Greater Bay Bancorp was downgraded Tuesday by Sandler O’Neill & Partners, with analysts saying the stock had become too pricey.

Chris Orgielewicz at Sandler reduced his rating to “market perform,” from “outperform.” “Greater Bay is a phenomenal story,” Mr. Orgielewicz said, “but the stock prices are phenomenal too.” He said the stock deserves a premium, but shares are already trading at 18 times Greater Bay’s 2001 earnings per share, which he expects to be $3.68. Greater Bay, a super-community bank based in Palo Alto, Calif., has $4.1 billion in assets and nine bank subsidiaries.

Despite the 20% growth the company is expected to achieve — an “amazing efficiency ratio” for 2000 of 45.53 — Mr. Orgielewicz said he thinks the stock should be trading in the mid-50s instead of at $65.9375, the closing price Tuesday, down 28.125 cents, or 0.42%.

Mr. Orgielewicz’s target market price is $70 per share, but said he would be willing to lift the firm to “outperform,” and, if the stock goes down, possibly a “buy” rating if earnings per share for the third quarter are more than his expected 81 cents.

“We believe GBBK will continue to post double-digit EPS growth,” he wrote in a research note. “Moreover, GBBK has a growing franchise in a desirable market.”

The firm’s success can be tied to the fact that 20% of its deposits are not interest-bearing, Mr. Orgielewicz said. The company has also been nimble in acquiring banks and letting them operate independently: Greater Bay bought eight banks in the last several years.

Campbell K. Chaney, an analyst at San Francisco-based Sutro & Co., part of Tucker Anthony Sutro, agreed that Greater Bay’s EPS growth and focus on buying smaller banks keeps the company moving forward.

“If you look for weaknesses, I don’t find any,” he said, but he said the 10% to 15% growth potential of the stock justifies only an “accumulate” rating.

Both analysts said the only threat to Greater Bay’s growth could be an economic slowdown, which could show itself in the bank’s higher-than-average 2.2% loan-loss ratio. Mr. Orgielewicz said the average loan-loss ratio for publicly traded banks is 1.5%.

Meanwhile, Jeffrey Miller, an analyst at Pennsylvania Merchant Group, initiated coverage of North Fork Bancorp. with a “buy” rating on Tuesday.

“North Fork operates an impressive New York metropolitan franchise, and produces outstanding operating results,” he wrote in his note. “We believe its offer to buy Dime Bancorp has put pressure on the stock, pressure that should dissipate once the Dime issue is resolved.”

North Fork’s board met Tuesday and announced it was postponing its decision about the acquisition of Dime, but would consider ending its bid. (See story.)

North Fork was down 6.25 cents, or 0.3% on Tuesday, closing at $20.50. Mr. Miller’s target price is $25 per share.

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