This Week, Industry Snapshot Looks at
Regional Banks

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The Bank of New York Company

First Chicago NBD Corporation

Norwest Corporation

Wells Fargo & Company

Westamerica Bancorporation

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This Weeks Industry Snapshot

One irony that has emerged in today's heady market environment is that banks have become safe havens. Formerly, a flood of capital away from equities, which invariably accompanied pronounced market downturns, led to an overflowing of bank coffers. Now banks have been buoyed by a similar influx of capital, but not as a result of a market downturn prompting an increase in deposits to savings and money market accounts.

The significant increase in bank stock prices and valuation multiples over the past year have come largely as a result of senior bank executives focusing on capital management and allocation. Banks have maximized revenues by growing their sources of income, and investors have responded by displaying a willingness to pay for this improved diversification. In addition, banks have experienced across-the-board expansions of their PE multiples, due to the increasing predictability of their earnings and their improving asset quality.

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