New York Community Bancorp
stock was falling Thursday after one analyst downgraded the stock on concerns that depositors may start pulling funds from the embattled lender.
NYCB stock opened Thursday trading down 5% to $4.25 on heavy volume. It had risen almost 7% on Wednesday after the bank put its chairman Sandro DiNello in charge and told investors it had ample liquidity.
DiNello is admired on Wall Street for having turned around Michigan-based Flagstar Bank before selling it last year to NYCB. In a sign that power has shifted from the New York office of Chief Executive Thomas Cangemi, journalists’ calls are now routed to Michigan.
DiNello told investors on a Wednesday call that NYCB has a strong balance sheet, and will make it stronger still by selling loans if need be. The bank will soon announce new heads of its risk management and audit operations.
“We’ll be laser-focused on reducing our [commercial real estate] concentration as quickly as we can,” DiNello told listeners. “Here’s one thing I can tell you. The bank has earnings power. Consensus estimates are that we can generate over $840 million of pre-provision, pre-tax income this year.”
Last week’s surprise dividend cut and half-billion-dollar increase in loan- loss provisions rekindled fears for the stocks of other regional banks that have large books of commercial real estate loans. The sector has been under a cloud since the failure of three banks last year—one of whose assets were acquired by NYCB.
But investors seemed to feel calmer about regional banks in general on Thursday morning. The
SPDR S&P Regional Banking ETF
was up 0.6% in early trading.
NYCB stock has fallen by more than half since last week, when it disclosed its results—a loss—along with the increase to reserves and the dividend cut.
After that stock drop, D.A. Davidson analyst Peter Winter decided now was the time to pull his Buy rating. He downgraded the shares to Neutral with a price target of $5.
“[We] are concerned that deposits and bankers could start fleeing the bank, with the headline risk of the
Moody’s
downgrade to junk, the barrage of negative news reports, plus, heavy exposure to CRE,” Winter wrote. “There is a much longer road ahead to transform the balance sheet than we realized coming out of the 4Q earnings call.”
Meanwhile, Raymond James analyst Steve Moss was out with a Thursday update, writing that he is encouraged to see DiNello taking the reins as executive chairman.
Moss maintained a Neutral stance on the stock, citing the uncertainty around NYCB.. But he noted that NYCB shares trade at 4.3 times his estimate for 2024 earnings, and just 39% of tangible book value. Other mid-cap banks trade at 10.5 times earnings and 1.4 times book.
Write to Bill Alpert at [email protected] and Brian Swint at [email protected]
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