A New York bank with $113.9 billion in assets is on the brink after revealing its balance sheet is far worse than investors already knew.
New York Community Bank (NYCB) initially triggered fears of a wider banking crisis when Moody’s downgraded its credit rating last month due to “multi-faceted financial, risk-management and governance challenges.”
Now, in a series of regulatory filings, the bank has revealed that its losses in the fourth quarter of last year were $2.4 billion worse than previously reported, acknowledging “material weakness” in its risk management operation.
“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.”
The news triggered a 25% drop in the bank’s stock – which had already fallen more than 50% in the last two months.
NYCB has faced mounting pressure over concerns that it’s overexposed to the troubled commercial real estate market, and its struggles have sparked renewed concern that the industry at large is in a precarious position due to the Federal Reserve’s sustained rise in interest rates.
The bank’s now former CEO, Thomas Cangemi, has resigned.
Incoming CEO Alessandro DiNello says the lender is confident that things are now moving in the right direction amid changes in upper management.
“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. The changes we’re making to our Board and leadership team are reflective of a new chapter that is underway.”
NYCB is based in Long Island and expanded nationwide when it acquired a significant portion of Signature Bank after its collapse in March of last year.
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