NEW YORK: The US regional bank NYCB, which took over Signature Bank last year, saw its share price plummet in early trading on Wednesday (Feb 7), only to rebound strongly after posting disappointing earnings results.
In an erratic day of trading on Wall Street, New York Community Bank’s shares plummeted by as much as 15% in early trading before reversing course and moving firmly into the green, finishing the day up 6.7%.
But despite closing higher, NYCB’s share price is still down more than 55% since the end of last month.
Last week, NYCB, which manages some 420 branches across the country, announced losses of US$252 million (RM1.19 billion) in the fourth quarter – a nasty surprise for financial analysts.
This led the US rating agency Moody’s to downgrade the bank’s long- and short-term credit rating to junk status on Tuesday.
The bank’s woes come less than a year after a banking crisis fuelled by the rapid collapse of Silicon Valley Bank. It has renewed fears about regional banks’ exposure to the commercial real estate sector, which is going through a challenging period.
NYCB has expanded rapidly in recent years, swallowing Flagstar in 2022, and then taking over Signature Bank at the height of last year’s banking turmoil in March 2023 – swelling its assets rapidly to more than US$100 billion.
Crossing the US$100 billion threshold automatically triggered new, more stringent capital requirements, and led to more regulatory oversight of the bank.
In response, NYCB’s board of directors issued a statement announcing changes to the bank’s management, which included the appointment of former Flagstar head Alessandro DiNello as the bank’s new executive chairman.
During a conference call with analysts, DiNello was quick to reassure them of the bank’s solidity, indicating that its retail banking arm was not losing deposits.
The group is reportedly seeking fresh capital to refinance residential loan portfolios, according to Bloomberg, and is also said to be exploring the sale of a billion-dollar batch of loans relating to boats and motorhomes.
“If we must sell non-strategic assets, then we’ll do that,” DiNello said. “We’ll do whatever it takes.”
NYCB’s woes have shocked investors still smarting from last year’s banking crisis, caused by SVB’s implosion following a bank run fuelled by concern over its exposure to interest rate risks.
SVB's demise led to the collapse of three other US regional lenders and the merger under pressure of Swiss banking giant Credit Suisse with regional rival UBS.
Other regional banks, including Western Alliance, Valley National Bancorp and KeyCorp, fell in early trading along with NYCB, before regaining some ground later in the day. – AFP
