Magazine article American Banker

National City Takes a Hit after Integra Announcement

Magazine article American Banker

National City Takes a Hit after Integra Announcement

Article excerpt

National City Corp.'s proposed acquisition of Integra Financial Corp. is one deal that hasn't received a ringing endorsement from investors.

Shares in the Cleveland-based buyer fell by $1.125, or 4%, on Monday, even as the American Banker index of the nation's 225 largest publicly traded banks was rising 2.3%. Shares fell an additional 62.5 cents on Tuesday to $29.875.

Wall Street banking analysts blamed the weakness on investor doubts that

National City's buying Integra would add much to earnings, together with disappointment that the Ohio bank is not itself being sold.

"We don't see much upside potential right now," said Fred A. Cummings of

McDonald & Company Securities, Cleveland, who cut his investment rating on

the stock to "hold" from "buy" after the $2.1 billion deal for the Pittsburgh bank was unveiled Monday.

Frank J. Barkocy of Advest Inc. noted that "some in the market had expected National City to be bought with $35 billion in assets. With $50 billion in assets after this deal, (a sale) is going to be much less likely."

Mr. Cummings said he liked the Integra deal strategically. "It's a logical move for National City," he said. "The problem is that in 1997, even after cost savings, you aren't looking at a significant level of earnings accretion."

Indeed, he said, the real payday for this deal may be three or four years away. That is beyond the investment horizon of many potential shareholders.

"There is some question in the market that the price paid for Integra might be on the high side," said Mr. …

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