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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (37926)	12/2/1998 10:58:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Tip, Overexpanding crappy regional bank which is seeing its spreads come down rapidly. These lousy super-regionals have kept prime rate high during the drop in rates, but that easy money has ended. Even though their cost of borrowing has gone down, their return from lending has declined faster of late. That means profit problems down the road for a stock already selling at 23 times eps. FTU is not currently growing fast enough to support their hefty pe ratio, but lower spreads make it even less likely that they keep their current spiked price in 1999. And that analysis does not include the fact that they own lots of horrible mortgage paper and credit card debt that could easily turn sour on them. The only way to widen those spreads is to loan to junkier credits. They may try that and get in real trouble. BTW, the same is true of many regionals, but FTU is kind of big and odd for a takeover candidate, so I don't expect takeover rumors to keep them afloat when the bad eps hit. MB