Magazine article American Banker

2 Weeks, 2 Deals: N.Y.'S North Fork in Growth Spurt

Magazine article American Banker

2 Weeks, 2 Deals: N.Y.'S North Fork in Growth Spurt

Article excerpt

Striking its second in-market deal in as many weeks, North Fork Bancorp. has agreed to buy Reliance Bancorp of Garden City, N.Y., for $352 million in stock.

The deal, announced Monday and slated to close in the first quarter after regulatory and shareholder approval, would bring $11.5 billion-asset North Fork 29 additional branches in the New York City borough of Queens and on Long Island, as well as $2.5 billion of assets and $1.6 billion of deposits.

North Fork, based in Melville on Long Island, had until recently been on the losing end of bidding contests for several New York-area thrifts. Analysts said Monday's announcement - on top of the $570 million deal to acquire Lynbrook, N.Y.-based JSB Financial Inc., also announced this month - indicates that North Fork is back in the merger hunt.

"Their bottom-line growth has depended on acquisitions, but they went into a dry spell in late 1998," said Gerard Cassidy, an analyst at Tucker Cleary. The two latest deals "indicate to investors that the company is back on its growth path."

"It's a clear home run," said John Wimsatt, an analyst at Friedman Billings Ramsey & Co.

Once the two deals are closed, North Fork would have $15.5 billion of assets, $9.2 billion of deposits, and 152 branches throughout the New York metropolitan area.

John Adam Kanas, chairman and chief executive officer of North Fork, said he has consistently refused to pay the rich acquisition premiums that recent banking deals have commanded. He said these two transactions indicate "a sea change." North Fork is paying approximately 15 times earnings for Reliance, or 2.8 times tangible book value. Analysts said recent deals have had price/earnings multiples closer to 20.

Mr. Kanas characteristically added that his company will still be in the market for acquisitions. "Our phone has been ringing," he said. …

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