This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Banks Get Cozy

Capital One (COF - Get Report), the credit-card lender best known for its aggressive advertising campaigns, is no longer a one-trick pony.

The Virginia-based financial firm's $14.6 billion deal to buy North Fork Bancorp (NFB) cements Capital One's move into retail banking. The deal, announced late Sunday, comes just months after Capital One acquired New Orleans-based Hibernia for $5 billion.

The North Fork deal not only gives Capital One more leverage in lowering its operations costs, it also gives it a significant foothold in the all-important New York metropolitan market. North Fork, based in Melville, N.Y., has 355 branches in New York, New Jersey and Connecticut.

The combined bank will have 655 branches and $84 billion in customer deposits.

In the deal, North Fork stockholders will receive $31.18 a share, or about a 23% premium to the bank's Friday closing price of $25.40. Shareholders will receive 0.2216 of a Capital One share plus $11.25 in cash.

In early trading, shares of North Fork were up $4.27, or 17%, to $29.67. Capital One, meanwhile, was down $5.57, or 6%, to $84.35.

The acquisition is another indication that the days of the stand-alone card company are all but over. The deal also could be the spark that ignites a long-predicted round of bank consolidation, particularly among smaller regional lenders.

The banking sector was notably not a big participant in the wave of corporate deals that have made headlines on Wall Street the past two years. Last year, U.S. banking deals totaled about $61 billion, down from $113 billion in 2004, according to Thomson Financial.

"We think the consolidation in the banking business is going to accelerate,'' says Sean Egan, of Egan-Jones Ratings. "The reason for consolidation remains as strong as ever. It is a national market. It's no longer a regional market.''

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AF $13.05 0.00%
COF $80.44 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs