Outlook 2006: Banking

January 5, 2006

William M. Samuelson, SVP, Director of Business and Professional Banking

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Jobs: Connecticut & Nationwide

• CT 2004 = 4.9%

• US 2004 = 5.5%

• CT 11/2005 = 5.1%

• US 11/2005 = 5.0%

• CT remains #1 in per-capita income

– However, CT Personal Income increased 5.3% in 2005, 37th in the nation in income growth

– CT ranked 20th in ”Economic Competitiveness” study (MA #1, RI #41)*

*Suffolk University’s Beacon Hill Institute study

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Key Interest Rates

• Current WSJ Prime = 7.25%– One Year Ago… WSJ Prime = 5.25%

• Current 10 Yr Treasury = 4.39%– One Year Ago…10 Yr Treasury = 4.22%

• Short v. Long Term Rates….Inverted Yield Curve

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Consumer/Business Confidence

• Energy prices ……..Katrina & related issues• Housing prices continue to rise…..bubble?• Quality/educated workforce• Future rate hikes….will they continue?• Unemployment……remains relatively low

• Can Business Investment help avoid a slowdown?*– 2/3 of companies surveyed plan to increase capital spending by 8-9%– Exports are expected to rise– Depleted inventories need to be restored

*Baruch College and Financial Executives International Study

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Business Borrowing

• Demand for Borrowing remains relatively high

• Credit standards have eased

• Bank competition remains intense for borrowers

• Rate, fees and structure are negotiable

• Some banks are committing to business startups and expansion v. mature borrowers

• Relationships remain key…..we think!

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