After Life on the Highway, Mid-Cap Banks Hit the Crossroads; Bear Stearns' Research Department Initiates Coverage of 12 Mid-Cap Regional Banks.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 14, 2003

Investors who put money in mid-cap banks and thrifts over the past three-years saw unprecedented returns as the group soared 69% outperforming the major market indices and large-cap banks. But a new report by Bear, Stearns & Co. Inc, Standing at the Crossroads, finds that while fundamentals are intact, the industry faces several near-term challenges including limited earnings, tougher comparisons and lackluster revenue growth. "The mid-cap banks and thrifts are still outperforming year-to-date, but its going to be a tough year for the group," said Sal DiMartino mid-cap bank analyst who today initiated coverage of 12 mid-cap regional banks. "While we're selectively bullish, we don't see any meaningful catalysts for the sector."

According to DiMartino, the love affair with mid-cap banks could further cool if the economy heats up. "Another concern with mid-cap banks and thrifts is sector rotation into growth and large-cap banks that are leveraged to an economic recovery," said DiMartino. "That aside, we believe that the long-term investment appeal of the mid-cap names remains intact."

Possibly adding to the appeal: the prospect for M&A activity in the sector. "When and if banks start to merge again, most of the action could be in this mid-cap area," said DiMartino. "Mid-cap banks and thrifts with steady customer streams, strong deposits and good locations could be attractive to buyers." DiMartino also added that with market caps of between $1 billion to $10 billion, a larger pool of potential buyers exists for mid-cap banks and thrifts than for their large-cap brethren.

DiMartino initiated coverage of Dime Community Bancshares (DCOM), Greenpoint Financial Corp. (GPT), Independence Community Bancorp (ICBC), New York Community Bancorp (NYB), Sovereign Bancorp (SOV) and Webster Financial Corp. (WBS) with Outperform ratings, Banknorth Group Inc. (BNK), Hudson United Bancorp (HU) and North Fork Bancorp (NFB) with Peer Perform ratings and Astoria Financial Bancorp (AF), Roslyn Bancorp (RSLN) and Staten Island Bancorp (SIB) with Underperform ratings.

For a copy of the report please call Monica Orbe at [phone] or email [e-mail].

Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. (NYSE:BSC). With approximately $30.6 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers prime broker and broker dealer services, including securities lending. Headquartered in New York City, the company has approximately 10,500 employees worldwide. For additional information about Bear Stearns, please visit the firm's Web site at http://www.bearstearns.com.

For important information regarding the companies in this report, please contact your registered representative at 1-800-371-0978, or write to Uzi Rosha, Equity Research Compliance, Bear Stearns & Co. Inc., 383 Madison Avenue, New York, NY 10179