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Player Avatar NetscribeBanking (89.28) Submitted: 4/26/2007 2:12:17 AM : Underperform Start Price: $31.99 PVTB Score: +46.85

The bank has recently completed its offering of $100 million in contingent convertible senior notes which would be used to replace existing debt, provide working capital, repurchase stock along with maturing brokered CD’s. With a coupon of 3.625% it not only diversifies the funding base and acts as an attractive low cost source of funding. Diluted earnings per share increased 21% in 2006 supported by increases in interest earning assets and growth in fee income. Though non performing assets and charge off has have increased in 2007, asset quality still looks impressive considering the plight of the banking industry due to interest rate factor.

The second part of 2007 may see stronger volumes with the margins improving as the yield curve improves. Its liability sensitive balance sheet would benefit a lot from the interest rate cuts by the Fed. It has set an ambitious goal of garnering around 30% of its total revenue from wealth management unit trying to unlock the hidden potential of its client base. It has also set an eye on efficiency ratio with an aim of bringing it down to 50% by the year-end.

Acquisition of Piedmont Bancshares would help serve the Atlanta regions and remains open to de novo office openings. Endorsing the same it is in the process of receiving banking charters in the regions of Kansas City and Wisconsin. Moreover it has a highly portable model with plans of expansions in the Texas, Minneapolis, Florida and Arizona region in the next four to six years. The stock has had a bad run starting 2007 as predicted and is trading at attractive price, being a good time to accumulate and reap the profits that would rise in the coming years.

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