Shares of New York Community Bancorp (NYCB.US) are losing nearly 15% today, fueled by concerns about deposit outflows. Yesterday, the stock slid 8% after Fitch Ratings downgraded its rating. In an interview on Sunday, Fed chair Jerome Powell indicated that commercial real estate in the U.S. is a 'manageable' problem however it could lead to the closure of some, regional banks.
- NYCB Bank reported a provision for credit losses of $552 million versus an expected $45 million in its Q4 2023 results. It argued that it needed to meet more restrictive, regulatory standards after its assets exceeded $100 billion (Signature Bank acquired in 2023). Since then, the drastic discounting of its shares has continued.
- Citi's most current recommendation indicates $7 per share. This is still nearly 40% above the current stock market valuation. Investors fear that the loans to XLF and the Kushner Group, to which the loss allowance (commercial real estate) was linked, will lead the bank to bankruptcy, linked to massive deposit outflows. The last few days of an unprecedented sell-off since 2008 have not been met with any substantive communication from the bank, fueling liquidity uncertainty.
- In addition, fears have been fueled by last year's banking cross, which began in early spring. The bank took over the failed Signature Bank in 2023, but did not take over its CRE loan portfolio with it. Nevertheless, it had previously acquired another bank, Flagstar, in 2022, which had a sizable exposure in commercial real estate. In addition, most of NYCB's deposits are accounted for by wealthy clients holding funds in excess of $250,000 (maximum FDIC guarantee), which may mean they will be willing to protect capital and withdraw money from it, 'just in case'.
NYCB.US shares (W1)
The decline in New York Community Bancorp shares is now greater than the volatility caused by the 2008 banking crisis
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Source: xStation5
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