John A. Kanas, chairman of North Fork Bancorp, ruffled more than a few feathers at a conference this week designed to showcase Northeast thrifts when he said the industry is under pressure and no longer tempts his acquisitive eye.
In remarks Tuesday to analysts, investors, and bankers at the conference, sponsored by the New York Society of Security Analysts, Mr. Kanas delivered a grim assessment of the mortgage business and vowed that North Fork of Melville, N.Y., would not buy another thrift.
Thrift deposits are shrinking, and competition is intensifying, he said. Theyre not growing, so the only choice is that they merge with themselves and squeeze out excess expenses or go and try something completely different, which is perilous.
Even the thrifts that have merged have been unable to save money or create efficiencies, he said.
North Forks assets have grown to $16 billion partly through several thrift acquisitions since the late 1980s. But Mr. Kanas said he plans to concentrate on building commercial assets. The same day North Fork unveiled a $175 million deal for Commercial Bank of New York.
Though a very big piece of our company is thrift-like, he said, North Fork has been deemphasizing the thrift side of its business for five years because its just not possible to make money.
Mr. Kanas actually seemed to relish his role as conference gadfly. Before his keynote speech, he looked around the crowded room, noted the large number of thrift executives and paused. This feels like being the speaker at the savings bank convention where, by the way, I havent been invited back in 15 years, he said.
Thrift executives who were in the audience challenged his bleak assessment of their business.
Joseph L. Mancino, chairman and chief executive officer of $7.6 billion-asset Roslyn Bancorp in New York, who spoke shortly after Mr. Kanas, disputed his remarks.
As Mark Twain said, Mr. Mancino began, the news of my demise is a little bit early. Is the thrift industry ending? No.
He offered his company as an example of a thriving thrift. Our deposits are growing, our earnings are growing, our footprint is growing, he said. To say that the day of the thrift is over may be more wishful thinking than anything else.
Mr. Mancino also disagreed with Mr. Kanas, who left after his speech, about thrifts buying other thrifts.
The comment was also made that thrifts dont know how to merge, said Mr. Mancino, whose company bought $4 billion-asset T R Financial Corp. of Garden City, N.Y., in 1999. Hey, we did a merger. We announced that the purchase would produce 40% cost savings we got 45%.
Richard D. Weiss, an analyst at Janney Montgomery Scott LLC in Philadelphia, also disagreed with Mr. Kanas assertions, saying that savings banks should be evaluated individually.
Its not right to throw all the thrifts, including such high-performing New York companies as Roslyn, Richmond County Financial Corp. of Staten Island, and New York Community Bancorp of Westbury, into one basket, he said after the conference.
New York Community, a $4.7 billion-asset, state-chartered savings bank, posted a return on assets last year of 1.56% and an efficiency ratio of 35%, far better than the industry averages.
Joseph R. Ficalora, the companys chairman, president, and chief executive officer, who also attended the conference, said afterward that Mr. Kanas comments were too sweeping and did not accurately present the industrys prospects.
Maybe the more important issue is whether or not the sector as a whole is more vibrant than it was six or 12 months ago, and the answer definitely is yes, Mr. Ficalora said. The opportunity for thrifts to sell financial services gives them an unlimited upside, since their most valuable asset is loyal customers, he said.
Despite narrowing loan margins and signs of a slowing economy, Mr. Ficalora said, he is hardly pessimistic.
There is going to be a change in the playing field, but thrifts in particular are not at greater risk here, he said. Access to our customers is a very valuable commodity.