Post by sunny225 on Feb 9, 2024 18:55:43 GMT
www.foxbusiness.com/economy/regional-bank-hit-with-third-credit-downgrade-as-crisis-concerns-linger
New York Community Bank (NYCB) was hit with its third credit downgrade as fears linger that the regional bank could be in peril nearly a year after the regional banking sector was hit by a crisis that triggered some of the largest bank failures in U.S. history.
Morningstar DBRS on Thursday downgraded NYCB’s credit rating and cited "outsized" exposure to commercial real estate (CRE) that the bank has pledged to reduce in the months ahead. CRE borrowers have been under pressure due to the higher interest rate environment as well as lower occupancy rates due to the rise of remote work.
The downgrade comes after rating agencies Fitch and Moody’s also lowered NYCB’s ratings in the last week. Last Friday, Fitch cut NYCB’s rating from BBB to BBB-, its lowest investment grade rating, while Moody’s lowered NYCB’s rating to Ba2, a non-investment grade or "junk" tier, on Wednesday.
"Liquidity appears sufficient, but given the bank failures last spring, we remain cautious given that the adverse headline risk, including a significant decline in NYCB’s stock price, could eventually spook customer and depositor confidence," Morningstar DBRS said of its downgrade.
Investors’ concerns about NYCB came to a head last week after the company posted a surprise loss and announced a dividend cut to boost reserves required by banking regulations, along with its exposure to the CRE market. Those worries sent the bank’s stock plunging to its lowest level since 2000.
NYCB’s management has tried to bolster investor confidence as the company’s stock has fallen over 59% in the last month, including a more than 6% decline during Thursday’s trading. Newly-appointed executive chairman Alessandro DiNello said Wednesday that NYCB will consider the sale of loans in its commercial real estate portfolio or let them run off the balance sheet naturally.
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New York Community Bank (NYCB) was hit with its third credit downgrade as fears linger that the regional bank could be in peril nearly a year after the regional banking sector was hit by a crisis that triggered some of the largest bank failures in U.S. history.
Morningstar DBRS on Thursday downgraded NYCB’s credit rating and cited "outsized" exposure to commercial real estate (CRE) that the bank has pledged to reduce in the months ahead. CRE borrowers have been under pressure due to the higher interest rate environment as well as lower occupancy rates due to the rise of remote work.
The downgrade comes after rating agencies Fitch and Moody’s also lowered NYCB’s ratings in the last week. Last Friday, Fitch cut NYCB’s rating from BBB to BBB-, its lowest investment grade rating, while Moody’s lowered NYCB’s rating to Ba2, a non-investment grade or "junk" tier, on Wednesday.
"Liquidity appears sufficient, but given the bank failures last spring, we remain cautious given that the adverse headline risk, including a significant decline in NYCB’s stock price, could eventually spook customer and depositor confidence," Morningstar DBRS said of its downgrade.
Investors’ concerns about NYCB came to a head last week after the company posted a surprise loss and announced a dividend cut to boost reserves required by banking regulations, along with its exposure to the CRE market. Those worries sent the bank’s stock plunging to its lowest level since 2000.
NYCB’s management has tried to bolster investor confidence as the company’s stock has fallen over 59% in the last month, including a more than 6% decline during Thursday’s trading. Newly-appointed executive chairman Alessandro DiNello said Wednesday that NYCB will consider the sale of loans in its commercial real estate portfolio or let them run off the balance sheet naturally.
more at link
