Silicon Valley Bancshares rallied as Wall Street took a bullish view of its third-quarter outlook, but KeyCorp's latest self-improvement plan has so far failed to impress analysts, who remained cautious in their views of the company's outlook.

Catherine Murray, an analyst at J.P. Morgan & Co., wrote in a report that KeyCorp's program is "in line with our expectations." The Cleveland banking company expects to fully implement its plan by the end of 2002 and projects total savings of $360 million. Even as announced, Ms. Murray said, the "targets are not significant enough to propel the stock upward." She raised her earnings estimate to $2.28 per share for this year, from $2.25, and to $2.55 for next year, from $2.41 but maintained a lukewarm "market perform" rating. Given KeyCorp's many restructuring campaigns in recent years, several analysts said, the company is unlikely to get any benefit of the doubt from investors until the new plan is well into the execution stage.

Nancy Bush at Prudential Securities also reiterated her "hold" rating and left unchanged her earnings estimates. "The Street has grown tired of these types of programs," she wrote. "No company that we follow has been through such an array of restructuring programs."

"Investors will take a wait-and-see attitude" until evidence demonstrates that the new plan is working, wrote Michael A. Plodwick, who covers KeyCorp for UBS Warburg. He too reiterated his "hold" rating but raised his earnings estimate for 2000 to $2.30 per share, from $2.25, and reduced his estimate for next year to $2.50, from $2.55.

On a day when financial stocks rallied to partially recover last week's losses, KeyCorp appreciated a modest 43.75 cents, or 1.86%, and closed at $23.9375. The American Banker index of the 50 largest banks rose 1.41%, and its index of 225 banks was up 1.78%.

A stronger performance was put in by Silicon Valley Bancshares after analyst Charlotte A. Chamberlain of Jefferies & Co. raised her rating to "buy" from "accumulate" on Monday.

In a research report she wrote that the strong deposit growth and fee income from the banks' investments in venture capital funds, as well a recent valuation decline, were the main reasons for upgrading the stock.

Silicon Valley Bancshares "has a solid performance so far for this quarter," she wrote. "The growth of total loans, interest-earning assets, and deposits reported for the end of August were all in line with our expectations. The net interest margin (6.9%) and efficiency ratio (43.2%) were right on our targets." Ms. Chamberlain expects earnings of 63 cents per share for the third quarter, $2.45 for 2000 and $3 for next year.

Gary B. Townsend, an analyst at Friedman Billings Ramsey & Co. in Arlington, Va., has a similar view. "I love what I have seen so far at the liability side," he said. "They do not have to borrow capital to invest. Many banks have to merge for that."

Mr. Townsend also said that the "non-performing-assets are at 0.54% higher than I would like them to be," and thought the stock was running ahead of itself when he downgraded the company to "accumulate" from "buy" on Sept. 15.

Silicon Valley closed at $52.75, up $1.9375, or 3.81%.

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