Mergers Seen Fueling Surges in Some Banks' Stock Prices
Padgett, Tania, American Banker
New merger activity may have cooled off this year, but mergers appear to have been a factor in the big boost some bank stocks got this week.
Many analysts have attributed the stock rally early this week to favorable economic news, but eight of the 10 biggest gainers among banks Monday and Tuesday had merger news to report.
"The initial reaction to an acquisition is one of great questioning, until an investor reaches a comfort level," said Frank J. Barkocy of Josephthal, Lyon & Ross Inc. "In these situations, investors' mindset became positive as these acquisitions were completed and neared completion."
Among the 225 largest banks in market capitalization, Texas Regional Bancshares was the biggest gainer Monday and Tuesday. It rose on the strength of a recent stock issue, as well as anticipation of its buyouts of First State Bank and Trust and Border Bank, which closed Wednesday morning. It gained another 50 cents Wednesday, to close at $24.75.
Other banks that saw substantial rises Monday and Tuesday included Bank of Boston Corp., up 4.1% as its acquisition of BayBanks Inc. draws near; Fleet Financial Group, up 3.8% after the smooth completion of its purchase of National Westminster Bancorp. Shares of CoreStates Financial, which acquired Meridian Bancorp this year, were up 3.5%
In trading Wednesday, shares of Fleet Financial, which also completed its Shawmut National Corp. acquisition on May 1, closed at $44.625, up 62.5 cents. CoreStates shares closed at $40.75, up 12.5 cents.
City National Corp., Beverly Hills, Calif., which completed an acquisition and is considered a likely takeover candidate, also saw its stock climb in heavy trading. Shares in the "bank of the stars" rose 5% Monday and Tuesday. On Wednesday, however, the stock closed at $15.50, down 12.5 cents.
BayBanks saw its shares rise 3.5% Monday and Tuesday. …