New York Community Bancorp Stock Nosedives After Bank Identifies 'Material Weakness' In Internal Controls, Announces Leadership Transition

New York Community Bancorp Inc NYCB shares are tumbling in after-hours trading Thursday after the company identified material weakness in internal controls and announced a leadership transition.

What Happened: In a new regulatory filing, New York Community Bancorp said management identified material weaknesses in the company's internal controls related to internal loan review, resulting from ineffective oversight, risk assessment and monitoring activities.

“Although assessment of the Company's internal controls is not yet complete, the Company expects to disclose in the 2023 Form 10-K that its disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2023. The Company's remediation plan with respect to such material weaknesses is expected to be described in the 2023 Form 10-K,” the company said in the filing.

Separately, New York Community Bancorp said it appointed executive chairman Alessandro (Sandro) DiNello as president and CEO, effective immediately. Thomas Cangemi has stepped down from this role, but will remain a member of the board.

“It is my mandate as president and CEO, alongside our Board, to continue our transformation into a larger, more diversified commercial bank,” DiNello 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 in the long term.”

The company also named Marshall Lux presiding director of the board, effective immediately, after Hanif Dahya stepped down from the role. Lux has also been named chair of the board’s nominating and corporate governance committee.

The news comes just weeks after New York Community Bancorp shares tumbled to levels not seen since 1997 after Moody's downgraded all of New York Community Bancorp's long-term issuer ratings and some short-term issuer ratings to junk. The company also provided a liquidity and deposit update and appointed DiNello as executive chairman earlier this month.

New York Community Bancorp’s 2024 annual meeting of shareholders is currently scheduled for May 17.

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NYCB Price Action: New York Community Bancorp shares were down 13.36% after hours at $4.79 at the time of publication Thursday, according to Benzinga Pro.

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