Buying Atlantic Bank of New York would end New York Community Bancorp Inc.’s painful balance-sheet restructuring and speed up its transformation into a commercial banking company.
The thrift company said Tuesday that it would pay National Bank of Greece, that country’s largest, $400 million in cash for Atlantic, which has $3.1 billion of assets. The purchase would take the $25.2 billion-asset buyer, which is based in Westbury, on Long Island, into Manhattan, one of the world’s most attractive deposit markets.
But the objective is more than geographical expansion, chief executive Joseph R. Ficalora said.
“As we build New York Commercial Bank, ultimately … it could very well be that we transition, down the road … [into] a commercial bank holding company rather than a thrift holding company,” Mr. Ficalora said Tuesday. “That has a variety of explicit benefits.”
The plan is to merge Atlantic Bank with Long Island Commercial Bank of Islandia, whose parent, the $540 million-asset Long Island Financial Corp., New York Community is also buying. (That deal was announced Aug. 1 and is to close this quarter.) The merged bank would be named New York Commercial Bank and operate under a state charter; Atlantic Bank and Long Island Commercial Bank would survive as brand names.
Even analysts critical of New York Community said that they like the Atlantic Bank deal, and that it should secure the buyer’s independence, for now.
Mr. Ficalora, who last year explored the possibility of selling, said the door to a sale remains open, and he conceded that recent moves make his company a more attractive target.
“We can easily create an opportunity for a much larger entity to look at us and say, ‘I’d love to have that asset base; I’d love to have that franchise,’ ” he said. “We have 170 branches [after the pending deals], a mix of commercial and thrift, in one of the best markets in the world.
“I’d say nothing that we have done here makes us less attractive.”
New York Community has struggled for several quarters because of rapid rate changes in early 2004 that hit its securities portfolio with mark-to-market adjustments. The company had used a large securities portfolio to fund its fast-growing loan portfolio, but it added even more securities after an acquisition deal fell through, leaving it with the money it had planned to spend on the deal.
A sizable, painful balance-sheet restructuring followed, and Mr. Ficalora pledged to find ways to boost deposits to fund loans.
Earlier this year the company created a limited-purpose bank to collect municipal deposits. That unit will also be folded into New York Commercial Bank, Mr. Ficalora said.
“We see this as, broad-brush, enhancing our balance sheet in all the ways we have been publicly stating we’d like to,” he said. “It increases our core deposits, it reduces our securities, it certainly reduces our wholesale department.
“It is a perfect match to what we have been doing over the last 15 months.”
Anthony Davis of BankAtlantic Bancorp’s Ryan Beck & Co. agreed. “Atlantic does put an end to the balance-sheet issue,” he said. New York Community plans to liquidate $1.3 billion of securities early next year, after the Atlantic deal closes.
At the end of last year Atlantic had $1.8 billion of deposits and $1.2 billion of loans — more than a quarter of them commercial and industrial.
New York Community has a niche in multifamily lending but virtually no C&I loans. Some analysts were surprised that Mr. Ficalora was so eager to broaden its focus.
“It is hard to think that they would go so far to the commercial side that they don’t need their thrift charter,” said James Ackor of Royal Bank of Canada’s RBC Capital Markets.
Others see the Atlantic deal as an opportunity to diversify. “It is a step into the right direction,” said Peter Winter of Bank of Montreal’s Harris Nesbitt Corp. The market “is getting very competitive on multifamily lending.”
Some analysts said the risk for New York Community is losing Atlantic Bank’s customers, for whom its ownership by National Bank of Greece may have given a cultural identity.
But Mr. Ficalora said that his company has two Greek-American board members, who helped to clinch the deal — John M. Tsimbinos, the former chairman of Roslyn Bancorp Inc., which New York Community bought in 2003; and Spiros J. Voutsinas, who was a board member at Roslyn. They are “very tied into the Greek community,” he said.
