New York Community Bancorp (NYSE: NYCB) stock plummeted on Monday, continuing its downward trend from the previous session. The plunge followed news of a CEO replacement and the disclosure of “material weaknesses” in internal controls related to a loan review.
Shares of New York Community Bancorp (NYCB) plummeted by more than 23% on Monday to reach their lowest point in 28 years, marking a significant downturn for the financial institution. This stark decline, which saw a peak drop of 26% on Friday, comes in the wake of reassurances from the bank regarding potential concerns over its financial reporting, assuring investors that its 2023 results would remain unaffected.
However, analysts at Morningstar DBRS expressed apprehension in a recent note, remarking,
“Unfortunately, these additional news items place further scrutiny on the company at a time when it needs to restore confidence.”
NYCB has been grappling with mounting selling pressure since it stunned investors with an unexpected fourth-quarter loss on January 31. The bank attributed this setback to increased provisions linked to its exposure to the troubled commercial real estate (CRE) sector, leading to a dividend cut.
Last week, the bank revised its quarterly loss to $2.7 billion, citing a significant $2.4 billion goodwill impairment associated with transactions dating back to 2007 and earlier. In addition, NYCB appointed George Buchanan, a seasoned financial services expert, as its chief risk officer.
The ratings agency said,
“The return to the news cycle will once again test customer loyalty and deposit stickiness given this new round of stock price pressure following the fallout from a disappointing 4Q23.”
Furthermore, NYCB finds itself grappling with stricter capital and liquidity regulations as its balance sheet surpasses the $100 billion regulatory threshold, primarily due to the acquisitions of Flagstar and select assets from the failed Signature Bank.
NY Community Bancorp (NYSE: NYCB) Stock Plummet Nets Short-sellers $145 Million
NYCB shares have plummeted nearly 65% this year, fueled by concerns about its CRE exposure that have resonated globally.
The KBW Regional Banking Index, a crucial measure of investor sentiment in the sector, has also experienced an 11.1% decline during the same period.
Short-sellers targeting a prominent regional U.S. bank exchange-traded fund have gained $977 million on paper this year. Meanwhile, the steep decline in NYCB’s stock has netted them $145 million, according to data from analytics firm Ortex.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
