New York Community Bancorp, winner of last year's crisis, is taking a hit
Less than a year ago, New York Community Bancorp appeared to be one of the big beneficiaries of a crisis among its peers when it acquired most of the assets of ailing Signature Bank and shot to more than $100 billion in assets.
The costs of that decision reverberated Wednesday when the bank, which has 420 branches, posted a $252 million loss in the latest quarter, cut its dividend and set aside a significant amount of reserves to cover any future losses. Share prices fell 38 percent to a 25-year low, dragging down the shares of other regional banks by an average of 6 percent.
New York Community Bancorp tried to put a brave face on the news — an accompanying message included the headline “Record Results for 2023,” where the bank is now much larger than it was before Signature's acquisition — but analysts and investors quickly came to zero. weaknesses.
It was an uncomfortable reminder of the tumult of last March, when the troubles at Silicon Valley Bank spilled over into the sector, including the collapse of Signature, a bank known for its real estate, legal and cryptocurrency lending. New York Community Bancorp bought a large portion of Signature under federal receivership.
Some of New York Community Bancorp's problems are of its own making, while others reflect Signature's absorption. The bank's executives said they would have to set aside more money for commercial real estate loan losses, partly because of a deteriorating investment climate for office space. (One director said there is “no real estate activity happening at the moment.”)
The bank did not respond to a request for comment.
As analysts spied on the bank's executives on their regularly scheduled call to discuss results, the questions became unusually pointed. JP Morgan's Steven Alexopoulos asked why the bank would not reveal more details about the effect on its future profitability.
“Why don't we give us the number?” Mr. Alexopoulos asked. “Your stocks are at a 25-year low. I can't imagine you're happy about this.” He added: “I don't know why you wouldn't take this opportunity to level expectations.”
Executives declined to provide further details, repeatedly linking their malaise to regulations that force banks with more than $100 billion in assets to keep more money in reserve than smaller lenders, as New York Community Bancorp previously did. On the dividend cut, the bank's president, Thomas R. Cangemi, said: “There is no doubt that this was a difficult decision as a company, but clearly necessary.”
One key difference between last year's crisis and what's happening to New York Community Bancorp: the bank's deposits appear to be relatively stable. Deposits fell 2 percent to $81.4 billion in the fourth quarter.