New York Community Bancorp Hit Hard By Uncertainty And A Liability-Sensitive Balance Sheet

Conditions have not improved for New York Community Bancorp (NYSE:NYCB) since my last update on the shares. The company’s liability-sensitive balance sheet is a significant vulnerability during a period of rising rates and there is still substantial uncertainty around the proposed Flagstar (FBC) deal – not just in whether the deal will be a synergistic positive, but whether the deal will even happen. On top of that, a high deposit beta and softer loan demand just further worsen the near-term sentiment.

Down about 20% since my last article, NYCB has significantly underperformed regional banks as a group, even though the bank’s core performance hasn’t been quite that bad. At this point, the story remains the same – there are a lot of positive things happening at this bank, but it’s not well-positioned for the current environment and the Flagstar deal remains a huge source of uncertainty. I still see value in the shares, but the underperformance over the last couple of years has been brutal and I can understand why investors may want nothing to do with the name.

 

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New York Community Bancorp Hit Hard By Uncertainty And A Liability-Sensitive Balance Sheet