Another U.S. bank has collapsed!
On January 31, New York Community Bank (NYCB) shares crashed** and sent markets through a flash crash. As of **, the stock is trading at 6$47 shares, down as much as 3767%。It fell as low as 5 at one point during the session$58 shares, down as much as 45% and hitting a new low in the 10-year history of listing.
On the same day, the New York Community Bank announced its fourth-quarter results that surprised the industry: a loss of 0. per share$36, while the industry had expected earnings per share of $0$28. The bank reported a net bad debt of 1$8.5 billion, up from $24 million in bad debt in the third quarter of last year, and more than the total amount of bad debt in the past 10 years.
Thomas R., Chief Executive Officer, New York Community BankCangemi said the bank intends to increase its quarterly dividend from 0$17 cut to $0 per share$05 and take other "decisive actions to accumulate capital".
Moody's Investors Service then said it was considering whether to downgrade the New York Community Bank's credit rating to junk status.
At the same time, poor earnings reports and share prices of New York community banks have led to a 6% drop in the stock prices of some regional banks** and the KBW Regional Bank Index, and have reignited investor concerns about the health of smaller banks, some of which have yet to recover from last year's wave of bank failures.
Founded in 1859, the Community Bank of New York has long been a small regional bank. Thomas R., Chief Executive OfficerCangemi took the helm in December 2020 and between 2000 and 2023, New York Community Bank completed 13 acquisitions. As of December 31 last year, the bank had total assets of $116.3 billion, loans of $85.8 billion and deposits of $81.4 billion.
The industry generally believes that the bad debts of New York community banks are directly related to the assets of two banks that "took over" last year.
About a year ago, in the wake of a regional banking crisis in the United States, New York Community Bank took the opportunity to acquire Flagstar Bank to strengthen its capabilities as a full-service commercial bank. Soon after, the New York Community Bank acquired a new lease from the Federal Deposit Insurance Corporation (FDIC).) acquired the assets and liabilities of Signature Bank, which collapsed in March, adding a large amount of low-cost deposits and new business totaling $38 billion, including $25 billion in cash and about $13 billion in loans.
With these two major acquisitions, New York Community Bank's net worth exceeded $100 billion. But it also comes at a cost: ultra-high net worth has ushered in greater scrutiny of capital and liquidity by regulators, while also draining the resources of New York's community banks.
The New York Community Bank said that in the fourth quarter of last year, 1$8.5 billion in bad debts, mainly related to two loans, accounted for 1The vast majority of $8.5 billion.
One is a cooperative loan, where the borrower is not in default, but is in a state of pending sale. The other one is more troublesome, involving a loan for an apartment building and a loan for a commercial office building, and the risk of default is higher. In response, the bank said: "Given the impact of the recent credit deterioration in the office portfolio, we believe it is prudent to increase the credit loss reserve coverage ratio." ”
The industry believes that the epidemic has caused the epidemic of working from home and the sharp rise in loan interest rates, which has made it difficult for commercial real estate lenders to refinance the cost, and some lenders have chosen to abandon office buildings because it is difficult to repay the loan. For example, the Aon Center, the third tallest office building in Los Angeles, recently opened at 1$47.8 billion** sold, about 45% lower than 2014 purchases**.
Data shows that by the end of 2025, the U.S. banking industry will face about $560 billion in commercial real estate debt maturing, accounting for more than half of the total real estate debt due during the same period. Regional banks are particularly vulnerable and have been hurt more than their larger counterparts.
According to a report released by JPMorgan Chase & Co. in April last year, commercial real estate loans accounted for 28 percent of small bank assets7%, compared to 65%。This risk has sparked additional scrutiny from regulators, who have been on high alert in the wake of last year's regional banking turmoil.