Mortgage Results Flagging at SIB
Analysts at Sandler O'Neill have reduced their rating on the stock of Staten Island Bancorp to "maintain," but they say an SEC "informal inquiry" into the bank's restatement of financials for 2001 and 2002 does not affect its earnings estimates for price targets for the bank.
The restatement relates to accounting for employee stock options, the impairment of certain securities, and mortgage banking operations, the Sandler O'Neill report said. In June of last year, Staten Island Bancorp replaced Arthur Andersen with PricewaterhouseCoopers as its accounting firm.
In early February, prior to the announcement of an SEC inquiry, Sandler O'Neill reduced its rating on the bank to "maintain" from "buy" and also lowered its price target by $6 to $18. Staten Island Bancorp trades under the symbol SIB.
The stock was trading at just over $15 on March 4. At the time of the downgrade in the bank's stock rating, Sandler O'Neill noted that despite a doubling of mortgage banking loan sales in the fourth quarter of last year, reported earnings per share of $0.43 fell short of Sandler O'Neill's $0.57 estimate.
As a result, Sandler O'Neill reduced its 2003 EPS estimate to $1.66, a drop of $0.53, to reflect lower mortgage banking results than previously assumed. The chief risk to the price target remains underestimating the bank's mortgage lending performance, the Wall Street report said.
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