New York Community Bancorp (NYCB) said Thursday it lost 7% of its deposits over the last month, highlighting the challenges facing a new investor group led by Steve Mnuchin that infused $1 billion into the troubled lender earlier this week.
The bank disclosed in an investor presentation that its total deposits dropped to $77.2 billion as of March 5, compared with $83 billion on Feb. 5.
Roughly 80% of its deposits are currently backstopped by insurance from the Federal Deposit Insurance Corporation, while 20% are uninsured. NYCB lost $7.8 billion in uninsured deposits over the last month.
The disclosure came one day after NYCB made a dramatic attempt to regain investor confidence by announcing a new CEO and a capital raise from a group led by Mnuchin, the former US Treasury Secretary and Goldman Sachs partner.
Its stock jumped after the market open Thursday, and it ended the day up nearly 6%.
It received some good news from Fitch Ratings, which said in a news release that the capital infusion “is a positive near-term development for creditors and could limit downside ratings momentum." Last week Fitch cut NYCB’s credit grade to junk.
The firms that lined up to provide the $1 billion infusion include Liberty Strategic Capital, a firm founded by Mnuchin in 2021, as well as Hudson Bay Capital, Reverence Capital Partners, and Citadel Global Equities.
They and some bank managers will purchase common and convertible-preferred stock, effectively taking control of the Hicksville, N.Y.-based company.
The deal also comes with a new change at the top.
Former Comptroller of the Currency Joseph Otting will become NYCB's new CEO, the third person to hold that title in just the last few weeks.
He replaces Alessandro DiNello, who had been acting as the bank’s true boss since Feb. 6 and officially became CEO last week following the exit of longtime CEO Thomas Cangemi. The transaction is scheduled to close by March 11 and is still subject to regulatory approvals.
Otting and DiNello held a call with analysts Thursday to explain their plans for the bank going forward.
Otting said the company's dividend will be reduced to $0.01 from $0.05 after having been reduced from $0.17 earlier this year.
"We'll continue to enhance our capital position and liquidity profile, as well as our credit management practices will evaluate opportunities to reduce commercial real estate concentration," said Otting.
DiNello told analysts that last Friday — which followed the disclosure of weaknesses in its internal controls and a tenfold increase in its fourth quarter loss to $2.7 billion — was "not a great day" for deposits but that things improved Monday and Tuesday of this week.
He emphasized that deposits are down only 5% compared with the level at the beginning of the year and said, "I think that's unbelievably outstanding performance by our team" given the turmoil surrounding NYCB.
He also told one analyst who asked about the costs NYCB is paying for deposits that "we didn't do anything crazy" or offer 6% CDs "to make the numbers look good."
The executives were asked if they were sure the bank wouldn't need to raise more capital. Otting said the bank and its board need "a little bit of time" to come up with "the vision of the way we see the future of the bank."
"We're gonna work hard over the next 30 days to be able to put that together" so it can be shared when NYCB reports first quarter earnings, he said.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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