New York Community Bancorp. surged by a record on Monday, leading a broader rally in regional bank stocks, after the lender was upgraded by at least two analysts following its agreement to take over Signature Bank’s deposits and some of its loans. Meanwhile, First Republic Bank extended its rout to an all-time intraday low.
(Bloomberg) — New York Community Bancorp. surged by a record on Monday, leading a broader rally in regional bank stocks, after the lender was upgraded by at least two analysts following its agreement to take over Signature Bank’s deposits and some of its loans. Meanwhile, First Republic Bank extended its rout to an all-time intraday low.
Shares of the bank jumped as much as 42%, its biggest intraday move ever. The move made it the best performing member of the KBW Regional Banking Index, which rallied as much as 5.4% on Monday.
“The deal almost seems too good to be true,” said KBW analyst Chris McGratty after upgrading the stock to outperform. McGratty called the agreement a “home run financially” and says that it “officially anoints NYCB as a winner with regulators.
Monday’s rally across regional banks helped stem what had been a brutal two-week stretch for the sector following the collapse of both SVB Financial Group and Signature Bank. UBS Group AG’s $3.2 billion takeover of Credit Suisse Group AG on Sunday helped further calm the nerves of investors.
Still, despite a rebound for the overwhelming majority of the banking sector, First Republic shares faced renewed selling pressure. The San Francisco-based lender tumbled after its credit rating was lowered by S&P for the second time in a week, hitting its lowest level on record.
The ratings agency said First Republic’s $30 billion infusion from some of Wall Street’s biggest lenders may not solve the “substantial” challenges the bank is now likely facing, even if it does ease near-term pressure on liquidity.
While analysts remain on edge that a continued deposit flight from regional banks will harm liquidity and potentially spark a credit crunch, some view the recent selloff as an opportunity for investors to buy the dip.
“We believe this is one of the best risk/reward trade-offs in this group that we have seen in our 23-year career,” said Baird analyst David George, noting the KBW Bank Index’s 15% drop last week. “The stocks are more inexpensive today than they were during the pandemic, and if you don’t buy banks here, we aren’t sure when you do.”
Wall Street’s larger firms were mostly positive, with JPMorgan Chase & Co., Goldman Sachs Group Inc., and Citigroup Inc all climbing by more than 1%. In Europe, shares of UBS Group AG erased losses of as much as 16% to trade higher following its emergency Sunday takeover Credit Suisse.
(Updates to add latest trading.)
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