One year after buying a failed bank, New York Community Bancorp is struggling
A New York bank is under severe pressure close to one year after absorbing a large chunk of another bank 30 miles away that had failed
A New York bank is under severe pressure Friday close to one year after absorbing a large chunk of another bank 30 miles (50 kilometers) away that had failed.
Shares of New York Community Bancorp plunged after longtime CEO Thomas Cangemi, who has spent much of this year reassuring investors about the bank’s viability, stepped down abruptly and the bank postponed a mandatory annual financial disclosure to U.S. regulators due to “material weakness” tied to loans.
Commercial banks like New York Community Bancorp have been hammered by falling values in the commercial real estate market after the pandemic upended work in offices for millions.
The bank reported a surprise loss of $252 million for the fourth quarter, including a provision for credit losses of $552 million, much of it tied to real estate. Its credit rating was downgraded to “junk” by Moody’s.
That pressure has been compounded at the Hicksville, New York, bank because it grew massively almost overnight after absorbing the failed Signature Bank.
That put New York Community Bancorp at a new level that requires higher regulatory scrutiny, a transition that has been rocky.
The filing late Thursday with the U.S. Securities and Exchange Commission included a $2.4 billion goodwill impairment charge, meaning that the bank is reassessing the value of its assets.
Those losses will be booked retroactively in the bank’s fourth quarter, meaning its surprise loss was just multiplied by 10 times.
“As part of management’s assessment of the company’s internal controls, management identified material weaknesses in the company’s internal
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