Muscling its way to prominence in the crowded New York-area market, North Fork Bancorp has agreed to buy North Side Savings Bank for $210 million in stock.
The deal, announced Monday, follows a series of acquisitions by the Mattituck, N.Y.-based company. It would boost North Fork's assets by $1.7 billion, or 41%, and move it to No. 7 from No. 10 in deposits in the key market of Long Island and Queens.
The deal appears to cast North Fork in the unlikely role of white knight. For several months, Floral Park, N.Y.-based North Side had resisted takeover moves by another area rival, New York Bancorp. North Fork, meanwhile, has itself pursued unfriendly takeovers of several other neighbors.
"North Fork has been on an acquisition campaign for several years since it was restored to health, and this was just another piece in the puzzle for them," said Salvatore DiMartino, thrift analyst at Advest Group Inc. in New York.
The transaction would give North Fork 17 new branches, including seven in the Bronx. Although the Bronx is a new market for North Fork, the bank already owns a sizable operation in nearby Westchester County.
In addition, North Fork would gain five branches in Queens, where it would rise to No. 4 in market share, from No. 6. The bank would also pick up four Nassau County branches, bringing its deposit total in that area to almost $900 million.
North Fork would add about 115,000 customers, with virtually no asset- quality risks, company officials maintained.
"North Fork has established itself as a growing company," said John Adam Kanas, chairman and chief executive. "We've had a chance to demonstrate our ability to build shareholder value, and I think North Side has wisely chosen to share in that in the future."
North Side had resisted a long takeover effort by Douglaston-based New York Bancorp, parent of Home Federal Savings Bank.
In March, New York Bancorp bought 7.84% of North Side stock and began to pressure North Side to consider a merger.
New York Bancorp officials indicated that they would apply for Federal Reserve Board approval to buy up to 20% of the stock, and then demanded a shareholder list from North Side.
Viewing New York's efforts as hostile to its shareholders, North Side responded by implementing a shareholder rights plan.
The situation changed suddenly in late June, when New York Bancorp sold 145,000 shares to North Fork, reducing its own holdings to 4.8%.
North Fork has historically used the same tactic as New York to apply pressure on companies it was interested in acquiring. But North Side's president and chief executive, Thomas M. O'Brien, said the thrift felt no pressure to sell to North Fork.
"We look at our options routinely," Mr. O'Brien said. "I honestly don't feel that as pressure. This was a smart transaction, and we like to do smart things."
The purchase of North Side would be North Fork's fourth acquisition on Long Island since 1994.
"There's a lot of room to grow in this market," Mr. Kanas said. "It's not like we have 30% to 40% of this market and have to worry about overconcentration. It's a market that our people understand. It's home - it's huge."
The acquisition is valued at 155% of North Side's projected book value in January 1997, when the deal is expected to close, and is projected to be accretive to earnings in 1997 by 28 cents per share. Mr. DiMartino said the price is in line with other thrift acquisitions in the metropolitan area.
North Fork officials expect pretax cost savings of about $10 million, and expect to boost revenue before taxes by about $11 million.
The merger is still subject to shareholder and regulatory approval.
