A sign is pictured above a branch of the New York Community Bank in Yonkers, New York, U.S., January 31, 2024.
Mike Segar | Reuters
New York Community Bank’s shares continued their downward spiral Wednesday after Moody’s Investors Service cut the firm’s credit rating two notches to junk status.
NYCB shares fell about 3%, trimming earlier losses of around 10%, in premarket trading. That followed a 22% decline Tuesday.
The regional bank has been in freefall since reporting a surprise loss last week, along with mounting losses on commercial real estate and the need to slash its dividend by 71% to shore up capital levels. The moves reignited concerns that some small and medium sized banks could be squeezed by declines in profitability and losses on real estate holdings.
Late Tuesday evening, Moody’s issued a report stating that NYCB faced “multi-faceted financial, risk-management and governance challenges.” It downgraded all the bank’s long term ratings by two notches to Ba2 from Baa3, and said the assessments remain on review for further downgrade.
“The downgrade reflects Moody’s views that NYCB faces high governance risks from its transition with regards to the leadership of its second and third lines of defense, the risk and audit functions of the bank, at a pivotal time,” Moody’s wrote. “In Moody’s view, control functions with strong knowledge of a bank’s risks are key to a bank’s credit strength.”
This story is developing. Please check back for updates.