Wednesday, August 21, 2002

Good Deals At Local Banks

Falling interest rates and investor flight from the stock market have, so far, worked to the advantage of regional banks and thrifts. Take GreenPoint Financial, whose GreenPoint Bank has offices throughout metropolitan New York. In the past two years, the thrift has seen its net profit margin widen to 24% from 16%, and its stock price nearly doubled.

With such runups, has the sector gotten too richly priced? Not according to bulls, who argue that although investors might be eager for a stock market rebound, it's unlikely they'll pile their assets into equities with abandon anytime soon. On the other hand, deposit accounts are likely to remain attractive. The same goes for real estate--provided home values don't collapse.

"I think we're going to see stronger-than-anticipated overall loan growth for the next two to three quarters," says Thomas Monaco, who covers savings banks for Keefe, Bruyette & Woods, a New York-based brokerage and investment banking concern.

Low short-term interest rates are also a boon for thrifts. Savings banks thrive on the spread between what they pay on deposits versus what they earn when they lend money at higher rates.

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