NY Community Bank says deposits are up, liquidity is ‘ample’ after downgrade

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New York Community Bancorp Inc. tried to reassure investors Wednesday, by naming an executive chairman to its board, saying total deposits have increased in the last several weeks and that it has “ample” liquidity.

Trading in New York Community Bancorp’s stock

remained volatile, as it rebounded by 2.6% in premarket trading Wednesday after hitting a 27-year low on Tuesday.

The stock was down as much as 16.7% in Tuesday’s after-hours session after Moody’s cut the bank’s credit rating to a speculative grade, or “junk,” rating, citing financial, risk-management and governance challenges.

In a statement, New York Community Bancorp’s Chief Executive Thomas Cangemi said its deposit ratings remain investment grade.

“The Moody’s downgrade is not expected to have a material impact on our contractual arrangements,” Cangemi said.

The bank reported an increase in deposits to $83 billion as of Feb. 5, up from $81.4 billion on Dec. 31.

The bank also reported total liquidity of $37.3 billion, which exceeded uninsured deposits of $22.9 billion, with a coverage ratio of 163%. Cash held on the balance sheet was $17 billion.

The bank also named board member Alessandro (Sandro) DiNello as executive chairman to “work alongside” Chief Executive Cangemi in an effort to “improve all aspects of the bank’s operations.”

DiNello had been non-executive chairman of the board after previously working for nine years as chief executive of Flagstar Bank, which New York Community Bancorp acquired in 2022.

Saying the bank’s “high risk profile” has pushed stock out of its comfort zone, JPMorgan Chase analyst Steven Alexopoulos downgraded New York Community Bancorp to neutral from overweight and cut the stock’s price target to $5.50 a share from $11.50 a share.

Alexopoulos said the bank confirmed reports by Bloomberg and The Wall Street Journal that its chief risk officer and chief audit executive left the bank.

“The departures of key executives in times of stress will heighten investor concerns,” Alexopoulos said in a research note.

Reacting to the bank’s statement on deposits, Citi analyst Keith Horowitz reiterated a neutral rating on New York Community Bancorp and said the stock faces “near-term pressure on profitability” due to its announced shift in deposits away from uninsured deposits.

“NYCB is down significantly since earnings and the lower stock price has fueled concerns about pressure on deposits, plus we got news of the departure of the chief risk and audit officers followed by Fitch downgrades,” Horowitz said.

The bank’s junk rating on its debt “may cause further stock pressure” while making it more challenging for New York Community Bancorp to issue debt, he said.

The bank’s latest statement shows a decline in uninsured deposits, but also a strong liquidity position, he noted.

On Tuesday, the bank’s stock fell 22% after it confirmed a report that its chief risk officer left the bank, and U.S. Treasury Secretary Janet Yellen said she was concerned about challenges facing regional banks.

Meanwhile, Fitch cut its long-term issuer default ratings to one notch above junk, to BBB- from BBB, with a negative outlook.

The bank’s timing of the announced actions to meet its Category IV bank regulatory challenges “were outside of Fitch’s baseline expectations.”

The stock has tumbled 56.3% over the past three months through Tuesday, while the S&P 500

has gained 13.2%.

The latest trouble began last week when the bank’s stock was crushed after reporting a surprise loss and a dividend cut.

Also read: New York Community Bancorp’s stock crushed on surprise loss, dividend cut and cost of two loans

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