The battered shares of Bankers Trust New York Corp. rallied Thursday as investors focused on the company's quarterly dividend announcement, due Tuesday.
The stock was ahead $1.875 during afternoon trading to $53.50, helped by the "trading buy" issued by banking industry analyst Raphael Soifer of Brown Brothers Harriman & Co.
Bankers Trust had plunged nearly 20% in value earlier in the week after the bank unexpectedly revealed that it may suffer a $125 million quarterly loss, or $1.56 a share, from Latin American trading activities.
"Our trading buy is based simply on the dividend. We think it is going to be there," said Mr. Soifer, who maintains an overall "neutral" rating on the stock.
The expected $1 dividend was also highlighted by Lawrence W. Cohn of PaineWebber Inc., who said he felt the payout remains "pretty secure."
"It will take a while for this company's earnings to rebound significantly, but we will be getting paid while we wait," said the analyst, who has a "buy" rating on the stock.
The sharp pullback in its stock price raised Bankers Trust's dividend yield to nearly 8%. That is roughly double the typical yield for major banks.
"The stock is selling around pro-forma book value and we think that is a compelling value," said the PaineWebber analyst. "We don't think the fundamental value of the company has changed."
But Mr. Cohn and others on Wall Street remain highly critical of how Bankers Trust communicated its prospective loss, which was disclosed late last Friday.
"Announcing such an unexpected loss late on a Friday afternoon is a truly cowardly act," Mr. Cohn asserted. "And not making any effort to be readily available to investors was equally cowardly.
"Their timing was particularly bad and it hurt their stock dramatically," he said. "They cost their shareholders a lot of money."
A Bankers Trust spokesman, Thomas A. Parisi, said the company deemed it proper to wait until financial markets had closed for the week before making the announcement, and had gotten in touch with as many analysts following the company as possible.
"Those calls went on into the weekend as necessary," he said.
"But we were not able to answer all questions, such as about the size of the restructuring charge we may take, since we don't yet know the size, or about the dividend, which has not yet been considered by our board," he said.
Some analysts are less certain than Mr. Soifer and Mr. Cohn about the security of Bankers Trust's dividend, particularly later this year, and the outlook for the company's earnings and stock price.
Analyst George M. Salem of Gerard Klauer Mattison & Co., New York, cut his rating to "sell" from "hold" on Monday, saying the dividend "could eventually be cut," although he said a reduction next Tuesday is unlikely.
Bankers Trust sets its annual dividend policy in December for the succeeding year. Last Dec. 20 the company raised its quarterly payout to $1 from 90 cents.
Mr. Salem cut his 1995 earnings estimate for the bank to $3 a share, down from $6.75 and well under the $4 annual dividend. Bankers Trust earned $7.15 a share in 1994 and $12.26 in 1993.
"Earnings may only average $1.50 per quarter in the last nine months (of 1995), exclusive of a possible second round of restructuring charges," he warned.
"No clues as to the outlook beyond the first quarter are available from management and no conference calls or meetings (for investors) are planned," he noted.
Bankers Trust is initiating a cost-cutting program that will include laying off 5% of the 1,200 officers in its global investment banking division. The charge to earnings from this corporate downsizing will deepen the first quarter loss.
"We estimate a restructuring charge of $100 million, pre-tax," Mr. Cohn said. Diane Glossman of Salomon Brothers has said the charge could run as high as $150 million.
Mr. Soifer said he anticipates the loss for the quarter, with the restructuring charge included, could reach $2.20 a share.
Besides its dividend, the fresh strength in Bankers Trust shares both Wednesday and Thursday has been partly due to a rebound in the market prices for Latin American debt securities.
Mr. Cohn said that probably means that Bankers Trust's losses from trading in such securities will now be smaller than expected. "I would be shocked if it actually reaches $125 million," he said.
In other news, shares of Barnett Banks Inc. were up 75 cents to $44.375 after analyst Michael L. Mayo of Lehman Brothers initiated coverage with a "buy" rating.
Mr. Mayo said he liked the stock because it trades at only 70% of its estimated franchise value of $62 a share, in contrast to 90% for other banking companies.
