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NYCB’s stock continues its slide even despite one analyst’s vote of confidence

Janney analyst says bank can handle loan stress, while Moody’s lowers debt rating further into junk territory Wall Street’s negative sentiment around New York Community Bancorp continued Monday even as an analyst reiterated a buy rating on the stock and said its business remains strong enough to handle expected loan risk.

The ratings actions around New York Community Bancorp’s stock NYCB, -12.25% remained mixed, however, as Moody’s Investors Service issued its second debt downgrade on the bank in about a month.

New York Community Bancorp’s stock fell 11.4% to $3.15 on Monday.

Janney stock analyst Christopher Marinac said the bank has more loss capacity to handle any loan stress than investors understand.

“There is sufficient loss coverage from existing PPNR (pre tax pre provision revenues) or operating cash flow to recognize problem credits and incur loan loss write-offs,” Marinac said Monday.

Marinac said New York Community Bancorp has a $2.04 billion loss severity forecast from 2024 to 2026, with combined reserves, provision charges, and residual pre-provision net revenue (PPNR) after paying dividends of $2.97 billion, Marinac said.

“This enables substantial loss capacity and problem loan recognition by the company,” he said.

The bank’s available capacity to recognize credit problems and absorb credit losses on its own with existing reserves and PPNR or operating cash flow “should enable the company to raise additional capital to position the company for future success,” Marinac said.

The bank is preparing to file its financial information with a remedy for internal control weaknesses and should enable a real understanding of actual criticized loans, he said.

“We feel the company could raise ‘comfort capital’ to increase its …regulatory ratio,” he said.