Regional banking company New York Community Bancorp (NYSE: NYCB) announced an equity investment of over $1 billion from investors on Wednesday and a change to the company's management team.
Analysts are sizing up what the changes mean for the short-term and future of the regional banking company.
The New York Community Bancorp Analysts:
- Keefe, Bruyette & Woods analyst Christopher McGratty has a Market Perform rating and $7.50 price target.
- RBC Capital analyst Jon Arfstrom has a Positive rating and $7 price target.
- Wedbush analyst David J. Chiaverini has an Underperform rating and lowers the price target from $3.50 to $3.
- Morgan Stanley analyst Manan Gosalia has an Equal-Weight rating and lowers the price target from $6 to $4.
- Bank of America analyst Ebrahim Poonawala has a Neutral rating and $5 price target.
The analyst estimates tangible book value of the company at $6.80 per share.
"We believe asset sales and a potential CRT transaction are still on the table, which would likely further increase CET1 above its current 10% target," McGratty said.
The analyst said this is a "good solution for the broader banking system."
RBC on NYCB: Changes to the board of directors and the investors could help bring regulatory experience and credibility to the company, Arfstrom said.
"While significantly dilutive, given recent concerns and share volatility, we believe the equity injection was a necessary step to help restore confidence in the stock and the near-term direction of the company," Arfstrom said.
The analyst said the announcements could be the first step in minimizing concerns about the regional bank.
"The company disclosed that the equity can be used to help support any future reserve building needs, though our sense is that the credit outlook is unchanged for now versus prior expectations."
Wedbush on NYCB: The equity infusion could be a lifeline for the company, but hurts existing shareholders, Chiaverini said in an investor note.
"While this deal provides a much-needed lifeline to NYCB, it is tremendously dilutive to common shareholders," Chiaverini said.
The analyst estimates the new tangible book value of the company at $6 per share, down from $10 per share at the end of 2023.
Morgan Stanley on NYCB: The equity infusion and management changes are a positive, but questions remain for the bank's future, Gosalia said.
"We still see several risks around office/multifamily losses, potential loan sales, and funding costs," Gosalia said.
The analyst said the new members to the board and management team bring regulatory experience and "an outside perspective" to the company.
"We still see a broad range of potential outcomes for NYCB, including higher funding costs, further reserve build, potential losses on their multifamily and other CRE portfolios."
The analyst said nonperforming loans and net charge offs in commercial real estate could accelerate in the next "couple of quarters," which will negatively impact many midcap banks.
"We don't think that the issues facing NYCB change the trajectory or pull forward the cycle, it just refocuses the market on an ongoing risk for the group."
Bank of America on NYCB: Turnaround experts are now in charge of the regional bank, Poonawala said.
"Credibility of investor base + capital injection should instill confidence," Poonawala said.
The analyst said the new announcements of management changes and equity allow the bank "time and flexibility" for a turnaround.
"The actions should alleviate investor concerns about NYCB's ability to navigate the current crisis."
Poonawala said investors are looking for an update on the bank's deposits and sees a balanced risk/reward for the stock at the present time.
NYCB Price Action: New York Community Bancorp shares are up 11% to $3.84 on Thursday versus a 52-week trading range of $1.70 to $14.22.