New York Community: Is the Acquisition of AmTrust More Accretive than We Expect?

Analysts at Morgan Stanley reiterate their "Equal-weight" rating on New York Community Bancorp, Inc. (NYSE: NYB) after New York Community Bancorp acquired most of the assets from failed bank AmTrust on Friday through an FDIC-assisted transaction. The target price for NYB is set to $13.

The Firm says “This (AmTrust’s acquisition) is a positive for NYB, in our view, as it both grows its balance sheet and provides it with more deposits to support growth in its multi-family business. However, our initial read is that the EPS accretion might be fairly modest once NYB raises equity to rebuild its TCE ratio.”

The firm estimated that NYB needs to raise $450 mil (at $13.50) to keep its TCE ratio at 6.0%, post the acquisition (excluding any bargain purchase gain). The additional shares would reduce the EPS accretion from 15% to just 5-6% in 2010, the analysts added.

Today, NYB has risen over 8.60% to $13.40.