New York Community Bancorp, Inc. (NYCB – Free Report) and its subsidiary New York Community Bank’s ratings were recently affirmed by Moody’s Investor Service, the rating services arm of Moody’s Corporation (MCO – Free Report) . The agency kept the company’s rating outlook stable.
New York Community Bancorp has an issuer rating of Baa2. Moreover, Moody has also assigned a Ba1 (hyb) rating to its non-cumulative preferred stock issuance. The company’s subsidiary, New York Community Bank, has long and short-term deposit ratings of A2 and Prime-1, respectively. Further, the Baseline Credit Assessment (BCA) rating of the subsidiary is baa1 and its Counterparty Risk Assessment (CRA) rating is A3 (cr)/Prime-2 (cr).
Looking at the price performance, NYCB stock has underperformed the Zacks categorized Financial – Savings and Loan industry by 1.9% over the past six months.
The company’s track record of low credit losses along with good operating efficiency resulted in profitability over the last few years. Per the rating agency, the bank has exhibited good asset quality performance since most of its loans are collateralized by rent regulated properties.
Moreover, the company has been recording low net charge-offs over the past three years. These factors contributed to the ratings affirmation.
However, a few credit challenges persist for the company in the Commercial Real Estate (CRE) segment as it constitutes a vast majority of its loans. Further, the company is relatively more dependent on wholesale funding compared to its U.S. regional bank peers.
Per the rating agency, the company has been experiencing a subdued growth due to the regulatory restrictions.
The ratings on the company’s BCA can be revised downward if its underwriting standards become weak because of poor internal practices or due to a more competitive market.
However, in order to get positive ratings, the company needs to improve its core funding levels compared to its peers and diversify by reducing its commercial real estate exposure, which leads to asset risk.
Currently, New York Community Bancorp carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks from the finance space are Lakeland Bancorp, Inc. (LBAI – Free Report) and Bank of America Corporation (BAC – Free Report) . Both these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lakeland Bancorp has witnessed an upward earnings estimate revision of 1.9% for the current year over the past 60 days. Its share price has surged 107% over the past one year.
Bank of America Corporation also witnessed an upward earnings estimate revision of 4.8% for the current year over the past 60 days. Its share price has surged 86.4% over the past one year.
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