The New York Community Bank (NYCB) headquarters in Hicksville, New York, USA, on Thursday, February 1, 2024.
Bing Guan | Bloomberg | fake images
New York Community Bank said Thursday that it lost 7% of its deposits in the turbulent month before announcing a capital injection of more than $1 billion from investors led by former Treasury Secretary Steven Mnuchin's Liberty Strategic Capital.
The bank had $77.2 billion in deposits as of March 5, NYCB said in an investor presentation related to the capital raise. That was down from $83 billion as of Feb. 5, the day before Moody's Investors Service cut the bank's credit ratings to junk.
NYCB also said it is cutting its quarterly dividend for the second time this year, from 5 cents to 1 cent per share, a drop of 80%. The bank paid a 17-cent dividend until it reported a surprise fourth-quarter loss that started a negative news cycle for the Long Island-based lender.
Before announcing a crucial lifeline Wednesday from a group of private equity investors led by Mnuchin's Liberty Strategic Capital, NYCB shares were in a tailspin on concerns about the bank's loan portfolio and deposit base. In just over a month, the bank changed CEOs twice, saw two rounds of rating downgrades from rating agencies and announced mounting losses.
At its lowest point, NYCB stock sank below $2 per share on Wednesday, a drop of more than 40%, before eventually recovering and ending the day higher. Shares rose 12% in Thursday morning trading.
The capital injection announced Wednesday has raised hopes that the bank will now have enough time to resolve lingering questions about its exposure to loans for multifamily apartments in the New York area, as well as “material weaknesses” around the loan review that the bank revealed last week.
Mnuchin told CNBC in an interview Thursday that he started looking at NYCB “a long time ago.”
“The problem really revolved around the perceived risks in the loans, and by putting billions of dollars of capital on the balance sheet, it really strengthens the franchise and whatever problems there are in the loans we will be able to solve,” Mnuchin said. Squawk in the street.”
“I think there is a great opportunity to make it a very attractive regional commercial bank,” he added.
Mnuchin said he did “extensive diligence” on NYCB's loan portfolio and that the “biggest problem” he found was loans from its New York offices, although he expected the bank to build up reserves over time.
“I don't see the New York office working or getting better in the future,” Mnuchin said.
Incoming CEO Joseph Otting, a former Comptroller of the Currency, told analysts Thursday that the bank would look to strengthen its capital and liquidity levels and reduce its concentration on commercial real estate lending.
— CNBC's Laya Neelakandan and Ritika Shah contributed to this report.
