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Biz Links Current Issue Q3-02 Index Q2-02 Index Q1-02 Index Q4-01 Index Q3-01 Index Q2-01 Index Q1-01 Index Prior Financial Services Updates May 2005 April 2005 March 2005 Feb 2005 Jan 2005 Dec 2004 Nov 2004 Oct 2004 Sept 2004 August 2004 July 2004 June 2004 May 2004 Feb 2004 Jan 2004 Dec 2003 Nov 2003 Oct 2003 |
NOTE: Please confirm through your own research any numbers on which you are to make a buy, sell or hold decision. The page is ment to be a supliment for those already getting monthly sector updates from their broker. It is the goal of this page to provide more timely data - and perhaps cover a wider array of stocks and different valuation metrics. Data entry errors sporadically happen. Monthly Sector Summary During June, large-cap banks fell to a loss of 5.96% from May's loss of 5.59% and yields rose 1 basis point to 3.58% from May's 3.57%. The ten year treasury ended the month at 3.92% [vs 4.00% on 5-31 - a fall of 8 basis points]. During a flat May [where the monthly price changes were up 0.63%], the year-to-date sector price performance rose to a loss of 5.59% from April's year-to-date loss of 6.13%. 05 EPS growth estimates ended April with a fall of to -2.69% vs April's fall of -2.27% - primarily cuase by downward expectations for Citigroup. Sector average yields fell 2 basis points to 3.57% from April's 3.59%. The ten year treasury ended the month yielding 4.00% [vs 4.20% on 4-29 - a fall of 20 basis points]. During April, the year-to-date sector price performance rose to a loss of 6.13% from March's loss of 7.30%. 05 EPS growth estimates ended April with a fall of to 2.27% vs March's fall of 2.39%. Yields fell 2 basis points to 3.59% from March's 3.61%. The ten year treasury ended the month at 4.20% [vs 4.50% on 3-31 - a fall of 30 basis points] after reaching a low of 4.17%. Over the last two months, this sector has gone from a March ending spread to the ten year treasury of an 89 basis point premium to the May ending spread of 43 basis point premium. ATM Fees Keep Moving Higher Jane Kim, WSJ 6-23 Despite efforts by a few banks to cut ATM fees, the average cost of using an automated teller machine is on the rise nationwide. Not only are banks charging their own customers more if they use another bank's ATMs, but they're also charging higher fees for other banks' customers who use their machines. This spring, the average fee a bank charges a customer for using another bank's ATM hit a record $1.35, up from $1.29 last fall, according to Bankrate.com's Checking Account Pricing Study. Meanwhile, the average costs that ATM owners are charging noncustomers who use their machines -- also known as "surcharges" or "foreign ATM fees" -- rose to $1.40 from $1.37. The study, which was released last month, looked at the 10 largest banks in each of the top 35 metropolitan markets. Indeed, Americans are expected to shell out nearly $4 billion this year for making withdrawals at the "wrong" bank's ATMs, up from an estimated $2.49 billion in 1998, according to Bankrate.com. One reason ATM fees are increasing is that more customers are using credit and debit cards more than cash, says Tony Hayes, managing director at Dove Consulting Group. That means fewer trips to the ATM and less fee revenue for banks. So banks are making up for that loss of revenue. The higher ATM fees are coming at a time when more banks are turning to fee income -- which can include ATM fees, bounced-check fees, and other charges that customers may be hit with if they fail to maintain minimum balances in their checking accounts. Fee income is a steady revenue source that isn't tied to fluctuations in the interest rates. Banks also are relying on fee income because their profit margin -- the so-called spread that they can earn between the rate at which they borrow and the yield at which they invest -- is continuing to narrow because short-term rates are rising faster than long-term rates. The most common fee for using an ATM is $1.50, but a growing number of banks are charging $2. The study by Bankrate.com, a unit of Bankrate Inc., said 64 institutions charged a $2 fee, up from 53 institutions last fall. There are a few big banks that have taken the opposite tack with ATM fees in an effort to lure customers and retain old ones. Last year, Citibank customers gained free access to ATMs. Bank of New York rolled out a checking account that waives its fees for customers using a competitor's ATM. Some banks see the no-fee ATMs as a way to attract customers as they enter new markets. Wachovia dropped ATM fees for customers using other bank's ATMs in some new markets, such as Texas and New York, which it entered in recent years. Earlier this year, Commerce Bank said it will refund ATM fees charged by other banks for customers who maintain a minimum daily balance of $2,500 in their checking account. The bank plans to waive that minimum balance requirement for the first year on new accounts in Washington, D.C., and northern Virginia -- where it will open locations this week. PNC Financial Services rolled out no-fee ATMs this year in the Washington, D.C., area, while Citizens Financial Group's Charter One Bank lowered surcharges to $1.75 from $2.25 in Ohio, Michigan, Illinois and Indiana to make its ATMs more competitive with other banks' ATMs. Banks Feel Pressure as Long-Term Rates Sink Jonathan Stempel, XXX 6-XX U.S. banks and their shareholders may suffer from the failure of long-term interest rates to do the expected -- rise. The Federal Reserve's decision last June to start raising short-term interest rates was expected to carry long-term rates higher. This could have helped banks, which can profit from a big gap between what they pay to borrow money [usually at short term rates] and what they get back in payments from loan customers [usually on longer term rates]. Yet despite eight increases in the Fed's overnight lending rate to 3% from 1%, long-term rates have sunk. The 10-year Treasury note yield briefly hit a 14-month low on Friday and has fallen below 4% from 4.74% a year ago. The result is a narrowing gap between long and short rates, which analysts call a flattening yield curve. Bank stocks have already been under pressure. Through Thursday, the Philadelphia KBW Bank Index has fallen 4.6% this year, while the S&P500 was down just 0.6%. "The environment today is tougher than it has been in any time over the last three years," Wachovia CEO Ken Thompson said on Wednesday. "We've got a flattening yield curve, we have some bond market turbulence, and competition." Merrill Lynch analyst Edward Najarian said further flattening will hurt regional banks' lending margins, crimping revenue growth. This is especially true for banks "generating significant revenue from the spread between the yield on their investment securities and the cost of their nondeposit borrowing (i.e. the 'carry trade')," he wrote. Big, money center banks might also feel that pain. J.P. Morgan Chase President Jamie Dimon this week said the No. 3 bank's quarterly trading results could prove worse than last year's third quarter, which he once described as "terrible." And Citigroup CEO Charles Prince called the capital markets environment, including trading, "in some ways, the most difficult in recent years. We're seeing the impact ... in our quarter-to-date (investment banking) financial results." Merrill's Najarian said banks, such as Cleveland's National City Corp. (NCC) and North Fork Bancorp. (NFB) of Melville, New York, might benefit if falling long-term rates herald more home purchases and refinancings. But several banks have said the long decline in bad loans is about over. Increased lending and a rising prime rate might lead to more consumer defaults. "I think we'll be fine through this year. If that flat yield curve persists for another 12 to 24 months, we're going to be hurt, but so is everybody else" Wachovia's Thompson said. Analysts divided on $3B BoA China Investment Paul Nowell, AP Business 6-18 Bank of America's $3 billion purchase of a stake in the China Construction Bank drew a mixed reaction Friday as a bold step into a growing market but one that could also be a risky venture that could lead to big losses. In announcing the move Thursday, Ken Lewis, head of the nation's third-largest bank, depicted it as a logical response to the direction of the global economy. "It makes sense, if you are looking to tap into economic growth, to consider an investment in China," said Lewis, chairman of Charlotte-based Bank of America. Under its agreement with state-owned China Construction, Bank of America will spend $3 billion for a 9 percent stake of the bank -- the largest single purchase of stock in a Chinese bank by any foreign bank. However, one industry analyst raised concern about the Chinese bank's "questionable record" and noted that other American banks have declined to make similar investments. "Clearly, the world has changed, China has changed, and the China Construction Bank has changed," analyst Richard Bove of Punk, Ziegel & Co. wrote to clients Friday. "Therefore, this may prove to be a brilliant investment. On the other hand it could also prove to be a source of more foreign-based losses for Bank of America." In an interview, Bove noted that the move is a departure from the domestic-only strategy the bank has followed since predecessor NationsBank took huge losses in Brazil and Argentina in the late 1980s. "(Former head) Hugh McColl was absolutely opposed to foreign investment after he was bit hard by the Latin American crisis," Bove said. "So the fact that Bank of America is looking at foreign investments is quite a shock." Other banks have made similar investments with an eye toward China's anticipated growth. HSBC Holdings PLC, Citigroup Inc. and the International Finance Corp. -- the lending arm of the World Bank -- have pursued partnerships aimed at tapping into the potentially lucrative Chinese market. "This investment is aimed at creating a long-term benefit by partnering with the best positioned bank in China, which is one of the fastest growing economies in the world with 1.3 billion consumers," Lewis said. Bank of America also said it has the option of boosting its stake in China Construction to 19.9 percent between now and 2011. Tony Plath, a finance professor at the University of North Carolina-Charlotte, called Bank of America's move risky but necessary: "It seems to me to be a risk, but it's a bigger risk to not be there." Plath distinguished this investment -- a joint venture with an established bank -- from NationsBank's failed Latin American ventures in the late 1980s. "The current thinking is to do it as a joint venture so your partner is connected to the local community," he said. "And they also have some skin in the game." In a research note Friday, Prudential Equity Group analyst Michael Mayo said the investment fits Bank of America's growth plans. "Strategically, BofA has been looking to increase its non-U.S. presence, reflecting the need to service large multinational clients in all regions," he wrote. Mayo said a 19.9 percent stake would represent 5 percent of Bank of America's pretax earnings. "In other words, the partnership helps cushion the financial risk," he wrote. "Also, management has shown a preference to date for international partnerships rather than outright acquisitions -- it has a 25 percent stake in Santander Serfin," which is Mexico's No. 3 bank. Lewis likened the China deal to the bank's Mexican investment. "This investment is structured in a very similar way to our highly successful investment in Banco Santander Serfin in Mexico and should create similar benefits," he said. "We have said that we liked the Serfin investment and would be interested in entering into another such transaction." With the domestic banking market largely stagnant, Bove expects Bank of America to quickly increase its China Construction stake to the maximum 19.9 percent. But he questioned Bank of America's move, which comes as rival Citigroup Inc. trims its international partnerships. "(Citigroup) has made the decision that it does not have the ability to make (partnerships) as profitable as it would like because it does not have control," he wrote. "Bank of America apparently believes Citigroup's new policy is incorrect and, therefore, is pursuing a limited number of minority investments overseas." Expect other big banks to follow Bank of America's lead, Bove said: "The other big banks like Wachovia will have to do this if they want to support their clients the same way Bank of America plans to." Under the agreement, Bank of America would provide expertise in risk management, credit cards and consumer banking, Lewis said. Risk management is an especially urgent issue for mainland Chinese banks. Many state-owned companies have defaulted on loans, saddling lenders with massive bad debts that are gradually being sold off as the banks restructure. All the major lenders have been ordered to beef up controls against fraud and other abuses after being caught up in corruption scandals that resulted in huge losses. A Bank-Merger Survivor's Mission Sasha Talcott, Boston Globe 6-05 More than a year after Bank of America Corp.'s acquisition of FleetBoston, Anne Finucane has emerged as one of just two top Fleet executives left at the combined bank. As president of the Northeast region, Finucane is a public face for Bank of America at a time when it has posted strong business results but endured criticism over job losses. Q: Tell us about your job at Bank of America. A: My new job is to oversee the strategic planning around the transition, then I have corporatewide responsibility for public policy and the charitable foundation. Q: What went well in the merger last year? A: I'm very proud of the work that thousands of people have done to make sure this transition has gone well, and I think there's all sorts of evidence that it has gone well. First of all, our customers are doing more business with us. We interview our customers constantly, and their overall satisfaction with Bank of America is 20 percent improved year over year. By way of example, since April 1 of last year, we've opened 200,000 more checking accounts. In the first quarter alone, we've opened nearly 100,000 new savings accounts. Obviously, there was skepticism early on, but our business results are excellent. Q: What didn't go well? A: We should have communicated better, and earlier, the value of the Bank of America offering. Early on, we could have done a better job of communicating the commitment to the community, and the earnestness with which Bank of America wants to contribute at a local level. Q: Has Bank of America been criticized unfairly? A: No. This is a very large merger. People don't like change. I fully appreciate that. We all fully appreciate that. It's our job to do a better job of communicating every day and demonstrating value to our customers and the community at large. Citigroup, Legg Mason Agree To $3.7 Billion Asset Swap WSJ 6-24 Citigroup and Legg Mason announced an asset-swap deal valued at about $3.7 billion under which Citigroup will give up nearly all of its asset-management business in exchange for Legg's brokerage network. The agreement excludes Citigroup's asset management business in Mexico, its Latin American retirement services operations and its interest in the CitiStreet joint venture. Citigroup also reached a three-year global agreement to continue to offer its clients asset-management products and take on Legg Mason Wood Walker's role as primary domestic provider for Legg Mason's equity funds. Citigroup said it expects to record a gain of about $1.6 billion after the deal closes, which is expected in Q4, subject to regulatory, shareholder and other approvals. The deal represents a big shift for both firms. Citigroup has been divesting itself of slow-growth businesses, while trying to minimize potential conflicts of interest that might arise from having its brokers sell its in-house financial products. The swap also will cement the transition of Legg Mason from a small regional brokerage firm into a money-management giant, making it the world's fifth-largest. In the past 10 years, Legg Mason's assets under management have grown to $373 billion as of the end of March from $25 billion, driven by a series of acquisitions as well as the popularity of Legg's fund manager, William H. Miller. Legg Mason said completion of the transition will transform it into a major "pure play" global asset manager of equity and fixed income products. The company's assets under management will aggregate over $830 billion. Under the deal, Legg Mason will acquire substantially all of Citigroup's world-wide asset management business, which includes $437 billion of assets under management, in exchange for Legg Mason's private client brokerage and capital markets businesses; $1.5 billion of Legg Mason common and nonvoting convertible preferred shares and $550 million in a five-year loan facility provided by Citigroup's corporate and investment bank. For Citigroup, the asset swap with Legg Mason will set the stage for the banking giant to focus its brokerage operations on offering "independent financial advice" to clients. The asset-swap will enable both companies to separate the "production" of financial products from their "distribution." As such, it would unwind one strand of the "financial supermarket" model that drove the creation of Citigroup and other big financial-services firms. Citigroup's asset-management unit, which counts 2,600 employees in 19 countries, provides a deep menu of investment strategies for a wide variety of clients. Its Smith Barney Asset Management mutual-fund group, with 80 funds and nearly $120 billion in assets, has a spotty record with only a handful posting returns in the top quarter of their peer groups. Investors pulled a net $2.8 billion out of Smith Barney's stock and bond funds in the 12 months ended March 31. Along with performance woes, Citigroup's fund group has been hamstrung by a reluctance of the firm's army of stock brokers to tout the firm's funds to clients for fear of appearing biased. And Legg Mason Chief Executive Raymond Mason last fall told investors that regulators are "going to make it more difficult" for firms like his to both manage mutual funds and sell them to clients. Fifth Third expects improvement David Weidner, MarketWatch 6-10 Fifth Third Bancorp, on the heels of a lackluster first quarter, on Friday said it expects non-interest income to improve and charge-offs to decline in the second quarter. The Cincinnati-based bank said in a regulatory filing that mortgage banking revenues will "remain steady" and that expenses will be "essentially unchanged." Net interest income is expected to rise "modestly." Fifth Third reported a 6% decline in net income in the first quarter amid weak net interest margins and impact from a recent acquisition. The bank reported first-quarter net income of $405 million, or 72 cents a share, down from $430 million, or 75 cents a share, in the same period a year ago. KeyCorp Acquires of Dallas-Based Malone Mortgage PRNewswire 6-06 KeyCorp has reached an agreement to acquire Dallas-based Malone Mortgage Company, a move that further expands its capabilities to deliver FHA financing and servicing solutions to its commercial real estate developer clients across the U.S. The acquisition, which requires certain approvals from Ginnie Mae, was signed May 27, 2005, and is expected to close within approximately 60 days. Malone Mortgage Company originates, underwrites, and services multifamily FHA loans nationwide for new construction, acquisition and the refinancing of existing facilities. It originates about $200 million in loan placements annually and services a loan portfolio of approximately $1.2 billion. This acquisition will place KeyBank Real Estate Capital, KeyCorp's commercial real estate line of business and the nation's third-largest commercial real estate capital provider with nearly $19 billion in annual financings, among the top-10 FHA servicers in the U.S. It also increases Key's overall commercial mortgage servicing portfolio to nearly $40 billion. Last year, Key expanded its FHA lending capacity by acquiring American Capital Resource, Inc. in Duluth, Ga. Dallas will serve as the West Region hub of Key's FHA origination efforts, while Duluth will serve as the company's East Region hub. Malone employees joining the Key organization will continue to work from their current office space. "The acquisition of Malone Mortgage enables Key to provide even greater value to our clients through significant industry knowledge, while, at the same time, expands our FHA market coverage and product delivery across the U.S.," said Todd Rodenberg, senior vice president and agency director for KeyBank Real Estate Capital. Bernard "Bud" P. Malone, president and founder of Malone Mortgage, added, "Combining our FHA expertise with KeyBank's national strength as a commercial real estate lender will provide our clients with the full-service lending institution they are looking for. We are looking forward to the endless capabilities this acquisition will offer our clients. Our employees will benefit as well, since they will be joining one of the premier real estate capital providers in the country." Wachovia, big in U.S. retail, grows investment bank Jonathan Stempel, Reuters 6-17 Wachovia, best known for its retail bank, is aggressively pushing to become a more powerful investment bank, and lure top talent from bigger rivals. Since the U.S. government in 1999 ended Depression-era laws barring commercial banks from underwriting securities, Chief Executive Ken Thompson has tried to expand that unit by using the No. 4 U.S. bank's retail banking relationships and lending capacity to win more, stock, bond and merger business. Steve Cummings, who has run Charlotte, North Carolina-based Wachovia's corporate and investment bank since 2000, said the investment bank has more than doubled in size over five years. "Our goal," Cummings said in an interview, "is to take (overall) market share, which is around 3 or 3.5 percent, and roughly double it over the next three years." Since late 2004, Wachovia's investment bank has hired a flurry of senior talent from such rivals as JPMorgan Chase and Bank of America. Wachovia has named new heads of mergers and acquisitions, corporate finance and financial institutions banking. And in perhaps its biggest splash, last week it lured a team of structured finance professionals from Morgan Stanley. That was part of a talent exodus that hastened the departure of that firm's chief executive, Philip Purcell. "This is a talent business," said Jeff Davis, a bank analyst at FTN Midwest Research in Nashville, Tennessee. "Wachovia is not massive, so there is more opportunity to grow the business and put one's stamp on it. One advantage they have is a big balance sheet." Cummings said Wachovia has a strong legacy of working with middle-market companies, but now also works with big companies such as Ford. While its strength remains in fixed income, Cummings sees "a lot of upside" in equities and mergers. Wachovia's investment bank is young, originating in the former First Union Corp. Principal investing started around 1988, and fixed-income banking took hold in the mid-1990s. First Union expanded further with the 1998 purchase of merger and acquisitions firm Bowles Hollowell Conner & Co., and financial services firm Wheat First Butcher Singer. First Union bought Wachovia in 2001 and took its name. Wachovia said its investment bank earned $213 million in Q1-05, up 10% from a year earlier, on revenue of $802 million, helped by a 27% jump in fees. For 2004, the unit earned $771 million on revenue of $2.69 billion, Wachovia's quarterly report shows. Wachovia regularly ranks among the top five syndicated and leveraged lenders, but this year it is 21st in arranging stock and bond sales and 19th in reported fees, Thomson Financial data show. Thomson puts Wachovia's market shares below 2 percent. Davis said companies view Wachovia as "doing a good job, a solid job. No home run." But Wachovia said it has added 275 lead bank relationships and lost fewer than 20 since 2003. It said it runs the books on 30 percent to 40 percent of the bond sales it handles, and on 50 percent more equity offerings than last year. "Wachovia has been a significant capital provider to us over the years," said Marvin Banks, chief financial officer of apartment operator Gables Residential Trust, which named Wachovia sole lead manager for its March bond sale. "Their ability to execute is as strong as anyone." The corporate and investment bank last year earned $1.67 billion on revenue of $5.19 billion, accounting for 32% of Wachovia's profit and 23% of revenue, the quarterly report said. That unit employs about 4,600 people. Through Thursday, Wachovia shares have risen 7.9% in the last year, ranking it second among the top five U.S. banks, after Bank of America. Wachovia's growth designs appealed to Quinten Stevens, who in May agreed to lead the newly consolidated equity division. He had been at JPMorgan and before that worked at Citigroup. "Our challenge is to raise our profile among issuers and investors," Stevens said. "I saw a tremendous opportunity to help get the platform to the next level." Cummings said some appeal lies in Charlotte itself. Most big U.S. investment banks are anchored in New York. But while Wachovia's employs some 300 people there and 200 in Baltimore, most of its 2,500 staff are in North Carolina. "There are a lot of people out there, believe it or not, who don't want to be in New York," Cummings said. Wachovia Announces Retail Banking Entry Into Long Island PRNewswire 6-23 Wachovia Bank, N.A. announced today the entry of its financial center network into Long Island, N.Y. Wachovia plans to open 10-12 financial centers in Long Island over the next 18 months, while continuing to expand its Manhattan branch network. "The Long Island retail entry is a natural extension of our Manhattan strategy, and our desire to serve customers where they live and work," said Mike Slocum, Atlantic Region CEO for Wachovia Bank, N.A. "Additionally, our Long Island plans complement our Wealth Management, Brokerage and Wholesale Banking groups that are currently serving this market." According to Slocum, Nassau and Suffolk counties have more than 2.7 million residents and more than 135,000 Manhattan commuters, which will offer a tremendous opportunity to deepen and enhance relationships with existing customers and acquire new customers. In Manhattan, the bank plans to open 10-12 more financial centers over the next 24 months. Agreements have been signed for financial centers at 120 Seventh Ave. and 17th St.; 1370 Third Ave. and 78th St.; and 2040 Broadway and 70th St. Wachovia opened its first two New York City retail branches in 2003. Previously, the company only operated its Corporate and Investment Bank, Insurance and Wealth Management and Capital Management lines of business in the New York City market. Today, Wachovia has 13 financial centers in Manhattan and employs more than 2,000 individuals through the company's General Bank, Corporate and Investment Bank, Capital Management and Wealth Management Groups. In the Tri-State, Wachovia has more than 465 financial centers and employs more than 10,000 through the company's various lines of business. JPMorgan installs ATMs in Duane Reade stores Reuters 6-21 JPMorgan Chase said on Tuesday it has installed automated teller machines in 216 Duane Reade drug stores in New York, as it battles rivals trying to gain a foothold on its home turf. Several large U.S. banks with traditional customer bases located in other regions, including Wachovia , Bank of America and Washington Mutual, have entered the New York market in recent years, hoping to chip away at dominant city players Chase and Citigroup. British bank HSBC is also adding branches and staff to the New York City area. Chase is also in the process of spreading its name and brand around the country to states where the bank's Bank One unit -- acquired in July 2004 -- has a presence in the Southwest and Midwest. The new ATMs will nearly double the number of locations from which Chase customers will be able to access cash in the five New York City boroughs, to 515 locations, including bank branches, Duane Reade stores and stand-alone machines. In the last year, Chase has added three branches in the city and 16 branches in the New York, New Jersey and Connecticut area. It plans to open at least 100 more branches in the tri-state area by the end of 2006. June Ratings Changes On 6-28 Advest initiated BAC at Buy. On 6-02 CIBC Wrld Mkts initiated coverage of BBT at Sector Underperform, initiated coverage of NCC and PNC at sector perform, and initiated coverage of STI at sector perform. On 6-22 Advest initiated coverage of NFB at Buy, initiated coverage on USB at Buy, initiated coverage of WB at buy, and initiated coverage of WFC at buy. From newratings.com on 6-28: Analysts at Morgan Stanley maintain their "overweight" rating on Citigroup, while reducing their estimates for the company. The target price is set to $56. In a research note published this morning, the analysts mention that Citigroup is selling its asset management business, which is likely to improve the company’s size and strengthen its competitive position in the private client business. According to the analysts, Citigroup will realize $1.6 billion in gains, which would be used for share repurchases. The sale of the segment is likely to be marginally dilutive to the company's near-term earnings and accretive to the 2007 earnings, Morgan Stanley adds. The EPS estimate for 2006 has been reduced from $4.53 to $4.52. From newratings.com on 6-27: Analyst Michael Mayo of Prudential Financial maintains his "neutral weight" rating on Citigroup. The target price is set to $47. In a research note published on June 24, the analyst mentions that the company is swapping a substantial portion of its asset management unit with Legg Mason's brokerage business in a $3.7 billion deal. Citigroup has retained its retirement services business and most of its Mexican asset management operations, Prudential Financial adds. The deal is unlikely to substantially impact the company's financials. On 5-23 Banc of America downgraded NFB from Buy to Neutral. On 5-23 Marquis Investment Research initiated USB at Hold. On 5-12 Marquis Investment Research initiated WB at Buy. On 5-16 Marquis Investment Research initiated WFC at Buy. As already mentioned in a seperate article above, on 5-06 Merrill Lynch analyst Edward R. Najarian cut NFB to "Neutral" from "Buy" citing the bank's exposure to the flattening yield-curve environment - and cut RF to "Sell" from "Neutral" due to what Merrill believes is an overvalued stock price. Merrill analyst Brian Bedell downgraded Bank of New York to "neutral" from "buy." He said the bank, which generates much of its business from securities processing rather than branch banking, may see slowing growth in profit per share as trading volume, especially in retail equities, declines. The analyst also said he expects Bank of New York to spend more on its retail bank and compete more aggressively for deposits, possibly hurting margins. On 4-8 Keefe Bruyette initiated C at Outperform. On 4-21 Prudential Downgraded JPM from Neutral to Underweight. On 4-18 Banc of America Sec Upgraded JPM from Neutral to Buy. On 4-19 Keefe Bruyette Upgrade KEY from Underperform to Mkt Perform. On 4-22 Merrill Lynch Upgraded NCC from Sell to Neutral. On 4-11 Ryan, Beck Initiated NCC at Outperform. On 4-21 Prudential Upgraded PNC from Underweight to Neutral. On 4 FTN Midwest initiated WFC at Buy. Monthly Mid-Cap Bank Sector Summary Mid-cap banks rose to a year-to-date loss of 3.78% from May's loss of 5.98% and yields ended at 3.46% [vs May's 3.56% - a rise of 10 basis points]. The ten year treasury ended the month at 3.92% [vs 4.00% on 5-31 - a fall of 8 basis points]. During May, the year-to-date sector prices rose to a loss of 5.98% [vs April's loss of 8.85%]. Year-to-date 05 EPS growth estimates fell to -5.00% [vs April's -4.61%]. Yields ended at 3.56% [vs April's 3.67% - a fall of 11 basis points. The ten year treasury ended the month at 4.00% [vs 4.20% on 4-29 - a fall of 20 basis points]. During April, the year-to-date sector prices fell to a loss of 8.85% [vs March's loss of 7.85%]. Year-to-date 05 EPS growth estimates fell to -4.61% [vs March's -2.99%]. Yields ended at 3.67% [vs March's 3.58% - a rise of 9 basis points. The ten year treasury ended the month at 4.20% [vs 4.50% on 3-31 - a fall of 30 basis points] after reaching a low of 4.17%. Flake Oakley Resigns as President of Colonial BancGroup Business Wire 6-01 The Colonial BancGroup announced today that W. Flake Oakley, IV has resigned as President of the Company and as President and director of Colonial Bank, N.A. Mr. Oakley's resignation is effective on June 1, 2005. In connection with his departure, Mr. Oakley has entered into a consulting agreement with Colonial. The agreement provides that Mr. Oakley will be available through December 31, 2005, to consult with the Company. Commenting on Mr. Oakley's decision, Robert E. Lowder, Chairman and CEO of Colonial said, "Flake Oakley has devoted 17 years of loyal service to Colonial, serving as our President since August, 2003. During all of that time, Colonial has experienced tremendous growth from a $1.3 billion to a $20 billion institution. Bank Independent to Acquire 13 Branches of Colonial in Northwest Alabama Business Wire 6-14 Bank Independent President Macke Mauldin and Colonial BancGroup Chairman and CEO Robert E. Lowder jointly announced today that the companies have entered into a branch purchase and assumption agreement for Bank Independent to acquire thirteen branches of Colonial Bank in northwest Alabama. The acquisition by Bank Independent will include the Colonial offices in Florence and Lexington in Lauderdale County; Muscle Shoals and Tuscumbia in Colbert County; Decatur and Hartselle in Morgan County; Russellville and Red Bay in Franklin County; Moulton in Lawrence County and Athens in Limestone County. Colonial BancGroup Chairman and CEO Robert E. Lowder said, "Colonial continues to focus on high growth markets in Alabama and elsewhere. This transaction furthers our strategy of optimizing our branch network and redeploying our corporate resources to maximize our growth opportunities." Completion of the transaction with Colonial is subject to approval by various regulatory agencies. Colonial BancGroup, a multi-state bank holding company headquartered in Montgomery, Alabama, has assets of approximately $20 billion and operates 317 offices in Florida, Alabama, Georgia, Nevada, and Texas. Sky Financial Group to Acquire Falls Bank PRNewswire 6-21 Sky Financial Group and Falls Bank (Stow, Ohio) announced today the execution of a definitive agreement for Sky Financial to acquire Falls Bank, an $83.6 million bank that operates two full-service branches in the Akron, Ohio market. The transaction is valued at $12.8 million. Sky Financial and Falls Bank anticipate that the transaction will be completed early in the fourth quarter of 2005, pending regulatory approvals, the approval of the shareholders of Falls Bank and completion of other customary closing conditions. Sky anticipates that Falls Bank will be combined with Sky Bank, its commercial banking affiliate, by the end of the year. "The Akron/Canton, Ohio area is a good market for Sky and the acquisition of Falls Bank is right on target with our strategy of expanding our presence in growth markets," stated Marty E. Adams, president, chairman and chief executive officer of Sky Financial. Dewey VanHoose is the regional president for Sky Bank's Stark/Summit/Medina Region, which will ultimately integrate Falls Bank's business into Sky Bank. "We have been looking to expand in and around Akron, and the acquisition of Falls Bank makes perfect sense for our expansion plans. Like Sky, Falls Bank focuses on the client's needs with superior service and local decision-making supported by quality people," stated VanHoose. "Joining Sky is an important next step for Falls Bank, our employees and clients," said Rodney Vargo, president and chief executive officer of Falls Bank. "Sky is a growing regional institution that can provide opportunities for our employees while at the same time give our customers access to the broader array of products and services delivered through a community bank structure." Wilmington Trust to Acquire Charleston Captive Management Company Business Wire 6-16 Wilmington Trust, a leading provider of specialized management and fiduciary services to corporations worldwide, announced today that it has signed a definitive agreement to acquire Charleston Captive Management Company (CCMC), a captive insurance management company headquartered in Charleston, South Carolina. CCMC provides a variety of administrative services that support the establishment and operation of captive insurance companies, also known as captives. These services include bookkeeping and regulatory reporting. The firm's expertise complements the entity management services that Wilmington Trust already provides to corporate clients. "This acquisition broadens the service offerings of our Corporate Client Services business line by giving us an established presence in a growing industry," said Ted T. Cecala, chairman and CEO of Wilmington Trust. "It advances our strategy to grow our fee-based businesses and further diversifies our well-rounded revenue streams." Captives are insurance companies that are owned by their insureds. Because they are insurance companies and bear risk, they are regulated and must be licensed. They usually are formed by companies that wish to better manage the cost and administration of their insurance coverage. June Ratings Changes On 6-02 CIBC Wrld Mkts initiated coverage of ASO at Sector Underperform. On 6-30 JP Morgan initiated FHN at Neutral. On 6-22 Advest initiated HU at Neutral. On 6-09 Keefe Bruyette downgraded SKYF from Market Perform to Underperform. On 6-23 Moors & Cabot initiated coverage of TCB at Buy. On 6-30 JP Morgan initiated TCB at Underweight. From May: On 5-05 Robert W. Baird Upgraded ASBC from Neutral to Outperform. On 5-10 Banc of America Initiated CBSS at Neutral. On 5-03 Susquehanna Financial Initiated CNB at 'Net Positive'. On 5-23 Lehman Brothers Downgraded HBAN to "underweight" from "equal weight," saying the stock has been trading above $24, where the firm believes it is fairly valued. On 5-05 AG Edwards Downgraded SNV from Buy to Hold. On 5-10 Banc of America Initiated TCB at Neutral. On 5-02 Legg Mason Upgraded SUSQ from Sell to Hold. From April: On 4-21 Keefe Bruyette Upgraded BSX from Underperform to Mkt Perform. On 4-25 Hibernia Southcoast Capital Upgraded CNB from Sell to Hold. On 4-22 Keefe Bruyette Upgraded FHN from Underperform to Mkt Perform. On 4-22 KeyBanc Capital Mkts / McDonald Downgraded FMER from Buy to Hold. On 4-15 Friedman Billings Downgraded HU from Mkt Perform to Underperform. On 4-15 Moors & Cabot downgraded HU from Hold to Sell. On 4-26 Ryan, Beck Upgraded HBAN from Underperform to Mkt Perform. On 4-26 Smith Barney Citigroup Downgraded TCB from Buy to Hold. Home Page Factoids Previous Update |