After cutting its dividend again and reporting 7% deposit declines, New York Community Bank (NYCB.N), opens new tab's new CEO claimed non-bank buyers are interested in some of its loans and will unveil a new business strategy next month.
The bank's shares gained 7% on Thursday after two days of market swings and trading halts that highlighted its financial difficulties.
On Wednesday, former Trump Comptroller of the Currency Joseph Otting was named NYCB's CEO after a $1 billion capital injection from investors including former Treasury Secretary Steven Mnuchin. On Thursday, Otting and Non-Executive Chair Alessandro DiNello told analysts they would shortly present a new business plan, had extensively examined the bank's accounts, and given deposit flow knowledge to boost trust.
"I've spent a fair amount of time getting to know the organization from afar and then a significant amount of time conducting due diligence on the portfolio and the balance sheet," Otting said, adding that NYCB had a "strong liquidity position." NYCB is seeking to stop a stock plunge that has wiped billions off its market worth over a year after Silicon Valley Bank and Signature Bank collapsed, raising fears about the sector.
Although most experts welcomed the capital injection and management revamp, some remain concerned about NYCB's survival, saying the bank still has to restore the damage. After the deal, three brokerages lowered their stock price targets. "While this deal provides a much-needed lifeline to NYCB, it is tremendously dilutive to common shareholders," Wedbush analysts said. NYCB investors bought $2 basic shares and preferred stock for their capital.
NYCB also committed to limit its commercial real estate (CRE) exposure after taking significant provisions in the fourth quarter for probable problematic loans. Empty office buildings post-pandemic and high borrowing prices have raised debt default concerns. On Thursday, Mnuchin told CNBC that he had considered a NYCB merger while he was OneWest Bank's chair a decade ago and analyzed NYCB's purchase of bankrupt Signature Bank assets last year.
DiNello said some customers lined up to withdraw their deposits on Wednesday after media reports claimed NYCB was seeking financing, but that stabilized later in the afternoon after the press statement. The bank also cut its quarterly dividend to 1 cent per share from 5 cents in January. The 31st Comptroller of the Currency and banking industry veteran Otting is the third leader in weeks. He rescued IndyMac, a mortgage company Mnuchin bought from the FDIC's receivership in 2009 alongside an investment group.
"Even the link with the OCC (Office of the Comptroller of the Currency) may not be the glowing endorsement that it seems, given that it was the OCC waived through NYCB's acquisition spree that has done so much to get it in trouble in the first place," said Russ Mould, AJ Bell's director of NYCB's acquisition of Flagstar Bank in 2022 and Signature Bank's assets last year brought its assets above $100 billion, subjecting it to stricter requirements.
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