New York Community Bancorp is the rare example of a regional bank that is emerging from the recent crisis on stronger footing, and the market is still undervaluing its stock, according to Jefferies. The Federal Deposit Insurance Corporation announced last month that NYCB’s Flagstar arm had purchased some of the failed Signature Bank’s deposits and loans. NYCB’s stock has jumped more than 30% since then. NYCB 1M mountain Shares of NYCB jumped after the bank acquired some of Signature Bank. There may still be room for the NYCB’s shares to run. Jefferies analyst Casey Haire upgraded the stock to buy from hold, saying in a note to clients Tuesday that the deal for Signature diversified and strengthened NYCB’s balance sheet. “Post the FDIC-assisted deal for SBNY, we like NYCB’s [balance sheet] positioning given dramatic improvement in the liquidity profile as well as increased scale and diversification within the loan portfolio. At 0.9x pro forma tangible book and 6.5x our ’24 EPS estimate, we expect NYCB to close the multiple gap with peers (1.2x/7.3x, respectively), which coupled with an attractive ~8% divi yield, moves us to Buy,” Haire wrote. In fact, the move brings NYCB’s loan-to-deposit ratio below 100% for the first time in over 20 years, Haire said. One key issue for regional banks during last month’s crisis was their ability to find the cash to meet withdrawals. However, NYCB is in a strong cash position, according to Jefferies. “The cash-rich nature of the balance sheet (cash =23% of assets) enables mgmt. to pay down high-cost borrowings substantially (2.6% rate in 4Q22) as the pro forma cash position of $27B equates to 127% of NYCB’s borrowings at 12/31,” Haire wrote. Jefferies raised its price target for NYCB to $11 per share from $10. The new target implies upside of 25% from Monday’s close of $8.79 per share. — CNBC’s Michael Bloom contributed to this report.
