Depositors sticking with New York Community Bancorp, its executives tell Wall Street
Joseph Otting, who will be the new CEO at New York Community Bancorp Inc. on April 1, is seen in 2019, when he was U.S. comptroller of the currency. Credit: CQ-Roll Call via Getty Images/Tom Williams
Depositors have largely remained with New York Community Bancorp Inc. despite the recent plunge in its stock price, which came in response to news of operational woes and multiple leadership changes, executives said on Thursday.
The Hicksville-based lender’s deposits totaled $77.2 billion as of Tuesday, down only 5% from Dec. 31. The reduction was due to an exodus of businesses and wealthy individuals with accounts above the federally insured amount of $250,000, the bank's executives told stock analysts.
NYCB has been in turmoil since late January, when it announced an unexpected loss for the October-December period and a dividend cut. That news was followed by a $2.4 billion accounting charge to last year’s earnings — turning an annual profit into a loss — and the replacement of CEO Thomas R. Cangemi.
Amid the upheaval, NYCB affixed the Flagstar Bank brand to its ATMS and 420 branches on Long Island, in New York City and across 12 states last month. The move erased the Roslyn Savings Bank and Queens County Savings Bank monikers that date from 1875 and 1859, respectively.
Earlier this week, there was speculation that NYCB might be taken over by federal regulators as Signature Bank and Silicon Valley Bank were one year ago. NYCB purchased some of Signature's assets.
“There certainly were some people that lined up at the [teller’s] window” to withdraw money, said Alessandro “Sandro” DiNello, NYCB's interim CEO and president.
But he said once the bank had announced a cash infusion of nearly $1.1 billion on Wednesday afternoon, “it was back to normal” in terms of depositors’ activity. “So, we were very, very pleased with the performance of the deposit base.”
Investors seemed reassured by the comments of DiNello and others, with NYCB shares closing up 20 cents, or 6%, to $3.66 on Thursday in New York Stock Exchange trading. The stock had begun to rally on Wednesday afternoon with the news of the cash infusion.
The largest chunk — $450 million — will come from Liberty Strategic Capital, a Washington, D.C.-based private equity firm. Its founder, Steven Mnuchin, U.S. Treasury secretary under former President Donald Trump, will join the NYCB board of directors.
Joseph Otting, who will succeed DiNello as CEO on April 1, didn’t rule out seeking additional cash to bolster the bank’s assets, which total $114 billion.
He also said NYCB would probably shrink the size of its portfolio of mortgages to owners of struggling apartment buildings and offices — some of which came with the 2022 purchase of Michigan-based Flagstar Bank. A smaller portfolio would bring NYCB's total assets below the $100 billion threshold where stricter federal regulations apply.
"That is an option that we'll continue to look at and then assess the organization's ability to function as a Category 4" bank, Otting said, referring to lenders with $100 billion or more in assets. He served as the comptroller of the currency in the Trump administration.
Also on Thursday, Otting announced a further reduction in the NYCB dividend to 1 cent. A dividend cut in January triggered the start of the sell-off of shares, sending them from above $10 to $1.70 on Wednesday.
Banking experts and analysts were impressed by how quickly NYCB was able to arrange for the infusion but also wondered whether it would be enough.
"NYCB may not have made it through the week without this large amount of capital coming in," said Michael B. Imerman, an assistant professor of teaching in finance at the University of California-Irvine's Paul Merage School of Business. "But I do worry that it may be too little too late."
He continued, "A lot of times we see distressed banks waiting until the eleventh hour to try and raise capital, and by then they are so battered that they end up failing."
Depositors have largely remained with New York Community Bancorp Inc. despite the recent plunge in its stock price, which came in response to news of operational woes and multiple leadership changes, executives said on Thursday.
The Hicksville-based lender’s deposits totaled $77.2 billion as of Tuesday, down only 5% from Dec. 31. The reduction was due to an exodus of businesses and wealthy individuals with accounts above the federally insured amount of $250,000, the bank's executives told stock analysts.
NYCB has been in turmoil since late January, when it announced an unexpected loss for the October-December period and a dividend cut. That news was followed by a $2.4 billion accounting charge to last year’s earnings — turning an annual profit into a loss — and the replacement of CEO Thomas R. Cangemi.
Amid the upheaval, NYCB affixed the Flagstar Bank brand to its ATMS and 420 branches on Long Island, in New York City and across 12 states last month. The move erased the Roslyn Savings Bank and Queens County Savings Bank monikers that date from 1875 and 1859, respectively.
Earlier this week, there was speculation that NYCB might be taken over by federal regulators as Signature Bank and Silicon Valley Bank were one year ago. NYCB purchased some of Signature's assets.
“There certainly were some people that lined up at the [teller’s] window” to withdraw money, said Alessandro “Sandro” DiNello, NYCB's interim CEO and president.
But he said once the bank had announced a cash infusion of nearly $1.1 billion on Wednesday afternoon, “it was back to normal” in terms of depositors’ activity. “So, we were very, very pleased with the performance of the deposit base.”
Investors seemed reassured by the comments of DiNello and others, with NYCB shares closing up 20 cents, or 6%, to $3.66 on Thursday in New York Stock Exchange trading. The stock had begun to rally on Wednesday afternoon with the news of the cash infusion.
The largest chunk — $450 million — will come from Liberty Strategic Capital, a Washington, D.C.-based private equity firm. Its founder, Steven Mnuchin, U.S. Treasury secretary under former President Donald Trump, will join the NYCB board of directors.
Joseph Otting, who will succeed DiNello as CEO on April 1, didn’t rule out seeking additional cash to bolster the bank’s assets, which total $114 billion.
He also said NYCB would probably shrink the size of its portfolio of mortgages to owners of struggling apartment buildings and offices — some of which came with the 2022 purchase of Michigan-based Flagstar Bank. A smaller portfolio would bring NYCB's total assets below the $100 billion threshold where stricter federal regulations apply.
"That is an option that we'll continue to look at and then assess the organization's ability to function as a Category 4" bank, Otting said, referring to lenders with $100 billion or more in assets. He served as the comptroller of the currency in the Trump administration.
Also on Thursday, Otting announced a further reduction in the NYCB dividend to 1 cent. A dividend cut in January triggered the start of the sell-off of shares, sending them from above $10 to $1.70 on Wednesday.
Banking experts and analysts were impressed by how quickly NYCB was able to arrange for the infusion but also wondered whether it would be enough.
"NYCB may not have made it through the week without this large amount of capital coming in," said Michael B. Imerman, an assistant professor of teaching in finance at the University of California-Irvine's Paul Merage School of Business. "But I do worry that it may be too little too late."
He continued, "A lot of times we see distressed banks waiting until the eleventh hour to try and raise capital, and by then they are so battered that they end up failing."
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
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