Investment Strategy

Key financial variables to consider in assessing the investment merits of afinancial company are the following:

Net Interest Margin: What is the trend? Widening margin, which is the differencebetween yield on earning assets and rate paid on funds, can indicate moresuccessful management of assets and liabilities, lead to greater contribution tonet interest income from a given level of loan growth.

Return on Assets: Rising ROA can indicate improving margins, lower loss rates.Given relatively large base of assets, most banks tend to have low ROA's (0.6% to1.5%) compared with industrial companies.% Reserve for

Loan Losses: The amount of reserve generally rises over time toaccount for loan growth. A higher percentage can indicate a riskier lendingportfolio or an expected weakening of credit quality.%

Return on Equity: Key perfomance measurement of capital efficency assesseswhat investment returns management can earn on a company's existing capitalbase. A sustained percentage above 20% is considered above average.