New York Community Bancorp reassures investors about its deposits, liquidity, and governance. Moody’s downgraded the bank’s credit rating to junk, NYCB’s stock plummeting by nearly 60% since shocking Wall Street last Wednesday. NYCB’s dropping stock is erasing billions in market value, dragging down the value of other regional bank stocks, and stoking new concerns about the industry’s vulnerability to office buildings and apartment complexes.

These problems at NYCB can be traced back to its response to a crisis in 2023 that took down Silicon Valley Bank, Signature Bank and First Republic. During that crisis, NYCB played the role of rescuer, picking up parts of the failed Signature Bank, a decision that moved the bank above an important asset threshold of $100 billion, leading to higher regulatory standards. This forced the bank to cut its dividend and boost the money it set aside for loan losses in the fourth quarter, with those loan loss provisions being $552 million, well above analyst estimates. Bloomberg reported Monday that the Office of the Comptroller of the Currency applied pressure on NYCB to set aside more money and slash its dividend in case commercial real estate loans sour. NYCB also faces challenges such as the high level of exposure to rent-controlled apartment complexes in New York City, which account for 22% of its loans, and a “relatively high dependence” on wholesale funding.

Steven Alexopoulos, a bank analyst for JPMorgan, downgraded NYCB, giving it a “neutral” recommendation Wednesday morning, and recommends investors avoid the stock at least in the intermediate term. NYCB highlighted its “deposit stability,” noting that total deposits of $83 billion were up from $81.4 billion at the end of 2023, and its “ample liquidity,” pointing out that total liquidity of $37.3 billion exceeded its level of uninsured deposits. CEO Thomas Cangemi assures that despite the Moody’s rating downgrade, the company’s deposit ratings from Moody’s, Fitch, and DBRS remain investment grade. Despite its troubles, Cangemi stated that the company took decisive actions to fortify its balance sheet and strengthen its risk management processes during the fourth quarter and now has “an investment in enhancing a risk management framework commensurate with the size and complexity of our bank.”