Banc One Bounces Back From Post-Earnings Selloff

Banc One Corp.'s shares rebounded amid a sluggish market as some investors looked past the company's disappointing second-quarter earnings to snap up the stock at bargain-basement prices.

This week investors bailed out of Banc One after the Columbus, Ohio- based bank reported lower-than-expected earnings. By Wednesday the company's stock had dropped by more than 13%.

However, in Thursday trading Banc One's shares surged 1.42%, bucking the trend in a market traders described as "tired and out of gas."

Its shares rose 75 cents, to $53.75, on three times daily volume. Shares of First Chicago NBD, which Banc One is buying, climbed 68.75 cents, to $86.3125, on slightly higher than average volume.

Investors realized that the market overreacted to the company's second- quarter earnings, said bank analyst Michael L. Granger of Fox-Pitt, Kelton Inc.

"It was overdone," said Mr. Granger. Because other banks' earnings have been meeting expectations, "a disappointment gets overdramatized."

Nevertheless, Mr. Granger does not believe Banc One shares will recoup their substantial losses soon. The company "will have to demonstrate better results," said Mr. Granger.

Bank analyst Anthony Polini of Advest Inc. said he has been chastising clients for stampeding out of Banc One's shares so quickly. "It is table- pounding time, not time to hide under the table," he said.

Unlike many of his peers, Mr. Polini said he was not disheartened by the company's second-quarter earnings. In fact, "we were pleased with the revenue and pleasantly surprised by the credit quality," he said.

"We love this story," asserted Mr. Polini. "We saw nothing in the second quarter that made us skeptical."

Meanwhile, most other stocks overall endured a poor outing as the market slipped another several notches.

The Standard & Poor's bank index dropped 1.02%, while the Dow Jones industrial average plummeted 2.15%. The Nasdaq bank index declined 0.8%, and the S&P 500 fell 2.09%.

"This is a very sloppy market," said Adam J. Lewis of Keefe, Bruyette & Woods Inc. "Bank stocks actually have outperformed the market all week. However, it's tough for them to stay ahead with the general market falling apart."

Federal Reserve Chairman Alan Greenspan's seemingly pessimistic outlook on the market and sour second-quarter earnings for major industrial companies continue to jangle investors' nerves. Concerns over Asia's troubled economy are deflating the sails of the market's most bullish investors, observers said.

Small- and mid-capitalization banks are particularly receiving the brunt of these investor jitters, Mr. Polini said.

"There is a premium in the market for liquidity," he said. "There is fresh money in the market place that is moving into Citicorp, into Merck, and then back into Citicorp. When you have that large-cap volatility it suggests that investors are not sure where the market leadership is."

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