Shares of New York Community Bancorp are experiencing a significant decline ahead of the market opening on Friday following the sudden departure of the bank's long-serving CEO. This departure has led to the delay in mandatory financial disclosures to regulators due to the discovery of 'material weakness' associated with loans.
New York Community Bancorp, which saw substantial growth last year after acquiring the failed Signature Bank, recently reported substantial losses on commercial real estate loans. Moody's downgraded its credit rating to 'junk' in response to these developments.
The bank announced late Thursday that Thomas Cangemi, who had been with the company for 27 years, is stepping down as president and CEO. Alessandro DiNello, the current executive chairman, will assume these roles. Despite stepping down, Cangemi will continue to serve as a board member.
Following these announcements, the bank's shares, which had already declined by over 50% this year, plummeted by 20% before the market officially opened on Friday.
DiNello, who joined New York Community Bancorp after the acquisition of Flagstar Bank in December 2022, previously held the position of president and CEO at Flagstar.
In a regulatory filing on Thursday, the bank disclosed its inability to file its annual report with the U.S. Securities and Exchange Commission, citing internal control issues. The bank identified 'material weaknesses' in its internal controls related to internal loan review, attributed to ineffective oversight, risk assessment, and monitoring activities.
New York Community Bancorp anticipates disclosing in its 2023 annual report that its disclosure controls and procedures, as well as internal control over financial reporting, were not effective. The bank plans to outline its remediation plan for these weaknesses in the annual report.
Despite the challenges, NYCB expects to file its annual report within the 15-day grace period. The bank's acquisition of most of the assets of Signature Bank in 2023 propelled it to over $100 billion in assets, subjecting it to increased regulatory scrutiny.
To meet regulatory requirements, the bank had to reduce its dividend, enhance its capital, and improve liquidity ratios. Concerns from investors regarding the bank's commercial real estate portfolio have also contributed to the decline in NYCB's stock value.
In the premarket trading, shares of NYCB fell by more than 22%, reflecting the ongoing challenges and uncertainties surrounding the bank's operations.
