NYCB Remains Cheapest Large US Bank Stock Due to Steep Decline and Provisioning for Loan Losses

According to an analysis by S&P Global Market Intelligence, New York Community Bancorp has been the cheapest US bank stock among lenders with over $3 billion in assets for the second consecutive month. The bank’s adjusted tangible book value (TBV), which shows the per-share value of equity after deducting intangible assets, was 30% as of April 30, indicating a significant discount compared to other banks. This follows a steep drop in the bank’s stock value, which has fallen by 64% since January when it announced a dividend cut and a surprise quarterly loss related to distressed commercial real estate loans. Last week, the bank disclosed a larger-than-expected loss for the first quarter and forecasted an even greater annual loss due to heightened provisioning for potential loan losses. Analysts at Morningstar DBRS suggested in May that the bank should focus on enhancing diversification and achieving long-term sustainable profitability. Citigroup, the third-largest US bank, was the only major bank included in the top twenty list, with a TBV of 71.9%. Ratings agencies have downgraded NYCB’s credit rating three times since January, citing weak earnings and risks associated with its recently proposed restructuring plan. The bank’s shares plunged by 4% following the most recent downgrade by Fitch. NYCB hopes to narrow the valuation gap over time.