New York, Feb 08, 2024 – The US regional bank NYCB, which took over Signature Bank last year, saw its share price plummet and then rebound on Wednesday after posting disappointing earnings results and a downgrade by Moody’s.
New York Community Bank’s shares plummeted as much as 15 percent on Wednesday before reversing and moving into the green around 1830 GMT.
The bank’s share price is down almost 60 percent since the end of last month.
The bank’s woes come less than a year after a banking crisis fueled by the rapid collapse of Silicon Valley Bank, and have renewed fears about regional banks’ exposure to the commercial real estate sector, which is going through a challenging period.
NYCB swallowed Flagstar in 2022 and then grew further following its takeover of Signature Bank in March 2023, swelling its assets rapidly to more than $100 billion.
Crossing this threshold automatically triggered new, more stringent capital requirements, and led to more regulatory oversight of the bank.
Last week, NYCB, which manages some 420 branches across the country, announced losses of $252 million in the fourth quarter — a nasty surprise for financial analysts.
On Tuesday evening, the US ratings agency Moody’s downgraded the bank’s long- and short-term credit rating to junk status.
In response, NYCB’s board of directors issued a statement announcing changes to the bank’s management, which included the appointment of former Flagstar head Alessandro DiNello as the bank’s new executive chairman.
During a conference call with analysts, DiNello was quick to reassure analysts of the bank’s solidity, indicating that its retail banking arm was not losing deposits.
The group is reportedly seeking fresh capital to refinance residential loan portfolios, according to Bloomberg, and is also said to be exploring the sale of a billion-dollar batch of loans relating to boats and motor homes.
“If we must sell non-strategic assets, then we’ll do that,” DiNello said. “We’ll do whatever it takes.”
NYCB’s woes have shocked investors still smarting from last year’s banking crisis, caused by SVB’s implosion following a bank run fueled by concern over its exposure to interest rate risks.
SVB’s demise led to the collapse of three other US regional lenders and the merger under pressure of Swiss banking giant Credit Suisse with regional rival UBS.
At noon local time (1700 GMT), other banking stocks were also in the red, including Western Alliance, Valley National Bancorp and KeyCorp.