Big West Coast Thrifts, Left Behind in Rally On Wall St., Rated Good

The recent stock market rally has bypassed the big West Coast thrifts, some analysts complain.

Shares of Golden State Bancorp, Golden West Financial Corp., and Washington Mutual Inc. all trade at deep discounts to the broader market and have good upside potential, said Jonathan Gray, a thrift analyst with Sanford C. Bernstein & Co. He rates them "outperform."

Golden State is especially well suited as a merger candidate "for a bank interested in entering the California market," the analyst said.

In trading Monday, Golden State was up 68.75 cents, to $19.125; Golden West added 93.75 cents, to $89.8675; and Washington Mutual gained $1.1875, to $42.6875.

Several community banks in the Southeast have also been neglected, said Eric Rothmann, banking analyst with Stephens Inc. He cited "solid operators" like Bank United Corp., Simmons First National Corp., and Southwest Bancorp of Texas as having been overlooked in favor of much larger competitors.

Bank United, based in Houston, "warrants attention because of its strong Texas-based franchise" and its ability to expand market share, the analyst said. Its shares closed Monday at $39.375, up 81.25 cents.

Simmons First National, Pine Bluff, Ark., rates a "buy" based on its status as a premier national credit card provider, as well as its competitive position in the state. The stock rose 50 cents, to $40.50.

Meanwhile, Southwest Bank of Texas "remains the only true Houston-based commercial lender, giving it a competitive advantage as it continues to expand its lending efforts," Mr. Rothmann said.

Southwest "also continues to effectively compete against larger competitors such as Chase Manhattan Corp. and Citigroup within its Houston marketplace," Mr. Rothmann said. Shares of Southwest were unchanged at $17.875.

The assessments came as the Standard & Poor's bank index fell 1.24% and the Dow Jones industrial average 0.24%.

The Nasdaq bank index dipped 0.47% and the S&P 500 0.88%.

"We're experiencing a bit of a pullback, which was necessary because a number of large bank stocks had gotten ahead of themselves," Mr. Rothmann said.

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