New York Community Bancorp’s stock dropped more than 26% on Friday following the regional lender’s announcement of a change in leadership and the revelation of problems with its internal controls.
Following Thursday’s market closing, the regional bank declared that Alessandro DiNello, its executive chairman, would assume the positions of president and CEO with immediate effect. Recent months have seen pressure on NYCB, partly because of worries about its exposure to commercial real estate.
The bank also revealed that it had added a disclosure regarding its internal risk management to its fourth-quarter results.
The company stated in a filing with the U.S. Securities and Exchange Commission that “as part of management’s assessment of the Company’s internal controls, management identified material weaknesses in the Company’s internal controls related to internal loan review, resulting from ineffective oversight, risk assessment, and monitoring activities.”
Prior to NYCB’s acquisition of Flagstar Bank in 2022, DiNello was the CEO of that bank. Just after the bank’s credit rating was reduced to junk status by Moody’s Investors Service, he was appointed executive chairman of NYCB earlier in February.
Despite the difficulties we’ve recently encountered, we have faith in the future course of our bank and our capacity to satisfy the needs of our clients, staff, and shareholders. In a news release on Thursday, DiNello stated, “The changes we’re making to our Board and leadership team are reflective of a new chapter that is underway.”
Marshall Lux succeeded Hanif Dahya as the presiding director of the NYCB board in yet another leadership shift. According to the press release, Lux was the global chief risk officer for Chase Consumer Bank at JP Morgan from 2007 to 2009.
Due to NYCB’s announcement on January 31 that it has taken a higher-than-expected charge against possible loan losses, the company’s shares had dropped 53% year to date.
Concerns regarding the overall health of regional banks and the commercial real estate industry were stoked by the threat of loan losses. In 2023, a number of regional banks, including Silicon Valley Bank, failed as investors and consumers lost faith in the amount of debt listed on bank balance sheets.
In fact, in March of last year, NYCB acquired Signature, one of those failing banks.