New York Community Bancorp: A Well-Run Bank At A Bargain Price

1/8/18

Even in hindsight the Astoria Financial deal made sense

Flashback two years ago to October 15, 2015, when the Astoria Financial (NYSE:AF) deal was announced, New York Community Bancorp (NYSE:NYCB) was closing in on USD 50bn in assets. Typically this kind of growth would be celebrated, but under Dodd-Frank reaching this arbitrary threshold would actually penalize it by classifying it as a Systemically Important Financial Institution (SIFI). A classification that would require the bank to meet a host of additional regulatory tests on its operations, plans for returning capital, and liquidity.

Management felt that if the bank was to pass the threshold, then it should do so with more assets so it could spread these new overhead costs across a larger base. And thus it embarked on its quest to acquire Astoria.

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