Excess capital could spark another round of consolidation among thrifts in the Northeast.

Analysts say most of the nation's thrifts are so loaded with capital that stock repurchase programs and dividends-traditional ways of allocating capital-are insufficient.

With few loan opportunities available, that would leave only acquisitions.

"There will be a lot of acquisitions going forward," said thrift analyst Martin S. Friedman of Friedman Billings Ramsey & Co., Arlington, Va. "The excess capital is just a trigger."

Based on takeover potential, "We would be buyers of North Fork Bancorp., Dime Bancorp, Long Island Savings Bancorp, Greenpoint Financial Corp., and Fleet Financial Group," wrote bond analyst Ethan M. Heisler, of Salomon Brothers Inc.

Roslyn Bancorp -a mutual that went public just six months ago and has a whopping 25% equity-to-assets ratio-is said to be looking actively.

Market sources said likely takeout targets for the company include Reliance Bancorp, TR Financial Corp., and JSB Financial Inc., all neighbors of Roslyn Savings on Long Island.

John R. Bransfield, executive vice president, of the $3.2 billion-asset company agreed that the only effective way for the thrift to leverage its capital is through acquisition but added: "We have not had any direct conversations with any company."

Nevertheless, analysts said it is just a matter of time before the company makes a move.

"They might consider buying back stock and special dividends, but they are more likely to do an acquisition," said Mr. Friedman. "They definitely are not alone."

Other thrifts that are taking the lay of the land include Long Island Bancorp, Melville, N.Y.-a company that itself is seen as an acquisition target.

The $5.3 billion-asset company has roughly a 10% to 11% capital ratio and has stressed its desire to remain independent, said Mr. Friedman.

The company, which is parent of Long Island Savings Bank is likely to shop in Suffolk and Nassau counties, the borough of Brooklyn, N.Y., and even in Connecticut. Long Island Savings did not respond to requests for comment.

Mark T. Fitzgibbon, associate director and analyst at Sandler O'Neill & Partners, agrees the Northeast is a likely hotbed for merger activity.

"The industry is overcapitalized to begin with and additionally has strong profitability and modest credit losses," said Mr. Fitzgibbon. "Furthermore, mutual savings companies are converting into public companies and that is just adding fuel to the fire."

When mutual savings associations convert to stock form they tend to accumulate substantial amounts of capital. Three large mutuals that are set to convert in coming months are Independence Savings Bank, Staten Island Savings Bank, and Richmond County Savings Bank.

"These companies are going to want to use their capital, and they can do it through buybacks. But they are going to have to buy back a heck of a lot of their stock to make the capital more manageable," Mr. Fitzgibbon said.

He said the Office of Thrift Supervision has clamped down on buyback programs for thrifts, which is likely to prompt more acquisitions.

Ben A. Plotkin, president at Ryan Beck & Co. in West Orange, N.J., said acquisitive thrifts will encounter some challenges.

"The reason why we haven't seen many mergers now is because you have high price levels in the merger and acquisition market and when you are purchaser that is not the best environment to be in."

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