Prices are down from a year ago, but this may be a short lived trend

-21 0%

Today's Market…

New Orleans

1-year (4-quarter) Appreciation (2010 Q2) -2.4%-2 5%

Local Trend

3-year (12-quarter) Appreciation (2010 Q2)

U.S.Price Activity

$176,867$161,900Current Median Home Price (2010 Q2)1.4%

New Orleans-Metairie-Kenner AreaLocal Market Report, Second Quarter 2010

$0$20,000$40,000$60,000$80,000

$100,000$120,000$140,000$160,000$180,000$200,000

-15%-10%-5%0%5%10%15%20%25%30%

2010 Q2

Q42009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

Median Price (Red Line) and One-year Price Growth

17.3%

$28,700

FHA Loan LimitLocal Median to Conforming Limit Ratio

$417,000

9-year (36 quarters) Housing Equity Gain*

39%

*Note: Equity gain reflects price apprecation only

Real estate remains a long-term investment: those who bought early in

the boom still hold some equity

-$4,1007-year (28 quarters) Housing Equity Gain*

$44,500

3-year (12-quarter) Housing Equity Gain* -$46,933

$729,250

-21.0%

$25,300

not comparable

-$167

**Note: the 2009 loan limits for FHA and the GSEs were extended through 2010.

-2.5%

State Existing Home Sales (2010 Q2 vs 2009 Q2)

3-year (12-quarter) Appreciation (2010 Q2)

$417,000

Home Sales LouisianaThe sales level is much higher than a

year ago and growing

U.S.

Conforming Loan Limit**Most buyers in this market have access

to government-backed financing$287,500

15.2%

$0$20,000$40,000$60,000$80,000

$100,000$120,000$140,000$160,000$180,000$200,000

-15%-10%-5%0%5%10%15%20%25%30%

2010 Q2

Q42009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

Median Price (Red Line) and One-year Price Growth

0

20

40

60

80

100

120

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

2010 Q2

Q42009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

State Home Sales (Red Line) and Sales Growth1,000s

(2010 Q2 vs 2009 Q2) year ago and growing.

$0$20,000$40,000$60,000$80,000

$100,000$120,000$140,000$160,000$180,000$200,000

-15%-10%-5%0%5%10%15%20%25%30%

2010 Q2

Q42009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

Median Price (Red Line) and One-year Price Growth

0

20

40

60

80

100

120

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

2010 Q2

Q42009 Q2

Q42008 Q2

Q42007 Q2

Q42006 Q2

Q42005 Q2

Q42004 Q2

Q42003 Q2

Q42002 Q2

Q42001 Q2

State Home Sales (Red Line) and Sales Growth1,000s

#N/A #N/A #N/A #N/A

Natural Resour 1.5% 7.9 Natural 0.6%

0.9%

9.5%

1-year (12 month) Job Growth Rate

Drivers of Local Supply and Demand…

-500

4,800 Employment has held up and is on an upward trend

9.5%

Share of Total Employment by Industry

Not Comparable

8.2%

12-month Job Change (May)Not

Comparable

10,10036-month Job Change (Jun)

Not Comparable

U.S.

7.8% Local employment growth is respectable compared to other markets-3.0%

Local Economic Outlook New Orleans

Current Unemployment Rate (Jun)

Year-ago Unemployment Rate

Unemployment has risen since the same period last year, but New

Orleans's labor market has been more resilient than the national average

12-month Job Change (Jun)

U.S.New Orleans-Metairie-Kenner Area

Natural Resources and Mining

1.5%Constructio

n5.8% Manufactur

ing

Government

16 2%

Natural Resources and Mining

0.6%

Construction

4.5% Manufacturing

9.0%Other S i

Government

16.3%Construction 5.8% 30.3 Constru 4.5%

Manufacturing 6.5% 33.9 Manufac9.0%

Trade/Transpo 20.1% 104.8 Trade/T 19.1%

Information 1.3% 6.6 Informa2.1%

Financial Act 4.7% 24.8 Financi5.9%

Prof. & Busin 12.7% 66.4 Profess12.9%

Educ. & Heal 13.9% 72.8 Educat 14.8%

Leisure & Ho 13.4% 70.1 Leisure10.6%

Other Service 3.8% 20 Other S4.2%

Government 16.2% 84.9 #N/A Govern16.3% #N/A

Financial ActivitiesProf. & Business ServicesEduc. & Health ServicesLeisure & HospitalityOther Services

Information Government

U.S.

100-400

0.2%

36-month change (2010 - Jun)

Louisiana

7003,400

The economy of Louisiana is weaker than the rest of the nation, but improved

modestly from last month

Construction

State Economic Activity Index

Manufacturing

12-month change (2010 - Jun)

Natural Resources and MiningNA

-300-1,400-900

Trade/Transportation/Utilities

2,700

-3.9%

1.0%

-800Natural Resources/Mining/Construction

12-month Employment Change by Industry in the New Orleans-Metairie-Kenner Area

100

0.4%

1,600

Natural Resources and Mining

1.5%Constructio

n5.8% Manufactur

ing6.5%

Trade/Transportation/

Utilities20.1%

Information1.3%Financial

Activities4.7%

Prof. & Business Services12.7%

Educ. & Health

Services13.9%

Leisure & Hospitality

13.4%

Other Services

3.8%

Government

16.2%

Natural Resources and Mining

0.6%

Construction

4.5% Manufacturing

9.0%

Trade/Transportation/Uti

lities19.1%

Information2.1%Financial

Activities5.9%

Professional & Business

Services12.9%

Educational & Health Services14.8%

Leisure & Hospitality

10.6%

Other Services

4.2%

Government

16.3%

36-month change (2010 - Jun) modestly from last month

Natural Resources and Mining

1.5%Constructio

n5.8% Manufactur

ing6.5%

Trade/Transportation/

Utilities20.1%

Information1.3%Financial

Activities4.7%

Prof. & Business Services12.7%

Educ. & Health

Services13.9%

Leisure & Hospitality

13.4%

Other Services

3.8%

Government

16.2%

Natural Resources and Mining

0.6%

Construction

4.5% Manufacturing

9.0%

Trade/Transportation/Uti

lities19.1%

Information2.1%Financial

Activities5.9%

Professional & Business

Services12.9%

Educational & Health Services14.8%

Leisure & Hospitality

10.6%

Other Services

4.2%

Government

16.3%

New Orleans

4,013

1,904

Reduced construction will limit new supply to the market, allowing demand

to catch up with current supply and foreclosures more quickly

-13.1%

not comparable

U.S.

not comparable

Construction

The current level of construction is 52.6% below the long-term average

8.3%

Local Fundamentals

12-month Sum of 1-unit Building Permits through Jun 2010

Single-Family Housing Permits (Jun 2010) 12-month sum vs. a year ago

Long-term average for 12-month Sum of 1-Unit Building Permits

Construction is down from last year, but appears to have bottomed.

3,000

4,000

5,000

6,000

7,000

Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Construction: 12-month Sum of Local Housing Permits (Historical Average Shown in Red Dashed Line)

Monthly Mortgage Payment to Income

More affordable than most markets12.2%Ratio for 2010 Q2

22.6%15.1%

Historical Average

New Orleans

9.5%Ratio for 2008 15.3%

U.S.Historically strong and an improvement

over the first quarter of 2010

Affordability

9.9%

0%

5%

10%

15%

20%

25%

30%

2009200720052003200119991997199519931991

Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, U.S. Average in Green)

U.S.

Ratio for 2010 Q21.5

Ratio for 2009

Historical Average1.5

g

Affordable compared to most markets2.4

Local affordability conditions have softened, but are better than the historic

average

Median Home Price to Income New Orleans

1.5

2.7

2.4

0%

5%

10%

15%

20%

25%

30%

2009200720052003200119991997199519931991

Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, U.S. Average in Green)

0%

2%

4%

6%

8%

10%

12%

14%

2010 Q22010 Q12009 Q42009 Q32009 Q22009 Q12008 Q42008 Q3

Recent Trend - Local Mortgage Servicing Cost to Income(Historical Average Shown in Red Dashed Line)

0%

5%

10%

15%

20%

25%

30%

2009200720052003200119991997199519931991

Long-Term Trend: Ratio of Local Mortgage Servicing Cost to Income (Local Historical Average Shown in Red, U.S. Average in Green)

0%

2%

4%

6%

8%

10%

12%

14%

2010 Q22010 Q12009 Q42009 Q32009 Q22009 Q12008 Q42008 Q3

Recent Trend - Local Mortgage Servicing Cost to Income(Historical Average Shown in Red Dashed Line)

The Mortgage Market

280 7.0%

30-year Fixed Mortgage Rate and Treasury Bond Yield

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2009200720052003200119991997199519931991

Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, U.S. Average in Green)

Long-term rates were on the rise early in the spring until a series of negative news events lead long-term Treasury rates downward in the second quarter. The debt crisis in Greece and fear of a European contagion started the tumble as nervous investors sought a shelter. Sharply lower post-tax credit home sales, weak consumer demand, the BP spill, and a drop in oil prices pressed the Treasury lower. The 30-year fixed rate mortgage (FRM) followed suit, slipping under 5.0% for the second time in history and nearly setting a new record. However, the 30-year FRM’s decline was not as strong as the Treasury’s and the spread between the two increased. One explanation for the expansion of the spread is that mortgage investors have less incentive to buy mortgage securities as rates go below 5.0%. Most mortgages issued in recent years have yields in the mid-5.0% range. Mortgage rates significantly below 5.0% could trigger a wave of refinancing, thereby cannibalizing the portfolio holdings of MBS investors. Despite mixed domestic economic news, the European situation appears largely contained and oil prices climbed in July and August, which will press up on Treasury rates in the long term. Mortgage rates are expected to rise this fall, but not as much as Treasuries in the short-term as MBS investors increase purchases to take advantage of higher mortgage yields causing the rate spread to shrink.

0

40

80

120

160

200

240

280

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2010 Q2Q42009 Q2Q42008 Q2Q42007 Q2Q42006 Q2Q42005 Q2

30-year Fixed Mortgage Rate and Treasury Bond Yield

Spread (left axis) 30-Year FRM (Right axis) 10-Year Treasury Bond (Right Axis)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2009200720052003200119991997199519931991

Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, U.S. Average in Green)

0

40

80

120

160

200

240

280

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2010 Q2Q42009 Q2Q42008 Q2Q42007 Q2Q42006 Q2Q42005 Q2

30-year Fixed Mortgage Rate and Treasury Bond Yield

Spread (left axis) 30-Year FRM (Right axis) 10-Year Treasury Bond (Right Axis)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2009200720052003200119991997199519931991

Ratio of Local Median Home Price to Local Average Income (Local Historical Average Shown in Red, U.S. Average in Green)

Foreclosures by Type

Looking Deeper….

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

State Total Foreclosure Rate vs. U.S Average(U.S. Average in Blue Dashed Line)

Source: Mortgage Bankers' Association

89.0% 2.6% 8.4% 88.9% 5.0% 6.1%

2.7% 2.8%

2.2% 2.6%

16.9% 17.2%

15.2% 18.0%

11.4% 14.6%

9.3% 14.8%

Source: First American CoreLogic, LoanPerformance data

Locally, today's foreclosure rate is low relative to the national average

There was a substantial increase versus October of last year

SUBPRIME: Foreclosure + REO

Rate

PRIME: Foreclosure + REO

Rate

The May rate for New Orleans is low compared to the national average

The New Orleans market has a lower share of subprime loans than the average market, but rising prime

foreclosures are becoming a problem

Delinquencies by TypeU.S.Monthly Market Data -

May 2010 New Orleans

o ec osu es by ype

Market Share: Prime (blue), Alt-A

(green), and Subprime (red)

The "foreclosure + REO rate" is the number of mortgages, by metro area, that are either in the foreclosure process or have completed the foreclosure process and are owned by banks divided by the total number of mortgages for that area.

ALT-A: Foreclosure + REO

Rate

A large local increase occurred compared to October of last year

Compared to the national average, today's local rate is low

There has been a large local increase versus six months earlier

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

State Total Foreclosure Rate vs. U.S Average(U.S. Average in Blue Dashed Line)

Source: Mortgage Bankers' Association

2.67%

2.17%

May-10Oct-09

2.83%2.58

%

May-10Oct-09

16.86%15.18

%

May-10Oct-09

11.37%9.33

%

May-10Oct-09

17.23%

18.01%

May-10Oct-09

14.61%

14.78%

May-10Oct-09

89.0%

2.6% 8.4%

88.9%

5.0%

6.1%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

State Total Foreclosure Rate vs. U.S Average(U.S. Average in Blue Dashed Line)

Source: Mortgage Bankers' Association

2.67%

2.17%

May-10Oct-09

2.83%2.58

%

May-10Oct-09

16.86%15.18

%

May-10Oct-09

11.37%9.33

%

May-10Oct-09

17.23%

18.01%

May-10Oct-09

14.61%

14.78%

May-10Oct-09

89.0%

2.6% 8.4%

88.9%

5.0%

6.1%

7.4% 7.3% 5.5% 7.3% 7.3% 5.5%

6.0% 5.8% 4.2% 6.3% 6.1% 4.4%

2.7% 2.2% 1.6% 2.8% 2.6% 2.1%

New Orleans U.S.

Prime: 60-day Delinquent

Prime: Foreclosure +

REO Rate

Prime: 90-day Delinquent

The increase in the 60 and 90-day delinquency rates over the most recent 6-month period will press up on local

prime foreclosure rate in the near future.

Prime Foreclosures and Delinquencies in ProcessMonthly Market Data -

May 2010

New Orleans's 90-day delinquency rate climbed faster than the national average

over the most recent 6-month period suggesting a bulge of foreclosures in

the future

The share of local 60-day delinquencies rose over the most recent 6 months

suggesting that the 90-day delinquency rate is likely to rise in the near future

7.38%

7.31%5.45

%

May-10Oct-09May-09

7.33%

7.30%5.46

%

May-10Oct-09May-09

6.31%

6.08%4.39

%

May-10Oct-09May-09

2.67%

2.17%

1.62%

May-10Oct-09May-09

2.83%

2.58%2.05

%

May-10Oct-09May-09

5.99%

5.76%4.22

%

May-10Oct-09May-09

Source: First American CoreLogic, LoanPerformance data

Jefferson Parish, Orleans Parish, Plaquemines Parish, St. Bernard Parish, St. Charles Parish, St. John the Baptist Pari, and St. Tammany Parish

More information on the OMB's geographic definitions can be found at http://www.whitehouse.gov/omb/inforeg_statpolicy/

The New Orleans area referred to in this report covers the geographic area of the New Orleans-Metairie-Kenner metro area as officially defined by the Office of Management and Budget of the U.S. Government. The official coverage area

includes the following counties:

Geographic Coverage

7.38%

7.31%5.45

%

May-10Oct-09May-09

7.33%

7.30%5.46

%

May-10Oct-09May-09

6.31%

6.08%4.39

%

May-10Oct-09May-09

2.67%

2.17%

1.62%

May-10Oct-09May-09

2.83%

2.58%2.05

%

May-10Oct-09May-09

5.99%

5.76%4.22

%

May-10Oct-09May-09