Magazine article American Banker

Firstar Enjoys Higher Profile as Alex. Brown Begins Coverage

Magazine article American Banker

Firstar Enjoys Higher Profile as Alex. Brown Begins Coverage

Article excerpt

Firstar Corp. received increased attention from Wall Street on Monday when Alex. Brown & Sons Inc. initiated coverage of the Milwaukee banking company's shares with a "neutral" rating.

Mark Alpert, a banking analyst, lauded Firstar's "hefty profitability and powerful balance sheet." But he said its stock is more expensive than others right now on price-to-book basis.

It was the second kudos in a week for Firstar from the investment community. Earlier, analyst Michael A. Plodwick of C.J. Lawrence/Deutsche Bank Securities Corp. reiterated a "buy" rating, saying he believed a rally in the shares is imminent.

In late-afternoon trading, Firstar shares were unchanged at $31.25.

Prospects for Growth

At a time when revenue prospects for banks are under suspicion by skeptical investors, Mr. Alpert said Firstar enjoys strong growth on both the lending and nonlending sides of its operations.

Its loan portfolio is growing because of the "relative health of Firstar's Upper Midwest service territory and the company's excellent penetration of its marketplace," he said.

He anticipates that average loans outstanding for Firstar will increase by 9% this year and about the same next year. In comparison, industrywide lending growth at banks this year is likely to be a meager 2%.

Besides loans, "strong fee income is an important weapon in the company's profit arsenal," the analyst said. "Firstar is very strong for its size in trust activities, and the bank also produces plenty of noninterest income in other parts of its business."

Fee Income Rising

Mr. …

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