Countrywide shares jump; WesBanco, Oak Hill shares up as merger closes

By Sheri Kasprzak

New York, Nov. 30 - Countrywide Financial Corp. saw its stock climb for the second straight session as banks draw closer to a bailout solution for homeowners with adjustable-rate mortgages.

Shares of Countrywide were impacted the most by the news, a sellside trader said, because they're the largest originator of home loans.

"It will [positively] affect the others but particularly CFC simply because they have the most [home loans]," said the trader Friday morning. "I think they're going to be OK. I also think there are a lot of bargain hunters picking up CFC right now because the feeling is, they're going to come back and probably sooner rather than later."

In fact, the volume of Countrywide shares traded on Friday was through the roof. The volume was 94,856,081 shares compared with the average 37,706,600 shares.

Shares of Countrywide climbed by 16.34%, or $1.52, to end the day at $10.82 (NYSE: CFC). After the closing bell, the stock gained another 6 cents.

The nation's banks are in talks to freeze adjustable-rate mortgages for homeowners who are having difficulties making their mortgage payments. U.S. Treasury Secretary Henry Paulson is set to give a speech on the matter on Monday.

Meanwhile, shares of Citigroup Inc. gained $1.01, or 3.13%, to end the week at $33.30 (NYSE: C). The major bank's shares gained another 8 cents after the market closed.

Shares of Thornburg Mortgage Inc. also benefited, gaining 58 cents, or 5.75%, to close at $10.66 (NYSE: TMA).

Not all mortgage lenders fared as well on Friday. Luminent Mortgage Capital Inc.'s stock slipped by 4.63%, or 5 cents, to end at $1.03 (NYSE: LUM). Shares of E*Trade Financial Corp. were also off, losing 22 cents, or 4.56%, to close at $4.60, gaining just 2 cents in after-hours trading (Nasdaq: ETFC).

WesBanco buys Oak Hill

Elsewhere, WesBanco, Inc. wrapped up its merger with Oak Hill Financial, Inc., a Jackson, Ohio-based regional bank.

WesBanco purchased all of Oak Hill's stock in a $209 million cash and stock transaction.

"Continuity in service and leadership are areas of particular emphasis as we prepare to offer a wider variety of products and services to Oak Hill's customers in our expanded Ohio market," said James Gardill, Oak Hill's chairman, in a statement.

"As WesBanco has grown through acquisitions over the past 23 years, we have stressed the importance of retaining key employees and maintaining community ties to effect a smooth transition in terms of customer retention," said Paul Limbert, CEO of WesBanco, in a statement.

"Through the Oak Hill transaction, we have acquired a quality financial institution that enhances our existing Ohio markets and provides a bridge of expansion into new markets. We are pleased with the prospect of competing for business across a larger market in the state of Ohio."

Shares of Wheeling, W.Va.-based WesBanco climbed by 12 cents to end the day at $23.98 (Nasdaq: WSBC).

Oak Hill's stock gained 25 cents to close at $30.28 (Nasdaq: OAKF).

Oak Hill's name will be changed to WesBanco in the spring of 2008.

According to a statement released by both companies on Friday, the merger will create a multi-state bank holding company with $5.4 billion in total assets.

CapitalSource shareholders OK TierOne deal

In other news, CapitalSource Inc. said late Thursday that shareholders of TierOne Corp. approved its merger with CapitalSource.

"By approving the transaction, shareholders of TierOne have recognized the substantial benefits of this merger for the bank, its depositors and its lending customers," said a statement released by TierOne's shareholders.

"TierOne's community banking franchise will bring diverse and stable funding to the combined company, while CapitalSource's national commercial lending franchise will bring diverse, profitable and high credit quality assets to TierOne - assets which are particularly important in the current market environment.

"It is more important than ever for TierOne to continue its long-held strategy to diversify its assets beyond those of a traditional thrift and to maintain a position of financial strength. The merger with CapitalSource will accelerate that strategy and enhance the bank's growth prospect, profitability, capital position and credit performance over time."

The news sent shares of CapitalSource up $1.06, or 6.75%, to end at $16.76 (NYSE: CSE). Meanwhile, shares of TierOne ended up $1.97, or 9.19%, at $23.40 (NYSE: TONE). The stock fell by 44 cents after hours.

Chevy Chase, Md.-based CapitalSource is a commercial lending company.

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