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In just two days, New York Community Bancorp’s stock lost nearly half its value. The stock price has fallen more than 70% since the beginning of the year.
new york
CNN
—
New York Community Bank (NYCB) stock drops 23% Monday, blow This was the lowest level since 1996.
The stock has struggled to recover since the embattled regional lender announced in a filing last week that it had identified “material weaknesses” in its management. NYCB said the issue cost shareholders $2.4 billion in the last quarter.
NYCB stock fell more than 25% on Friday, a day after the company unveiled new developments including a major shake-up of its management team. Alessandro Dinero, who was recently appointed Executive Chairman, will become the new President and CEO.
On Friday night, the stock price rose further after Fitch Ratings downgraded the quality of NYCB’s bonds to junk status, and Moody’s Investors Service further downgraded the bond into junk territory.
The Long Island-based bank announced last week that it was postponing the release of its annual financial disclosure requirements, known as a 10-K, as it focuses on addressing issues it has identified. The bank said it currently plans to file the 10-K by March 15. Unless the company provides additional updates, the 10-K will be the most up-to-date source of information on whether depositors are withdrawing their funds. The delay bears eerie similarities to First Republic Bank, which postponed reporting its quarterly results just before it collapsed last year.
The latest issue for the bank is that NYCB reports it will cut its dividend after reporting an unexpected loss of $252 million in the previous quarter, compared to a profit of $172 million in the fourth quarter of 2022. It happened just a month later. As a result, stock prices plummeted to record highs. Lowest level since 1997.
Amid the decline, the company sought to reassure depositors and investors by notifying them that deposits were stable and increased slightly in the final quarter of 2023.
Last week’s update raises new questions about the strength of the bank. The issues identified by management were related to “internal loan reviews resulting from ineffective supervision, risk assessment and monitoring activities.”
Such language echoes after-action reports from Silicon Valley Bank and Signature Bank, both of which went bankrupt a year ago.
NYCB stock has fallen more than 70% since the beginning of the year.
NYCB’s management crisis is having various effects on other regional bank stocks.
Valley National Bank (VLY) stock closed 5.6% lower on Monday, while Zions Bancorp (ZION) closed 1% higher. The KBW Regional Bank Index closed the day down 0.7%.
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