Merger News Boosts Regional Bank Stocks
Some regional bank stocks got a lift Thursday as investors looked around for other potential takeover candidates in the wake of J.P. Morgan Chase & Co.’s deal to buy Bank One Corp.
The $58-billion friendly takeover, announced after markets closed Wednesday, reminded Wall Street that “mergers beget mergers,” said Paul Fusco, an analyst for the John Hancock Financial Industries mutual fund.
The purchase of Bank One, the sixth-largest U.S. bank, “will stimulate the acquisition mill on the tier below the big ones,” said David Kungl, financial-institutions group director at SNL Financial in Charlottesville, Va.
Among the stocks that rose significantly Thursday were Comerica Inc., a Detroit-based bank that has large operations in Southern California; Seattle-based Washington Mutual Inc., which also is big in California; Atlanta-based SunTrust Banks Inc.; and Pittsburgh-based PNC Financial Services Group.
Comerica jumped $2.93 to $56.30, Washington Mutual rose $1.14 to $41.81, SunTrust gained $2.63 to $72.63 and PNC was up $1.32 to $54.43. Other winners included US Bancorp in Minneapolis, up 91 cents to $28.48; Northern Trust Co. in Chicago, up $1.69 to $50.28; and SouthTrust Corp. in Birmingham, Ala., up $1.15 to $32.78.
Wells Fargo & Co., the biggest bank based in California, edged up 17 cents to $56.50. Many analysts believe that Wells, which will rank as the fourth-largest bank after the J.P. Morgan Chase-Bank One deal is completed, is more likely to be an acquirer than a target.
“Get bigger or get out, basically,” Bank One Chief Executive Jamie Dimon said at a news conference in New York.
Mergers are nothing new in the banking business, which has been consolidating for two decades. But many banks face a weaker earnings outlook in 2004, assuming interest rates hit bottom last year, analysts say. That could spur more mergers, said Blake Howells, an analyst at Becker Capital Management Inc. in Portland, Ore.
