Most analysts hailed on Thursday the pending $3.6 billion merger between Dime Bancorp and Hudson United Bancorp that was announced Wednesday.

James M. Ackor, a banking analyst at Tucker Clearly Anthony Gull & Co., raised his ranking of Dime on Thursday to "strong buy," from "hold." He said the deal would create a "well diversified regional powerhouse."

Though it would lack the "instant gratification of an outright sale to a larger bank, this transaction will positively benefit Dime shareholders over the next 12-18 months," Mr. Ackor predicted.

From a strategic perspective, Dime and Hudson United are very complementary organizations, he said. When combined, Dime and Hudson United would be able to offer a vast variety of financial services to consumers and businesses in several of the country's most attractive, densely populated and affluent markets. These include New Jersey, eastern Pennsylvania, Manhattan, Long Island, and Connecticut.

Dime and Hudson have different strengths, Mr. Ackor said. Dime is strong in mortgage banking, consumer lending, investment services, and insurance products. Hudson United's strengths are commercial and business banking, private label credit card services, and trust and pension products, Mr. Ackor said.

Not every analyst offered as positive a reaction to the deal. Kenneth A. Posner of Morgan Stanley Dean Witter & Co. downgraded Dime to "neutral," from "outperform."

"The economics are not compelling," he said. The proposed merger introduces integration risk, he said, and "makes us question Dime's ability to grow earnings on a stand-alone basis."

Helping explain the persistent downward pressure on bank stocks in recent months, including Dime shares, Mr. Posner said his philosophy is "When in doubt, downgrade." He said, "That's our motto for the thrift/small bank sector, given the current lack of interest among investors."

"We've long argued that Dime shares are dramatically undervalued relative to the company's peers, not to mention relative to small banks," Mr. Posner said. "However, it's hard for us to believe that mixing Dime earnings into those of Hudson United will spark a revaluation."

Instead, the merged company will trade at a price-to-earnings ratio that "reflects the weighted average multiples of the two stand-alone entities," Mr. Posner said.

He said the deal reflects Dime's inability to prosper as a stand-alone bank. "It strikes us that Dime's willingness to merge at such uninspiring economic terms signals an acknowledgement that internal growth prospects are not compelling and that greater size is needed to remain competitive," Mr. Posner said.

The merger is expected to close in the first quarter of next year, and the combined firm would be known as Dime United Bancorp. Dime shareholders would receive 0.585 of Dime United shares for each Dime share they hold, and would end up with 56% of the new company.

In early afternoon trading, the Standard & Poor's bank index was down 0.85%, and the Nasdaq bank index, 0.8%. The Dow Jones industrial average lost 0.94%, and the S&P 500, 0.63%.

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