New York Community Bank (NYCB) executives tried to soothe frayed investor nerves on a call Thursday, a day after the beleaguered bank received a $1 billion cash injection from a consortium of lenders, including former Treasury Secretary Steve Mnuchin's firm Liberty Strategic Capital, and a new chief executive in former Comptroller of the Currency Joseph Otting.

NYCB stock was up 7.7% at $3.72 at around 1:15 p.m. ET, but has lost almost 65% year-to-date.

Deposits Down But Not Dire

NYCB's deposits stood at $77.2 billion as of Wednesday, about 7% lower than the $83 billion the bank reported on Feb. 5, a day before Moody’s downgraded its credit rating, and roughly 5% lower compared with the end of last year.

The bank also said that uninsured deposits—deposits greater than $250,000 not eligible for the FDIC’s deposit insurance—stood at $15.3 billion, or about 20% of all deposits.

NYCB Non-Executive Chairman Alessandro DiNello said that the bank had a good experience with deposits up until Thursday last week, when it filed a disclosure about “material weakness” in internal controls, and that “Friday was not a great day” in terms of deposits. Though the bank fared well in terms of deposits over the weekend and early part of this week, DiNello admitted “there certainly were some people that lined up to withdraw” after a Wednesday afternoon news story about a potential capital infusion.

“You think about everything this company has been through over the last two months, difficult fourth quarter with the provision, the cut in the dividend the downgrades that we experienced from both Fitch and Moody’s, the 8-K we filed last Thursday, that’s a lot of tough stuff and yet we’re only down 5% and our branches are actually flat over that period of time. I think that’s unbelievably outstanding performance by our team,” DiNello said.

Cutting Back Commercial Real Estate Loan Concentration

Incoming CEO Otting said that one of the items on his to-do list was to reduce the concentration of commercial real estate (CRE) loans for the bank.

Credit losses on loans to rent-regulated multifamily properties in New York drove up provisions by almost 800% at the end of last year, one of the dominoes that triggered the bank's recent troubles.

Multifamily loans accounted for about 44% of the bank's total $84.6 billion loans as of year-end 2023. Roughly 37% of the multifamily loans were associated with rent-regulated properties in New York City and were maturing over the next three years. Higher interest rates and restrictions on rent raises for such properties is making it harder for landlords to repay or refinance such loans.

But the new management has identified pockets of pain as well as opportunity in the CRE loan portfolio. Despite the brouhaha about NYCB's multifamily loan exposure, Mnuchin said "the biggest problem in the portfolio is the New York office" loans.

In an interview with CNBC, Mnuchin said, "[O]n multifamilies that have cash flow and lower interest rates, you can work out a lot. On New York office, where you have empty office buildings of class B, there's a reason why the values are down a lot. And I don't see New York office, particularly class B working out and getting better in the future. So that's not an area—we've taken that into account—it is a limited part of the portfolio."

Otting is set on building out a portfolio of middle market and industrial loans instead.

Contemplating Reducing Size Below $100 Billion

One of the reasons for New York Community Bank's recent troubles was its acquisition of some of the assets of the failed Signature Bank. That transaction pushed NYCB's balance sheet size over $100 billion, catapulting it among banks that get higher regulatory scrutiny and require greater capital reserve provisions.

“Clearly that will be something that we’ll evaluate, and it does obviously take you out of a specific category from the enhanced regulatory requirements that are imposed of the Category 4 banks,” Otting said. “So that is an option that we’ll continue to look at and assess the organization’s ability to function as a Category 4 but also what’s the impact to us from an advantage if we do shrink below that number."

Dividend Slashed Again

NYCB announced it will cut back its dividend payments further to a penny per share, down 80% from the 5 cents a share it declared for the fourth quarter of 2023, and more than 94% lower than the 17 cents it paid in the third quarter last year.