Shares of New York Community Bancorp Inc (NYSE: NYCB) opened 40% up today after a deal with the FDIC established it as a beneficiary of the recent bank failures.
Details of its deal with the FDIC
On Monday, the Federal Deposit Insurance Corporation confirmed that Flagstar Bank – a subsidiary of NYCB will take over substantially all deposits, some loans, and all forty branches of the recently collapsed Signature Bank (source).
As per the agreement, Flagstar will purchase loans worth $12.9 billion at a meaningful discount of about $2.7 billion. The regulatory agency expects this deal to cost roughly $2.5 billion to its Deposit Insurance Fund that ended last year holding just over $128 billion.
The stock market news arrives more than a month after NYCB reported lower than expected profit for its fourth financial quarter. Its shares are now trading a little above the price at which they started the year.
Wedbush Securities upgraded NYCB today
In total, Signature Bank had more than $110 billion worth of assets. Today’s agreement still leaves about $60 billion of its loans and $4.0 billion of deposits with the FDIC.
Also on Monday, Wedbush Securities’ analyst David Chiaverini upgraded NYCB stock to “outperform” and said the developments this morning will be a significant benefit for the regional bank in terms of earnings growth.
New York Community Bancorp benefits from a sweetheart deal as FDIC priced the assets to move quickly.
He raised his price target on the bank stock to $11 that suggests another 20% upside on top of today’s gain.
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