NYCB Shares Plummet 18% Following Revelation of Internal Controls Issue and CEO Transition

New York Community Bancorp witnessed an 18% decline in its shares during extended trading on Thursday, triggered by the disclosure of internal controls issues and a leadership transition.

Alessandro DiNello, the executive chairman, has assumed the roles of president and CEO with immediate effect.

This move comes amid growing concerns about the bank's exposure to commercial real estate, contributing to the pressure NYCB has faced in recent months.

Additionally, NYCB announced an amendment to its fourth-quarter results, incorporating a disclosure about its internal risk management.

The company revealed material weaknesses in its internal controls related to internal loan review, citing ineffective oversight, risk assessment, and monitoring activities in a filing with the U.S. Securities and Exchange Commission.

DiNello, who previously served as the CEO of Flagstar Bank (acquired by NYCB in 2022), took on the role of executive chairman at NYCB in February, shortly after Moody's Investors Service downgraded the bank's credit rating to junk status.

In response to the challenges, DiNello expressed confidence in the bank's direction and its capacity to deliver for customers, employees, and shareholders in the long term.

In another leadership change, Marshall Lux replaced Hanif Dahya as the presiding director of the NYCB board. Lux, a former global chief risk officer for Chase Consumer Bank at JP Morgan, assumed this position as part of the bank's efforts to navigate through the challenges.

NYCB shares have experienced a 53% year-to-date decline, sparked by the January 31 disclosure of a larger-than-expected charge against potential loan losses.

This revelation reignited concerns about the commercial real estate market and regional banks at large, leading to the failure of several regional banks in 2023.

The apprehension among customers and investors about the value of debt on bank balance sheets, exemplified by Silicon Valley Bank, contributed to this trend.

Notably, NYCB itself was involved in bank acquisitions, including the acquisition of Signature, one of the failed banks, in March of the preceding year.