© Reuters. FILE PHOTO: A screen displays the trading information for New York Community Bancorp on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 31, 2024. REUTERS/Brendan McDermid/File Photo
(Reuters) -New York Community Bancorp (NASDAQ:) shares jumped on Monday, extending gains from the previous session in response to top executives buying stake in the U.S. lender reeling with its exposure to the U.S office property market.
The bank has been looking to boost investor confidence to stem a share slide from Jan. 31 when it posted a surprise quarterly loss due to its loans tied to the stressed sector and slashed its dividend.
Shares surged on Friday after bank executives bought shares worth more than $870,000 combined. Among them was banking veteran and executive chairman Alessandro DiNello who had vowed to reduce the bank’s loan exposure to the commercial real estate (CRE).
“DiNello appears firmly in control of the go-forward strategy and we consider him as a credible executive with a proven track record of turning around a troubled bank and working with banking regulators,” brokerage Bank of America Securities wrote in a note.
NYCB stock was last up 7% in early morning trading after closing 17% higher on Friday. Still, they are down 50% so far this year and have weighed on the banking sector.
Investors worry that the weak demand for offices could trigger a wave of loan defaults and hurt the balance sheets of banks.
TD Cowen analysts said the NYCB episode would trigger additional scrutiny of banks with “significant loan concentrations.”
“We expect supervisors to use this window to push some banks with high loan concentration levels to diversify. It is consistent with the Washington mantra of never letting a good crisis go to waste.”
Brokerage Morgan Stanley said there will be a need to refinance about $2 trillion of CRE debt – half of which is on bank balance sheets – expected to mature by the end of 2025.
“Our work indicates that the top 25 banks have about 30% of this exposure and the rest of the 4,500+ smaller, regional banks have the remaining 70%,” it said in an industry note.
The KBW Regional Banking Index, a key index to gauge investor sentiment toward the sector, has lost 10% this year.
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