NYCB stock rout deepens as analyst downgrades pile up after earnings shocker

New York Community Bancorp sank for a second straight day as at least five Wall Street analysts downgraded their recommendations and Moody’s Investors Service put the bank’s credit rating on review for downgrade.

Shares tumbled more than 11% Thursday to $5.75, adding to Wednesday’s record 38% plunge. Analysts including Compass Point Research and RBC Capital Markets downgraded their recommendations on Hicksville-based  NYCB to hold-equivalent ratings in addition to cuts made by Raymond James, Jefferies and CFRA.

“The growing pains from being a larger bank will weigh on earnings in the near-to-medium term, and we believe management will need to outperform on credit to regain investor confidence,” RBC Capital Markets analyst Jon Arfstrom wrote in a note to clients.

In 2022, NYCB completed a $2.6 billion acquisition of Michigan-based Flagstar Bancorp Inc., making it one of the largest regional banks in the country with $116.3 billion in assets as of Dec. 31. On Long Island, its branches operate under the New York Community Bank and Roslyn Savings Bank names. 

Regional bank peers followed the firm lower, with the KBW Regional Banking Index extending its two-day drop to as much as 11% during the day Thursday, the most since March. Valley National Bancorp closed down 6.8% and Western Alliance Bancorp lost 7.6%. 

This week’s renewed rout in regional banks was ignited by NYCB’s surprise dividend cut and fourth-quarter loss. The firm’s results sparked broader concerns over issues facing the commercial real estate market and the exposure that the smaller lenders have to the industry.

After the market’s close Wednesday, the company filed an update to the presentation it had released earlier in the day adding additional guidance on its expectations for net interest income of $2.8 billion to $2.9 billion for 2024. That disclosure came after analysts had pushed the firm on its conference call for a forecast on the metric.

“We believe as the market continues to appreciate the value enhancing actions NYCB has taken, the share price will recover,” New York Community Bancorp said in an emailed statement.

— with Newsday staff