Capital One ( COF), 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.''

Not surprisingly, the deal was giving a lift to other regional banks, in particular those in the New York metro area. In early trading, shares of Astoria Financial ( AF) rose $1.43, or 5%, to $30.75. New Jersey-based Commerce Bancorp ( CBH) rose 48 cents, or 1.4%, to $35.25. New York Community Bancorp ( NYB) was up 30 cents, or 1.8%, to $17.25.

The Merrill Lynch Regional Bank Holdrs ( RKH), an exchange-traded fund that tracks the performance of about two dozen bank stocks, including some oft-mentioned acquisition targets, rose half a percentage point.

The paucity of deals in the banking sector has baffled analysts and investors, especially since the cooling off in the housing market has made it more difficult for regional banks to generate outsized profits.

Thrifts and regional banks have been particularly hard hit by the so-called inversion of the yield curve, which is likely to haunt the bond market this year.The curve inversion is the unusual phenomenon in which the yield on short-term Treasury notes is higher than the yield on longer-term government bonds.

A flat or inverted yield curve makes it particularly difficult for banks, which generate much of their profits by investing customer deposits into interest-bearing securities, such as mortgage-backed bonds. The flattening yield curve has all but wiped out the ability of banks to borrow on the cheap and reinvest the money in longer-term mortgage-backed securities.

North Fork has not been immune to the effects of the narrowing of this spread. In the fourth quarter of 2005 the bank reported a 5% decline in earnings and fell short of analyst estimates by 4 cents. The bank also took a $5 million charge, stemming from a restructuring of its balance sheet in light of the tricky interest rate environment.

In buying North Fork, Capital One will inherit some of the bank's interest rate woes.

Some analysts also worry that Capital One, in buying North Fork so soon after the Hibernia deal, may be trying to juggle too many deals at one time.

"While we believe this transaction is a significant step forward in Capital One's strategy to build a local scale deposit franchise ... we would note that the deal poses significant integration risk, as Capital One still has a lot on its plate integrating the legacy of the Hibernia franchise in the wake of Hurricane Katrina,'' says CreditSights in a Monday research note.

The devastation caused by Hurricane Katrina took a big toll on Hibernia's Louisiana banking operations. Many branches were closed for several weeks and the damage caused by the hurricane led Capital One and Hibernia to reduce the acquisition price.