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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: How are you factoring this into your outlook for 2002?

Ms. Thompson: Because we’re still in the middle of a recession, I’m assuming that interest rates are not going to start to head up until the latter half of this year at the earliest. So the net interest margin should remain relatively flat on average through most of 2002. We could see upward bias to the margin for banks with high loan-to-deposit ratios, as they are more reliant on more expensive funding, but for the most part, net interest margins should remain relatively flat for the group in the near term.

TWST: How have these stocks performed over the past 12 months, and how does the performance of the super-regionals compare with that of banks in other sectors of the industry?

Ms. Thompson: 2001 was a tough year for bank stocks, but a rebound in the fourth quarter helped the super-regional group to outperform the broader market for the full year. Specifically, for the full year 2001, the Putnam Lovell super-regional bank index was down about 5% compared with a 13% decline in the S&P 500 index. The super-regional group performed basically in line with the Putnam Lovell multinational bank index.

TWST: Have earnings been in line with your expectations over the past couple of quarters?

Ms. Thompson: Earnings over the past couple of quarters have been lower than I was anticipating. That’s primarily due to the acceleration of recessionary conditions that resulted in slower than expected loan growth and higher than expected credit costs.

TWST: And what kind of guidance are you getting from the companies for the fourth quarter and for the first half of 2002?

Ms. Thompson: The fourth quarter of 2001 is going to be quite messy, I believe. Revenue growth is likely to be sluggish, and again, that’s primarily reflecting the fact that loan growth is still slow, and market-related income will be unlikely to buoy revenue growth. But the real pressure on earnings is likely to stem from outsized credit costs. On top of core loan losses this quarter, some banks will likely meaningfully boost their loan loss reserves though over-provisioning activity, so they are better prepared for a difficult economic environment.

TWST: We also touched on SunTrust’s recent acquisition of Robinson Humphrey. What’s your rating on SunTrust?

Ms. Thompson: I have a buy rating on SunTrust (NYSE:STI). I like SunTrust because it has stuck to its knitting in terms of traditional commercial banking business supplemented with mortgage banking lending. They still operate primarily in the Southeast, which is the region of the country that has held up better than some other areas, namely the Midwest. SunTrust has an excellent credit culture, very good revenue growth prospects, and is one of the few large independent banks remaining in the Southeast.

TWST: Jennifer, in conclusion, what would your overall message be to investors who are looking at the bank stocks for 2002, particularly at the super-regionals?

Ms. Thompson: My message is that investors need to be selective among the names. It’s still a difficult operating environment with potential downside risk to the estimates due to credit cost, so it is important to focus on the companies that have sufficient balance sheet strength to sustain them through the difficult economic times and the revenue-generating capacity to grow at healthy rates over the longer term.

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.