Shares in New York Community Bancorp (NYCB) continued to fall on Wednesday, heightening unease about the US’s regional banking sector.
The bank’s stock has fallen by more than 60% to its lowest level in decades in recent days despite a scramble by the mid-sized lender to reassure investors of its financial strength.
It first set off alarm bells on Wall Street a week ago by revealing a surprise quarterly loss and cutting its dividend for shareholders.
NYCB’s rapid stock market rout comes less than a year after the collapse of Silicon Valley Bank (SVB) unleashed a regional banking crisis that roiled the industry. Last May First Republic became the largest US lender to fail since 2008.
In an effort to tackle concerns, on Tuesday NYCB released a mid-quarter update on its financial health. On Wednesday, it announced that the banking industry veteran Alessandro DiNello would become its executive chairman with immediate effect.
But trading of the bank’s stock remained volatile. After starting the day marginally higher following news of DiNello’s appointment, shares in NYCB quickly fell back into the red. By mid-morning in New York, they were down 10.2% at $3.77.
NYCB was dealt a fresh blow on Tuesday evening when Moody’s Investors Service downgraded its long-term debt ratings to junk status.
Last week NYCB revealed a $252m loss, with a $552m provision for credit losses that sparked concern about its exposure to the commercial real estate market. Other regional banking stocks have also come under pressure in recent days.
DiNello will work with NYCB’s executives “to improve all aspects of the bank’s operations”, it said in a statement. On a call with analysts, DiNello acknowledged the lender was in a “serious situation” but stressed that it “remains strong”.
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NYCB grew significantly last year. The bank’s assets swelled beyond $100bn after its purchase of the assets of Signature Bank, which failed in the aftermath of SVB’s collapse in the spring.
Based in Hicksville, New York, NYCB finished last year with deposits of $81.4bn. As of Tuesday evening, DiNello claimed that its deposit base had grown. The lender has 420 branches.