Why is New York Community Bancorp (NYCB) down 1.8% since its last earnings report?

A month has passed since New York Community Bancorp’s (NYCB) last earnings report. Shares have lost about 1.8% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is New York Community Bancorp due for a breakout? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

New York City Reports First Quarter Loss, Drop in Revenue

New York Community reported a first-quarter 2024 loss of 25 cents per share versus the Zacks Consensus Estimate of a loss of 13 cents. In the same quarter last year, the company recorded a profit of 23 cents.

The results were primarily influenced by a significant increase in provisions for credit losses and costs. Additional concerns included a decline in non-interest income and lower deposit balances. However, the significant increase in NII acted as a tailwind.

The net loss to common shareholders was $335 million, compared to net income of $1.99 billion in the prior-year quarter.

Revenues are falling, expenses are rising

Quarterly revenue was $633 million, down 76% from the prior-year quarter. The top line also missed the Zacks Consensus Estimate of $779.5 million.

NII was $624 million, up 12% from the prior-year quarter. Net interest margin of 2.28% decreased 32 basis points.

Noninterest income was $9 million, down year-over-year from $2.09 billion.

Non-interest expenses of $699 million increased 47% compared to the same quarter last year.

The efficiency rate was 82.47%, a year-on-year increase from 60.21%. An increase in the efficiency ratio indicates deteriorating profitability.

Total loans and leases held for investment purposes decreased 3% sequentially to $82.3 billion as of December 31, 2023. As of December 31, 2024, total deposits decreased 8% to $84.8 billion.

Credit quality is deteriorating

Non-performing assets amounted to $811 million, a significant increase from $174 million as of March 31, 2023.

Additionally, the provision for credit losses was $315 million, up significantly from $170 million in the prior-year quarter. Net write-downs amounted to $81 million, while the company recorded no net write-offs in the prior-year quarter.

Improving capital ratios

As of December 31, 2024, the Common Equity Tier 1 capital ratio was 9.45%, up from 9.05% as of December 31, 2023. The total risk-dependent capital ratio was 13.09%, up from 11.77 %.

The leverage capital ratio was 7.90%, improved from 7.75%.

Perspectives

By the end of 2026, the company plans to achieve an average return on profit-generating assets of 1%, an average return on tangible core capital of 11 and a CET 1 ratio of 11.

How have estimates changed since then?

Investors have witnessed a downward trend in estimate revisions over the past month.

As a result of these changes, the consensus estimate moved by -565.69%.

VGM results

Meanwhile, New York Community Bancorp has an average Growth Score of C, although it lags in the Momentum Score with an F. However, the stock is rated B for Value, putting it in the top 40% for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, New York Community Bancorp carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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