New York Community Bancorp Shares Plummet 42% After Missing Earnings Estimates and Slashing Dividend

New York Community Bancorp (NYCB) experienced a significant drop in its stock price, falling as much as 42% on Wednesday, following the release of its fourth-quarter earnings report. The bank reported a loss of $0.36 per share, missing analysts’ estimates of earnings of $0.27 per share. This disappointing performance was attributed to “merger-related items and a FDIC special assessment,” according to a statement released by the company.

Last year, NYCB’s Flagstar Bank unit took over the non crypto-related deposits previously held by defunct Signature Bank. Signature Bank was one of the casualties of the 2023 “banking crisis,” which also saw the voluntary liquidation of Silvergate Bank and the closure of Silicon Valley Bank. State regulators shut down Signature Bank due to its crypto-friendly operations.

In addition to missing earnings estimates, NYCB also announced a significant reduction in its quarterly dividends. The bank lowered its dividends to $0.05 per share, a decrease of approximately 71% from the previous quarter. NYCB’s President and CEO, Thomas Cangemi, acknowledged the impact of this decision on stockholders, stating that it was not made lightly. He emphasized that the dividend reduction was a prudent move to accelerate the building of capital and support the bank’s balance sheet as a Category IV bank.

The market responded negatively to NYCB’s earnings miss and dividend cut, with the bank’s shares plummeting nearly 40% this year. The SPDR S&P Regional Banking ETF (KRE) also experienced a decline of 2.2%.

It is worth noting that the decline in NYCB’s stock price cannot be solely attributed to the bank’s involvement in the crypto industry. While NYCB’s Flagstar Bank unit assumed non crypto-related deposits from Signature Bank, the earnings miss and dividend cut were the primary factors driving the stock’s decline.

Overall, NYCB’s disappointing fourth-quarter performance and subsequent drop in stock price highlight the challenges faced by the bank in the aftermath of the banking crisis. The bank will need to focus on rebuilding its capital and restoring investor confidence to regain stability in the market.