A New York-based bank has seen a massive exodus of deposits, totaling over $4 billion, as the Federal Reserve Chair warns of potential bank failures.
Declining Deposits at New York Community Bank
New York Community Bank’s (NYCB) latest earnings report reveals a sharp decline in deposits. From the start of the year to March 6th, deposits fell from $81.365 billion to $77.2 billion.
The bank’s deposit loss is attributed to concerns about its exposure to commercial real estate and its balance sheet after several acquisitions, including Signature Bank.
Fed Chair Warns of Bank Failures
Federal Reserve Chair Jerome Powell has cautioned that more bank failures are likely. He highlighted the vulnerability of small and medium-sized banks due to their exposure to the struggling commercial real estate market.
“We’ve identified banks with high commercial real estate concentrations,” Powell said. “We’re working with them to ensure they have sufficient capital, liquidity, and plans to address potential losses.”
NYCB’s Commercial Real Estate Exposure
According to data from Trepp, a real estate intelligence firm, NYCB’s commercial real estate (CRE) concentration ratio is 477% as of Q3 2023. This indicates that a significant portion of the bank’s loan portfolio is tied to commercial and multifamily mortgages.
Banks with high CRE concentration ratios face risks if borrowers fail to make loan payments.
