NYCB Stock Plunges as Bank Warns of ‘Material Weaknesses’

New York Community Bancorp (NYCB) stock plummeted Friday (March 1) amid a leadership shakeup.

The almost 26% drop came as the bank also reported a loss greater than what it had stated in the past, and said it had uncovered “material weaknesses” in its internal loan review controls.

“NYCB looks like a bank that is out of control, and it seems likely that they will have to take even steeper charges for loan loss provisions,” Octavio Marenzi, CEO of advisory and consulting firm Opimas, told Reuters.

That report also noted that NYCB’s shares are already down 65% this year.

The bank said in a Securities and Exchange Commission (SEC) filing last week that President and CEO Thomas R. Cangemi had resigned Feb. 23, noting that his departure was not the result of any disagreement with NYCB.

The bank has named the executive chairman of the board and its board, Alessandro (Sandro) DiNello, to succeed Cangemi as president and CEO.

In another leadership change, the company said in the SEC filing that Hanif (Wally) Dahya stepped down as presiding director of the board.

“At the time of my resignation I did not support the proposed appointment of Mr. DiNello as president and CEO of the company,” Dahya said in a resignation letter included with the filing.

In another Thursday filing with the SEC, NYCB said it is unable to file its annual report by the due date because it found adjustments that must be made to its financial reports prior to completing the report.

NYCB also noted in the filing that “management identified material weaknesses in the company’s internal controls related to internal loan review, resulting from ineffective oversight, risk assessment and monitoring activities.”

These announcements come a little more than a month after NYCB reported a dividend cut and an unanticipated loss of $260 million in the fourth quarter of 2023, versus a gain of $164 million in the same period the prior year.

Bank executives attributed the loss to a rise in expected loan losses, particularly from loans in the commercial property sector.

That news triggered a larger sell-off in the regional banking sector. NYCB’s troubles were seen as something of a surprise, as the bank had been viewed by investors as one of the winners of the 2023 banking crisis.

NYCB last year acquired Signature Bank — one of the failed lenders at the center of the crisis — picking up most of its deposits and a third of its assets.