: New York Community Bank upgraded to buy at DA Davidson after Signature Bank deal

New York Community Bancorp. Inc. NYCB was upgraded to buy by DA Davidson on Tuesday, with analysts saying the acquisition of certain assets and liabilities of Signature Bridge Bank would accelerate its transformation to a more commercial bank. The deal will lower the loan to deposit ratio to under 1003 and increase commercial and industrial loans. analyst Peter J. Winter wrote in a note to clients. “The deal also provides significant funding advantages, by lowering deposit costs with an increase in noninterest bearing deposits and significant cash ($25B), which will be used to pay down some high-cost borrowings,” Winter wrote. It’s also expected to boost per-share earnings by 20% in 2024 and to immediately lift tangible book value. The bank said Monday it would acquire $12.9 billion of C&I loans, bumping its overall portion of such loans to about 19% from 7% previously. New York Community Bank is also acquiring about $34 billion in deposits, about 54% of which are uninsured. “Although there is a risk of outflow of deposits from Signature, NYCB made a valid point that Signature has already realized a significant outflow of deposits; which were $89B at 12/31 and NYCB is not taking any crypto or venture capital related deposits; which have been very volatile,” the analyst wrote. The bank is hanging on to all of Signature’s branches, private banking and deposit gathering teams, “so a high level of the remaining deposits are operational business accounts and no disruption to the client relationship,” he said. The stock was up 3.6% premarket.

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