SEI Corp., a provider of trust and investment services, is riding anticipation of a positive earnings report to a substantial stock price rise.
Since Jan. 26, shares of the Oaks, Pa.-based company have appreciated 17% to $47.50 Friday. The mini-run caps several months of positive market performance for SEI. Since June the company's stock price has more than doubled.
SEI officials said they expect to make a positive earnings announce-ment Tuesday but know of no other news from within the company that would be driving the market reaction.
Last month SEI announced plans to repurchase another $15 million of common shares. The company, which has 18.1 million shares outstanding, had approved a $25 million buyback in September.
At least one external factor could be affecting the stock price. Dessauer & McIntyre Asset Management gave SEI a positive recommendation, saying it is on the verge of a earnings explosion that should carry its stock price above $50.
One of the moves SEI hopes will help it continue to grow is an expansion of its trust outsourcing business. It handles back-office trust processing for about 35 banks, most of them community institutions.
With trust banks encountering more competition from nonbank financial companies, SEI hopes larger banks will be open to freeing themselves of back-office burdens. For this reason, the company is aiming a new marketing push at regional banks. FirstMerit Corp. of Akron, Ohio, is the first regional using SEI's outsourcing service.
"Outsourcing is always an emotional issue, and it may be even more so for regionals than for community banks," said Richard S. Lieb, president of SEI's investment systems and services division. "But trust banks of all sizes are seeing competition like never before, and we think we're in a position to handle some things that will let them focus on strategic issues."
According to SEI, banks in 1990 owned 65% of the trust market. But today their share is only 30% of the $1.4 trillion industry. "That says something needs to be done," Mr. Lieb said.
Many regional banks are playing the community bank game in trust, emphasizing relationships and personalized service, said John Krzeminsky, senior vice president in SEI's outsourcing group. "But they're going to need to work harder on price and on upgrading their services to include asset management," he said. Outsourcing can free management to concentrate on these issues.
The outsourcing services address several back-office functions, including custody, trust operations, and asset management. SEI competes with M&I Data Services in this area.
Even as SEI is looking for new sources of revenue, it also is working to contain costs. In October 1996, the company moved to a newly built facility designed for maximum efficiency.
Constructed almost entirely of recycled materials, the office is an "open work space" with virtually no offices or partitions. Wheeled desks and chairs, and custom-made "pythons" (coiled power and computer lines that hang from the rafters) have streamlined the process of moving people within the company.
"The idea is to cut back on the amount of support staff and upheaval associated with our operation," said Mr. Lieb. "The facility has cost benefits, but it also says something about the way we want to do business."