(Bloomberg) -- A capital infusion and credit rating hike at New York Community Bancorp were not enough to convince Raymond James that the embattled lender will get beyond its challenges any time soon. 

Analyst Stephen Moss cut the bank’s rating to underperform from market perform, noting that credit issues are likely to impair earnings for “the next several years.” 

Shares of the Hicksville, New York-based bank fell as much as 5.6% Monday morning. The stock has tumbled 62% this year bringing its market value to $3.1 billion at the close Friday. 

Last week, the company had landed a capital injection from investors led by former US Treasury Secretary Steven Mnuchin and its credit rating was raised by Moody’s Ratings.

However, Moss wrote in a research note Monday that the company’s recent annual report filing “confirmed our suspicion that the bank’s interest-only, rent-regulated multi-family exposure is significant at $7 billion.” He added that the “recent disclosures have had an adverse mix on NYCB’s deposit base” and it “will likely reduce the bank’s earnings power.”  

 

The company has been under pressure since its earnings report in January included a surprise dividend cut and its provision for loan losses surged. Since then, the firm disclosed that it had discovered “material weaknesses” around how it tracks loan risks.

Analysts have since soured rapidly on the bank, with the stock now having only 11% of buy-equivalent rating, down from almost 70% in the end of last year. New York Community Bancorp now has at least two buys, 15 holds and two sell ratings among analysts tracked by Bloomberg. 

“Pipeline of potential problems for the next several years likely to result in hundreds of millions in credit costs,” Moss said. He became the second Wall Street broker to have a sell-equivalent rating on the stock.

--With assistance from Bre Bradham.

©2024 Bloomberg L.P.