US Banks Underweight
Analyst(s): FPKCCW US Bank Research Group 212-687-1105
2Q08 Bank Preview: Same Old Song And Dance
• It Seems Like We Heard This Song Before… We expect 2Q08 bank earnings will be negatively
impacted by deteriorating credit quality and most companies are not expected to give a positive outlook
for the rest of the 2008 (and probably 2009). This was the same message in 1Q08 and 4Q07 and we
think it has the potential to be worse in 2Q08. We expect earnings shortfalls vs. consensus at 31 banks
(55% of our universe), 6 to meet (11%) and 19 to beat (34%). 2Q08 earnings are likely to fall 31% year
over year.
• Lowering Estimates For Most Of The Banks. We are lowering EPS for 29 out of 56 banks
primarily due to higher credit costs (see Figures 2 and 3). The median bank in our universe is expected to
have NCOs of 60 bps compared to 52 bps in 1Q08 and 46 bps in 4Q07. We also expect banks to build
reserves in 2Q08 and the rest of 2008, especially given the increased pressure from regulators. We
expect a median LLR/Loans ratio for our universe in 2Q08 of 141 bps compared to 132 bps in 1Q08
and 124 bps in 4Q07. We are raising EPS estimates on two banks: FFIN and SBNY.
• A Relief Rally Possible, But Should Be Short Lived. The FPK 30 Index has declined about 14% in
2Q08 compared to the 26% decline for the BKX (more large cap focus). The FPK bank universe now
trades at a median 1.5x tangible book compared to 1.9x at the end of 1Q08. We believe the bank group
will get a relief rally during earnings season as credit metrics (while bad) are generally not as bad as
market expectations. However, we do not expect this relief rally to last very long as the fundamental
outlook remains challenging and concerns about future capital raises remain an overhang.
• Fundamentals Remain Under Pressure. NIMs should remain under pressure in 2Q08 as we expect
another 11 bps of compression. In terms of credit, we expect cumulative NCOs of $13.8 billion (up 42%
from 1Q08), NPA growth of 15%, and 5 bps of LLR build to 1.41% of loans. Revenue growth should
remain a challenge and more emphasis will be placed on expense saving opportunities. Obviously, we
think any forward looking color/guidance will be skewed to the negative rather than the positive for
most. The industry will need more capital (which we expect to occur over the next couple of quarters) and
will be more expensive. The candidates at risk of capital actions (raising equity or cutting the dividend)
include WB, RF, STI, SBCF, CMA, MI, and CPF.
• Stocks We Favor Heading Into 2Q: AF, MTB, PRSP, WABC, PACW, WFC, FMER
• Stocks We are Cautious On Into 2Q: RF, CBON, WTNY, CYN, CMA, MI, BAC

2Q08 EARNINGS PREVIEWS AND MODELS
Associated Banc-Corp (ASBC) ................................................................................................................................10
Astoria Federal Corporation (AF) .............................................................................................................................12
Bank of America Corp (BAC) ...................................................................................................................................14
Bank of Hawaii Corporation (BOH)...........................................................................................................................16
BankAtlantic (BBX) ...................................................................................................................................................18
BankUnited Financial (BKUNA) ...............................................................................................................................20
BB&T Corporation (BBT)..........................................................................................................................................22
Central Pacific Financial Corp (CPF)........................................................................................................................24
City National Corp (CYN)..........................................................................................................................................26
Colonial Bancgroup (CNB).......................................................................................................................................28
Comerica (CMA) ........................................................................................................................................................30
Commerce Bankshares (CBSH)...............................................................................................................................32
Community Bancorp (CBON)...................................................................................................................................34
Cullen/Frost Bankers (CFR) .....................................................................................................................................36
CVB Financial Corp (CVBF)......................................................................................................................................38
Dime Community (DCOM) ........................................................................................................................................40
Fifth Third Bancorp (FITB)........................................................................................................................................42
First Financial Bankshares (FFIN) ............................................................................................................................44
First Horizon National (FHN) ....................................................................................................................................46
FirstMerit Corporation (FMER).................................................................................................................................48
First Niagara Financial Group (FNFG)......................................................................................................................50
Guaranty Bancorp (GBNK).......................................................................................................................................52
Huntington Bancshares (HBAN) ...............................................................................................................................54
Hudson City Bancorp (HCBK)..................................................................................................................................56
JPMorgan Chase (JPM) ............................................................................................................................................58
KeyCorp (KEY) ..........................................................................................................................................................60
M&T Bank (MTB) .......................................................................................................................................................62
Marshall & Ilsley Corp (MI) .......................................................................................................................................64
National City Corp (NCC)..........................................................................................................................................66
New York Community (NYB) ....................................................................................................................................68
Pacific Capital (PCBC) ..............................................................................................................................................70
PacWest Bancorp (PACW) .......................................................................................................................................72
PNC Financial Services Group (PNC).......................................................................................................................74
Prosperity Bancshares (PRSP)................................................................................................................................76
Provident Bankshares Corp (PBKS).........................................................................................................................78
Regions Financial (RF) .............................................................................................................................................80

Seacoast Banking of Florida (SBCF)........................................................................................................................82
Signature Bank (SBNY) ............................................................................................................................................84
Sterling Bancshares (SBIB) .....................................................................................................................................86
SunTrust Banks (STI)................................................................................................................................................88
SVB Financial Group (SIVB).....................................................................................................................................90
Synovus Financial Group (SNV) ...............................................................................................................................92
TCF Financial Corporation (TCB) .............................................................................................................................94
Texas Capital Bancshares (TCBI)............................................................................................................................96
The South Financial Group (TSFG) ..........................................................................................................................98
U.S. Bancorp (USB).................................................................................................................................................100
Umpqua Holdings Co (UMPQ)................................................................................................................................102
Union Bancal Corp (UB) .........................................................................................................................................104
United Community Banks (UCBI) ...........................................................................................................................106
Wachovia Corporation (WB)...................................................................................................................................108
Wells Fargo & Co (WFC).........................................................................................................................................110
Westamerica Bancorporation (WABC)...................................................................................................................112
Western Alliance Bancorp (WAL) ...........................................................................................................................114
Whitney Holding Corp (WTNY)...............................................................................................................................116
Wilmington Trust Corp (WL) ..................................................................................................................................118
Zions Bancorp (ZION) .............................................................................................................................................120