Magazine article American Banker

1st Fidelity to Buy Thrift in N.Y. for $233 Million

Magazine article American Banker

1st Fidelity to Buy Thrift in N.Y. for $233 Million

Article excerpt

First Fidelity Bancorp. on Wednesday said it will acquire Peoples Westchester Savings Bank, a thrift with $1.8 billion in assets and 31 branches in New York's northern suburbs.

First Fidelity, New Jersey's largest banking company, said it would pay $233 million - half in cash and half in stock - or 1.4 times Peoples Westchester's book value.

But analysts said the cost will be higher because of First Fidelity's need to boost loan-loss provisions at the savings bank.

In afternoon trading on Wednesday, Peoples Westschester share price dropped $2 to $41. First Fidelity's fell 62.5 cents to $50.125.

Previous Overture

Peoples Westchester, based in Hawthorne, has been in play since early this year when a private investor group that included Minneapolis investor Irwin Jacobs offered $30 a share.

Analysts said that arbitragers were disappointed by the sale price of $463.90 a share, close to its current market value, and quickly dumped the stock.

"The arbs were expecting something in the high 40s to 50s," said Nancy Bush, an analyst at Brown Brothers Harriman.

While Peoples Westchester's loan problems remain - is $37 million in nonperforming assets could reach $47 million by year-end, according to First Fidelity--it has an attractive consumer and small-business constituency. It is the third-largest deposit-taking compan in Westchester County, with $1.6 billion of deposits and $166 million in equity.

First Fidelity said the acquisition will give it a 12% share of the affluent county's deposits, second only to Bank of New York. …

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