U.S. Bancorp Piper Jaffray Continues to See Pressure on Thrift and Mortgage Finance Company Stocks.

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--Nov. 5, 2001

In a recently published report, "Thrift Industry Overview," U.S. Bancorp Piper Jaffray Senior Specialty Finance Analyst Mike Grondahl reiterates his thesis on the thrift sector and mortgage industry. Grondahl initiated coverage of three thrifts, or mortgage finance companies, in August with Neutral ratings. His ratings are based on that thesis that higher unemployment and a moderating purchase market will continue to have a negative impact on business fundamentals and credit quality of thrift and mortgage finance companies, leading to near-term downside pressure on their share prices.

"While it is obvious that investing in the thrift companies over the past year and a half has been truly beneficial, we know that the mortgage market is cyclical, and thus so is mortgage stock performance," said Grondahl. "We point to mortgage originations (volume), which can be very volatile year-to-year, and margins, which are determined by interest rate movements that can also be cyclical. As such, investors need to be cognizant of the cyclical nature of the mortgage market and its impact on the mortgage stocks."

Grondahl highlights five key trends impacting the share price performance of mortgage and thrift stocks.

1. The mortgage market is cyclical, and thus so are mortgage

stocks. "We believe title insurance stocks started to roll