New York Community Bancorp (NYCB) said it lost 7% of its deposits in one month, highlighting the challenges facing a new investor group led by Steve Mnuchin as it outlined its turnaround strategy Thursday.
The bank disclosed in an investor presentation that its total deposits had dropped to $77.2 billion as of March 5, compared with $83 billion that it had on Feb. 5.
Roughly 80% of its deposits are currently backstopped by insurance from the Federal Deposit Insurance Corporation, while 20% are uninsured. It lost a $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 $1 billion infusion from a group led by Mnuchin, a former US Treasury Secretary and Goldman Sachs partner.
The firms that lined up to provide the 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 1 cent from 5 cents, after having been reduced from 17 cents 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 — following a 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 “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.”
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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