Bank of America said it’s unlikely that problems at New York Community Bancorp will foreshadow another banking crisis. Shares of NYCB plunged more than 37% Wednesday in its worst day since it went public in 1993. The brutal sell-off came after the bank reported that it swung to a fourth-quarter loss , took a $552 million provision for credit losses and cut its dividend to shore up capital. NYCB took over the failed Signature Bank during the regional bank crisis in 2023. Bank of America’s credit strategy team said in a report Wednesday that the troubles at NYCB, which has $116 billion in assets, appear confined to the regional bank alone. BofA noted that the fourth-quarter results for the big six U.S. banks as well as other large regional banks were “constructive on credit quality.” “That suggests the NYCB surprise was likely a one-off and not an indicator of a wider problem,” the Bank of America team wrote in a note. NYCB 5D mountain New York Community Bancorp Secondly, Bank of America said larger banks have strong capital buffers against credit losses. Additionally, the firm said that as the Fed nears the start of its easing cycle, the environment should improve for the sector. Other analysts pointed to the fact that NYCB recently reached more than $100 billion in assets, attaining Category IV bank status and requiring a higher reserve level. Category IV refers to banking standards for U.S. banks with total assets of $100 billion or more. “We believe that management became cognizant of the need to maintain peer-like reserve levels and a CET1 ratio closer to peer levels now that they are over $100 billion in assets and a Category IV bank,” RBC analyst Jon Arfstrom wrote in a client note, referring to Common Equity Tier 1 capital mandates. Jefferies also cited an “unexpectedly faster regulatory mandate” to Category IV bank compliance for NYCB. Both RBC and Jefferies lowered their investment ratings on NYCB on Thursday. The stock, which now yields 3.1% after the dividend cut, was ahead 2.5% in early trading Thursday. — CNBC’s Michael Bloom contributed reporting.
2024-02-01 14:32:52
#BofA #Community #Bancorp #plunge #isnt #indicative #wider #problem
