Donaldson, Lufkin & Jenrette began coverage of North Fork Bancorp on Wednesday, saying the Melville, N.Y., company has a shot at picking up market share in New York City, even without an acquisition of Dime Bancorp.

Analyst Rosalind F. Looby initiated coverage of North Fork with a "market performance" rating. In her report, she said the acquisitive banking company "is becoming increasingly focused on improving its internal growth rate." North Fork's latest acquisition attempt - its hostile bid for Dime - is on hold until Sept. 29, by which time Dime's managers must decide whether to accept North Fork's offer.

In the meantime, North Fork has the opportunity to outpace its peers in deposit growth, mainly through its five branches in Manhattan, Ms. Looby said. "The consolidation activity of large banks in Manhattan has caused many small-business customers to be jettisoned or alienated, creating an opportunity for a mid-sized, commercially-oriented bank like North Fork."

North Fork has 0.1% of the $183 billion of deposits in Manhattan, but since entering the market in 1996, its Manhattan deposits have grown 700%, to about $600 million.

Its "two most seasoned branches in Manhattan already account for 20% of the bank's total commercial interest-free demand deposits," and the company expects deposits at its Manhattan branches to swell to $1 billion this year, Ms. Looby said.

North Fork reported second-quarter earnings of 43 cents per share, up 11% from the first, and Donaldson Lufkin expects per-share earnings of $1.75 this year and $1.95 next year, and dividends of 72 cents per share for both years. Ms. Looby set no target price for the company's stock and said she cannot consider a rating upgrade as long as the Dime deal is open.

The stock fell 62.5 cents, or 3.52% to close at $17.125 Wednesday.

North Fork has been unusually successful in taking over local thrifts "and converting them into commercial-oriented banks," Ms. Looby said. It has also made the acquired operations more profitable by slashing management ranks, training personnel, and integrating back-office systems, she said.

"While many banks have attempted this growth model, very few have achieved North Fork's growth and returns," Ms. Looby said.

As for the pending Dime deal, North Fork "does not have to further pursue the Dime transaction" if Dime decides to turn it down, she said. "At this point, we do not see NFB management needing to expend significant further expenses or effort to bring the Dime bid to a conclusion."

Elsewhere in the market, banks stocks declined after Tuesday's rally. The American Banker index of top 50 banks was down 0.41%, while the index of 225 banks decreased 0.56%.

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