Real Estate

New York Community Bancorp flags ‘material weaknesses’ as it switches CEO

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New York Community Bancorp has replaced its chief executive and identified “material weaknesses” in internal controls that guide how loans are reviewed, amid worries about the US regional lender’s exposure to the commercial property market.

Shares of the New York bank fell by 26 per cent in February, and dropped another 19 per cent in after-hours trading after it disclosed the moves late on Thursday. 

Higher-than-expected losses from real estate loans for NYCB have revived concerns about potential defaults. The bank also cut its dividend earlier this year to meet tougher regulatory requirements. The pressures on NYCB come almost a year after the failures of Silicon Valley Bank and other regional banks unsettled the US banking industry.

In a regulatory filing, NYCB said the weakness in its internal controls resulted from “ineffective oversight, risk assessment and monitoring activities” noting that it would disclose a remediation plan in an annual report filing which will now be delayed. 

In a separate statement, the bank said that Alessandro DiNello, who was named executive chair just over three weeks ago, would replace Thomas Cangemi as chief executive, effective immediately.

Cangemi will stay on as a member of NYCB’s board of directors. NYCB said one member of its board, Hanif Dahya, had resigned as he did not support DiNello’s appointment as CEO. 

“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,” DiNello said in a statement. “The changes we’re making to our board and leadership team are reflective of a new chapter that is under way.”

NYCB grew rapidly with two rapid-fire deals to buy Flagstar Bank and then acquire most of the deposits at failed lender Signature Bank in 2023. Its increased size required NYCB to hold a higher level of minimum capital under US banking rules, a shift that led to the dividend cut.


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