New York: Ratings agency Moody’s says it has placed New York Community Bancorp (NYCB) on review for a downgrade, which could put the bank into the “junk” territory.
The credit ratings agency placed all long-term and short-term ratings and assessments of NYCB and its subsidiary, Flagstar Bank, including the baa2 baseline credit assessment, on review for a downgrade.
Moody’s said the ratings action reflected the bank’s unanticipated loss in its New York office and multi-family properties, weak earnings, material decline in its capitalisation, and its growing reliance on wholesale funding.
The review came after the bank, which bought some of Signature Bank’s assets last year, said it was cutting its dividend by 70% and building capital to bolster its balance sheet.
NYCB’s shares slumped as much as 46% in morning trading, but later recouped some losses.
The purchases at Signature Bank, along with its 2022 acquisition of Flagstar Bank, pushed NYCB’s balance sheet above a US$100bil regulatory threshold that is subject to stricter capital and liquidity requirements. It had assets of US$116.3bil as of December.
NYCB posted an adjusted loss of US$185mil for the quarter due to a chunky US$552mil provision for credit losses.
The lion’s share of those provisions was allocated to its commercial real estate portfolio which, as with many lenders, has been under pressure amid pandemic-led office vacancies.
The dividend cut and the surprise loss from NYCB dragged regional US bank stocks lower, renewing fears over the health of similar lenders. — Reuters
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