North Fork Bancorp. Inc.'s deal with Capital One Financial Corp. had a predictable effect on New York-area banking companies Monday: sharp rallies in shares of names frequently mentioned as possible sellers.
But analysts and others were far from unanimous on the deal's implications for others that might be looking to sell.
On one issue many agreed: It would be difficult for any other seller to get the type of premium Capital One is paying for North Fork.
The $58 billion-asset North Fork, of Melville, is the largest independent banking company in metropolitan New York, after JPMorgan Chase & Co. and Citigroup Inc., which are No. 1 and No. 2 in deposits. North Fork's share is 4.8%, according to the Federal Deposit Insurance Corp.'s most recent data, through June.
North Fork has a banking charter. Investment bankers and analysts say that most of the remaining companies are thrifts that usually get a smaller premium and have weaker assets. Moreover, North Fork has a network of 355 branches, including some in Manhattan.
Those attributes made North Fork the area's most appealing targets, observers said.
Capital One, of McLean, Va., which announced the deal late Sunday, said it would pay $14.6 billion, a 22.8% premium over North Fork's market value at Friday's close and 4.9 times its tangible book value. In November, Capital One bought Hibernia Corp. of New Orleans for $5 billion. (See story on front page.)
One observer, who said North Fork spent two years looking for a buyer, said it "is different" from other potential sellers and, "I would be surprised if this would spark a merger wave."
Shares of the $12.4 billion-asset Valley National Bancorp in Wayne, N.J., rose 3.6%. Gerald H. Lipkin, Valley National's chairman, president, and chief executive officer, said in an interview that the North Fork deal "increases our scarcity value, that's for sure."
But he would not say whether Valley National would sell itself, and added that the deal has little impact on his company's operations.
Like North Fork, Valley National is focusing on small-business customers and professionals, and it has a small Manhattan presence.
One analyst said prices in deals to come would be more in line with what Sovereign Bancorp Inc. of Philadelphia is paying for Independence Community Bank Corp. in Brooklyn, N.Y.
That deal was announced in October and involves a third party; Sovereign will sell 19.8% of itself to Banco Santander Central Hispano SA and use the proceeds to by Independence Community. Sovereign is paying a 30% premium for Independence stock, but only 3.6 time the tangible book value.
When investors placed their bets on Monday, the clear winner was Astoria Financial Corp. The Lake Success, N.Y., company has been rumored to be a takeover candidate for years, and its stock rose 3.9% Monday. It trades at a forward price-to-earnings multiple of 12.8, and 2.3 times its book value.
Through June, Astoria had a deposit market share of 1.7% in metropolitan New York, according to FDIC data.
Astoria is among the area's choice targets. It is large enough to give a buyer a good foothold on Long Island markets, its branches are larger by deposits, and its $3.2 billion market cap is manageable. But Astoria has no Manhattan operations, which some analysts said might be a prerequisite for certain buyers.
Calls to Astoria Financial were not returned by press time.
New York Community Bancorp Inc. of Westbury, on Long Island, a thrift focusing on multifamily lending, said in October that it was buying Atlantic Bank of New York from National Bank of Greece for $400 million. That would establish New York Community in Manhattan.
New York Community, which failed in a bid to sell itself two years ago, is trading at a forward multiple of 12.9 times earnings. It did not return phone calls Monday. The company's shares rose 2.4%.
Some analysts were upbeat. Jacqueline Reeves of BankAtlantic Bancorp's Ryan Beck & Co. said that several New York banking companies remained good targets and that their scarcity value has increased with Sunday's deal. North Fork's conceding to the difficult banking environment "could get some people thinking about how to position themselves," she said.
Michael L. Mayo of Prudential Equity Group LLC said the Capital One-North Fork deal could prompt Bank of New York Co. Inc. to sell its retail banking unit. Mr. Mayo said it could fetch between $4 billion and $5 billion, which would imply a forward multiple of 13 times earnings.
A Bank of New York spokesman declined to discuss Mr. Mayo's note. But he said the retail bank "continues to be a solid performer with attractive returns and a stable client base."
"We are making targeted capital investments and increasing our marketing support for the bank," the spokesman said. "And we are pleased with the returns."
