North Fork Report Is To-Do List for Cap One

By Davis, Paul | American Banker, October 23, 2006 | Go to article overview
Save to active project

North Fork Report Is To-Do List for Cap One


Davis, Paul, American Banker


Capital One Financial Corp.'s third-quarter results showed that its fledgling banking division has regained some momentum after the 2005 hurricane season, and now it appears to be facing new challenges from its pending acquisition of North Fork Bancorp.

On Friday, North Fork provided a cold-eyed glimpse into Capital One's future operations around New York. The $59 billion-asset Melville, N.Y., company reported profits that fell 8% from the second quarter and 14% from a year earlier, to $203 million, or 44 cents a share, which missed the average of analysts' estimates by 4 cents, according to Thomson Financial.

Two days earlier Capital One had reported that earnings from its banking operations rose 7% from the second quarter, to $46.2 million. However, for the second quarter the $95.5 billion-asset McLean, Va., company's division, created by the November acquisition of Hibernia Corp. in New Orleans, had reported that earnings were flat from the first quarter.

Capital One is expected to complete its $14.6 billion acquisition of North Fork this quarter, and Lana Chan, an analyst at Bank of Montreal's BMO Capital Markets, suggested in an interview Thursday that Capital One would face challenges.

On top of a poor profit outlook at North Fork, Capital One may also have difficulty retaining the seller's customers, she said.

"The earnings were weak" at North Fork, Ms. Chan said. "The environment since they announced the acquisition has gotten more competitive."

Its revenue slid 6% from the second quarter and 5% from a year earlier, to $595.2 million. The third-quarter total included $4.5 million of securities gains and $9.7 million of trading gains.

But Ms. Chan said she also expects competition for North Fork clients to intensify once Capital One rebrands its 351 branches. "North Fork is a very well-known brand. Rebranding is going to be challenging, given how everyone is aggressively going after incremental deposits."

North Fork has lost deposit share. Its share of the New York market slipped 58 basis points from a year earlier, to 4.22% as of June, according to data from the Federal Deposit Insurance Corp.

Richard Fairbank, Capital One's chairman and chief executive officer, indicated Wednesday that he is in no rush to overhaul North Fork's business model.

"We want to be very careful to operate very surefootedly with respect to this integration and the rebranding," he said during an earnings conference call. "I've met with a lot of customers and the associates, and I think our big message is ... this is not Capital One coming in to radically change the business model.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

North Fork Report Is To-Do List for Cap One
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?