First Fidelity Bancorp.'s chief financial officer batted .500 in meetings with two Wall Street companies.
On Tuesday morning, Smith Barney, Harris Upham & Co. - one of the companies visited the day before by the officer, Wolf-gang Schoellkopf - downgraded First Fidelity's stock to hold from buy.
A few hours later, Donaldson, Lufkin & Jenrette Securities Corp. went the other way, when analyst Frank R. DeSantis Jr. upgraded the shares to very attractive from hold.
The downgrade held sway over Tuesday's share price, when First Fidelity shares dropped 75 cents, to $40.875.
Smith Barney analyst Kristina E. Andersson had been recommending the stock for months. Her target price was $44 - and since the shares were approaching that level - removal from the buy list was imminent.
Mr. Schoellkopf apparently did not persuade Ms. Andersson to continue her buy rating. Ms. Andersson and Mr. Schoellkopf could not be reached for comment. A spokesman for Lawrenceville, N.J.-based First Fidelity said the meetings were just part of the bank's normal efforts to talk with analysts.
First Fidelity's shares have gained 26% this year, which is less than the nearly 40% rise for the average regional stock, according to Donaldson Lufkin. In 1991, however, First Fidelity was one of the best performing bank stocks.
Good Marks for Chairman
Analysts agree that Anthony P. Terracciano, who took over as bank chairman in February 1990, has engineered one of the most remarkable comebacks in the industry. He took a money loser and transformed it into a well-capitalized, well-managed institution, they say.
In the third quarter, return on assets was 1.1% and return on equity 16%. With $29 billion in assets and 15% deposit share, First Fidelity dominates banking in the affluent New Jersey market, according to a recent report from Keefe, Bruyette & Woods.
What keeps the bank off some analysts' buy lists is the share price: 1.5 times book value. That's pricier than some recommended regionals, such as Crestar Financial Corp., Richmond, Va., and Boatmen's Bancshares in St. Louis - which are both around 1.3.
40% Price Rise Forecast
Mr. DeSantis, however, believes there is still room for the stock to rise. He forecast that shares could jump 40% over the next 18 months, to around $55.
Mr. DeSantis said he had mulled upgrading First Fidelity for months, waiting for a clear sign that the bank's earning power is higher than consensus expectations. The meeting with Mr. Schoellkopf helped nudge him toward that conclusion, he said.
The bank's loan-loss provision of $230 million is too high, said Mr. DeSantis, and it masks the real earnings power. He expects that provision to drop to $180 million on an annual basis by the fourth quarter of 1993, which should increase profits.
First Fidelity has made seven purchases of assets and deposits in the past two years, including the recent acquisition of Howard Savings Bank. Mr. DeSantis and other analysts believe more purchases are on the way, which should boost earnings.