Thomas Cangemi has stepped down as chief executive of New York Community Bancorp, the embattled company said Thursday, as it also disclosed deficiencies in the way it was managing internal controls and recorded a fourth-quarter goodwill impairment charge of $2.4 billion.
Alessandro “Sandro” DiNello, who had recently been
In a separate regulatory filing, the $116.3 billion-asset company disclosed that its management team has identified “material weaknesses” in its internal controls. Those weaknesses, which relate to how New York Community does internal loan reviews, are the result of “ineffective oversight, risk assessment and monitoring activities,” the bank said.
Following the disclosures, New York Community’s stock price fell by 21% in after-hours trading.
Thursday’s developments capped a very difficult month for New York Community, a regional bank holding company that over the decades built a large part of its business around making loans to landlords that own rent-regulated apartment buildings in New York City.
Four weeks ago, the company reported a sizable quarterly loss and a surprise dividend cut,
On Thursday, New York Community said the full assessment of its internal controls is ongoing. In its upcoming annual 10-K filing, the company expects to disclose “that its disclosure controls and procedures and internal control over financial reporting were not effective as of Dec. 31, 2023,” the bank said in the filing.
A remediation plan to address its problems with internal controls will be included in the 10-K, the filing of which will be delayed as New York Community “completes its work” on the remediation plan, the company said. The 10-K is expected to be filed within the next 15 days, the firm added.
New York Community also disclosed that it completed a goodwill impairment assessment on Feb. 23, determining that it needs to take a goodwill impairment charge of $2.4 billion for the fourth quarter. The charge does not impact the company’s capital ratios, the company said.
“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,” DiNello said in the press release.
In early February,
At the time, DiNello tried to ease fears about the company’s deposit base and reassure the market that the chief risk officer position, which has been vacant since early this year, would soon be filled. He also spoke about the need to build capital and reduce the size of the firm’s commercial real estate portfolio.
In addition to his new roles, New York Community said Thursday that DiNello will remain executive chairman. But the company also announced changes to the makeup of its board, including one departure less than a week ago.
Hanif “Wally” Dahya resigned from the New York board on Feb. 25, the company said Thursday in a separate regulatory filing. In his brief resignation letter, Dahya said he “did not support the proposed appointment of Mr. DiNello as president and CEO of the company.”
Dahya’s resignation came less than a month after another New York Community director, Toan Huynh, resigned from the board to “pursue other interests.” Huynh, who joined New York Community’s board after serving in a similar role on Flagstar’s board, resigned on Feb. 6, the same day that DiNello was appointed executive chairman.
Also on Thursday, New York Community said that another director, Marshall Lux, has been appointed “presiding director” of the board and chair of its nominating and corporate governance committee, effective immediately.
Lux has worked as a senior partner at Boston Consulting Group, advising financial services companies, according to the press release. From 2007 to 2009, he was the global chief risk officer for JPMorgan Chase’s consumer bank.
“The changes we’re making to our board and leadership team are reflective of a new chapter that is underway,” DiNello said Thursday in the press release.
DiNello also said that his “mandate” as president and CEO is to work with the board to “continue our transformation into a larger, more diversified commercial bank.”
Cangemi had a similar task when he was promoted to the top job in late 2020.
His exit ends a 27-year career at New York Community. He was chief financial officer for 15 years before ascending to the CEO job when Joseph Ficalora, who led New York Community for 28 years,
As part of Cangemi’s charge to turn the traditional thrift institution into a full-service commercial bank with a diversified loan book and more low-cost deposits,
The deals pushed New York Community, which is now the parent company of Flagstar Bank, above the $100 billion-asset threshold, which is expected to bring a higher level of regulatory scrutiny.
Following Cangemi’s exit as CEO, he will remain on New York Community’s board of directors, according to the press release. The company did not say how long he will serve on the board.
New York Community’s management changes “aren’t overly surprising,” analyst Chris McGratty of Keefe, Bruyette & Woods wrote Thursday in a research note.
“But the material weakness is a tough headline and contributed to the selloff post-close today,” McGratty added. “Prior to this, the stock had stabilized recently, in part due to recent insider purchases.” DiNello and Cangemi were among the New York Community executives
“The immediate focus is twofold, in our view — file 10-K and provide a strategic update once the loan portfolio review is complete,” McGratty wrote in his note.
Other analysts expressed similar concern. Mark Fitzgibbon, an analyst at Piper Sandler, downgraded the bank’s stock late Thursday from “overweight” to “neutral,” citing a case of “whack-a-mole” and the potential for “additional issues” to arise.
“Today’s announcements give us concern that there could be more issues coming down the pike,” he wrote.
“None of that gives us comfort in recommending to investors that they should buy the stock,” he added.
Catherine Leffert contributed to this article.
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