Morningstar DBRS downgrades NYCB by a notch on near-term earnings pressure

By Thomson Reuters Mar 8, 2024 | 4:25 AM

(Reuters) – Morningstar DBRS downgraded the credit ratings of New York Community Bancorp to “BBB (low)” from “BBB”, citing near-term pressure on earnings, the ratings agency said late on Thursday.

The company, which cut its rating in February pointing to the lender’s “outsized” exposure to commercial real estate loans compared to its peers, also said the trend on all credit ratings is now stable.

Rival Moody’s has also changed the direction of its rating view of NYCB to “review for upgrade” from “review for downgrade”.

NYCB on Wednesday raised $1 billion from investors, including former U.S. Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital, and named a former Comptroller of the Currency its new CEO.

“The recently announced management change and capital raise from high-profile and experienced investors should help restore confidence in the company after a string of unexpected adverse announcements,” Morningstar DBRS said.

Shares in the bank, up in the last three sessions on improving investor sentiment and the capital infusion, remain down more than 60% for the year. The stock was last up 3% in premarket trading on Friday.

NYCB also disclosed a 7% drop in deposits over the past month and reduced its quarterly dividend for the second time since January on Thursday.

The bank came under renewed pressure last week when it disclosed “material weakness” in internal controls and revised its loss to more than 10 times of what was previously disclosed.

(Reporting by Manya Saini in Bengaluru; Editing by Sriraj Kalluvila)