net interest margins – how low can they go? - aba interest margins – how low can they go?...
TRANSCRIPT
Net Interest Margins ndash How Low Can They Go
INVESTMENT CONCLUSION
ldquoI wish I had an answer to that because Im tired of answering that questionrdquo ndashYogi Berra
Many banks and borrowers are awash in liquidity Loan-to-deposit ratios have been drifting lower due to sluggish loandemand as consumers continue to unwind leverage and many businesses lack the confidence needed to expand Interestrate and reinvestment risk have begun to overtake credit quality as the major concern ndash net interest margincompression will reduce earnings Companies with higher core deposits (especially non-interest bearing) have greaterlonger-term franchise value but the benefit of such funding is limited in the prolonged low interest rate environment Weopine that net interest margin decline will accelerate this quarter as higher levels of shorter-term investments re-price atlower rates without a corresponding decrease in the cost of funds
We find that changes in bank net interest margins are typically related to increasesdecreases in the slope of the yieldcurve (which is currently flattening due to expectations of anemic economic growth stable and low rates through 2014and the Fedrsquos ldquoOperation Twistrdquo) Changes in the yield spread have significant and lingering effects on net interestmargins for many banks but the effects are particularly notable for mortgage specialists and small community banks Ingeneral large and more diversified banks are less sensitive to interest-rate shocks (as opposed to credit shocks) On theother hand banks are more constrained in their ability to control loan pricing mostly because of increased competitionfor quality loans
We therefore believe that commercially-oriented banks are better positioned for higher rates due to better core fundingsources and a greater percentage of commercial and industrial loans which reprice more quickly than real estate-relatedloans if and when absolute interest rates should rise We continue to recommend those stocks with dividends backed bysolid earnings and strong fundamentals as the best potential for higher returns through this low growth environment OurBUY-rated dividend picks include Astoria Financial Institutions New York Community and NorthwestBancorp We also like the following NEUTRAL-rated names for dividend-oriented investors City HoldingCommunity Bank Systems First Niagara Hudson City MampT Bank Peoplersquos United Provident FinancialSterling and United Bankshares of WV
KEY POINTS
middot The long-term trend for net interest margins is clearly on a decline (see Figures 3-6) however we remain optimisticfor bank stocks due to 1) the attractiveness of cash dividends versus fixed-income investments 2) stronger balancesheets (higher capital ratios and more stable asset quality) 3) a play on an improving US economy 4) regulatoryuncertainty should begin to subside in 2012 and 5) better prospects for increased merger and acquisition activity
middot Competition for top-rated credits is fierce pricing power appears to rest with borrowers and lsquofloorsrsquo in mostcommercial credits will mute the positive impact of higher rates through the early stages of a rising rate environment
middot Funding Mix The pace of overall deposit growth appears to have slowed as banks are awash in liquidity howeverwe do expect the deposit mix to become more attractive While deposit pricing may be attractive the reinvestment ofthe current volume into mortgages and securities appears to be an increasingly less attractive proposition as interestrate risk is increasing and spreads are narrowing
KEY POINTS CONTINUED ON NEXT PAGE
David C Peppard 215-665-6457
dpeppardjanneycom
Rick Weiss 215-665-6224
rweissjanneycom
BanksThrifts
March 5 2012
Equity Research
Industry Report
Research Analyst Certifications and Important Disclosuresare on pages 14 - 15 of this report
KEY POINTS CONTINUED
As indicated by the January 2012 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Fed
banks in general expect continued net interest margin compression specifically from lower spreads for
commercial real estate and residential real estate lending (see Figure 2)
VALUATION SUMMARY
As of March 1 2012 mid-cap banks small-cap banks and thrifts traded at 137 times 135 times and 131 times
estimated 2012 earnings At this time last year price-to-earnings multiples were 166 times 153 times and 215
times estimated 2011 earnings for essentially the same companies On a price-to-tangible book value basis mid-cap
banks small-cap banks and thrifts traded at medians of 131 136 and 116 respectively
INVESTMENT SUMMARY
Exhibit 1-1 provides a snapshot of yield curve steepness Exhibit 1-2 gauges spread compression between the 3-
month Treasury Bill and the 5-year Treasury Note which began approximately 24-months ago and continued to
compress until approximately 6-months ago and Exhibit 1-3 identifies the same relationship between the 2-year
Treasury Note and the 5-year Treasury Note which began its contraction approximately 12-months ago We
generally believe the spread between the 2-year and 5-year Treasury note yield is the best proxy for a bankrsquos overall
funding cost and investment yield
Net Interest Margin Outlook ndash more narrowing near term Funding costs are down but assets are shifting into
lower yielding products or short-term securities Combined with the flattened yield curve we expect net interest
margins to remain under pressure until the Fedrsquos low rate commitment ends
Additionally regulatory directives from Washington will likely remain uncertain in the presidential election year
We do not expect any major policy decisions regarding the future roles of Fannie and Freddie which continue to
distort mortgage loan pricing and adversely affect single-family portfolio lenders such as Astoria and Hudson City
Exhibit 1-1 Current Yield Curve
Source Capital IQ
000
050
100
150
200
250
300
350
US Treasury - 3 months
US Treasury - 6 months
United States Treasury Bill - 1
Year
US Treasury - 2 year
US Treasury - 5 years
US Treasury - 10 years
US Treasury - 30 years
Yield Curve
- 2 -
Exhibit 1-2 Gauging the Steepness of the Yield Curve
Source Capital IQ
Exhibit 1-3 Gauging the Steepness of the Yield Curve
Source Capital IQ
Below are select highlights from our net interest margin sensitivity analyses of the Janney Coverage Universe
Banksrsquo earnings growth prospects can be simplified into the following equations
Industry growth = nominal GDP growth
EPS growth = industry growth + market share change + profit margin change + ∆ in shares
In the following tables we have gauged our banksrsquo sensitivity to net interest margin changes Our base scenario is
our fiscal 2012 estimates then keeping all else equal we highlight how net interest margin deviations from our
current estimate would affect earnings per share Most of our fiscal 2012 net interest margin estimates reduce fiscal
2011 net interest margins by 5-10 basis points Have we been sufficiently conservative Based on balance sheet
positioning most of our banks would be better served by rising rather that falling interest rates
000
050
100
150
200
250
Spread Between 3-mo and 5-year US Treasury
000
050
100
150
200
Spread Between 2-year and 5-year US Treasury
- 3 -
Astoria Financial (AF-$882 BUY 12-Month Fair Value Estimate $10)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately $011 per share all other things being equal The fiscal 2011 net interest margin was 228 -
fiscal 2012 Street estimates are for a net interest margin of 217
City Holding Company (CHCO-$3410 NEUTRAL 12-Month Fair Value Estimate $35)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately eight cents per share all other things being equal The fiscal 2011 net interest margin was
389 - fiscal 2012 Street estimates are for a net interest margin of 380
Community Bank Systems (CBU-$2744 NEUTRAL 12-Month Fair Value Estimate $28)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately ten cents per share all other things being equal The fiscal 2011 net interest margin was
408 - fiscal 2012 Street estimates are for a net interest margin of 387
Financial Institutions (FISI-$1592 BUY 12-Month Fair Value Estimate $20)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately $011 all other things equal The fiscal 2011 net interest margin was
394 - fiscal 2012 Street estimates are for a net interest margin of 390
EPS Sensitivity Analysis - 2012
Net Interest Margin 196 201 206 211 216 221 226 231
Earning Assets $16071826 $16071826 $16071826 $16071826 $16071826 $16071826 $16071826 $16071826
Net Income $31504 $36607 $41710 $46813 $51933 $57018 $62121 $67224
2012 EPS $034 $039 $044 $050 $055 $061 $066 $072
Net Interest Margin 353 363 373 383 393 403 413
Earning Assets $2471638 $2471638 $2471638 $2471638 $2471638 $2471638 $2471638
Net interest income (FTE) $87177 $89649 $92121 $94599 $97064 $99535 $102007
Net Income Avail to Common $48374 $49993 $51612 $37891 $54850 $56469 $58087
Earnings Per Share $236 $244 $252 $260 $268 $276 $284
Net Interest Margin 364 374 384 394 404 414 424
Earning Assets $6002628 $6002628 $6002628 $6002628 $6002628 $6002628 $6002628
Net interest income (FTE) $218454 $224457 $230459 $236495 $242464 $248467 $254470
Earnings Per Share $176 $186 $196 $205 $215 $224 $234
Net Interest Margin 366 376 386 396 406 416 426
Earning Assets $2270322 $2270322 $2270322 $2270322 $2270322 $2270322 $2270322
Net interest income $83044 $85314 $87585 $89967 $92125 $94396 $96666
Earnings Per Share $137 $148 $159 $170 $181 $192 $203
- 4 -
First Niagara (FNFG-$964 NEUTRAL 12-Month Fair Value Estimate $10)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents per share all other things equal The fiscal 2011 net
interest margin was 359 - fiscal 2012 Street estimates are for a net interest margin of 347
Fulton Financial (FULT-$986 BUY 12-Month Fair Value Estimate $11)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately three cents per
share for every five basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 390 - fiscal 2012 Street estimates are for a net interest margin of 377
Hudson City Bancorp (HCBK-$683 NEUTRAL 12-Month Fair Value Estimate $7)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately five cents per
share for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 188 - fiscal 2012 Street estimates are for a net interest margin of 207
MampT Bank (MTB-$8123 NEUTRAL 12-Month Fair Value Estimate $82)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately $038 per share
for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011 net
interest margin was 373 - fiscal 2012 Street estimates are for a net interest margin of 360
Net Interest Margin 312 322 332 342 352 362 372
Earning Assets $32984073 $32984073 $32984073 $32984073 $32984073 $32984073 $32984073
Net Interest Income (FTE) $1030110 $1063094 $1096078 $1129732 $1162046 $1195030 $1228014
Net Income $299916 $321356 $342796 $364671 $385675 $407115 $428554
2012 Earnings Per Share $085 $091 $097 $103 $109 $115 $122
Net Interest Margin 353 358 363 368 373 378 383 388 393
Average earning assets $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871
Net interest income 531699 539231 546764 554296 561833 569361 576893 584426 591958
Net interest margin 353 358 363 368 373 378 383 388 393
Net income 127079 132219 137359 142499 147643 152779 157919 163059 168199
2012 EPS $063 $066 $068 $071 $073 $076 $079 $081 $084
Net Interest Margin 163 173 183 193 203 213 223 233 243
2012 Net Interest Income $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037
Net Income $197135 $224216 $251297 $278378 $305370 $332539 $359620 $386701 $413782
2012 EPS $040 $045 $051 $056 $062 $067 $072 $078 $083
Net Interest Margin 321 331 341 351 361 371 381
Net interest income 2256498 2326886 2397275 2467663 2538052 2608440 2678829
Net income 734587 781747 828907 876067 923228 970388 1017548
Net inc avail com stkholders $682166 $729327 $776487 $823647 $870808 $917968 $965128
2012 EPS $542 $580 $617 $655 $692 $730 $767
- 5 -
New York Community (NYB-$1306 BUY 12-Month Fair Value Estimate $15)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things being equal The fiscal 2011 net interest margin was
344 - fiscal 2012 Street estimates are for a net interest margin of 321
Northwest Bancshares (NWBI-$1250 BUY 12-Month Fair Value Estimate $13)
Our interest rate sensitivity analysis projects that ten basis point swings in the net interest margin will change
earnings by approximately five cents per share all other things equal The fiscal 2011 net interest margin was
368 - fiscal 2012 Street estimates are for a net interest margin of 368
Peoplersquos United Financial (PBCT-$1272 NEUTRAL 12-Month Fair Value Estimate $14)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things equal The fiscal 2011 net interest margin was 414 -
fiscal 2012 Street estimates are for a net interest margin of 398
Provident Financial (PFS-$1348 NEUTRAL 12-Month Fair Value Estimate $15)
Our net interest margin sensitivity model forecasts that a ten basis point change in the net interest margin causes
earnings to adjust approximately nine cents per share all other things equal The fiscal 2011 net interest margin was
347 - fiscal 2012 Street estimates are for a net interest margin of 331
2012 EPS Sensitivity Analysis
Net Interest Margin 289 299 309 319 329 339 349 359 369
2012 Base Earning Assets $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731
Net Income $366295 $388877 $411460 $434043 $456686 $479209 $501792 $524375 $546957
Earnings Per Share $084 $089 $094 $099 $105 $110 $115 $120 $125
Net Interest Margin 339 349 359 369 379 389 399 409
Earning Assets $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315
Net Interest Income $255932 $263485 $271039 $280114 $286145 $293698 $301252 $308805
Net Income $52465 $57374 $62284 $68183 $72103 $77013 $81923 $86832
Earnings Per Share $057 $063 $068 $075 $079 $084 $090 $095
EPS Sensitivity Analysis - 2012
Earning Assets $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413
NIM 347 357 367 377 387 397 407 417 427
2011 Projected Net Income $1946 $2111 $2276 $2441 $2606 $2740 $2936 $3101 $3266
EPS $057 $061 $066 $071 $076 $080 $086 $090 $095
Net Interest Margin 293 303 313 323 333 343 353 363 373
Net Interest Income $191161 $197690 $204219 $210748 $217289 $223807 $230336 $236865 $243394
Net Income $43372 $48204 $53035 $57867 $62707 $67530 $72362 $77193 $82025
2012 EPS $076 $085 $093 $102 $110 $118 $127 $135 $144
- 6 -
Sandy Spring Bancorp (SASR -$1809 BUY 12-Month Fair Value Estimate $19)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately nine cents all other things equal The fiscal 2011 net interest margin
was 357 - fiscal 2012 Street estimates are for a net interest margin of 345
StellarOne Corporation (STEL- $1152 NEUTRAL 12-Month Fair Value Estimate $13)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately eight cents all other things equal The fiscal 2011 net interest
margin was 380 - fiscal 2012 Street estimates are for a net interest margin of 374
Sterling Bancorp (STL-$880 NEUTRAL 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately five cents all other things equal The fiscal 2011 net interest margin
was 378 - fiscal 2012 Street estimates are for a net interest margin of 384
Susquehanna Bancshares (SUSQ-$929 BUY 12-Month Fair Value Estimate $11)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately six cents per share all other things equal The fiscal 2011 net interest margin was 360 -
fiscal 2012 Street estimates are for a net interest margin of 371
Average earning assets $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837
Net interest income 105917 109414 112911 116407 119908 123401 126898 130395 133892
Net interest margin 303 313 323 333 343 353 363 373 383
2011 EPS $094 $103 $112 $121 $130 $140 $149 $158 $167
Net Interest Margin 333 343 353 363 373 383 393 403
Earning Assets $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266
Net interest income (FTE) $88249 $90897 $93545 $96194 $98844 $101490 $104138 $106787
Earnings Per Share $043 $051 $059 $067 $075 $083 $091 $099
Net Interest Margin 328 338 348 358 368 378 388 398 408
Average earning assets $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914
Net interest income 79051 81459 83867 86275 88683 91090 93498 95906 98314
Net interest margin 328 338 348 358 368 378 388 398 408
2012 EPS $039 $044 $049 $054 $060 $065 $070 $075 $081
Net Interest Margin 324 334 344 354 364 374 384 394 404
(Dollars in Millions except per share amounts)
Earning Assets $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913
Net Interest Income 5108976 5266636 5424296 5581956 5739616 5898429 6054936 6212596 6370255
NIM 324 334 344 354 364 374 384 394 404
EPS $042 $047 $053 $058 $064 $070 $075 $080 $086
- 7 -
United Bankshares of WV (UBSI-$2978 NEUTRAL 12-Month Fair Value Estimate $27)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately ten cents all other things equal The fiscal 2011 net interest margin
was 384 - fiscal 2012 Street estimates are for a net interest margin of 379
Virginia Commerce Bancorp (VCBI-$842 BUY 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents all other things equal The fiscal 2011 net interest margin
was 391 - fiscal 2012 Street estimates are for a net interest margin of 379
WSFS Financial (WSFS-$3800 BUY 12-Month Fair Value Estimate $47)
Our net interest margin sensitivity analysis suggests that five basis point swings in the net interest margin cause
earnings per share to change by approximately $014 cents all other things equal The fiscal 2011 net interest
margin was 360 - fiscal 2012 Street estimates are for a net interest margin of 356
Net Interest Margin 351 361 371 381 391 401 411
Average earning assets $7762834 $7762834 $7762834 $7762834 $7762834 $7762834 $7762834
Net interest income 272499 280261 288024 295810 303550 311313 319076
Net Income 75742 80788 85834 90894 95925 100971 106017
2012 EPS $150 $160 $170 $180 $190 $200 $210
Net Interest Margin 332 342 352 362 372 382 392 402 412
Average earning assets $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253
Net interest income 98229 101186 104143 107101 110067 113015 115972 118930 121887
Net interest margin 332 342 352 362 372 382 392 402 412
2011 EPS $050 $056 $062 $068 $075 $081 $087 $093 $100
Net Interest Margin 323 328 333 338 343 348 353 358 363
2012 Earning Assets $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180
Net Interest Income $121491 $123372 $125254 $127136 $134847 $130899 $132780 $134662 $136544
Net Income Available to Common $17409 $18632 $19855 $21078 $26090 $23524 $24747 $25970 $27193
2012 EPS $244 $258 $272 $286 $300 $314 $328 $342 $356
- 8 -
Table 1 Janney Coverage Universe Net Interest Margin Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net
Interest
Margin ( )
Net
Interest
Margin ( )
Street Net
Interest Margin
Estimate ( )
Street Net
Interest Margin
Estimate ( )
Change in Net
Interest Margin
(bps)
Change in Net
Interest Margin
(bps) 2011 actual
vs 2013 estimate
2010A 2011A 2012E 2013E
2011 actual
vs 2012 estimate
2011 actual
vs 2013 estimate
Astoria Financial AF 233 228 217 217 (011) (011)
BankUnited BKU 505 614 548 477 (066) (137)
Beneficial Mutual Bancorp BNCL 332 322 316 318 (006) (004)
City Holding Company CHCO 406 389 380 376 (009) (013)
Community Bank System CBU 404 408 387 378 (021) (030)
Financial Institutions FISI 407 394 390 371 (004) (023)
First Commonwealth Financial FCF 388 380 373 373 (007) (007)
First Niagara Financial Group FNFG 364 359 347 350 (012) (009)
Fulton Financial FULT 380 390 377 375 (013) (015)
Hudson City Bancorp HCBK 200 188 207 201 019 013
Investors Bancorp ISBC 314 336 327 321 (009) (015)
MampT Bank MTB 384 373 360 356 (013) (017)
Metro Bancorp METR 404 386 366 352 (020) (034)
National Penn Bancshares NPBC 345 352 342 342 (010) (010)
New York Community Bancorp NYB 344 344 321 314 (023) (030)
Northwest Bancshares NWBI 352 368 368 369 000 001
Orrstown Financial Services ORRF 372 366 341 344 (025) (022)
Peoples United Financial PBCT 370 414 398 385 (016) (029)
Provident Financial Services PFS 341 347 331 327 (016) (020)
SampT Bancorp STBA 405 383 368 367 (015) (016)
Sandy Spring Bancorp SASR 360 357 345 335 (012) (022)
StellarOne STEL 365 380 374 366 (006) (014)
Sterling Bancorp STL 407 378 384 384 006 006
Sun Bancorp SNBC 350 350 345 345 (005) (005)
Susquehanna Bancshares SUSQ 367 360 371 366 011 006
Union First Market Bankshares UBSH 456 457 429 413 (028) (044)
United Bankshares UBSI 360 384 379 372 (005) (012)
Virginia Commerce Bancorp VCBI 387 391 379 368 (012) (023)
WSFS Financial WSFS 359 360 356 348 (004) (012)
Median Commercial Banks 384 380 373 367 (012) (015)
Median Thrifts 343 346 329 324 (010) (013)
- 9 -
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
KEY POINTS CONTINUED
As indicated by the January 2012 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Fed
banks in general expect continued net interest margin compression specifically from lower spreads for
commercial real estate and residential real estate lending (see Figure 2)
VALUATION SUMMARY
As of March 1 2012 mid-cap banks small-cap banks and thrifts traded at 137 times 135 times and 131 times
estimated 2012 earnings At this time last year price-to-earnings multiples were 166 times 153 times and 215
times estimated 2011 earnings for essentially the same companies On a price-to-tangible book value basis mid-cap
banks small-cap banks and thrifts traded at medians of 131 136 and 116 respectively
INVESTMENT SUMMARY
Exhibit 1-1 provides a snapshot of yield curve steepness Exhibit 1-2 gauges spread compression between the 3-
month Treasury Bill and the 5-year Treasury Note which began approximately 24-months ago and continued to
compress until approximately 6-months ago and Exhibit 1-3 identifies the same relationship between the 2-year
Treasury Note and the 5-year Treasury Note which began its contraction approximately 12-months ago We
generally believe the spread between the 2-year and 5-year Treasury note yield is the best proxy for a bankrsquos overall
funding cost and investment yield
Net Interest Margin Outlook ndash more narrowing near term Funding costs are down but assets are shifting into
lower yielding products or short-term securities Combined with the flattened yield curve we expect net interest
margins to remain under pressure until the Fedrsquos low rate commitment ends
Additionally regulatory directives from Washington will likely remain uncertain in the presidential election year
We do not expect any major policy decisions regarding the future roles of Fannie and Freddie which continue to
distort mortgage loan pricing and adversely affect single-family portfolio lenders such as Astoria and Hudson City
Exhibit 1-1 Current Yield Curve
Source Capital IQ
000
050
100
150
200
250
300
350
US Treasury - 3 months
US Treasury - 6 months
United States Treasury Bill - 1
Year
US Treasury - 2 year
US Treasury - 5 years
US Treasury - 10 years
US Treasury - 30 years
Yield Curve
- 2 -
Exhibit 1-2 Gauging the Steepness of the Yield Curve
Source Capital IQ
Exhibit 1-3 Gauging the Steepness of the Yield Curve
Source Capital IQ
Below are select highlights from our net interest margin sensitivity analyses of the Janney Coverage Universe
Banksrsquo earnings growth prospects can be simplified into the following equations
Industry growth = nominal GDP growth
EPS growth = industry growth + market share change + profit margin change + ∆ in shares
In the following tables we have gauged our banksrsquo sensitivity to net interest margin changes Our base scenario is
our fiscal 2012 estimates then keeping all else equal we highlight how net interest margin deviations from our
current estimate would affect earnings per share Most of our fiscal 2012 net interest margin estimates reduce fiscal
2011 net interest margins by 5-10 basis points Have we been sufficiently conservative Based on balance sheet
positioning most of our banks would be better served by rising rather that falling interest rates
000
050
100
150
200
250
Spread Between 3-mo and 5-year US Treasury
000
050
100
150
200
Spread Between 2-year and 5-year US Treasury
- 3 -
Astoria Financial (AF-$882 BUY 12-Month Fair Value Estimate $10)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately $011 per share all other things being equal The fiscal 2011 net interest margin was 228 -
fiscal 2012 Street estimates are for a net interest margin of 217
City Holding Company (CHCO-$3410 NEUTRAL 12-Month Fair Value Estimate $35)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately eight cents per share all other things being equal The fiscal 2011 net interest margin was
389 - fiscal 2012 Street estimates are for a net interest margin of 380
Community Bank Systems (CBU-$2744 NEUTRAL 12-Month Fair Value Estimate $28)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately ten cents per share all other things being equal The fiscal 2011 net interest margin was
408 - fiscal 2012 Street estimates are for a net interest margin of 387
Financial Institutions (FISI-$1592 BUY 12-Month Fair Value Estimate $20)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately $011 all other things equal The fiscal 2011 net interest margin was
394 - fiscal 2012 Street estimates are for a net interest margin of 390
EPS Sensitivity Analysis - 2012
Net Interest Margin 196 201 206 211 216 221 226 231
Earning Assets $16071826 $16071826 $16071826 $16071826 $16071826 $16071826 $16071826 $16071826
Net Income $31504 $36607 $41710 $46813 $51933 $57018 $62121 $67224
2012 EPS $034 $039 $044 $050 $055 $061 $066 $072
Net Interest Margin 353 363 373 383 393 403 413
Earning Assets $2471638 $2471638 $2471638 $2471638 $2471638 $2471638 $2471638
Net interest income (FTE) $87177 $89649 $92121 $94599 $97064 $99535 $102007
Net Income Avail to Common $48374 $49993 $51612 $37891 $54850 $56469 $58087
Earnings Per Share $236 $244 $252 $260 $268 $276 $284
Net Interest Margin 364 374 384 394 404 414 424
Earning Assets $6002628 $6002628 $6002628 $6002628 $6002628 $6002628 $6002628
Net interest income (FTE) $218454 $224457 $230459 $236495 $242464 $248467 $254470
Earnings Per Share $176 $186 $196 $205 $215 $224 $234
Net Interest Margin 366 376 386 396 406 416 426
Earning Assets $2270322 $2270322 $2270322 $2270322 $2270322 $2270322 $2270322
Net interest income $83044 $85314 $87585 $89967 $92125 $94396 $96666
Earnings Per Share $137 $148 $159 $170 $181 $192 $203
- 4 -
First Niagara (FNFG-$964 NEUTRAL 12-Month Fair Value Estimate $10)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents per share all other things equal The fiscal 2011 net
interest margin was 359 - fiscal 2012 Street estimates are for a net interest margin of 347
Fulton Financial (FULT-$986 BUY 12-Month Fair Value Estimate $11)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately three cents per
share for every five basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 390 - fiscal 2012 Street estimates are for a net interest margin of 377
Hudson City Bancorp (HCBK-$683 NEUTRAL 12-Month Fair Value Estimate $7)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately five cents per
share for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 188 - fiscal 2012 Street estimates are for a net interest margin of 207
MampT Bank (MTB-$8123 NEUTRAL 12-Month Fair Value Estimate $82)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately $038 per share
for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011 net
interest margin was 373 - fiscal 2012 Street estimates are for a net interest margin of 360
Net Interest Margin 312 322 332 342 352 362 372
Earning Assets $32984073 $32984073 $32984073 $32984073 $32984073 $32984073 $32984073
Net Interest Income (FTE) $1030110 $1063094 $1096078 $1129732 $1162046 $1195030 $1228014
Net Income $299916 $321356 $342796 $364671 $385675 $407115 $428554
2012 Earnings Per Share $085 $091 $097 $103 $109 $115 $122
Net Interest Margin 353 358 363 368 373 378 383 388 393
Average earning assets $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871
Net interest income 531699 539231 546764 554296 561833 569361 576893 584426 591958
Net interest margin 353 358 363 368 373 378 383 388 393
Net income 127079 132219 137359 142499 147643 152779 157919 163059 168199
2012 EPS $063 $066 $068 $071 $073 $076 $079 $081 $084
Net Interest Margin 163 173 183 193 203 213 223 233 243
2012 Net Interest Income $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037
Net Income $197135 $224216 $251297 $278378 $305370 $332539 $359620 $386701 $413782
2012 EPS $040 $045 $051 $056 $062 $067 $072 $078 $083
Net Interest Margin 321 331 341 351 361 371 381
Net interest income 2256498 2326886 2397275 2467663 2538052 2608440 2678829
Net income 734587 781747 828907 876067 923228 970388 1017548
Net inc avail com stkholders $682166 $729327 $776487 $823647 $870808 $917968 $965128
2012 EPS $542 $580 $617 $655 $692 $730 $767
- 5 -
New York Community (NYB-$1306 BUY 12-Month Fair Value Estimate $15)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things being equal The fiscal 2011 net interest margin was
344 - fiscal 2012 Street estimates are for a net interest margin of 321
Northwest Bancshares (NWBI-$1250 BUY 12-Month Fair Value Estimate $13)
Our interest rate sensitivity analysis projects that ten basis point swings in the net interest margin will change
earnings by approximately five cents per share all other things equal The fiscal 2011 net interest margin was
368 - fiscal 2012 Street estimates are for a net interest margin of 368
Peoplersquos United Financial (PBCT-$1272 NEUTRAL 12-Month Fair Value Estimate $14)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things equal The fiscal 2011 net interest margin was 414 -
fiscal 2012 Street estimates are for a net interest margin of 398
Provident Financial (PFS-$1348 NEUTRAL 12-Month Fair Value Estimate $15)
Our net interest margin sensitivity model forecasts that a ten basis point change in the net interest margin causes
earnings to adjust approximately nine cents per share all other things equal The fiscal 2011 net interest margin was
347 - fiscal 2012 Street estimates are for a net interest margin of 331
2012 EPS Sensitivity Analysis
Net Interest Margin 289 299 309 319 329 339 349 359 369
2012 Base Earning Assets $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731
Net Income $366295 $388877 $411460 $434043 $456686 $479209 $501792 $524375 $546957
Earnings Per Share $084 $089 $094 $099 $105 $110 $115 $120 $125
Net Interest Margin 339 349 359 369 379 389 399 409
Earning Assets $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315
Net Interest Income $255932 $263485 $271039 $280114 $286145 $293698 $301252 $308805
Net Income $52465 $57374 $62284 $68183 $72103 $77013 $81923 $86832
Earnings Per Share $057 $063 $068 $075 $079 $084 $090 $095
EPS Sensitivity Analysis - 2012
Earning Assets $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413
NIM 347 357 367 377 387 397 407 417 427
2011 Projected Net Income $1946 $2111 $2276 $2441 $2606 $2740 $2936 $3101 $3266
EPS $057 $061 $066 $071 $076 $080 $086 $090 $095
Net Interest Margin 293 303 313 323 333 343 353 363 373
Net Interest Income $191161 $197690 $204219 $210748 $217289 $223807 $230336 $236865 $243394
Net Income $43372 $48204 $53035 $57867 $62707 $67530 $72362 $77193 $82025
2012 EPS $076 $085 $093 $102 $110 $118 $127 $135 $144
- 6 -
Sandy Spring Bancorp (SASR -$1809 BUY 12-Month Fair Value Estimate $19)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately nine cents all other things equal The fiscal 2011 net interest margin
was 357 - fiscal 2012 Street estimates are for a net interest margin of 345
StellarOne Corporation (STEL- $1152 NEUTRAL 12-Month Fair Value Estimate $13)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately eight cents all other things equal The fiscal 2011 net interest
margin was 380 - fiscal 2012 Street estimates are for a net interest margin of 374
Sterling Bancorp (STL-$880 NEUTRAL 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately five cents all other things equal The fiscal 2011 net interest margin
was 378 - fiscal 2012 Street estimates are for a net interest margin of 384
Susquehanna Bancshares (SUSQ-$929 BUY 12-Month Fair Value Estimate $11)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately six cents per share all other things equal The fiscal 2011 net interest margin was 360 -
fiscal 2012 Street estimates are for a net interest margin of 371
Average earning assets $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837
Net interest income 105917 109414 112911 116407 119908 123401 126898 130395 133892
Net interest margin 303 313 323 333 343 353 363 373 383
2011 EPS $094 $103 $112 $121 $130 $140 $149 $158 $167
Net Interest Margin 333 343 353 363 373 383 393 403
Earning Assets $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266
Net interest income (FTE) $88249 $90897 $93545 $96194 $98844 $101490 $104138 $106787
Earnings Per Share $043 $051 $059 $067 $075 $083 $091 $099
Net Interest Margin 328 338 348 358 368 378 388 398 408
Average earning assets $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914
Net interest income 79051 81459 83867 86275 88683 91090 93498 95906 98314
Net interest margin 328 338 348 358 368 378 388 398 408
2012 EPS $039 $044 $049 $054 $060 $065 $070 $075 $081
Net Interest Margin 324 334 344 354 364 374 384 394 404
(Dollars in Millions except per share amounts)
Earning Assets $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913
Net Interest Income 5108976 5266636 5424296 5581956 5739616 5898429 6054936 6212596 6370255
NIM 324 334 344 354 364 374 384 394 404
EPS $042 $047 $053 $058 $064 $070 $075 $080 $086
- 7 -
United Bankshares of WV (UBSI-$2978 NEUTRAL 12-Month Fair Value Estimate $27)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately ten cents all other things equal The fiscal 2011 net interest margin
was 384 - fiscal 2012 Street estimates are for a net interest margin of 379
Virginia Commerce Bancorp (VCBI-$842 BUY 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents all other things equal The fiscal 2011 net interest margin
was 391 - fiscal 2012 Street estimates are for a net interest margin of 379
WSFS Financial (WSFS-$3800 BUY 12-Month Fair Value Estimate $47)
Our net interest margin sensitivity analysis suggests that five basis point swings in the net interest margin cause
earnings per share to change by approximately $014 cents all other things equal The fiscal 2011 net interest
margin was 360 - fiscal 2012 Street estimates are for a net interest margin of 356
Net Interest Margin 351 361 371 381 391 401 411
Average earning assets $7762834 $7762834 $7762834 $7762834 $7762834 $7762834 $7762834
Net interest income 272499 280261 288024 295810 303550 311313 319076
Net Income 75742 80788 85834 90894 95925 100971 106017
2012 EPS $150 $160 $170 $180 $190 $200 $210
Net Interest Margin 332 342 352 362 372 382 392 402 412
Average earning assets $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253
Net interest income 98229 101186 104143 107101 110067 113015 115972 118930 121887
Net interest margin 332 342 352 362 372 382 392 402 412
2011 EPS $050 $056 $062 $068 $075 $081 $087 $093 $100
Net Interest Margin 323 328 333 338 343 348 353 358 363
2012 Earning Assets $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180
Net Interest Income $121491 $123372 $125254 $127136 $134847 $130899 $132780 $134662 $136544
Net Income Available to Common $17409 $18632 $19855 $21078 $26090 $23524 $24747 $25970 $27193
2012 EPS $244 $258 $272 $286 $300 $314 $328 $342 $356
- 8 -
Table 1 Janney Coverage Universe Net Interest Margin Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net
Interest
Margin ( )
Net
Interest
Margin ( )
Street Net
Interest Margin
Estimate ( )
Street Net
Interest Margin
Estimate ( )
Change in Net
Interest Margin
(bps)
Change in Net
Interest Margin
(bps) 2011 actual
vs 2013 estimate
2010A 2011A 2012E 2013E
2011 actual
vs 2012 estimate
2011 actual
vs 2013 estimate
Astoria Financial AF 233 228 217 217 (011) (011)
BankUnited BKU 505 614 548 477 (066) (137)
Beneficial Mutual Bancorp BNCL 332 322 316 318 (006) (004)
City Holding Company CHCO 406 389 380 376 (009) (013)
Community Bank System CBU 404 408 387 378 (021) (030)
Financial Institutions FISI 407 394 390 371 (004) (023)
First Commonwealth Financial FCF 388 380 373 373 (007) (007)
First Niagara Financial Group FNFG 364 359 347 350 (012) (009)
Fulton Financial FULT 380 390 377 375 (013) (015)
Hudson City Bancorp HCBK 200 188 207 201 019 013
Investors Bancorp ISBC 314 336 327 321 (009) (015)
MampT Bank MTB 384 373 360 356 (013) (017)
Metro Bancorp METR 404 386 366 352 (020) (034)
National Penn Bancshares NPBC 345 352 342 342 (010) (010)
New York Community Bancorp NYB 344 344 321 314 (023) (030)
Northwest Bancshares NWBI 352 368 368 369 000 001
Orrstown Financial Services ORRF 372 366 341 344 (025) (022)
Peoples United Financial PBCT 370 414 398 385 (016) (029)
Provident Financial Services PFS 341 347 331 327 (016) (020)
SampT Bancorp STBA 405 383 368 367 (015) (016)
Sandy Spring Bancorp SASR 360 357 345 335 (012) (022)
StellarOne STEL 365 380 374 366 (006) (014)
Sterling Bancorp STL 407 378 384 384 006 006
Sun Bancorp SNBC 350 350 345 345 (005) (005)
Susquehanna Bancshares SUSQ 367 360 371 366 011 006
Union First Market Bankshares UBSH 456 457 429 413 (028) (044)
United Bankshares UBSI 360 384 379 372 (005) (012)
Virginia Commerce Bancorp VCBI 387 391 379 368 (012) (023)
WSFS Financial WSFS 359 360 356 348 (004) (012)
Median Commercial Banks 384 380 373 367 (012) (015)
Median Thrifts 343 346 329 324 (010) (013)
- 9 -
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
Exhibit 1-2 Gauging the Steepness of the Yield Curve
Source Capital IQ
Exhibit 1-3 Gauging the Steepness of the Yield Curve
Source Capital IQ
Below are select highlights from our net interest margin sensitivity analyses of the Janney Coverage Universe
Banksrsquo earnings growth prospects can be simplified into the following equations
Industry growth = nominal GDP growth
EPS growth = industry growth + market share change + profit margin change + ∆ in shares
In the following tables we have gauged our banksrsquo sensitivity to net interest margin changes Our base scenario is
our fiscal 2012 estimates then keeping all else equal we highlight how net interest margin deviations from our
current estimate would affect earnings per share Most of our fiscal 2012 net interest margin estimates reduce fiscal
2011 net interest margins by 5-10 basis points Have we been sufficiently conservative Based on balance sheet
positioning most of our banks would be better served by rising rather that falling interest rates
000
050
100
150
200
250
Spread Between 3-mo and 5-year US Treasury
000
050
100
150
200
Spread Between 2-year and 5-year US Treasury
- 3 -
Astoria Financial (AF-$882 BUY 12-Month Fair Value Estimate $10)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately $011 per share all other things being equal The fiscal 2011 net interest margin was 228 -
fiscal 2012 Street estimates are for a net interest margin of 217
City Holding Company (CHCO-$3410 NEUTRAL 12-Month Fair Value Estimate $35)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately eight cents per share all other things being equal The fiscal 2011 net interest margin was
389 - fiscal 2012 Street estimates are for a net interest margin of 380
Community Bank Systems (CBU-$2744 NEUTRAL 12-Month Fair Value Estimate $28)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately ten cents per share all other things being equal The fiscal 2011 net interest margin was
408 - fiscal 2012 Street estimates are for a net interest margin of 387
Financial Institutions (FISI-$1592 BUY 12-Month Fair Value Estimate $20)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately $011 all other things equal The fiscal 2011 net interest margin was
394 - fiscal 2012 Street estimates are for a net interest margin of 390
EPS Sensitivity Analysis - 2012
Net Interest Margin 196 201 206 211 216 221 226 231
Earning Assets $16071826 $16071826 $16071826 $16071826 $16071826 $16071826 $16071826 $16071826
Net Income $31504 $36607 $41710 $46813 $51933 $57018 $62121 $67224
2012 EPS $034 $039 $044 $050 $055 $061 $066 $072
Net Interest Margin 353 363 373 383 393 403 413
Earning Assets $2471638 $2471638 $2471638 $2471638 $2471638 $2471638 $2471638
Net interest income (FTE) $87177 $89649 $92121 $94599 $97064 $99535 $102007
Net Income Avail to Common $48374 $49993 $51612 $37891 $54850 $56469 $58087
Earnings Per Share $236 $244 $252 $260 $268 $276 $284
Net Interest Margin 364 374 384 394 404 414 424
Earning Assets $6002628 $6002628 $6002628 $6002628 $6002628 $6002628 $6002628
Net interest income (FTE) $218454 $224457 $230459 $236495 $242464 $248467 $254470
Earnings Per Share $176 $186 $196 $205 $215 $224 $234
Net Interest Margin 366 376 386 396 406 416 426
Earning Assets $2270322 $2270322 $2270322 $2270322 $2270322 $2270322 $2270322
Net interest income $83044 $85314 $87585 $89967 $92125 $94396 $96666
Earnings Per Share $137 $148 $159 $170 $181 $192 $203
- 4 -
First Niagara (FNFG-$964 NEUTRAL 12-Month Fair Value Estimate $10)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents per share all other things equal The fiscal 2011 net
interest margin was 359 - fiscal 2012 Street estimates are for a net interest margin of 347
Fulton Financial (FULT-$986 BUY 12-Month Fair Value Estimate $11)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately three cents per
share for every five basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 390 - fiscal 2012 Street estimates are for a net interest margin of 377
Hudson City Bancorp (HCBK-$683 NEUTRAL 12-Month Fair Value Estimate $7)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately five cents per
share for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 188 - fiscal 2012 Street estimates are for a net interest margin of 207
MampT Bank (MTB-$8123 NEUTRAL 12-Month Fair Value Estimate $82)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately $038 per share
for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011 net
interest margin was 373 - fiscal 2012 Street estimates are for a net interest margin of 360
Net Interest Margin 312 322 332 342 352 362 372
Earning Assets $32984073 $32984073 $32984073 $32984073 $32984073 $32984073 $32984073
Net Interest Income (FTE) $1030110 $1063094 $1096078 $1129732 $1162046 $1195030 $1228014
Net Income $299916 $321356 $342796 $364671 $385675 $407115 $428554
2012 Earnings Per Share $085 $091 $097 $103 $109 $115 $122
Net Interest Margin 353 358 363 368 373 378 383 388 393
Average earning assets $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871
Net interest income 531699 539231 546764 554296 561833 569361 576893 584426 591958
Net interest margin 353 358 363 368 373 378 383 388 393
Net income 127079 132219 137359 142499 147643 152779 157919 163059 168199
2012 EPS $063 $066 $068 $071 $073 $076 $079 $081 $084
Net Interest Margin 163 173 183 193 203 213 223 233 243
2012 Net Interest Income $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037
Net Income $197135 $224216 $251297 $278378 $305370 $332539 $359620 $386701 $413782
2012 EPS $040 $045 $051 $056 $062 $067 $072 $078 $083
Net Interest Margin 321 331 341 351 361 371 381
Net interest income 2256498 2326886 2397275 2467663 2538052 2608440 2678829
Net income 734587 781747 828907 876067 923228 970388 1017548
Net inc avail com stkholders $682166 $729327 $776487 $823647 $870808 $917968 $965128
2012 EPS $542 $580 $617 $655 $692 $730 $767
- 5 -
New York Community (NYB-$1306 BUY 12-Month Fair Value Estimate $15)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things being equal The fiscal 2011 net interest margin was
344 - fiscal 2012 Street estimates are for a net interest margin of 321
Northwest Bancshares (NWBI-$1250 BUY 12-Month Fair Value Estimate $13)
Our interest rate sensitivity analysis projects that ten basis point swings in the net interest margin will change
earnings by approximately five cents per share all other things equal The fiscal 2011 net interest margin was
368 - fiscal 2012 Street estimates are for a net interest margin of 368
Peoplersquos United Financial (PBCT-$1272 NEUTRAL 12-Month Fair Value Estimate $14)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things equal The fiscal 2011 net interest margin was 414 -
fiscal 2012 Street estimates are for a net interest margin of 398
Provident Financial (PFS-$1348 NEUTRAL 12-Month Fair Value Estimate $15)
Our net interest margin sensitivity model forecasts that a ten basis point change in the net interest margin causes
earnings to adjust approximately nine cents per share all other things equal The fiscal 2011 net interest margin was
347 - fiscal 2012 Street estimates are for a net interest margin of 331
2012 EPS Sensitivity Analysis
Net Interest Margin 289 299 309 319 329 339 349 359 369
2012 Base Earning Assets $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731
Net Income $366295 $388877 $411460 $434043 $456686 $479209 $501792 $524375 $546957
Earnings Per Share $084 $089 $094 $099 $105 $110 $115 $120 $125
Net Interest Margin 339 349 359 369 379 389 399 409
Earning Assets $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315
Net Interest Income $255932 $263485 $271039 $280114 $286145 $293698 $301252 $308805
Net Income $52465 $57374 $62284 $68183 $72103 $77013 $81923 $86832
Earnings Per Share $057 $063 $068 $075 $079 $084 $090 $095
EPS Sensitivity Analysis - 2012
Earning Assets $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413
NIM 347 357 367 377 387 397 407 417 427
2011 Projected Net Income $1946 $2111 $2276 $2441 $2606 $2740 $2936 $3101 $3266
EPS $057 $061 $066 $071 $076 $080 $086 $090 $095
Net Interest Margin 293 303 313 323 333 343 353 363 373
Net Interest Income $191161 $197690 $204219 $210748 $217289 $223807 $230336 $236865 $243394
Net Income $43372 $48204 $53035 $57867 $62707 $67530 $72362 $77193 $82025
2012 EPS $076 $085 $093 $102 $110 $118 $127 $135 $144
- 6 -
Sandy Spring Bancorp (SASR -$1809 BUY 12-Month Fair Value Estimate $19)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately nine cents all other things equal The fiscal 2011 net interest margin
was 357 - fiscal 2012 Street estimates are for a net interest margin of 345
StellarOne Corporation (STEL- $1152 NEUTRAL 12-Month Fair Value Estimate $13)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately eight cents all other things equal The fiscal 2011 net interest
margin was 380 - fiscal 2012 Street estimates are for a net interest margin of 374
Sterling Bancorp (STL-$880 NEUTRAL 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately five cents all other things equal The fiscal 2011 net interest margin
was 378 - fiscal 2012 Street estimates are for a net interest margin of 384
Susquehanna Bancshares (SUSQ-$929 BUY 12-Month Fair Value Estimate $11)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately six cents per share all other things equal The fiscal 2011 net interest margin was 360 -
fiscal 2012 Street estimates are for a net interest margin of 371
Average earning assets $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837
Net interest income 105917 109414 112911 116407 119908 123401 126898 130395 133892
Net interest margin 303 313 323 333 343 353 363 373 383
2011 EPS $094 $103 $112 $121 $130 $140 $149 $158 $167
Net Interest Margin 333 343 353 363 373 383 393 403
Earning Assets $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266
Net interest income (FTE) $88249 $90897 $93545 $96194 $98844 $101490 $104138 $106787
Earnings Per Share $043 $051 $059 $067 $075 $083 $091 $099
Net Interest Margin 328 338 348 358 368 378 388 398 408
Average earning assets $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914
Net interest income 79051 81459 83867 86275 88683 91090 93498 95906 98314
Net interest margin 328 338 348 358 368 378 388 398 408
2012 EPS $039 $044 $049 $054 $060 $065 $070 $075 $081
Net Interest Margin 324 334 344 354 364 374 384 394 404
(Dollars in Millions except per share amounts)
Earning Assets $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913
Net Interest Income 5108976 5266636 5424296 5581956 5739616 5898429 6054936 6212596 6370255
NIM 324 334 344 354 364 374 384 394 404
EPS $042 $047 $053 $058 $064 $070 $075 $080 $086
- 7 -
United Bankshares of WV (UBSI-$2978 NEUTRAL 12-Month Fair Value Estimate $27)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately ten cents all other things equal The fiscal 2011 net interest margin
was 384 - fiscal 2012 Street estimates are for a net interest margin of 379
Virginia Commerce Bancorp (VCBI-$842 BUY 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents all other things equal The fiscal 2011 net interest margin
was 391 - fiscal 2012 Street estimates are for a net interest margin of 379
WSFS Financial (WSFS-$3800 BUY 12-Month Fair Value Estimate $47)
Our net interest margin sensitivity analysis suggests that five basis point swings in the net interest margin cause
earnings per share to change by approximately $014 cents all other things equal The fiscal 2011 net interest
margin was 360 - fiscal 2012 Street estimates are for a net interest margin of 356
Net Interest Margin 351 361 371 381 391 401 411
Average earning assets $7762834 $7762834 $7762834 $7762834 $7762834 $7762834 $7762834
Net interest income 272499 280261 288024 295810 303550 311313 319076
Net Income 75742 80788 85834 90894 95925 100971 106017
2012 EPS $150 $160 $170 $180 $190 $200 $210
Net Interest Margin 332 342 352 362 372 382 392 402 412
Average earning assets $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253
Net interest income 98229 101186 104143 107101 110067 113015 115972 118930 121887
Net interest margin 332 342 352 362 372 382 392 402 412
2011 EPS $050 $056 $062 $068 $075 $081 $087 $093 $100
Net Interest Margin 323 328 333 338 343 348 353 358 363
2012 Earning Assets $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180
Net Interest Income $121491 $123372 $125254 $127136 $134847 $130899 $132780 $134662 $136544
Net Income Available to Common $17409 $18632 $19855 $21078 $26090 $23524 $24747 $25970 $27193
2012 EPS $244 $258 $272 $286 $300 $314 $328 $342 $356
- 8 -
Table 1 Janney Coverage Universe Net Interest Margin Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net
Interest
Margin ( )
Net
Interest
Margin ( )
Street Net
Interest Margin
Estimate ( )
Street Net
Interest Margin
Estimate ( )
Change in Net
Interest Margin
(bps)
Change in Net
Interest Margin
(bps) 2011 actual
vs 2013 estimate
2010A 2011A 2012E 2013E
2011 actual
vs 2012 estimate
2011 actual
vs 2013 estimate
Astoria Financial AF 233 228 217 217 (011) (011)
BankUnited BKU 505 614 548 477 (066) (137)
Beneficial Mutual Bancorp BNCL 332 322 316 318 (006) (004)
City Holding Company CHCO 406 389 380 376 (009) (013)
Community Bank System CBU 404 408 387 378 (021) (030)
Financial Institutions FISI 407 394 390 371 (004) (023)
First Commonwealth Financial FCF 388 380 373 373 (007) (007)
First Niagara Financial Group FNFG 364 359 347 350 (012) (009)
Fulton Financial FULT 380 390 377 375 (013) (015)
Hudson City Bancorp HCBK 200 188 207 201 019 013
Investors Bancorp ISBC 314 336 327 321 (009) (015)
MampT Bank MTB 384 373 360 356 (013) (017)
Metro Bancorp METR 404 386 366 352 (020) (034)
National Penn Bancshares NPBC 345 352 342 342 (010) (010)
New York Community Bancorp NYB 344 344 321 314 (023) (030)
Northwest Bancshares NWBI 352 368 368 369 000 001
Orrstown Financial Services ORRF 372 366 341 344 (025) (022)
Peoples United Financial PBCT 370 414 398 385 (016) (029)
Provident Financial Services PFS 341 347 331 327 (016) (020)
SampT Bancorp STBA 405 383 368 367 (015) (016)
Sandy Spring Bancorp SASR 360 357 345 335 (012) (022)
StellarOne STEL 365 380 374 366 (006) (014)
Sterling Bancorp STL 407 378 384 384 006 006
Sun Bancorp SNBC 350 350 345 345 (005) (005)
Susquehanna Bancshares SUSQ 367 360 371 366 011 006
Union First Market Bankshares UBSH 456 457 429 413 (028) (044)
United Bankshares UBSI 360 384 379 372 (005) (012)
Virginia Commerce Bancorp VCBI 387 391 379 368 (012) (023)
WSFS Financial WSFS 359 360 356 348 (004) (012)
Median Commercial Banks 384 380 373 367 (012) (015)
Median Thrifts 343 346 329 324 (010) (013)
- 9 -
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
Astoria Financial (AF-$882 BUY 12-Month Fair Value Estimate $10)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately $011 per share all other things being equal The fiscal 2011 net interest margin was 228 -
fiscal 2012 Street estimates are for a net interest margin of 217
City Holding Company (CHCO-$3410 NEUTRAL 12-Month Fair Value Estimate $35)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately eight cents per share all other things being equal The fiscal 2011 net interest margin was
389 - fiscal 2012 Street estimates are for a net interest margin of 380
Community Bank Systems (CBU-$2744 NEUTRAL 12-Month Fair Value Estimate $28)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately ten cents per share all other things being equal The fiscal 2011 net interest margin was
408 - fiscal 2012 Street estimates are for a net interest margin of 387
Financial Institutions (FISI-$1592 BUY 12-Month Fair Value Estimate $20)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately $011 all other things equal The fiscal 2011 net interest margin was
394 - fiscal 2012 Street estimates are for a net interest margin of 390
EPS Sensitivity Analysis - 2012
Net Interest Margin 196 201 206 211 216 221 226 231
Earning Assets $16071826 $16071826 $16071826 $16071826 $16071826 $16071826 $16071826 $16071826
Net Income $31504 $36607 $41710 $46813 $51933 $57018 $62121 $67224
2012 EPS $034 $039 $044 $050 $055 $061 $066 $072
Net Interest Margin 353 363 373 383 393 403 413
Earning Assets $2471638 $2471638 $2471638 $2471638 $2471638 $2471638 $2471638
Net interest income (FTE) $87177 $89649 $92121 $94599 $97064 $99535 $102007
Net Income Avail to Common $48374 $49993 $51612 $37891 $54850 $56469 $58087
Earnings Per Share $236 $244 $252 $260 $268 $276 $284
Net Interest Margin 364 374 384 394 404 414 424
Earning Assets $6002628 $6002628 $6002628 $6002628 $6002628 $6002628 $6002628
Net interest income (FTE) $218454 $224457 $230459 $236495 $242464 $248467 $254470
Earnings Per Share $176 $186 $196 $205 $215 $224 $234
Net Interest Margin 366 376 386 396 406 416 426
Earning Assets $2270322 $2270322 $2270322 $2270322 $2270322 $2270322 $2270322
Net interest income $83044 $85314 $87585 $89967 $92125 $94396 $96666
Earnings Per Share $137 $148 $159 $170 $181 $192 $203
- 4 -
First Niagara (FNFG-$964 NEUTRAL 12-Month Fair Value Estimate $10)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents per share all other things equal The fiscal 2011 net
interest margin was 359 - fiscal 2012 Street estimates are for a net interest margin of 347
Fulton Financial (FULT-$986 BUY 12-Month Fair Value Estimate $11)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately three cents per
share for every five basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 390 - fiscal 2012 Street estimates are for a net interest margin of 377
Hudson City Bancorp (HCBK-$683 NEUTRAL 12-Month Fair Value Estimate $7)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately five cents per
share for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 188 - fiscal 2012 Street estimates are for a net interest margin of 207
MampT Bank (MTB-$8123 NEUTRAL 12-Month Fair Value Estimate $82)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately $038 per share
for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011 net
interest margin was 373 - fiscal 2012 Street estimates are for a net interest margin of 360
Net Interest Margin 312 322 332 342 352 362 372
Earning Assets $32984073 $32984073 $32984073 $32984073 $32984073 $32984073 $32984073
Net Interest Income (FTE) $1030110 $1063094 $1096078 $1129732 $1162046 $1195030 $1228014
Net Income $299916 $321356 $342796 $364671 $385675 $407115 $428554
2012 Earnings Per Share $085 $091 $097 $103 $109 $115 $122
Net Interest Margin 353 358 363 368 373 378 383 388 393
Average earning assets $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871
Net interest income 531699 539231 546764 554296 561833 569361 576893 584426 591958
Net interest margin 353 358 363 368 373 378 383 388 393
Net income 127079 132219 137359 142499 147643 152779 157919 163059 168199
2012 EPS $063 $066 $068 $071 $073 $076 $079 $081 $084
Net Interest Margin 163 173 183 193 203 213 223 233 243
2012 Net Interest Income $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037
Net Income $197135 $224216 $251297 $278378 $305370 $332539 $359620 $386701 $413782
2012 EPS $040 $045 $051 $056 $062 $067 $072 $078 $083
Net Interest Margin 321 331 341 351 361 371 381
Net interest income 2256498 2326886 2397275 2467663 2538052 2608440 2678829
Net income 734587 781747 828907 876067 923228 970388 1017548
Net inc avail com stkholders $682166 $729327 $776487 $823647 $870808 $917968 $965128
2012 EPS $542 $580 $617 $655 $692 $730 $767
- 5 -
New York Community (NYB-$1306 BUY 12-Month Fair Value Estimate $15)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things being equal The fiscal 2011 net interest margin was
344 - fiscal 2012 Street estimates are for a net interest margin of 321
Northwest Bancshares (NWBI-$1250 BUY 12-Month Fair Value Estimate $13)
Our interest rate sensitivity analysis projects that ten basis point swings in the net interest margin will change
earnings by approximately five cents per share all other things equal The fiscal 2011 net interest margin was
368 - fiscal 2012 Street estimates are for a net interest margin of 368
Peoplersquos United Financial (PBCT-$1272 NEUTRAL 12-Month Fair Value Estimate $14)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things equal The fiscal 2011 net interest margin was 414 -
fiscal 2012 Street estimates are for a net interest margin of 398
Provident Financial (PFS-$1348 NEUTRAL 12-Month Fair Value Estimate $15)
Our net interest margin sensitivity model forecasts that a ten basis point change in the net interest margin causes
earnings to adjust approximately nine cents per share all other things equal The fiscal 2011 net interest margin was
347 - fiscal 2012 Street estimates are for a net interest margin of 331
2012 EPS Sensitivity Analysis
Net Interest Margin 289 299 309 319 329 339 349 359 369
2012 Base Earning Assets $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731
Net Income $366295 $388877 $411460 $434043 $456686 $479209 $501792 $524375 $546957
Earnings Per Share $084 $089 $094 $099 $105 $110 $115 $120 $125
Net Interest Margin 339 349 359 369 379 389 399 409
Earning Assets $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315
Net Interest Income $255932 $263485 $271039 $280114 $286145 $293698 $301252 $308805
Net Income $52465 $57374 $62284 $68183 $72103 $77013 $81923 $86832
Earnings Per Share $057 $063 $068 $075 $079 $084 $090 $095
EPS Sensitivity Analysis - 2012
Earning Assets $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413
NIM 347 357 367 377 387 397 407 417 427
2011 Projected Net Income $1946 $2111 $2276 $2441 $2606 $2740 $2936 $3101 $3266
EPS $057 $061 $066 $071 $076 $080 $086 $090 $095
Net Interest Margin 293 303 313 323 333 343 353 363 373
Net Interest Income $191161 $197690 $204219 $210748 $217289 $223807 $230336 $236865 $243394
Net Income $43372 $48204 $53035 $57867 $62707 $67530 $72362 $77193 $82025
2012 EPS $076 $085 $093 $102 $110 $118 $127 $135 $144
- 6 -
Sandy Spring Bancorp (SASR -$1809 BUY 12-Month Fair Value Estimate $19)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately nine cents all other things equal The fiscal 2011 net interest margin
was 357 - fiscal 2012 Street estimates are for a net interest margin of 345
StellarOne Corporation (STEL- $1152 NEUTRAL 12-Month Fair Value Estimate $13)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately eight cents all other things equal The fiscal 2011 net interest
margin was 380 - fiscal 2012 Street estimates are for a net interest margin of 374
Sterling Bancorp (STL-$880 NEUTRAL 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately five cents all other things equal The fiscal 2011 net interest margin
was 378 - fiscal 2012 Street estimates are for a net interest margin of 384
Susquehanna Bancshares (SUSQ-$929 BUY 12-Month Fair Value Estimate $11)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately six cents per share all other things equal The fiscal 2011 net interest margin was 360 -
fiscal 2012 Street estimates are for a net interest margin of 371
Average earning assets $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837
Net interest income 105917 109414 112911 116407 119908 123401 126898 130395 133892
Net interest margin 303 313 323 333 343 353 363 373 383
2011 EPS $094 $103 $112 $121 $130 $140 $149 $158 $167
Net Interest Margin 333 343 353 363 373 383 393 403
Earning Assets $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266
Net interest income (FTE) $88249 $90897 $93545 $96194 $98844 $101490 $104138 $106787
Earnings Per Share $043 $051 $059 $067 $075 $083 $091 $099
Net Interest Margin 328 338 348 358 368 378 388 398 408
Average earning assets $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914
Net interest income 79051 81459 83867 86275 88683 91090 93498 95906 98314
Net interest margin 328 338 348 358 368 378 388 398 408
2012 EPS $039 $044 $049 $054 $060 $065 $070 $075 $081
Net Interest Margin 324 334 344 354 364 374 384 394 404
(Dollars in Millions except per share amounts)
Earning Assets $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913
Net Interest Income 5108976 5266636 5424296 5581956 5739616 5898429 6054936 6212596 6370255
NIM 324 334 344 354 364 374 384 394 404
EPS $042 $047 $053 $058 $064 $070 $075 $080 $086
- 7 -
United Bankshares of WV (UBSI-$2978 NEUTRAL 12-Month Fair Value Estimate $27)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately ten cents all other things equal The fiscal 2011 net interest margin
was 384 - fiscal 2012 Street estimates are for a net interest margin of 379
Virginia Commerce Bancorp (VCBI-$842 BUY 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents all other things equal The fiscal 2011 net interest margin
was 391 - fiscal 2012 Street estimates are for a net interest margin of 379
WSFS Financial (WSFS-$3800 BUY 12-Month Fair Value Estimate $47)
Our net interest margin sensitivity analysis suggests that five basis point swings in the net interest margin cause
earnings per share to change by approximately $014 cents all other things equal The fiscal 2011 net interest
margin was 360 - fiscal 2012 Street estimates are for a net interest margin of 356
Net Interest Margin 351 361 371 381 391 401 411
Average earning assets $7762834 $7762834 $7762834 $7762834 $7762834 $7762834 $7762834
Net interest income 272499 280261 288024 295810 303550 311313 319076
Net Income 75742 80788 85834 90894 95925 100971 106017
2012 EPS $150 $160 $170 $180 $190 $200 $210
Net Interest Margin 332 342 352 362 372 382 392 402 412
Average earning assets $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253
Net interest income 98229 101186 104143 107101 110067 113015 115972 118930 121887
Net interest margin 332 342 352 362 372 382 392 402 412
2011 EPS $050 $056 $062 $068 $075 $081 $087 $093 $100
Net Interest Margin 323 328 333 338 343 348 353 358 363
2012 Earning Assets $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180
Net Interest Income $121491 $123372 $125254 $127136 $134847 $130899 $132780 $134662 $136544
Net Income Available to Common $17409 $18632 $19855 $21078 $26090 $23524 $24747 $25970 $27193
2012 EPS $244 $258 $272 $286 $300 $314 $328 $342 $356
- 8 -
Table 1 Janney Coverage Universe Net Interest Margin Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net
Interest
Margin ( )
Net
Interest
Margin ( )
Street Net
Interest Margin
Estimate ( )
Street Net
Interest Margin
Estimate ( )
Change in Net
Interest Margin
(bps)
Change in Net
Interest Margin
(bps) 2011 actual
vs 2013 estimate
2010A 2011A 2012E 2013E
2011 actual
vs 2012 estimate
2011 actual
vs 2013 estimate
Astoria Financial AF 233 228 217 217 (011) (011)
BankUnited BKU 505 614 548 477 (066) (137)
Beneficial Mutual Bancorp BNCL 332 322 316 318 (006) (004)
City Holding Company CHCO 406 389 380 376 (009) (013)
Community Bank System CBU 404 408 387 378 (021) (030)
Financial Institutions FISI 407 394 390 371 (004) (023)
First Commonwealth Financial FCF 388 380 373 373 (007) (007)
First Niagara Financial Group FNFG 364 359 347 350 (012) (009)
Fulton Financial FULT 380 390 377 375 (013) (015)
Hudson City Bancorp HCBK 200 188 207 201 019 013
Investors Bancorp ISBC 314 336 327 321 (009) (015)
MampT Bank MTB 384 373 360 356 (013) (017)
Metro Bancorp METR 404 386 366 352 (020) (034)
National Penn Bancshares NPBC 345 352 342 342 (010) (010)
New York Community Bancorp NYB 344 344 321 314 (023) (030)
Northwest Bancshares NWBI 352 368 368 369 000 001
Orrstown Financial Services ORRF 372 366 341 344 (025) (022)
Peoples United Financial PBCT 370 414 398 385 (016) (029)
Provident Financial Services PFS 341 347 331 327 (016) (020)
SampT Bancorp STBA 405 383 368 367 (015) (016)
Sandy Spring Bancorp SASR 360 357 345 335 (012) (022)
StellarOne STEL 365 380 374 366 (006) (014)
Sterling Bancorp STL 407 378 384 384 006 006
Sun Bancorp SNBC 350 350 345 345 (005) (005)
Susquehanna Bancshares SUSQ 367 360 371 366 011 006
Union First Market Bankshares UBSH 456 457 429 413 (028) (044)
United Bankshares UBSI 360 384 379 372 (005) (012)
Virginia Commerce Bancorp VCBI 387 391 379 368 (012) (023)
WSFS Financial WSFS 359 360 356 348 (004) (012)
Median Commercial Banks 384 380 373 367 (012) (015)
Median Thrifts 343 346 329 324 (010) (013)
- 9 -
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
First Niagara (FNFG-$964 NEUTRAL 12-Month Fair Value Estimate $10)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents per share all other things equal The fiscal 2011 net
interest margin was 359 - fiscal 2012 Street estimates are for a net interest margin of 347
Fulton Financial (FULT-$986 BUY 12-Month Fair Value Estimate $11)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately three cents per
share for every five basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 390 - fiscal 2012 Street estimates are for a net interest margin of 377
Hudson City Bancorp (HCBK-$683 NEUTRAL 12-Month Fair Value Estimate $7)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately five cents per
share for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011
net interest margin was 188 - fiscal 2012 Street estimates are for a net interest margin of 207
MampT Bank (MTB-$8123 NEUTRAL 12-Month Fair Value Estimate $82)
Our net interest margin sensitivity analysis shows that earnings per share change by approximately $038 per share
for every ten basis point increasedecrease to the net interest margin all other things equal The fiscal 2011 net
interest margin was 373 - fiscal 2012 Street estimates are for a net interest margin of 360
Net Interest Margin 312 322 332 342 352 362 372
Earning Assets $32984073 $32984073 $32984073 $32984073 $32984073 $32984073 $32984073
Net Interest Income (FTE) $1030110 $1063094 $1096078 $1129732 $1162046 $1195030 $1228014
Net Income $299916 $321356 $342796 $364671 $385675 $407115 $428554
2012 Earnings Per Share $085 $091 $097 $103 $109 $115 $122
Net Interest Margin 353 358 363 368 373 378 383 388 393
Average earning assets $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871 $15064871
Net interest income 531699 539231 546764 554296 561833 569361 576893 584426 591958
Net interest margin 353 358 363 368 373 378 383 388 393
Net income 127079 132219 137359 142499 147643 152779 157919 163059 168199
2012 EPS $063 $066 $068 $071 $073 $076 $079 $081 $084
Net Interest Margin 163 173 183 193 203 213 223 233 243
2012 Net Interest Income $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037 $899037
Net Income $197135 $224216 $251297 $278378 $305370 $332539 $359620 $386701 $413782
2012 EPS $040 $045 $051 $056 $062 $067 $072 $078 $083
Net Interest Margin 321 331 341 351 361 371 381
Net interest income 2256498 2326886 2397275 2467663 2538052 2608440 2678829
Net income 734587 781747 828907 876067 923228 970388 1017548
Net inc avail com stkholders $682166 $729327 $776487 $823647 $870808 $917968 $965128
2012 EPS $542 $580 $617 $655 $692 $730 $767
- 5 -
New York Community (NYB-$1306 BUY 12-Month Fair Value Estimate $15)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things being equal The fiscal 2011 net interest margin was
344 - fiscal 2012 Street estimates are for a net interest margin of 321
Northwest Bancshares (NWBI-$1250 BUY 12-Month Fair Value Estimate $13)
Our interest rate sensitivity analysis projects that ten basis point swings in the net interest margin will change
earnings by approximately five cents per share all other things equal The fiscal 2011 net interest margin was
368 - fiscal 2012 Street estimates are for a net interest margin of 368
Peoplersquos United Financial (PBCT-$1272 NEUTRAL 12-Month Fair Value Estimate $14)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things equal The fiscal 2011 net interest margin was 414 -
fiscal 2012 Street estimates are for a net interest margin of 398
Provident Financial (PFS-$1348 NEUTRAL 12-Month Fair Value Estimate $15)
Our net interest margin sensitivity model forecasts that a ten basis point change in the net interest margin causes
earnings to adjust approximately nine cents per share all other things equal The fiscal 2011 net interest margin was
347 - fiscal 2012 Street estimates are for a net interest margin of 331
2012 EPS Sensitivity Analysis
Net Interest Margin 289 299 309 319 329 339 349 359 369
2012 Base Earning Assets $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731
Net Income $366295 $388877 $411460 $434043 $456686 $479209 $501792 $524375 $546957
Earnings Per Share $084 $089 $094 $099 $105 $110 $115 $120 $125
Net Interest Margin 339 349 359 369 379 389 399 409
Earning Assets $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315
Net Interest Income $255932 $263485 $271039 $280114 $286145 $293698 $301252 $308805
Net Income $52465 $57374 $62284 $68183 $72103 $77013 $81923 $86832
Earnings Per Share $057 $063 $068 $075 $079 $084 $090 $095
EPS Sensitivity Analysis - 2012
Earning Assets $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413
NIM 347 357 367 377 387 397 407 417 427
2011 Projected Net Income $1946 $2111 $2276 $2441 $2606 $2740 $2936 $3101 $3266
EPS $057 $061 $066 $071 $076 $080 $086 $090 $095
Net Interest Margin 293 303 313 323 333 343 353 363 373
Net Interest Income $191161 $197690 $204219 $210748 $217289 $223807 $230336 $236865 $243394
Net Income $43372 $48204 $53035 $57867 $62707 $67530 $72362 $77193 $82025
2012 EPS $076 $085 $093 $102 $110 $118 $127 $135 $144
- 6 -
Sandy Spring Bancorp (SASR -$1809 BUY 12-Month Fair Value Estimate $19)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately nine cents all other things equal The fiscal 2011 net interest margin
was 357 - fiscal 2012 Street estimates are for a net interest margin of 345
StellarOne Corporation (STEL- $1152 NEUTRAL 12-Month Fair Value Estimate $13)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately eight cents all other things equal The fiscal 2011 net interest
margin was 380 - fiscal 2012 Street estimates are for a net interest margin of 374
Sterling Bancorp (STL-$880 NEUTRAL 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately five cents all other things equal The fiscal 2011 net interest margin
was 378 - fiscal 2012 Street estimates are for a net interest margin of 384
Susquehanna Bancshares (SUSQ-$929 BUY 12-Month Fair Value Estimate $11)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately six cents per share all other things equal The fiscal 2011 net interest margin was 360 -
fiscal 2012 Street estimates are for a net interest margin of 371
Average earning assets $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837
Net interest income 105917 109414 112911 116407 119908 123401 126898 130395 133892
Net interest margin 303 313 323 333 343 353 363 373 383
2011 EPS $094 $103 $112 $121 $130 $140 $149 $158 $167
Net Interest Margin 333 343 353 363 373 383 393 403
Earning Assets $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266
Net interest income (FTE) $88249 $90897 $93545 $96194 $98844 $101490 $104138 $106787
Earnings Per Share $043 $051 $059 $067 $075 $083 $091 $099
Net Interest Margin 328 338 348 358 368 378 388 398 408
Average earning assets $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914
Net interest income 79051 81459 83867 86275 88683 91090 93498 95906 98314
Net interest margin 328 338 348 358 368 378 388 398 408
2012 EPS $039 $044 $049 $054 $060 $065 $070 $075 $081
Net Interest Margin 324 334 344 354 364 374 384 394 404
(Dollars in Millions except per share amounts)
Earning Assets $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913
Net Interest Income 5108976 5266636 5424296 5581956 5739616 5898429 6054936 6212596 6370255
NIM 324 334 344 354 364 374 384 394 404
EPS $042 $047 $053 $058 $064 $070 $075 $080 $086
- 7 -
United Bankshares of WV (UBSI-$2978 NEUTRAL 12-Month Fair Value Estimate $27)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately ten cents all other things equal The fiscal 2011 net interest margin
was 384 - fiscal 2012 Street estimates are for a net interest margin of 379
Virginia Commerce Bancorp (VCBI-$842 BUY 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents all other things equal The fiscal 2011 net interest margin
was 391 - fiscal 2012 Street estimates are for a net interest margin of 379
WSFS Financial (WSFS-$3800 BUY 12-Month Fair Value Estimate $47)
Our net interest margin sensitivity analysis suggests that five basis point swings in the net interest margin cause
earnings per share to change by approximately $014 cents all other things equal The fiscal 2011 net interest
margin was 360 - fiscal 2012 Street estimates are for a net interest margin of 356
Net Interest Margin 351 361 371 381 391 401 411
Average earning assets $7762834 $7762834 $7762834 $7762834 $7762834 $7762834 $7762834
Net interest income 272499 280261 288024 295810 303550 311313 319076
Net Income 75742 80788 85834 90894 95925 100971 106017
2012 EPS $150 $160 $170 $180 $190 $200 $210
Net Interest Margin 332 342 352 362 372 382 392 402 412
Average earning assets $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253
Net interest income 98229 101186 104143 107101 110067 113015 115972 118930 121887
Net interest margin 332 342 352 362 372 382 392 402 412
2011 EPS $050 $056 $062 $068 $075 $081 $087 $093 $100
Net Interest Margin 323 328 333 338 343 348 353 358 363
2012 Earning Assets $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180
Net Interest Income $121491 $123372 $125254 $127136 $134847 $130899 $132780 $134662 $136544
Net Income Available to Common $17409 $18632 $19855 $21078 $26090 $23524 $24747 $25970 $27193
2012 EPS $244 $258 $272 $286 $300 $314 $328 $342 $356
- 8 -
Table 1 Janney Coverage Universe Net Interest Margin Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net
Interest
Margin ( )
Net
Interest
Margin ( )
Street Net
Interest Margin
Estimate ( )
Street Net
Interest Margin
Estimate ( )
Change in Net
Interest Margin
(bps)
Change in Net
Interest Margin
(bps) 2011 actual
vs 2013 estimate
2010A 2011A 2012E 2013E
2011 actual
vs 2012 estimate
2011 actual
vs 2013 estimate
Astoria Financial AF 233 228 217 217 (011) (011)
BankUnited BKU 505 614 548 477 (066) (137)
Beneficial Mutual Bancorp BNCL 332 322 316 318 (006) (004)
City Holding Company CHCO 406 389 380 376 (009) (013)
Community Bank System CBU 404 408 387 378 (021) (030)
Financial Institutions FISI 407 394 390 371 (004) (023)
First Commonwealth Financial FCF 388 380 373 373 (007) (007)
First Niagara Financial Group FNFG 364 359 347 350 (012) (009)
Fulton Financial FULT 380 390 377 375 (013) (015)
Hudson City Bancorp HCBK 200 188 207 201 019 013
Investors Bancorp ISBC 314 336 327 321 (009) (015)
MampT Bank MTB 384 373 360 356 (013) (017)
Metro Bancorp METR 404 386 366 352 (020) (034)
National Penn Bancshares NPBC 345 352 342 342 (010) (010)
New York Community Bancorp NYB 344 344 321 314 (023) (030)
Northwest Bancshares NWBI 352 368 368 369 000 001
Orrstown Financial Services ORRF 372 366 341 344 (025) (022)
Peoples United Financial PBCT 370 414 398 385 (016) (029)
Provident Financial Services PFS 341 347 331 327 (016) (020)
SampT Bancorp STBA 405 383 368 367 (015) (016)
Sandy Spring Bancorp SASR 360 357 345 335 (012) (022)
StellarOne STEL 365 380 374 366 (006) (014)
Sterling Bancorp STL 407 378 384 384 006 006
Sun Bancorp SNBC 350 350 345 345 (005) (005)
Susquehanna Bancshares SUSQ 367 360 371 366 011 006
Union First Market Bankshares UBSH 456 457 429 413 (028) (044)
United Bankshares UBSI 360 384 379 372 (005) (012)
Virginia Commerce Bancorp VCBI 387 391 379 368 (012) (023)
WSFS Financial WSFS 359 360 356 348 (004) (012)
Median Commercial Banks 384 380 373 367 (012) (015)
Median Thrifts 343 346 329 324 (010) (013)
- 9 -
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
New York Community (NYB-$1306 BUY 12-Month Fair Value Estimate $15)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things being equal The fiscal 2011 net interest margin was
344 - fiscal 2012 Street estimates are for a net interest margin of 321
Northwest Bancshares (NWBI-$1250 BUY 12-Month Fair Value Estimate $13)
Our interest rate sensitivity analysis projects that ten basis point swings in the net interest margin will change
earnings by approximately five cents per share all other things equal The fiscal 2011 net interest margin was
368 - fiscal 2012 Street estimates are for a net interest margin of 368
Peoplersquos United Financial (PBCT-$1272 NEUTRAL 12-Month Fair Value Estimate $14)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately five cents per share all other things equal The fiscal 2011 net interest margin was 414 -
fiscal 2012 Street estimates are for a net interest margin of 398
Provident Financial (PFS-$1348 NEUTRAL 12-Month Fair Value Estimate $15)
Our net interest margin sensitivity model forecasts that a ten basis point change in the net interest margin causes
earnings to adjust approximately nine cents per share all other things equal The fiscal 2011 net interest margin was
347 - fiscal 2012 Street estimates are for a net interest margin of 331
2012 EPS Sensitivity Analysis
Net Interest Margin 289 299 309 319 329 339 349 359 369
2012 Base Earning Assets $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731 $35285731
Net Income $366295 $388877 $411460 $434043 $456686 $479209 $501792 $524375 $546957
Earnings Per Share $084 $089 $094 $099 $105 $110 $115 $120 $125
Net Interest Margin 339 349 359 369 379 389 399 409
Earning Assets $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315 $7553315
Net Interest Income $255932 $263485 $271039 $280114 $286145 $293698 $301252 $308805
Net Income $52465 $57374 $62284 $68183 $72103 $77013 $81923 $86832
Earnings Per Share $057 $063 $068 $075 $079 $084 $090 $095
EPS Sensitivity Analysis - 2012
Earning Assets $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413 $246413
NIM 347 357 367 377 387 397 407 417 427
2011 Projected Net Income $1946 $2111 $2276 $2441 $2606 $2740 $2936 $3101 $3266
EPS $057 $061 $066 $071 $076 $080 $086 $090 $095
Net Interest Margin 293 303 313 323 333 343 353 363 373
Net Interest Income $191161 $197690 $204219 $210748 $217289 $223807 $230336 $236865 $243394
Net Income $43372 $48204 $53035 $57867 $62707 $67530 $72362 $77193 $82025
2012 EPS $076 $085 $093 $102 $110 $118 $127 $135 $144
- 6 -
Sandy Spring Bancorp (SASR -$1809 BUY 12-Month Fair Value Estimate $19)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately nine cents all other things equal The fiscal 2011 net interest margin
was 357 - fiscal 2012 Street estimates are for a net interest margin of 345
StellarOne Corporation (STEL- $1152 NEUTRAL 12-Month Fair Value Estimate $13)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately eight cents all other things equal The fiscal 2011 net interest
margin was 380 - fiscal 2012 Street estimates are for a net interest margin of 374
Sterling Bancorp (STL-$880 NEUTRAL 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately five cents all other things equal The fiscal 2011 net interest margin
was 378 - fiscal 2012 Street estimates are for a net interest margin of 384
Susquehanna Bancshares (SUSQ-$929 BUY 12-Month Fair Value Estimate $11)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately six cents per share all other things equal The fiscal 2011 net interest margin was 360 -
fiscal 2012 Street estimates are for a net interest margin of 371
Average earning assets $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837
Net interest income 105917 109414 112911 116407 119908 123401 126898 130395 133892
Net interest margin 303 313 323 333 343 353 363 373 383
2011 EPS $094 $103 $112 $121 $130 $140 $149 $158 $167
Net Interest Margin 333 343 353 363 373 383 393 403
Earning Assets $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266
Net interest income (FTE) $88249 $90897 $93545 $96194 $98844 $101490 $104138 $106787
Earnings Per Share $043 $051 $059 $067 $075 $083 $091 $099
Net Interest Margin 328 338 348 358 368 378 388 398 408
Average earning assets $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914
Net interest income 79051 81459 83867 86275 88683 91090 93498 95906 98314
Net interest margin 328 338 348 358 368 378 388 398 408
2012 EPS $039 $044 $049 $054 $060 $065 $070 $075 $081
Net Interest Margin 324 334 344 354 364 374 384 394 404
(Dollars in Millions except per share amounts)
Earning Assets $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913
Net Interest Income 5108976 5266636 5424296 5581956 5739616 5898429 6054936 6212596 6370255
NIM 324 334 344 354 364 374 384 394 404
EPS $042 $047 $053 $058 $064 $070 $075 $080 $086
- 7 -
United Bankshares of WV (UBSI-$2978 NEUTRAL 12-Month Fair Value Estimate $27)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately ten cents all other things equal The fiscal 2011 net interest margin
was 384 - fiscal 2012 Street estimates are for a net interest margin of 379
Virginia Commerce Bancorp (VCBI-$842 BUY 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents all other things equal The fiscal 2011 net interest margin
was 391 - fiscal 2012 Street estimates are for a net interest margin of 379
WSFS Financial (WSFS-$3800 BUY 12-Month Fair Value Estimate $47)
Our net interest margin sensitivity analysis suggests that five basis point swings in the net interest margin cause
earnings per share to change by approximately $014 cents all other things equal The fiscal 2011 net interest
margin was 360 - fiscal 2012 Street estimates are for a net interest margin of 356
Net Interest Margin 351 361 371 381 391 401 411
Average earning assets $7762834 $7762834 $7762834 $7762834 $7762834 $7762834 $7762834
Net interest income 272499 280261 288024 295810 303550 311313 319076
Net Income 75742 80788 85834 90894 95925 100971 106017
2012 EPS $150 $160 $170 $180 $190 $200 $210
Net Interest Margin 332 342 352 362 372 382 392 402 412
Average earning assets $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253
Net interest income 98229 101186 104143 107101 110067 113015 115972 118930 121887
Net interest margin 332 342 352 362 372 382 392 402 412
2011 EPS $050 $056 $062 $068 $075 $081 $087 $093 $100
Net Interest Margin 323 328 333 338 343 348 353 358 363
2012 Earning Assets $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180
Net Interest Income $121491 $123372 $125254 $127136 $134847 $130899 $132780 $134662 $136544
Net Income Available to Common $17409 $18632 $19855 $21078 $26090 $23524 $24747 $25970 $27193
2012 EPS $244 $258 $272 $286 $300 $314 $328 $342 $356
- 8 -
Table 1 Janney Coverage Universe Net Interest Margin Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net
Interest
Margin ( )
Net
Interest
Margin ( )
Street Net
Interest Margin
Estimate ( )
Street Net
Interest Margin
Estimate ( )
Change in Net
Interest Margin
(bps)
Change in Net
Interest Margin
(bps) 2011 actual
vs 2013 estimate
2010A 2011A 2012E 2013E
2011 actual
vs 2012 estimate
2011 actual
vs 2013 estimate
Astoria Financial AF 233 228 217 217 (011) (011)
BankUnited BKU 505 614 548 477 (066) (137)
Beneficial Mutual Bancorp BNCL 332 322 316 318 (006) (004)
City Holding Company CHCO 406 389 380 376 (009) (013)
Community Bank System CBU 404 408 387 378 (021) (030)
Financial Institutions FISI 407 394 390 371 (004) (023)
First Commonwealth Financial FCF 388 380 373 373 (007) (007)
First Niagara Financial Group FNFG 364 359 347 350 (012) (009)
Fulton Financial FULT 380 390 377 375 (013) (015)
Hudson City Bancorp HCBK 200 188 207 201 019 013
Investors Bancorp ISBC 314 336 327 321 (009) (015)
MampT Bank MTB 384 373 360 356 (013) (017)
Metro Bancorp METR 404 386 366 352 (020) (034)
National Penn Bancshares NPBC 345 352 342 342 (010) (010)
New York Community Bancorp NYB 344 344 321 314 (023) (030)
Northwest Bancshares NWBI 352 368 368 369 000 001
Orrstown Financial Services ORRF 372 366 341 344 (025) (022)
Peoples United Financial PBCT 370 414 398 385 (016) (029)
Provident Financial Services PFS 341 347 331 327 (016) (020)
SampT Bancorp STBA 405 383 368 367 (015) (016)
Sandy Spring Bancorp SASR 360 357 345 335 (012) (022)
StellarOne STEL 365 380 374 366 (006) (014)
Sterling Bancorp STL 407 378 384 384 006 006
Sun Bancorp SNBC 350 350 345 345 (005) (005)
Susquehanna Bancshares SUSQ 367 360 371 366 011 006
Union First Market Bankshares UBSH 456 457 429 413 (028) (044)
United Bankshares UBSI 360 384 379 372 (005) (012)
Virginia Commerce Bancorp VCBI 387 391 379 368 (012) (023)
WSFS Financial WSFS 359 360 356 348 (004) (012)
Median Commercial Banks 384 380 373 367 (012) (015)
Median Thrifts 343 346 329 324 (010) (013)
- 9 -
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
Sandy Spring Bancorp (SASR -$1809 BUY 12-Month Fair Value Estimate $19)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately nine cents all other things equal The fiscal 2011 net interest margin
was 357 - fiscal 2012 Street estimates are for a net interest margin of 345
StellarOne Corporation (STEL- $1152 NEUTRAL 12-Month Fair Value Estimate $13)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately eight cents all other things equal The fiscal 2011 net interest
margin was 380 - fiscal 2012 Street estimates are for a net interest margin of 374
Sterling Bancorp (STL-$880 NEUTRAL 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately five cents all other things equal The fiscal 2011 net interest margin
was 378 - fiscal 2012 Street estimates are for a net interest margin of 384
Susquehanna Bancshares (SUSQ-$929 BUY 12-Month Fair Value Estimate $11)
Our sensitivity analysis indicates that a ten basis point change in the net interest margin causes annual earnings to
adjust approximately six cents per share all other things equal The fiscal 2011 net interest margin was 360 -
fiscal 2012 Street estimates are for a net interest margin of 371
Average earning assets $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837 $3496837
Net interest income 105917 109414 112911 116407 119908 123401 126898 130395 133892
Net interest margin 303 313 323 333 343 353 363 373 383
2011 EPS $094 $103 $112 $121 $130 $140 $149 $158 $167
Net Interest Margin 333 343 353 363 373 383 393 403
Earning Assets $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266 $2648266
Net interest income (FTE) $88249 $90897 $93545 $96194 $98844 $101490 $104138 $106787
Earnings Per Share $043 $051 $059 $067 $075 $083 $091 $099
Net Interest Margin 328 338 348 358 368 378 388 398 408
Average earning assets $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914 $2407914
Net interest income 79051 81459 83867 86275 88683 91090 93498 95906 98314
Net interest margin 328 338 348 358 368 378 388 398 408
2012 EPS $039 $044 $049 $054 $060 $065 $070 $075 $081
Net Interest Margin 324 334 344 354 364 374 384 394 404
(Dollars in Millions except per share amounts)
Earning Assets $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913 $157659913
Net Interest Income 5108976 5266636 5424296 5581956 5739616 5898429 6054936 6212596 6370255
NIM 324 334 344 354 364 374 384 394 404
EPS $042 $047 $053 $058 $064 $070 $075 $080 $086
- 7 -
United Bankshares of WV (UBSI-$2978 NEUTRAL 12-Month Fair Value Estimate $27)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately ten cents all other things equal The fiscal 2011 net interest margin
was 384 - fiscal 2012 Street estimates are for a net interest margin of 379
Virginia Commerce Bancorp (VCBI-$842 BUY 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents all other things equal The fiscal 2011 net interest margin
was 391 - fiscal 2012 Street estimates are for a net interest margin of 379
WSFS Financial (WSFS-$3800 BUY 12-Month Fair Value Estimate $47)
Our net interest margin sensitivity analysis suggests that five basis point swings in the net interest margin cause
earnings per share to change by approximately $014 cents all other things equal The fiscal 2011 net interest
margin was 360 - fiscal 2012 Street estimates are for a net interest margin of 356
Net Interest Margin 351 361 371 381 391 401 411
Average earning assets $7762834 $7762834 $7762834 $7762834 $7762834 $7762834 $7762834
Net interest income 272499 280261 288024 295810 303550 311313 319076
Net Income 75742 80788 85834 90894 95925 100971 106017
2012 EPS $150 $160 $170 $180 $190 $200 $210
Net Interest Margin 332 342 352 362 372 382 392 402 412
Average earning assets $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253
Net interest income 98229 101186 104143 107101 110067 113015 115972 118930 121887
Net interest margin 332 342 352 362 372 382 392 402 412
2011 EPS $050 $056 $062 $068 $075 $081 $087 $093 $100
Net Interest Margin 323 328 333 338 343 348 353 358 363
2012 Earning Assets $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180
Net Interest Income $121491 $123372 $125254 $127136 $134847 $130899 $132780 $134662 $136544
Net Income Available to Common $17409 $18632 $19855 $21078 $26090 $23524 $24747 $25970 $27193
2012 EPS $244 $258 $272 $286 $300 $314 $328 $342 $356
- 8 -
Table 1 Janney Coverage Universe Net Interest Margin Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net
Interest
Margin ( )
Net
Interest
Margin ( )
Street Net
Interest Margin
Estimate ( )
Street Net
Interest Margin
Estimate ( )
Change in Net
Interest Margin
(bps)
Change in Net
Interest Margin
(bps) 2011 actual
vs 2013 estimate
2010A 2011A 2012E 2013E
2011 actual
vs 2012 estimate
2011 actual
vs 2013 estimate
Astoria Financial AF 233 228 217 217 (011) (011)
BankUnited BKU 505 614 548 477 (066) (137)
Beneficial Mutual Bancorp BNCL 332 322 316 318 (006) (004)
City Holding Company CHCO 406 389 380 376 (009) (013)
Community Bank System CBU 404 408 387 378 (021) (030)
Financial Institutions FISI 407 394 390 371 (004) (023)
First Commonwealth Financial FCF 388 380 373 373 (007) (007)
First Niagara Financial Group FNFG 364 359 347 350 (012) (009)
Fulton Financial FULT 380 390 377 375 (013) (015)
Hudson City Bancorp HCBK 200 188 207 201 019 013
Investors Bancorp ISBC 314 336 327 321 (009) (015)
MampT Bank MTB 384 373 360 356 (013) (017)
Metro Bancorp METR 404 386 366 352 (020) (034)
National Penn Bancshares NPBC 345 352 342 342 (010) (010)
New York Community Bancorp NYB 344 344 321 314 (023) (030)
Northwest Bancshares NWBI 352 368 368 369 000 001
Orrstown Financial Services ORRF 372 366 341 344 (025) (022)
Peoples United Financial PBCT 370 414 398 385 (016) (029)
Provident Financial Services PFS 341 347 331 327 (016) (020)
SampT Bancorp STBA 405 383 368 367 (015) (016)
Sandy Spring Bancorp SASR 360 357 345 335 (012) (022)
StellarOne STEL 365 380 374 366 (006) (014)
Sterling Bancorp STL 407 378 384 384 006 006
Sun Bancorp SNBC 350 350 345 345 (005) (005)
Susquehanna Bancshares SUSQ 367 360 371 366 011 006
Union First Market Bankshares UBSH 456 457 429 413 (028) (044)
United Bankshares UBSI 360 384 379 372 (005) (012)
Virginia Commerce Bancorp VCBI 387 391 379 368 (012) (023)
WSFS Financial WSFS 359 360 356 348 (004) (012)
Median Commercial Banks 384 380 373 367 (012) (015)
Median Thrifts 343 346 329 324 (010) (013)
- 9 -
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
United Bankshares of WV (UBSI-$2978 NEUTRAL 12-Month Fair Value Estimate $27)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately ten cents all other things equal The fiscal 2011 net interest margin
was 384 - fiscal 2012 Street estimates are for a net interest margin of 379
Virginia Commerce Bancorp (VCBI-$842 BUY 12-Month Fair Value Estimate $9)
Our net interest margin sensitivity analysis suggests that ten basis point swings in the net interest margin cause
earnings per share to change by approximately six cents all other things equal The fiscal 2011 net interest margin
was 391 - fiscal 2012 Street estimates are for a net interest margin of 379
WSFS Financial (WSFS-$3800 BUY 12-Month Fair Value Estimate $47)
Our net interest margin sensitivity analysis suggests that five basis point swings in the net interest margin cause
earnings per share to change by approximately $014 cents all other things equal The fiscal 2011 net interest
margin was 360 - fiscal 2012 Street estimates are for a net interest margin of 356
Net Interest Margin 351 361 371 381 391 401 411
Average earning assets $7762834 $7762834 $7762834 $7762834 $7762834 $7762834 $7762834
Net interest income 272499 280261 288024 295810 303550 311313 319076
Net Income 75742 80788 85834 90894 95925 100971 106017
2012 EPS $150 $160 $170 $180 $190 $200 $210
Net Interest Margin 332 342 352 362 372 382 392 402 412
Average earning assets $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253 $2957253
Net interest income 98229 101186 104143 107101 110067 113015 115972 118930 121887
Net interest margin 332 342 352 362 372 382 392 402 412
2011 EPS $050 $056 $062 $068 $075 $081 $087 $093 $100
Net Interest Margin 323 328 333 338 343 348 353 358 363
2012 Earning Assets $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180 $3763180
Net Interest Income $121491 $123372 $125254 $127136 $134847 $130899 $132780 $134662 $136544
Net Income Available to Common $17409 $18632 $19855 $21078 $26090 $23524 $24747 $25970 $27193
2012 EPS $244 $258 $272 $286 $300 $314 $328 $342 $356
- 8 -
Table 1 Janney Coverage Universe Net Interest Margin Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net
Interest
Margin ( )
Net
Interest
Margin ( )
Street Net
Interest Margin
Estimate ( )
Street Net
Interest Margin
Estimate ( )
Change in Net
Interest Margin
(bps)
Change in Net
Interest Margin
(bps) 2011 actual
vs 2013 estimate
2010A 2011A 2012E 2013E
2011 actual
vs 2012 estimate
2011 actual
vs 2013 estimate
Astoria Financial AF 233 228 217 217 (011) (011)
BankUnited BKU 505 614 548 477 (066) (137)
Beneficial Mutual Bancorp BNCL 332 322 316 318 (006) (004)
City Holding Company CHCO 406 389 380 376 (009) (013)
Community Bank System CBU 404 408 387 378 (021) (030)
Financial Institutions FISI 407 394 390 371 (004) (023)
First Commonwealth Financial FCF 388 380 373 373 (007) (007)
First Niagara Financial Group FNFG 364 359 347 350 (012) (009)
Fulton Financial FULT 380 390 377 375 (013) (015)
Hudson City Bancorp HCBK 200 188 207 201 019 013
Investors Bancorp ISBC 314 336 327 321 (009) (015)
MampT Bank MTB 384 373 360 356 (013) (017)
Metro Bancorp METR 404 386 366 352 (020) (034)
National Penn Bancshares NPBC 345 352 342 342 (010) (010)
New York Community Bancorp NYB 344 344 321 314 (023) (030)
Northwest Bancshares NWBI 352 368 368 369 000 001
Orrstown Financial Services ORRF 372 366 341 344 (025) (022)
Peoples United Financial PBCT 370 414 398 385 (016) (029)
Provident Financial Services PFS 341 347 331 327 (016) (020)
SampT Bancorp STBA 405 383 368 367 (015) (016)
Sandy Spring Bancorp SASR 360 357 345 335 (012) (022)
StellarOne STEL 365 380 374 366 (006) (014)
Sterling Bancorp STL 407 378 384 384 006 006
Sun Bancorp SNBC 350 350 345 345 (005) (005)
Susquehanna Bancshares SUSQ 367 360 371 366 011 006
Union First Market Bankshares UBSH 456 457 429 413 (028) (044)
United Bankshares UBSI 360 384 379 372 (005) (012)
Virginia Commerce Bancorp VCBI 387 391 379 368 (012) (023)
WSFS Financial WSFS 359 360 356 348 (004) (012)
Median Commercial Banks 384 380 373 367 (012) (015)
Median Thrifts 343 346 329 324 (010) (013)
- 9 -
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
Table 1 Janney Coverage Universe Net Interest Margin Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net
Interest
Margin ( )
Net
Interest
Margin ( )
Street Net
Interest Margin
Estimate ( )
Street Net
Interest Margin
Estimate ( )
Change in Net
Interest Margin
(bps)
Change in Net
Interest Margin
(bps) 2011 actual
vs 2013 estimate
2010A 2011A 2012E 2013E
2011 actual
vs 2012 estimate
2011 actual
vs 2013 estimate
Astoria Financial AF 233 228 217 217 (011) (011)
BankUnited BKU 505 614 548 477 (066) (137)
Beneficial Mutual Bancorp BNCL 332 322 316 318 (006) (004)
City Holding Company CHCO 406 389 380 376 (009) (013)
Community Bank System CBU 404 408 387 378 (021) (030)
Financial Institutions FISI 407 394 390 371 (004) (023)
First Commonwealth Financial FCF 388 380 373 373 (007) (007)
First Niagara Financial Group FNFG 364 359 347 350 (012) (009)
Fulton Financial FULT 380 390 377 375 (013) (015)
Hudson City Bancorp HCBK 200 188 207 201 019 013
Investors Bancorp ISBC 314 336 327 321 (009) (015)
MampT Bank MTB 384 373 360 356 (013) (017)
Metro Bancorp METR 404 386 366 352 (020) (034)
National Penn Bancshares NPBC 345 352 342 342 (010) (010)
New York Community Bancorp NYB 344 344 321 314 (023) (030)
Northwest Bancshares NWBI 352 368 368 369 000 001
Orrstown Financial Services ORRF 372 366 341 344 (025) (022)
Peoples United Financial PBCT 370 414 398 385 (016) (029)
Provident Financial Services PFS 341 347 331 327 (016) (020)
SampT Bancorp STBA 405 383 368 367 (015) (016)
Sandy Spring Bancorp SASR 360 357 345 335 (012) (022)
StellarOne STEL 365 380 374 366 (006) (014)
Sterling Bancorp STL 407 378 384 384 006 006
Sun Bancorp SNBC 350 350 345 345 (005) (005)
Susquehanna Bancshares SUSQ 367 360 371 366 011 006
Union First Market Bankshares UBSH 456 457 429 413 (028) (044)
United Bankshares UBSI 360 384 379 372 (005) (012)
Virginia Commerce Bancorp VCBI 387 391 379 368 (012) (023)
WSFS Financial WSFS 359 360 356 348 (004) (012)
Median Commercial Banks 384 380 373 367 (012) (015)
Median Thrifts 343 346 329 324 (010) (013)
- 9 -
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
Table 2 Janney Coverage Universe Net Interest Income Historical vs Street Estimates
Source SNL Financial
Institution Name Ticker
Net Interest
Income ($000)
Net Interest
Income ($000)
Street
Net Interest
Income Estimate
($000)
Street
Net Interest
Income Estimate
($000)
Change in
Net Interest
Income ( )
Change in
Net Interest
Income ( )
2010A 2011A 2012E 2013E
2011 actual
vs 2012
estimate
2011 actual
vs 2013
estimate
Astoria Financial AF $433567 $375426 $349764 $360500 (68) (40)
BankUnited BKU 389488 499160 527825 518419 57 39
Beneficial Mutual Bancorp BNCL 147618 142097 142325 147721 02 40
City Holding Company CHCO 94288 92130 94776 97698 29 60
Community Bank System CBU 181684 209413 239089 255242 142 219
Financial Institutions FISI 78789 81863 89734 95600 96 168
First Commonwealth Financial FCF 206761 189867 193218 203386 18 71
First Niagara Financial Group FNFG 597754 881247 1157679 1271319 314 443
Fulton Financial FULT 558746 560160 564850 579831 08 35
Hudson City Bancorp HCBK 1190827 980934 900897 874179 (82) (109)
Investors Bancorp ISBC 269410 329084 354872 368986 78 121
MampT Bank MTB 2267526 2389756 2524489 2603494 56 89
Metro Bancorp METR 79850 82999 85828 88403 34 65
National Penn Bancshares NPBC 271232 259903 268172 281566 32 83
New York Community Bancorp NYB 1179963 1200421 1159006 1199452 (35) (01)
Northwest Bancshares NWBI 257641 267269 269466 277551 08 38
Orrstown Financial Services ORRF 45735 49607 46890 48618 (55) (20)
Peoples United Financial PBCT 699000 923600 983302 1012270 65 96
Provident Financial Services PFS 208965 215990 217246 225133 06 42
SampT Bancorp STBA 145846 137346 141704 147724 32 76
Sandy Spring Bancorp SASR 115607 112946 122097 124638 81 104
StellarOne STEL 94010 96421 98168 98473 18 21
Sterling Bancorp STL 81607 84077 92430 97463 99 159
Sun Bancorp SNBC 110962 103528 101324 103317 (21) (02)
Susquehanna Bancshares SUSQ 426506 433150 567148 596374 309 377
Union First Market Bankshares UBSH 151576 156360 154148 150637 (14) (37)
United Bankshares UBSI 238186 260728 287810 287952 104 104
Virginia Commerce Bancorp VCBI 105329 106802 110217 112921 32 57
WSFS Financial WSFS 120671 126037 136374 141614 82 124
Median Commercial Banks 32 76
Median Thrifts 07 39
- 10 -
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
Figure 1 Janney Coverage Universe Historical Net Interest Margin
Source SNL Financial
Relative to the October 2011 survey the net percentage of banks increasing spreads on loans to large and medium
sized firms continued to decline (-46) from the October survey (-41) however the net percentage of banks
increasing spreads of loan rates over their cost of funds to small firms eased a bit to (-43) versus (-48) for the
October survey Ultimately this reflects pricing pressures that should translate into net interest margin compression
through the current low absolute rate environment
Figure 2 of Banks Increasing Spreads of Loan Rates Over Banksrsquo Cost of Funds vs Reported Net Interest
Margins
Source Federal Reserve Janney Capital Markets
200
250
300
350
400
450
2011Q42010Y2009Y2008Y2007Y2006Y2005Y2004Y2003Y
Average Bank gt$10B Average Bank lt$10 B
Average Thrift gt$10B Average Thrift gt$10B - not including BankUnited
Average Thrift lt$10B
250
270
290
310
330
350
370
390
410
-80
-60
-40
-20
0
20
40
60
80
100
120
06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1
Net Interest Margin (Right Axis)
Net percentage of banks increasing spreads of loan rates over banks cost of funds to large and middle-market firms
Net percentage of banks increasing spreads of loan rates over banks cost of funds to small firms
- 11 -
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
Figure 3 Net Interest Margin for all US Banks ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 4 Net Interest Margin for all US Banks between $300M and $1B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 12 -
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
Figure 5 Net Interest Margin for all US Banks with Less Than $15B in Assets ()
Shaded areas denote US recessions Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
Figure 6 Net Interest Margin for all US Banks with More Than $15B in Assets ()
Shaded areas denote US recessions
Source Federal Reserve Bank of St Louis Federal Financial Institutions Examination Council
- 13 -
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
IMPORTANT DISCLOSURES
Research Analyst CertificationI David C Peppard and Rick Weiss the Primarily Responsible Analyst for this research report hereby certify that all of theviews expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuersNo part of my compensation was is or will be directly or indirectly related to the specific recommendations or views Iexpressed in this research report
Janney Montgomery Scott LLC (Janney) Equity Research Disclosure LegendIndividual disclosures for the companies mentioned in this report can be obtained by calling or writing Janney MontgomeryScott LLC as provided on the first page of this reportDisclosure Site
Definition of RatingsBUY Janney expects that the subject company will appreciate in value Additionally we expect that the subject company willoutperform comparable companies within its sector
NEUTRAL Janney believes that the subject company is fairly valued and will perform in line with comparable companieswithin its sector Investors may add to current positions on short-term weakness and sell on strength as the valuations orfundamentals become more or less attractive
SELL Janney expects that the subject company will likely decline in value and will underperform comparable companieswithin its sector
Janney Montgomery Scott Ratings Distribution as of 123011
IB ServPast 12 Mos
Rating Count Percent Count Percent
BUY [B] 226 5900 19 800
NEUTRAL [N] 155 4000 7 500
SELL [S] 2 100 0 000
Percentages of each rating category where Janney has performed Investment Banking services over thepast 12 months
Other DisclosuresJanney Montgomery Scott LLC is a US broker-dealer registered with the US Securities and Exchange Commission and amember of the New York Stock Exchange the Financial Industry Regulatory Authority and the Securities Investor ProtectionCorp
This report is for your information only and is not an offer to sell or a solicitation of an offer to buy the securities or instrumentsnamed or described in this report Interested parties are advised to contact the entity with which they deal or the entity thatprovided this report to them should they desire further information The information in this report has been obtained or derivedfrom sources believed by Janney Montgomery Scott LLC to be reliable Janney Montgomery Scott LLC however does notrepresent that this information is accurate or complete Any opinions or estimates contained in this report represent the judgmentof Janney Montgomery Scott LLC at this time and are subject to change without notice
Investment opinions are based on each stocks 6-12 month return potential Our ratings are not based on formal price targetshowever our analysts will discuss fair value andor target price ranges in research reports Decisions to buy or sell a stockshould be based on the investors investment objectives and risk tolerance and should not rely solely on the rating Investorsshould read carefully the entire research report which provides a more complete discussion of the analysts views Supportinginformation related to the recommendation if any made in the research report is available upon request
- 14 -
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268
Janney Montgomery ScottRESEARCHDEPARTMENT
Gary R Schatz Managing Director Director of Research (215) 665-6234
TECHNOLOGY and MEDIA Communications Equipment and IT Hardware Bill Choi ndash Managing Director (212) 888-2524 Chad Wood ndash Associate (646) 840-3219 Financial Technology Thomas C McCrohan ndash Managing Director (215) 665-6293 Leonard A DeProspo CFA ndash Associate (215) 665-4559 Internet Infrastructure amp Software Richard Fetyko ndash Director (646) 840-4616 Corbin Woodhull ndash Associate (646) 840-4615 Internet amp Interactive Entertainment Shawn C Milne ndash Managing Director (415) 981-9539 Mike Carroll - Associate (617) 367-3278 Entertainment amp Digital Media Tony Wible CFA ndash Managing Director (908) 470-3160 IT Outsourcing BPO Consulting Joseph D Foresi ndash Director (617) 557-2972 Jeffrey Rossetti ndash Associate (617) 557-2989 CONSUMER and RETAIL Casino Gaming and Lodging Brian T McGill ndash Managing Director (215) 665-6485 Brian Mullan CFA ndash Associate (646) 840-4604 Food Beverage Tobacco Jonathan Feeney CFA ndash Managing Director (215) 665-6679 Mark Williams ndash Associate (215) 665-6358 Mitchell B Pinheiro CFAndashManaging Director (215) 665-6280 Brian Holland ndash Associate (215) 665-4478 Household amp Personal Care John San Marco ndash Vice President (646) 840-4607 Amy Babington ndash Associate (646) 840-3207 Restaurants Mark Kalinowski ndash Director (212) 940-6997 Hardline Retailers David Strasser ndash Managing Director (646) 840-4609 Sarang Vora ndash Associate (646) 840-4605 Darren Bassman ndash Associate (646) 840-3201 Softline Retail ndash Specialty Apparel Adrienne Tennant ndash Managing Director (202) 499-4493
FINANCIALS Banks Thrifts Rick Weiss ndash Director (215) 665-6224 David C Peppard ndash Vice President (215) 665-6457 BDCs John T G Rogers CFA ndash Vice President (202) 955-4316 Insurance Robert Glasspiegel CFA ndash Managing Director (860) 724-1203 Larry Greenberg CFA ndash Managing Director (860) 724-1203 Steven Labbe CFA ndash Managing Director (860) 724-1203 Lindsey Glode ndash Associate (860) 724-1203 REITs Andrew DiZio CFA ndash Vice President (215) 665-6439 Daniel Donlan ndash Vice President (215) 665-6476 Elizabeth Bland ndash Associate (215) 665-4574 INFRASTRUCTURE Industrials James C Lucas ndash Managing Director (215) 665-6196 Michael J Wherley ndash Associate (215) 665-4476 Industrial Services Liam D Burke ndash Managing Director (202) 955-4305 Water amp Agriculture Ryan M Connors - Managing Director (215) 665-1359 Tim Feron - Associate (215) 665-4493
Master Limited Partnerships Suzanne Hannigan CFA ndash Director (215) 665-4475 TECHNICAL ANALYSIS Technical Strategy Dan Wantrobski CMT ndash Director (215) 665-4446 SUPERVISORY ANALYSTS Richard Jacobs - Director (215) 665-6290 Irene H Buhalo ndash Vice President (215) 665-6510 Holly Guthrie ndash Vice President (215) 665-1268