Processing and asset management businesses are helping four regional banking companies get better ratings on Wall Street.
Bank of New York Co., State Street Corp., Northern Trust Corp., and Mellon Financial Corp. all received strong buy recommendations from Raymond James & Associates analyst Richard X. Bove, who initiated coverage of the group Friday. 
Mr. Bove picked the four because their business models tilt away from traditional banking activities toward investment management, investment banking, and processing, fee-generating businesses he says should continue to provide growth opportunities.
Some analysts have balked at making such a recommendation on the stocks, because all four companies trade at relatively high price-to-earnings ratios, suggesting they are at the top of their growth trajectory.
Mr. Bove has the only strong buy rating on Northern Trust, which according to his report trades at 41.7 times his expected 2000 earnings. He is one of two analysts with the same rating on Bank of New York, which trades at 29.1 times his expected 2000 earnings.
State Street, of Boston, trades at 34.1 times expected 2000 earnings, and Mellon at 23 times.
In trading Friday, Bank of New York rose 2.43%, to $57.875; State Street fell 0.45%, to $126.41; Mellon rose 1.19%, to $47.8125; and Northern Trust fell 1.77%, to $86.8125.
The broader market was mixed Friday. Tech shares advanced, with the Nasdaq rising 0.66% and the Dow Jones industrial average falling 0.57%. The American Banker index of 225 bank stocks rose 0.15%, and its index of the 50 biggest banks stocks rose 0.26%
Mellon, of Pittsburgh, has positioned itself to benefit from an aging population that will demand more and more retirement-fund management services, Mr. Bove said. The company is the sixth-largest investment management firm in the United States and a leader in trust administration, Mr. Bove said.
He added that Mellon has exited less-promising businesses, including mortgages and credit cards.
Northern Trust also has strong potential in investment management, Mr. Bove said. The Chicago company focuses on wealth management services for customers with net worth exceeding $5 million, Mr. Bove said. There are literally hundreds of thousands of people in that category, he wrote in a research report.
Processing wins the day at Bank of New York, Mr. Boves report said. It processes more than 125,000 transactions a day and has established a record of continuous earnings growth reaching back for more than a decade, Mr. Bove wrote, adding that the banks balance sheet is strong, with declining loan charges and widening net interest margins.
Mr. Bove agreed that high multiples are a risk factor, but he said he looks for performance. For return on equity, Mr. Bove said he expects Bank of New York to report a 25.7% return, State Street 19.8%, Northern Trust 22.1%, and Mellon 25.8%.
