"Whatever It Takes" - NYCB Shares Crash Despite Reassurances "Virtually" No Deposit Outflow From Branches

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by Tyler Durden
Wednesday, Feb 07, 2024 - 06:00 PM

NYCB shares puked down to $3.50 overnight after Moody's downgraded them to junk.

This morning, the beleaguered, CRE-heavy bank released a statement from Chief Executive Thomas Cangemi that:

"The Moody's downgrade is not expected to have a material impact on our contractual arrangements."

Which seems a little disingenuous, given Moody's comments on the fact that one of the bank's major vulnerabilities is its need for market financing.

Additionally, as Goldman's Sara Cha notes, the lender stated that deposits are up from YE23 at $83b and that total liquidity at the firm exceeds uninsured deposits ($37.3b vs $22.9b of uninsured deposits), while adding that "this doesn't give much insights into types of deposits," and it does show a decline in uninsured deposits.

That data was as of the close on 2/5 (i.e before yesterday's share price collapse and the downgrade).

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."

All of which dragged the share price well off the lows.

And DiNello has just held a conference call during which he stated that the bank has "seen virtually no deposit outflow from retail branches."

Interesting choice of words - what about deposit flight from online?

NYCB's CFO commented that deposits on Feb 6th were "relatively stable" with Feb 5th.

DiNello reassured that the lender is focused on doing "whatever it takes" to build capital, has "really curtailed" CRE origination in recent months, and will consider loan sales among the options to reduce CRE exposure, as well as selling assets.

The market's response was disappointment...

Not exactly the vote of confidence they were expecting as shares are now down 12% from yesterday's close.

We warned...

...and there's lots of big bank cash.