New York Community Bancorp’s inventory continues its slide on analyst downgrades

On Wednesday, the financial institution mentioned it posted a shock loss and minimize its dividend, sending the shares down by 37% within the largest one-day drop in its historical past.

After the shut of buying and selling on Wednesday, New York Community Bancorp mentioned it expects 2024 web curiosity earnings of $2.8 billion to $2.9 billion, which is forward of the FactSet consensus estimate of $2.76 billion.

Net curiosity earnings displays a financial institution’s revenue from loans minus cash it pays out within the type of curiosity for financial savings accounts.

Crunching the brand new numbers, Wedbush analyst David J. Chiaverini reiterated his underperform ranking on New York Community Bancorp however mentioned its new web curiosity earnings outlook is above his prior forecast of $2.7 billion.

Wedbush raised its 2024 earnings-per-share estimate for New York Community Bancorp to 80 cents a share from 65 cents a share, “owing mainly to higher average earning asset and net interest income assumptions following the company’s guidance update.”

Wedbush’s underperform ranking on New York Community Bancorp is predicated on the financial institution’s above-average commercial-real-estate publicity and the chance posed as these loans mature or reset/reprice at larger charges, he mentioned.

Jefferies analyst Casey Haire downgraded New York Community Bancorp to carry from purchase and minimize the financial institution’s value goal to $6 a share from $13 on the financial institution’s unexpectedly quick Category IV financial institution compliance.

He minimize his 2024 revenue estimates for the financial institution by about 30%.

“NYCB’s actions taken thus far are a solid step forward, but impair profitability significantly given a need to run with higher capital/liquidity/reserves while trailing Cat IV peers modestly,” Haire mentioned. “We expect the path to improved profitability will take years while credit risk remains an overhang.”

Raymond James analyst Steve Moss downgraded New York Community Bancorp to market carry out from robust purchase as a result of its outlook modified unexpectedly.

“The announced repositioning significantly reduces the benefit of acquiring Signature Bank from the FDIC and highlights that regulatory rules for crossing $100 billion in assets is considerably more punitive especially given the dividend cut and level of reserve build that occurred this quarter,” Moss mentioned.

Along with its web curiosity earnings projection, New York Community Bancorp mentioned it expects web curiosity margin of two.4% to 2.5%, beneath the analyst estimate of two.55%. However, its outlook contains actions to extend its stability sheet liquidity and regulatory compliance.

It’s additionally projecting loans to drop by 3% to five% in 2024, whereas its deposits are anticipated to extend by 3% to five%.

The financial institution expects money and securities to extend by $7.5 billion on a mixed foundation in 2024.

Moody’s Investors Service has positioned all long-term and short-term scores and assessments of New York Community Bancorp Inc. and its Flagstar Bank NA unit on assessment for a downgrade from its present ranking of steady, the scores company mentioned late Wednesday.

Moody’s cited the financial institution’s “unanticipated loss content in its New York office and multifamily properties, weak earnings, material decline in its capitalization and high and growing reliance on wholesale funding.”

While the financial institution’s acquisition of chosen property of Signature Bank improved its capitalization and funding profile, the identical metrics deteriorated to pre-acquisition ranges as of Dec. 31, partly as a result of the financial institution now should meet Category IV regulatory necessities of being a much bigger financial institution with $100 billion to $250 billion of property, Moody’s mentioned.

“Moody’s expects capitalization and funding to remain under pressure,” Moody’s mentioned.