The
New
York
Community
Bank
(NYCB)
headquarters
in
Hicksville,
New
York,
US,
on
Thursday,
Feb.
1,
2024.
Bing
Guan
|
Bloomberg
|
Getty
Images
Embattled
lender
New
York
Community
Bank
disclosed
a
litany
of
financial
metrics
in
the
past
24
hours
in
a
bid
to
soothe
skittish
investors.
But
one
of
the
most
crucial
resources
for
any
bank
appears
to
be
in
short
supply
for
NYCB
lately:
confidence.
The
regional
bank
late
Tuesday
said
that
deposits
were
stable
at
$83
billion
and
that
the
firm
had
ample
resources
to
cover
any
possible
flight
of
uninsured
deposits.
Hours
later,
it
promoted
chairman
Alessandro
DiNello
to
a
more
hands-on
role
in
management.
The
moves
spurred
a
6%
jump
Wednesday
in
NYCB
shares,
a
small
dent
in
the
stock’s
more
than
50%
decline
since
the
bank
reported
fourth-quarter
results
last
week.
Shares
of
the
Hicksville,
New
York-based
last
traded
for
about
$4.48
per
share.
“There’s
a
confidence
crisis
here,” said
Ben
Emons,
head
of
fixed
income
at
NewEdge
Wealth.
“The
market
doesn’t
have
belief
in
this
management.”
Amid
the
freefall,
ratings
agency
Moody’s
cut
the
bank’s
credit
ratings
two
notches
to
junk,
citing
risk
management
challenges
while
the
firm
searches
for
a
pair
of
key
executives.
Making
matters
worse,
NYCB
was
hit
with
its
first
shareholder
lawsuit
Wednesday
over
the
share
collapse,
alleging
that
executives
misled
investors
about
the
state
of
its
real
estate
holdings.
The
sudden
decline
in
NYCB,
previously
deemed
one
of
last
year’s
winners
after
acquiring
the
assets
of
Signature
Bank,
reignited
fears
over
the
state
of
medium-sized
American
banks.
Investors
have
worried
that
losses
on
some
of
the
$2.7
trillion
in
commercial
real
estate
loans
held
by
banks
could
trigger
another
round
of
turmoil
after
deposit
runs
consumed
Silicon
Valley
Bank
and
Signature
last
March.
Real
estate
Last
week,
NYCB
said
it
was
forced
to
stockpile
much
more
cash
for
losses
on
offices
and
apartment
buildings
than
analysts
had
expected.
Its
provision
for
loan
losses
surged
to
$552
million,
more
than
10
times
the
consensus
estimate.
The
bank
also
slashed
its
dividend
by
71%
to
conserve
capital.
Companies
are
usually
loath
to
cut
dividends
because
investors
favor
firms
that
make
steady
payouts.
The
NYCB
results
sent
shares
of
regional
banks
tumbling
because
that
group
plays
a
relatively
large
role
in
the
country’s
commercial
real
estate
market
compared
to
the
megabanks,
while
generally
reserving
less
for
possible
defaults.
Shares
of
Valley
National,
another
lender
with
a
larger
weighting
to
commercial
real
estate,
have
declined
about
22%
in
the
past
week,
for
instance.
NYCB’s
results
“shifted
investor
sentiment
back
towards
the
risk
of
an
acceleration
in
CRE
nonperforming
loans
and
loan
losses
over
the
course
of
2024,”
Morgan
Stanley
analyst
Manan
Gosalia
wrote
Wednesday
in
a
research
note.
Despite
a
suddenly
low
valuation,
“the
perceived
risk
tied
to
all
things
commercial
real
estate
is
also
likely
to
weigh
on
investor
appetite
to
step
in,”
Bank
of
America
analyst
Ebrahim
Poonawala
wrote
Wednesday.
He
rates
NYCB
“neutral”
and
has
a
$5
price
target.
Office
buildings
are
at
greater
risk
of
default
because
of
lower
occupancy
rates
with
the
rise
in
remote
and
hybrid
work
models,
and
changes
in
New
York’s
rent
stabilization
laws
have
made
some
multifamily
dwellings
plunge
in
value.
“People
thought
that
office
space
is
where
the
stress
is;
now
we’re
dealing
with
rent-controlled
properties
in
New
York
City,”
Emons
said.
“Who
knows
what
will
happen
next.”
Institutions
‘stressed’
Emons
noted
that,
much
like
during
the
March
tumult,
speculators
have
piled
into
trades
betting
that
NYCB
shares
would
decline
further.
In
particular,
activity
for
put
options
that
pay
off
if
NYCB
stock
falls
to
$3
or
lower
have
surged,
he
said.
A
put
is
a
financial
contract
that
gives
the
buyer
the
right
to
sell
a
stock
at
a
predetermined
price
and
within
a
specific
time.
On
Tuesday,
Treasury
Secretary Janet
Yellen said
she
was
“concerned”
about
losses
in
commercial
real
estate,
but
that
bank
regulators
were
working
to
make
sure
that
the
financial
system
would
adjust.
“I
believe
it’s
manageable,
although
there
may
be
some
institutions
that
are
quite
stressed
by
this
problem,”
Yellen
said,
declining
to
speak
about
any
specific
bank.
That
jibes
with
the
view
of
Wells
Fargo
analysts
that
regulators
are
likely
to
take
a
more
critical
stance
on
reserving
for
possible
loan
losses
after
the
NYCB
flare
up.
“A
tougher
look
at
credit
likely
leads
to
more
write-offs,
which
can
lead
to
more
capital
needs,”
wrote
Wells
Fargo
analysts
led
by
Mike
Mayo.
