To help you stay ahead of potential trouble in the markets, we're closely monitoring the commercial real estate sector, which is under stress from decreasing demand and soaring lending costs. Banks supporting the sector, including NYCB, are on the brink -- will it be an isolated event or a contagion that could infect the financial system? Here's the latest:
10:03pm ET | Feb 20, 2024
U.S. banking regulators have initiated inquiries into the potential ripple effects across regional banks. Following NYCB's disappointing earnings report and dividend cut on January 31, officials from the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp, and state banking authorities engaged in discussions assessing the banks' liquidity, examining any shifts in deposit flows, and gauging customer concerns about the sector's stability.
3:18pm ET | Feb 15, 2024
In late 2023, around two dozen U.S. banks were flagged for having commercial real estate loan exposures that exceeded regulatory comfort levels, prompting concerns of increased scrutiny from federal regulators. This situation, highlighted by a Bloomberg analysis, reflects the broader challenges in the commercial real estate market, exacerbated by high interest rates and shifts in work habits post-pandemic. As a result, banks face pressure to bolster reserves and manage risks associated with these loans, amidst a market that's becoming increasingly difficult to navigate due to uncertain property values and looming loan maturities.
9:29am ET | Feb 15, 2024
11:28am ET | Feb 14, 2024
Following the stock decline of New York Community Bancorp (NYCB) due to its real estate exposure, ratings agencies like Moody's initiated inquiries with various regional banks, sparking concerns across the sector. These checks, aimed at assessing the banks' exposure to similar risks and their preparedness for potential fallout, have heightened the industry's anxiety, still reeling from the previous year's banking crisis. Despite efforts by regional banks to strengthen their balance sheets and funding since last March, the sector faces persistent challenges, including pressure on earnings and vulnerabilities in commercial real estate, leading to increased scrutiny from ratings agencies and investors alike. (Original source)
5:07p ET | Feb 13, 2024
New York Community Bancorp (NYCB) shares saw a nearly 4% decline following the release of January's inflation data, which heightened investor concerns over potential delays in interest rate cuts. This financial unease is particularly significant due to NYCB's substantial exposure to the stressed U.S. commercial real estate (CRE) sector. The reported 0.3% increase in the Consumer Price Index (CPI) for January, surpassing the economists' expectation of 0.2%, has intensified worries. Investors fear that elevated borrowing costs, coupled with low occupancy rates in office spaces, could further pressure lenders like NYCB, which are already facing risks of defaults from borrowers within the CRE sector.
12:24p ET | Feb 8, 2024
Dave Mazza from Roundhill Investments warns of potential contagion risks within the financial sector due to the pressures facing New York Community Bank (NYCB), especially if investor patience wears thin. In this interview with Yahoo! Finance, he highlights concerns around the commercial real estate market and multifamily loans, suggesting that the issues with NYCB could reflect broader systemic stresses. Despite some banks rebounding, Mazza advises caution for investors in regional banks and suggests that the situation could lead to acquisitions by larger banks, while also impacting real estate investment trusts (REITs) and the overall health of the financial market.
4:53pm ET | Feb 7, 2024
In a rollercoaster day of trading, New York Community Bancorp's stock made a comeback of sorts, climbing 6.7% -- but shares are still at their lowest level since 1997. This turnaround was fueled by the bank's new executive chairman, Alessandro DiNello, who attempted to cast a ray of hope, claiming the bank's liquidity and deposit base remain solid despite the tumultuous market response. Investor faith wavers as the bank, still reeling from a $252 million loss and a surprise dividend cut, grapples with a risky concentration in the faltering commercial real estate market. Amid the Federal Reserve's heightened scrutiny and the specter of a regional banking crisis, NYCB's strategy to navigate these choppy waters remains under intense scrutiny. With lawsuits piling up and regulatory eyes closely watching, the path ahead for NYCB is fraught with challenges, raising concerns over its ability to weather the storm.
12:49pm ET | Feb 7, 2024
Bloomberg reports the US commercial real estate market's difficulties have now spread to Europe. Deutsche Pfandbriefbank AG in Germany has become the latest bank to face challenges, with its bonds dropping due to its significant exposure to the troubled real estate sector. The bank has had to unexpectedly increase its financial cushions because of the “persistent weakness of the real estate markets.” It described the current turmoil as the “greatest real estate crisis since the financial crisis.”
The situation is made even worse by rising interest rates, which have lowered property values worldwide. US Treasury Secretary Janet Yellen acknowledges the concern but believes the issue is manageable, even as the US office market suffers from decreased values post-pandemic, with predictions of further declines ahead. (Original source)
10:21am ET | Feb 7, 2024
10:10am ET | Feb 7, 2024
Despite New York Community Bancorp's attempts to reassure investors with news of increased deposits and ample liquidity, its stock persisted in its downward trajectory, following a series of rating downgrades by Moody's, Fitch, and a notable stock downgrade from J.P. Morgan. As MarketWatch reports, analysts highlight the bank's "high risk profile" and recent executive departures as key factors exacerbating investor concerns. Citi analyst Keith Horowitz points out that despite the bank's strong liquidity position, the shift in its deposit strategy and the junk status of its debt could further pressure the stock and complicate debt issuance efforts.
Why is this important for investors like you? NYCB isn’t a small-scale operation. It's one of the largest regional banks in America. NYCB has:
NYCB has roughly $84 billion in loans with a large portion allocated to multifamily housing. Out of this, $30 billion is in buildings where rents are controlled by rules to keep them affordable. Unfortunately, some new regulations have made these buildings less valuable, which is bad news for the bank.
Treasury Secretary Janet Yellen said, “we are monitoring current banking stresses very carefully... Commercial real estate is an area that we’ve long been aware could create financial stability risks or losses in the banking system...”
There is $2.2 trillion in commercial real estate debt coming due by 2027. These debts now face refinancing at significantly higher rates. How much of that debt is going to be defaulted on?
Jerome Powell seems to believe commercial real estate’s impact on banking has just begun, saying it’s a “problem we’ll be working on for years...”
8:15pm ET | Feb 6, 2024
Moody's Investors Service has downgraded New York Community Bancorp’s credit rating to junk status, marking another setback for the already struggling lender. The downgrade to Ba2 from Baa3 is attributed to "financial, risk-management, and governance challenges," following a surprising quarterly loss and dividend cut by NYCB. This announcement exacerbated a sharp decline in the bank's stock value, which saw its lowest close since 1997 and a 15% drop after hours. NYCB's acquisition of Signature Bank and subsequent losses in its commercial real estate portfolio have put it under intense scrutiny, especially as it now exceeds $100 billion in assets, inviting stricter regulatory and capital requirements. Amidst a broader crisis of confidence in the banking sector, NYCB asserts that its deposits remain stable, despite recent high-profile executive departures and a projected decrease in net interest income for 2024. (Original source)
3:24pm ET | Feb 6, 2024
4:02pm ET | Feb 2, 2024
GoldSilver's own Alan Hibbard discusses New York Community Bancorp's falling stock price and it's move to slash its dividend by 70%.
10:12am ET | Feb 2, 2024
Last year, about this same time, Silicon Valley Bank and Signature Bank imploded sending shockwaves through the financial sector. Now, the would-be savor of Signature Bank, New York Community Bancorp that acquired its assets, is reporting massive losses on its commercial property loans. Its stock plummeted earlier this week...
And NYCB is not alone… banks in the US, Asia, and Europe are all facing mounting losses. It appears we’re in the early innings of this story. In fact, billionaire Barry Sternlicht sees more than $1 trillion in losses coming in the U.S. commercial property sector that is under pressure from soaring borrowing costs (persistently high interest rates) and plunging prices (slumping demand for offices).
For those of us with portfolios to protect and financial plans, now is the time to shore up our savings against any potential crisis that could be coming. Particularly in a tumultuous election year…
And we’re not talking about FDIC insurance. You need something banks can’t touch... something outside the walls of our volatile financial system... something that has been proven to help preserve and grow your wealth through good times and bad. Throughout history, holding physical gold bullion has acted as one of the best forms of insurance for an investor's portfolio against unforeseen events. That’s because gold is insurance in its purest form. Gold doesn’t get its value from the government. It’s an asset you can see and touch that’s acted as a store of value all over the world for thousands of years.
Just like insurance, when it comes to gold, a little goes a long way. It doesn’t take much gold in your portfolio to hedge against what’s happening in the rest of the market. You don’t need to drastically change your investment strategy. BUT you do need to take responsibility for your portfolio because no one else will. If you’re not holding precious metals like gold and silver, you’re probably uninsured. That never ends well. Once you hedge your portfolio with precious metals, you’re golden.
What are you waiting for? Buy gold (and/or silver).
9:31am ET | Jan 25, 2024
Explore the unfolding crisis in commercial real estate with Mike Maloney and Todd Sachs as they discuss the challenges faced by property owners, the risks associated with refinancing in a changing market, and the potential pitfalls of government interventions. Learn about the impact of rising interest rates, the distinction between recourse and non-recourse borrowers, and the controversial plan to convert office buildings into residential spaces. Gain insights into the complexities of the current real estate landscape and the potential consequences for both investors and the broader economy.