The New York Community Bank (NYCB) headquarters in Hicksville, New York, US, on Thursday, Feb. 1, 2024.
Bing Guan | Bloomberg | Getty Images
New York Community Bank said Thursday it lost 7% of its deposits in the turbulent month before announcing a $1 billion-plus capital injection from investors led by former Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital.
The bank had $77.2 billion in deposits as of March 5, NYCB said in an investor presentation tied to the capital raise. That was down from $83 billion it had as of Feb. 5, the day before Moody’s Investors Service cut the bank’s credit ratings to junk.
NYCB also said it’s slashing its quarterly dividend for the second time this year, to 1 cent per share from 5 cents, an 80% drop. The bank paid a 17-cent dividend until reporting a surprise fourth-quarter loss that kicked off a negative news cycle for the Long Island-based lender.
Before announcing a crucial lifeline Thursday from a group of private equity investors led by Mnuchin’s Liberty Strategic Capital, NYCB’s stock was in a tailspin over concerns about the bank’s loan book and deposit base. In a little more than a month, the bank changed its CEO twice, saw two rounds of rating agency downgrades and announced deepening losses.
At its nadir, NYCB’s stock sank below $2 per share Wednesday.
But the capital injection has raised hopes that it now has enough time to resolve lingering questions about its exposure to New York-area multifamily apartment loans, as well as the “material weaknesses” around loan review that the bank disclosed last week.
Mnuchin told CNBC in an interview Thursday that he started looking at NYCB “a long time ago.”
“The issue was really around perceived risks in the loans, and with putting billion dollars of capital into the balance sheet, it really strengthens the franchise and whatever issues there are in the loans we’ll be able to work through,” Mnuchin said.
“I think there’s a great opportunity to turn this into a very attractive regional commercial bank,” he added.
Mnuchin said he did “extensive diligence” on NYCB’s loan portfolio and that the “biggest problem” he found was its New York office loans, though he expected the bank to build reserves over time.
“I don’t see the New York office working out or getting better in the future,” Mnuchin said.
Incoming CEO Joseph Otting, a former Comptroller of the Currency, told analysts Thursday that the bank would look to strengthen its capital and liquidity levels and reduce its concentration in commercial real estate loans.
After Wednesday’s wild ride in which NYCB stock plunged more than 40% before ending the day higher on news of the capital raise, shares climbed 12% in morning trading.
This story is developing. Please check back for updates.
