Magazine article American Banker

Republic's Shares Weaken as Lesser Banks Advance

Magazine article American Banker

Republic's Shares Weaken as Lesser Banks Advance

Article excerpt

A victim of its own stature as a high-quality banking company, Republic New York Corp. has watched its share price sink this year, while so-called recovery plays lead the rally in bank stocks.

"It's totally mispriced relative to the [bank] group because everyone wants to play the junk," said Christoph Kotowski, a banking analyst at Oppenheimer & Co.

Republic, of course, isn't the only one with this problem. Blue-chip banks like J.P. Morgan & Co. have also seen their share prices slide this year.

'Flight from Quality'

"We've termed it a flight from quality," said David Berry of Keefe, Bruyette & Woods Inc.

But unlike Morgan, Republic does not have a big following among Wall Street analysts, making it harder for the company to gain the attention of investors.

So far this year, Republic has lost about 11% of its market value, falling from $46.875 a share at the close of trading on Dec. 31 to $41.875 a share on Friday.

"I think Republic is a great buy at this level," said Mr. Kotowski, a longtime bull on the stock.

In contrast, the American Banker index of the top 225 publicly traded banks has risen 8.21% so far this year.

Low-Price Stocks Jump

The most spectacular gains have been posted by stocks of such troubled banks as First City Bancorporation of Texas, up about 144%, and Constellation Bancorp of New Jersey, which has soared about 219%.

Meanwhile, Citicorp, the nation's biggest bank holding company, is up an eye-popping 65%, and Bank of Boston has risen 69%. …

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