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First Union and Summit Bancorp Receive Neutral Rankings, Analysts Suggest Growth Opportunities

Strategic Insights

— 2 min read

First Union Corp., the acquired CoreStates Financial Corp. in the Lehigh Valley, received a neutral ranking from Lehman Brothers, whereas Summit Bancorp, which dominates in Northampton County, received the same rating. Analysts from both institutions highlighted growth areas, such as capital markets and capital management, which contributed to the company's first-quarter operating earnings of 88 cents per share. Joan Goodman from Pershing Division of Donaldson, Lufkin and Jenrette Securities Corp. gave First Union a "buy" rating, attributing the shares' value to growth strategies and a share buy-back program.

Key Takeaways:

  • First Union Corp. received a neutral ranking from Lehman Brothers, due in part to its recent cost-savings measures and growth areas in capital markets and capital management.
  • Summit Bancorp, which dominates in Northampton County, received a neutral rating from Lehman Brothers, with analysts noting the bank's strong net interest income fueled by a nearly 15 percent rise in average earning assets.
  • Analysts at Lehman Brothers highlighted two crucial growth areas for First Union: capital markets and capital management, with the latter showing a 21 percent increase in revenues since the close of the fourth quarter.
  • Joan Goodman from Pershing Division of Donaldson, Lufkin and Jenrette Securities Corp. gave First Union a "buy" rating, attributing the shares' value to growth strategies and a share buy-back program.
  • Lana Chan from CIBC Oppenheimer noted Summit's fundamentals, citing the bank's solid start to the year, with almost all major income statement items exceeding anticipated values.
  • First Union reported first-quarter operating earnings of 88 cents per share, a penny ahead of expectations and nearly 9 percent better than last year's first quarter.
  • The company showed capital management revenues of $499 million in the first quarter, a 21 percent increase over the fourth quarter's figure.
  • Capital markets revenues of $371 million in the first quarter were 49 percent higher than the fourth-quarter figure, driven by increased investment banking revenues.

Statistics:

  • First Union Corp. closed at $53 on Friday, down $1.50 from Thursday.
  • First Union reported first-quarter operating earnings of 88 cents per share, a 9 percent increase over last year's first quarter.
  • The company showed capital management revenues of $499 million in the first quarter, a 21 percent increase over the fourth quarter's figure.
  • Capital markets revenues of $371 million in the first quarter were 49 percent higher than the fourth-quarter figure.
  • Summit Bancorp's stock closed at $42.06 on Friday, down from $43.12 on Thursday.
  • Summit reported first-quarter earnings of 68 cents a share, up 8 percent over per share earnings in the first quarter of 1998.

Sources:

  • Lehman Brothers
  • Pershing Division of Donaldson, Lufkin and Jenrette Securities Corp.
  • CIBC Oppenheimer
  • First Union Corp.
  • Summit Bancorp
  • The New York Times
  • The Wall Street Journal
  • Bloomberg News

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