NYCB is extending losses to a $3 handle after the downgrade...

While we heard all day about how NYCB was an idiosyncratic issue, Moody's warns that this is anything but, generalizing to the multi-family CRE space being a problem:

NYCB is highly concentrated in rent regulated multi-family properties, a segment which has historically performed well for them. However, this cycle may be different.

While vacancy rates are low for this CRE segment, properties may face different challenges this cycle due to higher interest expense when refinanced and already higher maintenance costs due to inflationary pressures.

These higher costs may prove more challenging for owners of rent regulated properties to pass along through rent increases to tenants.

Beyond rent-regulated, the bank has a significant concentration of low fixed-rate multifamily loans. This type of loan portfolio faces refinancing risk.

As a reminder,:

Once a $3 trillion asset class, offices now are "probably worth $1.8 trillion," said Barry Sternlicht, chief executive officer of Starwood Capital Group.

"There's $1.2 trillion of losses spread somewhere, and nobody knows exactly where it all is."

Additionally, Moody's warns this could end badly:

"The company's elevated use of market funding may limit the bank's financial flexibility in the current environment."

Moody's also points out that, as of Dec 31st, 33% of NYCB's deposits were uninsured, and "could face significant funding and liquidity pressure if there is a loss of depositor confidence."