In a significant development, two key competitors have made strategic moves against New York Community Bancorp by successfully recruiting private-bank teams that were instrumental in managing several billions of dollars in deposits for the bank.
These moves come at a critical juncture for New York Community Bancorp as it devises a strategic plan to revitalize its business under the stewardship of an investment consortium led by the esteemed former Treasury Secretary, Steven Mnuchin.
Peapack-Gladstone Financial, based in New Jersey, announced the acquisition of ten teams comprising commercial and private bankers, along with a top executive who previously directed 100 such teams at NYCB’s Flagstar Bank. These teams, responsible for securing deposits ranging between $3 billion to $5 billion at Flagstar, are expected to transition a significant portion of these assets, potentially in the billions, to Peapack-Gladstone within the next couple of years.
Following closely, Dime Community Bancshares revealed the recruitment of six deposit-centric teams, entrusted with managing several billion dollars in deposits at NYCB, indicating a substantial impact on NYCB's deposit base.
Piper Sandler's analyst, Mark Fitzgibbon, estimated that the cumulative deposits managed by the teams transitioning to rivals amount to between $5 billion to $8 billion, representing 6% to 10% of NYCB's total deposits. As of early March, NYCB reported a deposit base of $77.2 billion, marking a decline from $81.5 billion at the end of the previous year.
The potential ramifications of these departures are significant, with Fitzgibbon suggesting that without a robust response, NYCB might face further challenges from competitors aiming to capitalize on this situation. He advocates for NYCB to engage top legal resources to mitigate the impact of these moves.
NYCB has remained silent on these developments, amidst ongoing speculation regarding staff exits following an unexpected increase in loan-loss reserves and the acceptance of a $1 billion investment and new leadership from Mnuchin’s consortium.
Despite a slight uptick in NYCB's shares following the news, the stock experienced a decline, highlighting the market's reaction to these strategic moves by competitors. Fitzgibbon maintains a neutral stance on NYCB’s stock, contrasting with his positive outlook on Peapack-Gladstone and Dime Community Bancshares, both of which are expanding their presence in New York and surrounding areas.
Joseph Otting, NYCB's newly appointed CEO and former comptroller of the currency, is expected to unveil a comprehensive strategic plan for the bank, including potential asset reduction and operational adjustments to enhance return on assets and address the bank's exposure to commercial real estate loans.
The departure of a significant number of NYCB’s private-client teams would exacerbate concerns over its deposit stability, a situation the bank needs to address promptly to maintain shareholder confidence and navigate through these challenging times.
