Canceling its recent stock offering could force the Bank of New York to put the brakes on its acquisition plans, according to bank analysts.

Without $150 million in expected proceeds, the bank's tangible equity may be too thin to absorb th cost of a substantial acquisition and still satisfy regulators.

The equity threshold for an acquiring bank is generally considered to be 5% of total assets.

The shortfall probably rules out for now anything that the bank has had in its sights. "They are interested in doing something big rather than little," said bank analyst David S. Berry of Keee, Bruyette & Woods. "They are interested in the metropolitan New York market as well as out of region, which would build geographic diversity into the franchise."

2 Tempting Prospects

Rumored targets include United Jersey Bank of New Jersey and Shawmut National Corp. of Hartford, Conn., according to one institutional investor.

Bank of New York has told analysts that it is aiming for the 5% equity threshold. The stock sale would have nudged that ratio to 4.7%, from 4.3%, where it is now.

A bank spokesman insisted, however, that the failure to raise new equity will not interfere with the bank's ability to make an appropriate acquisition.

Between the third quarter of 1990 and the third quarter of 1991, Bank of New York has been able to strengthen its balance sheet without tapping capital markets.

Retained earnings contributed $129 million to shareholders equity while management was chopping assets by about 10%, to $40.3 million. These steps boosted tangible equity by nearly a full percentage point.

But retained earnings are getting harder to come by. The bank lost $61 million in the first quarter.

In response, it slashed its quarterly dividend, to 38 cents from 53 cents.

Earnings Down

Third-quarter figures were better, but $58 million in earnings was still down 17% from the previous year.

A further reduction in assets now appears likely. A factoring subsidiary is on the block and the bank has signed a letter of intent to sell the business, BNY Financial, in the first quarter. The bank didn't get its price and walked away from the deal.

Bank of New York has grown considerably more cautious on acquisitions since August 1990.

That's when the Federal Reserve took the unusual step of rejecting the bank's application to purchase Northeast Bancorp in Stamford, Conn. The Fed squashed the plan because the Bank of New York had insufficientOffering on HoldNew equity would have bolsteredthe Bank of New Yorkbalance sheet. With $150 million 9/90 9/91 5.95%Tier 1capital 4.89% 5.60% 5.95%Totalcapital 7.94 9.35 9.71ratioLeverageratio 5.09 6.06 6.46Tangiblecommonequity to 3.44 4.31 4.70assetsAssets(inbillions) $45.4 $40.3 Sources: Bank of New York;Keefe, Bruyette & Woods

capital.

Bank of New York is expected to try to sell stock again once the market improves, strengthening its case as an acquirer.

"If the market were to bounce back, we would revisit the issue of a common stock offering," said Michael Pascale, a spokesman. "That's unlikely before yearend." With the latest economic forecasts calling for a recovery in mid-1992, the bank may wait a while.

As for the rumored possible acquisitions of United Jersey and Shawmut, both carry benefits as well as cause for caution. UJB has a hammerlock in prosperous Bergen County, adjacent to New York City, and would extend Bank of New York's metropolitan area business. But the cost savings through retail branch overlap would be small.

An acquisition like Shawmut National, in New England, would allow the bank to expand regionally, diversifying loan risk in the future. For now, however, the New England economy shows little sign of digging out from real estate problems.

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