Tuesday, August 22, 2000

Industry notes: Banking

2 analysts rate 5/3 a 'buy'

By Jeff McKinney
The Cincinnati Enquirer

        Two Wall Street banking analysts rate Fifth Third Bancorp as a “buy.” Diane Meridian of Morgan Stanley Dean Witter said the Cincinnati-based banking company is the most highly valued bank her firm tracks, trading at about 23 times its estimated share earnings for this year. Fifth Third's consistent track record and potential for future strong revenue and earnings growth earned it the valuation. She also said early results from Fifth Third's acquisitions of Indiana's CNB Bancshares Inc. and Peoples Bank Corp. are encouraging.

        Though Ms. Meridian is not bullish on growth prospects in retail banking in general, she likes banks that are able to keep costs down and pass savings on to consumers with attractive loan and deposit rates. She said Fifth Third falls into that category.

        Ms. Meridian thinks the stock is undervalued based on Fifth Third's performance and earnings growth potential. Her 12-month stock price target: $70. Fifth Third closed at $43.75 Monday, down 68 cents.

        Keith Horowitz of Paine Webber also has initiated coverage of Fifth Third and rates the stock “attractive.”

        He predicted that Fifth Third can maintain its 15 percent annual share earnings growth rate because of its ability to take business from weaker rivals and its disciplined acquisition strategy.

        Mr. Horowitz's 12-month stock price target on Fifth Third is $80. That's because he thinks Fifth Third can hit key profitability barometers such as 20 percent return on equity and an earnings annual growth rate of at least 11 percent.

Peoples posts
71 percent gain

               Higher net interest income helped the parent of Peoples Community Bank post a 71 percent gain in third-quarter profits.

        Peoples Community Bancorp Inc. earned $439,000, up from $256,000, from a year ago. Quarterly interest income grew briskly to $5.1 million, fueled by loan growth and benefits of a merger.

        But one-time merger-related cost of $1 million reduced Peoples' nine-month profits to $254,000, down from $713,000 a year ago.

        Share earnings comparisons were not available, because Peoples changed its operations after the merger.

        The results come three months after Peoples Building, Loan and Savings Co. of Lebanon merged with Cincinnati's Oakley Improved Building and Loan. The two mutually owned thrifts then went public and paid $17 million in cash and stock to buy Harvest Financial Corp., parent of Harvest Home Savings Bank of Cheviot.

        The merger, the first of its type in the nation's thrift industry, created a new company, Peoples Community Bank. The combined entity has six offices in Southwest Ohio and assets of about $310 million.

PNC finance group
backs Ind. condos

               PNC Real Estate Finance has lined up $26.3 million in construction loans for an Indianapolis developer to build condominiums. The unit of PNC Financial Services Group will provide the financing for GPI Carmel at Carmel to build a 276-unit apartment and condominium complex in Carmel, north of Indianapolis.

        PNC Real Estate provides credit and other types of financing services to developers, owners and investors in commercial real estate. It operates in several cities including Cincinnati.

        PNC Financial Services is one of the nation's largest financial services companies. It holdings include PNC Bank, operator of Cincinnati's fourth-largest bank with 47 branches.

Third Federal
launches Internet bank

               Third Federal Savings and Loan, which expanded into Cincinnati two years ago, has launched an Internet bank.

        DeepGreen Bank, at www.deepgreenbank.com, will offer a variety of products, including home equity lines, certificates of deposit and, eventually, home mortgages.

        The new company's board will include former Comptroller of Currency Eugene A. Ludwig and former Federal Deposit Insurance Corp. Chairman L. William Seidman.

        Third Federal, which claims to be Cincinnati's second-largest mortgage lender behind Fifth Third, has four offices locally. Third Federal operates its own Web site at thirdfederal.com.

Firstar ATM receipts
contain Zoo coupons

               Firstar, trying to boost ATM usage, is offering discount coupons to the Cincinnati Zoo and Botanical Gardens.

        The coupons, good for $1 off a child admission and $2 off adult admission, are printed on Firstar ATM receipts.

        The zoo coupons are available at Thriftway in-store Firstar branches in Anderson Township, Hyde Park, Northgate, Western Hills, Harper's Point, Montfort Heights and Springdale.


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- Industry notes: Banking
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