North Fork Branching Out Into Manhattan

Much like Manhattan hipsters, New York banks would rather live in the city than be part of the "bridge-and-tunnel" crowd on the outskirts. And thanks to a flurry of bank merger activity that has altered the scene in the past week, Long Island-based North Fork Bank (NFB Quote) now has some prime Manhattan real estate to brag about.

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After a year in which it launched a hostile, and ultimately unsuccessful, bid for Dime (DME Quote) and then settled for smaller, somewhat lumpier acquisitions, North Fork finally realized its much sought-after goal of expanding its presence in New York City. The bank cinched a $175 million deal for Commercial Bank of New York's (CBNY Quote) domestic deposits, boosting its aggregate of Manhattan branches to its intended target of 20 in one fell swoop.

The deal vaults the bank's Manhattan business to 14% of its franchise from 5%. In the city, commercial demand deposits appear to be growing 10 times faster than on Long Island, says Jason Goldberg, banks analyst at Lehman Brothers. On Wednesday, he increased his target price for the bank by $2 to $30. Goldberg says the average deposit costs 1.63% in Manhattan, compared with 4.2% in the brutally competitive Long Island marketplace. (He rates North Fork a buy, and his firm hasn't done underwriting for the bank.) ...