Many bank stocks rebounded Wednesday, as investors began to hunt for bargains in the wake of the market's broad selloff.
Salomon Brothers Inc. put buy recommendations on shares of NationsBank Corp. and First Union Corp., which fell earlier in the week amid fears about how Hurricane Andrew would affect their southern Florida operations.
But banks from New York to Los Angeles -- and seemingly every place between -- were being touted after a rout that knocked nearly 5% off the price of bank stocks on average since last week.
"The whole group has been massacred," said Denis Laplante of Fox-Pitt, Kelton Inc. "You could almost throw a dart and find a cheap bank stock."
On Wednesday, NationsBank drifted down 12.5 cents, to $43.375. But First Union was up sharply, gaining 87.5 cents, to $37.625.
Also finding new support were Corestates Financial Corp., up $1.125, to $49; Comerica Inc., up 87.5 cents, to $57.125; and Fifth Third Bancorp, up $1.25, to $50.75.
With the Dow Jones industrial average up 14.59 points, to 3,246.81, Bankers Trust New York Corp. rose 75 cents, to $59.75. Midlantic Corp., after a steep slide the previous two days, was up 50 cents, to $13.875.
Mr. Laplante picked Chemical Banking Corp. as one of the better bargains.
Chemical's shares opened Wednesday at $31.50, off from a 52-week high of $39.50, and down from $33.25 as recently as Monday. By 4 p.m. Wednesday, the stock was up 50 cents, to $32.
Cheryl Swaim of Oppenheimer & Co., meanwhile, was not adding any banks to her buy list but said her buy ratings on KeyCorp and First Interstate Bancorp still stand.
At Wednesday's opening prices of $30.50 and $36.75, respectively, KeyCorp and First Interstate were trading at just under nine times projected pershare earnings. "I think those valuations are pretty attractive," she said.
In late trading, KeyCorp was at $31, up 50 cents, and First Interstate was at $37.125, up 37.5 cents.
Joseph Duwan of Keefe, Bruyette & Woods and Kenneth Puglisi of Chicago Corp., who cover banks in the Midwest, both mentioned Society Corp. and Comerica as undervalued.
Shares of midwestern banks were outpaced by the turnaround stocks during the rally in the first half of the year. They then suffered from profit taking along with the rest, despite the stable business conditions in their region, these analysts noted.
Society rose $1, to $54,25 by late Wednesday.
The bank is positioned for earnings growth because of its recent acquisition of AmeriTrust Corp., the analysts said. Mr. Puglisi added that Society's slide during the sell off may have been worsened because the stock is due to be listed on the New York Stock Exchange Sept. 1.
Often when a stock is about to switch to a new exchange, it loses support from its market makers.
Peter W. Tuz of Morgan Keegan & Co. said the southern banks he follows are trading about 13% off their peak prices and that the group has lost 5% since June 30 -- with most of the loss coming in the past week.
"Now there are a whole host of banks trading under 8.5 times what they ought to earn in 1993," he said.
Union Planters Corp., which announced on Wednesday that it would complete the awaited V3 acquisition of the Bank of East Tennessee, a $185 million-asset bank in Knoxville, was among his picks. Its share rose 12.5 cents, to $18.75.
Another of Mr. Tuz's picks, First Commerce Corp. of New Orleans, gained 50 cents, to $45.75.
Still, there was an air of caution from the analysts. "We're not recommending banks we think have quality questions," said Diane B. Glossman of Salomon Brothers.
And Ms. Swaim said uncertainty about the California economy prevented her from recommending any of the banks in that state other than First Interstate.
And despite a widespread recovery, a few major banks continued to decline. Wachovia Corp. was off 87.5 cents, to $57.875; Republic New York Corp. fell 62.5 cents, to $41.75; and NBD Bancorp lost 50 cents, dipping to $29.Searching for ValueAnalysts' hot picks: percentagechange in stock prices as ofTuesday from intraday highon Aug. 18SALOMON BROTHERSChase Manhattan -8.6%First Union -8.1%NationsBank -7.4CHICAGO CORP.Society -8.1%Norwest -7.7MORGAN KEEGAN & CO.First Commerce -10.8%Union Planters -7.7Mark Twain -4.4Source: DB Technologies