NYCB Is the First Domino

Banks are in trouble... [Total Wealth] BROUGHT TO YOU BY MANWARD PRESS NYCB Is the First Domino SPONSORED [The #1 AI Stock NOBODY Has Ever Heard Of...]( [Alexander Green #1 AI Stock]( The Man Who Correctly Called 4 of the Top 6 Performing Stocks of This Century... Now Says [This Obscure AI Stock Will Be the Biggest Winner of the AI Revolution](. [The Reason Why Will Surprise You.]( [Shah Gilani] Shah Gilani Chief Investment Strategist I'm not the kind of guy to say "I told you so"... but if I were, I'd sure be saying it now. Banks are in trouble. They're holding way too many underwater assets... especially when it comes to commercial real estate (CRE). New York Community Bancorp is a prime example. But there are also two other critical events coming down the pike that are sure to hurt the sector. SPONSORED [Insiders Recently Poured $156 Million Into Shares of One Tiny Stock]( [Peter Lynch quote]( [See Why Here!]( We'll start with how New York Community Bancorp (NYCB) got into its mess. The bank merged with Michigan-based Flagstar Bank, a top-25 U.S. mortgage lender, in December 2022. Then in March 2023, "Flagstar surprised the market amid the banking crisis by acquiring some assets, liabilities and deposits of Signature Bank from the Federal Deposit Insurance Corporation (FDIC)," according Lee Smith, senior executive vice president and president of mortgage at NYCB. Smith said the Flagstar-NYCB transaction created a "bigger bank with scale, very little business overlap, and a more diversified business model." He also noted the Signature deal strengthened the bank's balance sheet. And in a perfect example of regulatory mismanagement... Regulators took more than a year to approve the NYCB-Flagstar merger... the FDIC sold Signature assets and deposits to Flagstar... and the Federal Reserve, which not only provided financing for the Signature purchases by Flagstar, would be the bigger bank's primary regulator as its combined assets were bound to exceed $100 billion. All these watchdogs failed to what was happening right under their noses. That's worse than frightening. NYCB's assets were $116.3 billion in December 2023. That meant the bank would face tougher reserve requirements... would have to submit to stress testing... and was subject to an all-around tougher regulatory regime. When NYCB reported earnings last week, it announced it had to set aside $552 million for loan losses, 10 times what analysts expected. The bank lost $185 million in the fourth quarter, while analysts expected a $50 million profit. The stock dropped 46% in intraday trading and closed the day down 38%. The bank's credit rating was cut to junk by Moody's. It would have to raise more Tier-1 capital with its stock down 60% at $4.25. What was the cause of that huge loss? You probably already guessed... its commercial real estate loans. And we're going to see more losses like that in the near future... Bills Past Due The Fed's Bank Term Funding Program was born on March 12, 2023... thanks to a Federal Reserve Act provision that lets the private central bank do whatever it feels it has to under "unusual and exigent circumstances." The program has a 12-month sunset provision. It lets cash-strapped banks borrow from the Fed on a one-year term basis by putting up grossly underwater collateral the Fed would lend against at par value. Flagstar's assets were underwater, especially its mortgage portfolio and CRE portfolio. But the Fed lent against those assets, valuing them at par. That's how Flagstar was able to buy Signature assets and deposits. How insane is that? The program expires on March 11, 2024. And it's unlikely to be revived, especially in an election year. Why? Because besides providing liquidity to banks teetering on insolvency, especially if they had to sell any underwater assets to raise money, the program is a very profitable arbitrage opportunity for all who employ it. Borrowers put up underwater collateral and get full-value cheap term loans from the Fed at low interest rates, which they turn around and deposit back at the Fed and reap the Fed's hefty interest of reserves, which was 5.4% in January. That's free money for banks, baby! It's not going to be extended in an election year. And banks that need cash will be hit hard. Why would banks need cash? Because the clock is ticking on CRE refinancing. SPONSORED ["Weird" Savings Account Boost (Seniors Shocked)]( [Boost_Income]( "Magic Code" FORCES Banks to Pay You Up to [255 Times MORE Cash Interest]( (Give This Code to Your Bank ASAP.) [Show Me the Code!]( As $1.5 trillion in loans come due on empty commercial office buildings in the next four years, it's going to be hard to re-fi that debt at anything but exorbitant interest rates. A lot of those properties won't get refinanced and will have to be sold... to anyone brave enough to buy them, at pennies on the dollar. And when they're sold, banks will "realize" the losses they've been carrying in hidden "hold to maturity" buckets. Those losses will kill their earnings and capital. Clearly... banks are in trouble. And trying to buy put options on regional banks when they bounce is like trying to catch a falling knife. That's why I've put together [an urgent presentation]( on just how bad things are in commercial real estate... and how to use ["Flip Trades"]( to capture moonshot gains as the crisis unfolds. [Click here for all the details.]( Cheers, Shah Shah Gilani Shah Gilani is the Chief Investment Strategist of Manward Press. Shah is a sought-after market commentator... a former hedge fund manager... and a veteran of the Chicago Board Options Exchange. He ran the futures and options division at the largest retail bank in Britain... and called the implosion of U.S. financial markets (AND the mega bull run that followed). Now at the helm of Manward, Shah is focused tightly on one goal: to do his part to make subscribers wealthier, happier and freer. You are receiving this email because you subscribed to Total Wealth. To unsubscribe from Total Wealth, [click here](. Need help with your account? [Click here](. Have a question or comment for the editor? [Click here](mailto:mailbag@manwardpress.com). Please do not reply to this email as it goes to an unmonitored inbox. To cancel by mail or for any other subscription issues, write us at: Manward Press | Attn: Member Services | [14 West Mount Vernon Place | Baltimore, MD 21201](#) North America: [1.800.682.5210](#) | International: [+1.443.353.4263](#) Website: [manwardpress.com]( Keep the emails you value from falling into your spam folder. [Whitelist Total Wealth](. © 2024 Manward Press, LLC | All Rights Reserved Nothing published by Manward Press, LLC should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed personalized investment advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after publication before trading on a recommendation. Any investments recommended by Manward Press, LLC should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Protected by copyright laws of the United States and international treaties. The information found on this website may only be used pursuant to the membership or subscription agreement and any reproduction, copying or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Manward Press, LLC, 14 West Mount Vernon Place, Baltimore, MD 21201.