New York Community Bancorp Downgraded by Deutsche Bank After Disappointing Q4 Report

Deutsche Bank's Bernard von-Gizycki downgraded their rating on New York Community Bancorp (NYSE: NYCB) from Strong Buy to Hold on 2024/02/02. The analyst also lowered their price target by 53.3% from $15 to $7.

The stock tanked (down 45%) after the bank dropped a "very disappointing" Q4 report which revealed a meaningful increase in credit provision and a step down in management's NIM (Net Interest Margin) guidance, the analyst stated in a note assessing New York Community Bancorp's Q4 and FY 2023 print, released on 2024/01/31.

Their downgrade to Hold was a "tough call given the sharp sell-off and low valuation," von-Gizycki said, cautioning, however, that "there is also a lot of uncertainty surrounding New York Community Bancorp's credit quality, NII (Net Interest Income), and resulting earnings prospects."

New York Community Bancorp reported a loss per share of $0.27 for Q4 2023, which missed the Zacks Consensus Estimate of EPS of $0.29 and Q4 2022’s $0.25 EPS by 200%. The company's revenue for the quarter came in at $886M, which missed the Zacks Consensus Estimate of $935.8M but beat Q4 2022’s $577M by 53.6%.

For FY 2023, New York Community Bancorp reported an EPS of $0.80, which missed FY 2022’s $1.23 by 35%. The company's revenue for the fiscal year was $5.7B, beating FY 2022’s $1.6B by an impressive 252%.

Management guided for a net interest income of $2.8B to $2.9B. President & CEO Thomas R. Cangemi commented, "In 2023, New York Community reached an inflection point in its transformation to a dynamic, full-service commercial bank. We reported an increase in net income available to common stockholders, diversified our balance sheet with commercial loans now representing almost 50% of our total loans, and increased the percentage of non-interest-bearing deposits."

Cangemi also expressed confidence in the company's actions, stating, "While these necessary actions negatively impacted our Q4 results, we are confident they better align our larger organization with our new peers and provide a solid foundation going forward. We successfully grew into a $50B+ bank in 2018, and we believe the actions we are taking now will make our transition to a $100B+ bank even more successful."

In addition to Deutsche Bank's downgrade, Compass Point's Dave Rochester also issued an update on NYCB on 2024/02/02. Rochester lowered their price target by 50%, from $16 to $8, and downgraded their rating on the stock from Strong Buy to Hold.

Currently, 20% of top-rated analysts rate NYCB as a Strong Buy or Buy, while 80% see it as a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that NYCB's upcoming year will deliver earnings per share (EPS) of $1.5. If the analysts are correct, NYCB's next yearly EPS will be down by 62.5% on a year-over-year basis.

Since NYCB's latest quarterly report on 2024/01/31, the stock price has declined by 6.6%. Year-over-year, the stock is down 42%. During that period, NYCB has underperformed the S&P 500, which is down 18.6%.

It is worth noting that Deutsche Bank analyst Bernard von-Gizycki is ranked by WallStreetZen in the bottom 20% out of 4,463 Wall Street analysts, with an average return of -41.9% and a 33.3% win rate. They specialize in the Financial Services sector.

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

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