Transcript No Slide Title

1
Second Quarter 2004 Review
July 16, 2004
Speakers: Henry Meyer
Jeff Weeden
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
FORWARD-LOOKING STATEMENT DISCLOSURE
The conference call and discussion, including related questions and
answers, and presentation materials, contain forward-looking statements
about issues like anticipated third quarter and full-year 2004 earnings,
anticipated level of net loan charge-offs and nonperforming assets and
anticipated improvement in profitability and competitiveness. Forward-looking
statements by their nature are subject to assumptions, risks and
uncertainties. Actual results could differ materially from those contained in or
implied by such forward-looking statements for a variety of factors including:
changes in interest rates; failure of the economy to continue to recover,
which could materially impact credit quality trends and the ability to generate
loans; failure of the capital markets to function consistent with customary
levels; delay in or inability to execute strategic initiatives designed to grow
revenues and/or manage expenses; consummation of significant business
combinations or divestitures; new legal obligations or restrictions or
unfavorable resolution of litigation; further disruption in the economy or the
general business climate as a result of terrorist activities or military actions;
and changes in accounting, tax or regulatory practices or requirements.
2
Strategic Overview
 Strengthened management team
 Announced acquisitions
 Improved asset quality
 Increased commercial loan activity
3
Financial Summary – 2Q04
 EPS of $0.58
 Net interest margin down 17 bps vs. 1Q04
 Noninterest income up $15 million vs. 1Q04
 NPLs down $133 million vs. 1Q04
 Repurchased 6.0 million shares
4
5
Net Interest Income
$ in millions
Investments
Consumer Loans
Commercial Loans
Net Interest Income (TE)
Net Interest Margin (TE)
Average Earning Assets
Net Interest Income (TE)
$75,000
3.85%
$800
$73,934
$73,623
$73,113
$73,381
$73,874
2Q03
3Q03
4Q03
1Q04
2Q04
4.0%
3.73% 3.78% 3.74%
3.57%
$710
$690
$693
$685
$658
$50,000
3.0%
$600
$400
2.0%
$200
1.0%
2Q03
3Q03
4Q03
1Q04
2Q04
$25,000
$0
6
Total Revenue (TE)
$ in millions
$1,150
$1,184
$1,117
$1,169
$1,154 $1,170
$1,144 $1,153 $1,159$1,116
$1,144 $1,145
$1,104
$1,100
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04
Net Interest Inc.
Noninterest Inc.
695 719
455 398
730
454
726
418
702 721 722
443 448 432
724 703
446 397
710 690
434 463
693
466
685 658
431 446
7
Noninterest Expense
$ in millions
$858
$698
$683 $702
$661 $665
$659 $668
$657
$688 $699 $698
$659
$679
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04
364
Personnel
Non-Personnel 334
345
513
334 335
349 367
363
298
361 358
304 301
354 363
314 294
371
317
380 379
319 319
373 371
286 308
8
Asset Quality
$ in millions
2Q03
3Q03
4Q03
1Q04
2Q04
Net C/O
to Average Loans
$ 141
.90%
$ 123
.77%
$ 123
.78%
$ 111
$ 104
.71%
.67%
Nonperforming Loans
to EOP Loans
$ 837
1.32%
$ 795
1.27%
$ 694
1.11%
$ 587
$ 454
.94%
.71%
Nonperforming Assets
to EOP Loans + OREO
$ 897
1.42%
$ 862
1.37%
$ 753
1.20%
$ 670
$ 540
1.07%
.84%
Allowance
to Total Loans
to Nonperforming Loans
$1,405
$1,405
2.22%
2.24%
168%
177%
$1,406
2.24%
203%
$1,306 $1,276
2.09%
1.99%
222%
281%
9
Capital
2Q03
3Q03
4Q03
1Q04
2Q04
Tang. Equity/Tang. Assets
6.90%
6.94%
6.94%
6.98%
6.64%
Tier 1 Risk-Based Capital
7.94%
8.23%
8.35%
8.10%
7.73% *
Cash dividends paid
(per share)
$ .305
$ .305
$ .305
$ .31
$ .31
Shares Repurchased
(millions)
3.0
2.5
4.0
8.0
6.0
* Estimated
10
2004 Outlook
 Stable net interest margin
 Modest loan/earning assets growth
 Improving climate for fee-based businesses
 Improving asset quality
 Continued cost discipline
 EPS Range:
3Q04
2004 F.Y.
$0.57 to $0.61
$2.35 to $2.45
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Appendix
12
Assets Under Management
$ in billions
$71.4
$74.4
$70.2 $72.7 $72.4 $70.7
$62.4 $61.7 $60.8 $63.3 $65.0
$68.7 $69.4 $70.0
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04
Money Market
Fixed Income
Equity
22.0
14.7
34.7
23.2
15.3
35.9
21.2
16.9
32.1
20.0
16.9
35.8
19.4
18.5
34.5
20.7
18.9
31.1
19.4
17.6
25.4
18.4
16.1
27.2
19.1
16.3
25.4
19.3
17.1
26.9
18.9
17.3
28.8
19.5
17.4
31.8
19.3
18.2
31.9
19.0
18.7
32.3
13
Net Interest Margin (TE)
4.50%
4.25%
3.98%
4.00%
3.93%
3.98%
3.98% 3.99%
3.86%
3.85%
3.85%
3.78%
3.77%
3.73%
3.75%
3.63%
3.74%
3.69% 3.57%
3.50%
3.25%
3.00%
1Q01
2Q01
3Q01
KEY
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
Peer Median S&P Regional & Diversified Bank Indices
2Q04
Net Charge-Offs to Average Loans
14
1.50%
1.37%
1.32%
1.27%
1.16% 1.18%
1.20%
1.02% 1.04%
1.04%
0.90%
0.90%
0.77% 0.78%
0.71%
0.66%
0.67%
0.60%
0.30%
0.37%
0.00%
1Q01
2Q01
3Q01
KEY
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
Peer Median S&P Regional & Diversified Bank Indices
2Q04
15
Net Charge-Offs to Average Loans
by Loan Type
Commercial
Consumer
1.08%
1.00%
0.97%
0.84% 0.83%
0.59%
2Q03
3Q03
4Q03
0.83%
0.75%
0.73% 0.74%
1Q03
0.88%
1Q04
0.55%
2Q04
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
16
Allowance to Total Loans
3.00%
2.65%
2.51%
2.50%
2.41% 2.37%
2.32%
2.27% 2.22% 2.24%
2.24%
2.09%
1.99%
2.00%
1.50%
1.85%
1.82%
1.49%
1.39%
1.00%
0.50%
0.00%
1Q01
2Q01
3Q01
KEY
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
Peer Median S&P Regional & Diversified Bank Indices
2Q04
17
Allowance to NPL
300%
281%
262%
250%
222%
203%
200%
184%
154%
150%
168%
165% 161%
151%
154%
3Q02
4Q02
177%
157%
140%
133%
100%
50%
0%
1Q01
2Q01
3Q01
KEY
4Q01
1Q02
2Q02
1Q03
2Q03
3Q03
4Q03
1Q04
Peer Median S&P Regional & Diversified Bank Indices
2Q04
18
NPAs to Loans and OREO
2.00%
1.58% 1.56% 1.61% 1.59%
1.54%
1.49%
1.60%
1.41%
1.42% 1.37%
1.23%
1.20%
1.20%
1.10%
1.07%
0.84%
0.80%
0.64%
0.40%
0.00%
1Q01
2Q01
3Q01
KEY
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
Peer Median S&P Regional & Diversified Bank Indices
2Q04
19
Average Loans
$ in billions
$63.9
$63.5
$62.7
$62.8
$63.0
$63.1
$62.6
$62.8
$63.1
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04 2Q04 vs. 1Q04
Commercial $37.1
24.0
Consumer
Exit Portfolios
2.0
Auto
0.8
Commercial
$36.5
24.6
$36.4
24.3
$36.5
24.7
$36.5
25.2
$36.4
25.7
$36.1
25.7
$36.3
26.0
$37.3
25.5
11 %
(7)%
1.7
0.7
1.4
0.6
1.1
0.5
0.9
0.4
0.8
0.2
0.6
0.2
0.4
0.1
0.3
NM
NM
* Annualized
% change *
–
20
Corporate Banking – Utilization
55%
50.1%
50%
49.6%
47.7%
46.3%
45.7%
44.4%
45%
44.4%
42.1%
39.8%
40%
38.6%
38.9%
1Q04
2Q04
35%
30%
25%
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
21
Average Core Deposit Growth
$ in billions
$37.0
$37.2
2Q02
3Q02
Now/MMDA $13.2
Savings
2.0
CD’s
13.1
DDA
8.7
TOTAL
$37.0
* Annualized
$13.3
2.0
12.7
9.2
$37.2
$39.2
4Q02
$15.1
2.0
12.2
9.9
$39.2
$41.3
$42.2
$42.8
$42.6
$43.4
$40.4
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
% change *
2Q04 vs. 1Q04
$16.8
2.0
11.8
9.8
$40.4
$17.7
2.1
11.4
10.1
$41.3
$18.4
2.1
11.1
10.6
$42.2
$18.8
2.1
11.0
10.9
$42.8
$18.9
2.0
11.0
10.7
$42.6
$19.8
2.0
10.6
11.0
$43.4
19%
( 2)
(13)
13
8%
22
Strong Dividend Record
Dividend increased 39 consecutive years
$1.12
$1.18
$1.20
$1.22
$1.24
2001
2002
2003
2004T
$1.04
$0.94
$0.84
$0.72
$0.76
$0.64
1994
1995
1996
1997
1998
1999
2000
Tangible Equity to Tangible Assets
8.00%
7.00%
6.29% 6.25%
6.51% 6.29% 6.57%
6.94% 6.98%
6.69% 6.71% 6.73% 6.71% 6.90% 6.94%
6.64%
6.78%
6.00%
5.00%
4.00%
3.00%
2.00%
1Q01
2Q01
3Q01
KEY
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
Peer Median S&P Regional & Diversified Bank Indices
2Q04
23