Magazine article American Banker

N.J. Bank Stocks Hot after Deal by Bank of N.Y

Magazine article American Banker

N.J. Bank Stocks Hot after Deal by Bank of N.Y

Article excerpt

Bank of New York Co. has lit a fire under New Jersey bank stock prices.

Last Friday, the New York bank announced its first into the neighboring state, signing an agreement to buy National Community Banks Inc., West Paterson, for about $637.6 million in stock, or a robust 2.6 times book value.

The deal has focused investor attention on other large New Jersey banks with UJB Financial Corp., Princeton, and Summit Bancorp. drawing the most comment.

"The pressure is already on concerning New Jersey, and you will really see major excitement - and prices - if it begins to look like the banking industry might get permission for interstate branching," said Richard S. Lawrence, bank analyst at Janney Montgomery Scott Inc., Philadelphia.

Share Prices Jump

In late trading on Monday, UJB shares were quoted at $25.125. up $1.625, or about 7%, since the Bank of New York announcement. Summit shares were at $23.25, up $2.25. or 11%.

A UJB spokesman declined comment on acquisition rumors, while Summit representatives declined comment.

The state's second largest banking company, Midlantic Corp., Edison, has also been mentioned as a possible target. But it has not been affected greatly by the deal. Late Monday, the stock was quoted at $19, up 50 cents, or 3%, since the announcement.

Looking to Buy

Potential buyers include Chase Manhattan Corp.. Mellon Bank Corp., and PNC Financial Corp., which do not now operate in New Jersey. In addition, Chemical Banking Corp. is looking to build on its New Jersey operations, as is First Fidelity Bancorp., already the state's largest banking company

Reportedly, Chemical and a Pennsylvania bank were also weighing bids for National Community, which pushed up the eventual acquisition price.

Analysts said the deal demonstrates that banks in New York and Philadelphia view acquisitions in neighboring New Jersey as in-market transactions. …

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