Magazine article American Banker

Interest Margin Jitters Hit Compass of Ala.'s Shares

Magazine article American Banker

Interest Margin Jitters Hit Compass of Ala.'s Shares

Article excerpt

Shares of Compass Bancshares of Birmingham, Ala., fell despite a rising market Tuesday as investors dumped shares because of concerns about margin compression.

Investors became jittery after Marni Pont O'Doherty, an analyst at Keefe, Bruyette & Woods Inc., said in a note to clients said that she expects Compass' margins to compress by five basis points in the first quarter and perhaps another five basis points over the course of the year.

She cut her first-quarter operating profit estimate to the consensus of 49 cents a share and her recommendation to "market performer" from "buy."

At one point during the day Compass' shares were down more than 3%. The stock closed down 62.5 cents, or 0.33%, at $18.625.

Ms. Pont O'Doherty also reduced her full-year estimates by a nickel, to $2.05 for 2000 and to $2.25 for 2001.

Concerns about the revenue outlook and the uncertainty about a bad loan "will keep a lid on the stock, which is now trading at a slight premium to its Alabama-based peers."

Ms. Pont O'Doherty also pointed out that a $15 million retailing credit -- believed to be Just For Feet, a Birmingham seller of apparel and footwear -- became a nonperforming asset in the fourth quarter. She said a chargeoff of this credit remains a possibility but probably not in the first quarter.

The analyst said she expects the company's net interest income and fee income to decline in the first quarter.

Ms. Pont O'Doherty said Compass is offsetting the revenue pinch by cutting expenses. …

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