Brown Brothers Harriman & Co. analyst Nancy Bush has dropped coverage of Mellon Bank Corp. so she could pick up coverage of. Norwest Corp. and Crestar Financial Corp.
She initiated coverage of both Norwest and Crestar with "neutral" ratings.
The banks' stocks hardly reacted to the news. Mellon's stock closed at $58, up 25 cents. Shares of Crestar and Norwest stocks both fell 37.5 cents, to $47.625 and $25.875, respectively.
The Dow Jones industrial average closed at 3751.22, down 3.89.
Ms. Brown said she dropped coverage of Mellon because she wanted to diversify her coverage with banks outside the Northeast, particularly with institutions in the Midwest and Southeast.
"I want to keep my coverage to 15 banks," the analyst said.
"I wanted to add Southeast coverage because it's the best
region of the country right now."
She noted that she had a "sell" rating on Mellon and that it was the most expendable on her list.
Ms. Bush said she initiated coverage of Crestar because it enjoys a high price-to-earnings multiple and it is increasingly mentioned as an attractive takeover candidate.
"I wanted to add companies that are more likely to be consolidated," the analyst said.
"Crestar is on the short list for Northeast and Southeast companies."
She also initiated coverage of Norwest with a "neutral" rating, citing the company's healthy net interest margin and geographical diversity.
"Norwest and Crestar are both well-valued relative to their averages," Ms. Bush said.
"They are being looked at by banks from a lot of regions."
Norwest, which has a net interest margin of 5.65%, is the country's 14th-largest banking company, operating 600 branches in the Midwest and Southwest. The bank also is the country's largest retail mortgage originator.
Ms. Bush did say, however, that one of Norwest's shortcomings was its high level of expenses, resulting from its expansive branch system. Norwest is trying to cut costs, she said, which could "provide a lot of momentum" for the bank.
Separately, Hancock Institutional Equity Services initiated coverage of Glendale Federal Bank with a "buy" rating and noted that the California company is likely to be sold within two years.
The news sent Glenfed's stock up 37.5 cents for the day, to $12.375.
Hancock noted Glenfed's restructuring continues, with the company agreeing to sell its 60 branches in Florida, and its Washington subsidiary, in an effort to concentrate on its core California residential business.
The brokerage firm pointed out that aggressive shareholders, weak earnings prospects, and poor franchise positioning make a sale within two years very likely -- at an estimated price of $18 to $22 per share.
