FDIC Dumps NYCB Stock After Signature Deal


  • The Federal Deposit Insurance Corporation (FDIC) is selling its stake in New York Community Bank (NYCB).
  • The agency acquired the stake when Signature Bank (SBNY) collapsed in March.
  • NYCB agreed to take $38 billion in bank assets as part of the deal.
NYCB stock - FDIC Dumps NYCB Stock After Signature Deal

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The Federal Deposit Insurance Corporation (FDIC) is selling its stake in New York Community Bancorp (NYSE:NYCB), which it acquired after taking assets from the failed Signature Bank (OTCMKTS:SBNY).

The sale will occur through a public underwriting. The offering will be held on May 19, closing before June 8. Barclays (NYSE:BCS) will manage the offering. NYCB is not selling any shares in the FDIC offering.

New York Community’s bank in Hicksville, on Long Island, acquired $38 billion of Signature Bank assets in March, including $13 billion in loans. NYCB is up 59% since it acquired the assets. Its stock rose 5% overnight, opening at about $10.70 per share, representing a market capitalization of $7.3 billion.

Is There a Happy Ending for NYCB Stock?

Signature Bank’s collapse, which the FDIC now blames on “poor management,” caused a regional banking crisis that is only now ebbing. The FDIC’s report said Signature’s investments in cryptocurrencies helped cause its collapse.

But Signature was also heavily involved in commercial real estate. That industry remains in crisis as demand for office space has fallen, with many employees working from home. The failed bank still has $60 billion in loans to sell. However, it is laying off its commercial real estate team at the end of the month. The layoffs were announced as former bank officials were criticized at a congressional hearing.

NYCB itself may be in good shape. Morgan Stanley has kept its “equal weight” rating on the stock. Michael Burry’s Scion Asset Management recently bought shares.

CEO Thomas Cangemi said the bank is curtailing real estate lending and “sitting on lots of cash.” Analysts are coming to the bank’s defense, calling it undervalued and lauding its solid earnings.

What Happens Next?

The happy ending for NYCB is a sad one for the region’s commercial real estate business, which must now find a new place to borrow money.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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