Magazine article American Banker

Analysts Raise Forecast of Mellon's '91 Earnings

Magazine article American Banker

Analysts Raise Forecast of Mellon's '91 Earnings

Article excerpt

Analysts Raise Forecast Of Mellon's '91 Earnings

Mellon Bank Corp.'s better than expected earnings in the second quarter have stirred banking analysts to hike earnings expectations for 1991.

"In our view, while credit concerns remain cause for caution, the earnings picture has brightened considerably," said Salomon Brothers bank analyst Thomas H. Hanley.

This enthusiasm augurs well for the bank's growth strategy, which earnings will help support. Mellon has emerged as the prime contender to acquire the largest thrift institution in the nation's capital, Perpetual Savings Bank, which is in the hands of regulators.

Saying their "confidence has increased," analysts at Salomon Brothers last week raised their 1991 forecast to $4.30 a share from $3.75 and their 1992 expectations to $4.50 from $4.10.

Rallying Call for Market

Partly on the strength of such endorsements, Mellon's shares have gained in the past few days. They were ahead $1.25 to $32.75 in Monday afternoon trading, among the day's best performers in the bank group.

Second-quarter net earnings were $1.20 a share, off 57% from last year, when special items were involved. The good news was that net interest income rose 14% while noninterest income gained 10.3%.

Good news has been a long time coming for the venerable Pittsburgh banking company.

Before suffering a huge loss in first-quarter 1987, Mellon had not reported a deficit in 188 years of operation. It has since undergone an innovative recapitalization under the aegis of aggressive new management. …

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