NYCB - Chaos At New York Community Bank: Stock Plunges As Wall Street Issues Fresh Warnings

2024-02-07 11:49:04 ET

Summary

• New York Community Bank shares have plummeted after key risk and audit executives resigned, a Q1 loss, and a Moody's downgrade of its credit.
• The bank grew rapidly through acquisitions. Now it's seeing a sharp uptick in past-due loans, particularly in the commercial real estate sector.
• Investors are rightfully concerned about the credit quality of NYCB's loans.
• NYCB may need to raise more money via bonds, but this will be challenging after a credit rating downgrade from Moody's.
• Common shareholders are in a terrible spot, but preferred shareholders have a better chance of seeing their capital returned.

Nassau County-based New York Community Bank ( NYCB ) shares plunged last week after the company announced a dividend cut and a Q1 loss . This week, the pressure ramped up as a chorus of Wall Street analysts issued downgrades. Yesterday, Moody's cut NYCB's credit rating to junk and warned of more downgrades, citing corporate governance and risks from commercial property. Worse, Bloomberg reported that the company's chief risk officer and chief audit executive both resigned and that 30-day past due debt was up 48% quarter over quarter . NYCB stock has a few defenders as well, including analysts at BofA , and investors tempted by the low price of the stock. For their part, short sellers seem to have little interest in NYCB stock, with my latest data showing only 4% short interest or so....

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