{"id":10744,"date":"2024-02-08T03:13:50","date_gmt":"2024-02-08T03:13:50","guid":{"rendered":"https:\/\/imsfund.com\/?p=10744"},"modified":"2024-02-08T03:13:50","modified_gmt":"2024-02-08T03:13:50","slug":"nycb-reignites-banking-industry-commercial-real-estate-fears","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2024\/02\/08\/nycb-reignites-banking-industry-commercial-real-estate-fears\/","title":{"rendered":"NYCB reignites banking industry, commercial real estate fears"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div id=\"RegularArticle-ArticleBody-5\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"\/><\/p>\n<div class=\"InlineImage-imageEmbed\" id=\"ArticleBody-InlineImage-107370222\" data-test=\"InlineImage\">\n<div class=\"InlineImage-wrapper\">\n<div>\n<p>The New York Community Bank (NYCB) headquarters in Hicksville, New York, US, on Thursday, Feb. 1, 2024.\u00a0<\/p>\n<p>Bing Guan | Bloomberg | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>Embattled lender <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"RegularArticle-QuoteInBody-1\"><a href=\"https:\/\/www.cnbc.com\/quotes\/NYCB\/\">New York Community Bank<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span> disclosed a <a href=\"https:\/\/www.prnewswire.com\/news-releases\/new-york-community-bancorp-inc-issues-current-liquidity-and-deposit-information-302055530.html\" target=\"_blank\" rel=\"noopener\">litany<\/a> of financial metrics in the past 24 hours in a bid to soothe skittish investors.<\/p>\n<p>But one of the most crucial resources for any bank appears to be in short supply for NYCB lately: confidence.<\/p>\n<p>The regional bank late Tuesday <a href=\"https:\/\/www.prnewswire.com\/news-releases\/new-york-community-bancorp-inc-issues-current-liquidity-and-deposit-information-302055530.html\" target=\"_blank\" rel=\"noopener\">said<\/a> that deposits were stable at $83 billion and that the firm had ample resources to cover any possible flight of uninsured deposits. Hours later, it <a href=\"https:\/\/ir.mynycb.com\/news-and-events\/news-releases\/press-release-details\/2024\/NEW-YORK-COMMUNITY-BANCORP-INC-APPOINTS-ALESSANDRO-DINELLO-AS-EXECUTIVE-CHAIRMAN\/default.aspx\" target=\"_blank\" rel=\"noopener\">promoted<\/a> chairman Alessandro DiNello to a more hands-on role in management.<\/p>\n<p>The moves spurred a 6% jump Wednesday in NYCB shares, a small dent in the stock&#8217;s more than 50% decline since the bank reported fourth-quarter results last week. Shares of the Hicksville, New York-based last traded for about $4.48 per share.<\/p>\n<p>&#8220;There&#8217;s a confidence crisis here,&#8221;\u00a0said <a href=\"https:\/\/www.newedgewealth.com\/newedge-wealth-adds-ben-emons-to-investment-team-lineup\/\" target=\"_blank\" rel=\"noopener\">Ben Emons<\/a>, head of fixed income at NewEdge Wealth. &#8220;The market doesn&#8217;t have belief in this management.&#8221;<\/p>\n<p>Amid the freefall, ratings agency Moody&#8217;s cut the bank&#8217;s credit ratings <a href=\"https:\/\/www.cnbc.com\/2024\/02\/07\/nycb-moodys-downgrades-banks-credit-rating-to-junk-shares-tumble.html\">two notches to junk<\/a>, citing risk management challenges while the firm searches for a pair of key executives. Making matters worse, NYCB was hit with its first <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2024-02-07\/nycb-hit-with-first-investor-lawsuit-over-share-price-collapse\" target=\"_blank\" rel=\"noopener\">shareholder lawsuit<\/a> Wednesday over the share collapse, alleging that executives misled investors about the state of its real estate holdings.<\/p>\n<p>The sudden decline in NYCB, previously deemed one of last year&#8217;s winners after acquiring the assets of <a href=\"https:\/\/www.cnbc.com\/2023\/03\/13\/signature-bank-third-biggest-bank-failure-in-us-history.html#:~:text=Bank%20withdrew%20more%20than%20$10%20billion%20in,run%20on%20deposits%20quickly%20led%20to%20the\">Signature Bank,<\/a> reignited fears over the state of medium-sized American banks. Investors have worried that losses on some of the $2.7 trillion in commercial real estate loans held by banks could trigger another round of turmoil after deposit runs consumed <a href=\"https:\/\/www.cnbc.com\/2023\/03\/10\/silicon-valley-bank-collapse-how-it-happened.html\">Silicon Valley Bank<\/a> and Signature last March.<\/p>\n<\/div>\n<h2 class=\"ArticleBody-subtitle\"><a id=\"headline0\"\/>Real estate<\/h2>\n<div class=\"group\">\n<p>Last week, NYCB said it was forced to stockpile much more cash for losses on offices and apartment buildings than analysts had expected. Its provision for loan losses surged to $552 million, more than 10 times the consensus estimate.<\/p>\n<p>The bank also slashed its dividend by 71% to conserve capital. Companies are usually loath to cut dividends because investors favor firms that make steady payouts.<\/p>\n<p>The NYCB results sent shares of regional banks tumbling because that group plays a relatively large role in the country&#8217;s commercial real estate market compared to the megabanks, while generally reserving less for possible defaults.<\/p>\n<p>Shares of Valley National, another lender with a larger weighting to commercial real estate, have declined about 22% in the past week, for instance.<\/p>\n<p>NYCB&#8217;s results &#8220;shifted investor sentiment back towards the risk of an acceleration in CRE nonperforming loans and loan losses over the course of 2024,&#8221; Morgan Stanley analyst Manan Gosalia wrote Wednesday in a research note.<\/p>\n<p>Despite a suddenly low valuation, &#8220;the perceived risk tied to all things commercial real estate is also likely to weigh on investor appetite to step in,&#8221; Bank of America analyst Ebrahim Poonawala wrote Wednesday. He rates NYCB &#8220;neutral&#8221; and has a $5 price target.<\/p>\n<p>Office buildings are at greater risk of default because of lower occupancy rates with the rise in remote and hybrid work models, and changes in New York&#8217;s rent stabilization laws have made some multifamily dwellings <a href=\"https:\/\/www.bloomberg.com\/news\/features\/2024-02-05\/nyc-apartments-go-on-sale-for-50-off-due-to-tougher-rent-control\" target=\"_blank\" rel=\"noopener\">plunge<\/a> in value.<\/p>\n<p>&#8220;People thought that office space is where the stress is; now we&#8217;re dealing with rent-controlled properties in New York City,&#8221; Emons said. &#8220;Who knows what will happen next.&#8221;<\/p>\n<\/div>\n<h2 class=\"ArticleBody-subtitle\"><a id=\"headline1\"\/>Institutions &#8216;stressed&#8217;<\/h2>\n<div class=\"group\">\n<p>Emons noted that, much like during the March tumult, speculators have piled into trades betting that NYCB shares would decline further.<\/p>\n<p>In particular, activity for put options that pay off if NYCB stock falls to $3 or lower have surged, he said. A put is a financial contract that gives the buyer the right to sell a stock at a predetermined price and within a specific time.<\/p>\n<p>On Tuesday, Treasury Secretary\u00a0Janet Yellen\u00a0said she was &#8220;concerned&#8221; about losses in commercial real estate, but that bank regulators were working to make sure that the financial system would adjust.<\/p>\n<p>&#8220;I believe it&#8217;s manageable, although there may be some institutions that are quite stressed by this problem,&#8221; Yellen said, declining to speak about any specific bank.<\/p>\n<p>That jibes with the view of <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"RegularArticle-QuoteInBody-11\"><a href=\"https:\/\/www.cnbc.com\/quotes\/WFC\/\">Wells Fargo<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span> analysts that regulators are likely to take a more critical stance on reserving for possible loan losses after the NYCB flare up.<\/p>\n<p>&#8220;A tougher look at credit likely leads to more write-offs, which can lead to more capital needs,&#8221; wrote Wells Fargo analysts led by Mike Mayo.<\/p>\n<\/div>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.cnbc.com\/2024\/02\/07\/nycb-reignites-banking-industry-commercial-real-estate-fears.html\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The New York Community Bank (NYCB) headquarters in Hicksville, New York, US, on Thursday, Feb. 1, 2024.\u00a0 Bing Guan | Bloomberg | Getty Images Embattled lender New York Community Bank disclosed a litany of financial metrics in the past 24 hours in a bid to soothe skittish investors. But one of the most crucial resources [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":10745,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/image.cnbcfm.com\/api\/v1\/image\/107370222-1707313657678-gettyimages-1970357172-NEW_YORK_BANKCORP_PLUNGE.jpeg?v=1707313682&w=1920&h=1080","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-10744","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10744","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=10744"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10744\/revisions"}],"predecessor-version":[{"id":10746,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10744\/revisions\/10746"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/10745"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=10744"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=10744"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=10744"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}