National City Corp. shares rose 62.5 cents to $65.75 Monday on news that it plans to buy back up to 20 million, or nearly one-tenth, of its outstanding shares.
"We can say to the Street we have excess capital and are acting upon it," said Julie I. Sabroff, investor relations vice president at the $53 billion-asset Cleveland banking company.
The positive news offset investor jitters over the Japanese financial market that sent most stocks lower.
National City, Ms. Sabroff said, has about $1 billion of cash on hand, and will purchase up to $1.4 billion of shares over the next several months through open market and private transactions.
Analysts applauded the move, saying National City is known for weighing opportunities and then acting. "A lot of companies have been chided for using stock buybacks instead of pursuing acquisitions," said Stephen Biggar, bank equities analyst with Standard & Poor's Corp. "But National City has been doing both."
The majority of bank stocks tumbled Monday, especially banks with significant Asian operations. BankAmerica Corp. fell $2.25 to, $73, Chase Manhattan Corp. was off $3.1875, to $110.125, Citicorp was down $4.8125 to $122.0625.
The Standard & Poor's bank index fell 2.05% while the Dow Jones industrial average was off 1.44% The Nasdaq bank index dipped 0.63% and the S&P 500 fell 1.70%.
Investors were concerned that problems in Japan's financial system- including last Friday's failure of Yamaichi Securities Co., one of Japan's Big Four brokerages-will ripple into the U.S., Mr. Biggar said.
In merger-related action, shares of Central Fidelity Banks were up 43.75 cents, to $47.8125, and Wachovia Corp. shares fell 31.25 cents, to $75.9375 following approval by Central Fidelity shareholders of the company's purchase.
The deal, which is expected to close by mid-December, will combine $10 billion-asset Central Fidelity, the third largest bank in Virginia, with $47.7 billion-asset Wachovia, based in Winston-Salem, N.C.
Also, SunTrust Banks Inc. shares were down 62.5 cents, to $69.625. The shares were rated a new "neutral" by analyst Sean Ryan of Bear, Stearns & Co.
And Carolina First Corp. shares fell $1 to $19 after Morgan Keegan cut its rating on the stock to "hold" from "buy."
