PNC calls National City trust preferreds, paper gains; Ally, JPMorgan up; MetLife, BofA fall

By Stephanie N. Rotondo

Portland, Ore., Oct. 17 - Preferred stocks were in a "holding pattern," a trader said Monday, as investors reacted to news out of Europe as well as earnings from Citigroup Inc. and Wells Fargo & Co.

"It was good if you consider the equity tape being down 200-plus [points]," the trader said of the day's performance.

"The market was not exactly heavily traded," said another market source. "It's responding again to Europe stuff. Liquidity was pretty poor."

The Group of 20 is meeting over the week. German chancellor Angela Merkel reportedly came out and said that while summit leaders expect to have some form of a plan in hand by Sunday, it would likely not solve all the problems.

"The chancellor reminds [everyone] that the dreams that are emerging again, that on Monday everything will be resolved and everything will be over, will again not be fulfilled," Steffen Seibert, Merkel's spokesperson, said.

Bank earnings from Citi and Wells Fargo came out. A market source said Citi "did pretty well relative [to other banks]" and Wells Fargo's numbers were "OK, but on a revenue basis it was showing 'Oh yes, there is weakness in the banking sector.'"

The name of the day was not, however, either Citi or Wells Fargo but PNC Financial Services Group Inc.

Late Friday, the Pittsburgh-based financial services company announced it will redeem National City Capital Trust II's 6.625% trust preferreds. Come Monday, the trust preferreds were not only the most actively traded security but were also trading higher.

"There is buyer interest in trust preferreds that will be called," a trader said.

Meanwhile, other financial preferreds were trading mixed. Of the most actively traded issues, Ally Financial Inc. and JPMorgan Chase & Co. were better, while MetLife Inc. and Bank of America Corp. were lower.

Several new issues from real estate investment trusts continue to be shopped in the market, but no pricing details have come. According to one trader, there is talk that a utility company could "potentially [have a deal] in the works."

PNC calls TRUPs

Late in the day Friday, PNC Financial Services announced a call for $750 million of 6.625% trust preferreds issued by National City Capital Trust II. They will be redeemed at $25.00 each plus accrued dividends on Nov. 15.

Come Monday, the news resulted in high trading volume and higher prices for the trust preferreds.

The trust preferreds (NYSE: NCCPA) moved up 18 cents to $25.38.

"It's a very attractive yield when you factor that to a par call," a market source said.

The trust preferreds were originally scheduled to come due Nov. 15, 2036. The redemption is part of a capital plan approved by the Federal Reserve, and the call will be funded with available cash.

PNC is scheduled to report earnings on Wednesday.

Banks end mixed

The overall market was trading mixed, as evidenced by the most actively traded preferreds.

Ally Financial's 8.5% series A preferreds (NYSE: ALLYPA) rose 7 cents to $19.35. JPMorgan's 8% fixed-to-floating capital securities, series Z (NYSE: JPMPZ) were also better, gaining 14 cents to close at $25.77.

On the weaker side were MetLife's 6.5% series B noncumulative preferreds (NYSE: METPB). They closed down 3 cents at $25.03.

Bank of America's 8.2% series H depositary shares (NYSE: BACPH) meantime fell 22 cents to $22.35.

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