-
ments in the value of loans and leases
deemed uncollectible by management. Gross
recoveries represent the value of amounts
collected in excess of the carrying value on
previously impaired loans and leases.
Net charge-offs are usually measured as a
percentage of average loans outstanding dur-
ing a given period. For banks, net charge-offs
typically range between 0.1% and 1.0% of
total loans. A high percentage of charge-offs
implies that a bank has a risky loan portfolio.
Charge-offs usually rise during a recession
and decline only after an economic recovery
is well underway. For instance, from a high
of 1.27% in 1992, net charge-offs declined
steadily until 1995, when they reached
0.49%. Since then, they generally trended
upward, reaching 0.97% in 2002, according
to the FDIC. Starting in 2003, the trend ap-
pears to have reversed direction once again.
Net charge-offs were 0.78%, 0.56%, 0.50%,
and 0.38% of average loans and leases in
2003, 2004, 2005, and 2006, respectively.
Net charge-offs in the second quarter of
2007 were 0.35%, down from 0.43% in the
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
year-earlier quarter.
◆ Nonperforming loans. Loans on which
income is no longer being accrued and repay-
ment has been rescheduled are considered
nonperforming. The level of nonperforming
loans is another indication of the quality of a
bank’s portfolio. The ratio of nonperforming
loans to total loans can range upward from
0.20%. When the ratio exceeds 3.00% — as
it has in past years, for banks with heavy
commercial real estate exposure — it can
cause concern. In addition to reducing the
24
flow of interest income, nonperforming loans
represent potential charge-offs if their quality
deteriorates further.
As the level of nonperforming loans rises,
charge-offs and the provision for loan losses
frequently rise as well. For a bank with a
very high level of nonperforming loans —
approaching 7.00% or more — the future
may be in doubt. According to the FDIC, the
industry’s level of nonperforming loans stood
at 0.90% at June 30, 2007, up from 0.70%
a year earlier — the lowest level recorded in
the 24 years that this data has been collected.
◆ Capital levels. The Federal Reserve Sys-
tem has established two basic measures of
capital adequacy with which bank holding
companies must comply: a risk-based mea-
sure and a leverage measure.
Risk-based standards consider differences
in risk profile among banks to account for
off–balance-sheet exposure and to encourage
banks to hold liquid assets. Assets and
off–balance-sheet items are assigned to broad
risk categories, each representing various
weightings. Capital ratios represent capital
as a percentage of total risk-weighted assets.
The minimum guideline for the ratio of to-
tal capital to risk-weighted assets is 8.0%.
At least half of total capital must consist of
Tier 1 capital: common equity and certain
preferred stock, less goodwill and other in-
tangible assets.
The Fed’s minimum leverage ratio guide-
lines for bank holding companies provide for
a 3.0% minimum ratio of Tier 1 capital to
average assets, less goodwill and certain in-
tangible assets. Bank holding companies
making acquisitions are expected to maintain
capital positions substantially above the min-
imum supervisory level.
To meet the regulatory requirement to be
classified as “well capitalized,” the financial
institution must have a leverage capital ratio
exceeding 5%, a Tier 1 risk-based capital ra-
tio exceeding 6%, and a total risk-based cap-
ital ratio exceeding 10%.
In general, the higher the percentage given
for either of these measures, the more con-
servative the bank. A high capital ratio also
indicates the ability to grow through either
internal means or acquisitions. Failure to
meet capital guidelines could subject a bank
to a variety of enforcement actions, including
the termination of deposit insurance by the
FDIC and restrictions on the bank’s business
by the FDIC or the Federal Reserve.
A bank that falls shy of minimum capital
requirements is considered by the FDIC to
be a “problem” institution. As of June 30,
2007, the FDIC’s problem-bank list had 61
institutions, with a total of $21.5 billion in
assets, out of a total of 8,615 commercial
and savings banks. This is up from the low
of 47, at September 30, 2006, and down
from the high of 136 in 2002. During the
first quarter of 2007, one FDIC-insured bank
failed; this was the first failure since June
2004, breaking a nearly three-year stretch in
which no FDIC-insured institutions failed.
◆ Debt leverage. Banks incur debt when
they invest in productive capacity — whether
expanding their facilities or borrowing mon-
ey to make additional loans for which they
do not have sufficient deposits.
The extent of a bank’s financial leverage
says something about its relative risk profile.
One measure of leverage is long-term debt
divided by the sum of equity and total debt.
For banks, a figure of 45% is generally the
upper limit. Banks with lower debt levels
have more room to borrow should the need
arise.
◆ Liquidity. A low debt level contributes
to a bank’s liquidity (its ability to raise funds
for lending and other purposes). One gauge
of liquidity is the proportion of loans out-
standing to total assets. A bank that is
“loaned up” has a high ratio of loans to
assets; 65% or more is considered high, or
illiquid.
In contrast, a liquid bank has a smaller
proportion of its assets in loans, and more in
short-term money market investments and
investment securities, both of which can be
quickly converted into funds and loaned out.
If a bank has a high proportion of such in-
vestments and a small proportion of loans, it
could indicate a lack of good business oppor-
tunities in the bank’s market.
◆ Derivatives. Derivatives are financial in-
struments, designed to transfer risk between
parties, with values derived from the level of
an underlying instrument, index, or interest
rate level, which can include equity or debt
securities, currencies, interest rates, com-
modities, and even things as abstract as
whether or not a company defaults on its
debt. Some derivative contracts are traded on
exchanges; other derivative contracts can be
directly negotiated between parties, and still
others can be arranged through a third party.
Banks generally use derivatives to hedge a
variety of risks, including interest rate changes.
As a result of such hedging, many banks
have become less interest rate–sensitive.
One type of derivative commonly used by
banks is an interest rate swap. A bank that
receives a fixed interest rate for a particular
asset may want to protect against future rate
changes, since a majority of a bank’s funding
is derived from floating rate sources. As a re-
sult, the bank will want to convert this fixed
interest rate into a floating rate. The bank
will find a party that may prefer to receive a
fixed rate instead of a floating rate over time
and enter into a swap agreement. The counter
party may be an investor holding a floating-
rate debt instrument. Such an investor may
decide to convert the current floating rate
into a fixed rate, thus locking in future inter-
est payments related to that investment. As a
result, the bank would receive payments
that change as interest rates change from
the counter party and make payments to
the counter party at the agreed upon fixed
rate. Of course, only the net difference be-
tween the payments would change hands
between the parties.
Derivatives pose inherent risks if they are
not used for hedging purposes, as there is the
chance that the bet will not go in the direc-
tion that one hopes. Most derivatives contain
counter-party credit risk, in which a counter
party may fail to fulfill an obligation speci-
fied by the derivative contract terms.
Credit exposure is assessed by the cost to
replace a contract at current market rates.
Many banks try to limit counter-party credit
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
risk in one or more ways. They can deal with
derivatives dealers that are national market
makers with strong credit ratings in their de-
rivatives activities. They can subject counter
parties to credit reviews and approvals simi-
lar to those used in making loans and other
extensions of credit. Finally, they can require
counter parties to provide cash collateral
when their unsecured loss positions exceed
certain negotiated limits. ■
25
 ANALYZING A HYPOTHETICAL BANK
Since analyzing a financial institution is quite
different from analyzing an industrial company,
let’s walk through a brief analysis of XYZ bank,
which has reported the fictitious financial results
shown in the tables below.
(a) Divide net operating income by total assets
to get ROA: 11/1100 = 1.00%.
Divide net income (minus preferred dividends)
by average common stockholders’ equity to get the
return on equity (ROE): 11/50 = 22%. By both mea-
sures, ROA and ROE, the bank is highly profitable.
(b) Divide total interest income by total earn-
ing assets to get the gross yield on earning as-
sets 60/995 = 6.03%.
(c) Divide total interest expense by total
earning assets to get the rate paid on funds:
40/995 = 4.02%.
(d) Divide net interest income by total
earning assets to get the net interest margin
(NIM): 20/995 = 2.01%.
(e) Provision for loan losses does not cover
net charge-offs. Consequently, the reserve
for loan losses is being run down. Assuming that
loans did not grow during the year, the reserve
as a percentage of total loans declined from
1.56% at 2005 year-end to 1.11% (14/900 = 1.56%,
versus 10/900 = 1.11%). Because the level of non-
performing loans is relatively high (45/900 =
5.00%) and net charge-offs as a percentage of
loans is relatively high (6/900 = 0.67%), the re-
serve should arguably be higher. This would have
required a higher provision, which would, in turn,
have reduced income.
(f) Long-term debt as a percentage of debt
plus equity is fairly high — 35/(35 + 50) = 41% —
suggesting that further borrowing could be
difficult.
(g) The ratio of loans to total assets
(900/1100 = 82%) is very high. The bank is
loaned up, and its liquidity is low.
(h) Tier I and total capital are calculated as
follows: Tier I = $50 stockholders’ equity/$1,095
in risk-adjusted assets ($5 cash is weighted at
0%, the rest at 100% for simplicity’s sake, total-
ing $1,095 in risk adjusted assets) = a Tier I ratio
of 4.57%, which is above the FDIC’s 1996 guide-
line of 4.00%. Total capital includes Tier I plus
$10 in the reserve for loan losses (up to 1.25% of
risk-adjusted assets) plus subordinated notes up
to 50% of Tier I capital (or $25 in this example).
Total risk-adjusted capital would equal
$85/$1,095, or 7.77%, which is below the 8.00%
1996 guideline. Some additional equity financing
in conjunction with an addition to the reserve
appears to be in order. ■

INCOME STATEMENT FOR XYZ BANK — 2006 RESERVE FOR LOAN LOSSES
(XYZ Bank - 2006)
Total interest income 60 (b)
Total interest expense -40 (c) Balance, beginning of year 14 (e)
Net interest income 20 (d) Provision for loan losses 2
Provision for loan losses -2 (e) Charge-offs -8
Noninterest income 2 Recoveries 2
Noninterest expense -4 Net charge-offs -6 (e)
Pretax income 16 Balance, at end of year 10 (e)
Income taxes -5 Nonperforming loans 45 (e)
Net operating income 11 (a)
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

BALANCE SHEET FOR XYZ BANK

(Year ended December 31, 2006*)

Assets Liabilities
Cash 5 (h)
Temporary investments 20 Deposits 775
Investment securities 75 (b)(c)(d) Short-term borrowings 240
Loans 900 (e)(g) Long-term debt 35 (f)
Total earnings assets 995 (b)(c)(d)
Reserve for loan losses -10 (e)(h) Total liabilities 1,050
Building and equipment 110 Stockholders' equity 50 (a)(f)(h)
Total assets 1,100 (a)(g)(h) Total liabilities & stockholders' equity 1,100
*For simplicity's sake, year-end and average figures are assumed to be the same.

26
G LOSSARY
Asset-sensitive — A financial institution is said to be
asset-sensitive if its net interest margin will widen
during a period of rising interest rates and narrow
when rates fall.
Basis point — One-hundredth of one percent (0.01%);
the unit generally used to measure movements in in-
terest rates or investment returns.
Capital — For commercial banks, capital is the sum of
equity capital and loan loss reserves. Under certain
conditions, regulators allow some categories of sub-
ordinated debt to be included as capital.
Commercial paper — Short-term promissory notes is-
sued by companies and sold to investors, mainly
other companies. Commercial paper provides cor-
porations with a way to borrow among themselves,
bypassing the banking network.
Core deposits — The total of a bank’s demand deposits
(checking accounts), consumer time deposits (sav-
ings certificates and regular passbook savings ac-
counts), and negotiable order of withdrawal (NOW)
accounts.
Cross-border outstandings — Loans, acceptances, and
deposits made to a foreign country in a currency
other than that country’s local currency.
Discount rate — Interest rate at which an eligible de-
pository institution may borrow funds, typically for a
short period, directly from a Federal Reserve Bank.
Earning assets — Interest-bearing financial instru-
ments, comprising: commercial, real estate, and con-
sumer loans; investment and trading account
securities; money-market investments; lease finance
receivables; and time deposits in foreign banks.
Federal funds — Funds, including those in excess of
bank reserve requirements, that are deposited by
commercial banks at Federal Reserve banks. Com-
mercial banks may lend federal funds to each other
on an overnight basis at the federal funds rate.
Federal funds rate — The interest rate charged by
banks that loan their excess reserves in a Federal
Reserve district bank to other banks that need
overnight loans to meet reserve requirements.
Float — The portion of gross checking account (de-
mand deposit) balances that is in the process of be-
ing collected.
Gap — The difference between a financial institution’s
liabilities and its assets as both items mature over
time. If more liabilities than assets mature or are
repriced, the bank is liability-sensitive (has a nega-
tive gap). If more assets mature than liabilities, the
bank is asset-sensitive (has a positive gap). In a peri-
od of falling interest rates, a bank with a negative
gap will see net interest margins widen; conversely,
a bank with a positive gap will benefit during a peri-
od of rising rates.
Hedging — A strategy used to offset financial risk. A
bank looking to minimize its exposure to interest rate
or currency risk, for example, would buy or sell fu-
tures or options contracts. A perfect hedge is one
that eliminates the possibility of future gain or loss.
Interest rate sensitivity — The degree to which an as-
set is subject to fluctuations in interest rates. The
term is typically used with respect to interest-earning
assets or interest-bearing liabilities whose interest
rates are adjustable within a short period (less than
one year), according to maturity or contractual
terms. Rate adjustments usually reflect changes in
prevailing short-term money rates.
Liability-sensitive — A financial institution is said to be
liability-sensitive if its net interest margin will narrow
during a period of rising interest rates and widen
when rates fall.
Margin — Net interest income divided by average
earning assets.
Negotiable certificates of deposit — Marketable re-
ceipts for funds deposited in a bank at interest for a
specified period, usually between 30 and 90 days;
sold in denominations of $100,000 or more.
Negotiable order of withdrawal (NOW) accounts —
Interest-bearing checking accounts written on time
deposits. Technically, 30 to 90 days’ notice is re-
quired before these funds can be withdrawn; but in
practice, prior notice is not needed, and the nego-
tiable order of withdrawal works like a check.
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
Net charge-offs — The collective amount of loans that
are no longer likely to be collected and are written
off as bad debt expense, minus recoveries of pay-
ments previously charged off.
Net interest income — Total interest revenues minus
total interest expenses; considered to be a bank’s in-
terest revenues for the purposes of calculating total
revenues.
27
 Net interest spread — The difference between the av-
erage rate a bank receives from its earning assets
and the average rate it pays for deposits and bor-
rowed funds; a measure of the profitability of a
bank’s lending business.
Trading account securities — Bank bond inventories.
These securities, held primarily with the expectation
that they will generate capital gains, are valued on
bank balance sheets at cost or at market value,
whichever is lower.

Nonaccrual (cash-basis) loans — Loans or other assets

whose income is recognized when cash is actually
collected. In some situations, cash receipts from
these assets are credited directly to principal. This
method of accounting differs from the standard prac-
tice of accruing rights to that income, where banks
reasonably expect to continue accruing principal
and interest payments.

Nonperforming assets — A bank’s total nonaccrual

loans, renegotiated-rate loans, and other real estate
owned, from which principal and interest payments
are not being received according to the original
agreements.

Other real estate owned (OREO) — Foreclosed proper-

ties of real estate investments acquired in lieu of
loan indebtedness.

Prime rate — The base rate that banks use in pricing

commercial loans to their most creditworthy cus-
tomers. This key rate is determined by the Federal
Reserve’s prevailing interest rates for short-term
borrowing.

Renegotiated-rate loan — A loan for which the interest

rate or repayment terms have been revised due to
credit deterioration.

Reserve for loan losses — A reserve fund composed of

accumulated earnings that a bank sets aside to pro-
tect its loan portfolio from potential losses on loans.
It is distinct from the deposits with the Federal
Reserve Bank that are mandated to satisfy reserve
requirements.

Risk-based capital — A regulatory measurement of a

bank’s capital adequacy. Guidelines set forth how
capital is measured and how assets, including off-
balance-sheet items, are risk-adjusted to reflect the
level of credit risk they entail.

Taxable equivalent income — Income from tax-exempt

securities and certain other tax-exempt assets that,
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

for purposes of comparison, is increased by the

amount of tax that would have been paid if it were
taxable at statutory rates.

Tier 1 capital — Common equity, less goodwill and oth-

er intangible assets, plus noncumulative perpetual
preferred stock and cumulative preferred stock.

Total revenues — The sum of net interest income and

noninterest income.

28
I NDUSTRY R EFERENCES
PERIODICALS
ABA Banking Journal
Simmons-Boardman Publishing Corp.
345 Hudson St., New York, NY 10014
(212) 620-7210
Web site: http://www.ababj.com
Monthly journal of the American Bankers Association;
focuses on regulatory developments and compliance
issues.
American Banker
Thomson Media
One State St. Plaza, 27th Fl., New York, NY 10004
(212) 803-8200
Web site: http://www.americanbanker.com
Daily newspaper reporting on a broad range of legisla-
tive, product, and financial developments affecting de-
pository institutions.
Federal Reserve Bulletin
Board of Governors of the Federal Reserve System
20th St. and Constitution Ave. NW
Washington, DC 20551
(202) 452-3000
Web site:
http://www.federalreserve.gov/publications.htm
Monthly bulletin with data and articles covering bank-
ing and economic developments.
Quarterly Banking Profile
Federal Deposit Insurance Corp.
Public Information Center, Room 100
550 17th St. NW, Washington, DC 20429
(202) 898-7192
Web site: http://www2.fdic.gov/qbp/index.asp
Quarterly bulletin with earnings and balance-sheet data
for FDIC-insured institutions.
REGULATORY AND OTHER FEDERAL AGENCIES
Federal Deposit Insurance Corp. (FDIC)
550 17th St. NW, Washington, DC 20429
(202) 898-7192
Web site: http://www.fdic.gov
Independent deposit insurance agency created by Con-
gress to maintain stability and public confidence in the
US banking system by identifying, monitoring, and ad-
dressing risks to insured depository institutions.
Federal Reserve System, Board of Governors
20th St. and Constitution Ave. NW
Washington, DC 20551
(202) 452-3000
Web site: http://www.federalreserve.gov
Founded by Congress in 1913, the Federal Reserve Sys-
tem supervises and regulates banks; maintains the sta-
bility of the financial system; conducts US monetary
policy by influencing money and credit conditions; and
provides certain financial services to the US govern-
ment, the public, financial institutions, and foreign offi-
cial institutions.
US Department of Justice (DOJ)
Antitrust Division
950 Pennsylvania Ave. NW, Washington, DC 20530
(202) 514-2401
Web site: http://www.usdoj.gov/atr/index.html
As enforcer of antitrust rules, the DOJ reviews bank
mergers for compliance with the Clayton Act, which
prohibits mergers or acquisitions that are likely to re-
duce competition.
TRADE ASSOCIATIONS
American Bankers Association
1120 Connecticut Ave. NW, Washington, DC 20036
(800) 226-5377
Web site: http://www.aba.com
Largest banking trade association; represents all cate-
gories of banking institutions, including community, re-
gional, and money center banks.
American Bankruptcy Institute
44 Canal Center Plaza, Ste. 404, Alexandria, VA 22314
(703) 739-0800
Web site: http://www.abiworld.org
A multidisciplinary, nonpartisan organization founded in
1982 to provide Congress and the public with analysis
of bankruptcy issues. Membership includes 7,500 attor-
neys, auctioneers, bankers, judges, professors, turn-
around specialists, accountants, and other bankruptcy
professionals.
America’s Community Bankers
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
900 19th St. NW, Ste. 400, Washington, DC 20006
(202) 857-3100
Web site: http://www.acbankers.org
National trade association for community banks; spon-
sors conferences, meetings, and education programs,
and maintains research resources.
29
 Mortgage Bankers Association
1919 Pennsylvania Ave. NW, Washington, DC 20006
(202) 557-2700
Web site: http://www.mortgagebankers.org
A national association representing the real estate fi-
nance industry. Over 3,000 member companies include
mortgage companies, mortgage brokers, commercial
banks, thrifts, life insurance companies, and others in
the mortgage lending field. The Web site provides data
and forecasts related to the mortgage industry.

MARKET RESEARCH FIRMS

Highline Data
One Alewife Center, Ste. 460, Cambridge, MA 02140
(877) 299-9424; (617) 441-5976
Web site: http://www.highlinedata.com
A financial information and research firm that collects,
standardizes, and disseminates corporate, financial,
market, and merger and acquisition data, plus news on
banking and other industries.

Sheshunoff Information Services

807 Las Cimas Pkwy., Ste. 300, Austin, TX 78746
(800) 456-2340; (512) 472-2244
Web site: http://www.sheshunoff.com
A market research firm offering financial data and
analysis to banks, credit unions, corporations, and ac-
counting and consulting firms.

SNL Financial
One SNL Plaza, PO Box 2124, Charlottesville, VA 22902
(434) 977-1600
Web site: http://www.snl.com
A financial information and research firm that collects,
standardizes, and disseminates corporate, financial,
market, and merger and acquisition data, plus news
and analytics on banking and other industries.
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

30
D EFINITIONS FOR C OMPARATIVE C OMPANY A NALYSIS TABLES
Operating revenues
The sum of net interest income, taxable equivalent adjust-
ment, and noninterest income. Net interest income is in-
terest and dividend income, minus interest expense. Tax-
able equivalent adjustment is the increase to render in-
come from tax-exempt loans and securities comparable to
fully taxed income. Noninterest income includes service
fees and trading and other income; it excludes gains/loss-
es on securities transactions.
Net income
The final profit before dividends (common and preferred)
from all sources, after deduction of expenses, taxes, and
fixed charges, but before any discontinued operations or
extraordinary items.
Net interest margin
A percentage computed by dividing net interest income, on
a taxable equivalent basis, by average earning assets. Used
as an analytical tool to measure profit margins from provid-
ing credit services.
Return on assets
Net income divided by average total assets. Used in
industry comparisons and as a measure of asset-use
efficiency.
Return on equity
Net income, less preferred dividend requirements,
divided by average common shareholder‘s equity.
Generally used to measure performance and to make
industry comparisons.
Total assets
Includes interest-earning financial instruments — princi-
pally commercial, real estate, and consumer loans and
leases; investment securities/trading accounts; cash/mon-
ey market investments; and other owned assets.
Total loans
All domestic and foreign loans (excluding leases), minus
unearned discount and reserve for possible losses. Gen-
erally considered a bank’s principal asset.
Total deposits
The sum of demand (payable at any time upon demand of
depositor) and time (not payable within 30 days) deposits.
Equity/assets
Average common equity divided by average total assets. It
is a measure of capital adequacy.
Loans/deposits
Proportion of loans funded by deposits. It is a measure of liq-
uidity and an indication of a bank’s ability to write more loans.
Loan loss reserves
Expressed as a percentage of total loans, this is a contra-
account to loan assets. Built through provisions for loan
losses, it serves as a cushion for possible future loan
charge-offs.
Price/earnings ratio
The ratio of market price to earnings, obtained by
dividing the stock’s high and low market price for the
year by earnings per share (before extraordinary items).
It essentially indicates the value investors place on a
company’s earnings.
Dividend payout ratio
The percentage of earnings paid out in dividends. It is
calculated by dividing the annual dividend by the
earnings. Dividends are generally total cash payments
per share over a 12-month period. Although payments are
usually calculated from the ex-dividend dates, they may
also be reported on a declared basis where this has been
established to be a company’s payout policy.
Dividend yield
Total cash dividend payments, divided by the year’s high
and low market prices for the stock.
Earnings per share
The amount a company reports as having been earned
for the year (based on generally accepted accounting
standards), divided by the number of shares outstanding.
Amounts reported in Industry Surveys exclude
extraordinary items.
Tangible book value per share
The theoretical dollar amount per common share one
might expect to receive should liquidation take place.
Generally, book value is determined by adding the stated
(or par) value of the common stock, paid-in capital, and
retained earnings, then subtracting intangible assets,
preferred stock at liquidating value, and unamortized debt
discount. This amount is divided by the number of
outstanding shares to get book value per common share.
Share price
This shows the calendar-year high and low of a stock’s
market price.
In addition to the footnotes that appear at the bottom of
each page, you will notice some or all of the following:
NA—Not available.
NM—Not meaningful.
NR—Not reported.
AF—Annual figure. Data are presented on an annual
basis.
DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY
CF—Combined figure. In this case, data are not available
because one or more components are combined with
other items.
31
32 DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

C OMPARATIVE C OMPANY A NALYSIS — B ANKING

Operating Revenues
Million $ Compound Growth Rate (%) Index Basis (2001 = 100)
Ticker Company Yr. End 2006 2005 2004 2003 2002 2001 5-Yr. 1-Yr. 2006 2005 2004 2003 2002
DIVERSIFIED BANKS‡
CMA * COMERICA INC DEC 2,838.0 2,898.0 2,667.0 2,813.0 2,946.0 2,754.0 0.6 -2.1 103 105 97 102 107
USB * U S BANCORP DEC 13,554.0 13,046.0 12,475.7 12,456.1 12,384.2 10,821.8 4.6 3.9 125 121 115 115 114
WB * WACHOVIA CORP DEC 29,615.0 25,608.0 22,296.0 19,558.0 17,441.0 13,965.0 16.2 15.6 212 183 160 140 125
WFC * WELLS FARGO & CO DEC 35,667.0 32,938.0 29,885.0 28,389.0 25,249.0 20,150.0 12.1 8.3 177 163 148 141 125
REGIONAL BANKS‡
ASBC † ASSOCIATED BANC-CORP DEC 965.0 963.3 762.9 757.2 721.6 617.6 9.3 0.2 156 156 124 123 117
BOH † BANK OF HAWAII CORP DEC 618.8 615.2 593.5 542.8 554.2 807.5 -5.2 0.6 77 76 73 67 69
BBT * BB&T CORP DEC 6,211.0 5,858.3 5,462.0 4,496.5 4,400.7 3,614.2 11.4 6.0 172 162 151 124 122
CYN † CITY NATIONAL CORP DEC 848.5 820.6 730.2 691.8 660.1 566.5 8.4 3.4 150 145 129 122 117
CNB † COLONIAL BANCGROUP DEC 944.5 871.5 711.0 633.8 562.6 512.6 13.0 8.4 184 170 139 124 110

CBH * COMMERCE BANCORP INC/NJ DEC 1,865.7 1,596.4 1,391.6 1,088.3 830.2 598.1 25.5 16.9 312 267 233 182 139
CFR † CULLEN/FROST BANKERS INC DEC 709.9 621.6 556.5 529.1 514.7 489.2 7.7 14.2 145 127 114 108 105
EWBC § EAST WEST BANCORP INC DEC 401.8 309.8 231.0 176.1 142.7 120.9 27.1 29.7 332 256 191 146 118
FITB * FIFTH THIRD BANCORP DEC 4,977.0 5,458.0 5,152.0 5,368.3 4,894.4 3,882.0 5.1 -8.8 128 141 133 138 126
FBP § FIRST BANCORP P R DEC 475.0 406.6 457.1 410.9 325.3 289.0 10.4 16.8 164 141 158 142 113

FHN * FIRST HORIZON NATIONAL CORP DEC 2,141.9 2,383.8 2,219.5 2,445.8 2,293.6 1,945.9 1.9 -10.1 110 123 114 126 118
FMER † FIRSTMERIT CORP DEC 535.5 539.5 525.1 603.8 608.0 573.9 -1.4 -0.7 93 94 91 105 106
HBAN * HUNTINGTON BANCSHARES DEC 1,566.5 1,594.7 1,731.1 1,909.6 2,042.3 1,405.7 2.2 -1.8 111 113 123 136 145
KEY * KEYCORP DEC 4,942.0 4,868.0 4,328.0 4,485.0 4,518.0 4,378.0 2.5 1.5 113 111 99 102 103
MTB * M & T BANK CORP DEC 2,858.4 2,744.1 2,652.5 2,369.5 1,759.5 1,627.7 11.9 4.2 176 169 163 146 108

MI * MARSHALL & ILSLEY CORP DEC 3,405.7 2,981.5 2,578.5 2,216.4 2,089.0 1,752.4 14.2 14.2 194 170 147 126 119
NCC * NATIONAL CITY CORP DEC 8,622.6 7,929.1 8,966.6 7,923.9 6,817.4 6,046.6 7.4 8.7 143 131 148 131 113
PNC * PNC FINANCIAL SVCS GROUP INC DEC 8,481.0 6,316.0 5,514.0 5,158.0 5,394.0 4,614.0 12.9 34.3 184 137 120 112 117
RF * REGIONS FINANCIAL CORP DEC 5,320.4 4,478.3 3,650.6 2,852.8 2,751.3 2,384.1 17.4 18.8 223 188 153 120 115
TSFG § SOUTH FINANCIAL GROUP INC DEC 532.6 455.6 456.2 365.1 267.6 239.3 17.4 16.9 223 190 191 153 112

STI * SUNTRUST BANKS INC DEC 8,117.2 7,635.4 6,261.2 5,623.3 5,563.2 5,304.4 8.9 6.3 153 144 118 106 105
SIVB † SVB FINANCIAL GROUP DEC 473.4 416.8 335.3 200.9 262.6 333.8 7.2 13.6 142 125 100 60 79
SNV * SYNOVUS FINANCIAL CORP DEC 3,267.5 2,887.3 2,381.7 2,132.4 1,952.3 1,567.5 15.8 13.2 208 184 152 136 125
TCB † TCF FINANCIAL CORP DEC 1,027.0 996.0 982.4 900.4 918.1 852.7 3.8 3.1 120 117 115 106 108
WBS † WEBSTER FINANCIAL CORP DEC 676.1 729.8 641.4 644.5 589.3 525.9 5.2 -7.4 129 139 122 123 112

WTNY § WHITNEY HOLDING CORP DEC 546.7 464.4 401.0 384.1 380.4 364.8 8.4 17.7 150 127 110 105 104
WL † WILMINGTON TRUST CORP DEC 636.9 642.2 581.1 541.3 535.1 486.8 5.5 -0.8 131 132 119 111 110
ZION * ZIONS BANCORPORATION DEC 2,288.2 1,796.3 1,591.8 1,481.2 1,403.7 1,359.7 11.0 27.4 168 132 117 109 103
OTHER COMPANIES WITH SIGNIFICANT COMMERCIAL BANKING OPERATIONS
BAC * BANK OF AMERICA CORP DEC 71,775.0 56,763.0 50,114.0 38,827.0 34,996.0 33,808.0 16.2 26.4 212 168 148 115 104
BK * BANK OF NEW YORK MELLON CORP DEC 6,715.0 6,865.0 6,298.0 5,441.0 4,808.0 5,221.0 5.2 -2.2 129 131 121 104 92
CATY † CATHAY GENERAL BANCORP DEC 300.7 262.9 231.1 150.1 120.3 108.0 22.7 14.4 279 243 214 139 111
C * CITIGROUP INC DEC 89,615.0 83,642.0 86,190.0 77,442.0 71,308.0 80,057.0 2.3 7.1 112 104 108 97 89
EWBC § EAST WEST BANCORP INC DEC 401.8 309.8 231.0 176.1 142.7 120.9 27.1 29.7 332 256 191 146 118

JPM * JPMORGAN CHASE & CO DEC 61,132.0 51,247.0 38,032.0 33,156.0 27,104.0 26,527.0 18.2 19.3 230 193 143 125 102
MEL MELLON FINANCIAL CORP DEC 5,304.0 4,769.0 4,496.0 4,184.0 4,291.0 3,170.0 10.8 11.2 167 150 142 132 135
NTRS * NORTHERN TRUST CORP DEC 2,996.1 2,605.4 2,255.0 2,090.4 2,138.6 2,175.3 6.6 15.0 138 120 104 96 98
STT * STATE STREET CORP DEC 6,311.0 5,473.0 4,850.0 4,328.0 4,400.0 3,807.0 10.6 15.3 166 144 127 114 116
UCBH § UCBH HOLDINGS INC DEC 307.0 265.9 238.4 191.8 130.3 105.4 23.9 15.5 291 252 226 182 124
Note: Data as originally reported. ‡ S&P 1500 Index group. * Company included in the S&P 500. † Company included in the S&P MidCap. § Company included in the S&P SmallCap. # Of the following calendar year. ** Not calculated; data for base year or end year not available.
A - This year's data reflect an acquisition or merger. B - This year's data reflect a major merger resulting in the formation of a new company. C - This year's data reflect an accounting change. D - Data exclude discontinued operations. E - Includes excise taxes. F - Includes
other (nonoperating) income. G - Includes sale of leased depts. H - Some or all data are not available, due to a fiscal year change.
 Net Income

Million $ Compound Growth Rate (%) Index Basis (1996 = 100)

Ticker Company Yr. End 2006 2005 2004 2003 2002 2001 1996 10-Yr. 5-Yr. 1-Yr. 2006 2005 2004 2003 2002
DIVERSIFIED BANKS‡
CMA * COMERICA INC DEC 782.0 861.0 757.0 661.0 601.0 709.6 417.2 6.5 2.0 (9.2) 187 206 181 158 144
USB * U S BANCORP DEC 4,751.0 4,489.0 4,166.8 3,710.1 3,326.4 1,706.5 158.4 40.5 22.7 5.8 3,000 2,835 2,631 2,343 2,101
WB * WACHOVIA CORP DEC 7,745.0 6,429.0 5,214.0 4,247.0 3,579.0 1,619.0 1,499.0 17.8 36.8 20.5 517 429 348 283 239
WFC * WELLS FARGO & CO DEC 8,482.0 7,671.0 7,014.0 6,202.0 5,710.0 3,423.0 1,153.9 22.1 19.9 10.6 735 665 608 537 495
REGIONAL BANKS‡
ASBC † ASSOCIATED BANC-CORP DEC 316.6 320.2 258.3 228.7 210.7 179.5 57.2 18.7 12.0 (1.1) 553 559 451 399 368
BOH † BANK OF HAWAII CORP DEC 180.4 181.6 173.3 135.2 121.2 117.8 133.1 3.1 8.9 (0.7) 135 136 130 102 91
BBT * BB&T CORP DEC 1,528.0 1,653.8 1,558.4 1,064.9 1,293.2 973.6 283.7 18.3 9.4 (7.6) 539 583 549 375 456
CYN † CITY NATIONAL CORP DEC 233.5 234.7 206.3 186.7 183.1 146.2 66.6 13.4 9.8 (0.5) 351 353 310 280 275
CNB † COLONIAL BANCGROUP DEC 265.8 228.5 172.9 149.9 140.9 122.7 53.6 17.4 16.7 16.3 496 426 322 280 263

CBH * COMMERCE BANCORP INC/NJ DEC 299.3 282.9 273.4 194.3 144.8 103.0 26.6 27.4 23.8 5.8 1,124 1,063 1,027 730 544
CFR † CULLEN/FROST BANKERS INC DEC 193.6 165.4 141.3 130.5 122.2 77.9 55.0 13.4 20.0 17.0 352 301 257 237 222
EWBC § EAST WEST BANCORP INC DEC 143.4 108.4 78.0 59.0 48.7 38.9 NA NA 29.8 32.3 ** ** ** ** NA
FITB * FIFTH THIRD BANCORP DEC 1,184.0 1,549.0 1,525.0 1,721.6 1,634.7 1,100.6 335.1 13.5 1.5 (23.6) 353 462 455 514 488
FBP § FIRST BANCORP P R DEC 84.6 114.6 177.3 152.3 108.0 87.0 37.6 8.4 (0.6) (26.2) 225 305 471 405 287

FHN * FIRST HORIZON NATIONAL CORP DEC 250.8 441.1 454.4 473.3 376.5 329.6 179.9 3.4 (5.3) (43.1) 139 245 253 263 209
FMER † FIRSTMERIT CORP DEC 94.9 130.5 103.2 121.7 154.4 122.6 70.9 3.0 (5.0) (27.2) 134 184 145 171 218
HBAN * HUNTINGTON BANCSHARES DEC 461.2 412.1 398.9 385.7 323.7 178.5 262.1 5.8 20.9 11.9 176 157 152 147 124
KEY * KEYCORP DEC 1,193.0 1,129.0 954.0 903.0 976.0 157.0 783.0 4.3 50.0 5.7 152 144 122 115 125
MTB * M & T BANK CORP DEC 839.2 782.2 722.5 573.9 485.1 378.1 151.1 18.7 17.3 7.3 555 518 478 380 321

MI * MARSHALL & ILSLEY CORP DEC 807.8 727.5 627.1 544.1 480.3 337.9 203.4 14.8 19.0 11.0 397 358 308 267 236
NCC * NATIONAL CITY CORP DEC 2,299.8 1,985.2 2,779.9 2,117.1 1,593.6 1,388.1 736.6 12.1 10.6 15.8 312 270 377 287 216
PNC * PNC FINANCIAL SVCS GROUP INC DEC 2,595.0 1,325.0 1,197.0 1,029.0 1,200.0 377.0 992.0 10.1 47.1 95.8 262 134 121 104 121
RF * REGIONS FINANCIAL CORP DEC 1,353.1 1,000.5 823.8 651.8 619.9 508.9 229.7 19.4 21.6 35.2 589 436 359 284 270
TSFG § SOUTH FINANCIAL GROUP INC DEC 112.9 70.2 120.0 95.1 60.6 43.6 10.5 26.8 21.0 60.7 1,078 670 1,146 908 578

STI * SUNTRUST BANKS INC DEC 2,117.5 1,987.2 1,572.9 1,332.3 1,331.8 1,369.2 616.6 13.1 9.1 6.6 343 322 255 216 216
SIVB † SVB FINANCIAL GROUP DEC 89.2 92.5 63.9 12.0 53.4 88.2 21.5 15.3 0.2 (3.6) 416 431 298 56 249
SNV * SYNOVUS FINANCIAL CORP DEC 616.9 516.4 437.0 388.9 365.3 311.6 139.6 16.0 14.6 19.5 442 370 313 279 262
TCB † TCF FINANCIAL CORP DEC 244.9 265.1 255.0 215.9 232.9 207.3 85.7 11.1 3.4 (7.6) 286 310 298 252 272
WBS † WEBSTER FINANCIAL CORP DEC 133.8 185.9 153.8 163.2 160.0 136.8 25.6 18.0 (0.4) (28.0) 522 726 601 637 625

WTNY § WHITNEY HOLDING CORP DEC 144.6 102.3 97.1 98.5 95.3 75.8 40.6 13.5 13.8 41.3 356 252 239 243 235
WL † WILMINGTON TRUST CORP DEC 143.8 173.0 141.9 134.4 133.2 124.0 97.3 4.0 3.0 (16.9) 148 178 146 138 137
ZION * ZIONS BANCORPORATION DEC 583.1 480.1 406.0 339.6 317.1 290.2 101.3 19.1 15.0 21.5 575 474 401 335 313
OTHER COMPANIES WITH SIGNIFICANT COMMERCIAL BANKING OPERATIONS
BAC * BANK OF AMERICA CORP DEC 21,133.0 16,465.0 14,143.0 10,810.0 9,249.0 6,792.0 2,375.0 24.4 25.5 28.4 890 693 595 455 389
BK * BANK OF NEW YORK MELLON CORP DEC 1,476.0 1,571.0 1,440.0 1,157.0 902.0 1,343.0 1,020.0 3.8 1.9 (6.0) 145 154 141 113 88
CATY † CATHAY GENERAL BANCORP DEC 117.6 104.1 86.8 55.6 48.7 42.6 13.3 24.3 22.5 12.9 883 782 652 417 366
C * CITIGROUP INC DEC 21,249.0 19,806.0 17,046.0 17,853.0 13,448.0 14,284.0 2,300.0 24.9 8.3 7.3 924 861 741 776 585
EWBC § EAST WEST BANCORP INC DEC 143.4 108.4 78.0 59.0 48.7 38.9 NA NA 29.8 32.3 ** ** ** ** NA

JPM * JPMORGAN CHASE & CO DEC 13,649.0 8,483.0 4,466.0 6,719.0 1,663.0 1,719.0 2,461.0 18.7 51.3 60.9 555 345 181 273 68
MEL MELLON FINANCIAL CORP DEC 932.0 912.0 800.0 677.0 667.0 436.0 733.0 2.4 16.4 2.2 127 124 109 92 91
NTRS * NORTHERN TRUST CORP DEC 665.4 584.4 504.8 423.3 447.1 487.5 258.8 9.9 6.4 13.9 257 226 195 164 173
STT * STATE STREET CORP DEC 1,096.0 945.0 798.0 722.0 1,015.0 628.0 293.0 14.1 11.8 16.0 374 323 272 246 346
UCBH § UCBH HOLDINGS INC DEC 100.9 97.8 85.6 64.6 38.9 30.5 NA NA 27.0 3.1 ** ** ** ** NA
Note: Data as originally reported. ‡S&P 1500 Index group. Regional Banks includes only those companies in the Regional Banks group of the S&P 1500 with operating revenues greater than $400 million. *Company included in the Standard & Poor's 500 Index. †Company included in
the Standard & Poor's MidCap Index. §Company included in the Standard & Poor's SmallCap Index. NA-Not available. # Of the following calendar year. ** Not calculated; data for base year or end year not available.
33

DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

34 DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

Net Interest Margin (%) Return on Assets (%) Return on Equity (%)

Ticker Company Yr. End 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
DIVERSIFIED BANKS‡
CMA * COMERICA INC DEC 3.8 4.1 3.9 4.0 4.6 1.4 1.6 1.5 1.2 1.2 15.3 16.9 14.8 13.1 12.3
USB * U S BANCORP DEC 3.7 4.0 4.3 4.5 4.6 2.2 2.2 2.2 2.0 1.9 23.3 22.7 21.5 19.9 19.2
WB * WACHOVIA CORP DEC 3.1 3.2 3.4 3.7 3.9 1.3 1.3 1.2 1.1 1.1 13.2 13.6 13.1 13.2 11.8
WFC * WELLS FARGO & CO DEC 4.8 4.9 4.9 5.1 5.5 1.8 1.7 1.7 1.7 1.7 19.6 19.5 19.4 19.1 19.9
REGIONAL BANKS‡
ASBC † ASSOCIATED BANC-CORP DEC 3.6 3.6 3.8 3.8 4.0 1.5 1.5 1.4 1.5 1.5 13.9 14.7 15.3 17.5 18.0
BOH † BANK OF HAWAII CORP DEC 4.3 4.4 4.3 4.2 4.0 1.7 1.8 1.8 1.4 1.2 25.5 24.1 21.6 14.9 10.7
BBT * BB&T CORP DEC 3.7 3.9 4.0 4.1 4.3 1.3 1.6 1.6 1.2 1.7 13.4 15.0 15.0 12.3 19.1
CYN † CITY NATIONAL CORP DEC 4.6 4.8 4.5 4.7 5.3 1.6 1.6 1.5 1.5 1.7 15.8 16.7 16.1 16.0 18.3
CNB † COLONIAL BANCGROUP DEC 3.7 3.8 3.5 3.5 3.6 1.2 1.1 1.0 0.9 1.0 13.3 13.7 13.4 13.3 14.6

CBH * COMMERCE BANCORP INC/NJ DEC 3.3 3.8 4.3 4.4 4.6 0.7 0.8 1.0 1.0 1.0 11.7 14.2 18.6 17.7 18.6
CFR † CULLEN/FROST BANKERS INC DEC 4.7 4.4 4.1 4.0 4.6 1.6 1.5 1.4 1.4 1.4 16.4 18.3 17.7 17.7 18.8
EWBC § EAST WEST BANCORP INC DEC 4.0 4.2 4.2 4.3 4.1 1.5 1.5 1.5 1.6 1.6 16.4 17.4 17.8 17.8 17.8
FITB * FIFTH THIRD BANCORP DEC 3.1 3.2 3.5 3.6 4.0 1.1 1.6 1.6 2.0 2.2 12.2 16.9 17.5 20.3 20.3
FBP § FIRST BANCORP P R DEC 2.8 3.2 3.4 3.2 3.6 0.2 0.4 1.0 1.1 0.9 6.7 11.4 23.0 25.0 21.1

FHN * FIRST HORIZON NATIONAL CORP DEC 2.9 3.1 3.6 3.8 4.3 0.7 1.3 1.7 2.0 1.7 10.5 20.3 23.1 26.4 23.8
FMER † FIRSTMERIT CORP DEC 3.7 3.7 3.7 4.0 4.4 0.9 1.3 1.0 1.1 1.5 10.6 13.6 10.5 12.5 16.5
HBAN * HUNTINGTON BANCSHARES DEC 3.3 3.3 3.3 3.5 3.6 1.4 1.3 1.3 1.3 1.2 16.6 16.2 16.6 17.3 14.1
KEY * KEYCORP DEC 3.7 3.7 3.6 3.8 4.0 1.3 1.2 1.1 1.1 1.2 15.6 15.3 13.5 13.1 15.0
MTB * M & T BANK CORP DEC 3.7 3.8 3.9 4.1 4.4 1.5 1.4 1.4 1.4 1.5 13.8 13.5 12.6 12.9 15.8

MI * MARSHALL & ILSLEY CORP DEC 3.3 3.3 3.5 3.7 4.0 1.6 1.7 1.7 1.6 1.6 14.9 17.0 17.4 17.1 17.2
NCC * NATIONAL CITY CORP DEC 3.8 3.7 4.1 4.1 4.3 1.6 1.4 2.2 1.8 1.4 16.9 15.6 25.1 24.0 20.3
PNC * PNC FINANCIAL SVCS GROUP INC DEC 2.9 3.0 3.2 3.6 4.0 2.7 1.5 1.6 1.5 1.8 26.8 16.5 16.9 15.2 18.9
RF * REGIONS FINANCIAL CORP DEC 4.2 3.9 3.7 3.5 3.7 1.2 1.2 1.2 1.4 1.3 8.6 9.4 10.8 15.1 15.1
TSFG § SOUTH FINANCIAL GROUP INC DEC 3.2 3.1 3.1 3.3 3.7 0.8 0.5 1.0 1.0 0.9 7.4 4.9 10.1 11.7 11.0

STI * SUNTRUST BANKS INC DEC 3.0 3.2 3.2 3.1 3.4 1.2 1.2 1.1 1.1 1.2 12.3 12.1 12.2 14.4 15.6
SIVB † SVB FINANCIAL GROUP DEC 7.4 6.5 5.4 5.3 5.7 1.5 1.7 1.3 0.3 1.3 14.9 16.7 12.9 2.3 8.8
SNV * SYNOVUS FINANCIAL CORP DEC 4.3 4.2 4.2 4.3 4.7 2.1 2.0 1.9 1.9 2.0 18.5 18.5 17.9 18.1 19.6
TCB † TCF FINANCIAL CORP DEC 4.2 4.5 4.5 4.5 4.7 1.7 2.1 2.2 1.8 2.0 24.1 27.1 27.1 22.7 24.6
WBS † WEBSTER FINANCIAL CORP DEC 3.2 3.3 3.1 3.1 3.4 0.8 1.1 1.0 1.2 1.3 7.6 11.6 11.4 14.9 15.7

WTNY § WHITNEY HOLDING CORP DEC 5.1 4.8 4.4 4.5 4.6 1.4 1.1 1.2 1.3 1.3 13.9 11.0 11.1 12.0 12.6
WL † WILMINGTON TRUST CORP DEC 3.8 3.7 3.6 3.6 4.0 1.3 1.8 1.5 1.6 1.7 13.9 18.0 16.6 17.4 18.7
ZION * ZIONS BANCORPORATION DEC 4.6 4.6 4.3 4.4 4.6 1.3 1.3 1.4 1.2 1.2 12.9 13.7 15.2 13.8 13.6
OTHER COMPANIES WITH SIGNIFICANT COMMERCIAL BANKING OPERATIONS
BAC * BANK OF AMERICA CORP DEC 2.8 2.8 3.3 3.4 3.8 1.5 1.4 1.5 1.5 1.4 18.1 16.4 19.2 22.0 18.7
BK * BANK OF NEW YORK MELLON CORP DEC 2.0 2.4 2.1 2.2 2.6 1.4 1.6 1.5 1.4 1.1 13.8 16.4 16.3 15.3 13.9
CATY † CATHAY GENERAL BANCORP DEC 4.2 4.3 4.1 3.9 4.3 1.6 1.7 1.5 1.3 1.9 13.7 14.0 13.0 12.3 18.2
C * CITIGROUP INC DEC NA NA NA NA NA 1.3 1.3 1.2 1.5 1.2 18.4 18.0 16.6 19.5 16.2
EWBC § EAST WEST BANCORP INC DEC 4.0 4.2 4.2 4.3 4.1 1.5 1.5 1.5 1.6 1.6 16.4 17.4 17.8 17.8 17.8

JPM * JPMORGAN CHASE & CO DEC 2.2 2.2 2.3 2.1 2.1 1.1 0.7 0.5 0.9 0.2 12.2 8.0 5.9 15.4 4.0
MEL MELLON FINANCIAL CORP DEC 1.7 1.9 2.1 2.6 2.7 2.3 2.4 2.3 1.9 1.9 21.0 22.0 20.5 19.1 19.4
NTRS * NORTHERN TRUST CORP DEC 1.7 1.8 1.7 1.7 1.9 1.2 1.2 1.2 1.0 1.1 17.6 16.9 15.9 14.2 16.1
STT * STATE STREET CORP DEC 1.3 1.1 1.1 1.2 1.4 1.1 1.0 0.9 0.8 1.3 16.1 15.1 13.4 13.7 23.5
UCBH § UCBH HOLDINGS INC DEC 3.5 3.6 3.7 3.4 3.5 1.1 1.4 1.4 1.2 1.0 14.5 18.0 19.1 18.6 17.1
Note: Data as originally reported. ‡S&P 1500 Index group. Regional Banks includes only those companies in the Regional Banks group of the S&P 1500 with operating revenues greater than $400 million. *Company included in the Standard & Poor's 500 Index. †Company included
in the Standard & Poor's MidCap Index. §Company included in the Standard & Poor's SmallCap Index. NA-Not available. # Of the following calendar year.
 Total Assets (Million $) Total Loans (Million $) Total Deposits (Million $)

Ticker Company Yr. End 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
DIVERSIFIED BANKS‡
CMA * COMERICA INC DEC 58,001 53,013 51,766 52,592 53,301 46,938 42,731 40,170 39,499 41,490 44,927 42,431 40,936 41,463 41,775
USB * U S BANCORP DEC 219,232 209,465 195,104 189,286 180,027 141,575 135,765 124,235 115,866 113,829 124,882 124,709 120,741 119,052 115,534
WB * WACHOVIA CORP DEC 707,121 520,755 493,324 401,032 341,839 416,798 256,291 221,083 163,067 160,299 407,458 324,894 295,053 221,225 191,518
WFC * WELLS FARGO & CO DEC 481,996 481,741 427,849 387,798 349,197 315,352 306,966 283,824 249,182 188,659 310,243 314,450 274,858 247,527 216,916
REGIONAL BANKS‡
ASBC † ASSOCIATED BANC-CORP DEC 20,861 22,100 20,520 15,248 15,043 14,678 15,003 13,692 10,114 10,141 14,316 13,573 12,786 9,793 9,125
BOH † BANK OF HAWAII CORP DEC 10,572 10,187 9,766 9,462 9,516 6,532 6,077 5,880 5,628 5,216 8,023 7,907 7,565 7,333 6,920
BBT * BB&T CORP DEC 121,351 109,170 100,509 90,467 80,217 82,023 73,569 66,744 60,795 50,417 80,971 74,282 67,699 59,350 51,280
CYN † CITY NATIONAL CORP DEC 14,884 14,582 14,232 13,018 11,870 10,231 9,112 8,346 7,717 7,835 12,173 12,138 11,987 10,937 9,840
CNB † COLONIAL BANCGROUP DEC 22,784 21,426 18,897 16,273 15,822 15,304 14,729 12,709 11,450 11,557 16,091 15,483 11,864 9,769 9,320

CBH * COMMERCE BANCORP INC/NJ DEC 45,272 38,466 30,502 22,712 16,404 15,455 12,525 9,319 7,329 5,732 41,288 34,727 27,659 20,701 14,549
CFR † CULLEN/FROST BANKERS INC DEC 13,224 11,741 9,953 9,672 9,552 7,230 5,954 5,026 4,449 4,436 10,388 9,146 8,106 8,069 7,628
EWBC § EAST WEST BANCORP INC DEC 10,824 8,278 6,029 4,055 3,321 8,182 6,724 5,080 3,234 2,313 7,235 6,259 4,523 3,313 2,926
FITB * FIFTH THIRD BANCORP DEC 100,669 105,225 94,456 91,143 80,894 73,582 69,181 59,095 51,538 45,245 69,380 67,434 58,226 57,095 52,208
FBP § FIRST BANCORP P R DEC 17,390 19,918 15,637 12,668 9,644 11,070 12,436 9,547 6,906 5,515 11,004 12,464 7,912 6,765 5,483

FHN * FIRST HORIZON NATIONAL CORP DEC 37,918 36,579 29,772 24,507 23,823 21,889 20,411 16,270 13,830 11,201 20,213 23,438 19,782 15,680 15,714
FMER † FIRSTMERIT CORP DEC 10,253 10,161 10,123 10,474 10,688 6,788 6,591 6,336 6,454 7,092 7,499 7,234 7,365 7,503 7,711
HBAN * HUNTINGTON BANCSHARES DEC 35,329 32,765 32,565 30,484 27,432 25,881 24,204 23,289 20,740 18,251 25,048 22,410 20,768 18,487 17,499
KEY * KEYCORP DEC 92,337 93,126 90,739 84,487 85,202 64,882 65,512 62,973 58,931 58,902 59,116 58,765 57,842 50,858 49,346
MTB * M & T BANK CORP DEC 57,065 55,146 52,939 49,826 33,175 42,297 39,693 37,772 35,158 25,291 39,911 37,100 35,429 33,115 21,665

MI * MARSHALL & ILSLEY CORP DEC 56,230 46,213 40,437 34,373 32,875 41,214 33,525 29,097 24,801 23,259 34,084 27,674 26,455 22,270 20,394
NCC * NATIONAL CITY CORP DEC 140,191 142,397 139,280 113,933 118,258 94,361 104,945 98,949 78,154 71,036 87,234 83,986 85,955 63,930 65,119
PNC * PNC FINANCIAL SVCS GROUP INC DEC 101,820 91,954 79,723 68,168 66,377 49,545 48,505 42,888 33,448 34,777 66,301 60,275 53,269 45,241 44,982
RF * REGIONS FINANCIAL CORP DEC 143,369 84,786 84,106 48,598 47,939 93,495 57,621 56,772 31,730 30,549 101,228 60,378 58,667 32,733 32,926
TSFG § SOUTH FINANCIAL GROUP INC DEC 14,211 14,319 13,798 10,719 7,941 9,590 9,332 8,011 5,659 4,364 9,517 9,234 7,671 6,029 4,593

STI * SUNTRUST BANKS INC DEC 182,202 179,713 158,870 125,393 117,323 120,450 113,527 100,376 79,790 72,238 124,022 122,053 103,361 81,190 79,707
SIVB † SVB FINANCIAL GROUP DEC 6,081 5,542 5,146 4,465 4,183 3,440 2,807 2,271 1,925 2,016 4,058 4,253 4,220 3,667 3,436
SNV * SYNOVUS FINANCIAL CORP DEC 31,855 27,621 25,050 21,633 19,036 24,340 21,103 19,215 16,239 14,264 24,294 20,784 18,577 15,942 13,929
TCB † TCF FINANCIAL CORP DEC 14,670 13,365 12,341 11,319 12,202 11,275 10,134 9,307 8,271 8,044 9,769 9,111 7,962 7,612 7,710
WBS † WEBSTER FINANCIAL CORP DEC 17,097 17,837 17,021 14,569 13,468 12,776 12,139 11,563 9,091 7,796 12,458 11,631 10,571 8,372 7,606

WTNY § WHITNEY HOLDING CORP DEC 10,186 10,109 8,223 7,755 7,098 6,974 6,471 5,572 4,823 4,389 8,433 8,605 6,613 6,159 5,783
WL † WILMINGTON TRUST CORP DEC 11,157 10,228 9,510 8,820 8,131 8,001 7,306 6,673 6,135 5,940 8,329 7,289 6,872 6,577 6,337
ZION * ZIONS BANCORPORATION DEC 46,970 42,780 31,470 28,558 26,566 34,050 29,532 22,159 19,475 18,471 34,982 32,642 23,292 20,897 20,132
OTHER COMPANIES WITH SIGNIFICANT COMMERCIAL BANKING OPERATIONS
BAC * BANK OF AMERICA CORP DEC 1,459,737 1,291,803 1,110,457 736,445 660,458 697,474 565,746 513,211 365,300 335,904 693,497 634,670 618,570 414,113 386,458
BK * BANK OF NEW YORK MELLON CORP DEC 103,370 102,074 94,529 92,397 77,564 37,506 40,315 35,190 34,615 30,508 62,146 64,424 58,721 56,406 55,387
CATY † CATHAY GENERAL BANCORP DEC 8,027 6,398 6,098 5,542 2,754 5,671 4,575 3,757 3,230 1,848 5,675 4,916 4,595 4,428 2,315
C * CITIGROUP INC DEC 1,884,318 1,494,037 1,484,101 1,264,032 1,097,190 876,878 714,601 652,535 546,608 511,457 783,773 631,947 578,009 479,959 414,886
EWBC § EAST WEST BANCORP INC DEC 10,824 8,278 6,029 4,055 3,321 8,182 6,724 5,080 3,234 2,313 7,235 6,259 4,523 3,313 2,926

JPM * JPMORGAN CHASE & CO DEC 1,351,520 1,198,942 1,157,248 770,912 758,800 420,648 377,858 369,094 194,195 211,014 638,788 554,991 521,456 326,492 304,753
MEL MELLON FINANCIAL CORP DEC 41,478 38,678 37,115 33,983 36,231 5,933 6,510 6,656 7,364 8,311 27,331 26,074 23,591 20,843 22,657
NTRS * NORTHERN TRUST CORP DEC 60,712 53,414 45,277 41,450 39,478 22,469 19,843 17,812 17,665 17,903 43,820 38,520 31,058 26,270 26,062
STT * STATE STREET CORP DEC 107,353 97,968 94,040 87,534 85,794 8,928 6,464 4,611 4,960 4,113 65,646 59,646 55,129 47,516 45,468
UCBH § UCBH HOLDINGS INC DEC 10,346 7,961 6,316 5,585 4,854 6,574 5,774 3,994 3,731 2,979 7,203 6,264 5,216 4,484 4,007
Note: Data as originally reported. ‡S&P 1500 Index group. Regional Banks includes only those companies in the Regional Banks group of the S&P 1500 with operating revenues greater than $400 million. *Company included in the Standard & Poor's 500 Index. †Company included
in the Standard & Poor's MidCap Index. §Company included in the Standard & Poor's SmallCap Index. NA-Not available. # Of the following calendar year.
35

DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

36 DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

Equity/Assets (%) Loan/Deposits (%) Loan Loss Reserves (%)

Ticker Company Yr. End 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
DIVERSIFIED BANKS‡
CMA * COMERICA INC DEC 8.9 9.6 9.9 9.7 9.3 1.0 1.0 1.0 1.0 1.0 0.8 1.0 1.3 1.5 1.5
USB * U S BANCORP DEC 9.2 9.6 10.0 10.2 10.1 1.1 1.1 1.0 1.0 1.0 0.9 1.0 1.1 1.3 1.3
WB * WACHOVIA CORP DEC 9.9 9.1 9.6 8.1 9.4 1.0 0.8 0.7 0.7 0.8 0.5 0.5 0.6 0.6 0.8
WFC * WELLS FARGO & CO DEC 9.5 8.4 8.9 8.9 8.7 1.0 1.0 1.0 1.0 0.9 0.8 0.8 0.9 1.0 1.1
REGIONAL BANKS‡
ASBC † ASSOCIATED BANC-CORP DEC 10.8 10.5 9.8 8.8 8.5 1.0 1.1 1.1 1.0 1.1 1.0 0.9 0.9 1.2 1.1
BOH † BANK OF HAWAII CORP DEC 6.8 6.8 8.3 8.4 10.7 0.8 0.8 0.8 0.8 0.8 0.9 0.9 1.1 1.4 1.5
BBT * BB&T CORP DEC 9.7 10.2 10.8 11.0 9.2 1.0 1.0 1.0 1.0 1.0 0.7 0.8 0.8 0.9 0.9
CYN † CITY NATIONAL CORP DEC 10.0 10.0 9.5 9.4 9.4 0.8 0.8 0.7 0.7 0.8 1.0 1.1 1.0 1.3 1.4
CNB † COLONIAL BANCGROUP DEC 9.0 9.0 7.4 7.2 6.8 1.0 1.0 1.1 1.2 1.2 0.8 0.8 0.8 0.9 0.9

CBH * COMMERCE BANCORP INC/NJ DEC 6.2 6.0 5.5 5.6 5.6 0.4 0.4 0.3 0.4 0.4 0.3 0.3 0.4 0.5 0.6
CFR † CULLEN/FROST BANKERS INC DEC 10.4 8.4 8.3 8.0 7.4 0.7 0.7 0.6 0.6 0.6 0.7 0.7 0.8 0.9 0.9
EWBC § EAST WEST BANCORP INC DEC 9.4 8.9 8.5 8.9 9.1 1.1 1.1 1.1 1.0 0.8 0.7 0.8 0.8 1.0 1.1
FITB * FIFTH THIRD BANCORP DEC 9.9 9.0 9.4 9.3 10.5 1.1 1.0 1.0 0.9 0.9 0.8 0.7 0.8 0.8 0.8
FBP § FIRST BANCORP P R DEC 3.9 3.3 4.2 4.3 4.5 1.0 1.0 1.2 1.0 1.0 0.9 0.7 0.9 1.0 1.2

FHN * FIRST HORIZON NATIONAL CORP DEC 6.5 6.3 6.9 7.7 7.1 1.1 0.9 0.8 0.9 0.7 0.6 0.5 0.5 0.7 0.6
FMER † FIRSTMERIT CORP DEC 8.3 9.2 9.7 9.4 9.0 0.9 0.9 0.9 0.9 0.9 0.9 0.9 1.0 0.9 1.1
HBAN * HUNTINGTON BANCSHARES DEC 8.5 7.8 7.8 7.5 8.0 1.0 1.1 1.1 1.1 1.0 0.8 0.8 0.8 1.1 1.2
KEY * KEYCORP DEC 8.3 8.2 7.8 8.2 8.0 1.1 1.1 1.1 1.2 1.2 1.0 1.0 1.3 1.7 1.7
MTB * M & T BANK CORP DEC 11.0 10.7 10.8 11.5 9.6 1.1 1.1 1.1 1.1 1.2 1.1 1.2 1.2 1.2 1.3

MI * MARSHALL & ILSLEY CORP DEC 10.9 10.1 9.6 9.7 9.2 1.2 1.2 1.1 1.1 1.1 0.7 0.8 0.9 1.0 1.0
NCC * NATIONAL CITY CORP DEC 10.4 8.9 9.2 8.2 7.0 1.1 1.2 1.2 1.2 1.1 0.8 0.8 0.9 1.0 0.9
PNC * PNC FINANCIAL SVCS GROUP INC DEC 10.6 9.3 9.4 9.7 10.3 0.7 0.8 0.8 0.7 0.8 0.5 0.6 0.8 0.9 1.0
RF * REGIONS FINANCIAL CORP DEC 14.4 12.5 12.8 9.2 8.7 0.9 1.0 1.0 1.0 0.9 0.7 0.9 0.9 0.9 0.9
TSFG § SOUTH FINANCIAL GROUP INC DEC 11.0 10.4 10.1 9.1 8.1 1.0 1.0 1.0 0.9 1.0 0.8 0.8 0.7 0.7 0.9
STI * SUNTRUST BANKS INC DEC 9.5 9.4 10.1 7.8 7.5 1.0 0.9 1.0 1.0 0.9 0.6 0.6 0.7 0.8 0.8
SIVB † SVB FINANCIAL GROUP DEC 10.3 10.3 10.5 10.0 14.1 0.8 0.7 0.5 0.5 0.6 0.7 0.7 0.7 1.4 1.7
SNV * SYNOVUS FINANCIAL CORP DEC 11.6 10.7 10.5 10.4 10.7 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.1 1.0 1.0
TCB † TCF FINANCIAL CORP DEC 7.0 7.5 7.8 8.1 8.0 1.2 1.1 1.2 1.1 1.0 0.4 0.5 0.6 0.7 0.6
WBS † WEBSTER FINANCIAL CORP DEC 11.0 9.2 9.1 7.9 7.7 1.0 1.0 1.1 1.1 1.0 0.9 0.8 0.9 0.8 0.9

WTNY § WHITNEY HOLDING CORP DEC 10.9 9.5 11.0 10.8 11.3 0.8 0.8 0.8 0.8 0.8 0.7 0.9 0.7 0.8 0.9
WL † WILMINGTON TRUST CORP DEC 9.5 9.9 9.5 9.1 9.1 1.0 1.0 1.0 0.9 0.9 0.8 0.9 0.9 1.0 1.0
ZION * ZIONS BANCORPORATION DEC 10.1 9.9 8.9 8.9 8.9 1.0 0.9 1.0 0.9 0.9 0.8 0.8 0.9 0.9 1.1
OTHER COMPANIES WITH SIGNIFICANT COMMERCIAL BANKING OPERATIONS
BAC * BANK OF AMERICA CORP DEC 9.1 7.8 8.9 6.5 7.6 1.0 0.9 0.8 0.9 0.9 0.6 0.6 0.8 0.8 1.0
BK * BANK OF NEW YORK MELLON CORP DEC 11.2 9.7 9.8 9.1 8.6 0.6 0.6 0.6 0.6 0.6 0.3 0.4 0.6 0.7 1.1
CATY † CATHAY GENERAL BANCORP DEC 11.7 12.1 11.7 11.2 10.5 1.0 0.9 0.8 0.7 0.8 0.8 0.9 1.0 1.2 0.9
C * CITIGROUP INC DEC 6.3 7.5 7.3 7.7 7.8 1.1 1.1 1.1 1.1 1.2 NA NA NA NA NA
EWBC § EAST WEST BANCORP INC DEC 9.4 8.9 8.5 8.9 9.1 1.1 1.1 1.1 1.0 0.8 0.7 0.8 0.8 1.0 1.1

JPM * JPMORGAN CHASE & CO DEC 8.6 8.9 9.1 5.9 5.4 0.7 0.7 0.7 0.6 0.7 0.5 0.6 0.6 0.6 0.7
MEL MELLON FINANCIAL CORP DEC 11.3 10.9 11.1 10.9 9.4 0.2 0.2 0.3 0.4 0.4 0.1 0.2 0.3 0.3 0.4
NTRS * NORTHERN TRUST CORP DEC 6.5 6.7 7.3 7.4 7.3 0.5 0.5 0.6 0.7 0.7 0.2 0.2 0.3 0.4 0.4
STT * STATE STREET CORP DEC 6.8 6.5 6.5 6.6 5.6 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.1 0.1
UCBH § UCBH HOLDINGS INC DEC 7.6 7.6 7.7 7.4 5.8 0.9 0.9 0.8 0.8 0.7 0.6 0.8 0.9 1.1 1.0
Note: Data as originally reported. ‡S&P 1500 Index group. Regional Banks includes only those companies in the Regional Banks group of the S&P 1500 with operating revenues greater than $400 million. *Company included in the Standard & Poor's 500 Index. †Company included
in the Standard & Poor's MidCap Index. §Company included in the Standard & Poor's SmallCap Index. NA-Not available. # Of the following calendar year.
 Price / Earnings Ratio (High-Low) Dividend Payout Ratio (%) Dividend Yield (High-Low, %)

Ticker Company Yr. End 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002

DIVERSIFIED BANKS‡
CMA * COMERICA INC DEC 12-10 12-10 14-11 15-10 19-10 48 43 47 53 56 4.7-3.9 4.1-3.5 4.1-3.3 5.4-3.5 5.5-2.9
USB * U S BANCORP DEC 14-11 13-11 14-11 16-10 14-9 53 50 46 44 45 4.8-3.8 4.6-3.9 4.1-3.2 4.6-2.9 4.9-3.2
WB * WACHOVIA CORP DEC 13-11 14-11 14-11 15-10 15-11 46 47 43 39 38 4.2-3.6 4.2-3.4 3.9-3.0 3.9-2.7 3.5-2.5
WFC * WELLS FARGO & CO DEC 15-12 14-13 15-13 16-12 16-12 43 44 45 41 33 3.6-2.9 3.5-3.1 3.4-2.9 3.5-2.5 2.7-2.0
REGIONAL BANKS‡
ASBC † ASSOCIATED BANC-CORP DEC 15-13 14-12 15-12 14-10 14-10 47 43 43 43 43 3.8-3.2 3.7-3.0 3.6-2.8 4.2-3.1 4.5-3.2
BOH † BANK OF HAWAII CORP DEC 15-13 16-13 16-13 19-13 18-13 42 39 38 38 42 3.2-2.8 3.1-2.5 3.0-2.4 3.0-2.0 3.2-2.4
BBT * BB&T CORP DEC 16-13 15-12 15-12 19-15 14-11 56 48 48 58 40 4.2-3.6 3.9-3.3 4.1-3.1 4.0-3.1 3.5-2.8
CYN † CITY NATIONAL CORP DEC 16-12 16-14 17-14 17-10 15-11 34 30 30 25 21 2.7-2.1 2.2-1.9 2.2-1.8 2.5-1.5 1.9-1.4
CNB † COLONIAL BANCGROUP DEC 16-14 17-13 17-12 15-9 14-9 39 40 44 47 44 2.9-2.5 3.1-2.3 3.5-2.6 5.3-3.1 4.7-3.2

CBH * COMMERCE BANCORP INC/NJ DEC 25-19 21-16 19-13 20-13 23-17 30 26 22 24 28 1.5-1.2 1.6-1.2 1.6-1.1 1.8-1.2 1.7-1.2
CFR † CULLEN/FROST BANKERS INC DEC 17-15 18-13 18-14 17-11 17-12 38 37 38 37 36 2.5-2.2 2.8-2.1 2.7-2.1 3.2-2.1 3.1-2.1
EWBC § EAST WEST BANCORP INC DEC 17-14 21-15 28-16 22-12 18-12 8 10 13 16 13 0.6-0.5 0.7-0.5 0.8-0.5 1.4-0.7 1.1-0.7
FITB * FIFTH THIRD BANCORP DEC 19-17 17-13 22-17 21-16 25-20 74 52 48 38 35 4.4-3.8 4.2-3.0 2.9-2.2 2.4-1.8 1.8-1.4
FBP § FIRST BANCORP P R DEC 25-16 35-11 19-10 14-7 14-9 52 30 14 14 20 3.3-2.1 2.7-0.9 1.4-0.7 1.9-1.1 2.2-1.4

FHN * FIRST HORIZON NATIONAL CORP DEC 21-18 13-10 13-11 13-10 14-10 89 49 45 35 35 4.9-4.2 5.0-3.9 4.0-3.4 3.7-2.7 3.5-2.6
FMER † FIRSTMERIT CORP DEC 22-18 19-15 24-19 19-13 16-10 97 71 87 71 54 5.5-4.3 4.6-3.8 4.6-3.7 5.7-3.7 5.3-3.3
HBAN * HUNTINGTON BANCSHARES DEC 13-12 14-12 15-12 13-11 16-12 51 47 43 40 48 4.4-4.0 4.0-3.3 3.6-3.0 3.8-3.0 4.0-2.9
KEY * KEYCORP DEC 13-11 13-11 15-12 14-10 13-9 47 47 53 57 52 4.2-3.6 4.3-3.7 4.4-3.6 5.5-4.1 5.7-4.1
MTB * M & T BANK CORP DEC 17-14 16-14 18-14 19-15 17-13 30 25 26 24 20 2.1-1.8 1.8-1.6 1.9-1.5 1.6-1.2 1.6-1.2

MI * MARSHALL & ILSLEY CORP DEC 15-13 15-13 16-13 16-10 14-10 32 30 29 29 24 2.6-2.1 2.3-2.0 2.3-1.8 2.8-1.8 2.4-1.7
NCC * NATIONAL CITY CORP DEC 10-9 13-10 9-7 10-8 13-9 40 46 31 36 46 4.6-4.0 4.8-3.6 4.2-3.4 4.7-3.6 4.9-3.6
PNC * PNC FINANCIAL SVCS GROUP INC DEC 8-7 14-11 14-12 15-11 15-8 24 43 47 53 45 3.5-2.9 4.1-3.0 4.1-3.3 4.7-3.5 5.9-3.1
RF * REGIONS FINANCIAL CORP DEC 15-12 16-13 16-12 13-10 14-10 65 63 45 42 42 5.4-4.5 4.7-3.8 3.7-2.8 4.2-3.3 4.3-3.0
TSFG § SOUTH FINANCIAL GROUP INC DEC 19-16 34-26 18-14 15-10 17-12 45 67 32 29 33 2.8-2.4 2.5-1.9 2.3-1.8 2.9-1.9 2.7-2.0

STI * SUNTRUST BANKS INC DEC 15-12 14-12 15-12 15-11 15-11 42 40 38 38 37 3.5-2.8 3.4-2.9 3.3-2.6 3.5-2.5 3.3-2.5
SIVB † SVB FINANCIAL GROUP DEC 21-17 20-15 25-17 NM-48 28-12 0 0 0 0 0 0.0-0.0 0.0-0.0 0.0-0.0 0.0-0.0 0.0-0.0
SNV * SYNOVUS FINANCIAL CORP DEC 16-13 18-16 20-16 23-13 26-13 41 44 49 51 48 3.0-2.5 2.8-2.4 3.1-2.4 3.8-2.3 3.6-1.8
TCB † TCF FINANCIAL CORP DEC 15-13 16-12 17-13 18-12 17-11 48 43 40 42 36 3.8-3.2 3.5-2.7 3.1-2.3 3.6-2.4 3.3-2.1
WBS † WEBSTER FINANCIAL CORP DEC 20-18 15-12 17-14 13-9 12-9 42 28 30 23 22 2.3-2.1 2.3-1.9 2.2-1.7 2.4-1.8 2.4-1.8

WTNY § WHITNEY HOLDING CORP DEC 17-12 20-15 19-17 17-12 16-11 48 60 56 50 46 4.0-2.9 4.1-2.9 3.4-2.9 4.0-3.0 4.1-2.9
WL † WILMINGTON TRUST CORP DEC 22-18 16-13 18-16 18-13 17-12 59 46 53 52 50 3.2-2.7 3.6-2.9 3.4-2.9 4.1-2.9 4.0-2.9
ZION * ZIONS BANCORPORATION DEC 16-14 15-12 15-12 17-10 17-10 27 27 28 27 23 2.0-1.7 2.3-1.9 2.3-1.8 2.6-1.6 2.3-1.3
OTHER COMPANIES WITH SIGNIFICANT COMMERCIAL BANKING OPERATIONS
BAC * BANK OF AMERICA CORP DEC 12-9 12-10 13-10 12-9 13-9 45 46 45 40 40 5.0-3.8 4.6-4.0 4.4-3.6 4.5-3.4 4.5-3.2
BK * BANK OF NEW YORK MELLON CORP DEC 21-16 16-13 19-15 22-13 37-17 44 42 42 49 61 2.8-2.1 3.2-2.6 2.9-2.3 3.9-2.3 3.6-1.6
CATY † CATHAY GENERAL BANCORP DEC 17-15 19-14 23-15 20-12 18-11 16 17 17 20 20 1.1-0.9 1.2-0.9 1.1-0.7 1.6-1.0 1.8-1.1
C * CITIGROUP INC DEC 13-10 13-11 16-13 14-9 20-9 45 45 48 32 27 4.4-3.4 4.1-3.5 3.8-3.0 3.6-2.2 2.9-1.3
EWBC § EAST WEST BANCORP INC DEC 17-14 21-15 28-16 22-12 18-12 8 10 13 16 13 0.6-0.5 0.7-0.5 0.8-0.5 1.4-0.7 1.1-0.7

JPM * JPMORGAN CHASE & CO DEC 12-10 17-14 28-22 12-6 49-19 35 56 86 41 168 3.6-2.8 4.1-3.4 3.9-3.1 6.8-3.6 8.9-3.4
MEL MELLON FINANCIAL CORP DEC 19-14 16-12 18-14 21-13 27-13 38 35 37 36 32 2.6-2.0 3.0-2.2 2.6-2.1 2.9-1.7 2.4-1.2
NTRS * NORTHERN TRUST CORP DEC 20-16 21-16 22-17 25-14 31-15 31 32 34 36 34 1.9-1.5 2.1-1.6 2.0-1.5 2.5-1.4 2.2-1.1
STT * STATE STREET CORP DEC 21-16 21-14 24-17 25-14 19-10 24 25 27 26 15 1.5-1.2 1.8-1.2 1.6-1.1 1.8-1.0 1.5-0.8
UCBH § UCBH HOLDINGS INC DEC 18-15 22-14 25-18 27-14 22-14 11 9 8 7 10 0.8-0.6 0.7-0.4 0.5-0.3 0.5-0.3 0.7-0.5
Note: Data as originally reported. ‡S&P 1500 Index group. Regional Banks includes only those companies in the Regional Banks group of the S&P 1500 with operating revenues greater than $400 million. *Company included in the Standard & Poor's 500 Index. †Company included
in the Standard & Poor's MidCap Index. §Company included in the Standard & Poor's SmallCap Index. NA-Not available. # Of the following calendar year.
37

DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

38 DECEMBER 6, 2007 / BANKING INDUSTRY SURVEY

Earnings per Share ($) Tangible Book Value per Share ($) Share Price (High-Low, $)

Ticker Company Yr. End 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002
DIVERSIFIED BANKS‡
CMA * COMERICA INC DEC 4.88 5.17 4.41 3.78 3.43 31.75 29.80 28.37 27.68 26.80 60.10 -50.12 63.38 -53.17 63.80 -50.45 56.34 -37.10 66.09 -35.20
USB * U S BANCORP DEC 2.64 2.45 2.21 1.93 1.74 5.34 5.62 5.87 5.77 4.93 36.85 -28.99 31.36 -26.80 31.65 -24.89 30.00 -18.56 24.50 -16.05
WB * WACHOVIA CORP DEC 4.70 4.13 3.87 3.20 2.62 15.60 15.76 15.25 15.27 14.48 60.04 -50.85 56.28 -46.30 55.01 -43.05 46.74 -32.12 39.88 -28.57
WFC * WELLS FARGO & CO DEC 2.52 2.28 2.08 1.85 1.67 4.82 5.04 5.70 5.07 4.46 36.99 -30.31 32.35 -28.81 32.02 -27.16 29.59 -21.64 27.42 -20.75
REGIONAL BANKS‡
ASBC † ASSOCIATED BANC-CORP DEC 2.40 2.45 2.28 2.07 1.88 9.81 9.78 9.39 9.64 9.14 35.27 -30.10 35.26 -28.87 35.16 -26.99 29.00 -21.33 25.63 -18.01
BOH † BANK OF HAWAII CORP DEC 3.59 3.50 3.26 2.32 1.75 13.36 12.49 13.83 13.46 15.09 55.15 -47.00 54.44 -43.82 51.10 -40.97 42.99 -29.25 31.05 -22.79
BBT * BB&T CORP DEC 2.84 3.02 2.82 2.09 2.73 11.04 10.93 10.71 10.30 11.36 44.74 -38.24 43.92 -37.04 43.25 -33.02 39.69 -30.66 39.47 -31.03
CYN † CITY NATIONAL CORP DEC 4.82 4.77 4.21 3.84 3.69 25.13 23.61 21.27 18.65 17.42 78.25 -60.02 76.10 -66.39 70.99 -57.36 64.49 -38.70 56.42 -40.10
CNB † COLONIAL BANCGROUP DEC 1.73 1.53 1.32 1.20 1.18 9.05 8.02 7.50 7.06 6.58 27.27 -23.42 26.00 -19.56 22.70 -16.45 18.10 -10.63 16.19 -11.01

CBH * COMMERCE BANCORP INC/NJ DEC 1.62 1.70 1.75 1.37 1.08 14.11 12.33 10.42 J 8.35 J 6.77 J 41.20 -31.20 35.98 -26.87 33.83 -23.35 26.74 -18.11 25.25 -18.05
CFR † CULLEN/FROST BANKERS INC DEC 3.49 3.15 2.74 2.54 2.40 13.61 14.65 13.59 12.65 11.40 59.81 -52.03 56.43 -41.90 49.20 -38.84 43.75 -29.05 40.75 -28.30
EWBC § EAST WEST BANCORP INC DEC 2.40 2.03 1.54 1.23 1.03 12.29 10.04 8.82 6.63 5.77 41.75 -34.29 42.29 -30.68 43.68 -24.45 27.51 -14.63 19.03 -12.43
FITB * FIFTH THIRD BANCORP DEC 2.14 2.79 2.72 3.01 2.82 12.82 11.91 13.33 12.92 12.65 41.57 -35.86 48.12 -35.04 60.00 -45.32 62.15 -47.05 69.70 -55.26
FBP § FIRST BANCORP P R DEC 0.54 0.92 1.71 1.52 1.02 8.16 8.01 8.10 6.74 5.06 13.30 -8.59 32.62 -10.37 32.74 -17.42 20.75 -11.35 14.00 -9.13

FHN * FIRST HORIZON NATIONAL CORP DEC 2.02 3.52 3.64 3.73 2.97 4.71 4.78 6.33 7.06 8.41 43.07 -37.10 44.80 -34.78 48.65 -40.79 48.50 -35.58 41.00 -29.76
FMER † FIRSTMERIT CORP DEC 1.18 1.56 1.22 1.44 1.82 8.79 9.65 9.95 9.94 9.68 26.54 -20.89 29.06 -24.12 28.85 -23.00 27.92 -18.05 29.51 -18.55
HBAN * HUNTINGTON BANCSHARES DEC 1.95 1.79 1.74 1.68 1.34 10.12 10.03 9.69 8.68 8.34 24.97 -22.56 25.41 -20.97 25.38 -20.89 22.55 -17.78 21.77 -16.00
KEY * KEYCORP DEC 2.95 2.76 2.32 2.13 2.29 15.99 15.05 13.91 13.88 13.35 38.63 -32.90 35.00 -30.10 34.50 -28.23 29.41 -22.31 29.40 -20.98
MTB * M & T BANK CORP DEC 7.55 6.88 6.14 5.08 5.25 28.33 25.56 23.08 21.42 21.36 124.98 -105.72 112.50 -96.71 108.75 -82.90 98.98 -74.71 90.05 -67.70

MI * MARSHALL & ILSLEY CORP DEC 3.24 3.15 2.81 2.41 2.24 11.50 9.37 7.76 9.96 8.61 49.10 -40.83 47.40 -40.05 44.70 -35.67 38.46 -24.60 32.12 -23.11
NCC * NATIONAL CITY CORP DEC 3.77 3.13 4.37 3.46 2.61 NA NA NA 11.33 10.70 38.04 -33.26 40.00 -29.75 39.66 -32.14 34.97 -26.53 33.75 -24.60
PNC * PNC FINANCIAL SVCS GROUP INC DEC 8.89 4.63 4.25 3.68 4.23 NA NA NA 14.22 14.78 75.15 -61.78 65.66 -49.35 59.79 -48.90 55.55 -41.63 62.80 -32.70
RF * REGIONS FINANCIAL CORP DEC 2.70 2.17 2.22 2.37 2.24 11.22 10.65 10.73 11.81 11.01 39.15 -32.37 35.54 -29.16 35.97 -27.26 30.70 -24.16 31.10 -21.95
TSFG § SOUTH FINANCIAL GROUP INC DEC 1.51 0.96 1.86 1.93 1.45 11.63 10.64 10.98 10.61 8.55 28.41 -24.60 32.98 -25.40 32.61 -25.85 29.58 -19.25 24.29 -17.51

STI * SUNTRUST BANKS INC DEC 5.87 5.53 5.25 4.79 4.71 26.11 24.67 22.50 28.43 25.46 85.64 -69.68 75.77 -65.32 76.65 -61.27 71.73 -51.44 70.20 -51.48
SIVB † SVB FINANCIAL GROUP DEC 2.57 2.64 1.81 0.33 1.21 17.65 15.20 14.08 11.69 12.07 54.78 -43.70 52.33 -40.68 45.15 -31.02 37.25 -15.71 33.99 -14.00
SNV * SYNOVUS FINANCIAL CORP DEC 1.92 1.66 1.42 1.29 1.23 9.14 7.82 7.04 6.50 6.40 31.13 -25.74 30.10 -26.30 29.09 -22.50 29.25 -17.24 31.93 -16.48
TCB † TCF FINANCIAL CORP DEC 1.90 2.00 1.87 1.53 1.59 6.75 6.04 5.50 5.09 5.15 28.41 -24.23 32.03 -24.55 32.62 -23.92 27.13 -18.25 27.30 -17.55
WBS † WEBSTER FINANCIAL CORP DEC 2.50 3.47 3.05 3.58 3.36 18.65 17.54 15.66 17.62 16.18 50.44 -45.25 50.65 -43.10 52.15 -41.35 46.76 -33.60 40.10 -30.28

WTNY § WHITNEY HOLDING CORP DEC 2.24 1.65 1.59 1.65 1.59 12.10 11.54 12.31 12.32 11.69 37.26 -27.27 33.69 -24.14 30.83 -26.35 27.55 -20.50 25.83 -17.93
WL † WILMINGTON TRUST CORP DEC 2.10 2.56 2.12 2.04 2.03 10.70 9.26 7.78 8.08 7.31 45.61 -38.54 40.96 -33.01 38.80 -33.34 36.47 -26.00 34.63 -25.05
ZION * ZIONS BANCORPORATION DEC 5.46 5.27 4.53 3.77 3.46 25.15 20.45 23.29 20.23 17.21 85.25 -75.13 77.67 -63.33 69.29 -54.08 63.86 -39.31 59.65 -34.14
OTHER COMPANIES WITH SIGNIFICANT COMMERCIAL BANKING OPERATIONS
BAC * BANK OF AMERICA CORP DEC 4.66 4.10 3.76 3.63 3.04 12.18 12.48 11.80 11.38 11.88 55.08 -42.75 47.44 -41.13 47.47 -38.51 42.45 -32.13 38.54 -26.98
BK * BANK OF NEW YORK MELLON CORP DEC 2.07 2.17 1.98 1.63 1.32 NA NA NA NA NA 42.98 -32.66 35.71 -28.55 36.94 -28.88 35.50 -20.40 49.29 -22.10
CATY † CATHAY GENERAL BANCORP DEC 2.29 2.07 1.74 1.43 1.36 11.23 9.81 8.44 6.55 7.82 39.95 -33.42 39.82 -29.51 40.18 -26.75 28.49 -17.34 24.15 -15.35
C * CITIGROUP INC DEC 4.33 3.90 3.32 3.49 2.63 14.14 12.76 11.72 10.75 9.70 57.00 -44.81 49.99 -42.91 52.88 -42.10 49.15 -30.25 52.20 -24.48
EWBC § EAST WEST BANCORP INC DEC 2.40 2.03 1.54 1.23 1.03 12.29 10.04 8.82 6.63 5.77 41.75 -34.29 42.29 -30.68 43.68 -24.45 27.51 -14.63 19.03 -12.43

JPM * JPMORGAN CHASE & CO DEC 3.93 2.43 1.59 3.32 0.81 16.11 14.02 13.34 14.76 14.21 49.00 -37.88 40.56 -32.92 43.84 -34.62 38.26 -20.13 39.68 -15.26
MEL MELLON FINANCIAL CORP DEC 2.28 2.20 1.91 1.59 1.53 4.40 4.54 3.86 3.30 2.82 43.08 -32.78 35.15 -26.40 34.13 -26.47 33.83 -19.89 40.80 -20.42
NTRS * NORTHERN TRUST CORP DEC 3.06 2.68 2.30 1.92 2.02 15.53 14.05 13.97 12.78 12.51 61.40 -49.12 55.00 -41.60 51.35 -38.40 48.75 -27.64 62.67 -30.41
STT * STATE STREET CORP DEC 3.31 2.86 2.38 2.18 3.14 16.35 13.70 12.49 11.65 12.92 68.56 -54.39 59.80 -40.62 56.90 -39.91 53.63 -30.37 58.36 -32.11
UCBH § UCBH HOLDINGS INC DEC 1.07 1.06 0.94 0.74 0.49 5.21 5.01 4.37 3.51 2.68 19.60 -15.55 23.02 -15.07 23.98 -16.86 20.05 -10.19 10.91 -6.78

Note: Data as originally reported. ‡ S&P 1500 Index group. * Company included in the S&P 500. † Company included in the S&P MidCap. § Company included in the S&P SmallCap. # Of the following calendar year. J-This amount includes intangibles that cannot be identified.

The analysis and opinion set forth in this publication are provided by Standard & Poor’s Equity Research Services and are prepared separately from any other analytic activity of Standard & Poor’s. In this regard, Standard & Poor’s Equity Research Services
has no access to nonpublic information received by other units of Standard & Poor’s. The accuracy and completeness of information obtained from third-party sources, and the opinions based on such information, are not guaranteed.
Topics Covered by
INDUSTRY SURVEYS
Advertising Electric Utilities Movies & Home Entertainment
Aerospace & Defense Environmental & Waste Management Natural Gas Distribution
Agribusiness Financial Services: Diversified Oil & Gas: Equipment & Services
Airlines Foods & Nonalcoholic Beverages Oil & Gas: Production & Marketing
Alcoholic Beverages & Tobacco Healthcare: Facilities Paper & Forest Products
Apparel & Footwear Healthcare: Managed Care Publishing
Autos & Auto Parts Healthcare: Pharmaceuticals REITs
Banking Healthcare: Products & Supplies Restaurants
Biotechnology Heavy Equipment & Trucks Retailing: General
Broadcasting & Cable Homebuilding Retailing: Specialty
Chemicals Household Durables Savings & Loans
Communications Equipment Household Nondurables Semiconductor Equipment
Computers: Commercial Services Industrial Machinery Semiconductors
Computers: Consumer Services & Insurance: Life & Health Supermarkets & Drugstores
the Internet Insurance: Property-Casualty Telecommunications: Wireless
Computers: Hardware Investment Services Telecommunications: Wireline
Computers: Software Lodging & Gaming Transportation: Commercial
Computers: Storage & Peripherals Metals: Industrial

GLOBAL INDUSTRY SURVEYS

Industry/Region Industry/Region
Advertising/Asia, Europe Healthcare: Pharmaceuticals/Asia, Europe
Aerospace & Defense/Europe Healthcare: Products & Supplies/Asia, Europe
Airlines/Asia, Europe Industrial Machinery/Asia, Europe
Autos & Auto Parts/Asia, Europe Insurance: Life & Health/Asia, Europe
Banking/Asia, Europe, Latin America Insurance: Property-Casualty/Asia, Europe
Biotechnology/Asia, Europe Investment Services/Asia, Europe
Broadcasting & Cable/Asia, Europe Oil & Gas: Production & Marketing/Asia, EMEA, Latin America
Chemicals/Asia, Europe Publishing/Asia, Europe
Communications Equipment/Asia, Europe Real Estate/Asia, Europe
Computers: Hardware/Asia Retailing: Specialty/Asia, Europe
Construction & Engineering/Asia, Europe Supermarkets & Drugstores/Asia, Europe
Consumer Electronics/Asia Telecommunications: Wireless/Asia, Europe, Latin America
Electric Utilities/Asia, Europe Transportation: Commercial/Asia, Europe
Foods & Nonalcoholic Beverages/Asia, Europe

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