- 3 years ago
New York Community Bancorp plunges again after Moody's downgrades to junk.
New York Community Bancorp Appoints Alessandro (Sandro) Dinello As Executive Chairman Effective Immediately.
New York Community Bancorp Appoints Alessandro (Sandro) Dinello As Executive Chairman Effective Immediately.
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NewsTranscript
00:00 I guess we'll start with the regional banks, NYCB all over the place.
00:06 Yeah. So you had this stock, it absolutely crushed yesterday, closed down 22%. You had a Moody's
00:12 downgrade come in, moved the stock lower, and then a couple more downgrades came in. But instead of
00:18 going lower from there, traders decided, "No, we're going to go ahead and buy this." Let me
00:21 pull up a chart on the five minute and you can see what's been going on this morning.
00:26 And looks like we popped off and now selling off again. So multiple headlines here. So you
00:33 get the Moody's downgrade last night, and you get obviously multiple downgrades overnight. The stock
00:38 ticked under $3.50. I saw $3.50 last night. Is that what you saw too, Joel?
00:43 The after hours low, yep, $3.50, right? $3.50. So we were down another 70 cents on a $4 stock.
00:51 So I don't know what the math, down another 15, 16% or whatever that adds up to. So it was really
00:57 ugly last night. And it looked like, "Man, we're going to come in here, have a really ugly day for
01:01 the banks, really ugly day for the regional banks." KRE was getting smacked last night,
01:05 getting smacked again this morning. And then about 30 minutes ago, NYCB came out with a headline,
01:12 and this was the game changer here, is they're appointing Alessandro Daniello as Executive
01:19 Chairman effective immediately. I believe, and I'm not 100%, but I believe this person came from
01:25 Flagstar, which like you said, Joel, this is where NYCB came from if we go way back. So they are
01:33 bringing back, or I don't know if Alessandro was ever there originally, because I don't know the
01:38 story here, but they're coming in with some guns here, obviously trying to save this bank. Because
01:45 when you're seeing a stock go from 10 to 6 to 350, Moody's downgrading, you're like, "Holy crap,
01:51 could this bank fail?" So they're coming in with a new Executive Chairman effective immediately
01:56 to come in and try to save this bank. That's why it's popping. It's popping on a hope that
02:01 maybe this Executive Chairman can make a difference. We are coming off those highs,
02:04 unfortunately. 8.30 Eastern, they're going to have a conference call. So in 30 minutes,
02:10 24 minutes from right now, they're going to have a conference call discussing these changes. So
02:15 lots to chew on here if you're watching the regional bank story.
02:19 The Flagstar Bank, the good purchase, right? Helped the stock out, the transition. This was
02:26 a while ago, Flagstar, Midwest Bank. But they got a little bit greedy, right? They got the assets
02:33 from, I believe, from SIVB. They took on more assets, got in a little bit over their head here.
02:40 And then, and now, where are the assets they got from SIVB? They're some big buildings in New York
02:48 City and commercial property. So the question is, is where's the mark on these things? They're
02:53 trying to go to the market here. If they need to unload some of these loans, where's the market
02:59 going to be? What is the true value? So boy, it's bouncing around like a ping pong.
03:05 It's really bouncing around.
03:06 Yeah. A lot of-
03:07 Can you bring up a chart of it, Joel? Bring up the chart.
03:09 Yeah. I'll bring up the chart. I was just going to say from this press release real quick,
03:12 it does look like Danello has been with the company as a non-executive chairman of the board
03:19 since December 2022 after the Flagstar Bank acquisition. And now they're just adjusting
03:25 his role instead of being the non-executive chairman of the board to be the executive
03:29 chairman of the board. So I don't know, just that slight language change there.
03:34 You're seeing this again. We got all the way up to around $5, selling off again now back below $4.50.
03:40 Yeah. Wild.
03:41 And we've got the call started in 22 minutes. So I mean, we'll be-
03:45 The call is going to make it more wild. What are they going to say on the call? You know
03:48 what they're going to say. They're going to come in and say, "Liquidity is sound. We're okay."
03:54 Because that's what they always say. And when they say that, and they have to say that,
03:58 it means it's probably usually the opposite. But again, so just explaining people who don't
04:03 understand liquidity and banks, not that I'm a banking expert, but I got the gist of it.
04:08 My wife used to be a banker. It's all built on confidence. Banking system is all built on
04:13 confidence because you have short-term deposits. And then so a lot of majority banks are forwarding
04:20 short and lending long. They can't just all of a sudden call in these mortgages.
04:24 "Hey, we need some money. We need you to pay more of your mortgage off." So if you have
04:29 short-term demand, meaning the depositors come in and say, "Hey, give me my money. I'm not
04:35 comfortable here." They can meet those to a certain extent. After so long, like let's say you get up to
04:41 10% of depositors, 15% of depositors, 20% of depositors come in and say, "Give me my money now."
04:46 Then you have a liquidity crunch where they don't have that money now because they've lent it out
04:52 for the next 30 years in some cases to Joe guy over there at 3% for his mortgage. So I mean,
04:58 this is the issue that's plaguing all these regional banks is they obviously borrow short
05:03 for the most part and they lend very long. So it's a mismatch of maturities that's really
05:10 the danger here. So the danger, it's fine if nobody asks for their money. But if people start
05:15 going in and saying, "I see what's happening in the stock. I'm uncomfortable here. I want my money."
05:20 Then you can get into a situation where you could have a bank run and that's where a bank can fail.
05:25 The other thing too is that they were a smaller regional bank and then they picked up those
05:29 assets and now they're in a larger category. So their credit line or what they need to cover
05:37 their credit is ballooned and that's running into the problem. But right now trading up 32 cents at
05:46 452 of course, you'd be on the call at 830 will have an impact. Just see how it shakes out today.
05:54 The one thing you have to worry about if you're picking it up here is that there's a lot of
05:57 overhead supply here. This thing was at seven. I mean, you look at the end of last week, this thing
06:03 was over 10 bucks. So you have your shorter term traders just coming in for scalps. They don't care
06:09 if it goes back to five. They don't care if it goes back to six. They don't care if it goes back
06:13 to seven. They're looking to book small profits. So we'll see if pre-market low is a ways away.
06:20 It seemed to have found a bid after finding that new executive.
06:24 And you hope it stabilizes. We don't want to see another banking crisis here. And people saying,
06:31 "Oh, it's only 1% of the carry. Who cares?" Because it's a contagion effect here where you
06:37 have a bank fail and it's like, "Oh, we saw this back in March of last year." And then they worry
06:41 about this bank and then they worry, "Well, am I safe over in this one? Am I safe over in this one?"
06:45 And all of a sudden, you have a situation where none of these banks are as safe as they were
06:51 before. That's what you don't want to see happen. So good that it's bouncing here this morning.
06:55 Would have been bad to come in and this thing is at like 250 because of the booties downgrade.
07:01 We're wondering how many days it has less to survive. So it's nice that it's seeing a relief
07:06 rally here. It's nice that they're identifying that they needed to do something. We'll have to
07:10 wait and see what they say on this conference call. Chat, obviously we're doing a live show here.
07:14 So we will lean on the chat too. If anybody wants to listen to that conference call,
07:18 it'd be great to get some info from that as well. Final note, final note. There's other
07:22 rating agencies besides Moody's and that's what we saw with some of the other banks. The Moody's
07:27 comes in and then S&P or the other companies come in. Moody's made the first move. That's
07:34 one thing that you got to be cognizant of is that there could be other downgrades coming down the
07:39 road. Remember the whole market traded down off Moody's downgrade in the US credit outlook last
07:44 year? It's ridiculous that we lean on these ratings, Aaron, as much as we care.
07:50 And take it back to the financial crisis here. All these ratings companies got it all dead wrong.
07:56 They were like, "Oh yeah, we have all these subprime mortgages, AAA." Remember, they had all
08:04 the subprime mortgages and all these other packaged up and I'm butchering it here. But the ratings
08:09 agency has had it all wrong in the financial crisis and they were partially responsible for it.
08:14 So now we look and you sit here and you're like, "Hey, leaning on what they say here,"
08:18 but they did a pretty dang bad job during the financial crisis. Yeah, Bear Stearns is sound.
08:23 Yeah, Lehman Brothers is sound. And then a month later, Lehman Brothers has failed and Bear
08:31 Stearns is to get bought out for $2 from JP Morgan. So I mean, just leaning on other people's
08:37 opinions, it's just, again, you have to respect it because they move price. But just saying,
08:43 "Oh, Moody's is saying this, so I'm going to buy this or sell this because of that."
08:49 I think it's just a tough game.