New York Community Bancorp Inc. has so far seen minimal impact on its deposit base even as a slew of private banking teams left the company in April.
The company has 100 private banking teams left following the departures of 26 teams and is working hard to keep those remaining teams. The bank is bullish on its ability to keep most of the deposits under those teams intact, executives said on the company's first-quarter earnings presentation.
Deposits under the teams that left totaled about $6.2 billion, of which just $200 million so far have left the bank. Most of those outflows occurred in the first two weeks since the departures and have since slowed to a "trickle," CFO Craig Gifford said.
"We do recognize some of those deposits will take time to migrate out of the organization," President and CEO Joseph Otting said. "So there's always that risk for some more deposits, but ... we've actually had pretty good growth in deposits during the quarter. And we continue to see that carrying through into April as well."
New York Community's deposits totaled $74.86 billion at March 31, down from $81.53 billion at the end of 2023. After the company struck its $1 billion capital raise in early March, deposits stabilized and have grown, and that trend has continued into April even with the team departures, Gifford said.
The company is confident that it will be able to retain deposits that were under the employees who left.
In most cases, it was not entire teams that exited but just portions of teams, Otting said.
"So the team was ten, they took three and left seven people. Those seven people have done an extraordinary job of stepping up and calling on those contracts and retaining those," Otting said. "There were smaller teams where the whole team left, we quickly reassigned those to other teams. And so I think the combination of that has helped us be able to retain a significant amount of those deposits and be in a position to kind of move forward."
The company is also bullish on retaining a good portion of the deposits because the teams went to smaller banks. Dime Community Bancshares Inc., Customers Bancorp Inc. and Peapack-Gladstone Financial Corp. recently announced the hiring of former New York Community teams.
"Some of these clients just can't be serviced by those small banks. So they may move part of the relationship, but if they're fully integrated into the bank, it's very complicated to delink the treasury management and all the services and systems that you have," Otting said. "So my guess is we'll have split relationships with some of those small banks and things that can move over but we've been able to retain a significant portion of the deposits and activities."
Still, New York Community is working to retain its existing teams. The company offers incentives to private banking employees such as cash payments after each of their first two years and restricted share rights that vest in their third year. Even so, if private banking employees cannot support their clients, it can lead to frustration and departures even with that monetary incentive.
"We've got to fix that," Otting said. "Lockups are one thing, but if you're not able to take care of your customers ... then I don't think there's any money that would keep you at the bank."
In the case of the recent departures, many of them are legacy Signature Bank teams who were frustrated after a "tough integration," the CEO said.
"Some of it has been our fault and we have to take responsibility that not all of our products have flowed effectively for them," Otting said. "If you're not able to support your clients, you're going to be frustrated and you're not going to stay at an institution you don't think that will give you those tools."
