NEW YORK (
New York Community Bancorp
was the winner among large U.S. banks on Friday, with shares rising 2% to close at $13.91.
The company announced on Friday that it its main subsidiary, New York Community Bank, would assume $2.3 billion in deposits from
Aurora Bank, FSB
, of Wilmington, Del., agreeing to pay a premium of $24 million. There were no branches include with the transaction, and the deposits had been gathered as part of Aurora's Internet-based service.
The broad indexes saw gains as investors continued to react to events in Europe. Spain announced it would cut government ministry spending by 16%. Austrian Finance Minister Maria Fekter announced that Eurozone finance ministers had agreed to strengthen the single-currency bloc's debt crisis fund to about 800 billion euro ($1.1 trillion).
About 500 million euro of the crisis found will come from the permanent, European Stability Mechanism when it becomes operational in July, with another 200 billion euro available through the European Financial Stability Facility. A further 53 billion euro will be derived from bilateral loans that have been made available to Greece and 49 billion will be available through European Financial Stability Mechanism.
Back home, the University of Michigan's survey of consumer sentiment reached its highest level in more than a year in March, coming in at a level of 76.2 from 75.3 in February, ahead of the 74.7 reading expected by economists surveyed by Thomson Reuters.
The Commerce Department reported that U.S. consumer spending rose 0.8% in February, following a 0.4% increase the previous month, for the largest spending increase since July.
KBW Bank Index
rose slightly to close at 49.73.
New York Community Bancorp's shares have now risen 13% year-to-date.
Based on a 25-cent quarterly payout, the shares have a dividend yield of 7.19%.
The company is scheduled to report its first-quarter results on April 18.
The consensus among analysts polled by Thomson Reuters is for New York Community Bancorp to post first-quarter earnings of 26 cents a share, following EPS of 27 cents, and earnings of 28 cents a share, during the first quarter of 2011.
CEO Joseph Ficlora said on Friday that the Aurora deposit acquisition was "an attractive opportunity to assume low-cost funding and is consistent with our focus on strategic actions that are accretive to the earnings of the Company."
Like most banks in the prolonged low-rate environment, New York Community Bancorp is trying to boost or maintain its net interest margin, which is the difference between a bank's average yield on loans and investments, and its average cost for deposits and wholesale borrowings.
The company's fourth-quarter net interest margin was 3.45%, increasing from 3.33% the previous quarter, and matching the margin during the fourth quarter of 2010.
New York Community Bancorp's shares trade for 13 times the consensus 2013 EPS estimate of $1.10.
The company had a relatively strong earnings track record during 2011, with its quarterly operating returns on average assets ranging between 1.13% and 1.21%, according to HighlineFI.
After "recent travels with management" of the company, FBR Capital Markets analyst Bob Ramsey on Thursday reiterated his "Outperform" rating for New York Community Bancorp, with a price target of $15, saying "near-term margin pressures are known, but the recent uptick in longer-term rates could reduce pressure in future periods."
Importantly for New York Community's shareholders, Ramsey said "there is also no shift in the company's commitment to its dividend, now yielding more than 7%, and given strong capital, profitability, and credit quality, we see no need to reduce the dividend just because the payout ratio is high."
The analyst said that the "Outperform rating reflects NYB's large dividend yield, as well as pristine credit, sizable capital ratios, and strong profitability."
Interested in more on New York Community Bancorp? See TheStreet Ratings' report card for this stock.
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Written by Philip van Doorn in Jupiter, Fla.
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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.