Returning to her old roost at Ryan, Beck & Co., bank analyst Nancy Bush started coverage Wednesday of 15 major banking companies, including negative ratings for two and positive for three.

Ms. Bush, who was recently dismissed from Prudential Securities, initiated her coverage during a session in which banking stocks gave back some of their gains from Tuesday as they were dragged down by the broader market.

The American Banker index of 225 banks fell 1.68%, the Dow Jones industrial average 1.63%, and Nasdaq 5.99% because of continued bad news from the technology sector.

In her reports, Ms. Bush tagged two Cleveland companies, KeyCorp and National City Corp., as "distribute," indicating that shareholders should sell the stock or consider selling it.

But she labeled FleetBoston Financial Corp. and PNC Financial Services Group Inc. as "strong buys" and gave State Street Corp. a "buy" rating.

Ms. Bush wrote that KeyCorp "has not demonstrated a coherent strategy for growth, nor has it shown that it can deliver on even lowered earnings expectations." She expects the company's first-quarter per-share earnings will be 54 cents, a penny less than it earned in the same period last year and also a cent under the First Call/Thomson Financial analyst consensus.

KeyCorp's shares have risen 43% since hitting a low of $17.50 last July. The stock dropped 0.2% Wednesday to close at $25.41.

Ms. Bush also said National City Corp., needs a firm strategy after several years of acquisitions. She expects its first-quarter per-share earnings to match those of a year earlier, 53 cents. The bank's stock was unchanged wednesday at $26.47.

While she took a positive view of FleetBoston in a research note, she also jokingly referred to it as "the world's most frustrating stock ... a head banger, the one stock that makes you want to smash your head against a brick wall every once in a while."

FleetBoston's biggest challenge is to sell investors on the idea that it is a different company after years of big mergers, Ms. Bush said. Other analysts have taken a more pessimistic view of the company, but "I certainly think there is enormous potential for the combined company and I think that we're going to see that this year," she said.

Ms. Bush echoed other bank analysts who are bracing for a grim first-quarter earnings season. She said she expects large banking companies to suffer as capital markets revenues drop and more large commercial loans go bad.

However, she also said she believes financial stocks in general are undervalued, because investors and analysts are focusing too closely on negative announcements.

"We're losing the forest for the trees," she said in an interview. "I think that the Street fails, in many instances, to see the relative attractions of the bank stock group. We as sell-side analysts get very focused on the negative things going on. There's still positive earnings momentum for many of these banks."

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