NYCB Rout Deepens as Analyst Downgrades Pile Up After Earnings Shocker

NYCB Rout Deepens as Analyst Downgrades Pile Up After Earnings Shocker

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

Most Read from Bloomberg

Shares tumbled as much as 15% on Thursday, hitting their lowest level since 2000, adding to Wednesday’s record 38% plunge. Analysts including Compass Point Research and RBC Capital Markets downgraded their recommendations on 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.

Read more: NYCB May Be Cut to Junk by Moody’s Over Risks From Real Estate

Regional bank peers followed the firm lower, with the KBW Regional Banking Index extending its two-day drop to as much as 11%, the most since March. Valley National Bancorp and Western Alliance Bancorp each fell more than 10%, while Zions Bancorp NA and BankUnited, Inc. were both lower by more than 8%.

This week’s renewed rout in regional banks was ignited by NYCB’s surprise dividend cut, fourth-quarter loss and provision build. 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 space.

Read more: A $560 Billion Property Warning Hits Banks From NY to Tokyo (2)

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.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.