NYCB cuts dividend as it implements $1B rescue plan
New York Community Bancorp (NYCB) has taken drastic measures to address the challenges it faces, slashing its dividend to just 1 cent per share. This move comes after the regional bank reported losses of 7% of its deposits, a significant blow to its liquidity position.
Coupled with the appointment of a new CEO on Wednesday, NYCB announced it has secured a $1 billion capital infusion from private investment groups.
Yahoo Finance's Julie Hyman and Josh Lipton break down the details.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Angel Smith
Video Transcript
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JOSH LIPTON: Check it in now on a few trending tickers as we get closer to the closing bell here on Wall Street. New York Community Bancorp slashing its dividend to $0.01 while also revealing it lost 7% of deposits in one month. This comes after the regional lender announced a new CEO and a $1 billion rescue plan on Wednesday. Shares higher right now by about 5 and 1/2%, Julie.
So listen, we were just talking yesterday about how they did secure that $1 billion injection from investors, including the firm run by our former Treasury Secretary Steve Mnuchin. The new CEO Joseph Otting had a conference call with analysts. Headline here wants to see a bank that's equally spread out-- consumer, commercial, real estate.
What the bank said about customer deposits was also-- did get some attention. Totaled more than $77 billion as of March 5th. Now last month, it was around 83 billion. But I did see some analysts-- I saw quoted as saying that was actually above what, in fact. They expected.
JULIE HYMAN: Right, that the drop was not as--
JOSH LIPTON: Yeah.
JULIE HYMAN: --bad as they had expected. Now the team that is taking over New York Community Bank is--
JOSH LIPTON: Yep.
JULIE HYMAN: --very interesting because Otting is a former comptroller of the currency. And he also teamed up with Steven Mnuchin to rescue IndyMac--
JOSH LIPTON: Right.
JULIE HYMAN: --back in the day. Mnuchin is part of the investor--
JOSH LIPTON: I have forgotten--
JULIE HYMAN: --group here.
JOSH LIPTON: --that, by the way that--
JULIE HYMAN: Yeah.
JOSH LIPTON: --that had been partners, yeah.
JULIE HYMAN: Exactly. So Mnuchin is part of the investor group here. But Otting saying that if you're looking at NYCB, he said on the conference call talking about this today, that the right balance sheet for a bank like this is a third of it consumer related, a third commercial banking, and a third in real estate.
The problem for NYCB is its real estate holdings are concentrated in New York, you know, as you might gather from the name. And they're concentrated in office, which is not in great shape as we know, as well as in multifamily housing, but specifically multifamily housing that is rent stabilized. So that is why it's been problematic.
And now this new team is going to look at sort of how to rightsize perhaps some of those assets and get the bank back in better shape. Is it-- is a a billion dollars going to be enough, that investment? You know, I think we'll have to see. There have been some-- there has been some skepticism expressed in some quarters.
JOSH LIPTON: Yeah, I saw former Treasury Secretary Mnuchin was talking on another network this morning, called the bank a unique franchise, Julie. Sees a lot of opportunity to build out the business. We'll see.
JULIE HYMAN: Yes, we will.
