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New York Community Bancorp shines with 30% gain on multiple analyst upgrades amid Signature deal

Seeking Alpha logo Seeking Alpha 3/20/2023
  • New York Community Bancorp (NYSE:NYCB) skyrocketed 29.5% in premarket after Wall Street analysts upgraded the stock amid subsidiary Flagstar Bank agreeing to take over Signature Bank's (NASDAQ:SBNY) deposits and some of its loans, in an earnings-accretive move.
  1. Wedbush analyst David Chiaverini upgraded the stock to outperform from neutral stating, "NYCB benefits from sweetheart deal as FDIC priced the assets to move quickly."
  2. KBW analyst Christopher McGratty upgraded the stock to outperform from market perform indicating, "NYCB has effectively fixed its funding challenges overnight and has significantly more flexibility than it previously had."
  3. With a overweight rating, Piper Sandler analyst Mark Fitzgibbon says it's a large deal, but the analyst has confidence in the bank management team’s ability to make big transactions work.
  4. While RBC Capital Markets analyst Jon Arfstrom assigned Outperform rating stating that the deal is positive for NYCB due to significant likely lift in deposit balances while the relatively small risk to credit given large marks. He adds, "We believe this deal does go a long way to improving the funding profile of the company and ultimately helping move the balance sheet away from the liability sensitive rate position that has been a headwind for the company during this recent Fed tightening rate cycle."
  5. "With New York Community's addition of certain deposits and assets of Signature's Bridge Bank, NYCB's balance sheet could be improved with less reliance on higher-cost wholesale funding. NYCB's loan-to-deposit ratio should decline from a high 119% in Q4 with the assumption of Signature deposits, while $12.9B in loans were bought for $2.7B, which equates to a 79% haircut," Bloomberg Intelligence analyst Herman Chan commented.

Now read: First Republic gains after getting $30B in deposits from banks (update)

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