(Bloomberg) — Latest York Community Bancorp’s credit grade was cut to junk by Fitch Rankings, and Moody’s Investors Service lowered its rating even further, a day after the commercial real estate lender said it discovered “material weaknesses” in the best way it tracks loan risks.
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Fitch downgraded the bank’s long-term issuer default rating to BB+, one level below investment grade, from BBB-, in response to an announcement Friday. Moody’s, which cut the bank to junk last month, lowered its issuer rating to B3 from Ba2.
The bank’s discovery of weaknesses “prompted a reconsideration of NYCB’s controls around adequacy of provisioning, particularly with respect to its concentrated exposure to industrial real estate,” Fitch said.
Read More: NYCB Flags Weaknesses in Loan Oversight and Names Latest CEO
The bank’s announcement Thursday that it must shore up loan reviews reignited investor concern with reference to the firm’s potential exposure to struggling commercial-property owners, including Latest York apartment landlords. The stock plunged 26% Friday, similtaneously the company said it doesn’t expect that control weaknesses will end in changes to its allowance for credit losses.
“Moody’s believes that NYCB could must further increase its provisions for credit losses over the next two years as a consequence of credit risk on its office loans,” the credit rater said in an announcement. It also pointed to “substantial repricing risk on its multifamily loans.”
NYCB’s stock ended the week at $3.55, bringing its decline this 12 months to 65%.
“The company has strong liquidity and a solid deposit base,” Chief Executive Officer Alessandro DiNello, who took over this week, said in an announcement earlier Friday. “I’m confident we’ll execute on our turnaround plan to deliver increased shareholder value.”
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