MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTEREST SENSITIVITY AND DISCLOSURES ABOUT MARKET RISK continued Results for the base, rising and falling interest rate scenarios are listed below, based upon the Corporation's rate sensitive assets at December 31, 2002. The net interest income shown represents cumulative net interest income over a 12-month time horizon. Balance sheet assumptions used for the base scenario are the same for the rising and falling simulations. BASE RISING FALLING =============================================================================== Net Interest Income (dollars in thousands) $105,138 $113,855 $ 98,793 Variance from base $ 8,717 $ (6,345) Percent of change from base 8.29% (6.03)% EARNING ASSETS EARNING ASSETS Earning assets increased approximately $355 million during 2003. The table below reflects the earning asset mix for the years 2003 and 2002 (at December 31). Loans grew by $349.2 million, while investment securities increased by $14.8 million. $298.7 million of the increase in loans and $12.5 million of the increase in investment securities are attributable to the March 1, 2003 acquisition of CNBC Bancorp. Excluding increases related to this acquisition, loans increased by $50.5 million and investments increased by $2.3 million. (dollars in millions) December 31, ================================================================================ 2003 2002 -------- -------- Federal funds sold and interest-bearing time deposits $ 40.6 $ 35.0 Securities available for sale ....................... 348.9 332.9 Securities held to maturity ......................... 7.9 9.1 Mortgage loans held for sale ........................ 3.0 21.5 Loans ............................................... 2,353.6 2,004.4 Federal Reserve and Federal Home Loan Bank stock .... 15.5 11.4 -------- -------- Total ........................................... $2,769.5 $2,414.3 ======== ======== 15