NYCB in crisis: What the hell is happening with New York Community Bank?
It’s been a rough week for New York Community Bank (NYCB). The New York-based commercial real estate lender’s stock dropped to its lowest level since 1996 at the opening of the market Friday. The drop comes after the company revealed a surprise quarterly loss in January, and has caused concerns in the U.S.’s regional banking sector just a year after the collapse of Silicon Valley Bank. Here’s what you need to know. What is New York Community Bank? NYCB is the parent company of Flagstaff Bank, one of the largest regional banks in the country. NYCB had acquired most of the assets of Signature Bank after Signature failed in the banking crisis of March 2023. At the end of last year, the company had $116.3 billion of assets, $85.8 billion of loans, deposits of $81.4 billion, and total stockholders’ equity of $10.8 billion. What happened this week? The company announced this week that its fourth-quarter-earnings loss was $2.4 billion worse than it had previously stated, which it attributes to “material weaknesses” in its loan review process. The bank says that the loss won’t impact its regulatory or credit agreements. However, the announcement caused shares of New York Community Bancorp to drop 23% in after-hours trading Thursday. That 23% drop adds to a substantial fall the company took in February, after it announced a $252 million loss for the fourth quarter. The bank’s stock is down a total of 60% since January 30. What happened on January 30? On January 30, NYCB announced a 70% drop in its dividend and a half-billion-dollar increase in its reserve for loan losses. The announcement was a surprise loss for investors and raised concerns over the overall health of regional lenders as a whole. Who is in charge? Amid the drama, the company announced it is also changing CEOs. Thomas R. Cangemi stepped down from his role as president and chief executive officer on Thursday, after 27 years with the company. Cangemi is being immediately replaced by Alessandro (Sandro) DiNello as president and CEO, and as executive chairman of the board. Cangemi will remain on the board. DiNello was given the job of executive chairman in mid-February. In a statement announcing his appointment, DiNello said that he hopes to transform the bank into a “larger, more diversified commercial bank.” He also acknowledged the bank’s very recent issues. ”While we’ve faced recent challenges, we are confident in the direction of our bank and our ability to deliver for our customers, employees, and shareholders in the long term,” he said. “The changes we’re making to our Board and leadership team are reflective of a new chapter that is underway.” Will regulators get involved? Axios notes that regulators would be well within their rights to take over NYCB this weekend, but speculates that they likely won’t be in favor of doing that, as they would want to avoid a situation similar to what we experienced with Silicon Valley Bank last year.
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It’s been a rough week for New York Community Bank (NYCB). The New York-based commercial real estate lender’s stock dropped to its lowest level since 1996 at the opening of the market Friday.
The drop comes after the company revealed a surprise quarterly loss in January, and has caused concerns in the U.S.’s regional banking sector just a year after the collapse of Silicon Valley Bank.
Here’s what you need to know.
What is New York Community Bank?
NYCB is the parent company of Flagstaff Bank, one of the largest regional banks in the country. NYCB had acquired most of the assets of Signature Bank after Signature failed in the banking crisis of March 2023.
At the end of last year, the company had $116.3 billion of assets, $85.8 billion of loans, deposits of $81.4 billion, and total stockholders’ equity of $10.8 billion.
What happened this week?
The company announced this week that its fourth-quarter-earnings loss was $2.4 billion worse than it had previously stated, which it attributes to “material weaknesses” in its loan review process. The bank says that the loss won’t impact its regulatory or credit agreements. However, the announcement caused shares of New York Community Bancorp to drop 23% in after-hours trading Thursday.
That 23% drop adds to a substantial fall the company took in February, after it announced a $252 million loss for the fourth quarter. The bank’s stock is down a total of 60% since January 30.
What happened on January 30?
On January 30, NYCB announced a 70% drop in its dividend and a half-billion-dollar increase in its reserve for loan losses. The announcement was a surprise loss for investors and raised concerns over the overall health of regional lenders as a whole.
Who is in charge?
Amid the drama, the company announced it is also changing CEOs. Thomas R. Cangemi stepped down from his role as president and chief executive officer on Thursday, after 27 years with the company.
Cangemi is being immediately replaced by Alessandro (Sandro) DiNello as president and CEO, and as executive chairman of the board. Cangemi will remain on the board. DiNello was given the job of executive chairman in mid-February.
In a statement announcing his appointment, DiNello said that he hopes to transform the bank into a “larger, more diversified commercial bank.”
He also acknowledged the bank’s very recent issues.
”While we’ve faced recent challenges, we are confident in the direction of our bank and our ability to deliver for our customers, employees, and shareholders in the long term,” he said. “The changes we’re making to our Board and leadership team are reflective of a new chapter that is underway.”
Will regulators get involved?
Axios notes that regulators would be well within their rights to take over NYCB this weekend, but speculates that they likely won’t be in favor of doing that, as they would want to avoid a situation similar to what we experienced with Silicon Valley Bank last year.
