I don't comprehend this acquisition. For several years now whenener you would see a list of the highest paying CD rates in the country Aurora was always on the list. Basically Aurora was an internet based high CD rate banking concern. Needless to say paying the higher rates helped Aurora become insolvent. So NYB inherits the $2 billion in high interest paying CD's and throws in $32 million of its own monies for good measure. So as these high yielding CD's mature what can NYB offer these customers to retain them as customers? A one year CD paying one quarter of one per cent? From my perspective all they accomplished with this latest acquisition is to move them closer to the $50 billion asset threshold which will put NYB on a Fed stranglehold in their ability to continue paying the lofty dividend. Someone tell me the logic of the Aurora acquisition.
You have this completely backwards. They were paid $24 million to take the assets. They did not pay $32 million.
Did you just pull that number out of a hat, or did it sound like a good number to back up your short story?
Given how easy it is to get virtually free money these days, NYB must have done due diligence on these assets and found that it was worth their while to get them on their books. Moreover, as you allude to, they would have had good reason to avoid them (staying away from the $50 billion threshold) unless it was truly accretive.
Banks account for deposits as LIABILITIES not ASSETS. So this transaction has nothing to do with the $50b threshold. The high cost CD's will run off (NYB won't renew at the same rates) and the bank will be left with some amount of low cost core deposits.