The sign above the New York Community Bank branch in Yonkers, New York, USA on January 31, 2024.
Fresh Mike | Reuters
regional lender New York Community Bank As the anniversary of last year’s banking turmoil approaches, the Bank of England finds itself in a significantly worsening predicament.
Shares of the troubled bank plunged 25% on Friday to under $4 a share in the wake of the NYCB incident restate Earnings officially fell by $2.4 billion in latest quarter replaced its CEO and Delay Publish key annual reports.
The most concerning developments, however, are directly related to investor concerns about commercial real estate and the bank’s reported shortcomings in key aspects of its business: NYCB said weak oversight led to “significant deficiencies” in the way it reviewed its portfolio. loan.
Raymond James analyst Steve Moss said in a research note on Thursday that the disclosure was “a significant concern and suggests that credit costs are likely to be higher over the longer term.” . “These disclosures heighten our concerns about NYCB’s interest-only multifamily portfolio, which may require a lengthy adjustment period unless interest rates decline.”
In a stunning reversal of fortune, a year later a run on deposits drained the capital of regional banks including Silicon Valley Bank and New York Bank of Commerce—one of the perceived winners of the period. Obtain The government has seized a chunk of Signature Bank’s assets – and is now facing its own existential questions.
tough quarter
A month ago, the bank’s trajectory suddenly changed. A disastrous fourth-quarter report showed the company unexpectedly lost money, slashed its dividend and shocked analysts with levels of loan-loss provisions.
Days later, ratings agency Moody’s downgraded the bank’s credit rating by two notches to junk amid concerns about the bank’s risk management capabilities, following the departures of NYCB’s chief risk officer and chief audit executive.
At the time, some analysts were pleased with the steps NYCB was taking to shore up its capital, noting promotion The appointment of former Flagstar CEO Alessandro DiNello as executive chairman has boosted management’s confidence.A series of insider reports briefly boosted the bank’s share price Buy Demonstrates senior executives’ confidence in the bank.
Dinello became chief executive on Thursday following the resignation of his predecessor.
Deposit update?
Now, some are questioning the stability of NYCB deposits amid the turmoil.Last month, the bank It said its deposits as of February 5 were $83 billion, a slight increase from the end of the year. The bank said most deposits are insured and it has ample resources to draw on if uninsured deposits leave the bank.
“NYCB still has not provided an update on deposits and we can only infer that deposits have declined,” DA Davidson analyst Peter Winter said in a note Thursday.
“The question is, by how much?” Winter asked. “We believe corporate treasurers are reassessing whether to retain deposits at NYCB when corporate debt ratings are downgraded to junk status.”
in a statement In announcing the appointment of a new chief risk officer and chief audit executive on Friday, NYCB CEO Dinello noted that he had identified the weaknesses disclosed Thursday and was “taking the necessary steps to address them.” He added that no changes were expected to the bank’s provisions for credit losses.
“The company has strong liquidity and a solid deposit base and I am confident we will execute on our turnaround plan,” Dinello said.
Key inventory levels breached
NYCB’s operations and profitability are under pressure due to rising interest rates and an uncertain outlook for loan defaults, raising questions about whether NYCB, which until recently had been a serial banker, will be forced to sell itself to a more stable partner.
Ben EmmonsThe head of fixed income at NewEdge Wealth pointed out that the market believes that banks trading below $5 per share are at risk of being seized by the government.
NYCB representatives did not immediately respond to a request for comment.
For now, concerns appear to be limited to New York Commercial Bank, which has commercial real estate accounting for a larger portion of its loans than some rivals. While NYCB stock hit a 52-week low of $3.32 a share on Friday, other bank indexes fell only slightly.
“We expect there will be more questions about whether NYCB will be sold,” Citigroup analyst Keith Horowitz said in a note. “But given the uncertainty, even at this price, We also don’t see many potential buyers… In our view, NYCB is on its own.”
—CNBC’s Tom Rotunno and Michael Bloom contributed to this article.
