Magazine article American Banker

Mellon: Market 'Doesn't Compute' Our Money-Managing Strength

Magazine article American Banker

Mellon: Market 'Doesn't Compute' Our Money-Managing Strength

Article excerpt

Investors have yet to fully reward Mellon Bank Corp. for its asset management business, according to vice chairman Christopher Condron.

Mr. Condron told the Bank and Financial Analysts Association's annual symposium in New York that Mellon's shares have lagged behind those of other asset managers, despite the company's $130 billion of assets under management for institutional retirement plans, wealthy individuals, and other investors.

"We're the third- or fourth-largest asset manager in the country, but we're selling at a bank multiple, which just doesn't compute," Mr. Condron said during a panel discussion Wednesday afternoon.

By Mr. Condron's reasoning, Mellon's stock should trade for close to the 20-times earnings that shares of the most highly regarded asset managers command. Instead, the Pittsburgh banking company's shares trade at less than 14 times projected 1997 earnings.

Analysts acknowledged that asset managers generally commands higher multiples than banks but added that that doesn't mean Mellon's share price should match the industry leaders'.

"I understand where he's coming from," said Dennis Laplante, an analyst at Fox-Pitt Kelton, "but asset management doesn't represent the same proportion of Mellon's earnings as it does in some of the purer players."

Mr. Laplante said Mellon should trade at 13.9 times estimated earnings of $5.65 per share in 1997, or $78.535. Its shares were at $77.875 Thursday. The banking industry trades at about 13. …

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