Shares of New York-area banking companies soared Monday, the day after Capital One Financial Corp. agreed to buy North Fork Bancorp. Inc. of Melville for $14.6 billion.
The $58-billion asset North Fork's stock was among the day's top gainers in financial services; it rose 15%, while Capital One's fell 7.6%.
North Fork has $36.6 billion of deposits and 355 branches in New York, New Jersey, and Connecticut.
After the deal closes, Capital One, the McLean, Va., consumer finance company famous for its tag line "What's in Your Wallet?" would have $84 billion of deposits, $143 billion of loans, and 655 branches.
Capital One does not have branches in the New York market, but it has been building its operations in the South. In November it bought Hibernia Corp. of New Orleans for $4.9 million.
On Monday, Fitch Inc. raised Capital One's long-term issuer rating to BBB-plus, from BBB, with a "positive" outlook. The agency said the upgrade was a result of the progress Capital One has made in integrating Hibernia, as well as the stable consumer business.
Fitch said it considers the North Fork deal "transformational" for Capital One. North Fork would bring "a material residential mortgage banking platform, an area in which Capital One has a small presence, as well as strong deposit share in the New York City metropolitan area."
Several other New York-area companies were among the day's gainers. State Bancorp Inc. of Jericho, N.Y., rose 4.6%, while Astoria Financial Corp. of Lake Success, N.Y., rose 3.9%.
"The scarcity value has improved for everyone up there" in New York, said Jeff K. Davis, an analyst at First Horizon National Corp.'s FTN Midwest Research Securities Corp. The larger a core deposit base a company has in the region, "the more attractive the institution."
Stuart Simpson, a bank stock trader at FTN Midwest Research, said investors were busy trading bank stocks early in the day as a result of the deal.
"There is a lot of excitement and a lot of volume," he said. "It's kind of lifted all the bank stocks."
The American Banker index of 225 bank stocks rose 0.35%, while the index of top 50 banks rose 0.16%. The Standard & Poor's 500 rose 0.2%. The Dow Jones industrial average was unchanged.
Shares of Commerce Bancorp Inc. of Cherry Hill, N.J., one of North Fork's largest rivals, rose 2.8%.
North Fork would be removed from the S&P 500 once it is folded into Capital One. Mark Fitzgibbon, the director of research at Sandler O'Neill & Partners LP, wrote in a note Monday that the $36 billion-asset Commerce would be a candidate to take North Fork's place on the index.
"In ranking the largest U.S. banks by market cap, it seems to us that Commerce is next in line for a bid," Mr. Fitzgibbon wrote.
Companies recently added to the S&P 500 returned an average of 3% above the market between the time the listing was announced and the actual listing, he wrote.
Besides Capital One, the top losers in financial services included Fremont General Corp. of Santa Monica, Calif., which fell 3.6%, and First Marblehead Corp. of Boston, which fell 3.1%.
