Magazine article American Banker

2Q Previews Are Mixed for Midcap Bank Profits

Magazine article American Banker

2Q Previews Are Mixed for Midcap Bank Profits

Article excerpt

Equity analysts previewing second-quarter earnings are giving midcap banks mixed reviews.

While, year-to-date, the sector is the best performing among the nine financial services sectors covered by Lehman Brothers, individual companies have had some very different results, according to Brock Vandervliet, a Lehman analyst.

With less exposure to the capital markets and private equity markets and less emphasis on syndicated lending than their larger peers, second-quarter results should be reasonably good from this sector, Mr. Vandervliet wrote in a research report released Thursday.

"Like last quarter, we expect the majority of banks to meet or exceed expectations," he wrote.

He listed City National Corp., North Fork Bancorp., and TCF Financial Corp. as companies to keep an eye on, calling them "three franchises where we would put new money ahead of earnings." North Fork and TCF Financial should experience healthy revenue growth and benefit from de novo expansion and continued deposit growth, Mr. Vandervliet wrote.

Prudential Securities analyst David Trone said that City National's "likelihood to be on the upside is a surprise."

Its credit quality was "better than people expected and margin pressure should be mitigated by some good financial engineering," he said. "Now there's a chance that City National will see a 10% earnings per share growth this year."

Not faring as well are Regions Financial Corp., AmSouth Bancorp., and Wilmington Trust Corp., according to Mr. …

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