Troy Financial Corp. said Thursday that it has agreed to buy fellow upstate New York thrift company Catskill Financial Corp. for $90 million in cash.

Acquiring Catskill's $346.1 million of assets would boost the assets of the Troy Savings Bank parent to $1.2 billion. The announcement came just six weeks after Hudson River Bancorp and Cohoes Bancorp announced a deal to merge as a $1.8 billion-asset holding company.

Some observers said Troy is offering a high price for Catskill Financial in response to tougher competition in the Albany region. The price - $23 a share, or 1.5 times book value - is "on the aggressive side," said Scott Valentin of the investment banking firm Friedman, Billings, Ramsey.

But Troy Financial said its Catskill purchase, which is slated to close by yearend, was not motivated by the Hudson River-Cohoes deal. "We have every capability to compete with them right now," said Daniel J. Hogarty Jr., its chairman, president, and chief executive officer.

Five of Catskill's seven branches are in Greene County, where it has a 30% market share and where Cohoes-Hudson Bancorp would also have a foothold. Troy's network would expand to 21 branches in eight New York counties, and the Catskill region would give it another market for its trust, investment, and insurance services.

Mr. Valentin said he likes Catskill's strategy of targeting small towns that lack a big-bank presence. "They go after smaller businesses and retail customers," he said, adding that the company uses its size to its advantage.

Troy, which recently said it plans to start a commercial bank in order to accept municipal deposits, would merge Catskill Savings Bank into Troy Savings Bank. The company expects that the deal will involve a one-time transaction cost of $6.2 million and be accretive to earnings by yearend 2001.

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