The tumult surrounding New York Community Bancorp (NYSE:NYCB) became more severe with two ratings agencies cutting its credit grade.
Bloomberg reported Fitch Ratings lowered the bank’s long-term issuer default rating from BBB-to BB+, which is one level below investment grade. Fitch said its decision was based on the bank’s discovery of weaknesses, which “prompted a reconsideration of NYCB’s controls around adequacy of provisioning, particularly with respect to its concentrated exposure to commercial real estate.”
Moody’s, which dropped the bank to junk rating last month, lowered its issuer rating further from Ba2 to B3. Moody’s warned that “NYCB may have to further increase its provisions for credit losses over the next two years because of credit risk on its office loans,” and it also cited “substantial repricing risk on its multifamily loans.”
NYCB’s stock plummeted on Friday by 26%, ending the week at $3.55 – a 65% year-over-year collapse of its stock price.
Last week, CEO Thomas Cangemi resigned following the announcement that NYCB’s fourth quarter loss was amended to $2.7 billion, a tenfold increase from its previously declared $252 million net loss. Alessandro DiNello, the new CEO, declared, “The company has strong liquidity and a solid deposit base. I am confident we will execute on our turnaround plan to deliver increased shareholder value.”
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