After a downgrade from Credit Suisse analysts, share prices of Westbury-based New York Community Bancorp began falling during trading Monday.
Credit Suisse analyst Moshe Orenbuch slashed NYB shares from outperform to neutral, citing lower interest rates, increased competition and a tougher regulatory environment as reasons the bank may suffer on its bottom line.
The effect on NYB stock was immediate -- shares slipped as trading began. Around noon shares were trading on the Nasdaq at $12.37, down 46 cents, off about 3.6 percent.
Orenbuch pointed out that less mortgage refinancing and lower prepayment penalties may affect the bank's income. In addition, NYB may attract the attention of federal regulators if it continues to issue a high annual dividend and increase its payout ratio.
New York Community Bank is a holding company that runs several commercial banking operations along the East coast.
Despite the downgrade, the Credit Suisse report said the bank still remains a stable company.
"We think a neutral rating is warranted as NYB is a strong niche player in the multifamily lending space, and we expect to see NYB continue to generate loan and balance sheet growth, albeit at a slower pace than our previous forecasts," Orenbach wrote.