NYCB shares end lower as earlier gains evaporate By Reuters

© Reuters. FILE PHOTO: A screen displays the trading information for New York Community Bancorp on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 31, 2024. REUTERS/Brendan McDermid/File Photo

(Reuters) -New York Community Bancorp (NASDAQ:) shares gave up earlier gains to close with a small loss on Monday, though some analysts remain focused on confidence-building measures taken by the lender after a tumble in its stock.

NYCB’s shares closed down 0.2% at $4.89, after rising by more than 7% earlier in the session.

The bank has been looking to boost investor confidence to stem a share slide from Jan. 31, when it posted a surprise quarterly loss due to its loans tied to the stressed U.S. commercial real estate sector and slashed its dividend.

Its shares surged on Friday after bank executives bought more than $870,000 in stock combined. Among them was banking veteran and newly appointed Executive Chairman Alessandro DiNello who had vowed to reduce the bank’s loan exposure to the commercial real estate (CRE).

“DiNello appears firmly in control of the go-forward strategy and we consider him as a credible executive with a proven track record of turning around a troubled bank and working with banking regulators,” brokerage Bank of America Securities wrote in a note.

Others worry that the weak demand for offices could trigger a wave of loan defaults and hurt the balance sheets of banks.

TD Cowen analysts said the NYCB episode would trigger additional scrutiny of banks with “significant loan concentrations.”

Brokerage Morgan Stanley said there will be a need to refinance about $2 trillion of CRE debt – half of which is on bank balance sheets – expected to mature by the end of 2025.

“Our work indicates that the top 25 banks have about 30% of this exposure and the rest of the 4,500+ smaller, regional banks have the remaining 70%,” it said in an industry note.

The KBW Regional Banking Index, a key index to gauge investor sentiment toward the sector, has lost around 8.4% this year. It was up 1.8% on Monday.

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