North Fork Picks a Fight in N.Y. with Fleet's Help
Moyer, Liz, American Banker
After years of bidding against each other on small acquisitions, the biggest thrifts in the New York metropolitan region are turning their sights on each other, setting the stage for a furious round of consolidation.
North Fork Bancorp in Melville, N.Y., escalated the conflict late Sunday, launching a $1.88 billion hostile bid for rival Dime Bancorp. With the offer, North Fork was playing as much defense as it was offense; Dime shareholders are scheduled to vote March 15 on a deal to acquire a third thrift company, New Jersey-based Hudson United Bancorp.
The pie coveted by the handful of companies -- in addition to North Fork, Dime and Hudson United, the list includes GreenPoint Financial Corp. and Astoria Financial Corp. -- is a lucrative commercial market in which the top survivors would vie against heavyweights Chase Manhattan Corp. and Citigroup Inc.
Also lurking is FleetBoston Financial Corp., which entered the fray through a surprise side deal to lend much-needed financial support to North Fork, while leaving open the chance it could launch its own Dime bid if North Fork's failed.
North Fork's move, one aimed for at least a spoiler role in the Dime-Hudson United deal, is the latest salvo in its long-running and at times bitter rivalry with Dime, GreenPoint, and Astoria Financial. The four have frequently clashed as bidders for smaller institutions in the region, with North Fork more often than not coming out the loser.
Still, North Fork has a reputation as an aggressive acquirer. It recently successfully bid to acquire JSB Financial Inc. in Lynbrook, N.Y., and Reliance Bancorp in Garden City, N.Y., both in the densely populated Long Island suburbs. It also reported an ownership position of 700,000 shares, less than 1%, in Dime.
In a twist, it has persuaded FleetBoston to weigh in as an investor for this bid with an injection of $250 million in capital in support of a takeover of Dime. In return, Fleet would own about 7% of the combined North Fork-Dime with the right to buy up additional shares. FleetBoston would also have the option to pay $160 million more to acquire $2 billion in deposits and 17 branches in Manhattan and on Long Island.
North Fork, like its peers, has a long-standing desire to raise its profile in New York City. John Adam Kanas, chairman and chief executive officer of $16 billion-asset North Fork, said consolidation among the region's biggest commercial banks in recent years has created new opportunities for "outsiders" like North Fork to capture business, particularly in the small- and middle-market commercial lending sector.
The deal "provides North Fork the chance to dramatically grow its commercial banking franchise in Manhattan," Mr. Kanas said during a conference call with investors. "The Manhattan market has been over consolidated. This is a very good opportunity."
The arrangement with Fleet, Mr. Kanas said, also removes the bank as a potential counter-bidder from the proceedings. "It is clear that Fleet could have outbid us," he said.
North Fork began building a presence in Manhattan two years ago by opening two de novo branches. Last year, it announced plans for further de novo expansion. Mr. Kanas said the company has already amassed $400 million of deposits through the efforts. "We are growing at warp speed in Manhattan," he said.
Dime indicated it would resist the overture. "North Fork's offer is an attempt to destroy a transaction that is in the best interests of Dime," said Lawrence J. …