US Banks Underweight
Analyst(s): FPKCCW US Bank Research Group 212-687-1105
4Q08 Bank Preview: Another Kitchen Sink Quarter
• Expect Mostly Shortfalls Across The Board. We expect 4Q08 fundamentals will remain
challenged as credit costs will continue to mount and NIMs will be pressured. Overall, we expect
earnings shortfalls versus consensus at 24 banks (44% of our universe), 9 to meet (16%) and 22 to
beat (40%). Overall 4Q08 earnings are expected to decline 33% year-over-year.
• Credit Will Be The Focus Once Again… 4Q08 results will generally focus on credit quality
deterioration and related credit costs. We expect results will be somewhat less bifurcated this
quarter as deterioration is spilling over nationally and into CRE, C&I, and consumer credits. We
expect many of our banks to have increased reserve build in 4Q08 given a deteriorating economic
outlook and the infusion of TARP capital. Banks operating in more stressed markets such as the
Southeast and the West will continue to have inferior credit quality metrics.
• …But NIM Compression Also A Pressure Point. We also expect NIM compression for many of
our banks given the Fed’s multiple rate cuts in 4Q08 as deposit costs have reached a floor and the
benefit from liability repricing will be muted. Overall, we think the banks will limit forward looking
guidance given the rapidly changing credit environment. We also expect to hear more discussion
around usage of TARP now that most banks have received the capital.
• We Recently Lowered 4Q08 EPS Estimates. We recently lowered estimates for 27 banks n our
2009 Bank Outlook piece “2009 Outlook-Under The TARP, But Not Out Of The Storm” published
1/05/09. The common theme among our lower EPS revisions was higher credit costs. The median
bank in our universe is expected to have NCOs of 101 bps of average loans in 4Q08 compared to
77 bps in 3Q08, and 61 bps in 2Q08. LLRs are expected to rise to a median 1.60% of loans,
compared to 1.49% in 3Q08, and 1.40% in 2Q08. We expect reserve build to continue in 2009.
• Stock Reaction Likely To Be Negative. The fundamental outlook for banks remains challenging as
real estate prices have yet to reach a trough, and a weak economy will add more credit pressure.
Visibility for 2009 is low and we expect the stocks to pullback on the uncertainty and the large
negative EPS revisions following 4Q08 results.
• Stocks We Favor Heading Into 4Q: AF, BAC, NYB, WFC, BBT
• Stocks We Are Cautious On Into 4Q: CMA, MI, SUSQ, CYN, WL.

TABLE OF CONTENTS
Figure 1: FPKCCW Bank Universe Company Index................................................4
Figure 2: FPKCCW EPS Estimates Versus The Street............................................5
Figure 3: 4Q08 Reporting Dates And Earnings Call Information ...........................6
Figure 4: FPKCCW 4Q08 Earnings Calendar ...........................................................7
Earnings Models: 2008-2010 .....................................................................................8
Associated Banc-Corp (ASBC).................................................................................9
Astoria Federal Corporation (AF)............................................................................10
BancorpSouth (BXS) ..............................................................................................11
Bank of America Corp. (BAC).................................................................................12
Bank of Hawaii Corporation (BOH).........................................................................13
BankAtlantic (BBX) .................................................................................................14
BB&T Corporation (BBT) ........................................................................................15
Central Pacific Financial Corp (CPF)......................................................................16
Citigroup, Inc. (C) ...................................................................................................17
City National Corp (CYN)........................................................................................18
Colonial Bancgroup (CNB) .....................................................................................19
Comerica (CMA).....................................................................................................20
Commerce Bankshares (CBSH).............................................................................21
Community Bancorp (CBON) .................................................................................22
Cullen / Frost Bankers (CFR) .................................................................................23
CVB Financial Corp (CVBF) ...................................................................................24
Dime Community (DCOM)......................................................................................25
Fifth Third Bancorp (FITB)......................................................................................26
First Commonwealth Financial (FCF) .....................................................................27
First Financial Bankshares (FFIN) ..........................................................................28
First Horizon National (FHN) ..................................................................................29
FirstMerit Corporation (FMER) ...............................................................................30
First Niagara Financial Group (FNFG)....................................................................31
Guaranty Bancorp (GBNK).....................................................................................32
Huntington Bancshares (HBAN).............................................................................33
Hudson City Bancorp (HCBK) ................................................................................34
JPMorgan Chase (JPM) .........................................................................................35
KeyCorp (KEY) .......................................................................................................36
M&T Bank (MTB)....................................................................................................37
Marshall & Ilsley Corp (MI) .....................................................................................38

New York Community (NYB) ..................................................................................39
PacWest Bancorp (PACW).....................................................................................40
PNC Financial Services Group (PNC) ....................................................................41
Prosperity Bancshares (PRSP) ..............................................................................42
Regions Financial (RF)...........................................................................................43
Renasant Corporation (RNST) ...............................................................................44
Seacoast Banking of Florida (SBCF)......................................................................45
Signature Bank (SBNY)..........................................................................................46
Sterling Bancshares (SBIB)....................................................................................47
SunTrust Banks (STI) .............................................................................................48
Susquehanna Bancshares (SUSQ)........................................................................49
SVB Financial Group (SIVB)...................................................................................50
Synovus Financial Group (SNV).............................................................................51
TCF Financial Corporation .....................................................................................52
Texas Capital Bancshares (TCBI) ..........................................................................53
The South Financial Group (TSFG)........................................................................54
United Community (UCBI) ......................................................................................55
U.S. Bancorp (USB) ...............................................................................................56
Umpqua Holdings Co (UMPQ) ...............................................................................57
Wells Fargo & Co (WFC)........................................................................................58
Westamerica Bancorporation (WABC) ...................................................................59
Western Alliance Bancorp (WAL) ...........................................................................60
Whitney Holding Corp (WTNY)...............................................................................61
Wilmington Trust Corp (WL) ...................................................................................62
Zions Bancorp (ZION) ............................................................................................63