New York Community Bancorp, Inc. (NYSE: $NYCB) is the parent company of Flagstar Bank, N.A., which is one of the largest regional banks in the U.S. It is based in Hicksville, NY.
As of December 31, 2023, the bank has $116.3 worth of assets, $85.8 billion in loans, and holds deposits of $81.4 billion. Total stockholder equity stands at $10.8 billion.
New York Community Bancorp Earnings Report
According to the Q4 earnings report, New York Community Bancorp has a net loss of $252 million, compared to a net income of $207 million in the previous quarter. It reported a full-year net income of $2.4 billion, compared to a full-year net income of $650 million in FY22. It had an adjusted net loss of $185 million for Q4, compared to a net income of $274 million in the previous quarter.
The diluted EPS for the fourth quarter was $0.36, compared to $0.27 reported in the previous quarter. For FY23, New York Community Bancorp reported a diluted EPS of $2.24, compared to the diluted EPS of $1.26 reported in Q422.
Dividend Reduction
According to President and Chief Executive Officer Thomas R. Cangemi, the bank had been engaged in an effort to become a full-service commercial bank in 2023. He added that the opportunity to accelerate the transformation came in the form of an offer from the FDIC to purchase certain assets and liabilities from the defunct Signature Bank.
Cangemi added that various decisions and actions made throughout 2023 had transformed the bank into a Category IV bank, which is a class of banks with $100-$250 billion in assets.
The CEO added that the leadership had decided to prioritize building capital, reinforce their balance sheet, and strengthen risk management processes. One measure the bank was taking to build capital was cutting quarterly dividends. For the quarter, stockholders would receive $0.05 per share.
New York Community Bancorp Stock Tumbles
NYCB stock tumbled by 37.67% at the close of trading on Wednesday, January 31, 2024, to $6.47 per share. The sharp decline was due to the bank’s decision to cut dividends for the quarter drastically. Additionally, the surprise net loss for the quarter did not help the stock price.
Revenue Drop Triggers Regional Bank Stock Selloff
Soon after New York Community Bancorp released its results, it triggered a selloff of regional bank stocks. The KBW Regional Banking Index closed trading on January 31, 2024, 6% lower—the biggest single-day decline since the collapse of Signature Bank on March 13, 2023.
Signature’s collapse was triggered by depositor panic after Silicon Valley Bank collapsed a few days earlier. NYCB Investors’ fears were amplified on Wednesday afternoon after the Fed revealed that it would maintain rates at the current levels.
Are Regional Banks In Danger of Collapse?
Regional bank stocks are more subject to emotional trading. After the collapse of several regional banks in 2023, traders have been understandably jittery. However, the current performance of regional banks is to be expected due to higher interest rates. Analysts do not see a risk of a wider spillover in regional bank stocks, describing it as a relatively small incident.
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