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New York Community Bancorp Downgraded by DA Davidson Amid Deposit Withdrawal Concerns

By Don Francis, Editor
February 9, 2024 10:26 AM UTC
New York Community Bancorp Downgraded by DA Davidson Amid Deposit Withdrawal Concerns

DA Davidson's Peter Winter downgraded their rating on New York Community Bancorp (NYSE: NYCB) from Strong Buy to Hold on 2024/02/08. The analyst also lowered their price target by 41.2% from $8.5 to $5.

Winter expressed concern over Moody's recent downgrade of NYCB to junk status and its exposure to the commercial resale estate market. These factors could potentially lead to deposit withdrawals for the bank, despite NYCB issuing a favorable Liquidity and Deposit Information report on February 6, 2024. According to the report, total deposits increased by $1.5 billion to $83 billion.

Winter pointed out that while NYCB may consider raising capital by selling non-strategic assets, the analyst doubts that it will have a solution for possible deposit withdrawals. The analyst stated, "New York Community Bank is no longer trading based on fundamentals."

In its fourth-quarter 2023 report, NYCB reported a loss per share of $0.27, missing the Zacks Consensus Estimate of EPS of $0.29 by 200% and falling short of Q4 2022's $0.25 EPS. However, the bank's revenue of $886 million exceeded Q4 2022's $577 million, representing a 53.6% increase.

For the full fiscal year 2023, NYCB reported an EPS of $0.80, a 35% decline compared to FY 2022's $1.23. On the other hand, the bank's revenue of $5.7 billion surpassed the previous fiscal year's $1.6 billion by an impressive 252%.

NYCB's management provided guidance for net interest income in the range of $2.8 billion to $2.9 billion. President and CEO Thomas R. Cangemi highlighted the bank's transformation to a dynamic, full-service commercial bank in 2023. Cangemi also mentioned NYCB's successful integration of Flagstar Bank and its plans for a re-branding campaign.

According to data from WallStreetZen, 20% of top-rated analysts currently rate NYCB as a Strong Buy or Buy. The majority, 80%, see it as a Hold, while no analysts recommend or strongly recommend selling the stock.

Since NYCB's latest quarterly report on January 31, 2024, the stock price has plummeted by 35.2%. Year-over-year, the stock has declined by 57.7%. During the same period, NYCB has underperformed the S&P 500, which is down 21.4%.

DA Davidson analyst Peter Winter, who downgraded NYCB's rating, is ranked in the top 31% of 4,469 Wall Street analysts by WallStreetZen. Winter specializes in the Financial Services sector and has an average return of 2.3% and a 41.9% win rate.

New York Community Bancorp, Inc., the holding company for New York Community Bank, operates in Metro New York, New Jersey, Ohio, Florida, and Arizona. The bank offers deposit products, loans, annuities, life and long-term care insurance, and mutual funds. Founded in 1859, New York Community Bancorp is headquartered in Hicksville, NY.

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