Magazine article American Banker

Bank Stock Seen Holding Up

Magazine article American Banker

Bank Stock Seen Holding Up

Article excerpt

Regional bank stock prices should remain consistent in the wake of last week's terrorist attacks, but banks will see slower earnings growth, and credit quality will continue to deteriorate, analysts said.

"I see banks performing at least as well as the broader market," said Fred Cummings, an analyst at McDonald Investments in Cleveland. "I think they can sustain growth."

Before the attacks that shut down Wall Street for the better part of a week, analysts had estimated that banks' average earnings per share would grow 10% to 12% next year. Now, Mr. Cummings and his colleagues have reduced their estimates to 8% to 10%, he said.

Bank stocks rebounded somewhat Tuesday. In late afternoon trading, the S&P Bank index was up 1.1%, and the Dow Jones Industrial Average 0.3%, but the Nasdaq was down 0.7% and the S&P 500 about 0.2%.

Among the big financial companies, American Express Co. was down again, falling nearly 10%, to $27.25, and J.P. Morgan Chase & Co. was off about 1%, to $34.90, Citigroup Inc. was off just a bit, holding near its opening level of $39.60 through much of the session. Wells Fargo & Co. was up 0.4%, at $43.67.

Thrifts continued to outperform both their banking peers and the broad market. In late afternoon activity, Washington Mutual Inc. was up more than 3%, to $38.24, extending its Monday gains, and Astoria Financial Corp was up 1.5%, to $58.90, also adding to its advance on Monday.

Analysts agreed that the Federal Reserve's decision to cut interest rates by half a percentage point was good for bank stocks. …

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