Feb 1, 2024 - Business

NY Community Bancorp shares plunge amid property loan concerns

Data: FactSet ; Chart: Axios Visuals
Data: FactSet ; Chart: Axios Visuals

Shares of New York Community Bancorp have plunged 45% over a two-day span since the regional bank reported a sharp drop in earnings and slashed its dividend.

Why it matters: The bank, which took over Signature Bank last March after that lender failed, has sent shock waves of concern across the regional bank sector and added fuel to the worries about commercial property loans.

Details: The Hicksville, N.Y. lender swung to a fourth-quarter loss and said it had to cut its dividend to build up capital due to its more than $100 billion in assets.

  • Eclipsing that threshold opens it up to stricter regulatory requirements, the bank said in its earnings release.
  • CEO Thomas Cangemi said the dividend cut decision was "not made lightly" and that the move "will allow us to accelerate the building of capital to support our balance sheet as a Category IV bank."
  • NYCB purchased Flagstar Bank in 2022 and shortly after that, swooped in on Signature Bank — two purchases that pushed its asset base above $100 billion.

Zoom in: NYCB is mostly a real estate lender, an area where concern has grown over the past year, especially in the commercial and office space.

  • The company cited two loans in its earnings release that contributed to a huge spike in charge-offs during the quarter. One of these was an office loan that "went non-accrual during the third quarter, based on an updated valuation."
  • "Given the impact of recent credit deterioration within the office portfolio, we determined it prudent to increase the ACL (allowance for credit losses) coverage ratio," NYCB said.

By the numbers: The company's stock plunged on Wednesday and continued to fall on Thursday. Before its earnings release, shares traded at $10.46 per share. The stock closed at $5.75 on Thursday.

What they're saying: "We believe as the market continues to appreciate the value enhancing actions NYCB has taken the share price will recover," the company said in a statement.

This story was updated to add NYCB's statement.

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