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Regional banks surge amid Wall Street turmoil

September 18, 2008
As stock prices of Wachovia Corp. and other big names in banking take massive hits, regional banks like Integra and Old National in Evansville are quietly racking up large gains.

An analysis of the best-performing Indiana stocks since Sept. 1 reveals regional banks atop the list.

Integra Bank Corp. has seen its shares soar nearly 32 percent, to $8.22. Old National is up nearly 22 percent, to $21.22.

Others hot stocks are Lakeland Financial Corp. in the northern Indiana prosthetics capital of Warsaw, First Financial Corp. in Terre Haute and Horizon Bancorp in Michigan City in northern Indiana.

"People are leaving the big national banks to the regionals," said Paul Coan, managing partner at the Indianapolis investment firm Wealth Planning & Management LLC.

Regional banks "master the basics," Coan added. "They don't try to invest in quasi products no one understands, like credit default swaps."

Spooked investors are attempting to sort out a string of bad news from Wall Street this month. Those shocks include the bankruptcy of investment bank Lehman Brothers and troubles at giant California thrift Washington Mutual.

The Standard & Poor's 500 Index is up 5.75 today after sliding 54.5 yesterday to 1156.6

The rise of the regional bank stocks coincides with large declines among some of the state's best-known companies.

Carmel insurer Conseco Inc. is down 47 percent since the first of the month, to $4.71.

Indianapolis radio and magazine company Emmis Communications Inc. is off 26 percent, to $1.63. And Cummins Inc., the Columbus diesel engine maker, has seen a 17-percent drop, to $53.43, after sustaining three years of heady gains.

Coan, who focuses on doctors, lawyers and retirees with $1 million to $15 million in assets available to invest, has parked about 70 percent of those assets in passively managed stock index funds. The funds are hedged so that they won't suffer loses, but still have potential to gain if the indexes rise.

The other 30 percent is invested in companies that mine minerals including gold, silver and uranium. Coan also believes European heavy equipment manufacturers and companies that ship oil in tankers have significant upside potential.

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