Shares of New York Community Bancorp Inc. (NYSE:NYCB) have plummeted by over 54% so far this year as the bank struggles to manage its assets during the latest wave of the regional banking crisis. The bank reported a total loss of $252 million in the fourth quarter of 2023 and slashed dividends by roughly 71% from the previous quarter to $0.05 per share.
Signature Bank Acquisition
In the aftermath of last spring’s banking crisis, New York Community Bank (NYCB) seized the opportunity to acquire a significant portion of Signature Bank’s business, comprising $13 billion worth of loans (primarily commercial and industrial) and $34 billion worth of deposits.
NYCB executives expressed confidence that the Signature acquisition had enhanced the bank by introducing “low-cost deposits” and a lucrative business catering to medium-sized companies and affluent families.
NYCB’s total assets grew to over $100 billion post the acquisition, making it one of the major regional players, with more than 420 branches across the country.
Nonetheless, the bank disclosed in its latest earnings call that its enlarged size following the acquisition of Signature Bank has exacerbated its challenges. The value of its commercial real estate loans plummeted sharply, accounting for the majority of its quarterly losses.
This can be attributed to the decreasing demand for office occupancy post-pandemic, as well as the increasing cost of loans amid sky-high interest rates.
Moody’s downgraded New York Community Bancorp to Ba2 from Baa3 following its earnings release because of “multifaceted financial, risk management and governance challenges.”
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Recovery Measures
The disappointing earnings release caused investors to panic, leading to a steep selloff of NYCB shares. However, the bank released its current liquidity and deposit information in a press release on Feb. 6, stating that the company’s total liquidity of $37.3 billion exceeds its total uninsured deposits of $22.9 billion.
“Our actions are an investment in enhancing a risk-management framework commensurate with the…
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