New York Community Bancorp, Inc.

NYCB Details

New York Community Bancorp, Inc. (NYSE: NYCB) is the holding company of New York Community Bank holding company, a New York-based state-chartered savings bank, which operates 236 branches, out of which 19 operate directly under Community Bank, and the remaining 217 operate through eight divisional banks. It provides loan and deposit products and other related financial services to individuals and businesses. As of October 19, 2021, the company’s market capitalization stood at USD 6.56 billion.

Latest News:

• Adoption of Real-Time Payment Process: On September 30, 2021, NYCB’s banking subsidiary, New York Community Bank, has completed a ground-breaking digital payment process by creating a blockchain-based digital marker that will enable Figure Technologies, Inc. (Figure or FTI) to conduct real-time secondary trading in digital shares of its stock using Figure ATS, an alternative trading system registered with the US Securities and Exchange Commission (SEC) and based on the Provenance Blockchain.

• Key Recruitments: On September 07, 2021, NYCB announced the appointment of Douglas Pagliaro as its Senior Managing Director and Deputy Chief Digital and Banking as a Service Officer. Mr. Pagliaro carries an experience of 28 years in the banking and financial services industry, including 11 years in the digital and Banking as a Service (BaaS) market. This news followed the earlier appointment of Julie Signorille-Browne as Executive Vice President and Chief Administrative Officer on August 30, 2021. Ms. Signorille-Browne has an experience of more than 30 years in the banking operations and related roles.

Q2FY21 Results:

• Flat Interest Income: The company reported a slight increase of 1.89% in total interest income to USD 431 million in Q2FY21 (ended June 30, 2021) compared to USD 423 million in Q2FY20 (ended June 30, 2020). Interest income from loans and leases contributes 89.56%, while the interest income from securities contributes 10.44% of the total interest income in Q2FY21.
• Expansion in Net Income: The company reported a 44.76% increase in net income to USD 152 million in Q2FY21 compared to USD 105 million in Q1FY20.
• Improvement in NIM: Net Interest Margin (NIM) in Q2FY21 improved by 32 bps as compared to Q2FY20.
• Deposits Growth: In Q2FY21, the company’s total deposits increased by 5.36% to USD 34.18 billion from USD 32.44 billion in Q4FY20.
• NPA Position: As of Q2FY21, the company’s Non-Performing Asset (NPA) is down by 13.04% to USD 40 million compared to USD 46 million at Q4FY20.

Key Risks:

• Product Concentration Risk: As of December 31, 2020, Multi-Family Loans and Commercial Real Estate (CRE) accounted for 75.3% and 16% of the NYCB’s total loan portfolio, respectively. These loans possess a higher risk of non-payment than one-to-four family residential mortgage loans. If these loans get impaired due to any reason, it may severely impact the company's financials

Valuation Methodology: Price/Book Value Multiple Based 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 10.93% in the past month and is currently leaning towards the higher end of its 52-week range of USD 7.72 to USD 14.14. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 75.67. We have valued the stock using the Price/Book Value based relative valuation methodology and arrived at a target price of USD 15.54

Considering the movement in stock price, decline in NPAs, and strong balance sheet, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 14.11, up 2.62% as of October 19, 2021.

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

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