EX-99 2 f8k_ex991.htm EXHIBIT 99.1
Exhibit 99.1


SECOND QUARTER 2005
FINANCIAL SUPPLEMENT


CONSOLIDATED SUMMARY
Quarterly, Unaudited
(Thousands)  2Q05   1Q05   4Q04   3Q04   2Q04 
Net interest income $241,608  $227,447  $228,446  $218,250  $213,606 
Noninterest income 343,312  343,464  313,682  307,231  347,285 
Divestitures                          -                           -                    3,200                           -                    1,800 
Security G/L 75  (66) (3,734) 20,383  3,214 
Total revenue 584,995  570,845  541,594  545,864  565,905 
Noninterest expense   419,031  394,855  382,688  365,596  384,080 
Provision 15,786  13,109  11,783  10,044  12,292 
Pretax income 150,178  162,881  147,123  170,224  169,533 
Income taxes 47,473  53,672  43,971  56,623  51,149 
Net income 102,705  109,209  103,152  113,601  118,384 
       
Diluted shares 128,914  128,032  127,719  127,845  128,497 
EPS $0.80  $0.85  $0.81  $0.89  $0.92 
Tax rate 32% 33% 30% 33% 30%
Efficiency ratio 72% 69% 71% 67% 68%
                 
Certain previously reported amounts have been reclassified to agree with current presentation.

1


STATEMENTS OF INCOME
Quarterly, Unaudited
(Thousands)  2Q05   1Q05   4Q04   3Q04   2Q04 
Interest income $438,385  $384,876  $334,789  $300,183  $277,815 
Less interest expense 196,777  157,429  106,343  81,933  64,209 
  Net interest income 241,608  227,447  228,446  218,250  213,606 
Provision for loan losses 15,786  13,109  11,783  10,044  12,292 
  Net interest income after    
  provision for loan losses   225,822  214,338  216,663  208,206  201,314 
Noninterest income:    
  Mortgage banking 108,993  118,762  94,771  105,155  118,266 
  Capital markets 94,789  95,162  76,522  79,913  102,195 
  Deposit transactions    
  and cash management 39,471  33,255  37,695  38,624  38,234 
  Merchant processing 23,239  20,460  19,679  19,299  19,365 
  Insurance commissions 13,525  14,749  11,649  13,962  14,104 
  Trust services and investment    
  management 11,278  11,164  11,741  11,838  11,891 
  Gains on divestitures                          -                           -                    3,200                           -                    1,800 
  Securities (losses)/gains, net 75  (66) (3,734) 20,383  3,214 
  Other   52,017  49,912  61,625  38,440  43,230 
Total noninterest income 343,387  343,398  313,148  327,614  352,299 
  Adjusted gross income after    
  provision for loan losses 569,209  557,736  529,811  535,820  553,613 
Noninterest expense:    
  Employee compensation,    
  incentives and benefits 248,064  242,986  228,206  210,089  238,402 
  Occupancy 26,548  24,516  22,875  23,865  21,699 
  Equipment rentals, depreciation,    
  and maintenance 19,406  18,085  18,633  18,713  17,573 
  Operations services 20,328  18,477  18,379  17,801  15,944 
  Communications and courier 13,684  12,893  12,446  12,118  13,223 
  Amortization of intangible assets 3,360  3,362  3,014  2,165  2,191 
  Other 87,641  74,536  79,135  80,845  75,048 
Total noninterest expense 419,031  394,855  382,688  365,596  384,080 
Pretax income 150,178  162,881  147,123  170,224  169,533 
  Applicable income taxes 47,473  53,672  43,971  56,623  51,149 
Net income $102,705  $109,209  $103,152  $113,601  $118,384 
                 
Diluted earnings per common share $        .80  $        .85  $        .81  $        .89  $        .92 
Dividends declared        .43         .43         .43         .40         .40 
       
SELECTED FINANCIAL RATIOS:      
Return on average assets 1.14% 1.30% 1.40% 1.63% 1.75%
Return on average shareholders' equity                   19.6                      21.8                      20.8                      23.7                      25.5   
Certain previously reported amounts have been reclassified to agree with current presentation.

2


OTHER INCOME AND OTHER EXPENSE
Quarterly, Unaudited
(Thousands)  2Q05   1Q05   4Q04   3Q04   2Q04 
All other income and commissions:    
Revenue from loan sales and securitizations $10,319  $13,232  $14,151  $22  $3,976 
Cardholder fees                  6,733  6,092  6,405  6,461  6,348 
Other service charges                  5,753  5,218  5,270  4,696  5,098 
Remittance processing                  3,790  3,787  3,888  4,423  5,486 
Check clearing fees                  1,778  1,869  2,340  2,562  2,523 
Other                23,644  19,714  29,571  20,276  19,799 
Total      $52,017   $49,912   $61,625   $  38,440   $  43,230 
All other expense:    
Advertising and public relations  $  12,518   $11,535   $8,585   $    9,976   $  9,527 
Legal and professional fees                11,829  8,749  11,816  9,529  9,700 
Travel and entertainment                  8,898  7,445  8,684  7,983  7,044 
Computer software                  8,845  7,024  7,199  7,127  7,596 
Contract employment                  8,631  6,700  7,877  6,264  5,430 
Supplies                  4,040  4,360  4,399  4,187  4,545 
Foreclosed real estate                     (614) 2,497  2,759  2,072  977 
Fed service fees                  1,905  1,926  1,979  2,263  2,267 
Deposit insurance premium                     746  689  923  661  708 
Charitable contributions                     460  374  339  414  494 
Other                    30,383  23,237  24,575  30,369  26,760 
Total                    87,641                 74,536                 79,135                 80,845  75,048 
Certain previously reported amounts have been reclassified to agree with current presentation.

3


AVERAGE STATEMENTS OF CONDITION
Quarterly, Unaudited
(Millions)  2Q05  1Q05 4Q04 3Q04 2Q04 
Loans, net of unearned income:    
  Commercial:    
  Commercial, financial and industrial $  5,894.5  $  5,480.1  $  5,213.6  $  4,935.3  $  4,736.6 
  Real estate commercial 1,086.3  1,004.5  929.7  960.2  965.1 
    Real estate construction 1,546.2  1,306.0  1,132.1  945.1  796.6 
   Total commercial loans 8,527.0  7,790.6  7,275.4  6,840.6  6,498.3 
  Retail:    
  Real estate residential 7,533.5  7,385.8  8,204.5  7,852.6  7,253.7 
  Real estate construction 1,321.2  1,105.4  939.8  746.1  619.1 
  Other retail 161.1  160.7  172.6  180.0  188.7 
    Credit card receivables 239.5  238.1  244.1  239.3  258.4 
     Total retail loans 9,255.3  8,890.0  9,561.0  9,018.0  8,319.9 
  Total loans, net of unearned income 17,782.3  16,680.6  16,836.4  15,858.6  14,818.2 
Investment securities 2,931.3  2,794.8  2,150.6  2,625.7  2,474.6 
Loans held for sale 6,055.9  5,315.1  4,696.1  4,036.7  4,689.7 
Other earning assets 4,849.7  4,576.6  1,895.7  1,687.7  1,658.0 
  Total earning assets  31,619.2  29,367.1  25,578.8  24,208.7  23,640.5 
Cash and due from banks  727.4  729.8  779.2  740.0  718.4 
Other assets 3,935.6  3,994.5  2,951.9  2,767.9  2,917.4 
  Total assets $36,282.2  $34,091.4  $29,309.9  $27,716.6  $27,276.3 
     
Certificates of deposit under    
  $100,000 and other time $  2,184.3  $  2,102.4  $  2,065.8  $  2,015.0  $  1,880.6 
Other interest-bearing deposits 4,613.9  4,567.8  4,228.4  4,128.6  4,146.7 
  Total interest-bearing core deposits 6,798.2  6,670.2  6,294.2  6,143.6  6,027.3 
Demand deposits 1,835.6  1,785.0  1,879.7  1,741.6  1,809.1 
Other noninterest-bearing deposits 3,331.8  3,001.7  3,034.0  2,800.6  3,091.0 
  Total core deposits 11,965.6  11,456.9  11,207.9  10,685.8  10,927.4 
Certificates of deposit $100,000 and more 10,557.3  10,147.1  8,079.0  6,971.1  6,580.7 
     Total deposits 22,522.9  21,604.0  19,286.9  17,656.9  17,508.1 
Short-term borrowed funds 7,239.8  6,152.7  4,506.8  4,602.7  4,223.0 
Term borrowings  2,585.2  2,616.1  2,385.1  2,340.6  2,442.0 
Other liabilities           1,539.2  1,653.2  1,157.4  1,210.4  1,231.8 
Preferred stock of subsidiary              295.4                 30.0                     .5                     .5                     .5 
Shareholders' equity 2,099.7  2,035.4  1,973.2  1,905.5  1,870.9 
  Total liabilities and shareholders' equity $36,282.2  $34,091.4  $29,309.9  $27,716.6  $27,276.3 
Diluted shares outstanding 128.9  128.1  127.7  127.8  128.5 
Certain previously reported amounts have been reclassified to agree with current presentation.

4


RETAIL/COMMERCIAL BANKING
Quarterly, Unaudited
(Thousands)  2Q05   1Q05   4Q04   3Q04   2Q04 
Net interest income $211,470  $197,908  $193,886  $179,862  $167,331 
Noninterest income 123,104         121,379  127,466  114,461  119,407 
Divestitures                   -                    -             3,200                    -             1,800 
Security G/L                   -                    -  (1) 637  303 
Total revenue 334,574  319,287  324,551  294,960  288,841 
Total noninterest expense   203,218  188,798  191,551  180,250  177,235 
Provision 15,667  13,069  11,798  10,044  12,310 
Pretax income 115,689  117,420  121,202  104,666  99,296 
       
Efficiency ratio 61% 59% 59% 61% 61%
       
Average loans (millions) $17,700  $16,622  $16,792  $15,827  $14,798 
Other earning assets (millions) 2,054  1,889  1,206  882  896 
  Total earning assets (millions) 19,754  18,511  17,998  16,709  15,694 
       
Total deposits 10,606  10,384  9,975  9,666  9,474 
       
Net interest margin 4.29% 4.34% 4.29% 4.28% 4.29%
       
Noninterest revenue detail          
Deposit transactions & cash mgmt $39,440  $33,254  $37,694  $38,622  $38,233 
Merchant processing 23,243  20,465  19,683  19,304  19,369 
Insurance commissions 13,085  14,287  11,206  13,539  13,674 
Trust services & investment mgmt 11,278  11,164  11,741  11,837  11,891 
Cardholder fees 6,529  5,922  6,252  6,332  6,301 
Other service charges 5,219  4,806  4,900  4,378  4,802 
Check clearing fees 1,778  1,869  2,340  2,562  2,523 
Revenue from loan sales and      
   securitizations (a) 8,386  11,114  14,151  22  3,976 
Miscellaneous revenue 14,146  18,498  19,499  17,865  18,638 
Total noninterest revenue 123,104  121,379  127,466  114,461  119,407 
       
Statistics      
Trust total assets (millions)(b)  12,233  12,164  12,228  12,327  12,154 
Trust total managed assets (millions)(b) 7,183  7,204  7,608  7,463  7,539 
Merchant transactions 46,309  42,701  39,347  40,480  39,340 
(a)  Includes gains from whole-loan sales and net revenue from asset securitizations
(b)  Current quarter is an estimate
Certain previously reported amounts have been reclassified to agree with current presentation.

5


MORTGAGE BANKING
Quarterly, Unaudited
(Thousands)  2Q05   1Q05   4Q04   3Q04   2Q04 
Net interest income $37,601  $32,957  $38,858  $37,758  $44,352 
Noninterest income:      
  Net origination fees 95,676  99,964  76,567  68,375  99,101 
  Net servicing fees 6,295  13,765  15,382  25,560  14,407 
  Other fees 15,769  8,846  9,901  15,291  9,549 
Total noninterest income 117,740  122,575  101,850  109,226  123,057 
Total revenue 155,341  155,532  140,708  146,984  167,409 
Noninterest expense 117,150  112,702  110,736  109,255  118,711 
Provision                      119                         40                       (15)                          -  (18)
Pretax income 38,072  42,790  29,987  37,729  48,716 
         
Noninterest expense detail      
Commissions & incentives $81,429  $60,739  $67,930  60,891  69,026 
FAS 91 cost deferral (1,332) (2,574) (6,315) 2,195  (594)
Other salaries & benefits 59,381  57,569  63,429  54,694  54,931 
  Total salaries & benefits 139,478  115,734  125,044  117,780  123,363 
Contract labor & outsourcing  5,298  4,456  4,688  4,210  4,234 
Equipment & occupancy 16,786  15,600  16,837  17,717  16,163 
Foreclosure provision  (647) 2,414  2,418  1,757  617 
Other expenses  46,133  42,947  32,927  50,593  44,367 
Total expenses before FAS 91 reclass 207,048  181,151  181,914  192,057  188,744 
FAS 91 reclassification (92,667) (70,808) (74,881) (86,706) (74,414)
Total Noninterest Expense Before      
  Segment Allocations  114,381  110,343  107,033  105,351  114,330 
Segment Allocations 2,769  2,359  3,703  3,904  4,381 
 Total Noninterest Expense  117,150  112,702  110,736  109,255  118,711 
       
Other information      
Efficiency ratio 75% 72% 79% 74% 71%
       
Warehouse (millions) $4,081  $3,522  $3,543  $3,217  $3,858 
Other earning assets (millions) 391  343  318  287  250 
  Total earning assets (millions) 4,472  3,865  3,861  3,504  4,108 
       
Escrow balances 2,054  1,724  1,779  1,570  2,005 
       
Net interest margin 3.37% 3.46% 4.00% 4.29% 4.34%
       
Warehouse Spread 2.66% 2.89% 3.58% 3.93% 3.84%
                 
Certain previously reported amounts have been reclassified to agree with current presentation.

6


MORTGAGE BANKING
Quarterly, Unaudited
(Thousands)    2Q05   1Q05   4Q04   3Q04   2Q04 
ORIGINATION INCOME      
Origination Fees $97,468  $76,050  $79,235  $82,425  $96,270 
FAS 91 Fee Deferral            (3,774)               (939)            (3,192)              2,966                  474 
Appraisal, Final Inspection,       
     Credit Report Fees              8,967               6,926               7,142               7,335               8,345 
  Total origination fees          102,661             82,037             83,185             92,726           105,089 
       
Secondary Marketing Income:      
OMSR             80,076             72,948             62,462             58,120           103,186 
SRP             13,629             10,426               7,709               8,656               7,847 
Marketing G/L (Trading Gains)              19,884             27,553             15,605             20,904             (2,418)
Concessions          (27,319)          (21,944)          (15,360)          (25,724)          (39,328)
LOCOM                   (588)               (248)            (2,153)                 399                (861)
  Total Secondary Marketing Fees -      
          Mortgage              85,682             88,735             68,263             62,355             68,426 
       
FAS 91 Reclassification          (92,667)          (70,808)          (74,881)          (86,706)          (74,414)
       
Total Origination Income            95,676             99,964             76,567             68,375             99,101 
       
KEY ORIGINATIONS METRICS      
       
Production ($ in millions):      
  First Lien Production              9,526               7,618               7,840               6,842               8,915 
       
Refinanced Production               3,545               3,588               3,475               2,117               4,226 
Refinanced % 37% 47% 44% 31% 47%
Purchased Production              5,981               4,030               4,365               4,725               4,689 
Purchased % 63% 53% 56% 69% 53%
       
ARMs % (Excluding Gov't ARMS) 50% 45% 47% 48% 41%
       
Total Sales Force 2,629  2,574 2,416  2,258  2,191 
       
Warehouse/Pipeline Balance:      
Ending Warehouse Balance 3,663  3,477  3,420  2,832  2,840 
Ending Pipeline Balance (Locked)              5,209               4,065               3,309               3,922               3,646 
       
Loan Sales (Deliveries):      
Total Loan Sales              8,738               7,380               7,134               6,529               9,535 
       
Margins:      
Marketing Margin on Deliveries (bps):      
OMSR 92  99  88  89  108 
Marketing G/L (Trading Gains) 23  37  22  32  (3)
LOCOM                   (1)                      -                    (3)                     1                    (1)
Concessions/SRP    (16) (16) (11) (26) (33)
Total Marketing Margin on Deliveries 98  120  96  96  71 
               
Certain previously reported amounts have been reclassified to agree with current presentation.

7


MORTGAGE BANKING
Quarterly, Unaudited
     2Q05   1Q05   4Q04   3Q04   2Q04 
(Thousands)   $ bps $ bps $ bps $ bps $ bps
SERVICING INCOME                      
Gross Service Fees $87,285  39 $85,908  39 $80,462  38 $75,279  39 $69,584  39
Guarantee Fees        (19,039) (9)        (19,127) (9)        (18,020) (9)        (17,022) (9)        (15,042) (9)
Sub-Service Fee Income                 40      -                    4      -                    2      -                    7      -                    6      - 
Lender Paid MI             (159)     -              (121)     -              (143)     -              (134)     -              (141)     - 
  Net Service Fees            68,127  30           66,664  30           62,301  29           58,130  30           54,407  30 
         
Early Payoff Interest Expense          (5,742)   (2)          (5,193)   (2)          (5,485)   (2)          (4,064)   (2)          (6,443)   (3)
Ancillary Fees            6,001  3             6,411  3             5,864  3             5,666  3             5,539  3 
  Total Service Fees            68,386  31           67,882  31           62,680  30           59,732  31           53,503  30 
         
AMORTIZATION/IMPAIRMENT        
Amortization        (45,808)          (46,915)        (41,639)        (38,111)        (38,971)  
Impairment        (23,545)          (10,375)          (9,489)        (13,356)               379   
  Total Amortization/Impairment          (69,353)          (57,290)          (51,128)          (51,467)          (38,592)  
         
HEDGE GAINS        
MSR Hedge Gains/(Losses)        
  NII on SWAPs          13,607             18,330           16,382           16,987           21,649   
  Hedge Ratios          16,092             11,013           15,481             8,648             1,756   
  Other Ineffectiveness        (10,391)          (11,843)        (13,342)          (1,701)        (14,866)  
    Total MSR Hedge Gains/(Losses)            19,308             17,500             18,521             23,934               8,539   
         
Time Decay of MSR Hedges          (9,513)            (9,984)        (12,129)          (7,637)          (4,633)  
         
Hedge MTM & Time Decay:        
  I/O Strip Time Decay          (2,092)            (3,257)          (1,874)          (1,246)             (421)  
  I/O Strip MTM             (441)            (1,086)             (688)            2,244           (3,989)  
    Total Hedge MTM & Time Decay            (2,533)            (4,343)            (2,562)                 998             (4,410)  
Total Hedge Gains              7,262               3,173               3,830             17,295                (504)  
         
Total Servicing Income              6,295             13,765             15,382             25,560             14,407   
         
KEY SERVICING METRICS        
($ in millions)        
Avg. Servicing Portfolio (Owned) $89,366    $87,397  $84,863  $76,885  $71,543   
End. Servicing Portfolio (Owned) $90,823    $88,010  $86,587  $81,591  $72,165   
Average Loans Serviced (#)        599,361           598,997         583,248         539,527         517,217   
         
Product Mix (Average)         
Product Mix (%)        
GNMA 10%   11% 12% 14% 14%  
FNMA/FHLMC 68%   69% 69% 68% 68%  
Private   18%   16%   15%   13%   13%  
Sub-Total 96%   96% 96% 95% 95%  
Warehouse 4%   4% 4% 5% 5%  
Total   100%   100%   100%   100%   100%  
         
Other Statistics        
(Annualized)        
Ancillary Income per Loan $40.05    $42.81  $40.22  $42.01  $42.84   
Direct Servicing Cost per Loan $52.68    $54.20  $56.88  $56.85  $57.88   
         
Portfolio Data        
(in millions)        
Average Servicing Asset ** 1,093   1,049 971 947 902  
Valuation Reserve (Ending Balance) 2   3 4 7 7  
Servicing Book Value (bps)   122   120 114 123 127
         
Amortization/Average Servicing Asset 17%   18% 17% 16% 17%  
Impairment/Average Servicing Asset 9%   4% 4% 6% 0%  
         
Run-Off Rate 25%   22% 26% 22% 34%  
         
** Includes valuation reserve/MSRs only                    
Certain previously reported amounts have been reclassified to agree with current presentation.

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CAPITAL MARKETS
Quarterly, Unaudited
(Thousands)   2Q05     1Q05     4Q04     3Q04     2Q04  
Net interest income ($ 10,633) ($ 5,820) ($ 124) $207   $25  
Noninterest income:         
     Depository 22,307   27,834   23,623   26,751   34,756  
     Nondepository 28,512   35,186   22,296   20,004   23,498  
     Other fees 49,399   33,407   34,164   34,600   44,725  
Total noninterest income 100,218   96,427   80,083   81,355   102,979  
Total revenue 89,585   90,607   79,959   81,562   103,004  
Noninterest expense 82,679   81,537   69,527   64,640   77,945  
Pretax income 6,906   9,070   10,432   16,922   25,059  
              
           
Efficiency ratio 92% 90% 87% 79% 76%
           
Trading inventory (millions) $2,069   $2,235   $857   $719   $694  
Other earning assets (millions) 2,283   1,850   634   518   545  
   Total earning assets (millions) 4,352   4,085   1,491   1,237   1,239  
           
           
Net interest margin -0.98% -0.58% -0.03% 0.07% 0.01%
           
                          

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CORPORATE
Quarterly, Unaudited
(Thousands)  2Q05   1Q05   4Q04   3Q04   2Q04 
Net interest income $3,170  $2,402  ($ 4,174) $423  $1,898 
Noninterest income 2,250  3,083  4,283  2,189  1,842 
Security G/L 75  (66) (3,733)                 19,746                    2,911 
Total revenue 5,495  5,419  (3,624) 22,358  6,651 
Total noninterest expense 15,984  11,818  10,874  11,451  10,189 
Pretax income (10,489) (6,399) (14,498) 10,907  (3,538)
                 

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CAPITAL HIGHLIGHTS
(Dollars in millions except per share amounts, Unaudited)
     2Q05  1Q05 4Q04 3Q04 2Q04
Tier 1 Capital (a) $  2,364.8  $  2,292.3  $  2,080.2  $  2,027.2  $  1,985.3 
Tier 2 Capital (a) 1,095.9  1,108.8  1,102.5  739.4  738.0 
  Total Capital (a) $  3,460.7  $  3,401.1  $  3,182.7  $  2,766.6  $  2,723.3 
     
Risk-Adjusted Assets (a) $27,530.6  $25,736.7  $24,140.7  $22,505.2  $21,091.1 
     
Tier 1 Ratio (a) 8.59% 8.91% 8.62% 9.01% 9.41%
Tier 2 Ratio (a)                3.98                   4.31                   4.56                   3.28                   3.50   
  Total Capital Ratio (a) 12.57% 13.22% 13.18% 12.29% 12.91%
     
Leverage Ratio (a) 6.59% 6.81% 7.16% 7.38% 7.35%
     
Shareholders' Equity/Assets Ratio (b)                 5.79                   5.97                   6.73                   6.87                   6.86   
     
Book Value $ 17.32    $ 16.73    $ 16.39    $ 15.96    $ 15.42   
             
(a)  Current quarter is an estimate
(b)  Calculated on average balances

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NET INTEREST MARGIN (NIM) HIGHLIGHTS
(Unaudited)
         2Q05      1Q05     4Q04     3Q04     2Q04
Consolidated Yields and Rates:    
 Investment securities 4.33 % 4.27 % 4.21 % 4.36 % 4.30 %
 Loans, net of unearned               5.98                   5.63                   5.33                   5.01                   4.81    
 Other earning assets               5.21                   5.01                   5.26                   5.05                   4.67    
 Yields on earning assets               5.56                   5.29                   5.22                   4.95                   4.72    
 Interest bearing core deposits               1.92                   1.73                   1.56                   1.43                   1.28    
 CD's over $100,000               3.06                   2.59                   2.09                   1.61                   1.21    
 Fed funds purchased and repos               2.71                   2.24                   1.78                   1.29                     .90    
 Commercial paper and other short-term    
    borrowings               4.42                   4.01                   3.34                   3.55                   3.67    
 Long-term debt               3.71                   3.18                   2.70                   2.28                   1.87    
 Rates paid on interest-bearing liabilities               2.90                   2.49                   1.99                   1.63                   1.34    
  Net interest spread               2.66                   2.80                   3.23                   3.32                   3.38    
 Effect of interest-free sources                   .40                     .32                     .34                     .28                     .25    
  FHN - NIM   3.06 % 3.12 % 3.57 % 3.60 % 3.63 %
Certain previously reported amounts have been reclassified to agree with current presentation.

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