New York Community Bancorp stock value set to halve as slump extends

(Reuters) -Shares of New York Community Bancorp dived another 9% on Tuesday, extending a sell-off since the lender reported a surprise quarterly loss last week and putting the stock on track to shed more than half of its value at the current levels.

The frenzied selling since Wednesday has also dragged down shares of peers on renewed fears about the health of the industry, even as analysts highlighted that the issues at the bank were specific to its balance sheet.

The KBW Regional Banking index dropped around 0.9% on Tuesday.

NYCB’s assets breached a $100 billion threshold after the lender purchased Signature Bank last year, subjecting it to stricter regulatory requirements, which led NYCB to build capital.

But some analysts have said NYCB’s capital-building exercise, which spurred a 70% cut to its dividend last week, was a part of its efforts to catch up with peers of the same size.

NYCB’s bigger provisions for potential bad loans, tied to its exposure to the commercial real estate (CRE) industry, have also raised eyebrows.

“There’s a lot of anecdotal evidence that it’s grim out there in CRE and indeed that may be getting even worse than folks are allowing people to know, at least in terms of office real estate,” said Russell Hackmann, founder of Hackmann Wealth Partners.

NYCB’s market value since its earnings report has fallen to about $3.5 billion, a far cry from its peak value of nearly $10 billion in August.

At least 13 brokerages have downgraded or lowered their price targets for the bank’s stock since the earnings report.

Fitch also downgraded the bank’s credit rating last week, citing the increased regulatory requirement will curtail its “flexibility” as it focuses on building capital.

The size of provisions NYCB took were also “outside of Fitch’s baseline expectations,” the ratings agency said.

(Reporting by Niket Nishant and Johann M Cherian in Bengaluru; Editing by Sriraj Kalluvila and Shinjini Ganguli)