Magazine article American Banker

Merger-Watching Investors Keep Bank Stocks on a Roll

Magazine article American Banker

Merger-Watching Investors Keep Bank Stocks on a Roll

Article excerpt

Stocks of midsize banks maintained their momentum Tuesday as investors bought shares on merger anticipation for the second straight day.

Fifth Third Bancorp stock rose $1.25 in the bustle, to $87.50. KeyCorp was up $2.5625, to $42.9375, and SunTrust Banks Inc. $2.4375, to $79.1875.

The action followed Monday's announcements of blockbuster merger agreements between BankAmerica Corp. and NationsBank Corp. and between Banc One Corp. and First Chicago NBD Corp.

Unlike the pattern after last week's Citicorp-Travelers Group announcement-bank stocks soared and then fell back the next day-on Tuesday many held and even added to Monday's gains.

This time "we're looking at bank-to-bank deals, and investors seem to be continuing to focus on the midsize franchises," said Joseph Duwan, analyst at Keefe, Bruyette & Woods Inc.

The market is also being buoyed by first-quarter earnings announcements that are dispelling earlier concerns by indicating many banks performed in line with, if not better than, analysts' expectations.

One exception was J.P. Morgan & Co., which dipped dipped 31.25 cents, to $147.3125, after disclosing first-quarter results that included a $215 million charge for job cuts and writeoffs.

The dip in Morgan shares-which are part of the Dow Jones industrial average-did not prevent the index from moving forward. For the day, the Dow was up 1.09%, and the Standard & Poor's bank index rose 0.17%. The Nasdaq bank index was up 0.48%, and the S&P 500 gained 0.55%.

Banking companies with market capitalizations between $10 billion and $25 billion appear most appealing, according to Tuesday's stock activity. …

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