New York Community Bancorp's stock jumps more than 30% after reporting narrower-than-expected loss

By Steve Gelsi

New Chief Executive Joseph Otting sees 'path to profitability' in the next two years

New York Community Bancorp's stock flirted with its largest-ever one-day gain Wednesday after the company reported a narrower-than-expected loss following an eventful first quarter that included a $1 billion capital raise from a firm led by former Treasury Secretary Steven Mnuchin's private-equity firm.

The stock (NYCB) was up 31.7% at midday, which would narrowly beat out its largest one-day gain ever on March 20, 2023, when it rose 31.65%, according to FactSet data.

Chief Executive Joseph Otting, who stepped into the role after Mnuchin led the capital raise in March, said the bank has a "clear path to profitability over the following two years."

NYCB said it lost $335 million, or 45 cents a share, in the quarter. In the year-ago quarter, the bank reported net income of $2 billion, or $2.87 a share.

The bank's adjusted loss was 25 cents a share, a penny better than the FactSet consensus estimate for a loss of 26 cents a share.

Revenue fell to $633 million from $2.65 billion in the year-ago quarter and missed the analyst estimate of $776.8 million.

Citi analyst Ben Gerlinger reiterated a neutral rating on NYCB and said the bank's stock is likely to move higher due to the "smaller than feared deposit mix shift trend plus a formal three-year goal ... of profitability improvement."

Jefferies analyst Casey Haire reiterated a hold rating, saying, "Overall, we believe results are better than worst-case fears as reserve build/credit migration finished was reasonable and the deposit franchise demonstrated resilience."

NYCB said it increased its allowance for credit losses and leases to 1.48% from 1.17% in the previous quarter, after conducting an audit of its loan book.

Its deposits remained "resilient" after it raised capital during the quarter and the bank said its capital is "ample."

Deposits at the bank stood at $74.9 billion, including 24% non-interest bearing.

Initially boosted by its acquisition of ailing Signature Bank last year, NYCB saw its stock plunge on Jan. 31 after it reported a surprise loss due to two troubled commercial real-estate loans and the cost of setting aside capital to meet regulatory requirements of a bank of its size.

The stock took another dive on Feb. 29 and March 1 after it disclosed material weakness in its loan review process, but bounced after Mnuchin's Liberty Strategic Capital led a $1 billion infusion into the bank and named Otting as chief executive on March 6.

Otting said NYCB conducted an "in-depth due diligence" of its loan portfolio. The effort included a "thorough review" of its top 250 multi-family loans, the top 50 office loans, and the top 50 non-office commercial real-estate loans.

As a result, the bank increased its credit reserve during the quarter.

"We anticipate an elevated level of loan loss provision over the remainder of 2024 related to the potential for market and rate conditions to impact borrower performance on certain portions of our loan portfolio," Otting said.

The bank ended the quarter with total liquidity of $28 billion, including $12.9 billion of cash and $4.1 billion of high-quality liquid assets. It also has $11.7 billion of available borrowing capacity.

The bank had been listed on FactSet as providing a first-quarter update on April 24, but did not do so at the time. The bank did not reply to queries from MarketWatch on the date of its quarterly results.

Prior to Wednesday's moves, NYCB's stock was down 74% in 2024, compared with a 5.6% rise by the S&P 500 SPX.

-Steve Gelsi

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05-01-24 1208ET

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