New York Community Bancorp plunges on dividend cut, surprise loss

  • Stock Market News
New York Community Bancorp plunges on dividend cut, surprise loss
Credit: © Reuters.

New York Community Bancorp (NYSE: NYCB ) shares plunged as much as 40% Wednesday after the company announced surprised investors by posting a loss in the fourth quarter.

NYCB also missed consensus revenue expectations and said it would cut its dividend by more than two-thirds.

The company posted Q4 EPS of ($0.27), $0.53 worse than the analyst consensus estimate of $0.26, while revenue for the quarter came in at $886 million versus the consensus estimate of $929.51 million.

The dividend cut was made as the company looks to accelerate its capital build and support its balance sheet as a Category IV bank.

"During the fourth quarter, we took decisive actions to build capital, reinforce our balance sheet, strengthen our risk management processes, and better align ourselves with the relevant bank peers," said NYCB president and CEO Thomas Cangemi. "We significantly built our reserve levels by recording a $552 million provision for loan losses, bringing our ACL coverage more in line with these peer banks. In addition, we added on-balance sheet liquidity as we prepare for the enhanced prudential standards that apply to banks with $100 billion or more in total assets."

Reacting to the report, analysts at Deutsche Bank maintained a By rating and a $15 price target on the stock.

"[The] Biggest takeaway is that mgmt added a large provision of $552m (vs. $62m in 3Q and our expectations of $60m) as mgmt re-priced risk in both the multi-family and CRE office portfolios," they wrote. "Mgmt decided to cut the qtrly dividend from $0.17 to $0.05. Both moves were surprising and led to shares declining nearly 30% pre-market."

Analysts at UBS maintained a Neutral rating and $11 price target on the stock, telling investors that the results were challenging.

Analysts at RBC Capital noted that the primary reason for the quarterly loss was a larger-than-expected provision for credit losses.

"This was a major negative surprise. The company also reduced its common dividend from $0.17 per quarter to $0.05 per share," they wrote. "This was another major negative surprise. Overall, results were weaker than expected, particularly with the margin, net interest income, loan balances, and most importantly, credit."

Analysts at JPMorgan said the company's EPS was "well below Street expectations."

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or


Related Articles