NYCB's latest challenge: Losing bankers to competitors

Amid an operational overhaul stemming from months of turbulence, New York Community Bancorp has taken another hit, as dozens of commercial and private-client bankers recently defected to smaller institutions.

Peapack-Gladstone Financial and Dime Community Bancshares said Monday that they had hired at least 16 teams combined from the Long Island company's subsidiary, Flagstar Bank.

The outgoing staffers represent about 12% of the 134 private client teams at New York Community, and they carried combined deposit books of $5 billion to $8 billion, according to Piper Sandler analyst Mark Fitzgibbon. 

"I don't think it's a positive thing to lose these teams," Fitzgibbon said in an interview. "New York Community will likely look to get smaller, but I think they want to get smaller on the loan side, not the deposit side."

New York Community had been ardently working for several years to build its private client operations. It anticipated a boon to the business from last year's acquisition of $34 billion of deposits from the failed Signature Bank, the majority of which were part of private client accounts.

Later in 2023, the $114-billion asset institution added six more teams from First Republic Bank following the West Coast company's collapse and acquisition by JPMorgan Chase.

However, New York Community's stock price tumbled some 80% in six weeks after it announced a staggering loan-loss provision and slashed its dividend at the end of January. In mid-March, New York Community landed a $1 billion capital infusion, led by former Treasury Secretary Steven Mnuchin, which quelled the risk of immediate disaster.

Newly appointed CEO Joseph Otting, a former comptroller of the currency, has said he will announce New York Community's revamped strategy on its first-quarter earnings call at the end of the month. New York Community did not provide comment for this article.

A source familiar with the matter said that the bank hasn't seen its deposits fluctuate since the recent employee exits. The bank has already reassigned client accounts to current employees, the source added.

New York Community stock price was down 2.13% Tuesday to $3.22.

Fitzgibbon said that he thinks the bank should work to "stop the bleeding" of staff and get the company "back on track." He added that New York Community could try flexing legal muscles to nip the exodus in the bud.

Fitzgibbon said he had been hearing that other banks were looking to capitalize on New York Community's challenges, but he didn't expect so many staffers to depart. 

"I've been concerned about this happening," Fitzgibbon said. "We remain concerned that more teams may leave to go to other institutions. We have no doubt that New York Community is working really diligently to keep the existing teams in place because it's an important part of their business."

New York Community had incentivized employees with stock grants, the value of which has fallen by more than 50% since most of those teams started, Fitzgibbon said.

For Hauppauge, New York-based Dime, the latest hires continue a spree that began in the spring of 2023. The $13.6 billion-asset bank nabbed six teams that were originally from Signature, where they managed billions of dollars in deposits, Chief Financial Officer Avinash Reddy said in an interview.

Over the past year, Dime has hired a total of 13 deposit groups, hailing from Signature, First Republic and the $61 billion-asset Valley National Bancorp, according to Reddy. A four-person team, formerly at Valley National, formed the nucleus of a national deposit group that Dime rolled out last month to serve a range of niche markets, including hedge funds, insurance, fund banking, private equity, family offices, escrow services and medical billing.

Dime President and CEO Stuart Lubow said that the bank "really went on the offensive" after last spring's bank failures.

"The reality is we saw disruption in the marketplace, and we sought to grow our franchise," he said. "We view all of our hiring efforts over the course of the past year as investments that we believe will accrue to the benefit of the franchise and create more shareholder value."

Already in 2024, Dime has added $400 million of deposits. Lubow said that he expects opportunities to take advantage of continued disruption in the coming months.

Dime's latest hires are concentrated in Brooklyn, Nassau and Westchester counties, surrounding its Long Island headquarters. The Westchester team gives Dime its first presence in the county, which is one of the nation's most affluent banking markets with a deposit base totaling $240 billion, according to the Federal Deposit Insurance Corp. 

"Westchester is an amazing banking market," Reddy said, adding that its hometown community banks have largely been merged out of existence. "It's one of those areas that does not really have a local bank anymore."

Other teams snagged from New York Community will be part of Peapack's private banking expansion in New York City, continuing a strategy the bank first announced last summer. The Bedminster, New Jersey-based company said that it has brought on Andrew Corrado, who spent nearly a decade at Signature prior to its demise, to lead more than 10 newly hired teams, totaling 50 commercial and private bankers.

Fitzgibbon said that Peapack's new staffers had accounts at New York Community with between $3 billion and $5 billion in deposits, and that the new hires expect to attract at least $2 billion of those funds to Peapack, which would mark a 38% increase in its total deposits.

Such deposit growth would be "transformational" for the $6.5 billion-asset company, which has been steadily making moves to grow its business, including leasing prime office space in midtown Manhattan and bringing on its own team of ex-First Republic bankers, Fitzgibbon said. 

Dime's stock price was up 5.07% Tuesday, to $19.70 per share, while shares in Peapack rose by 1.46% to $24.32.