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Two analysts and top management from eight sector firms examine the Financial Services sector in this special 37-page Suntrust Robinson-Humphrey Capital Markets Sunbelt Community Bank Conference issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info421.htm

TWST: What are the economic and the demographic positives or negatives within the Sunbelt that you do focus on?

Mr. Marinac: Demographics, in terms of job growth, household formation, and particularly migration of people or population growth, are tremendous drivers for most of the companies in our universe. In the Sunbelt you have had positive flows over the last two decades. One could argue it is a little bit slower today than in years past because you have had some economic softness. However, my belief is that, on a relative basis, it’s actually still stronger here in the Sunbelt, as a general rule, than it would be nationwide. In Texas you still have some very strong cities — Houston, Dallas, and San Antonio. Atlanta, where things are clearly slower than they have been in some time, is still positive with job growth and businesses coming in. We are not scared off by the economy and we think some of the longer-term drivers that have helped Sunbelt demographics will continue. Comparing 2001 to 1991 or to 1981, you do have more sophisticated cities with a larger job base and a larger pool of small businesses, which really has created the demand for commercial lending for a lot of the community banks that we track. Also, of course, with the population and job growth, you’ve created the demand for real estate, both residential and commercial. That demand is not going away. It might be incrementally less today because of the current economic condition, but this will end up being a pothole or a blip on a radar screen relative to the next 10 or 20 years. There are some very attractive MSAs that are going to drive business in the future. The greater Washington, DC, metroplex is one example. In Texas, particularly, Houston and Dallas are examples. Atlanta is another example.

TWST: What impact, if any, does the techno fallout have on your institutions? Have they been able to either avoid or lessen any damage that might have been done through companies and businesses that have gone belly up?

Mr. Marinac: The dot-coms and even the related companies that may have done business with them really were not borrowers and the credits that they had were largely secured. The one difference today, compared to past cycles, is that the structure of lending is so much better today as banks are now getting much better personal guarantees. Banks are also requiring more equity in transactions. Equity in a real estate loan was unheard of in the 1980s. Today equity mandated at least 20%, if not 30% to get a lot of real estate deals done.

TWST: Who would be another attractive company?

Mr. Marinac: Sandy Spring (Nasdaq:SASR) is a unique company that has extremely high credit quality. They’re based in a suburb of metro Baltimore and indirectly play off of the big Washington DC metroplex. We think that the economy in Baltimore, and really in the metroplex of DC for that matter, has remained very solid this year. You have diversity of employment. You’ve got the government backbone which, of course, always helps. You also have a lot of various industries and service companies and a very good level of personal income that has supported a lot of new businesses over the years, whether it is small or medium companies. So Sandy Springs is in a real nice niche. Even though the large banks do not dominate DC as they do in Texas, there still is a lot of opportunity for small business banking in that metro. We think the community banks, and banks such as Mercantile (Nasdaq:MRBK) and Sandy Spring, have an excellent opportunity to win business versus the area’s largest banks. The management team is very strong, and clearly, to us, it’s an up-and-comer in that area and is a very well positioned, attractive company.

This special conference issue includes:

1) Outlook for SunTrust Robinson-Humphrey - In an in-depth (2,000 words) Analyst Interview, R. Charles Shufeldt, Executive Vice President at SunTrust Robinson-Humphrey Capital Markets, examines the outlook for the sector and shares specific stock recommendations.

2) Outlook for Sunbelt Community Banks - In an in-depth (4,700 words) Analyst Interview, Christopher Marinac, Managing Director of Research and Jefferson L. Harralson, VP of Research, both at SunTrust Robinson-Humphrey Capital Markets, examine the outlook for the sector and share specific stock recommendations.

3) CEO interviews (average 2,500 words). Top management of eight sector firms examine the outlook for their firm and the sector.