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Five analysts and top management from twenty-five sector firms examine the eastern regional banks sector in this special 127-page Eastern Regional Banks issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info481.htm.

TWST: If we may move on to your stock recommendations, Gerard, are there two or three stocks that you particularly like right now? What is your outlook for 2002?

Mr. Cassidy: The way we’re positioning ourselves is that we think that the economy is going to be stronger in the first half and weaker in the second half than expectations. When I say that, I’m not suggesting that we’re going back into a recession in the second half of the year, but we think there’s going to be a springback effect, particularly living near Manhattan. There’s going to be a springback effect as a result of September 11. Another example of this would be that Washington’s National Airport just announced that another 14 cities are going to be opened up to fly to, and Chris mentioned that Florida vacationers seem to be coming back. There was such a significant falloff in business activity following September 11 that we now believe there’s going to be a springback to about the pre-September 11th level. The longer-term economic trend prior to September 11 was slowing — in some cases, one could even say contracting.

Today consensus calls for the economy to remain slow in the first half of 2002 and start to accelerate in the second half; we’re saying that it won’t be as slow in the first half and might surprise people on the upside. But in the second half, it’s not going to have the follow-through that I think some folks are expecting because the slower, longer economic trends are still in place, such as the low capacity utilization. Furthermore, the housing market hasn’t broken. In past recessions, some of the strongest markets to snap back coming out of a recession, which really give it the upside swing, were the housing and auto markets, and neither of those markets has declined precipitously in this downturn. Therefore, in the aforementioned scenario, what kind of bank stocks do we want to own? We are primarily sticking with our strategy of high quality bank stocks because I think credit is still going to be an issue for most of this year. Also, we believe investors can start to buy the asset-sensitive bank stocks because I think the Fed has finished lowering short-term interest rates. We do not want to own the banks that benefited last year from falling short-term interest rates because it’s challenging for a bank to play on both sides of the interest rate cycle and be successful at it. Therefore we’d like to own the banks that would benefit from a rising short-term interest rate environment in terms of expanding margins. Those banks tend to be your regional banks that have very large core deposit bases, and they will benefit when these rates go higher as the cost of their cheap funding does not increase but the asset yields will increase. In that scenario, one of the names that we do like and continue to recommend to our investors is Mercantile Bankshares (Nasdaq:MRBK) out of Baltimore, Maryland. Fulton Financial (Nasdaq:FULT) is another bank stock we like. These two bank stocks are not large cap stocks but they are mid-cap stocks that offer most investors ample liquidity to take meaningful investment positions. Fulton Financial is located in Lancaster, Pennsylvania. It’s a multibank holding company that also has a dominant position in low-cost core checking accounts. And when rates start to stabilize and possibly go higher, they, too, will see their margins stabilize over the near term and then possibly go higher later in 2002. In both cases, these companies have strong credit cultures; therefore, asset quality problems are not a big concern for these stocks. The company has over 10 consecutive years of increased earnings and dividends.

This special issue includes:

1) Eastern Regional Banks - In an in-depth (13,500 words) Analyst Roundtable, Nancy A. Bush, Managing Director at Ryan Beck & Co., Gerard S. Cassidy, Managing Director of Equity Research at RBC Capital Markets and Christopher Marinac, Managing Director at SunTrust Robinson Humphrey, examine the outlook for the sector including stock performance in 2001, regulatory outlook and share specific stock recommendations.

2) Super-Regional Banks - In an in-depth (4,100 words) Analyst Interview, Jennifer A. Thompson, Analyst at Putnam Lovell Securities, Inc., examines the outlook for the sector including and shares specific stock recommendations.

3) Eastern Banks - In an in-depth (3,100 words) Analyst Interview, Jacqueline Reeves, Managing Director at Putnam Lovell Securities, Inc., examines the outlook for the sector including and shares specific stock recommendations.

4) The TWST confidential Off-The-Record survey of management performance of nineteen sector firms asked market insiders about the ability of management teams to create shareholder value.

5) CEO interviews (average 2,500 words). Top management of twenty-five sector firms examine the outlook for their firm and the sector.