SBNY - Hot Stocks: Bank stocks rise; NYCB jumps 32%; FRC plunges on S&P downgrade; CGC hits 52-week low

2023-03-20 17:51:25 ET

Bolstered by easing fears for the banking sector, the major U.S. equity averages pushed higher on Monday. Investors also looked ahead to a Federal Reserve decision due out later this week.

Amid further steps to shore up threatened banks, the sector in general saw an upswing. This included gains from the likes of Ally Financial ( ALLY ), U.S. Bancorp ( USB ), Fifth Third Bancorp ( FITB ) and Lincoln National ( LNC ).

NY Community Bancorp ( NYSE: NYCB ) was a standout performer among financial stocks. Shares expanded their value by nearly a third after the firm reached a deal to buy deposits and some loans from shuttered Signature Bank ( SBNY ).

First Republic Bank ( FRC ) moved in the other direction. Another downgrade from S&P led the stock to lose almost half its value.

Outside the financial sector, Canopy Growth ( CGC ) was another notable loser. Amid a decline in Canadian cannabis stocks, CGC reached a fresh 52-week low.

Sector In Focus

Bank stocks drifted higher amid hope that the sector is emerging from the turmoil that has recently led to multiple high-profile failures. Ally Financial ( ALLY ) was among the standouts in the group, climbing about 5% on speculation that the firm could be a potential target for billionaire Warren Buffett's Berkshire Hathaway ( BRK.B ).

U.S. Bancorp ( USB ) showed strength as well, recording an advance of almost 5%. The stock received an upgrade from Baird, which raised its rating on the bank to Outperform from Neutral .

Elsewhere, Fifth Third Bancorp ( FITB ) and Lincoln National ( LNC ) both climbed about 5%.

Standout Gainer

NY Community Bancorp ( NYCB ) surged nearly 32% after agreeing to buy deposits and some loans from shuttered Signature Bank ( SBNY ), which collapsed earlier this month, with New York state regulators taking possession of the bank.

Under the deal, 40 former SBNY branches will operate under NYCB's Flagstar Bank brand. The transaction includes the purchase of about $38.4B of Signature Bridge Bank North American assets, including loans of $12.9B purchased at a discount of $2.7B.

Boosted by the news, NYCB finished at $8.61, a gain of $2.07 on the day. With the advance, the stock recovered losses posted earlier this month, with shares returning to their highest close since March 6.

Overall, NYCB is now about flat for 2023 as a whole, after bouncing off a 52-week low of $5.81 reached in mid-March. Shares are about 21% lower over the past 12 months.

Standout Decliner

While much of the bank sector showed gains, First Republic Bank ( FRC ) was a glaring exception. The stock plunged 47% to reach an all-time low, dragged down by another S&P downgrade .

Citing "substantial long-term challenges for the business," S&P lowered its long-term issuer credit rating on the bank to 'B+' from 'BB+', along with other downgrades of its senior unsecured issue rating, its subordinated issue rating and its preferred stock issue rating.

FRC dropped $10.80 to close at $12.18, with the stock touching an intraday 52-week low of $11.52. Shares have lost 90% of their value over the past month.

Notable New Low

Canopy Growth ( CGC ) was among a group of marijuana-related stocks that slipped to new 52-week lows, adding to a recent slide. The stock dropped 7%, falling 14 cents to $1.86. Shares also reached an intraday 52-week low of $1.85.

Monday's decline added to a longer-term downtrend. CGC has fallen nearly 23% over the past month. Meanwhile, the stock has lost nearly 74% of its value over the past year.

Fellow Canadian cannabis names Aurora Cannabis ( ACB ) and Organigram Holdings ( OGI ) also touched new 52-week lows. ACB dropped 9% and OGI slipped 5%.

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