\n NYCB,
\n
\n disclosed \u201cmaterial weaknesses\u201d in its accounting and other financial-reporting issues \u2014 news that sent its stock down 28% early Friday.<\/p>\n
\u201cWe expect more questions on whether NYCB will sell, but we do not see a lot of potential buyers here even at this price due to the uncertainty,\u201d Horowitz wrote in a note to clients.<\/p>\n
While the material weakness \u201cadds more fuel\u201d to the fire around the bank, no additional financial impact is expected beyond the $2.4 billion goodwill impairment charge that it took for its fourth quarter, Horowitz said.<\/p>\n
New York Community Bancorp\u2019s stock fell to $3.56 a share Friday after the bank said late Thursday it found material weakness related to its loan review in an evaluation of its internal financial controls<\/a>. The stock last traded at its current level in 1996.<\/p>\n On Friday, the bank named George F. Buchanan III as vice president and chief risk officer, a position that had been vacant prior to the bank\u2019s troubles this year. Buchanan comes to the bank with more than 30 years of experience including at First Union, which is now part of Wells Fargo & Co. The bank also said it has named Colleen McCullum as its chief audit executive. McCullum has roughly 20 years of experience in the business.<\/p>\n Late Thursday, the bank said its internal-control deficiencies were the result of \u201cineffective oversight, risk-assessment and monitoring activities.\u201d <\/p>\n A spokesperson for the Federal Deposit Insurance Corp. declined to comment. <\/p>\n Wall Street analysts were quick to point out that the troubles appear to be isolated around New York Community Bancorp, which is the holding company for Flagstar Bank. <\/p>\n J.P. Morgan analyst Steven Alexopoulos said the bank\u2019s situation is \u201cnot representative of pressure\/uncertainty on regional banks more broadly.\u201d<\/p>\n Despite these assurances, shares of regional banks fell in early trading on Friday<\/a>.<\/p>\n Citigroup analyst Horowitz said \u201csignificant changes\u201d will be needed for New York Community Bancorp\u2019s credit-risk monitoring, \u201cwhich we expect may lead to them being more proactive on recognizing issues going forward.\u201d<\/p>\n The bank\u2019s disclosure that it does not anticipate a materially different operations disclosure is important, Horowitz said. <\/p>\n \u201cA material weakness does not necessarily always equate to an impact on financials,\u201d Horowitz said. \u201cIn our view, the delay in the 10-K is likely meant to give auditors sufficient time to ensure that there was no financial impact from the material weakness in the control environment, which means a lot of time for individual loan testing.\u201d<\/p>\n Wedbush analyst David Chiaverini reiterated an underperform rating \u2014 the equivalent of sell \u2014 on New York Community Bancorp and cut his price target for the stock to $3.50 from $5.<\/p>\n \u201cOur underperform rating is based on NYCB\u2019s high exposure to [New York City] rent-regulated multifamily loans, which we believe are under stress, and represent 25% of NYCB\u2019s total loans, which is the highest in our J.P. Morgan\u2019s Alexopoulos said the bank continues to pose risks and that investors should remain on the sidelines.<\/p>\n \u201cWhile it doesn\u2019t appear that the incidence of weakness in controls being identified would pose limitations on the company\u2019s business\/lending activities or result in a material increase in costs beyond what has been already identified along with [fourth-quarter 2023] results, this new information further elevates the uncertainty surrounding the company,\u201d Alexopoulos said.<\/p>\n Piper Sandler analyst Mark Fitzgibbon downgraded New York Community Bancorp to neutral from overweight, saying that \u201cthe whack-a-mole at New York Community continues.\u201d<\/p>\n The bank\u2019s latest disclosure raises concerns \u201cthat there could be more issues coming down the pike for the company,\u201d Fitzgibbon said.<\/p>\n New York Community Bancorp\u2019s sole bond offering \u2014 a $300 million bond it issued in 2018 \u2014 also traded sharply lower. <\/p>\n <\/p>\n New York Community Bancorp\u00a0said it had appointed Alessandro DiNello as its new president and chief executive effective immediately, after Thomas Cangemi resigned from the roles after 27 years at the company. DiNello, the former chief executive of Flagstar, was appointed as the bank\u2019s executive chair earlier this month, having previously served as nonexecutive chair of its board. Cangemi will remain on the board.<\/p>\n The developments marked the latest turn in a roller-coaster ride for the bank since it acquired the distressed Signature Bank, a former S&P 500 component, in a deal brokered by the FDIC following the collapse of Silicon Valley Bank one year ago.<\/p>\n Last summer, the bank reported a roughly 150% increase in second-quarter profit, which sent its stock higher<\/a>.<\/p>\n Then the stock lost a third of its value on Jan. 31, in the largest one-day slide in its history,<\/a> when the bank reported a surprise-fourth-quarter loss, a dividend cut and costs tied to two loans, one on an office property and the other a multifamily-property deal.<\/p>\n That triggered selling in other regional banks in early February as New York Community Bancorp\u2019s stock price fell to levels not seen since the 1990s. Insiders then acquired stock at discounted prices, and the stock had been fighting its way back for the past couple of weeks. Among the buyers was billionaire George Soros, who bought about 1 million shares<\/a>.<\/p>\n New York Community Bancorp boosted its loan-loss reserves by 790%, or $490 million, in the fourth quarter from the previous quarter, more than any other bank in its class<\/a>, as it faced potential challenges in its office and multifamily-loan portfolio.<\/p>\n When the bank bulked up by buying Signature Bank, it reached a size that triggered higher capital requirements by regulators. This led the bank to set aside more money for its balance sheet.<\/p>\n Also read: <\/strong>New York Community Bancorp\u2019s stock crushed on surprise loss, dividend cut and cost of two loans<\/a><\/p>\n
\n WFC,
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\n and at AmSouth Bancorporation, US Bank and Regions Bank. <\/p>\n
coverage,\u201d Chiaverini said.<\/p>\n\n <\/div>
NYCB\u2019s bond price is down sharply after the company\u2019s material-weakness disclosure.<\/h4>\n
\n BondCliQ Media Services
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