Ten years ago, Frank W. Anderson of Stephens Inc., Little Rock, had plenty of southwestern bank stocks to track. But a decade of upheaval in the region has forced the Dallas-based financial services analyst to expand his universe of stocks beyond the commercial banking industry and into such companies as the Federal National Mortgage Association and Resource Mortgage Capital.

While Stephens' new bank advisory group will again make banks his focus in the near future, his depth of coverage has given Mr. Anderson a perspective on the relative valuations of banks and other finance companies.

Does the market value specialty finance companies more than commercial banks?

ANDERSON: I would say so because investors have traditionally linked earnings growth to price-earnings ratios. That's just standard securities analysis. If a company is in a niche business, they are considered to be more efficient because they know the business better and are more focused on that market. As a result, their growth rates tend to be higher.

What is the effect on price multiples?

ANDERSON: Whereas banks get 70% to 75% of the Standard & Poor's market earnings multiples, some of these financial companies can get market multiples of 17 to 18 times earnings.

Are there any threats on the horizon to these companies?

ANDERSON: We're pretty favorable on the direction of interest rates. But what we're worried about is the possibility of recession, because that is where you start getting credit quality problems.

Are investors taking into account this possibility?

ANDERSON: I get the sense that investors are trading more now on perceptions of the slope of the yield curve than on fundamentals. Only after we get to a time when interest rates stabilize do investors get interested about what a company does.

Are there any other financial stocks you like now?

ANDERSON: For yield purposes, as much as appreciation, we still like Resource Mortgage Capital.

Is there any role banks stocks can have in an investment portfolio at this time?

ANDERSON: We're looking at banks as much as defensive plays as offensive plays now. We think they are better than traditional defensive interest- sensitive stocks like utility companies.

Which stocks are you recommending against?

ANDERSON: I don't know if I would sell anything at this time. At worst, I'd be neutral to positive on some names. If I followed more specialty finance companies I would have a different attitude, though.

Which bank stocks do you like at this time?

ANDERSON: We like Roosevelt Financial, which is a thrift that looks like and is intent on becoming a commercial bank. I still like Cullen Frost (Bankers Inc., San Antonio). I don't think (chairman) Tom (Frost) is going to sell out. NationsBank is the one big bank that we like. And Boatmen's Bancshares, although we've got a "hold" on their stock now, is still one of the most attractive banking franchises available currently.

Are you recommending any bank stocks as takeover possibilities?

ANDERSON: We're not going to recommend a stock strictly for takeover purposes. While consolidation is one of the great themes in the recent run- up of bank stocks, we try to find stocks we think can do well without a takeover. And if they are taken over, well that's gravy.

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