TIMELINE: New York Community Bancorp’s Latest Troubles
New York Community Bancorp (NYCB) faces renewed scrutiny over its financial stability following unexpected quarterly losses and a dividend cut, largely due to difficulties within the commercial real estate (CRE) sector. This situation rekindles concerns about the resilience of regional banks with similar CRE exposures.
NYCB’s decision to reduce dividends aimed to strengthen capital in light of surpassing $100 billion in assets, a move that triggered a steep decline in share value and a flurry of rating downgrades. Here’s a brief timeline highlighting critical developments in NYCB’s recent financial journey:
- March 19, 2023: NYCB’s subsidiary, Flagstar Bank, agrees to purchase deposits and loans from the collapsed Signature Bank.
- January 31, 2024: NYCB’s shares fall sharply by 37.7% after a 70% dividend cut and a surprise fourth-quarter loss, driven by stress within its CRE portfolio. Moody’s announces a review for potential downgrades of NYCB and Flagstar Bank’s ratings.
- February 1, 2024: A further 11.1% drop in NYCB shares contributes to broader regional banking sector losses, amid widespread sell-offs. The bank remains optimistic about its recovery potential through strategic actions.
- February 2, 2024: The bank’s stock marginally recovers by 5% following a 45% loss over the previous two days. Fitch subsequently downgrades the long-term issuer default ratings of NYCB and Flagstar Bank post-market close.
- February 5, 2024: NYCB shares continue their decline amid news of Chief Risk Officer Nick Munson’s departure, confirmed by the bank.
- February 6, 2024: Amidst increasing CRE concerns, U.S. Treasury Secretary Janet Yellen reassures that the situation is manageable with regulatory support, despite launching a class action lawsuit against NYCB for alleged investor fraud regarding its credit loss provisions. Moody’s downgrades several ratings of NYCB and Flagstar Bank to junk status, hinting at possible further downgrades. Meanwhile, NYCB reports a slight increase in total deposits.
- February 7, 2024: Analysts highlight NYCB’s “governance risks” for late disclosures of executive changes but acknowledge its solid liquidity. NYCB appoints banking veteran Alessandro DiNello as executive chairman and commits to reducing its CRE exposure.
