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NYCB Profits from Signature Bank Acquisition Lost

New York Community Bancorp (NYCB) shares closed down 38% Wednesday (Jan. 31) following its announcement of a dividend cut and an unexpected loss.

This news surprised investors who had considered NYCB one of the winners of the 2023 crisis that saw the downfall of Signature Bank, Silicon Valley Bank and First Republic, the Financial Times (FT) reported Wednesday.

Amid last year’s regional banking turmoil, NYCB acquired the failed Signature Bank, taking over most of its deposits and a third of its assets, including $13 billion in loans, according to the report.

Initially, investors responded with enthusiasm, driving NYCB shares higher, the report said. However, those gains were lost Wednesday as NYCB reported a loss of $260 million in the fourth quarter of 2023, compared to a gain of $164 million in the same period the previous year.

Bank executives attributed the loss to a rise in expected loan losses, particularly from loans tied to office buildings, per the report.

NYCB CEO Thomas Cangemi said during an earnings call that the bank was cutting its dividend to comply with banking regulations, according to the report. The acquisition of Signature Bank pushed NYCB’s assets over $100 billion, triggering stricter capital requirements.

The decline in NYCB’s stock — which dropped as much as 46% before closing down 38% — also had a negative impact on other smaller banks, with the KBW Regional Bank index falling by 6%, the report said.

CFRA analyst Alexander Yokum downgraded NYCB’s shares to “hold,” citing diminishing confidence in NYCB’s ability to efficiently integrate its recent acquisitions, per the report.

NYCB said that the integration of the Signature acquisition would take longer than expected and might not be completed until next year, according to the report.

Despite the challenges, Cangemi remained optimistic and praised the teams involved in the acquisition, per the report.

NYCB subsidiary Flagstar Bank acquired Signature on March 19, 2023, a week after the Federal Deposit Insurance Corp. (FDIC) assumed control of the failed bank on March 12.

Signature’s collapse came days after the failure of Silicon Valley Bank and the announcement by another bank, Silvergate, that it was self-liquidating. Signature had been known as a crypto-friendly bank, but its buyer divested its crypto business.