Magazine article American Banker

Chemical's Rosy Picture of Earnings Boosts Stock

Magazine article American Banker

Chemical's Rosy Picture of Earnings Boosts Stock

Article excerpt

Chemical Banking Corp.'s stock advanced in active trading Wednesday after the New York bank company said it would enjoy stronger than anticipated third-quarter results.

The announcement - which spurred other money-center banking stocks - offered a preview of the upcoming earnings season that may be rosier than analysts expected.

Chemical was up 25 cents a share, to $45.375, in late trading, and its stock ranked among the most actively traded issues on the New York Stock Exchange.

Citicorp, Chase Ahead

Meanwhile, Citicorp was ahead 37.5 cents, to $38.875 a share, and Chase Manhattan Corp. appreciated 25 cents, to $37.625.

John F. McGillicuddy, Chemical's chairman and chief executive officer, said results would top $1.37 per share. That is 20% more than Wall Street had expected, according to the $1.15 consensus estimate compiled by First Call Corp.

It is also 40% above the 98 cents Chemical earned in the same quarter a year ago and would stand as a record result for the company, which combined with Manufacturers Hanover Corp. in late 1991 to form the nation's third-largest bank.

After Mr. McGillicuddy's announcement, analyst Ronald I. Mandle of Sanford C. Bernstein & Co. raised his third-quarter estimate to $1.40, from $1.20, and reiterated the firm's "outperform" rating on Chemical's stock.

Mr. Mandle said he expects Chemical's loan-loss provision to fall to $300 million, from the second quarter's $308 million. His third-quarter estimate excludes an additional $55 million associated with disposition of $162 million of nonperforming residential mortgages.

Mr. Mandle said he expects the loan-loss provision to fall again in the fourth quarter.

Analysts had anticipated that money-center banks would do well this quarter in light of the lucrative environment for trading this summer. …

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