The last two months haven't been easy for money managers who have put their faith in bank stocks. Just ask Miles Seifert.

"I'm still wildly bullish, but this certainly has not turned out to be my favorite year," the chief investment officer at Gray, Seifert & Co., New York, said last week.

His firm has roughly $300 million invested in the shares of 37 regional banks from Hawaii to Florida. During September's bloody bank stock rout he watched a respectable 7% year-todate gain on that investment evaporate.

The stocks have recently recouped about half the lost value, on the strength of better-thanexpected third-quarter earnings at most banks.

But Mr. Seifert is still shaking his head.

"We get interstate banking and they all sold off in advance of great earnings. It doesn't make a lot of sense to me," he said.

"But then, I suppose I never will begin to understand these momentum players," he said, using a Wall Street term for large investors prone to sharp mood swings, often at the drop of the latest economic report.

"I think its the wrong way to invest a foolish way to invest," he said. But Mr. Seifert noted that he speaks from a position of being "fully invsted and gettting hurt."

"As far as I can see, the bank stock [price-to-earings] multiples are ridiculosly low, while the news is nearly all good," Mr. Seifert said.

"It's hard for me to understand how the banks can sell 8 or 9 times [expected earnings], yeild 3.5% to 4% increase dividents, buy back their stock, produce good earnings-- and nobody cares," he said.

"Investors have the scenario firmly in mind that if rates go up, bank stocks must go down," he said. "To convince them otherwise is impossible, it seems," he said.

Many investors remain fearful that further interest rate hikes by the Federal Reserve Board, in its yearlon credit tightening campaign to subvert future inflation, will hurt bank earnings.

In particular, they fear tightening will hury banks' net interest margins, as they are unable to pass along the increase in the cost of stheri own funding.

Bank margins grew historically wide after they Fed sharply cut rates during the last recession.

Some narrowing would not bother Mr. Seifert, as long as the pace of nfew loans grows. "How often have the banks had margins like this to play with?" he asked.

"The only risk is they'll have to start paying out more for deposits. Then the earnings could be hurt. But so far we haven't seen than," he said.

Gray, seifert & Co.'s largest banks stock holding is in West One Bancorp., Boise, Idaho. The firm also has sizable positions in Norwest Corp., Minneapolis; Barnett Banks Inc., Jacksonville, Fla.; Marshall & Ilsley Corp., Milwaukee; and Integra Financial Corp., Pittsburgh, Pa.

Others in which it owns stock include Boatmen's Bancshares and Mark 'Twain Bancshares, both in St. Louis; Commerce Bancshares. Kansas City; Hawkeye Bancorp, Des Moines; Crestar Financial Corp., Richmond, Va.; and Fourth Financial Corp., Wichita, Kan.

Recently, Mr. Seifert acquired shares in First Hawaiian Inc., Honolulu. "Hawaii has not had interstate banking and we think First Hawaiian may be a takeover candidate down the road," he said.

Banks in Hawaii. along with Missouri and some southeastern states, will be opened to acquistion by banks in any other state next September under the Riegle-Neal Interstate Banking and Branching Efficiency Act signed last month by President Clinton.

In fact. many of the banks in which Mr. Seifert owns shares are regarded as potential takeover candidates.

"We think industry consolida tion is going to continue." he said.

Meanwhile the banks remain in fundamentally sound shape. "The third quarter was better than we expected, with 15% to 20% earnings gains," he said, "and the [year-to-year] comparisons were not easy, because the third quarter of '93 was also a good one."

Mr. Seifen was a major owner of bank stocks in the early to mid 1980s, got out in 1987, began acquiring the stocks again when they were trading at lows in 1990, and has been building ever since.

"The only thing right now that could get me to sell the bank stocks would be a major downturn in the economy," he said. He does not see that in the cards.

"The bank stocks can't keep selling at these multiples," he said. "I want to be holding them when buyers come back in." That could happen anytime, he said, but perhaps not until next year.

"If I have to," he said, "I'll be the last bull around for the banks."

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