Magazine article American Banker

Gains at Union Planters Fail to Sway Wall Street

Magazine article American Banker

Gains at Union Planters Fail to Sway Wall Street

Article excerpt

Union Planters Corp. is reaping the benefits of a two-year restructuring that cut costs and boosted revenues, but analysts are questioning whether the Memphis company can continue to build its earnings now that the restructuring is done.

Since early 2000 the $33 billion-asset regional banking company has closed 120 branches, or about 15% of its branch network; consolidated key systems and operations; and eliminated more than 1,000 jobs through an efficiency campaign called UPExcel.

During an investor presentation Tuesday in Memphis, Jackson W. Moore, the company's chairman, chief executive, and president, said that the campaign will add about $125 million a year to after-tax profits once its full effects are felt in mid-2003. "It has been a very significant driver of our financial results."

Investors have responded by pushing Union Planters' stock price up 30% since Jan. 1, 2000 -- an increase adjusted for splits. During that period the Standard & Poor's 500 and other major stock indexes have declined.

"We think that the impact of what we've done is being seen in the market, and we think the impact of what we've done is reflected in (our financial) numbers," Mr. Moore said during the conference, sponsored by Morgan Keegan & Co., a Memphis brokerage unit of Regions Financial Corp.

However, analysts do not share his optimism. Instead, some are wondering how the company will be able to keep growing without a major improvement in the economy.

In particular, they have doubts about Union Planters' decision to report a gain in the value of mortgage-servicing rights while most banks were taking losses. …

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