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Investors have fled the stock since the lender last week
reported a surprise quarterly loss and recorded huge provisions
for potential bad loans tied to the commercial real estate (CRE)
segment, sending shockwaves through the industry.
NYCB said on Tuesday it was looking for candidates to fill up
the chief risk officer (CRO) and chief audit executive positions
after Bloomberg first reported about the departures a day
earlier.
It currently has "qualified personnel" holding those roles on an
interim basis, the bank said.
J.P. Morgan, which had maintained its "overweight" rating
despite the turbulence following the bank's earnings report last
week, said it was "surprised that the news of these departures,
particularly for the CRO role did not come from NYCB directly."
"NYCB's choice not to disclose the departures of key executives
in times of stress will heighten investor concerns," the
brokerage wrote in a note.
The brokerage downgraded the stock to "neutral" and slashed its
price target to $5.5 from $11.5. The stock, which has plumbed
lows not seen since 1997, last traded at $3.78 before the bell,
31% lower than J.P. Morgan's new target.
At least 14 brokerages have cut their price targets or their
ratings on the stock.
On Tuesday, Moody's cut the bank's credit rating to junk and
warned of further downgrades.
"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," the agency
said.
NYCB CEO Thomas Cangemi said Moody's downgrade was not expected
to have a material impact on its contractual arrangements.
The bank sought to reassure investors with some details of its
financial strength. Total deposits of $83 billion were up from
$81.4 billion at the end of 2023, the bank said.
Total liquidity of $37.3 billion also exceeds uninsured
deposits, NYCB said.
(Reporting by Niket Nishant in Bengaluru; Editing by Sriraj
Kalluvila)
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