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NYCB Chief Executive Announces New Business Plan and Search for Non-Bank Bidders amid Stock Market Uncertainty

New York Community Bank NYCB.N is interested in non-bank bidders for some of its loans and will present a new business plan next month, its new chief executive said Thursday, after the bank again cut its dividend and revealed that deposits fell by 7%. The bank’s shares rose 7% on Thursday, after swinging between gains and losses over the past two days, with periodic trading halts that underscored continued uncertainty over its finances. Joseph Otting, a former comptroller of the currency in the Trump administration, was named chief executive of NYCB on Wednesday as part of a billion-dollar capital infusion by a group of investors that included the former Treasury secretary Steven Mnuchin. In an attempt to shore up confidence, Mr. Otting and non-executive chairman Alessandro DiNello told analysts on Thursday that they would soon unveil a new business plan and that they had taken a close look at the bank’s books, and given a SURVEY of deposit flows. “I spent quite a bit of time getting to know the organization from afar and then a lot of time doing due diligence on the portfolio and the balance sheet,” Mr. Otting said, noting that NYCB had a ‘strong liquidity position’ NYCB is working to end a lingering stock market rout that has wiped billions off its market value, nearly a year after the collapse of Silicon Valley Bank and Signature Bank has sparked widespread concern about the health of the sector. While most analysts welcomed the capital infusion and management shakeup, some remain concerned about NYCB’s future, believing the bank still has a long way to go to repair the damage. At least three brokerages reduced their price targets on the stock after the deal was announced. “While this transaction provides a much-needed lifeline to NYCB, it is extremely dilutive to common shareholders,” Wedbush analysts said. In exchange for their capital, NYCB investors purchased common shares at $2 each, as well as preferred shares. NYCB has also committed to reducing its exposure to the commercial real estate (CRE) sector, after taking huge provisions in the fourth quarter for potential bad debts related to this sector. Empty office buildings in the post-pandemic era and high borrowing costs have compounded concerns about defaults. In an interview with CNBC, Mr. Mnuchin said Thursday that he had considered a merger between NYCB when he was president of OneWest Bank a decade ago and that he had also explored NYCB’s purchase of the assets of Signature Bank went bankrupt last year. it also studied NYCB’s purchase of assets from bankrupt Signature Bank last year. “So I followed that deal and more recently when they did the Signature Bank deal, I followed that as well, and I think it was a very interesting deal for them.” , did he declare. Senior executives on Thursday did not respond to questions about which portfolios NYCB might divest to reduce its heavy exposure to the struggling commercial real estate (CRE) sector and raise capital. A surprise quarterly loss and a 70% cut to its dividend in January hammered NYCB’s stock, which came under pressure again last week after it said it found a “material weakness” in internal controls and having revised its loss to 10 times higher than previously due to a goodwill impairment charge. DEPOSITS DECLINE NYCB reported total deposits of $77.2 billion as of March 5, down from $83 billion a month ago. About 19.8% of deposits were uninsured. Compared to its peers, it has the lowest concentration of uninsured deposits and has said it has enough liquidity to offer its customers expanded deposit insurance. Mr. DiNello said some people lined up to withdraw their deposits Wednesday after media reports that NYCB was seeking capital, but the situation stabilized later in the afternoon after the release. company press release. The bank also cut its quarterly dividend to 1 cent per share, less than the 5 cents announced in January. Mr. Otting, who is the third to take charge of the bank in a matter of weeks, is a banking industry veteran who served as the 31st Comptroller of the Currency. He is credited with reviving IndyMac, a mortgage bank that Mr. Mnuchin bought in 2009, with a group of investors, to escape the receivership of the Federal Deposit Insurance Corporation (FDA). “Even the connection to the OCC (Office of the Comptroller of the Currency) may not be as complimentary as it seems, given that it is the OCC’s waiver under NYCB’s acquisition spree that did so much to put it in trouble,” said Russ Mould, chief investment officer at AJ Bell. NYCB’s acquisition of Flagstar Bank in 2022 and Signature Bank’s assets last year pushed its assets above $100 billion, subjecting it to stricter regulations imposed on lenders in this wingspan. The OCC approved NYCB’s deal with Flagstar even though other regulators were concerned it could create problems at the New York bank, Reuters reported Thursday.

2024-03-07 19:16:12
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