All year, Sean Ryan has been one of the most bearish analysts on the banking industry.
But as the market went into virtual free-fall last week in the wake of the terrorist attacks, Ryan changed his mind. Now, he says, is the time to buy bank stocks.
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He even took the extraordinary step of upgrading his rating on Chicago-based Bank One Corp. to a “buy” from a “sell” last week.
Ryan argues that bank stock prices now reflect the possibility of higher credit losses than had been expected. Long-term prospects for household financial strength also could improve as consumer spending slows. And increased liquidity from the Federal Reserve should provide a near-term cushion, he wrote in a research report for Fulcrum Global Partners last week.
“In our view, bank stocks spent most of 2001 trading at unduly high valuations due largely to market expectations of a second-half recovery,” he wrote. “Now, however, we believe banks are trading at unduly low valuations due largely to market expectations of an imminent recession.”
He suggests “a middle ground of sorts–the possibility that we have been and remain in a recession.”
That would mean a continued decline in credit quality at the same time the government has taken steps to mitigate the losses.
Ryan recommends buying shares in credit card companies and regional banks with little or no exposure to the events of Sept. 11.
“We don’t pretend to know that this is the bottom for the market, and we recognize that the difference between being `early’ and being `wrong’ is mainly semantic. At the same time, we believe that fundamentals and valuations are sufficiently out of whack to justify the risk of being a bit early,” Ryan wrote.
The check’s in the mail: Some people who have never missed a loan payment received calls last week from their lenders, asking whether they had sent their payments.
Mostly, the checks are in the mail. But some of them arrived late because of delivery problems stemming from the terrorist attacks.
Credit card payments from the East Coast were particularly slow to arrive at U.S. Bancorp’s collection centers in Cincinnati and Fargo, N.D., said Pat Wesner, head of the banking company’s credit card unit.
“We finally got current today,” she said Thursday.
Meanwhile, some customers have been insulted by calls from collections employees.
“They shouldn’t have even made this call,” said Cheryl Lutzow of suburban River Grove, whose car payment was mailed Sept. 10, the day before the attacks, but did not arrive on its due date.
U.S. Bancorp officials, who acknowledged Lutzow is a “great customer,” said they have tried to be especially careful when calling people whose payments have not arrived.
The company is evaluating late payments on a case-by-case basis, but people whose checks appear to have been sent in time for their due dates will not be charged late fees, they said.
Bank notes: Bank One Corp. named Julie Benda its new director of investor relations Thursday, the same day her predecessor, Jay Gould, assumed the same post at Huntington Bancshares Inc. in Columbus, Ohio, where the former Banc One was based until it acquired First Chicago NBD Corp. in 1998.
Gould, who had been head of investor relations for Bank One since 1996, left the company last year. Benda most recently marketed and structured asset-backed commercial paper programs for Bank One’s large corporate customers.