NEW YORK - New York Community Bancorp (NYSE:NYCB) shares jumped 15% following the announcement of the first quarter results, which were better than feared by analysts. The company reported an adjusted EPS of -$0.25, slightly surpassing the analyst estimate of -$0.26.
However, revenue fell short of expectations, coming in at $633 million against the consensus estimate of $776.81 million.
President and CEO Joseph Otting highlighted the company's strategic moves during the first quarter, including a successful $1.05 billion capital raise and the strengthening of the executive management team.
Otting expressed confidence in the bank's transformation into a high-performing regional bank, with a clear path to profitability by the end of 2026. The bank aims to achieve peer-level profitability, targeting a return on average assets (ROAA) of 1% and a return on average tangible common equity (ROATCE) of 11% to 12%, alongside a common equity tier 1 (CET1) capital ratio of 11% to 12%.
The positive market response is also attributed to the bank's efforts in increasing its allowance for credit losses on loans and leases to 1.48%, up from 1.17% in the previous quarter, and maintaining a well-capitalized position with a CET1 ratio of 9.45%, or 10.14% when fully converted. The bank's deposits remained resilient post-capital raise, ensuring ample liquidity.
Otting expressed his gratitude to the team for their endurance through recent challenges and reaffirmed the bank's commitment to enhancing shareholder value. The bank anticipates an elevated level of loan loss provision over the remainder of 2024, which reflects the potential impact of market and rate conditions on borrower performance.
Investors reacted positively to the news, with the stock's significant rise indicating confidence in the bank's strategic initiatives and its path to improved profitability. Despite the revenue miss, the bank's operational and capital-strengthening measures appear to have assuaged investor concerns, setting a more optimistic tone for its future performance.
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