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New York Community Bancorp shares shed a quarter of their value on Friday after the regional lender disclosed it had replaced its chief executive and identified “material weaknesses” in internal controls that guide how loans are reviewed.
The company’s shares fell as much as 31 per cent shortly after Wall Street’s opening bell and having disclosed the moves late on Thursday. The decline moderated, leaving shares down almost 26 per cent on the day and taking their year-to-date drop to 65 per cent amid worries about the US regional lender’s exposure to the commercial property market.
Higher than expected losses from real estate loans for NYCB have revived concerns about potential defaults. The bank also cut its dividend this year to meet tougher regulatory requirements. The pressures on NYCB come almost a year after the failures of Silicon Valley Bank and other regional banks unsettled the US banking industry.
The latest hit to NYCB did not have a significant impact on other regional bank stocks, with the industry’s index slipping 0.7 per cent on Friday.
In a regulatory filing, NYCB said the weakness in its internal controls resulted from “ineffective oversight, risk assessment and monitoring activities”, noting that it would disclose a remediation plan in an annual report filing that will now be delayed.
In a separate statement, the bank said Alessandro DiNello, who was named executive chair just over three weeks ago, would replace Thomas Cangemi as chief executive, with effect immediately.
Cangemi will stay on as a member of NYCB’s board of directors. NYCB said one member of its board, Hanif Dahya, had resigned because he did not support DiNello’s appointment as chief executive.
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In a separate statement on Friday, NYCB said it had appointed George Buchanan, an executive at Regions Bank, as its new chief risk officer. NYCB parted ways with its previous CRO shortly before it reported the larger than expected loan losses in January. The bank also named Colleen McCullum as chief audit executive, joining from United Community Bank.
“While we’ve faced recent challenges, we are confident in the direction of our bank and our ability to deliver for our customers, employees and shareholders in the long term,” DiNello said in a statement. “The changes we’re making to our board and leadership team are reflective of a new chapter that is under way.”
NYCB grew swiftly with two rapid-fire deals to buy Flagstar Bank and most of the deposits at failed lender Signature Bank in 2023. Its increased size required NYCB to hold a higher level of minimum capital under US banking rules, a shift that led to the dividend cut.
“The management changes aren’t overly surprising, but the material weakness is a tough headline and contributed to the sell-off post close today,” wrote KBW analysts in a research note on Thursday.
2024-03-01 21:40:46
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