New York Community Bancorp Inc
What Happened: New York Community Bancorp shares fell approximately 22% on Tuesday and tumbled to levels not seen since 1997 in early trading Wednesday before bouncing back.
Late Tuesday, New York Community Bancorp reported total deposits of $83 billion and noted that total deposits are up from the end of 2023. The bank holding company said insured and collateralized deposits represent 72% of total deposits.
New York Community Bancorp also announced that it has total liquidity of $37.3 billion, which exceeds uninsured deposits with a coverage ratio of 163%. The company also has $17 billion in cash held on its balance sheet and unencumbered securities of approximately $6.1 billion in lendable value.
"We took decisive actions to fortify our balance sheet and strengthen our risk management processes during the fourth quarter. Our actions are an investment in enhancing a risk management framework commensurate with the size and complexity of our bank and providing a solid foundation going forward," said Thomas Cangemi, president and CEO of New York Community Bancorp.
"Despite the Moody's ratings downgrade, our deposit ratings from Moody's, Fitch and DBRS remain investment grade."
Moody's downgraded all of New York Community Bancorp's long-term issuer ratings and some short-term issuer ratings to junk on Tuesday and warned that more downgrades are expected. Analyst downgrades came rolling in Wednesday morning.
JPMorgan analyst Steven Alexopoulos downgraded New York Community Bancorp from Overweight to Neutral and lowered the price target from $11.50 to $5.50 on Wednesday. BofA Securities analyst Ebrahim Poonawala downgraded the stock from Buy to Neutral and lowered the price target from $8.50 to $5.
New York Community Bancorp on Wednesday also announced the appointment of Alessandro DiNello as executive chairman, effective immediately.
DiNello will work closely with Cangemi to improve all aspects of the bank's operations in addition to continuing in his role on the board.
What Else Is Going On: According to a new Bloomberg report citing people with knowledge of the matter, New York Community Bancorp has reached out to investors seeking financing for a portfolio of residential mortgages held under Flagstar Bank.
The report indicates that a synthetic risk transfer backed by a portfolio of approximately $5 billion in home loans originated when interest rates were at lower levels is among the bank's options.
A separate Bloomberg report indicates that New York Community Bancorp has been hit with its first securities fraud lawsuit, alleging the company misled shareholders about the current standing of its commercial real estate loan portfolio. Bloomberg notes that several other securities fraud lawsuits are likely to follow.
Wednesday afternoon, New York Community Bancorp scheduled its 2024 annual meeting of shareholders for May 17. The date of record for voting at the meeting will be March 18 and investors will receive proxy materials on or about April 5.
NYCB Price Action: New York Community Bancorp shares were halted on a circuit breaker to the downside early Wednesday before bouncing back. The stock was up 4.64% at $4.39 at the time of publication, according to Benzinga Pro.
