Amid a fall in the overall bank stock market in the second quarter, a handful of issues soared.
Leading the gainers was Firstier Financial Corp., Omaha. Its shares ran up 28.3% on news in April that it had accepted a takeover offer from Banc One Corp.
The other stocks with strong showings were MBNA Corp., Huntington Bancshares Inc., Norwest Corp., and Signet Banking Corp. -- all of which had answers to investors' questions about the industry's ability to improve earnings. Their shares gained at least 9% in the quarter.
Analysts said other banks have also shown they can boost earnings in the face of weak loan demand and tough competition. But their shares did not rise sharply because of high trading multiples or other factors.
The American can Banker index -- a weighted average of 225 bank stocks -- lost 2.9% during the period, according to SNL Securities.
Leading the plunge were shares of Union Bank, which plummeted 30.1%. Other decliners were State Street Boston Corp., Zions Bancorp., Northern Trust Corp., and Bancorp Hawaii.
In the Cards for MBNA, Signet
Late last year, analysts and money managers predicted that this year would be a "stock pickers" market, in which the sector's shares were not likely to outperform the general market. From the second-quarter performance, it appears that banks showing revenue growth are attracting attention.
Both MBNA, whose shares rose 19.4%, and Signet, up 9.3%, have shown dramatic growth in credit-card-related assets.
"Signet is catching a lot of imagination and interest with its asset growth, stemming from credit cards," said Robert Albertson, an analyst with Goldman, Sachs & Co. "They can show growth where others fear to tread."
Outstandings Up 40%
In 1992, Signet's outstanding credit card loans rose 40%. Mr. Albertson estimated that outstanding credit card loans may have reached $2 billion in the second quarter, nearly a third of the bank's assets.
Practically all of MBNA's assets come from credit cards, mostly with upscale affinity groups.
Thomas P. Facciola, an analyst with S.G. Warburg, said the bank added 1.1 million accounts in the second quarter after bringing on 600,000 new customers in the first quarter.
When investors' fears about rising rates subsided in early June, MBNA's stock looked attractively priced at 11.5 times earnings, Mr. Facciola said. He predicted the bank will increase annual earnings 15% in each of the next two years.
The Word Is Out
Norwest and Huntington, analysts said, are good earnings stories that have gotten out.
Huntington earned 1.41% on assets in the first quarter, versus 1.04% a year before. Operating expenses as a percentage of revenues -- the efficiency ratio -- fell to 60% from 65%. And asset quality improved, with nonperforming loans falling to 0.88% of total loans from 1.65% a year earlier. The shares gained 11.3% last quarter.
"The market is beginning to recognize that the performance has improved," said Kenneth F. Puglisi, an analyst with the Chicago Corp.
Norwest a Fast Grower
Investors have come to recognize that Norwest is a fast-growing company. The bank predicts 13% to 15% annual earnings growth for the next three years. At the end of the second quarter, shares were trading at $27.375, a 9.8% gain in three months, and about 17 times trailing earnings -- one of the industry's highest multiples.
The sharp decline in Union Bank's share price came after a disappointing first quarter and a stock offering, which doubled the number of outstanding shares and put pressure on the stock price, said analysts.