Magazine article American Banker

Plea on Guidance Seeks Emphasis on Longer Term

Magazine article American Banker

Plea on Guidance Seeks Emphasis on Longer Term

Article excerpt

A corporate governance appeal from the Aspen Institute is not expected to pose much of a challenge for the banking industry.

On Monday the Washington advocacy group encouraged companies to "de-emphasize short-term financial metrics," such as guidance on earnings per share, in favor of increasing discussion of long-term strategies. The suggestion was a priority in a wide-ranging list of objectives put forth by the group, which bills itself as a coalition of business executives, institutional investors, union leaders, lawyers, and accountants.

However, a relatively small number of banking companies still offer estimates of earnings per share, and the industry has generally been moving away from them. Some observers claim the difficulty of setting and meeting expectations in a volatile environment is as responsible for this trend as a growing interest in cultivating strategic-thinking shareholders.

"The migration has become more pronounced in the last year or so" as fundamentals have come under pressure, said Frank Barkocy, the director of research at Keefe Managers Inc. "That type of information is becoming few and far between, ... particularly in an environment where things can change so quickly."

The few financial companies that still give earnings estimates include Capital One Financial Corp. of McLean, Va.; Synovus Financial Corp. of Columbus, Ga.; KeyCorp of Cleveland; and Huntington Bancshares Inc. of Columbus, Ohio. Rather than providing numbers for each quarter, these companies supply investors with annual ranges that they update quarterly.

Providing specific guidance is "a best practice," Jay Gould, Huntington's head of investor relations, said in an interview. "We believe in being totally transparent, and we think it's important for our investors to have a feeling of what we think we're capable of doing in any given environment."

Mr. …

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