Magazine article American Banker

Regionals Lag Behind, but Analysts Confident It's Only 'A Correction.'(bank stocks)(Column)(Brief Article)

Magazine article American Banker

Regionals Lag Behind, but Analysts Confident It's Only 'A Correction.'(bank stocks)(Column)(Brief Article)

Article excerpt

Stocks at large banks trailed the overall market Tuesday during a sluggish day of trading, but analysts weren't worried.

Elizabeth Summers, bank analyst at Ryan, Beck & Co. said recent trading trends indicate "a correction of regional banks in a bull market."

The Standard & Poor's bank index fell 0.34%, while the S&P 500 fell 0.29%, and the Dow Jones industrial average rose 0.14%.

Ms. Summers and other analysts are optimistic bank stocks will recover early next year. "I'm comfortable because I know where the earnings are going to come from, where the revenue growth will be," she said.

She added that some of her favorite banks, such as First Union Corp., PNC Bank Corp., and Fleet Financial Group have recovered the 5% to 8% drops they experienced in last week's selloff.

Anthony Davis, bank analyst at Dean Witter Reynolds, said preliminary indications show loan growth is up slightly at banks. He predicted solid earnings in the fourth quarter, with less of the financial engineering he says some used to bolster third-quarter results.

Despite the current malaise, investors continue to reward banks that initiate or expand stock buyback programs. Shares at Star Banc Corp. rose $2.50, to $91. The Cincinnati bank announced a three-for-one stock split and an expansion of its stock buyback program to 10% from 7%.

Shares of Summit Bancorp rose 12.5 cents, to $43.875, after receiving an upgrade to "buy" from "market perform" by Oppenheimer & Co. …

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