market, Madison, recently offered investors a lesson in the perils of rising expectations. Margin pressure and acquisition-related costs recently caused the $1.6 billion-asset thrift holding company to register quarterly earnings below Wall Street analysts' estimates for the first time this year. Anchor reported net earnings of 81 cents per share in its second fiscal quarter versus 85 cents a year earlier and 87 cents in the prior quarter, without giving effect to its recent 5-for-4 stock split. The split, and at least one reduced estimate, helped push down Anchor's current-year consensus earnings forecast by 21.5% to $2.75 per share, according to First Call Corp. "There was nothing significantly fundamental about the earnings report. The margin slid more than some people anticipated, but the Madison market has been so strong that expectations had gotten a little too high," said Gregory P. Anderson of Chicago Corp. The expectations have helped drive up Anchor's stock price by 47% this year, to $34.625 on Tuesday. Another analyst, Wayne Bopp of Stifel, Nicolaus & Co., St. Louis, noted that the thrift's stock currently sells at 1.5 times book value versus an average of 1.2 times book for other Midwestern thrifts. Anchor's results were below Mr. Anderson's own quarterly estimate of 83 cents, which was the lowest among analysts following the stock. "They'd been beating estimates every quarter for some time and some people began extrapolating that into the future," he said. "Like everyone else, they have had a little trouble managing the margin and loan growth was at an unsustainably high rate." Anchor's margin fell in the September quarter to 3.17%, compared to 3.28% the prior quarter and 3.67% a year earlier "I think they've had to pay up a bit more for deposits, partly because the market has been so good, and of course that is going to be reflected in the margin," said Raymond E. Cabillot of Piper Jaffray Inc., Minneapolis Mr. Cabillot lowered his current-year earnings estimate for Anchor to $2.75 from $2.84 previously, after accounting for the stock split. He estimates $2.85 for the 1997 fiscal year, which begins in April. Anchor's expenses during the quarter included the costs of acquiring American Equity Bancorp, Stevens Point, according to Michael W. Helser, the thrift's chief financial officer. Mr. Helser said the earnings estimate reduction and analysts' slightly lowered expectations for Anchor are "fine with me." But he noted that the company raised its profitability on a half-year basis, earning $1.68 per share in the six months ended Sept. 30 versus $1.62 in the same period a year earlier. Mr. Anderson and Mr. Cabillot both have "neutral" ratings on Anchor's stock, while Mr. Bopp rates it a "long-term buy."

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