Investors can't seem to get enough of bank stocks, so banks are looking to give them what they want.
At least 17 regional banks and one major credit card specialist are seeking to double and in some cases triple the number of common shares they are authorized to issue, according to proxies mailed to shareholders in the last few days.
Making more shares available will enable banks to raise substantial amounts of capital, which they will use for mergers they have made or would like to make.
"Over the next three or four years banks will be very focused on capital-raising, and it all ties into mergers and acquisitions," said Thomas H. Hanley, a bank analyst at UBS Securities.
Indeed, Union Planters Corp., among the busiest buyers, is seeking the largest percentage increase in authorized shares-to 300 million from 100 million. The bank now has 83.5 million outstanding.
First Virginia Banks Inc., which has bought few banks, may be thinking about making more deals. It wants to nearly triple its shares authorized, to 175 million from 60 million.
It is unusual for banks to seek approval to more than double their shares, said Barry P. Taff, a partner in Silver, Freedman & Taff, the Washington law firm. A big jump suggests a bank may be contemplating splitting its stock a few times.
And while stock splits are popular with small shareholders because they make shares more affordable, they are an administrative headaches for institutional shareholders who own large blocks of stock.
"I've never really understood most banks' reasons for splitting their stocks," said James K. Schmidt, a portfolio manager at John Hancock Funds, one of the nation's biggest investors in bank stocks.
Banks, reluctant to reveal much corporate strategy, say little.
Old Kent Financial Corp., which seeks to double its authorized shares to 300 million from 150 million, says the move is housekeeping.
The bank did a 2-for-1 stock split on Dec. 15 and says its present pool of stock would be too small for a similar split in the future, "although the board of directors has no present plans or expectations as to if and when further splits would be decided."
In the market Tuesday, shares of Chase Manhattan Corp. rose $3.125 to $124.6875, after Goldman, Sachs & Co. upgraded the stock. The upgrade was intriguing because Chase is rumored to be interested in acquiring Goldman, one of Wall Street's last private partnerships. Goldman, however, does not seem to be interested in selling.
