MBNA Corp. stock was lifted Friday by news of lower credit-card delinquencies and a favorable bond market.
The Newark, Del.-based company reported April delinquencies of 3.42% - the lowest level since last year's second quarter. The industry average for bank delinquencies in March was 5.01% and has been climbing, said Robert McKinley, president of RAM Research, Frederick, Md.
"MBNA has always been one of those banks that managed delinquencies well," he added.
The Stanard & Poor's bank index rose 1.17%; while MBNA shares rose 2.54%, closing at $30.25, up 75 cents.
Analyst Moshe A. Orenbuch, with Sanford, Bernstein & Co., said MBNA's stock price was also buoyed by a healthy bond market. The government reported a widening trade deficit, which helped boost bond prices by quelling inflationary fears.
Mr. Orenbuch said that MBNA has been characterized by "extraordinary marketing and growth." He noted that the company has a third less credit losses than other banks and has a new platinum card, which could garner as many as a million new customers.
Analyst Merrill H. Ross of Wheat First Butcher & Singer observed, however, that the delinquency level should be kept in perspective. A 3.42% delinquency level is higher that MBNA has experienced in the past, she said, adding that delinquency ratios can be distorted by account growth.
New accounts "do not start out bad," explained Ms. Ross., but could go bad at a later date.
Separately, BankAmerica Corp. stock rose dramatically on news of an upgrade from Keefe, Bruyette & Woods Inc. Shares closed at $76.125, up $1.625, after analyst Thomas F. Theurkauf upgraded the San Francisco company to " attractive" from "hold."
"There are many ways that BankAmerica can make you feel good as a shareholder," Mr. Theurkauf said, pointing to the valuation of the stock and the prospects of improvement in the California economy.
BankAmerica was one of the subjects discussed in a wide-ranging conference call to investors by UBS Securities analyst Thomas Hanley, who predicted a major merger for the bank with an East Coast institution within a year.
Trading in Dime Bancorp was heavy following a new offering of 8.4 million shares. Merrill Lynch & Co. - the lead underwriter of the offering, which was priced Thursday - upgraded the stock Friday to "accumulate" from "neutral." Shares closed at $12.125, up 37.5 cents.
Brown Brothers Harriman initiated coverage on Southern National Corp. with a rating of "perform/hold."
Analyst Nancy A. Bush based her rating on the belief that performance of the bank's stock would probably be "relatively lackluster" in a market struggling with the possibility of inflation and higher interest rates. Southern National's shares closed at $28.75, up 25 cents.
Big gainers included Summit Bancorp, up $1.375, to $39; Signet Banking Corp.; up $1, to $25; and Bankers Trust New York Corp., up $1.625, to $74.25.