Do we see a start of bank failures in 2024?
Will NYCB be the first bank to fail?
Is it because of the toxic Signature Bank asset acquisition in 2023?
I started to review some of the bank's holdings reported at the end of 2023, and I do see many issues with band loans spike and poor asset quality in commercial loans, construction loans.
Ratings agency Moody’s mid-February downgraded NYCB’s long-term ratings to a junk rating.
At the same time, Bank still has solid assets on the books, such as deposits, MSRs, leases, etc...
With a lot of commercial debt maturing in 2024, I expect NYCB to struggle and to be forced to announce layoffs or be sold to a larger bank like JPMorgan or allow FDIC brokered sale through receivership with deep discount.
I am also monitoring quarterly announcements from Zions Bancorp and Synovus Bank. Zions has $87.2 billion in assets: $16.4 billion in CRE mortgages, $2.7 billion in CRE construction loans, and $3.5 billion in unused CRE commitments (for a total CRE exposure of $22.6 billion, but has only $5.6 billion in total equity). Total CRE exposure is 398% of total equity.
Again, it's only one bad quarter, but it spooked investors assuming it's a trend. I personally think that it is the start of a trend. I would love to see the next quarter reporting, before ringing the alarm bell.
If the "fire sale" will start happening on the CRE assets, I hope you contact my firm to value the asset from a loan quality perspective using the latest AI and Machine Learning technologies. We are built for very high volume and can increase the discount request for these assets using our market leading workflows. Looking forward to working with investors to clean this mess up.
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