New York Community Bank Replaces CEO Amid $2.4B Earnings Hit
By Andrew Coen February 29, 2024 7:35 pm
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New York Community Bank late Thursday appointed Alessandro DiNello as its new CEO, replacing Thomas Cangemi, to try to steer the struggling financial institution back on course after it revealed a $2.4 billion hit to its earnings stemming from weaknesses in its loan review procedures.
The bank made the leadership announcement regarding DiNello, who earlier this month was named executive chairman, in the midst of its stock price plunging by 20 percent in after-hours trading. The move followed a regulatory filing announcing that the struggling bank suffered $2.4 billion impairment to its fourth-quarter financials. The company attributed the hit to a “goodwill” impairment connected to transactions from before the Global Financial Crisis of 2008.
“Management identified material weaknesses in the company’s internal controls related to internal loan review, resulting from ineffective oversight, risk assessment and monitoring activities,” the bank said in the filing.
The regional bank also said in a separate regulatory disclosure that more time was needed before filing an annual report to shareholders as it works toward improving its internal controls.
Cangemi stepped down from his roles as CEO and president after 27 years with the Long Island-based bank, which reported in its fourth-quarter earnings report in late January a provision for credit losses of $552 million. The distress, which was largely tied to commercial real estate loans, prompted Moody’s Investors Service to downgrade NYCB’s credit rating to junk level.
NYCB named DiNello as executive chairman on Feb. 6 and three days later purchased more than $200,000 of the company’s stock after it had fallen more than 50 percent for the year. DiNello previously served as non-executive chairman of the NYCB board of directors after joining the company following its 2022 acquisition of Flagstar Bank, where he was CEO and president.
“It is my mandate as president and CEO, alongside our board, to continue our transformation into a larger, more diversified commercial bank,” DiNello said in a statement. “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 changes we’re making to our board and leadership team are reflective of a new chapter that is underway.”
Andrew Coen can be reached at acoen@commercialobserver.com
