Magazine article American Banker

Riggs National Gives Investors Reason to Cheer

Magazine article American Banker

Riggs National Gives Investors Reason to Cheer

Article excerpt

Investors have paid grudging tribute during the past week to the surprising improvements at Riggs National Corp. since its fall from favor more than a year ago amid the collapse of the mid-Atlantic real estate market.

In a burst of trading four times its typical share volume, the stock has rebounded from a 52-week low of $3.75 to as high as $5.75 intraday last week.

That's a windfall of more than 50% for investors smart enough to buy at the bottom, but a far cry from the $13 Riggs common commanded early last year.

Last week, Riggs reported fourth-quarter net income of 15 cents a share, or $2.1 million, an impressive comeback from its fourth-quarter 1990 loss of $4.62 a share, or $63.7 million.

Progress on Bad Assets

More eye-catching was the bank's announcement that it had sold $55 million of troubled real estate and managed to halt the growth of nonperforming assets.

While the stock market flurry was doubtless inspired by the bottom-fishing instincts of keen-eyed institutions, the earnings and balance sheet improvements at the $5.5 billion-asset banking company are real enough. The optimism about its results seemed to spill over to other Middle Atlantic banks with similar problems, says John B. Works, of Keefe, Bruyette & Woods, who one of the few bank analysts following Riggs.

Although they have not yet reported earnings, MidLantic Corp. and MNC Financial also scored big percentage gains in price from depressed levels in the wake of Riggs' announcement. …

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