Wachovia Corp., which was beset by credit quality issues last year, was downgraded Monday by a senior analyst at Sterne, Agee & Lee Inc.

Saying he believes their stock prices may have peaked, Peyton N. Green lowered his rating on the Winston-Salem, N.C., company and three other Southern banks — Colonial Bancorp, Compass Bancshares and Southtrust Corp. — from “accumulate” to “hold.” Wachovia shook the bank-stock market in June 2000 when it said it would increase its loan-loss reserve by $200 million and that its nonperforming loans would grow 30%. The company’s own stock made a good recovery, but Mr. Green says he thinks Wachovia and the other three banks, which have reported no loan problems, could get battered by a weakening economy and the resulting failure by some corporations to repay bank loans.

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