New York Community Bancorp’s Stock ‘Untethered from Fundamentals’

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D.A. Davidson cuts New York Community Bancorp to neutral and reduces target price for the stock to $5 from $8.50

New York Community Bancorp was downgraded to neutral from buy at D.A. Davidson partly because its stock is “trading untethered from fundamentals,” according to the firm’s analyst.

D.A. Davison’s Peter Winter cut his price target for New York Community Bancorp (NYCB) to $5 from $8.50 a share after a flurry of fresh developments at the bank, including its report of a rise in deposits and its aim to name a new chief risk officer in the near future.

New York Community Bancorp’s stock fell 7% in morning trading, to $4.16 a share.

Although Winter said the bank’s report of higher deposits is impressive, he remains concerned about deposits leaving the bank, which drew a debt downgrade to junk from Moody’s Investors Service on Wednesday.

The bank has seen its stock price drop sharply since reporting its fourth-quarter results last week.


The Moody’s downgrade and a “barrage” of negative headlines could impact deposits, Winter said, adding: “We are concerned that deposits and bankers could start fleeing the bank.”

Winter also said that board member Alessandro (Sandro) DiNello, who was named executive chair on Wednesday, answered nearly all of the questions from analysts on conference call, instead of Chief Executive Tom Cangemi.

“Sandro’s top priority is to reduce the commercial real estate concentration (multifamily is 44% of loans and commercial real estate is 12%) and [he is] willing to sell nonstrategic assets to accelerate that diversification and to shore up capital if needed,” Winter said.

“There is a much longer road ahead to transform the balance sheet than we realized coming out of the [fourth-quarter] earnings call.”


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