Shares of Dime Bancorp dropped Tuesday after it reported an earnings shortfall, though some analysts said that after adjusting for a capital infusion from Warburg Pincus, Dime's results were better than expected.
Financial stocks as a group fell despite Citigroup Inc.'s topping third-quarter estimates and as-expected operating profits for FleetBoston Financial Corp. and Bank One Corp. (see article on page 1) on a weak day for the entire stock market. American Banker's 225-bank index fell 4.4%, while its index of the top 50 banks fell 3.51%. The Standard & Poor's 500 index fell 1.79% and the Nasdaq fell 2.3%.
Citigroup shares fell $1.4375, or 2.8%, to $49.375, while FleetBoston's slipped $0.6875, or 2%, to $33.75, and Bank One fell $1.8125, or 5.2%, to $32.8125.
Among regional banks reporting on Tuesday, Mellon Financial Corp.'s earnings per share of 51 cents met analysts' consensus estimate. Comerica Inc. said earnings were $1.18 a share, beating the consensus by 1 cent.
Both companies' results somewhat quelled growing anxiety over credit quality. Mellon reported a slight decline in nonperforming assets, while Comerica reported a modest uptick.
Previously announced restructuring programs hurt other regional earnings. KeyCorp in Cleveland said profits dropped 55%, to $121 million, because of one-time charges. Amsouth Bancorp in Birmingham, Ala., reported a loss of $36.3 million.
Mellon shares fell $1.25, or 3%, to $40.4375, Comerica fell $1.125, or 2.1%, to $53.5625, KeyCorp fell $0.9375, or 4%, to $22.8125 and AmSouth fell $0.1875, or 1.5%, to $12.375.
Excluding charges, Dime's per-share earnings were 59 cents, 1 cent short of the First Call/Thomson Financial consensus estimate. Its shares fell $0.6875, or 2.9%, to close at $22.9375, a decrease in line with other financial stocks.
Dime got a $238 million infusion in the third quarter from Warburg Pincus Equity Partners LP and affiliates. New York-based Dime said it plans to use the capital this quarter to reduce the number of shares outstanding by 13.6 million, the amount issued to Warburg Pincus.
Analysts who accounted for the Warburg Pincus deal in their predictions argued that Dime exceeded earnings expectations.
Tom Theurkauf, a bank analyst at Keefe, Bruyette & Woods Inc., had expected earnings of 57 cents a share after accounting for the Warburg Pincus investment. If the stake is included, he said, "the quarter was not only fine, but a bit better than our expectation."
Moderate loan growth, a flat margin of 3%, and strong fee income strengthened Dime in the quarter, said Jim Ackor, vice president of equity research at Tucker Anthony Capital Markets. "Net-net, it looked like a good, solid quarter to me if you can look past the clutter of some of these one-time events," he said.
Dime's operating earnings were $69.4 million, against $61.8 million in the year-earlier period. The company said per-share earnings will remain flat until it completes its planned $13.6 million share-buyback program.