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Shares of New York Community Bancorp fell more than 25% on Friday after the regional lender announced a leadership change and disclosed issues with its internal controls.
The regional bank announced after market close on Thursday that Alessandro DiNello, its executive chairman, is taking on the roles of president and CEO, effective immediately. NYCB has been under pressure in recent months due in part to concerns about its exposure to commercial real estate.
Shares of NYCB dropped sharply in after hours trading.
The bank also announced an amendment to its fourth-quarter results, adding a disclosure about its internal risk management.
“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 company said in a filing with the U.S. Securities and Exchange Commission.
DiNello previously served as the CEO of Flagstar Bank, which NYCB acquired in 2022. He was named executive chairman at NYCB earlier in February just after Moody’s Investors Service downgraded the bank’s credit rating to junk status.
“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,” DiNello said in a press release Thursday.
In another leadership change, Marshall Lux was elevated to presiding director of the NYCB board, replacing Hanif Dahya. Lux served as global chief risk officer for Chase Consumer Bank at JP Morgan from 2007 to 2009, according to the press release.
Shares of NYCB are now down 65% year to date, a selloff sparked by the bank’s disclosure on Jan. 31 that it took a larger-than-expected charge against potential loan losses.
The specter of loan losses reignited fears about the state of the commercial real estate market and regional banks more broadly. Several regional banks failed in 2023 after customers and investors became uneasy about the value of the debt on bank balance sheets, including Silicon Valley Bank.
NYCB was actually the acquirer of one of those failed banks, Signature, in March of last year.
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