Wednesday, January 16, 2002

Industry notes: Banking

Slowdown continues for mergers

        Activity for mergers and acquisitions among U.S. banks continued to fall last year, expanding a trend for the past three years.

        There were 179 bank deals totaling $31.7 billion last year, down from 211 deals worth $90.1 billion in 2000. That was down from 411 deals in 1998 totaling $265.3 billion, the peak year when higher bank stock values promoted more deals, according to SNL Securities, a Charlottesville, Va.-based financial research firm. The numbers are based on announced deals, not completed deals.

        At the same time, the number of bank assets sold tied to those deals totaled $187.3 billion last year, versus $533.4 billion in 2000. In comparison, $1.1 trillion in assets was sold in 1998.

        And without the only major deal last year — First Union Corp.'s $13.6 billion purchase of Wachovia Corp. — volume-based deal amount and assets sold reached its lowest point since 1994.

        The slowdown comes as banks have pulled back on making huge deals as the value of banks' stock has declined in recent years.

        In addition, many banks are not willing to make large investments on acquisitions, largely because many such deals have not always deliverered on desired results from mergers. There also are greater concerns about rising problem loans, particularly with the economy slowing.

Bank One adds stock options

        Taking a cue from other U.S. banks, Bank One Corp. has issued about $12 million in stock options to employees to help boost productivity and boost revenues.

        The Chicago-based company has awarded $300 in stock grants to the retirement accounts of 40,000 employees. Bank One employs 300 to 400 people in Cincinnati and Northern Kentucky at about 31 branches.

        The grants are part of a big plan by Bank One management to make employees work harder and be more loyal. The initiative also is part of a system at Bank One that grants larger bonuses to the top-performing managers while deducting extra pay from others, based on how profitable businesses they run for the bank are.

        Awarding stock to employees is not uncommon at banks, particularly those that are known for aggressively selling products.

        Locally, Fifth Third, Provident, Firstar and Huntington are among banks that in recent years have offered stock awards to employees as incentives to boost productivity and reward performance.

        Bank One will distribute the stock to full-time and part-time workers who have been at the company at least a year as of Dec. 31. Those shares will vest after three years of working for the bank. After the disbursement, 95 percent of Bank One employees who have been with the bank at least a year will own stock.

BlackRock up 15%

        Higher fee income and more assets under management helped BlackRock Inc. post a 15 percent gain in fourth-quarter profits.

        BlackRock, the money management arm of PNC Financial Services Group Inc., earned $28.3 million, or 44 cents a share, up from $24.5 million, or 38 cents a share, a year earlier. The company beat the 43-cents-a-share estimate of seven analysts.

        The company's revenues rose 1 percent to $129.4 million, fueled by fee growth from sales of fixed-income and cash-management products. BlackRock's assets under management rose 17 percent to $238.6 billion for the 12 months ended Dec. 31.

        BlackRock manages assets for individuals and institutions in Greater Cincinnati.

        Call Jeff McKinney at 768-8499; fax 564-6991; or e-mail



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