New York Community Bancorp Inc. (NYCB) has recently encountered a series of setbacks that have negatively impacted its stock performance and financial standing. The bank’s stock has experienced a significant decline in premarket trading, following the announcement of a substantial dividend cut. Moreover, NYCB surprised investors with a fourth-quarter loss and failing to meet Wall Street’s revenue expectations.
Dividend Cut and Capital Building
In an effort to meet regulatory requirements as a larger bank, NYCB has decided to reduce its dividend by over two-thirds. This strategic move aims to strengthen the bank’s capital position. Chief Executive Thomas R. Cangemi emphasized the importance of this decision, stating: “We recognize the significance of the dividend reduction for all our stockholders, and it was not made lightly. We believe this is a prudent choice that will enable us to accelerate capital buildup to support our balance sheet as a Category IV bank.”
New Regulatory Classification
After acquiring struggling Signature Bank with its substantial $38 billion in assets, NYCB now meets the definition of a Category IV bank. This classification is reserved for banks with assets ranging from $100 billion to $250 billion. Furthermore, NYCB finalized its acquisition of Flagstar Bank at the end of 2022.
Fourth-Quarter Loss and Revenue Miss
The bank reported an unexpected loss of $260 million, or 36 cents per share, in the fourth quarter. In comparison, it had reported a net income of $199 million, or 27 cents per share, during the same period in the previous year. Adjusting for one-time items, NYCB’s adjusted loss stood at 27 cents per share, falling short of FactSet’s consensus estimate of 26 cents per share.
Additionally, fourth-quarter revenue reached $886 million, indicating growth from $577 million in the year-ago quarter. However, this figure fell below the analyst estimate of $929.5 million, as reported by FactSet.
The bank’s total assets as of December 31 stood at $116.3 billion, showcasing an increase from $111.2 billion as of September 30 and $90.1 billion as of December 31.
Despite these challenges, NYCB remains committed to adapting to its new regulatory framework and navigating the evolving financial landscape. The bank will continue to implement strategic measures to bolster its capital and improve its financial performance.