Several bank stocks resisted a downturn for the group Wednesday as investors sought safe stocks in a volatile market.
Shares of SouthTrust Corp. of Birmingham, Ala., and Northern Trust Corp. of Chicago rose as investors bought stocks of banking companies that have strong earnings, respected management, and steady fee income.
Wells Fargo & Co. of San Francisco and FleetBoston Financial Corp., which were up during the day, closed flat or slightly down.
Shares of many other banking companies fell because of renewed interest rate jitters and investors' rotation out of the sector and into technology companies.
The American Banker index of the 50 largest banks fell 2.12%, and its index of 225 banks, 2.19%. The Dow Jones industrial average was down 1.61%, but the Nasdaq composite index was up 2.19%.
SouthTrust rose 12.5 cents, or 0.48%, to $25.3125, and Northern Trust 56.25 cents, or 0.86%, to $66.25. Wells was flat at $43.0625, and FleetBoston fell 18.75 cents, or 0.50%, to $37.25.
"Investors are becoming much more selective because the market has been extremely volatile in the last few weeks," said Eric E. Rothmann, an analyst at First Security Van Kasper in San Francisco. "They are putting their money in companies with strong managements and business operations."
After stumbling a bit in the fourth quarter, Wells has gotten right back on track, said Andrew Collins, a bank analyst at ING Barings.
"Many people thought that [Wells'] core year-over-year revenue growth would be 3% or 4%, but it was 7%," said the analyst. "Investors also thought their margin in the first quarter would shrink by as much as 15 basis points, but it only decreased by five, which is highly manageable."
David W. Allaire, co-portfolio manager at the Imperial Fund, agreed. Smooth post-merger integrations at FleetBoston and Wells have boosted investors' confidence in both, he said.
The two companies also have strong fee income, which makes their earnings stream less vulnerable to rising interest rates, Mr. Allaire said.
SouthTrust shares are another defensive play in a volatile market, said David Trone, an analyst at Credit Suisse First Boston.
"Although the company does have margin pressure, it is a stock that investors would want to buy," Mr. Trone said. "It is a conservative bank with a solid track record" that does not rely on one-time gains to boost earnings.
Angelina Billon, an analyst at Johnston, Lemon & Co. in Washington, agreed.
"There were a lot of concerns about [SouthTrust's] ability to meet earnings without relying on federal Home Loan advances, but those concerns were overblown," she said.
She pointed out that the company's net chargeoffs declined in the first quarter and that its nonperforming assets rose only slightly.
Lori Appelbaum of Goldman Sachs Group Inc. said that SouthTrust's shares have been pounded recently because of investors' worry that rising interest rates could hurt the company. "Investors really appreciate their generally good top-line growth," she said, "which has been a function of their southern markets and SouthTrust's strong sales culture."