After announcing leadership changes and disclosing internal control issues, the stock price of New York Community Bancorp plummeted by 25.89% on Friday, falling below $4 and closing at $3.55 per share, hitting a 52 week low.
New York Community Bank announced after market hours on Thursday that it has appointed its executive chairman, Alessandro DiNello, as its president and CEO. Dinello previously served as the CEO of Flagstar Bank, which was acquired by New York Community Bank in 2022. As the international rating agency Moody's downgraded the credit rating of New York Community Bank to& in early February; Quota; Garbage level; Quota; Later, Dinelo was appointed as the executive chairman of the bank.
The New York Community Bank also announced a revision to its fourth quarter performance, adding disclosures about its internal risk management. The bank stated in its filing with the Securities and Exchange Commission (SEC) that management has identified significant weaknesses in the company's internal controls related to internal loan reviews, which stem from ineffective oversight, risk assessment, and monitoring activities.
Steve Moss, an analyst at investment bank Raymond James, believes that this disclosure is a major concern, suggesting that credit costs may be higher during the extension period, increasing his concerns about the interest only multi family portfolio of New York Community Bank. Unless interest rates decrease, it will take a long time to resolve.
Ben Emons, head of fixed income at wealth management firm NewEdge Wealth, said that the market believes that banks trading below $5 face the risk of government takeover. Citigroup analyst Keith Horowitz believes that due to financial uncertainty, even at this price, New York Community Bank is unlikely to attract buyers and can only rely on itself.
The risk of bank loan losses has raised concerns in the market about commercial real estate and the broader regional banking situation. In recent months, the operation and profitability of New York Community Bank have been under pressure due to its exposure to commercial real estate. So far this year, the stock price of the bank has fallen by 65.3%, with a sharp drop of nearly 38% on January 31st due to the release of a huge loss financial report.
A year ago, New York Community Bank acquired approximately $38 billion in assets from Signature Bank.