Benzinga - by Shanthi Rexaline, Benzinga Editor.
Shares of regional bank New York Community Bancorp, Inc. (NYSE:NYCB) rose in premarket trading on Wednesday.
The Slump: This marks a reversal from the 22% losses they experienced on Tuesday after a Bloomberg report said the Treasury Department’s Office of the Comptroller of the Currency may have forced the bank to announce a surprise dividend cut and set aside increased provisioning for the fourth quarter.
On Tuesday, the bank confirmed the departure of Chief Risk Officer Nicholas Munson after the Bloomberg report said the executive departed before the dividend cut and the raised fourth-quarter provisions. The report also flagged that Chief Audit Executive Meagan Belfinger quit around the same time.
To add fuel to the fire, Moody’s downgraded all long-term and some short-term ratings and assessments of the bank on Tuesday. The long-term issuer rating was cut from Baa3 to Ba2, and the long-term deposits rating of its lead bank, Flagstar, was lowered from A3 to Baa2 from A3.
“All ratings, except short-term counterparty risk ratings, and assessments remain on review for further downgrade,” Moody’s said.
The rating action, the firm said, reflected “multi-faceted financial, risk-management and governance challenges facing NYCB.”
NY Community Bank Assuages Concerns: Late Tuesday, the bank put out a release, flaunting its $83 billion in deposits, which represented an increase from end-December and ample liquidity position. The bank noted that 90% of the balances in our top 20 deposit relationships are fully insured or collateralized.
CEO Thomas Cangemi said, “We took decisive actions to fortify our balance sheet and strengthen our risk management processes during the fourth quarter. Our actions are an investment in enhancing a risk management framework commensurate with the size and complexity of our bank and providing a solid foundation going forward.”
He also allayed concerns about the Moody’s rating downgrade.
“Finally, as part of the bank’s enhancements to its risk management processes, we have been engaged in an orderly process of bringing in a new chief risk officer and chief audit executive with large bank experience, and we currently have qualified personnel filling those positions on an interim basis,” he added.
In premarket trading, the stock rose 7.62% to $4.52, according to Benzinga Pro data.
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