- NYCB stock plummeted over 40% on Wednesday amid reports that the struggling regional bank is seeking outside investment to raise capital.
- NYCB has faced multiple challenges in 2024 including loan loss provisions, credit downgrades, and identified weaknesses in loan reviews, leading to a CEO change.
- NYCB’s quick decline has drawn comparisons to other recent bank failures like Silicon Valley Bank and Signature Bank, as rate hikes pressure regional lenders.
New York Community Bancorp (NYCB) stock saw a dramatic drop on Wednesday as the struggling regional bank reportedly looks for a cash infusion to shore up its balance sheet. This is just the latest turmoil for the bank in 2024.
NYCB Stock Plummets Over 40%
Shares of NYCB fell more than 40% during trading on Wednesday before being halted pending news. The stock price, which started the year above $10, is now below $2 per share.
The sharp decline came amid reports from Reuters and the Wall Street Journal that the bank is seeking outside investment to raise capital. NYCB did not immediately respond to a request for comment.
A Challenging 2024 So Far
A potential cash infusion would be the newest difficulty this year for the beleaguered NYCB. In January, the bank disclosed it was significantly increasing provisions for potential loan losses, particularly in commercial real estate. This led Moody’s to downgrade NYCB’s credit rating to junk status.
Last week, NYCB announced it had identified material weaknesses in internal controls around loan reviews. As part of this, the bank said former Flagstar CEO Alessandro DiNello would take over as CEO. He had joined NYCB as executive chairman in January after the departure of the previous CEO.
Comparisons to Recent Bank Failures
NYCB’s struggles have drawn comparisons to other regional banks like Silicon Valley Bank and Signature Bank, which failed last year amid higher interest rates and deposit flight.
The Federal Reserve’s continued interest rate hikes to fight inflation have negatively impacted regional banks invested in lower-yielding Treasuries. Rate hikes also pressure commercial real estate, a focus area for NYCB.
NYCB’s quick decline may have surprised regulators. Last March, NYCB acquired the remains of the failed Signature Bank from the FDIC. With the economy still showing strength, the environment remains difficult for struggling lenders like NYCB.
Conclusion
NYCB faces significant challenges in 2024, with its stock price plummeting as the bank now seeks new capital investment. The regional lender continues to deal with the fallout from loan concerns, leadership changes, and rate pressures affecting the industry. Whether an infusion can stabilize the troubled institution remains unclear.
