Mid-Cap Regional Bank Valuation Update
Valuation and Performance Spreadsheets for: ASO, ASBC, BXS, CBCF, CBSS, CMA, CNB,
CYN, FNB, FHN, FMER, FULT, HBAN, ONB, SKYF, SNV, SUSQ, TCB, UB, WL, VLY

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Regional Mid-Cap Banks 12-29-06


Mid-Cap Bank News

Huntington Bancshares and Sky Financial Group Announce Merger Agreement     PRNewswire 12-20
    Huntington Bancshares and Sky Financial Group announced the signing of a definitive agreement to merge the two companies in a stock (90%) and cash (10%) transaction valued at approximately $3.6 billion. Under the terms of the agreement, Sky Financial Group shareholders will receive 1.098 shares of Huntington common stock, on a tax-free basis, and a taxable cash payment of $3.023 for each share of Sky Financial Group. Based on the $24.77 closing price of Huntington's common stock on December 19, 2006, the transaction values each share of Sky Financial Group common stock at $30.22, a 25% premium to its closing price of $24.17. Huntington expects the transaction to be immediately accretive to 2007 earnings, excluding one-time charges, and is expected to result in approximately $115 million in annual cost savings.

Sky Completes Merger with Perpetual     PRNewswire 12-08
    Sky Financial Group announced the merger of Perpetual State Bank with its banking affiliate, Sky Bank, effective at the commencement of business tomorrow. Perpetual Savings Bank was acquired by Sky Financial on November 15, 2006 and converted from a savings bank to a state bank under the name Perpetual State Bank on November 29, 2006.


December Ratings Changes     On 12-06 Ryan, Beck & Co Initiated coverage of ONB at Mkt Perform. On 12-15 Stifel Nicolaus Initiated coverage of SNV at Buy. On 12-21 UBS Initiated coverage of FHN at Neutral. On 12-22 Oppenheimer Upgraded HBAN from Sell to Neutral.

    On 12-13 Merrill Lynch downgraded Susquehanna Bancshares [SUSQ] to sell from neutral, citing concerns over relative valuation and potentially rising funding costs. The stock was last down 15 cents, or 0.5%, at $27.41, but is still up 22% over the past five months. "We think Susquehanna's recent price advance reflects elevated take-out speculation following the announced PNC Financial-Mercantile Bankshares merger, though we regard Susquehanna as a more likely buyer than seller," Analyst Beth Messmore said in a research note. Messmore also lowered her fourth-quarter earnings estimate to 36 cents a share from 39 cents, and her 2007 forecast to $1.56 a share from $1.75, to reflect lower net interest margin assumptions, more conservative balance sheet growth and lower gains on sale. She expects negative deposit mix shift into higher cost certificates of deposits to restrain margins.


November Ratings Changes     On 11-7 Ryan, Beck & Co Upgraded WL from Market Perform to Outperform and on 10-23 Keefe Bruyette Upgraded WL from Market Perform to Outperform. On 11-17 Prudential Equity Group upgraded Friday shares of Mellon Financial to overweight from underweight, increased its profit estimates for 2007 and lifted its target price on the stock to $48 from $35. Analyst Michael Mayo in a research note said he's more comfortable with Mellon's targeted margin improvement and that it should not result from aggressive expense capitalization. He noted "the structural story is better" and that Chief Executive Robert Kelly "has outlined a series of steps that should help liven up what we had considered a sleepy organization." Also, the company's revenue would be helped by stocks moving higher, the analyst said.


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