New York Community Bankcorp shares soar on Signature deal
Finance professor: ‘Shares are likely just rebounding from last week’s big fall’
Banking crisis is absolutely stabilizing: Jacob Sonenshine
Barron's markets reporter Jacob Sonenshine discusses whether the banking sector is on the brink of a 2008-style bailout on 'Varney & Co.'
Shares of New York Community Bancorp jumped Monday, gaining almost 40% when U.S. trading opened. The Hicksville, New York, financial institution announced its Flagstar Bank unit is buying certain assets and assumed certain liabilities of Signature Bridge Bank from the Federal Deposit Insurance Corporation. All regulatory approvals, including approval from the Office of the Comptroller of the Currency, have been obtained, and the transaction has closed.
The stock has already risen roughly 1.5% since Jan. 1, but is down almost 20% the last year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NYCB | NO DATA AVAILABLE | - | - | - |
The purchase will not include digital asset banking, crypto-related assets or deposits, nor did New York Community Bancorp acquire loans or deposits related to the fund banking business.
Derek Horstmeyer, a finance professor at George Mason University, said, "They fell 30% last week on rumors of this acquisition, so I am guessing they rebounded 30% today because the deal wasn't as bad as rumored."
UBS REACHES AGREEMENT TO BUY CREDIT SUISSE AFTER UPPING OFFER
"Perhaps they are up big on the news because it is just the assets being sold while liabilities are being left off the table," he added. "All in all, they are only up a few percentage points over the last eight days, so it is not really as good a deal as it looks."
New York Community Bancorp is acquiring approximately $38 billion of assets, including $25 billion of cash and roughly $13 billion in loans.
As part of the deal, New York Community will work on an agreement to sub-service the legacy Signature multifamily, commercial real estate and other loans it did not acquire.
A branch of Signature Bank is photographed, late Sunday, March 12, 2023, in New York. New York Community Bank has agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp., said late Su (AP Photo/Bobby Caina Calvan / AP Newsroom)
In a statement issued by New York Community Bankcorp on Monday, president and CEO Thomas Cangemi, said, "This transaction continues our transformation from a predominantly multi-family lender to a diversified full-service commercial bank."
"The deal is expected to significantly strengthen our deposit base, lower the loan-to-deposit ratio, provide the opportunity to pay down a substantial amount of our wholesale funding, and further diversify our loan portfolio away from CRE loans and more toward commercial loans," he continued. "Financially, the deal is expected to be significantly accretive to both earnings per share and to tangible book value per share."
SILICON VALLEY BANK COLLAPSE WILL 'DEFINITELY' IMPACT REAL ESTATE, DEVELOPER WARNS
"The net interest margin expands due to lower funding costs, the additional deposits reduce the loan-to-deposit ratio to less than 90%, improves our profitability ratios, adds liquidity, and we maintain strong pro-forma capital ratios," Cangemi added.
Also included in the transaction is Signature's wealth-management and broker-dealer business.