New York Community Bancorp Inc stock fell. fell 36% on heavy trading volume in pre-market trading on Wednesday after it said it would cut its dividend by more than two-thirds as the company builds capital to meet regulatory requirements as a larger bank.
The bank also reported a surprise loss in the fourth quarter and missed Wall Street estimates for revenue and net interest income, as well as problems with two of its loans that caused net charge-offs to increase from the third quarter.
New York Bancorp NYCB Community Stock,
It fell in premarket trading to $6.60 per share on volume of 7 million shares.
“We recognize the importance and impact of the dividend reduction on all of our shareholders and it is not done lightly,” said CEO Thomas R. Cangemi. “We believe this is a wise decision because it will allow us to accelerate the process of building capital to shore up our balance sheet as a Series 4 bank.”
After acquiring troubled Signature Bank and its $38 billion in assets last year, New York Community Bancorp now meets the regulatory definition of a Class IV bank with assets between $100 billion and $250 billion. It also completed its acquisition of Flagstar Bank in late 2022.
The bank said it is cutting its dividend to 5 cents per share from 17 cents per share as it builds capital and takes other steps to meet requirements for a Category 4 bank.
As of December 31, total assets were $116.3 billion, up from $111.2 billion on September 30 and $90.1 billion as of December 31.
New York Community Bancorp reported a fourth-quarter loss of $260 million, or 36 cents per share. In the same quarter last year, it reported net income of $199 million, or 27 cents per share.
Breaking down one-time items, New York Community Bancorp's adjusted loss was 27 cents per share, below the FactSet consensus estimate for earnings of 26 cents per share.
Fourth-quarter revenue of $886 million was up from $577 million in the same quarter last year but beat analysts' estimates of $929.5 million, according to FactSet data.
Fourth-quarter net interest income of $740 million also beat estimates of $788.1 million.
Net charges — money it doesn't expect to repay — came to $185 million in the fourth quarter from $24 million in the third quarter, mostly due to two loans, the bank said.
The bank said the first loan has the unique advantage of pre-financed capital expenditures.
“Although the borrower was not in default, the loan was converted to held for sale during the fourth quarter,” the banks said.
It expects the loan to be sold during the first quarter.
The bank said it conducted a review of other cooperative loans and did not find any others with similar characteristics.
The second discount came on an office loan that became outstanding during the third quarter, based on an updated assessment, the bank said.
“Given the impact of the recent credit deterioration within the office portfolio, we have determined that it is prudent to increase the credit loss coverage ratio (CDR) provisions,” the bank said.
