Magazine article American Banker

Large, Healthy Banks Show Some Big Gains

Magazine article American Banker

Large, Healthy Banks Show Some Big Gains

Article excerpt

Large, Healthy Banks Show Some Big Gains

Bank stocks kept pace with the rally in the overall stock market Monday.

The American Banker Index of 225 bank stocks rose 1.22%, just a bit below the 1.26% daily gain for the Dow Jones industrial average.

However, analysts said investors remainnervous that lackluster loan demand in a weak economy could short-circuit the improvement in bank profitability.

Profit-taking and sector rotation by institutional investors eager to preserve the big gains they have garnered in the year-long bank stock rally are also causes for concern.

"I think the seed has been planted, in the form of mixed signals on the economy, that loan demand is the big unsettled factor in an otherwise decent earnings period for banks," said Frank J. Barkocy, a bank analyst at Advest Inc.

Merger-Potential Factor

Among the advancing stocks, National City Corp., Cleveland, was ahead 87.5 cents to $44.375; BankAmerica Corp. was up $1.125 to $46.75; and Chemical Banking Corp. was up $1.50 to $37.25.

Analysts said the big gainers were banks likely to benefit from mergers or lower loan-loss provisions. National City last weekend completed the acquisition of Merchants National Corp., Indianapolis; BankAmerica recently bought Security Pacific Corp.; and Chemical is still riding the wave of its merger with Manufacturers Hanover Corp.

The big gain at J.P. Morgan & Co., up $1.875 to $56.625, was attributed to its membership in the Dow Jones Industrial Average. …

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