A leading Wall Street analyst has given his New Year's blessings to NationsBank Corp.
George M. Salem of Gerard Klauer Mattison reiterated a "buy" rating on the Charlotte, N.C. banking company, increasing his one-year price target for the stock to $125 from $115.
Mr. Salem says that Wall Street will learn of favorable "surprise" developments about the bank during a Jan. 13 analyst meeting timed to follow release of fourth-quarter earnings results.
For example, Mr. Salem expected that the bank will announce it is boosting its estimate of cost savings arising from the Boatmen's Bancshares merger to between $475 million and $550 million, from the $335 million previously announced. The analyst expects the bank to report earnings of $2.25 per share for the fourth quarter, up 15% from the $1.95 per share reported a year ago.
After Mr. Salem's recommendation, NationsBank jumped $1.75 to $101.125 in Monday's trading.
Other bank stocks followed suit.
The S&P bank index rose 0.17% to close at 469.23, while the Nasdaq bank index rose 0.28% to 1270.9. Meanwhile, the Dow Jones industrial average lost 0.18% to 6549.37.
Fleet Financial Group offered to exchange 11 million of its outstanding shares of Group Series V Preferred stock with trust-originated preferred securities on Monday.
Holders of series V preferred stock can swap their issues - which have a coupon of 7.25% - for the 8%-coupon trust preferred securities until Jan. 30.
One depositary share of series V preferred is equal to one depositary share of trust preferred securities.
In the past month, banks have issued more than $15 billion intrust preferred securities because proceeds are tax deductible and qualify as Tier 1 capital.
Boston-based Fleet is the third bank using the from such issuance to replace its costlier traditional preferred stock. BankAmerica Corp. and Mellon Bank Corp. announced similar transactions earlier this month.
Tania Padgett contributed to this report.
