2024-05-02 13:15:47 ET
Summary
- New York Community Bancorp has recently undergone a CEO change, a $1 billion capital raise, and started a turnaround plan to diversify loan risk and return to profitability.
- The pedigree of the new board and management is impressive.
- Dilution for common shareholders is the main problem, but NYCB preferred stock offers no dilution, ~9x the dividend yield, seniority to common equity, and a healthy discount to par.
- Consider investing in NYCB preferred stock for a 9.3% dividend yield and a 31% discount to par.
In February, I covered the chaos at New York Community Bancorp, Inc. ( NYCB ) after key risk and audit executives resigned, the bank reported a Q4 loss, and Moody's downgraded its credit. Fortunately for NYCB, an investor group led by former US Treasury Secretary Steve Mnuchin stepped in with a $1 billion rescue package in March, giving the group roughly 40% control of the bank and a new CEO. Since then, the new management has begun a cleanup operation to diversify and return the bank to profitability. So far so good, as NYCB didn't deliver any further negative shocks in its Q1 earnings report . Additionally, on this week's Q1 earnings conference call , CEO Joseph Otting shared that the bank was close to finalizing a $5 billion asset sale at par (expected to be formalized in the next week or so), which will continue to help deleverage the bank. The company also introduced new 2026 profitability targets that were well-received by analysts and the market....
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New York Community Bancorp: The Preferred Stock Looks Like A Good Bet After Q4 Earnings