New York Community Bancorp, Inc.

NYCB Details

Key Positives:

Increase in Deposit Growth to 1.3% for Quarter ending September 30, 2021, from a decline of (0.1%) in Quarter ending June 21.

Increase in Efficiency Ratio to 40.5% for Quarter ending September 30, 2021, from 40.1% in Quarter ending June 21.

Key Negatives:

Higher Non-Performing Loans (% of Total Loans) 1.16% for the Quarter ending September 30, 2021 vs 0.83% Industry Median.  

New York Community Bancorp, Inc. (NYSE: NYCB) is operates as the bank holding company for New York Community Bank that provides banking products and services in Metro New York, New Jersey, Ohio, Florida, and Arizona. The company accepts various deposit products, such as interest-bearing checking and money market, savings, non-interest-bearing, and individual retirement accounts, as well as certificates of deposit.  New York Community Bancorp, Inc. was founded in 1859 and is headquartered in Hicksville, New York.

Recent Updates:

• USD 28 Billion community benefit agreement with NCRC: On January 30, 2021, New York Community Bancorp & National Community Reinvestment Coalition, came together to an agreement to provide USD 28 Billion in loans, investments and various other financial support to the communities and people of color, low- and moderate-income families and communities and small business. This raises the banks score in the ESG parameters, leading towards the higher rank in the banking circle.
• Dividend Declaration: The NYCB bank declared a quarterly cash dividend on its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A (NYSE: NYCB PA) at the rate of $15.94 per preferred share, which equates to $0.3984 for each depositary share.

Q3FY21 Results:

• Increase in Cash from Operating Activities: The Bank witnessed an uptick in its 3Q FY21 cash from operating activities to USD 75 million as compared from the USD 14 million in 2QFY21. The major contribution to this increase is sourced from the rise in Net Income of approx. 50% on Quarter over Quarter basis to USD 446 million in 3QFY21.
• Increase in Non-Performing Loans: The Non-performing loans for 3QFY 21 increased to 1.16% as compared to the 0.22% in 2QFY21.
• Improvement in Tier 1 Risk-Adjusted Capital Ratio: The Bank reported an improved Risk adjusted ratio for its Tier 1 Capital to 11.13% IN 3QFY21 as compared to the 11.05% in 2QFY21. This is the key most important ration in the banking sector which depicts the safety and liquidity of the banks.

Key Risks:

• Macro tailwind & Rising NPA: The recent uptick in the inflation, is curbing the purchasing power which is enabling the Central banks to raise the interest rates and drain the liquidity. The evaporating liquidity will put the pressure on the borrowing costs, and this can hamper the profitability f the banks in near to midterm. Further the rising NPA and lower Tier 1 Risk Adjusted Capital ratio as compared to the industry mean is also a setback to the bank unless they show the turnaround in its performance. The results will the reported-on 26^th January 2022, for the Quarter ending December 2021.

Valuation Methodology: Price/Earnings Per Share Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

NYCB Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

NYCB's stock price rose 1.6183% in the past month and is entering in a range bound zone, with the supports being placed at the higher end of the range. The price when trades above the 200 DMA (Daily Moving Average), depicts the strength and the longevity of the long-term trend is kept intact. One of the most prominent leading indicators, Relative Strength Index showed the reading of 40.91 and bounced from the lower range of 30 (as the zone of oversold) thrice, again giving some bullish taste to the stock price from these levels. On the fundamental aspect, we have valued the stock using the Price/Earnings Per Share relative valuation methodology and arrived at a target price of USD 13.31.

 Further, the rising interest will boost the Net Interest Margins of the banks and can act as a tail wind to the stock further, hence we recommend a "Hold" rating on the stock at the closing price of USD 12.19, down 0.48% as of January 25, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.