Magazine article American Banker

Amsouth Shares Get Analyst's 'Buy' Sign as Dealmaking Pays Off

Magazine article American Banker

Amsouth Shares Get Analyst's 'Buy' Sign as Dealmaking Pays Off

Article excerpt

Amsouth Bancorp. shares were upgraded to "buy" Friday by Interstate Johnson Lane analyst John J. Mason, who said acquisitions were beginning to pay off for the Birmingham, Ala., bank and that the stock was relatively cheap.

Its shares rose 37.5 cents, to $52.25, as pessimism about interest rates continued to choke investment in the banking sector. While the Dow Jones industrial average recouped about 56 points of the 161 it had lost Thursday, a 0.82% gain, the S&P bank index was up less than 0.01%, to 514.44.

Mr. Mason said Amsouth's $1.625 price decline, to $51.875 on Thursday- when the S&P bank index plummeted 3.5%-was only a minor factor in his decision to upgrade the shares.

"If the market goes up 150 points, we'll take a bow. But if it goes down, we'll still like this stock," the Atlanta-based analyst said.

Mr. Mason said Amsouth's performance prospects are helped by a low tax environment in the Southeast, yet its stock trades at about 11.8 times projected earnings, a significant discount to the average bank. The stock has been hurt by poor initial returns from some thrift acquisitions, starting three years ago in Florida, he said. But now those businesses have been converted into "more banklike operations" that will contribute 12% to 13% to annual earnings growth for Amsouth, he said.

Mr. Mason is bullish on the sector, especially southern banks, even though he says the Fed may ratchet interest rates slightly higher this year. …

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