Commercial banking

The Long Island-based lender has released a number of new details about its reconfiguration following a $1 billion capital injection led by two former Trump administration officials.

The stock prices of five of these banks fell by more than 7% on the day they announced their fourth-quarter results, including two with double-digit decreases.

Midsize lenders have largely defied the most dire predictions following Silicon Valley Bank's demise. But the nation's largest banks still have structural advantages, and the regionals remain hampered by their real-estate heavy portfolios and the continuing impact of high interest rates.

During the March 2023 banking crisis, company executives had to calm panicked customers, shore up liquidity and reassure investors after two other regionals failed. Key decisions during a critical seven-day window likely averted disaster.

The Long Island bank plans to balance its loan mix and fix its risk controls. But following a large capital injection led by two former Trump administration officials, the new leadership is asking for more time to formulate its strategy.

The Columbus, Ohio, regional bank will focus first on Dallas before venturing statewide. Its move into the Lone Star State comes three months after announcing a similar initiative in the Carolinas.

Former Trump administration officials Steven Mnuchin and Joseph Otting are headlining an investment group that's seeking to rescue the troubled Long Island lender. Otting is expected to serve as CEO, and Mnuchin will have a board seat.

The auditing giant KPMG audited the three regional banks that failed last year. New York Community's recent disclosures that it had financial reporting weaknesses in 2023 raises new questions over the auditors' role.

Long Island-based New York Community Bancorp has a large concentration in loans on New York City apartment buildings with rent restrictions. Property values in that sector have tanked amid higher interest rates, inflation and 2019 revisions to state law.

Critics argue the Federal Home Loan Bank System earned record profits last year and should provide a public benefit commensurate with the perks to members.