Vote AGAINST under valued takeover by NYCB

Here's why:

Quality comparisons NYCB Flagstar
MRQ Return on average assets 1.03% 2.00%
MRQ Return on average equity 8.63% 25.70%
MRQ Net interest margin 2.48% 2.82%
MRQ Efficiency ratio 39.9% 67.7%


Flagstar is by far the better bank with higher returns and much more efficient. So a larger rubbish bank is taking over a smaller better run bank. However as Warren Buffett pointed out when a good business buys a bad business and good management buys a bad business the bad business’s reputation and record will survive the takeover.
Flagstar manages to earn almost twice the return of NYCB on its assets. And after this Flagstar’s expenses must also be lower as the return on equity is over four times greater than the inferior NYCB.
For shareholders in a bank the key is the return on equity and here NYCB is particularly awful with a return of less than a quarter of Flagstar’s. For Flagstar’s shareholders to get the same return from NYCB they would need to invest around four time the capital.
On all of these metrics

Valuation comparison Peer group Flagstar
Price/2021E earnings PE median 13.8 6.2
Price/2021E earnings PE bottom quartile 13.1 6.2
Price/2022E earnings PE median 13.4 8.7
Price/2022E earnings PE bottom quartile 12.5 8.7
Price / Stated Book Value per share median 1.2 1.1
Price / Stated Book Value per share bottom quartile 1.0 1.1
Price / Tangible Book Value per share median 1.6 1.1
Price / Tangible Book Value per share bottom quartile 1.4 1.1

To add insult to injury NYCB is not even offering a takeover premium to Flagstar shareholders. NYCB labels the takeover a merger to try a disguise its nil premium takeover. When Flagstar’s valuation is compared to a peer group on all the metrics used by Goldman Sach’s employed by NYCB Flagstar is considerably undervalued.