New York Community Bank shares tumble on news of operational problems, leadership changes
The headquarters of New York Community Bancorp Inc. in Hicksville now bears the company’s new Flagstar name. Credit: Flagstar Bank
The stock price of New York Community Bancorp Inc. continued to tumble on Friday in response to the Hicksville-based lender's disclosure that it took a $2.4 billion charge against last year's earnings because of poor loan review practices and other operational deficiencies.
The charge turned the company's 2023 profit into a loss.
NYCB shares closed down $1.24, or 26%, to $3.55 in New York Stock Exchange trading. The stock had been above $10 in January.
The sell-off began Thursday night after NYCB said its 2023 annual report to shareholders would be about 15 days late because “management [had] identified material weaknesses in the company’s internal controls related to internal loan review, resulting from ineffective oversight, risk assessment and monitoring activities," according to a filing with the U.S. Securities and Exchange Commission.
As a result, the bank wrote down the value of some assets using a "goodwill impairment" charge of $2.4 billion. The accounting change occurs when the value of an asset is lower than what was reported on the company's financial statements.
In this case, NYCB's revised statement shows a loss of $79 million for the year ended Dec. 31, not the $2.4 billion profit reported in January.
"The leadership team identified the material weaknesses disclosed yesterday and has been taking the necessary steps to address them, including appointing new executives," CEO and president Alessandro "Sandro" DiNello said on Friday. "Our allowance for credit losses considered these weaknesses and is not expected to change."
He added, "The company has strong liquidity and a solid deposit base, and I am confident we will execute on our turnaround plan."
DiNello's appointment as CEO and president was announced on Thursday and represents NYCB's second leadership change in three weeks. DiNello's elevation led one board director to resign, according to a separate securities filing.
DiNello had been nonexecutive chairman for more than a year after NYCB's purchase of Flagstar Bank, which he led for years. Last week, NYCB put the Flagstar Bank name on all branches, dropping 10 brand names — including Roslyn Savings Bank, Queens Savings Bank and New York Community Bank.
DiNello’s move to the corner office at the NYCB headquarters led board member Hanif “Wally” Dahya to resign last Sunday.
“I do not support the proposed appointment of Mr. DiNello as president and CEO of the company,” Dahya wrote in a letter filed with the SEC. Dahya runs an investment firm and served on the NYCB board for 17 years.
DiNello, 69, succeeds Thomas R. Cangemi, who led NYCB for three years and worked there for 27 years. He resigned on Feb. 23 but the decision “was not the result, in whole or in part, of any disagreement with the company on any matters relating to the company’s operations, policies or practices,” the filing states.
Cangemi, 55, remains a board director. He was paid $6.3 million in 2022 as president and CEO.
Also on Thursday, NYCB announced the immediate appointment of financial consultant Marshall Lux to the board. On Friday, the bank named a new chief risk officer and new chief audit executive.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
Updated now Newsday travel writer Scott Vogel took the ferry over to Block Island for a weekend of fun.
Updated now Newsday travel writer Scott Vogel took the ferry over to Block Island for a weekend of fun.
