David C. Peppard
215-665-6457
[email protected]
Rick Weiss
215-665-6224
Banks/Thrifts
[email protected]
March 5, 2012
Net Interest Margins – How Low Can They Go? INVESTMENT CONCLUSION: “I wish I had an answer to that because I'm tired of answering that question.” –Yogi Berra Many banks and borrowers are awash in liquidity. Loan-to-deposit ratios have been drifting lower due to sluggish loan demand as consumers continue to unwind leverage and many businesses lack the confidence needed to expand. Interest rate and reinvestment risk have begun to overtake credit quality as the major concern – net interest margin compression will reduce earnings. Companies with higher core deposits (especially non-interest bearing) have greater longer-term franchise value, but the benefit of such funding is limited in the prolonged low interest rate environment. We opine that net interest margin decline will accelerate this quarter as higher levels of shorter-term investments re-price at lower rates without a corresponding decrease in the cost of funds. We find that changes in bank net interest margins are typically related to increases/decreases in the slope of the yield curve (which is currently flattening due to expectations of anemic economic growth, stable and low rates through 2014, and the Fed’s “Operation Twist”). Changes in the yield spread have significant and lingering effects on net interest margins for many banks, but the effects are particularly notable for mortgage specialists and small community banks. In general, large and more diversified banks are less sensitive to interest-rate shocks (as opposed to credit shocks). On the other hand, banks are more constrained in their ability to control loan pricing, mostly because of increased competition for quality loans. We, therefore, believe that commercially-oriented banks are better positioned for higher rates due to better core funding sources and a greater percentage of commercial and industrial loans, which reprice more quickly than real estate-related loans if and when absolute interest rates should rise. We continue to recommend those stocks with dividends backed by solid earnings and strong fundamentals as the best potential for higher returns through this low growth environment. Our BUY-rated dividend picks include Astoria, Financial Institutions, New York Community, and Northwest Bancorp. We also like the following NEUTRAL-rated names for dividend-oriented investors: City Holding, Community Bank Systems, First Niagara, Hudson City, M&T Bank, People’s United, Provident Financial, Sterling, and United Bankshares of WV. KEY POINTS: · The long-term trend for net interest margins is clearly on a decline (see Figures 3-6); however, we remain optimistic for bank stocks due to: 1) the attractiveness of cash dividends versus fixed-income investments; 2) stronger balance sheets (higher capital ratios and more stable asset quality); 3) a play on an improving US economy; 4) regulatory uncertainty should begin to subside in 2012; and 5) better prospects for increased merger and acquisition activity. · Competition for top-rated credits is fierce, pricing power appears to rest with borrowers, and ‘floors’ in most commercial credits will mute the positive impact of higher rates through the early stages of a rising rate environment. · Funding Mix: The pace of overall deposit growth appears to have slowed as banks are awash in liquidity; however, we do expect the deposit mix to become more attractive. While deposit pricing may be attractive, the reinvestment of the current volume into mortgages and securities appears to be an increasingly less attractive proposition, as interest rate risk is increasing and spreads are narrowing. KEY POINTS CONTINUED ON NEXT PAGE
Equity Research Industry Report
Research Analyst Certifications and Important Disclosures are 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 13.7 times, 13.5 times, and 13.1 times estimated 2012 earnings. At this time last year, price-to-earnings multiples were 16.6 times, 15.3 times, and 21.5 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 3month 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 bank’s overall funding cost and investment yield. Net Interest Margin Outlook – 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 Fed’s 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 3.50% 3.00% 2.50% 2.00%
1.50% 1.00% 0.50%
0.00% U.S. Treasury - 3 U.S. Treasury - 6 months months
United States Treasury Bill - 1 Year
U.S. Treasury - 2 U.S. Treasury - 5 U.S. Treasury - 10 U.S. Treasury - 30 year years years years
Yield Curve Source: Capital IQ
-2-
Exhibit 1-2: Gauging the Steepness of the Yield Curve 2.50% 2.00%
1.50% 1.00% 0.50% 0.00%
Spread Between 3-mo and 5-year US Treasury Source: Capital IQ
Exhibit 1-3: Gauging the Steepness of the Yield Curve 2.00%
1.50%
1.00%
0.50%
0.00%
Spread Between 2-year and 5-year US Treasury Source: Capital IQ
Below are select highlights from our net interest margin sensitivity analyses of the Janney Coverage Universe. Banks’ 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 banks’ 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.
-3-
Astoria Financial (AF-$8.82; 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 $0.11 per share, all other things being equal. The fiscal 2011 net interest margin was 2.28% fiscal 2012 Street estimates are for a net interest margin of 2.17%. EPS Sensitivity Analysis - 2012 Net Interest Margin Earning Assets
1.96%
2.01%
2.06%
2.11%
2.16%
2.21%
2.26%
2.31%
$16,071,826 $16,071,826
$16,071,826
$16,071,826
$16,071,826
$16,071,826
$16,071,826
$16,071,826
Net Income
$31,504
$36,607
$41,710
$46,813
$51,933
$57,018
$62,121
$67,224
2012 EPS
$0.34
$0.39
$0.44
$0.50
$0.55
$0.61
$0.66
$0.72
City Holding Company (CHCO-$34.10; 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 3.89% - fiscal 2012 Street estimates are for a net interest margin of 3.80%. Net Interest Margin Earning Assets Net interest income (FTE) Net Income Avail to Common Earnings Per Share
3.53%
3.63%
3.73%
3.83%
3.93%
4.03%
4.13%
$2,471,638 $2,471,638 $2,471,638 $2,471,638 $2,471,638 $2,471,638 $2,471,638 $87,177 $89,649 $92,121 $94,599 $97,064 $99,535 $102,007 $48,374 $49,993 $51,612 $37,891 $54,850 $56,469 $58,087 $2.36 $2.44 $2.52 $2.60 $2.68 $2.76 $2.84
Community Bank Systems (CBU-$27.44; 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 4.08% - fiscal 2012 Street estimates are for a net interest margin of 3.87%. Net Interest Margin Earning Assets Net interest income (FTE) Earnings Per Share
3.64%
3.74%
3.84%
3.94%
4.04%
4.14%
4.24%
$6,002,628
$6,002,628
$6,002,628
$6,002,628
$6,002,628
$6,002,628
$6,002,628
$218,454
$224,457
$230,459
$236,495
$242,464
$248,467
$254,470
$1.76
$1.86
$1.96
$2.05
$2.15
$2.24
$2.34
Financial Institutions (FISI-$15.92; 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 $0.11, all other things equal. The fiscal 2011 net interest margin was 3.94% - fiscal 2012 Street estimates are for a net interest margin of 3.90%. Net Interest Margin Earning Assets
3.66%
3.76%
3.86%
3.96%
4.06%
4.16%
4.26%
$2,270,322
$2,270,322
$2,270,322
$2,270,322
$2,270,322
$2,270,322
$2,270,322
Net interest income
$83,044
$85,314
$87,585
$89,967
$92,125
$94,396
$96,666
Earnings Per Share
$1.37
$1.48
$1.59
$1.70
$1.81
$1.92
$2.03
-4-
First Niagara (FNFG-$9.64; 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 3.59% - fiscal 2012 Street estimates are for a net interest margin of 3.47%. Net Interest Margin Earning Assets Net Interest Income (FTE) Net Income
3.12%
3.22%
$32,984,073
$32,984,073
$1,030,110
$1,063,094
$1,096,078
$1,129,732
$299,916
$321,356
$342,796
$0.85
$0.91
$0.97
2012 Earnings Per Share
3.32%
3.42%
3.52%
3.62%
3.72%
$32,984,073 $32,984,073
$32,984,073
$32,984,073
$32,984,073
$1,162,046
$1,195,030
$1,228,014
$364,671
$385,675
$407,115
$428,554
$1.03
$1.09
$1.15
$1.22
Fulton Financial (FULT-$9.86; 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 increase/decrease to the net interest margin, all other things equal. The fiscal 2011 net interest margin was 3.90% - fiscal 2012 Street estimates are for a net interest margin of 3.77%. Net Interest Margin
3.53%
Average earning assets Net interest income Net interest margin Net income 2012 EPS
3.58%
3.63%
3.68%
3.73%
3.78%
3.83%
3.88%
3.93%
$15,064,871 $15,064,871 $15,064,871 $15,064,871 $15,064,871 $15,064,871 $15,064,871 $15,064,871 $15,064,871 531,699 539,231 546,764 554,296 561,833 569,361 576,893 584,426 591,958 3.53% 3.58% 3.63% 3.68% 3.73% 3.78% 3.83% 3.88% 3.93% 127,079 132,219 137,359 142,499 147,643 152,779 157,919 163,059 168,199 $0.63 $0.66 $0.68 $0.71 $0.73 $0.76 $0.79 $0.81 $0.84
Hudson City Bancorp (HCBK-$6.83; 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 increase/decrease to the net interest margin, all other things equal. The fiscal 2011 net interest margin was 1.88% - fiscal 2012 Street estimates are for a net interest margin of 2.07%. Net Interest Margin 2012 Net Interest Income Net Income
1.63%
1.73%
1.83%
1.93%
2.03%
2.13%
2.23%
2.33%
2.43%
$899,037
$899,037
$899,037
$899,037
$899,037
$899,037
$899,037
$899,037
$899,037
$197,135
$224,216
$251,297
$278,378
$305,370
$332,539
$359,620
$386,701
$413,782
$0.40
$0.45
$0.51
$0.56
$0.62
$0.67
$0.72
$0.78
$0.83
2012 EPS
M&T Bank (MTB-$81.23; NEUTRAL; 12-Month Fair Value Estimate $82) Our net interest margin sensitivity analysis shows that earnings per share change by approximately $0.38 per share for every ten basis point increase/decrease to the net interest margin, all other things equal. The fiscal 2011 net interest margin was 3.73% - fiscal 2012 Street estimates are for a net interest margin of 3.60%. Net Interest Margin Net interest income Net income Net inc avail com stkholders 2012 EPS
3.21%
3.31%
3.41%
3.51%
3.61%
3.71%
3.81%
2,256,498
2,326,886
2,397,275
2,467,663
2,538,052
2,608,440
2,678,829
734,587
781,747
828,907
876,067
923,228
970,388
1,017,548
$682,166
$729,327
$776,487
$823,647
$870,808
$917,968
$965,128
$5.42
$5.80
$6.17
$6.55
$6.92
$7.30
$7.67
-5-
New York Community (NYB-$13.06; 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 3.44% - fiscal 2012 Street estimates are for a net interest margin of 3.21%. 2012 EPS Sensitivity Analysis Net Interest Margin 2012 Base Earning Assets Net Income
2.89%
2.99%
3.09%
$35,285,731
$35,285,731
$35,285,731
$366,295
$388,877
$411,460
$434,043
$456,686
$0.84
$0.89
$0.94
$0.99
$1.05
Earnings Per Share
3.19%
3.29%
3.39%
3.49%
3.59%
3.69%
$35,285,731 $35,285,731
$35,285,731
$35,285,731
$35,285,731
$35,285,731
$479,209
$501,792
$524,375
$546,957
$1.10
$1.15
$1.20
$1.25
Northwest Bancshares (NWBI-$12.50; 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 3.68% - fiscal 2012 Street estimates are for a net interest margin of 3.68%. Net Interest Margin
3.39%
3.49%
3.59%
3.69%
3.79%
3.89%
3.99%
4.09%
Earning Assets Net Interest Income Net Income Earnings Per Share
$7,553,315 $255,932 $52,465 $0.57
$7,553,315 $263,485 $57,374 $0.63
$7,553,315 $271,039 $62,284 $0.68
$7,553,315 $280,114 $68,183 $0.75
$7,553,315 $286,145 $72,103 $0.79
$7,553,315 $293,698 $77,013 $0.84
$7,553,315 $301,252 $81,923 $0.90
$7,553,315 $308,805 $86,832 $0.95
People’s United Financial (PBCT-$12.72; 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 4.14 % fiscal 2012 Street estimates are for a net interest margin of 3.98%. EPS Sensitivity Analysis - 2012 Earning Assets
$24,641.3
$24,641.3
$24,641.3
$24,641.3
$24,641.3
$24,641.3
$24,641.3
$24,641.3
3.47%
3.57%
3.67%
3.77%
3.87%
3.97%
4.07%
4.17%
4.27%
$194.6
$211.1
$227.6
$244.1
$260.6
$274.0
$293.6
$310.1
$326.6
$0.57
$0.61
$0.66
$0.71
$0.76
$0.80
$0.86
$0.90
$0.95
NIM 2011 Projected Net Income EPS
$24,641.3
Provident Financial (PFS-$13.48; 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 3.47% - fiscal 2012 Street estimates are for a net interest margin of 3.31%. Net Interest Margin
2.93%
3.03%
3.13%
3.23%
3.33%
3.43%
3.53%
3.63%
3.73%
Net Interest Income
$191,161
$197,690
$204,219
$210,748
$217,289
$223,807
$230,336
$236,865
$243,394
Net Income
$43,372
$48,204
$53,035
$57,867
$62,707
$67,530
$72,362
$77,193
$82,025
2012 EPS
$0.76
$0.85
$0.93
$1.02
$1.10
$1.18
$1.27
$1.35
$1.44
-6-
Sandy Spring Bancorp (SASR -$18.09; 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 3.57% - fiscal 2012 Street estimates are for a net interest margin of 3.45%. Average earning assets Net interest income Net interest margin 2011 EPS
$3,496,837 $3,496,837 $3,496,837 $3,496,837 $3,496,837 $3,496,837 $3,496,837 $3,496,837 $3,496,837 105,917 109,414 112,911 116,407 119,908 123,401 126,898 130,395 133,892 3.03% 3.13% 3.23% 3.33% 3.43% 3.53% 3.63% 3.73% 3.83% $0.94 $1.03 $1.12 $1.21 $1.30 $1.40 $1.49 $1.58 $1.67
StellarOne Corporation (STEL- $11.52; 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 3.80% - fiscal 2012 Street estimates are for a net interest margin of 3.74%. Net Interest Margin
3.33%
Earning Assets Net interest income (FTE) Earnings Per Share
3.43%
3.53%
3.63%
3.73%
3.83%
3.93%
4.03%
$2,648,266 $2,648,266 $2,648,266 $2,648,266 $2,648,266 $2,648,266 $2,648,266 $2,648,266 $88,249 $90,897 $93,545 $96,194 $98,844 $101,490 $104,138 $106,787 $0.43 $0.51 $0.59 $0.67 $0.75 $0.83 $0.91 $0.99
Sterling Bancorp (STL-$8.80; 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 3.78% - fiscal 2012 Street estimates are for a net interest margin of 3.84%. Net Interest Margin Average earning assets Net interest income Net interest margin 2012 EPS
3.28%
3.38%
3.48%
3.58%
3.68%
3.78%
3.88%
3.98%
4.08%
$2,407,914 $2,407,914 $2,407,914 $2,407,914 $2,407,914 $2,407,914 $2,407,914 $2,407,914 $2,407,914 79,051 81,459 83,867 86,275 88,683 91,090 93,498 95,906 98,314 3.28% 3.38% 3.48% 3.58% 3.68% 3.78% 3.88% 3.98% 4.08% $0.39 $0.44 $0.49 $0.54 $0.60 $0.65 $0.70 $0.75 $0.81
Susquehanna Bancshares (SUSQ-$9.29; 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 3.60% fiscal 2012 Street estimates are for a net interest margin of 3.71%. Net Interest Margin (Dollars in Millions, except per share amounts.) Earning Assets Net Interest Income NIM EPS
3.24%
3.34%
3.44%
3.54%
3.64%
3.74%
3.84%
3.94%
4.04%
$15,765,991.3 $15,765,991.3 $15,765,991.3 $15,765,991.3 $15,765,991.3 $15,765,991.3 $15,765,991.3 $15,765,991.3 $15,765,991.3 510,897.6 526,663.6 542,429.6 558,195.6 573,961.6 589,842.9 605,493.6 621,259.6 637,025.5 3.24% 3.34% 3.44% 3.54% 3.64% 3.74% 3.84% 3.94% 4.04% $0.42 $0.47 $0.53 $0.58 $0.64 $0.70 $0.75 $0.80 $0.86
-7-
United Bankshares of WV (UBSI-$29.78; 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 3.84% - fiscal 2012 Street estimates are for a net interest margin of 3.79%. Net Interest Margin
3.51%
Average earning assets Net interest income Net Income 2012 EPS
3.61%
3.71%
3.81%
3.91%
4.01%
4.11%
$7,762,834 $7,762,834 $7,762,834 $7,762,834 $7,762,834 $7,762,834 $7,762,834 272,499 280,261 288,024 295,810 303,550 311,313 319,076 75,742 80,788 85,834 90,894 95,925 100,971 106,017 $1.50 $1.60 $1.70 $1.80 $1.90 $2.00 $2.10
Virginia Commerce Bancorp (VCBI-$8.42; 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 3.91% - fiscal 2012 Street estimates are for a net interest margin of 3.79%. Net Interest Margin Average earning assets Net interest income Net interest margin 2011 EPS
3.32%
3.42%
3.52%
3.62%
3.72%
3.82%
3.92%
4.02%
4.12%
$2,957,253 $2,957,253 $2,957,253 $2,957,253 $2,957,253 $2,957,253 $2,957,253 $2,957,253 $2,957,253 98,229 101,186 104,143 107,101 110,067 113,015 115,972 118,930 121,887 3.32% 3.42% 3.52% 3.62% 3.72% 3.82% 3.92% 4.02% 4.12% $0.50 $0.56 $0.62 $0.68 $0.75 $0.81 $0.87 $0.93 $1.00
WSFS Financial (WSFS-$38.00; 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 $0.14 cents, all other things equal. The fiscal 2011 net interest margin was 3.60% - fiscal 2012 Street estimates are for a net interest margin of 3.56%. Net Interest Margin
3.23%
3.28%
3.33%
3.38%
3.43%
3.48%
3.53%
3.58%
3.63%
2012 Earning Assets
$3,763,180 $3,763,180 $3,763,180 $3,763,180 $3,763,180 $3,763,180 $3,763,180 $3,763,180 $3,763,180
Net Interest Income
$121,491 $123,372 $125,254 $127,136
Net Income Available to Common 2012 EPS
$134,847 $130,899 $132,780 $134,662 $136,544
$17,409
$18,632
$19,855
$21,078
$26,090
$23,524
$24,747
$25,970
$27,193
$2.44
$2.58
$2.72
$2.86
$3.00
$3.14
$3.28
$3.42
$3.56
-8-
Table 1: Janney Coverage Universe Net Interest Margin Historical vs. Street Estimates
Institution Name
Ticker
Net Interest Margin (% )
Net Interest Margin (% )
Street Net Interest Margin Estimate (% )
2010A
2011A
2012E
Street Net Interest Margin Estimate (% )
Change in Net Change in Net Interest Margin Interest Margin (bps) 2011 actual (bps) vs. 2013 estimate
2011 actual 2011 actual 2013E vs. 2012 estimate vs. 2013 estimate
Astoria Financial
AF
2.33
2.28
2.17
2.17
(0.11)
(0.11)
BankUnited
BKU
5.05
6.14
5.48
4.77
(0.66)
(1.37)
Beneficial Mutual Bancorp
BNCL
3.32
3.22
3.16
3.18
(0.06)
(0.04)
City Holding Company
CHCO
4.06
3.89
3.80
3.76
(0.09)
(0.13)
Community Bank System
CBU
4.04
4.08
3.87
3.78
(0.21)
(0.30)
Financial Institutions
FISI
4.07
3.94
3.90
3.71
(0.04)
(0.23)
First Commonwealth Financial FCF
3.88
3.80
3.73
3.73
(0.07)
(0.07)
First Niagara Financial Group
FNFG
3.64
3.59
3.47
3.50
(0.12)
(0.09)
Fulton Financial
FULT
3.80
3.90
3.77
3.75
(0.13)
(0.15)
Hudson City Bancorp
HCBK
2.00
1.88
2.07
2.01
0.19
0.13
Investors Bancorp
ISBC
3.14
3.36
3.27
3.21
(0.09)
(0.15)
M&T Bank
MTB
3.84
3.73
3.60
3.56
(0.13)
(0.17)
Metro Bancorp
METR
4.04
3.86
3.66
3.52
(0.20)
(0.34)
National Penn Bancshares
NPBC
3.45
3.52
3.42
3.42
(0.10)
(0.10)
New York Community Bancorp NYB
3.44
3.44
3.21
3.14
(0.23)
(0.30)
Northwest Bancshares
NWBI
3.52
3.68
3.68
3.69
0.00
0.01
Orrstown Financial Services
ORRF
3.72
3.66
3.41
3.44
(0.25)
(0.22)
People's United Financial
PBCT
3.70
4.14
3.98
3.85
(0.16)
(0.29)
Provident Financial Services
PFS
3.41
3.47
3.31
3.27
(0.16)
(0.20)
S&T Bancorp
STBA
4.05
3.83
3.68
3.67
(0.15)
(0.16)
Sandy Spring Bancorp
SASR
3.60
3.57
3.45
3.35
(0.12)
(0.22)
StellarOne
STEL
3.65
3.80
3.74
3.66
(0.06)
(0.14)
Sterling Bancorp
STL
4.07
3.78
3.84
3.84
0.06
0.06
Sun Bancorp
SNBC
3.50
3.50
3.45
3.45
(0.05)
(0.05)
Susquehanna Bancshares
SUSQ
3.67
3.60
3.71
3.66
0.11
0.06
Union First Market Bankshares UBSH
4.56
4.57
4.29
4.13
(0.28)
(0.44)
United Bankshares
UBSI
3.60
3.84
3.79
3.72
(0.05)
(0.12)
Virginia Commerce Bancorp
VCBI
3.87
3.91
3.79
3.68
(0.12)
(0.23)
WSFS Financial
WSFS
3.59
3.60
3.56
3.48
(0.04)
(0.12)
Median Commercial Banks
3.84
3.80
3.73
3.67
(0.12)
(0.15)
Median Thrifts
3.43
3.46
3.29
3.24
(0.10)
(0.13)
Source: SNL Financial
-9-
Table 2: Janney Coverage Universe Net Interest Income Historical vs. Street Estimates
Institution Name
Ticker
Astoria Financial
AF
BankUnited
Net Interest Income ($000)
2010A
Street Street Net Interest Net Interest Net Interest Income Estimate Income Estimate Income ($000) ($000) ($000)
2011A
2012E
2013E
Change in Change in Net Interest Net Interest Income (% ) Income (% ) 2011 actual 2011 actual vs. 2012 vs. 2013 estimate estimate
$433,567
$375,426
$349,764
$360,500
(6.8)
(4.0)
BKU
389,488
499,160
527,825
518,419
5.7
3.9
Beneficial Mutual Bancorp
BNCL
147,618
142,097
142,325
147,721
0.2
4.0
City Holding Company
CHCO
94,288
92,130
94,776
97,698
2.9
6.0
Community Bank System
CBU
181,684
209,413
239,089
255,242
14.2
21.9
Financial Institutions
FISI
78,789
81,863
89,734
95,600
9.6
16.8
First Commonwealth Financial
FCF
206,761
189,867
193,218
203,386
1.8
7.1
First Niagara Financial Group
FNFG
597,754
881,247
1,157,679
1,271,319
31.4
44.3
Fulton Financial
FULT
558,746
560,160
564,850
579,831
0.8
3.5
Hudson City Bancorp
HCBK
1,190,827
980,934
900,897
874,179
(8.2)
(10.9)
Investors Bancorp
ISBC
269,410
329,084
354,872
368,986
7.8
12.1
M&T Bank
MTB
2,267,526
2,389,756
2,524,489
2,603,494
5.6
8.9
Metro Bancorp
METR
79,850
82,999
85,828
88,403
3.4
6.5
National Penn Bancshares
NPBC
271,232
259,903
268,172
281,566
3.2
8.3
1,179,963
1,200,421
1,159,006
1,199,452
(3.5)
(0.1)
New York Community Bancorp NYB Northwest Bancshares
NWBI
257,641
267,269
269,466
277,551
0.8
3.8
Orrstown Financial Services
ORRF
45,735
49,607
46,890
48,618
(5.5)
(2.0)
People's United Financial
PBCT
699,000
923,600
983,302
1,012,270
6.5
9.6
Provident Financial Services
PFS
208,965
215,990
217,246
225,133
0.6
4.2
S&T Bancorp
STBA
145,846
137,346
141,704
147,724
3.2
7.6
Sandy Spring Bancorp
SASR
115,607
112,946
122,097
124,638
8.1
10.4
StellarOne
STEL
94,010
96,421
98,168
98,473
1.8
2.1
Sterling Bancorp
STL
81,607
84,077
92,430
97,463
9.9
15.9
Sun Bancorp
SNBC
110,962
103,528
101,324
103,317
(2.1)
(0.2)
Susquehanna Bancshares
SUSQ
426,506
433,150
567,148
596,374
30.9
37.7
Union First Market Bankshares UBSH
151,576
156,360
154,148
150,637
(1.4)
(3.7)
United Bankshares
UBSI
238,186
260,728
287,810
287,952
10.4
10.4
Virginia Commerce Bancorp
VCBI
105,329
106,802
110,217
112,921
3.2
5.7
WSFS Financial
WSFS
120,671
126,037
136,374
141,614
8.2
12.4
Median Commercial Banks
3.2
7.6
Median Thrifts
0.7
3.9
Source: SNL Financial
- 10 -
Figure 1: Janney Coverage Universe Historical Net Interest Margin Average Bank >$10B Average Thrift >$10B Average Thrift
