LONDON, NEW YORK and CHICAGO, April 28 /PRNewswire/ -- Fox-Pitt Kelton Cochran Caronia Waller ("FPKCCW"), a leading global investment bank specializing in the financial services sector, announced today that we are upgrading our group rating on U.S. Banks to Marketweight from the Underweight rating which had been in place since April 2004. This move is predicated on certain criteria for credit (loan loss reserves and non-performing assets ("NPAs"), valuation and capital. Bank stocks historically have rallied off down-cycle lows about two or three quarters before NPAs peak, and we now believe they will peak near year-end 2009. Risk/Reward More In Balance. These criteria had not been met when banks were at their lows in early March. While banks have rebounded, the group remains at historically low valuations, 1.26x tangible book vs. a historical mean of 2.34x. Intersecting the valuation with the key criteria, we believe risk/reward has become materially better, albeit not attractive enough for aggressive buying. It appears to us that the market is starting to show a willingness to look beyond the deepening cyclical problems, just as it did in the Fall of 1990. Upgrading Two Names and Bumping Two Targets. Today, we are upgrading Fifth Third (to In Line from Underperform) and Private Bancorp (to In Line from Underperform). Our universe now has 16 Outperforms, 39 In Lines, and 6 Underperforms. We are also bumping targets on CYN to $36 (1.5x projected TBV) from $27 and RNST to $13 (1.3x projected TBV) from $12. Our top picks in the universe are FHN, BAC, WFC and PRSP. What Could the Government Do? Our stress-tests are based on what we believe are logical translations of: (a) the adverse-case economy to loan-loss rates by category; (b) minimum standards of capital adequacy (i.e. 6% Tier 1) at the point of stress; (c) our earnings projections; and (d) our expectations of increase in risk-weighted assets ("RWAs"). However, regulators might be looking for: (i) higher than minimum capital adequacy even at the point of maximum stress; and (ii) an increase in banks' lending capacity. Therefore, we conduct sensitivity analyses on our stress tests as we fully recognize that the regulators' actual findings could deviate from ours. We Believe It Is About Converts, NOT Direct Common Injections Today. Since the stress tests are a wholly speculative exercise, which will bear no resemblance to the actual outcome at any given bank, it makes no sense to dilute common shareholders immediately. Thus, we believe the U.S. government will do the more sensible thing and use securities that will convert into common on an as-needed basis. If so, shareholders will only end up being diluted by the exact amounts necessary, and at which times actual facts dictate it. Stress-Test Sensitivity. If we increase minimum required Tier 1 ratio to 8%, increase our estimated RWAs by 10% and reduce our earnings projections by 5% - 20%, additional banks that appear to have a lower common equity cushion include RF, PNC, STI, WFC, HBAN, MI, ZION, MTB, SNV and CPF. To view this report, please click on the link below. If you have any trouble viewing the document, please contact http://www.fpk.com/tg_res/28042009USBanksUpgrading.pdf About Fox-Pitt Kelton Cochran Caronia Waller Founded in 1971, with offices in New York, Chicago, Boston, Hartford, San Francisco, London, Hong Kong and Tokyo, FPKCCW is one of the leading global specialist investment banks focused exclusively on the financial services sector. Fox-Pitt, Kelton and Cochran Caronia Waller closed on August 31, 2007 their previously announced merger. FPKCCW's reputation has been built around its equity research team which has consistently been recognized by institutional investors for its quality and independence. FPKCCW is also a leading underwriter of equity securities and actively serves as a strategic advisor providing advice on mergers & acquisitions, corporate restructurings and equity capital market transactions for banks, insurance companies and other financial services companies around the world. FPKCCW has been consistently ranked among the leaders in insurance investment banking transactions. CRD number 10485 For further information, please visit our website at www.fpk.com. DATASOURCE: Fox-Pitt Kelton Cochran Caronia Waller CONTACT: Tiffany Gosnell of FPKCCW, +1-312-425-4074, Web Site: http://www.ccwco.com/ http://www.fpk.com/

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