A late rally in the overall stock market failed to carry bank shares with it on Thursday.
The Dow Jones industrial average surged late in the day to close up 23.78 points to 3,176.03 nearly wiping out a 25.94 point drop on Tuesday.
Bank shares, which were mixed, went ignored in the rally, as investors focused on technology issues.
Waiting for Trading Profits
Among the big losers, Bankers Trust New York Corp. fell $1.625 as investors took gains. The stock had been very volatile lately, largely on investors' uncertainly about the bank's third-quarter profits from foreign exchange trading in light of the European currency crisis.
"Everyone is waiting to see what the trading profits will be this quarter," said Lawrence Cohn, an analyst at PaineWeber. "Most people expect the profits will be terrific, but there is a worry that the bank could have been on the wrong side of some trades."
BankAmerica Corp. lost $1.125 to $41.125, and Fifth Third Bancorp, Cincinnati, lost $1 to $47.75.
Citicorp Still Active
On the positive side, money managers say downward pressure on Citicorp shares is over for now.
Shares of the New York bank were the fourth most active on the New York Stock Exchange Thursday, with 2.4 million shares changing hands.
That was the third straight day of furious trading in the stock. On Monday, the bank announced that Richard S. Braddock resigned as president and that third-quarter earnings would be half what Wall Street analysts had expected.
The news caused investors to bail out of the stock Tuesday and Wednesday. Over those two days, the shares fell 87.5 cents, or 5.5%. On Thursday, Citicorp shares were unchanged at $14.50.
"It's a positive sign that the stock was so active and didn't fall," said Coreen Kraysler, a vice president with Independence Investment Associates, a money management company in Boston. "I think whatever downward pressure there was is over."
Low Earnings Expectations
The two-day free fall has made the shares cheap, according to some investors who were encouraged by the bank's announcement that expense control and core earnings had improved.
Money managers said the resignation of Mr. Braddock, rather than the earnings announcement, put the stock into a tailspin.
"We were all surprised by Braddock's resignation," said one money manager with a big stake in the banking company.
"Expectations for earnings were so low already that the announcement wasn't a surprise," said Ms. Kraysler.
Why He Resigned
One reason for the surprise is that companies do not usually announce the resignation of a top official just before or during an attempt to raise capital. Citicorp and lead underwriter Morgan Stanley & Co. began marketing a $650 million issue of convertible preferred stock this week.
At a sales presentation for money managers in New York on Thursday, chairman John S. Reed was not peppered with questions about Mr. Braddock's departure, according to one analyst who attended the meeting.
The analyst said Mr. Reed told the audience that Mr. Braddock resigned after the scope of his duties had been narrowed.
Mr. Reed also said that credit-card profits fell in the third quarter and that the bank may not need to float another big stock issue to reach a target 6.5% Tier 1 capital ratio by the end of 1993.
The convertible issue is scheduled to be priced late next week. From the reception Mr. Reed received, the analyst said the issue would be sold, but at more favorable terms to investors than originally planned.
Wells Reverses Fall
Another stock that reversed a fall was Wells Fargo & Co., which rose 62.5 cents to $63. Investor Warren Buffett announced Thursday that he lifted his stake in the San Francisco bank to 11.85% from 10.75%.
Wells' gain erased most of the $2 loss of the previous day, when money managers sold off their shares in response to a new book that said 2,000 banks, including Wells, were on the brink of collapse.