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US regional lender New York Community Bancorp has sought to reassure inventors that it is still taking in new deposits, after a week in which its share price has more than halved and it was downgraded to “junk” status by Moody’s.
The bank also announced that Alessandro DiNello, the former chief executive of Flagstar Bank, which NYCB bought in 2022, would take on an executive role.
DiNello had been serving as non-executive chair, but the lender said he would now become executive chair and work with chief executive Thomas Cangemi “to improve all aspects of the bank’s operations”.
Shares in NYCB were down about 2 per cent by Wednesday lunchtime in New York. The stock had already fallen more than 50 per cent over the past week to its lowest level in more than 20 years, after the bank reported higher than expected losses from real estate loans and cut its dividend to meet tougher regulatory requirements.
NYCB’s recent losses on property loans have rekindled worries about potential defaults in the real estate market. Its struggles have weighed on other regional US lenders, in an echo of the pressure the sector came under last year following the failure of Silicon Valley Bank.
DiNello said NYCB was “laser-focused on reducing” its exposure to commercial real estate. “The challenge today is not easy. But this company has a strong foundation, strong liquidity and a strong deposit base, which gives me confidence for our path forward,” DiNello told analysts.
DiNello added that the bank was open to selling “non-core assets”, without elaborating further.
NYCB said late on Tuesday it had total deposits of about $83bn — up slightly from $81.4bn at the end of 2023 — and that its total liquidity exceeded the amount of deposits not protected by US government-backed insurance, which is capped at $250,000.
NYCB has had to offer premium rates in order to keep deposits flowing, however. It has continued to pay as much as 5.5 per cent annual interest on some short-term certificates of deposit, while other banks have pared back their rates.
The statement followed a downgrade from rating agency Moody’s on Tuesday, which cut the bank’s overall credit rating to junk. Fitch, a rival rating agency, downgraded the bank on Friday but left its rating in investment grade territory.
Moody’s said NYCB faced numerous “financial, management and risk management” issues. The credit rating group said the bank still lacked sufficient reserves to cover potential loan losses, even after setting aside an additional $500mn in its most recent quarter.
Cangemi said that the Moody’s downgrade was “not expected to have a material impact on our contractual arrangements”.
The bank also said it had started a process to bring in new chief risk and audit executives “with large bank experience”. The Financial Times reported this week that NYCB’s chief risk officer Nicholas Munson left the bank just weeks before it announced unexpected losses for the fourth quarter.
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