As the anniversary of the crisis that sank several midsize banks approaches, the problems of another lender are once again focusing attention on the sector.
New York Community Bancorp has been trying to allay concerns about its financial health, releasing statements and hosting a last-minute call with investors Wednesday morning as its stock price plummeted.
The bank's shares have plummeted since it released an ugly earnings report last week that included unexpected losses on real estate loans tied to both office and apartment buildings.
Its shares have lost nearly two-thirds of their value in the last week, after a series of incessant descents.
Fuente: The New York Times
“Obviously, we have been faced with a very serious situation since the release of the fourth quarter results,” Alessandro DiNello, the bank's newly appointed chief executive, told investors at the start of the bank's call on Wednesday.
Those responsible for the entity wanted to “instill a certainto trust that this bank is still strong and will get back on track,” he said.
The bank, which operates 420 branches nationwide under brands such as Flagstar Bank and Ohio Savings Bank, grew in size over the past year to more than $100 billion in assets after acquiring the failing Signature Bank last spring in an auction organized by federal regulators. .
Shares of other lenders with commercial real estate portfolios have fallen – although not as much – a reminder that what affects one lender can affect others, as when fears about concentrated customer bases and low-value bond portfolios Interest rates brought down a group of lenders last spring.
This is what you need to know.
What's behind the latest banking concerns?
The biggest shock to New York Community Bancorp came when it admitted that the value of its real estate loans had plummeted, prompting it to slash its dividend and save $500 million to protect against future losses.
In its earnings report last week, the bank identified a pair of loans – one related to an office complex and another to a collective housing building – responsible for losses of $185 million.
Bank representatives, who did not respond to requests for comment, further stoked angst by deflecting analysts' questions about their expectations for future profits.
Bank shares plummeted cases 40% after the earnings report and have continued to lose ground, falling 11% on Monday and more than 20% on Tuesday.
Moody's downgraded the bank's credit rating late Tuesday, citing the “multiple financial, risk management and governance challenges” facing the lender.
On Wednesday, the bank's share price initially sank, before recovering in a volatile session.
A wide swath of other lenders, including community banks and private lenders, could also suffer losses tied to commercial real estate loans, many of which were made before the shift to remote and hybrid work during and after the pandemic put pressure on landlords. of offices and caused the value of their buildings to fall.
The rise in interest rates in recent years has also made refinancing such loans more expensive.
What other banks are in the spotlight?
M&T Bank has a similar size and comparable exposure to the commercial real estate sector, according to Wolfe Research.
In its latest earnings report, the bank reported an increase in problem real estate loans, but analysts said the exposure was “manageable.”
The average share of a regional bank has lost more than 10% in the last week.
And the largest banks?
The largest banks in the United States, such as JPMorgan Chase y Citigroup, They have been setting aside money for months to face possible real estate losses.
They are generally considered to be better able to withstand a recession due to their diversified loan and depositor base.
The stock prices of the biggest banks have held up better lately than those of smaller lenders, and Chase said Tuesday it would open 500 more branches over the next three years.
What do the regulators say?
The chairman of the Federal Reserve, Jerome Powellsaid during an interview on “60 Minutes” that aired Sunday that he saw improbable a banking crisis caused by the real estate sector.
He said some smaller and regional banks were “in trouble,” but the U.S. central bank was working with them.
Powell described the situation as a “considerable problem” that the Fed had been aware of for a “long time.”
In testimony Tuesday to the House Financial Services Committee, Treasury Secretary Janet Yellensaid it was monitoring current banking tensions, but declined to comment specifically on New York Community Bancorp.
“I don't want to get ahead of things,” he said.
Is there a risk of bank run?
Last spring's banking crisis was exacerbated by worried customers rushing to withdraw their money at once, forcing several banks to halt withdrawals as they scrambled to get cash.
(Thanks to the widespread use of mobile banking and electronic transfers, this phenomenon can occur faster never.
There is little sign that New York Community Bancorp is anywhere near that precipice.
Bank officials said last week that deposits had fallen only 2% in the fourth quarter.
On Tuesday, in what UBS analysts called “breaking news,” the bank released an update on its financials, noting that deposits had risen since the beginning of the year, to roughly where they were before the fourth-quarter slump. .
New York Community Bancorp CEO Thomas R. Cangemi said in a statement that the bank was investing in “a risk management framework commensurate with the size and complexity of our bank.”
He added that Moody's downgrade would not have a “material impact” in the bank.
The bank's chief risk officer stepped down in early January and the bank is “engaged in an orderly process of onboarding a new chief risk officer and an executive audit director with experience in large banks,” Cangemi said.
On Wednesday, the bank named DiNello CEO, tasked with working with Cangemi “to improve all aspects of the bank's operations,” the company said in a statement.
DiNello became a non-executive director of New York Community Bancorp in late 2022, following the acquisition of Flagstar, where he was CEO.
Are there immediate reasons for bank customers to worry?
Falling stock prices do not directly impede a bank's daily operations.
New York Community Bancorp branches continue to operate as normal, and each customer is protected by government insurance. $250,000.
Even for accounts above that level, regulators often hold disaster auctions (as they did last spring) in which failing banks are taken over by healthier ones, with the goal of protecting account holders. ordinary.
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