Kellye Johns
Mar 06, 2024 - 11:15

NYCB stock freefall questions mount bank survive

NYCB stock plummets over 40% amid cash infusion rumors, deposit concerns. Management shakeup adds to uncertainty. Shares near all-time low.

New York Community Bank (NYCB) is facing a major crisis as its stock takes a nosedive, dropping over 40% in a single afternoon. Reports from The Wall Street Journal indicate that the regional bank is scrambling to secure a significant cash infusion, with bankers actively seeking investors to buy stock in the company.

The halt in trading around 12:30 pm ET has sparked concerns about the bank's ability to weather the storm, especially as questions arise about potential deposit withdrawals. Despite NYCB's reassurances of stable deposits and a slight increase in the last quarter of 2023, a surprise loss and issues with soured commercial real estate loans have raised red flags.

The discovery of "material weakness" in the company's controls, resulting in a $2.4 billion loss for shareholders last quarter, has further exacerbated the situation. With the delay in filing its annual financial disclosure (10-K) to address these issues, investors are left in a state of uncertainty reminiscent of past banking failures.

The recent management shakeup, including the appointment of Alessandro DiNello as president and CEO, has added to the turmoil within NYCB. With the stock trading at less than $2 and nearing an all-time low, the bank's future hangs in the balance as it grapples with internal and external challenges.

Despite the impact on NYCB, other regional banks with similar exposures to commercial real estate have managed to weather the storm better. Valley National Bank (VLY), for example, saw a modest decline of less than 3% on Wednesday, while the KBW Regional Bank Index also remained relatively stable.

As this crisis unfolds, investors and industry watchers are closely monitoring NYCB's next moves and the potential implications for the broader banking sector. Stay tuned for further updates on this developing story. For more news and updates, visit CNN.com and sign up for our newsletters.