Brooklyn thrift's shares drop on news of sale price.

Shares in a small New York thrift that had been touted as a hot merger play plummeted on Friday, when an actual sale was unveiled and investors saw the real-world price.

Investors unloaded shares in Hamilton Bancorp after New York Bancorp said it would buy the $750 million-asset Brooklyn thrift for $133 million of stock.

The purchase price of $34.60 a share, based on the price of New York Bancorp shares Thursday, represented a moderate 1.62 times book value.

But shares in Hamilton had already shot past the purchase price to $35.50 as of the close Thursday.

After the announcement, Hamilton opened at $31, a decline of more than 12%. The stock ended the day at $31.25, off $4.25. Shares in New York Bancorp meanwhile fell 62.5 cents to $21.

Took Losses

Many investors who had bought stock recently on the takeover rumors unloaded their shares at a loss, while earlier investors appeared satisified to register their profits quickly.

It had nothing to do with the economics of the deal, officials of the acquiring bankcomplained.

Last month, CNBC correspondent Dan Dorfman had predicted the sale of Hamilton to a New Jersey institution for $40 a share, jacking up the stock price and attracting speculators, cbheif exectuve Michael A. McManus said.

"The problem is Dan Dorfman and others have been saying" that a New Jersey firm was going to buy Hamilton. "They were given false expectations, and people who were in the stock for a quick turnaround are getting out."

McManus said the deal would not be dilutive to earnings, and added he expected the transaction to be accretive to both earnings and book value upon completion early next year.

John D. Rooney, a thrift analyst with Legg Mason Wood Walker Inc.'s office in New Haven, Conn., who believes many Northeastern financial institutions may have to come back to earth, said however that the price represented the ceiling for thrift sales.

The main reason Hamilton's stock fell so far is because of the bulky arbitrage fee, said Thomas F. Theurkauf of Keefe, Bruyette & Woods Inc. While there may have been some runup in stock because of speculators, the stock was not wildly overpriced, he argued.

Hamilton would have received more had the transaction been cash, he added.

The stock had surged from just under $20 at the beginning of April.

Any investor who got in the game north of $34.60 has lost money, acknowledged Thomas J. Romano of McConnell, Budd & Downes Inc. in Morristown, N.J. However, the only day the stock traded higher than $34.60 was Thursday, when it closed at the year's high of $35.50.

For New York Bancorp, based in the Borough of Queens, the acquisition represnets an expansion into the Brooklyn market, which is a wonderful move, Mr. Romano said.

Other New York thrifts that could be acquired soon, Mr. Rooney predicted, are Progressive Bank, in Brewster, and Poughkeepsie Savings Bank. Look for First Fidelity to continue making aggressive moves in the area, he added.

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