EX-99 2 exh991.htm EXHIBIT 99.1

SECOND QUARTER 2006
FINANCIAL SUPPLEMENT



The following supplement is provided to assist in your financial analysis.

If you need further information, please contact:

Marty Mosby, CFO
901-523-5620

First Horizon National Corporation
2Q 2006 Financial Supplement

Dear Investor,

In conjunction with the release of First Horizon National Corporation's second quarter results for 2006, we have prepared this financial supplement to assist investors in understanding First Horizon National Corporation’s financial results.

This supplement compares current period results to earnings and other financial information from the previous four quarters.

Please feel free to call if you have any additional questions.

Regards,

Marty Mosby
CFO
901-523-5620

CONSOLIDATED SUMMARY
Quarterly, Unaudited
(Thousands)  2Q06   1Q06   4Q05   3Q05   2Q05 
Net interest income $253,598  $245,721  $254,812  $260,160  $241,608 
Noninterest income 329,094  286,025  314,150  347,005  320,038 
Divestitures                   -                    -             7,029                    -                    - 
Security gain/(loss) 2,893  (80,281) (181) (406) 75 
Total revenue 585,585  451,465  575,810  606,759  561,721 
Noninterest expense   419,986  443,215  413,292  426,175  406,222 
Provision 18,653  17,799  16,175  22,608  15,786 
Pretax income/(loss) 146,946  (9,549) 146,343  157,976  139,713 
Provision/(benefit) for income taxes 43,013  (12,959) 42,695  49,862  43,567 
Income from continuing operations 103,933  3,410  103,648  108,114  96,146 
Income from discontinued operations, net of tax 376  210,273  5,369  4,830  3,858 
Income before cumulative effect 104,309  213,683  109,017  112,944  100,004 
Cumulative effect of changes in accounting      
     principle, net of tax                 -               1,345           (3,098)                   -                    - 
Net income $104,309  $215,028  $105,919  $112,944  $100,004 
       
Tax rate 29% NM 29% 32% 31%
Efficiency ratio 72% 98% 72% 70% 72%
                 
NM - Not meaningful

1

SELECTED FINANCIAL DATA
Quarterly, Unaudited
(Dollars in thousands, except per share data)  2Q06   1Q06   4Q05   3Q05   2Q05 
Income from continuing operations $103,933  $3,410  $103,648  $108,114  $96,146 
Income from discontinued operations, net of tax 376  210,273  5,369  4,830  3,858 
Cumulative effect of changes in accounting      
  principle, net of tax                    -    1,345             (3,098)                      -                       - 
Net income 104,309  215,028  105,919  112,944  100,004 
Common Stock Data      
     
Diluted earnings per common share:    
Diluted EPS from continuing operations $.82  $.03  $.80  $.83  $.74 
Diluted EPS before cumulative effect of     
  changes in accounting principle                  .82   1.66   .84   .87   .77 
Diluted EPS                  .82   1.67   .81   .87   .77 
     
Diluted shares 127,280  129,100  130,043  129,924  129,428 
Period-end shares outstanding 123,947  123,230  126,222  126,003  125,111 
Dividends declared per share $.45  $.45  $.45  $.43  $.43 
Selected Average Balances    
     
Total assets $38,494,898  $37,689,523  $37,720,410  $38,090,993  $36,282,202 
Total loans, net of unearned income 21,429,616  20,838,397  19,952,086  18,722,002  17,782,262 
Investment securities 3,008,310  3,026,429  2,858,410  2,934,030  2,931,319 
Earning assets 33,946,387  33,142,044  33,191,778  33,562,038  31,619,216 
Deposits 21,981,445  22,939,767  23,918,717  23,981,764  22,522,907 
Total long-term debt 5,160,610  3,805,307  2,665,867  2,374,568  2,585,246 
Shareholders' equity 2,401,428  2,335,512  2,284,400  2,220,232  2,132,528 
Selected Period-End Balances    
     
Total assets $37,469,234  $37,300,975  $36,579,061  $37,042,307  $37,165,789 
Total loans, net of unearned income 21,699,729  21,186,991  20,600,922  19,211,703  18,428,561 
Investment securities 3,108,569  2,944,826  2,912,486  2,842,016  2,998,495 
Earning assets 31,879,716  31,617,338  31,578,065  31,204,048  31,203,158 
Goodwill 281,910  281,475  281,440  282,192  264,787 
Other intangible assets, net 75,055  76,666  76,647  76,893  75,818 
Mortgage servicing rights, net 1,595,413  1,475,448  1,314,629  1,210,284  1,018,029 
Deposits 21,693,442  21,517,047  23,317,557  25,269,302  21,586,027 
Total long-term debt 5,606,294  4,599,339  3,437,643  2,000,113  2,537,046 
Shareholders' equity 2,442,193  2,399,608  2,347,539  2,292,337  2,216,914 
Selected Ratios and Other    
     
Return on average assets 1.09% 2.31% 1.11% 1.18% 1.11%
Return on average equity              17.4                 37.3                 18.4                 20.2                 18.8   
     
FTE employees          12,413             13,053             13,175             13,164             13,141   

2

STATEMENTS OF INCOME
Quarterly, Unaudited
(Thousands)  2Q06   1Q06   4Q05   3Q05   2Q05 
Interest income $578,582  $533,369  $519,475  $497,438  $438,385 
Less interest expense 324,984  287,648  264,663  237,278  196,777 
  Net interest income 253,598  245,721  254,812  260,160  241,608 
Provision for loan losses 18,653  17,799  16,175  22,608  15,786 
  Net interest income after    
  provision for loan losses 234,945  227,922  238,637  237,552  225,822 
Noninterest income:    
  Mortgage banking 113,448  88,815  114,713  140,482  108,992 
  Capital markets 102,165  92,858  80,896  82,158  94,789 
  Deposit transactions    
  and cash management 42,756  38,023  42,196  41,268  39,471 
  Insurance commissions 12,461  14,686  13,144  12,673  13,525 
  Revenue from loan sales and securitizations 12,212  11,357  13,146  10,878  10,317 
  Trust services and investment    
  management 10,824  10,657  10,873  11,299  11,278 
  Gains on divestitures -   -                    7,029                          -   - 
  Securities gains/(losses), net 2,893  (80,281) (181) (406) 75 
  Other   35,228  29,629  39,182  48,247  41,666 
Total noninterest income 331,987  205,744  320,998  346,599  320,113 
  Adjusted gross income after    
  provision for loan losses 566,932  433,666  559,635  584,151  545,935 
Noninterest expense:    
  Employee compensation,    
  incentives and benefits 245,796  260,141  244,943  259,583  244,123 
  Occupancy 27,525  30,102  28,000  26,082  26,068 
  Operations services 17,075  17,440  18,363  18,739  18,402 
  Equipment rentals, depreciation,    
  and maintenance 17,858  20,264  19,108  19,033  18,741 
  Communications and courier 13,409  14,912  14,379  14,352  13,189 
  Amortization of intangible assets 2,881  2,888  2,667  2,893  2,604 
  Other 95,442  97,468  85,832  85,493  83,095 
Total noninterest expense 419,986  443,215  413,292  426,175  406,222 
Pretax income/(loss) 146,946  (9,549) 146,343  157,976  139,713 
  Provision/(benefit) for income taxes 43,013  (12,959) 42,695  49,862  43,567 
Income from continuing operations 103,933  3,410  103,648  108,114  96,146 
Income from discontinued operations,      
   net of tax 376  210,273  5,369  4,830  3,858 
     Income before cumulative effect 104,309  213,683  109,017  112,944  100,004 
Cumulative effect of changes in accounting    
     principle, net of tax -                    1,345    (3,098)  -   - 
Net income $104,309  $215,028  $105,919  $112,944  $100,004 
                 

3

OTHER INCOME AND OTHER EXPENSE
Quarterly, Unaudited
(Thousands)  2Q06   1Q06   4Q05   3Q05   2Q05 
All other income:  
Bankcard income $6,362  $6,916  $7,391  $6,998  $6,701 
Other service charges   5,806  5,766  5,531  5,968  5,753 
Remittance processing   3,642  3,994  3,926  3,908  3,790 
Check clearing fees   1,679  1,727  1,801  1,885  1,778 
Other   17,739  11,226  20,533  29,488  23,644 
Total      $35,228   $29,629  $39,182  $48,247  $41,666 
All other expense:
Advertising and public relations $10,998  $11,995  $11,066  $11,246  $12,489 
Legal and professional fees   11,600  8,295  11,879  11,910  11,445 
Travel and entertainment  8,652  6,972  7,834  7,446  8,472 
Computer software    8,827  7,987  7,374  7,327  7,755 
Contract employment    7,094  7,535  7,922  7,963  8,005 
Supplies   4,260  3,674  4,468  4,652  3,935 
Fed services fees  1,736  1,749  1,852  1,885  1,905 
Foreclosed real estate    (437) 8,341  1,835  3,547  (614)
Deposit insurance premium  801  895  782  795  746 
Charitable contributions  530  490  418  938  457 
Distributions on preferred stock   4,453  4,050  3,806  3,374  3,577 
Other       36,928  35,485  26,596  24,410  24,923 
Total     $95,442  $97,468  $85,832  $85,493  $83,095 

4

CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
Quarterly, Unaudited                  
Interest Percent
Average
Balance		 Revenue/
Expense		 Average
Rate/Yield
   
(Fully taxable equivalent)
(Dollars in thousands) 2Q06 1Q06 2Q06 1Q06 2Q06 1Q06
Assets:
Earning assets:
Loans, net of unearned income*  $21,429,616   $20,838,397   $393,546   $363,577  7.37% 7.07%
Loans held for sale       4,623,847        4,776,373        75,832        76,342  6.56     6.39    
Investment securities:
  U.S. Treasuries             53,561             72,265             624             781  4.67     4.38    
  U.S. government agencies       2,731,213        2,736,495        38,211        32,676  5.60     4.78    
  States and municipalities              1,893               1,916                 7                 7  1.39     1.37    
  Other          221,643           215,753          2,726          2,548  4.92     4.72    
    Total investment securities       3,008,310        3,026,429        41,568        36,012  5.53     4.76    
Capital markets securities inventory       2,356,754        2,176,124        31,849        27,327  5.41     5.02    
Mortgage banking trading securities          462,592           442,453        11,798        11,246  10.20     10.17    
Other earning assets:
  Federal funds sold and securities 
     purchased under agreements to resell       2,018,408        1,866,146        23,712        18,995  4.71     4.13    
  Investment in bank time deposits            46,860             16,122             580             179  4.96     4.51    
    Total other earning assets       2,065,268        1,882,268        24,292        19,174  4.72     4.13    
Total earning assets/Interest income     33,946,387      33,142,044   $578,885   $533,678  6.83% 6.50%
Allowance for loan losses        (202,003)        (196,316)
Cash and due from banks          794,019           831,172 
Capital markets receivables          187,435           199,635 
Premises and equipment, net          427,213           418,882 
Other assets       3,341,847        3,294,106 
Total assets  $38,494,898   $37,689,523 
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits:
  Savings  $     279,269   $     282,558   $       149   $     105  .21% .15%
  Checking interest and money market       4,867,053        4,512,081        28,039        20,792  2.31     1.87    
  Certificates of deposit under 
     $100,000 and other time       2,779,821        2,602,581        29,116        25,338  4.20     3.95    
    Total interest-bearing core deposits       7,926,143        7,397,220        57,304        46,235  2.90     2.53    
Certificates of deposit $100,000 and more       8,859,178      10,626,088      110,068      119,296  4.98     4.55    
Federal funds purchased and securities
   sold under agreements to repurchase       4,975,223        4,745,621        58,084        47,821  4.68     4.09    
Capital markets trading liabilities       1,368,933        1,304,492        19,923        18,347  5.84     5.70    
Commercial paper and other short-term
   borrowings          750,789           765,178          9,296          8,423  4.97     4.46    
Total long-term debt       5,160,610        3,805,307        70,309        47,526  5.46     5.00    
Total interest-bearing liabilities/Interest            
   expense     29,040,876      28,643,906   $324,984   $287,648  4.49% 4.06%
Demand deposits       1,817,045        1,712,247 
Other noninterest-bearing deposits       3,379,079        3,204,212 
Capital markets payables          236,481           229,867 
Other liabilities       1,324,715        1,268,505 
Preferred stock of subsidiary          295,274           295,274 
Shareholders' equity       2,401,428        2,335,512 
Total liabilities and shareholders' equity  $38,494,898   $37,689,523 
Net interest income-tax equivalent basis  $253,901   $246,030 
Fully taxable equivalent adjustment (303)          (309)
Net interest income  $253,598   $245,721 
Net interest spread 2.34% 2.44%
Effect of interest-free sources used to fund
   earning assets .66     .55    
Net interest margin 3.00% 2.99%
* Includes loans on nonaccrual status. 
Yields and corresponding income amounts are adjusted to a fully taxable equivalent.  Earning assets yields are expressed net of unearned income.  
Rates are expressed net of unamortized debenture cost for long-term debt.  Net interest margin is computed using total net interest income. 

5

CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
Quarterly, Unaudited                            
Average Balance Interest Revenue/Expense % Average Rate/Yield
(Fully taxable equivalent)
(Dollars in thousands) 4Q05 3Q05 2Q05 1Q05 4Q05 3Q05 2Q05 1Q05 4Q05 3Q05 2Q05 1Q05
Assets:
Earning assets:
Loans, net of unearned income*  $19,952,086   $18,722,002   $17,782,262   $16,680,642   $338,113   $299,199   $264,919   $231,645  6.72% 6.34% 5.98% 5.63%
Loans held for sale       5,758,831        6,936,767        6,055,933        5,315,114        93,327      111,573        93,897        79,085  6.48     6.43     6.20     5.95    
Investment securities:
  U.S. Treasuries             42,419             40,315             40,208             43,843             394             232             230             216  3.68     2.29     2.30     2.00    
  U.S. government agencies       2,608,478        2,690,823        2,691,954        2,548,693        29,079        29,109        29,348        27,559  4.46     4.33     4.36     4.33    
  States and municipalities              2,787               3,544               5,459               6,913               23               37               73             101  3.25     4.30     5.35     5.85    
  Other          204,726           199,348           193,698           195,356          2,463          2,177          2,083          1,988  4.81     4.37     4.30     4.07    
    Total investment securities       2,858,410        2,934,030        2,931,319        2,794,805        31,959        31,555        31,734        29,864  4.47     4.30     4.33     4.27    
Capital markets securities inventory       2,160,676        2,158,334        2,069,131        2,235,004        27,126        27,029        22,714        24,528  5.02     5.01     4.39     4.39    
Mortgage banking trading securities          360,891           271,915           292,301           288,387        10,148          8,716          9,226          9,144  11.25     12.82     12.63     12.68    
Other earning assets:
  Federal funds sold and securities 
     purchased under agreements to resell       2,086,401        2,532,662        2,482,568        2,047,342        18,939        19,604        16,135        10,851  3.60     3.07     2.61     2.15    
  Investment in bank time deposits            14,483               6,328               5,702               5,874             154               47               50               30  4.22     2.92     3.57     2.09    
    Total other earning assets       2,100,884        2,538,990        2,488,270        2,053,216        19,093        19,651        16,185        10,881  3.61     3.07     2.61     2.15    
Total earning assets/Interest income     33,191,778      33,562,038      31,619,216      29,367,168   $519,766   $497,723   $438,675   $385,147  6.23% 5.90% 5.56% 5.29%
Allowance for loan losses        (190,805)        (176,167)        (169,427)        (164,598)
Cash and due from banks          781,178           769,813           727,429           729,802 
Capital markets receivables          288,292           393,513           742,190           880,462 
Premises and equipment, net          410,361           400,533           387,475           378,041 
Other assets       3,239,606        3,141,263        2,975,319        2,900,566 
Total assets  $37,720,410   $38,090,993   $36,282,202   $34,091,441 
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits:
  Savings  $     285,313   $     289,703   $     294,366   $     294,114   $       106   $       108   $       117   $         77  .15% .15% .16% .11%
  Checking interest and money market       4,409,563        4,287,166        4,319,510        4,273,739        18,460        16,153        13,656        11,206  1.66     1.49     1.27     1.06    
  Certificates of deposit under 
     $100,000 and other time       2,402,900        2,278,094        2,184,264        2,102,399        22,642        20,466        18,733        17,172  3.74     3.56     3.44     3.31    
    Total interest-bearing core deposits       7,097,776        6,854,963        6,798,140        6,670,252        41,208        36,727        32,506        28,455  2.30     2.13     1.92     1.73    
Certificates of deposit $100,000 and more     11,393,018      11,467,752      10,557,321      10,147,069      116,707      102,061        80,433        64,782  4.06     3.53     3.06     2.59    
Federal funds purchased and securities
   sold under agreements to repurchase       4,760,566        4,913,288        4,651,584        3,991,180        43,751        39,395        31,387        22,040  3.65     3.18     2.71     2.24    
Capital markets trading liabilities       1,351,785        1,665,342        1,589,408        1,470,515        19,556        23,237        20,591        16,807  5.74     5.54     5.20     4.64    
Commercial paper and other short-term
   borrowings       1,052,369        1,230,394           998,762           691,000        11,668        11,224          7,911          4,560  4.40     3.62     3.18     2.68    
Total long-term debt       2,665,867        2,374,568        2,585,246        2,616,152        31,773        24,634        23,949        20,785  4.77     4.16     3.71     3.18    
Total interest-bearing liabilities/Interest                        
   expense     28,321,381      28,506,307      27,180,461      25,586,168   $264,663   $237,278   $196,777   $157,429  3.71% 3.31% 2.90% 2.49%
Demand deposits       2,018,721        1,941,952        1,835,618        1,784,963 
Other noninterest-bearing deposits       3,409,202        3,717,097        3,331,828        3,001,739 
Capital markets payables          275,721           350,531           423,810           569,760 
Other liabilities       1,115,711        1,059,562        1,082,525        1,050,840 
Preferred stock of subsidiary          295,274           295,312           295,432             29,998 
Shareholders' equity       2,284,400        2,220,232        2,132,528        2,067,973 
Total liabilities and shareholders' equity  $37,720,410   $38,090,993   $36,282,202   $34,091,441 
Net interest income-tax equivalent basis  $255,103   $260,445   $241,898   $227,718 
Fully taxable equivalent adjustment (291) (285) (290)          (271)
Net interest income  $254,812   $260,160   $241,608   $227,447 
Net interest spread 2.52% 2.59% 2.66% 2.80%
Effect of interest-free sources used to fund
   earning assets .54     .50     .40     .32    
Net interest margin 3.06% 3.09% 3.06% 3.12%
* Includes loans on nonaccrual status. 
Yields and corresponding income amounts are adjusted to a fully taxable equivalent.  Earning assets yields are expressed net of unearned income.  
Rates are expressed net of unamortized debenture cost for long-term debt.  Net interest margin is computed using total net interest income. 

6

AVERAGE AND PERIOD-END LOANS
Quarterly, Unaudited
(Millions)  2Q06  1Q06 4Q05 3Q05 2Q05
Average loans:    
Loans, net of unearned income:    
  Commercial:    
  Commercial, financial and industrial $  6,570.3  $  6,415.4  $  6,357.0  $  6,176.2  $  5,894.5 
  Real estate commercial 1,259.4  1,225.0  1,208.9  1,163.2  1,086.3 
    Real estate construction 2,380.4  2,197.7  1,973.1  1,735.9  1,546.2 
   Total commercial loans 10,210.1  9,838.1  9,539.0  9,075.3  8,527.0 
  Retail:    
  Real estate residential 8,544.5  8,629.4  8,123.6  7,593.7  7,533.5 
  Real estate construction 2,028.5  1,961.7  1,874.8  1,643.9  1,321.2 
  Other retail 162.6  164.6  170.5  167.5  161.1 
  Credit card receivables 197.7  238.1  244.2  241.6  239.5 
  Real estate loans pledged against     
      other collateralized borrowings (a) 286.2                   6.5                      -                       -                       -  
     Total retail loans 11,219.5  11,000.3  10,413.1  9,646.7  9,255.3 
  Total loans, net of unearned income $21,429.6  $20,838.4  $19,952.1  $18,722.0  $17,782.3 
     
       
     
Period-end loans:    
Loans, net of unearned income:    
  Commercial:    
  Commercial, financial and industrial $  6,705.9  $  6,538.8  $  6,578.1  $  6,354.4  $  6,181.6 
  Real estate commercial 1,276.3  1,232.0  1,213.1  1,171.6  1,128.2 
    Real estate construction 2,453.6  2,277.8  2,108.1  1,849.1  1,662.8 
   Total commercial loans 10,435.8  10,048.6  9,899.3  9,375.1  8,972.6 
  Retail:    
  Real estate residential 8,545.2  8,486.4  8,357.1  7,603.3  7,549.9 
  Real estate construction 2,076.0  2,001.9  1,925.1  1,814.6  1,499.5 
  Other retail 163.1  161.6  168.4  170.7  163.8 
  Credit card receivables 202.1  194.9  251.0  248.0  242.8 
  Real estate loans pledged against     
      other collateralized borrowings (a) 277.5               293.6                      -                       -                       -  
     Total retail loans 11,263.9  11,138.4  10,701.6  9,836.6  9,456.0 
    Total loans, net of unearned income $21,699.7  $21,187.0  $20,600.9  $19,211.7  $18,428.6 
(a) During first quarter 2006, FHN sold loans through an on-balance sheet securitization, which is structured as a financing for accounting purposes.
     

7

RETAIL/COMMERCIAL BANKING 
Quarterly, Unaudited 
(Thousands)   2Q06   1Q06   4Q05    3Q05    2Q05  
Net interest income  $230,725  $224,869  $227,698  $224,895  $211,294 
Noninterest income  111,827             106,493  106,682  106,564  99,830 
Divestitures                         -                         -                 7,029                         -                         - 
Security G/L                         -                         -                         -                         -                         - 
Total revenue  342,552             331,362             341,409  331,459  311,124 
Total noninterest expense             211,873             215,555             203,154             199,653             192,738 
Provision  18,361  18,026  15,897  22,428  15,667 
Pretax income  $112,318  $97,781  $122,358  $109,378  $102,719 
                 
Efficiency ratio  62% 65% 60% 60% 62%
       
Average loans (millions)  $21,096  $20,596  $19,785  $18,613  $17,700 
Other earning assets (millions)  589  878  1,599  2,250  1,844 
  Total earning assets (millions)  $21,685  $21,474  $21,384  $20,863  $19,544 
       
Total deposits  $11,773  $11,510  $11,280  $10,916  $10,606 
       
Net interest margin  4.27% 4.25% 4.22% 4.28% 4.34%
       
Noninterest revenue detail       
Deposit transactions & cash mgmt  $42,718  $38,011  $42,191  $41,298  $39,440 
Insurance commissions  12,048  14,236  12,693  12,236  13,085 
Trust services & investment mgmt  10,824  10,657  10,873  11,300  11,278 
Bankcard Income 6,103  6,660  7,184  6,769  6,501 
Other service charges  5,336  5,356  5,078  5,367  5,219 
Check clearing fees  1,679  1,727  1,801  1,885  1,778 
Revenue from loan sales and       
   securitizations (a)  10,548  8,238  10,630  8,638  8,386 
Miscellaneous revenue  22,571  21,608  16,232  19,071  14,143 
Total noninterest revenue  $111,827  $106,493  $106,682  $106,564  $99,830 
       
Statistics       
Trust total assets (millions)(b)   $11,629  $11,838  $11,971  $12,451  $12,208 
Trust total managed assets (millions)(b)  6,311  6,379  6,707  6,984  7,158 
(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. 

8

MORTGAGE BANKING 
Quarterly, Unaudited 
(Thousands)   2Q06   1Q06   4Q05    3Q05    2Q05  
Net interest income  $25,052  $25,415  $34,619  $41,769  $37,886 
Noninterest income:      
  Net origination fees  107,392  72,339  87,545  115,541  95,676 
  Net servicing fees  (727) 10,717  20,175  17,951  6,295 
  Other fees  7,355  11,648  12,182  17,762  15,769 
Total noninterest income  114,020  94,704  119,902  151,254  117,740 
Total revenue  139,072  120,119  154,521  193,023  155,626 
Noninterest expense  109,581  125,699  115,261  132,253  113,584 
Provision                       292                     (227)                      278                       180                       119 
Pretax income (loss) $29,199  $(5,353) $38,982  $60,590  $41,923 
         
Noninterest expense detail       
Commissions & incentives  $54,831  $53,385  $62,946  $84,774  $77,400 
FAS 91 cost deferral  4,473  (1,743) 4,813  4,616  (1,332)
Other salaries & benefits  50,420  63,709  60,206  62,462  60,979 
  Total salaries & benefits  109,724  115,351  127,965  151,852  137,047 
Contract labor & outsourcing  4,170  4,771  4,938  5,059  5,296 
Equipment & occupancy  16,074  17,953  17,633  16,554  16,786 
Foreclosure provision  (646) 7,051  1,264  3,063  (647)
Other expenses  46,554  44,872  40,976  48,848  45,047 
Total expenses before FAS 91 reclass  175,876  189,998  192,776  225,376  203,529 
FAS 91 reclassification  (69,334) (67,178) (82,257) (97,429) (92,667)
Total noninterest expense before       
  segment allocations  106,542  122,820  110,519  127,947  110,862 
Segment allocations  3,039  2,879  4,742  4,306  2,722 
 Total noninterest expense   $109,581  $125,699  $115,261  $132,253  $113,584 
       
Other information       
Efficiency ratio  79% 105% 75% 69% 73%
       
Warehouse (millions)  $3,613  $3,539  $3,854  $4,583  $4,081 
Other earning assets (millions)  850  724  580  394  391 
  Total earning assets (millions)  $4,463  $4,263  $4,434  $4,977  $4,472 
       
Escrow balances  $1,903  $1,641  $2,034  $2,334  $2,054 
       
Net interest margin  2.25% 2.42% 3.10% 3.33% 3.40%
       
Warehouse Spread  1.44% 1.77% 2.06% 2.33% 2.66%
                 
Certain previously reported amounts have been reclassified to agree with current presentation. 
*See Note 1 - Financial Glossary

9

MORTGAGE BANKING
Quarterly, Unaudited
(Thousands)    2Q06   1Q06   4Q05    3Q05    2Q05  
ORIGINATION INCOME      
Origination Fees $77,174  $67,043  $79,808  $104,395  $97,468 
FAS 91 Fee Deferral              1,523                (126)              4,932               4,846             (3,774)
Appraisal, Final Inspection,       
     Credit Report Fees              7,901               6,778               7,574               9,639               8,967 
  Total origination fees              86,598             73,695             92,314           118,880           102,661 
       
Secondary Marketing Income:      
  Prime:      
   OMSR, SRP            89,999             73,896             88,023           110,813             82,641 
   Marketing G/L (Trading Gains)              37,907             22,277             21,236             15,167             19,875 
   Concessions          (41,459)          (34,093)          (35,560)          (39,370)          (27,176)
   LOCOM                   (398)                 666                  614             (1,840)               (837)
   Subtotal Prime              86,049             62,746             74,313             84,770             74,503 
       
  Non-Prime:      
   OMSR, SRP              2,262               4,416               4,747             11,779             10,930 
   LOCOM              1,817             (1,340)            (1,572)            (2,459)                 249 
   Subtotal Non-Prime                4,079               3,076               3,175               9,320             11,179 
  Total Secondary Marketing Fees -      
          Mortgage              90,128             65,822             77,488             94,090             85,682 
       
FAS 91 Reclassification          (69,334)          (67,178)          (82,257)          (97,429)          (92,667)
       
Total Origination Income $107,392  $72,339  $87,545  $115,541  $95,676 
       
KEY ORIGINATIONS METRICS      
       
Production ($ in millions):      
  First Lien Production $7,482  $6,865  $7,991  $10,557  $9,526 
       
Refinanced Production               2,505               2,793               3,259               4,387               3,545 
Refinanced % 33% 41% 41% 42% 37%
Purchased Production              4,977               4,072               4,732               6,170               5,981 
Purchased % 67% 59% 59% 58% 63%
       
ARMs % (Excluding Gov't ARMS) 28% 33% 37% 41% 50%
       
Total Sales Force 2,467  2,609  2,630  2,602  2,629 
       
Warehouse/Pipeline Balance:      
Ending Warehouse Balance 2,604  2,813  2,942  3,159  3,663 
Ending Pipeline Balance (Locked)              3,645               3,691               3,119               3,930               5,209 
       
Loan Sales (Deliveries):      
Prime              7,061               6,364               7,474             10,071               8,395 
Non-Prime                 330                  443                  416                  492                  343 
Total Loan Sales                7,391               6,807               7,890             10,563               8,738 
       
Margins:      
Marketing Margin on Deliveries (bps):      
Prime:      
   OMSR, SRP 128  116  118  110  98 
   Marketing G/L (Trading Gains)   54  35  28  15  24 
   Concessions (59) (53) (48) (39) (32)
   LOCOM     (1) 1  1  (2) (1)
   Total Prime   122  99  99  84  89 
  Non-Prime:      
   OMSR, SRP 68  99  114  239  319 
   LOCOM     55  (30) (38) (50) 7 
   Total Non-Prime   123  69  76  189  326 
               
Total Marketing Margin on Deliveries 122  97  98  89  98 

10

MORTGAGE BANKING
Quarterly, Unaudited
     2Q06   1Q06   4Q05   3Q05   2Q05 
(Thousands)   $ bps $ bps $ bps $ bps $ bps
SERVICING INCOME                      
Gross Service Fees $95,043  39 $93,454  39 $91,735  39 $88,866  38 $87,285  39
Guarantee Fees      (17,348) (7)      (18,876) (8)      (18,980) (8)      (18,900) (8)      (19,039) (9)
Sub-Service Fee Income              71      -               64      -             144   -             101      -               40      - 
Lender Paid MI             (20)     -             108      -            (168)  -            (145)     -            (159)     - 
  Net Service Fees         77,746  32        74,750  31        72,731  31        69,922  30        68,127  30 
         
Early Payoff Interest Expense        (4,324)   (2)        (3,838)   (2)        (5,164)   (2)        (6,844)   (3)        (5,742)   (2)
Ancillary Fees         6,820  3          6,934  3          6,698  3          6,601  3          6,001  3 
  Total Service Fees         80,242  33        77,846  32        74,265  32        69,679  30        68,386  31 
         
MSR Asset - Value Changes        
Change in MSR Value - Runoff      (72,270)        (58,836)      (71,669)      (71,981)      (68,067)  
Change in MSR Value - Other than Runoff       69,564          95,961        55,684      129,596     (141,417)  
MSR Hedge Gains/(Losses)      (72,104)        (98,290)      (32,673)      (99,271)     159,440   
    Total Net Change MSR Value        (74,810)        (61,165)        (48,658)        (41,656)        (50,044)  
         
Trading Asset & Associated Derivatives:        
Change in Trading Asset Value         3,044            8,467          3,720        15,892       (25,260)  
Trading Asset Hedge Gains/(Losses)        (4,438)        (10,932)        (5,722)      (15,766)       24,819   
    Total Trading Asset & Associated Derivatives        (1,394)          (2,465)          (2,002)              126              (441)  
         
Option Expense on Servicing Hedges        (4,765)          (3,499)        (3,430)      (10,198)      (11,606)  
                       
Total Servicing Income             (727)         10,717          20,175          17,951            6,295   
         
KEY SERVICING METRICS        
($ in millions)        
Avg. Servicing Portfolio (Owned) $98,342    $96,147  $94,388  $92,235  $89,366   
End. Servicing Portfolio (Owned) $99,304    $97,303  $95,284  $93,589  $90,823   
Average Loans Serviced (#)     626,527        620,476      616,649      610,895      599,361   
         
Product Mix (Average)         
Product Mix (%)        
GNMA 8%   9% 9% 9% 10%  
FNMA/FHLMC 65%   65% 65% 67% 68%  
Private   24%   23%   22%   20%   18%  
Sub-Total 97%   97% 96% 96% 96%  
Warehouse 3%   3% 4% 4% 4%  
Total   100%   100%   100%   100%   100%  
         
Other Statistics        
(Annualized)        
Ancillary Income per Loan $43.54    $44.70  $43.45  $43.22  $40.05   
Servicing Cost per Loan $50.60    $53.01  $51.96  $51.80  $52.08   
         
Portfolio Data        
(in millions)        
Average Servicing Asset ** 1,503   1,350 1,262 1,106 1,062  
Valuation Reserve (Ending Balance)                 -                  -    1 1 6  
Servicing Book Value (bps) 153   140 134 120 119  
         
Change in MSR Asset /         
        Average Servicing Asset 20%   18% 15% 15% 19%  
         
Run-Off Rate 18%   17% 22% 28% 25%  
         
** Includes valuation reserve/MSRs only                    

11

CAPITAL MARKETS 
Quarterly, Unaudited 
(Thousands)   2Q06   1Q06   4Q05    3Q05    2Q05  
Net interest income/(expense) $240  $(594) $(957) $(2,563) $(4,863)
Incremental cost of equity (4,769)                 (4,969)                 (4,856)                 (5,181)                 (4,549)
Net interest expense (4,529) (5,563) (5,813) (7,744) (9,412)
Noninterest income:       
  Fixed income  41,843  50,602  44,397  43,870  50,819 
  Other product revenue 62,179  45,901  39,800  41,110  46,587 
  Total product revenue 104,022  96,503  84,197  84,980  97,406 
  Other non-product revenue (3,029) 2,400  621  1,261  2,812 
Total noninterest income  100,993  98,903  84,818  86,241  100,218 
Total revenue  96,464  93,340  79,005  78,497  90,806 
Noninterest expense  80,553  86,379  75,759  76,093  82,757 
Pretax income  $15,911  $6,961  $3,246  $2,404  $8,049 
         
       
Efficiency ratio  84% 93% 96% 97% 91%
       
Trading inventory (millions)  $2,356  $2,175  $2,160  $2,158  $2,069 
Other earning assets (millions)  2,262  2,149  2,285  2,512  2,493 
  Total earning assets (millions)  $4,618  $4,324  $4,445  $4,670  $4,562 
       
       
Net interest margin  (0.39)% (0.52)% (0.52)% (0.66)% (0.83)%
       
                 

12

CORPORATE 
Quarterly, Unaudited 
(Thousands)   2Q06   1Q06   4Q05    3Q05    2Q05  
Net interest income  $ 2,350  $ 1,000  $ ( 1,692) $ 1,240  $ 1,840 
Noninterest income  2,254  (14,075) 2,748  2,946  2,250 
Security gain/(loss) 2,893  (80,281) (181)                    (406)                        75 
Total revenue  7,497  (93,356) 875  3,780  4,165 
Total noninterest expense  17,979  15,582  19,118  18,176  17,143 
Pretax loss $ (10,482) $ (108,938) $ (18,243) $ (14,396) $ (12,978)
                 

13

CAPITAL HIGHLIGHTS
(Dollars in millions except per share amounts, Unaudited)
     2Q06  1Q06 4Q05 3Q05 2Q05
Tier 1 Capital (a) $  2,611.5  $  2,558.3  $  2,489.0  $  2,430.8  $  2,364.8 
Tier 2 Capital (a) 1,331.2  1,344.5  1,090.5  1,112.5  1,096.7 
  Total Capital (a) $  3,942.7  $  3,902.8  $  3,579.5  $  3,543.3  $  3,461.5 
     
Risk-Adjusted Assets (a) $30,783.6  $29,166.8  $29,111.9  $28,225.1  $27,464.8 
     
Tier 1 Ratio (a) 8.48% 8.77% 8.55% 8.61% 8.61%
Tier 2 Ratio (a)                4.33                   4.61                   3.75                   3.94                   3.99   
  Total Capital Ratio (a) 12.81% 13.38% 12.30% 12.55% 12.60%
     
Leverage Ratio (a) 6.86% 6.86% 6.67% 6.45% 6.59%
     
Shareholders' Equity/Assets Ratio (b)                 6.52                   6.43                   6.42                   6.19                   5.96   
     
Book Value $ 19.59    $ 19.36    $ 18.46    $ 18.06    $ 17.59   
             
(a)  Current quarter is an estimate
(b)  Calculated on period-end balances

14

Note 1 - Financial Glossary

Appraisal Fees: A fee charged to the borrower for the cost of appraising a property.

Concessions: The net amount of the total of the discount or premium pricing charged to the borrower upon loan origination. This also includes the servicing release premium paid to correspondents to purchase loans. Discount pricing is used to competitively price mortgage loans.

Credit Report Fee: A fee charged to the borrower for the cost of reviewing the borrower's credit report.

FAS 91 Fee Deferral: The timing difference between recording origination fees on a loan. Per FAS 91, origination fees can only be recognized at the time the loan is sold, not at the time the loan is originated.

FAS 91 Reclassification: The reclassification of the cost of originating the loans sold during the period.

Final Inspection Fee: A fee charged to the borrower to inspect a property.

Lower of Cost or Market (LOCOM): A method of accounting for certain assets by recording them at the lower of their historical cost or their current market value.

Marketing G/L (Trading Gains): The net result of hedging activities.

Other Mortgage Servicing Rights (OMSR): Represents the amount by which the present value of the estimated future net cash flows from servicing mortgage loans exceeds the cost of servicing mortgage loans.

Origination Fees: A fee charged to the borrower by the lender to originate a loan. Usually stated as a percentage of the face value of the loan.

Servicing Right Premium (SRP): The premium received for selling loans on a servicing released basis.

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