New York Community Bank fell more than 10% for two consecutive days, and after being directly attacked by Powell, doubts about the resignation of senior executives have arisen again

Finance Associated Press, February 7 (edited by Shi Zhengcheng) In the second trading day of the week in the U.S. stock market, the New York Community Bank (NYCB) fell by more than 10% after the opening of the market, rekindling Wall Street's concerns about the asset quality and commercial real estate crisis of regional and local banks in the United States.

As of press time, New York Community Bank is down 16%, down more than 10% in four of the last five trading days. Since the release of the market-shocking earnings report on January 31, the company's stock price has fallen by 55%. The KBW Regional Bank Index also fell more than 1% on Tuesday.

（纽约社区银行，来源：TradingView）

The Financial Associated Press mentioned in a previous report that the reason for the initial collapse of the New York community bank was that the company made a provision for loan losses that far exceeded expectations by ten times, resulting in huge financial losses and a sharp decline in dividends. Although the main reason for the company's emphasis is that after the asset size exceeds 100 billion US dollars, it needs to deal with stricter capital requirements. However, the financial report also clearly shows the pressure of bad debts in office loans, as well as the significant increase in the rate of bad debts in loans.

Unexpectedly, the story of the New York Community Bank continued to unfold this week, bringing further jaw-dropping declines.

Powell threw a straight ball, and doubts emerged about the executive's resignation

During the Fed chairman's appearance on the TV talk show "60 Minutes" last weekend, while the market was generally more concerned about the path of rate cuts, the pressure on regional banks mentioned by Powell poured salt into the sore spot of New York's community banks.

(Source: CBS)

Powell said that in terms of real estate problems such as office buildings, the Fed has studied the balance sheets of large banks and found that the problems seem to be manageable. Some of the smaller regional banks have concentrated exposure in these areas, and they will face challenges.

He further said that the Fed has been aware of the problem for a long time and is working with these banks to ensure they have the right resources and plans to deal with the expected losses. The chairman of the Fed further emphasized here that there will be expected losses.

Powell stressed that the scale of the problem is and it may take years to solve, but the problem today does not have the status of the subprime mortgage crisis.

If Powell was more of an allusion to the entire U.S. regional bank, Monday's after-hours news sent a chill down to investors at New York Community Bank.

According to the news, shortly before the world-shocking earnings report, Nicholas Munson, the chief risk officer of the New York Community Bank, and Meagan Belfinger, the chief audit officer, both disappeared from the "leadership team" column of the bank's official website. It is reported that the two men were still on the site at least in early October last year, but disappeared by the end of the year.

As the incident unfolded, the New York Community Bank confirmed the departure of the two men on Monday, but declined to disclose the specific reasons for their departure.

According to another person familiar with the matter, behind the decision of the New York Community Bank to make a huge provision for losses and cut dividends, there is also pressure from the U.S. Office of the General Monetary Verification. The New York Community Bank's acquisition of Flagstar Bank in late 2022 gives regulators the power to object to any dividends set by the company until the end of 2024, according to regulatory filings.

In addition, after the Silicon Valley Bank incident forced the U.S. government to "rescue the market" last year, U.S. banking supervision has become the target of public criticism, including the rapid growth of Silicon Valley Bank's assets, and the failure of supervision to implement policies in a timely manner. With the acquisition of assets from Flagstar Bank and Signature Bank, the New York Community Bank nearly doubled its assets to the $100 billion mark in just 15 months.

In the face of criticism, Michael Barr, the Fed's vice chairman for supervision, has suggested that the authorities sometimes have to be more aggressive, even forcing banks to hold extra capital to "focus management's attention."

(Finance Associated Press, Shi Zhengcheng)