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.

“So far, most incidents have been among the superregionals and regionals,” but “people get scared,” the Birmingham, Ala.-based analyst said in an interview.

“Wachovia’s valuation at today’s price is not as compelling as it was at the beginning of December 2000,” Mr. Green wrote in his research note. But it should trade at a premium when the macro-environment improves, he said.

At Compass the problem is a little different, Mr. Green said. “The bank did a good job in managing transaction accounts” and subsequently had better-than-average earning growth while it kept credit quality at high levels, as did Southtrust.

In a downward market, Wachovia fell 1.86% Monday, to $62.75; Colonial 5.43%, to $10.875; Compass 0.27%, to $23.375; and Southtrust 1.69%, to $39.9375.

Meanwhile, Bank of America Corp., whose stock price took a beating Friday on concerns about exposure to the troubled California utilities Pacific Gas and Electric and Southern California Edison, was defended by analysts Monday.

Calling Friday’s 7% fall in valuations “excessive,” Ruchi Madan at Citigroup’s Salomon Smith Barney wrote in a research note that “credit quality concerns are overblown.” Bank of America’s exposure is “only $250 million to $300 million, which isn’t all that large of an amount” given its size, Ms. Madan wrote. She said she has already accounted for possible losses from such loans in her 2001 earnings estimates.

Ms. Madan rates Bank of America with “outperform” while Richard X. Bove, an analyst at Raymond James & Associates Inc. in St. Petersburg, Fla., reiterated his “strong buy” on the company.

Bank of America rose 50 cents, or 1.05%, to $48.25. The American Banker index of the top 50 banks fell 0.96% Monday and its 225-bank index fell 1.27%.

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