On Thursday, New York Community Bancorp (NYSE: NYCB) stock saw a second consecutive day of decline as five Wall Street analysts lowered their recommendations. In addition, Moody’s Investors Service initiated a review that could lead to a downgrade of the bank’s credit rating.
NYCB shares nosedived by 15% on Thursday, marking their lowest point since 2000. This comes hot on the heels of an unprecedented 38% drop on Wednesday. Analysts from Compass Point Research, RBC Capital Markets, Raymond James, Jefferies, and CFRA have all downgraded their recommendations on NYCB to hold equivalent ratings.
RBC Capital Markets analyst Jon Arfstrom expressed concerns in a client note, stating,
“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.”
The impact rippled through regional banks, with the KBW Regional Banking Index plummeting by about 11% over the past two days, the most significant since March. Valley National Bancorp (NASDAQ: VLY) and Western Alliance Bancorp (NYSE: WAL) each saw declines of over 10%, while Zions Bancorp (NASDAQ: ZION) and BankUnited (NYSE: BKU) posted drops of more than 8%.
NYCB Sparks Regional Bank Concerns
This week, regional banks saw a downturn sparked by NYCB’s surprise dividend cut, Q4 loss, and increased provisions. This raised broader concerns about challenges in the commercial real estate market and the exposure of smaller lenders to this sector.
Following the market close on Wednesday, NYCB filed an update to its earlier presentation, offering additional guidance on net interest income expectations for 2024, ranging from $2.8 billion to $2.9 billion. This disclosure came in response to analysts seeking a forecast on this crucial metric during the conference call.
New York Community Bancorp said in an emailed statement,
“We believe as the market continues to appreciate the value-enhancing actions NYCB has taken, the share price will recover.”
NY Community Bancorp (NYSE: NYCB) Stock Price Action
NYCB stock plunged -11.21% on Thursday. The traders had exchanged hands with 119,236,901 (119.23 million) shares compared to the average daily trading volume of 10.83 million.
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.
