New York Community Bancorp right to reassure investors: analyst
Published: 11:54 07 Feb 2024 EST
New York Community Bancorp (NYSE:NYCB)’s (NYCB) late-night move to reassure investors of its balance sheet strength on Tuesday was the right decision, according to UBS analysts.
Though questions still remain over the press release, the bank noted, such reassurances over NYCB’s increased liquidity and deposits in recent months should act as a "positive catalyst".
NYCB put out the statement late on Tuesday night, following a slump in its share price and downgrades from rating agencies Fitch and Moody’s, which themselves came after the bank cut its dividend and reported a surprise fourth-quarter US$252 million loss last week.
This statement detailed a 2% rise in deposits since the end of last year to US$83 billion, an increase in its insured and collateralized deposit mix from 67% to 72% over the same period and a stronger cash position of US$17 billion.
These, according to UBS, were among key takeaways from the release and offered “a great first step in allowing investors to regain confidence”.
“The press release has some notable positives in it, in our opinion, and came at a pivotal time,” analysts added in a note.
UBS did raise questions, however, such as asking for further clarity on the mix of deposits discussed by NYCB, alongside weighing up the effects of further downgrades.
“We think the actions NYCB took are idiosyncratic and are not necessarily a proverbial canary in the coal mine for other banks in the space,” analysts added.
“We expect little in the way of actual balance sheet or fundamental implications [but] what could be a read-across is continued increases in regulatory scrutiny, which of course ratcheted up following last year's bank failures.”
NYCB shares continued downward on Wednesday, falling 12.9% to US$3.66.
