The turmoil surrounding New York Community Bancorp (NYCB) continued Thursday with the departure of CEO Thomas Cangemi, weaknesses in internal controls and a 10-fold jump in fourth-quarter losses to $2.7 billion. The incident escalated again after it was revealed that he had done so.
Shares of the Hicksville, New York-based commercial real estate finance company plunged 20% in after-hours trading.
The new disclosures are the latest development in a month-long turmoil that has plagued the lender, which played a savior role during the 2023 local banking crisis exactly one year ago. NYCB's stock price began to fall on Jan. 31, when the company surprised analysts by cutting its dividend, increasing its loan loss reserves and reporting a quarterly net loss of $252 million.
The $114 billion bank, now one of the 30 largest U.S. banks, said in a new filing that it had revised its fourth-quarter loss to $2.7 billion after incurring a new $2.4 in goodwill impairment charge. states that it was done.
“Goodwill from past transactions (prior to 2007) is fully impaired as of December 31, 2023, as confirmed by the company's current market capitalization,” the assessment completed on February 23 said. The bank said it decided to file this charge after concluding that Thursday declaration.
Separately, the bank said management had “identified material weaknesses in the company's internal controls related to internal loan review as a result of ineffective supervision, risk assessment and monitoring activities.”
The company has taken steps to postpone the filing of its annual report in order to “complete work related to its assessment and plans to improve material weaknesses.”
Thursday's surprise announcement included a significant leadership change. In a separate press release, the bank announced that Kangemi, who had been with the bank for 27 years, had “resigned” from his role but would remain on the board.
He will be replaced by executive chairman Alessandro Dinero, who has been the bank's boss since February 6, after the board changed the company's bylaws so that Cangemi reports directly to Dinero.
Mr. Dinero previously served as CEO of Troy, Michigan-based Flagstar Bank, which New York CB acquired in late 2022. After the acquisition he served as non-executive chairman.
The decision to buy Flagstar and absorb assets from the then-defunct Signature Bank in 2023 has brought NYCB's assets to more than $100 billion and increased regulatory scrutiny.
NYCB said these stricter requirements led to its decision to cut its dividend and set aside more for future loan losses. The company secured $552 million, significantly more than expected, to offset weaknesses related to office real estate and multifamily properties.
The NYCB troubles, which began a month ago, have caused major concern in the local banking community, nearly a year after three large mid-sized financial institutions were seized by regulators after deposit runs.
Other NYCB board changes were also announced Thursday. The bank announced that Marshall Lux, who has served as an independent director since 2022, has been appointed as president and former president Hanif “Wally” Dahiya has resigned as director.
“Despite the recent challenges our bank has faced, I remain confident in our direction and our ability to serve our customers, employees, and shareholders over the long term,” Dinero said in a press release. “The changes we have made to our board and management team reflect a new chapter in the making.”
David Hollerith is a senior reporter at Yahoo Finance, covering banking, cryptocurrencies, and other financial areas.
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