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Regional Bank Credit Quality is Improving: Net Charge-Offs are Dropping Below 1% and Balance Sheets Derisk by Almost Half; an Industry Expert Talks to The Wall Street Transcript and Analyzes Companies and Trends for This Industry

67 WALL STREET, New York - February 6, 2013 - The Wall Street Transcript has just published its Southeast & Midwestern Banks Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Heightened M&A Activity - Consolidation in Regional Banking - Growth in U.S. Midwest - Regulatory Obstacles and Fee Income Replacement - Rise of Commercial and Industrial Lending

Companies include: Bank of America Corporation (BAC), Citigroup, Inc. (C), JPMorgan Chase & Co. (JPM), Wells Fargo & Company (WFC), US Bancorp (USB), PNC Financial Services Group I (PNC), SunTrust Banks, Inc. (STI), Regions Financial Corp. (RF), BB & T Corp. (BBT), Huntington Bancshares Inc. (HBAN), KeyCorp (KEY), Fifth Third Bancorp (FITB), M&T Bank Corp. (MTB), First Horizon National Corp. (FHN), Zions Bancorp. (ZION), The Bank of New York Mellon Co (BK), Northern Trust Corporation (NTRS), State Street Corp. (STT) and many more.

In the following excerpt from the Southeast & Midwestern Banks Report, an expert analyst discusses the outlook for the regional banking industry.

TWST: How is credit quality faring overall in these two regions?

Mr. Mosby: Credit quality actually is one of the key elements of the recovery. The first phase that we have been able to go through is the provisioning coming back down for most of these banks. Net charge-offs are dropping below 1% again, and for some of the better banks they are actually starting to move into their range of what we would think they would be in a historical average, and a couple have actually gotten down below that toward 50 basis points; so we're seeing the losses have come down, we're seeing the derisking of the balance sheet with these overhang portfolios that were, in some cases, 15% to 20% of the balance sheets now down to less than 10%. So they're not having to overcome a lot of the runoff that you had in the past in those portfolios, and really being able to see that their composition being much smaller means that there's a lot less risk on these balance sheets than what we saw five years ago when we entered this recession.

TWST: Are these banks experiencing loan growth?

Mr. Mosby: If you look at all of them, they're really starting to see commercial and industrial, middle market and corporate lending start to show some pretty nice growth, with that sector of the economy being the one segment that's getting the most traction with the low interest rates.

Consumer is still deleveraging, so the consumer books are not growing significantly. Auto lending is just starting to come back because you don't have the competition from the captive finance companies that the auto companies were really aggressive with in the last cycle, so the banks have become the more traditional lender into that group again; so if you weren't in the auto before, you don't have a lot on the consumer side. But the commercial side is strong. We are seeing activity starting to pick up. We're even seeing some utilization rates pick up.

TWST: What are your top picks or favorite names right now?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.