Feb 29, 2024 - Business

New York Community Bancorp goes from bad to worse

Data: YCharts; Chart: Axios Visuals
Data: YCharts; Chart: Axios Visuals

For a $100 billion bank to lose both its chief audit officer and chief risk officer might be considered a misfortune. For the same bank to then lose its CEO, while admitting that it had no "internal control over financial reporting," looks like carelessness.

Driving the news: Shares in New York Community Bancorp plunged in after-hours trading Thursday upon the news that it had defenestrated its CEO; that it was not going to be able to file its annual report on time; and that it had been suffering from "ineffective oversight, risk assessment and monitoring activities."

The big picture: In early February, NYCB took a massive $552 million provision for credit losses on its commercial real-estate portfolio, plunging the bank into the red and sending its stock price reeling.

  • NYCB had acquired many of the assets of Signature Bank after Signature failed in the banking crisis of March 2023. That deal took NYCB over the $100 billion mark.
  • The job of righting the ship in the wake of fourth-quarter losses was given to Sandro DiNello, the former CEO of Flagstar, a bank that NYCB acquired at the end of 2022.
  • Also in early Feburary, DiNello was given the job of executive chairman; he has now officially taken on the CEO role.

Threat level: Bank regulators have very little tolerance for these kind of shenanigans.

  • They would be entirely within their rights to take over NYCB this weekend — although they probably won't, since no one wants another banking crisis exactly one year after Silicon Valley Bank failed.

The bottom line: It's not easy to get a $100 billion house in order, especially when that house comprises three banks — NYCB, Flagstar, and Signature — that were only recently merged. DiNello faces an uphill task in persuading the markets that he has a grip on the bank he now runs.

Editor's note: This story has been corrected to state the NYCB acquired many of Signature's assets, rather than most of its assets.

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