NYCB stock plummets as bank replaces CEO, cites 'material weakness'
New York Community Bancorp shares tumbled after replacing its CEO and disclosing lapsed internal controls. Shares of the regional bank fell over 20%.
"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 bank detailed in a filing with the Securities and Exchange Commission.
As a result, recent financial reporting is being reviewed. The bank, whose parent is Flagstar Bank, one of the largest regional banks in the U.S, has over $116 billion in assets.
Alessandro DiNello, the bank's executive chairman, will succeed Thomas Cangemi as CEO, effective immediately. Cangemi will remain on the board.
Several firms, including Piper Sandler, Wedbush and Deutsche Bank cut price targets on NYCB shares to a range of $3.50 to $5.00 on Friday.
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The SPDR Regional Banking ETF was down sharply, while bigger financial stocks, including JPMorgan, Bank of America, Citigroup and Wells Fargo, were also lower.
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Still, the broader markets remained higher.
The disclosures come ahead of the anniversary of the collapse of Silicon Valley Bank (SVB) last March.
As fears ripped through the sector, NYCB picked up Signature Bank – which at the time experienced a massive investor exodus – for about $38 billion as its stand-alone survival became uncertain.