Julia Coronado, founder and president of MacroPolicy Perspectives, talks on Making Money about whether a new local banking crisis is on the horizon.
new york community bank Nearly a year after the local banking sector was hit by a crisis that triggered the largest bank failure in U.S. history, (NYCB) is closing for the third time, amid lingering concerns that the regional bank could be in crisis. suffered a credit rating downgrade.
Morningstar DBRS downgraded NYCB’s credit rating on Thursday, citing “huge” exposures. Commercial real estate (CRE) The bank has promised cuts in the coming months. CRE borrowers are under pressure due to a rising interest rate environment and lower occupancy rates due to increased remote work.
The downgrade comes after rating agencies Fitch and Moody’s also downgraded NYCB’s rating last week. Last Friday, Fitch lowered NYCB’s rating from BBB to BBB-, the lowest investment grade rating, while Moody’s on Wednesday lowered NYCB’s rating to Ba2, the non-investment grade or “junk” stage.
Regarding the downgrade, Morningstar DBRS said, “Liquidity appears to be ample, but given last spring’s bank failure, negative headline risks, including a sharp decline in NYCB stock prices, could ultimately undermine customer and depositor confidence.” “We remain cautious given the possibilities.”
Bank that bought failed community bank faces credit rating downgrade
New York Community Bank suffered its third downgrade last week. (Photo by: Lev Radin/Pacific Press/LightRocket, Getty Images / Getty Images)
Investor concerns about NYCB came to a head last week when the company posted an unexpected loss and announced a dividend cut to increase needed reserves. banking regulations, also includes exposure to the CRE market. Those concerns caused the bank’s stock price to fall to its lowest level since 2000.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| new york cb | NEW YORK COMMUNITY BANCORP INC. | 4.19 | -0.31 | -6.94% |
NYCB management has been trying to boost investor confidence as NYCB stock has fallen more than 59% in the past month and was down more than 6% in Thursday trading.new Executive Committee Chairman Alessandro Dinero said Wednesday that NYCB will consider selling loans in its commercial real estate portfolio or letting them flow naturally from its balance sheet.
The full effects of Fed rate hikes are yet to be seen, US bank CEO warns
New York Community Bank has moved to strengthen its reserves and balance sheet amid investor concerns about its exposure to commercial real estate. (Photographer: Bing Guan/Bloomberg via Getty Images / Getty Images)
The lender also indicated that, if necessary, it would consider selling non-core assets to reduce its balance sheet in order to strengthen its Common Equity Tier 1 ratio, an important measure of financial strength.
Treasury Secretary Janet Yellen He said at Thursday’s hearing that he expects further stress and some financial losses from the downturn in the CRE market, but that banking regulators are working with banks to address these risks.
NYCB set aside more capital to meet capital and liquidity regulatory requirements that came into effect after its total assets exceeded the $100 billion threshold.
CLICK HERE TO GET FOX BUSINESS ON THE GO
New York Community Bank acquired Signature Bank, which collapsed during the local banking crisis last year. (Photo by Leonardo Muñoz/VIEWpress/Getty Images)
Founded in 1859, NYCB served as a small regional bank for many years. Between 2000 and 2023, he completed 13 acquisitions and grew to its current size.
Those acquisitions included Signature Bank, which failed during last year’s local banking crisis. Additionally, we recently acquired Flagstar Bank and were able to expand our footprint across the country.
last year’s local bank crisis The largest bank failure in U.S. history occurred. First Republic Bank’s failure was second only to Washington Mutual’s failure in 2008 and surpassed Silicon Valley Bank and Signature Bank’s failures in 2023.
Reuters contributed to this report.
