New York Community Bancorp announced on Wednesday that it has appointed banking expert Alessandro DiNello as its executive chairman. DiNello has served on the bank’s board since it acquired Flagstar Bank in 2022. Following the announcement, the bank’s shares saw an approximate 8.6% increase in pre-market trading.
New York Community Bancorp Appoints a New Executive Chair
The rally higher helped mitigate the recent downturn triggered by the bank’s disclosure of significant provisions for potential bad loans in the commercial real estate sector, an unexpected quarterly loss, and a reduction in dividend payments.
The decline in shares previously erased around 60% of the bank’s market value, bringing it down to just over $3 billion. It also led to downgrades in credit ratings and negatively affected the stock prices of other regional banks. In response, over a dozen financial analysis firms have either lowered their price targets for NYCB or downgraded their stock ratings.
Following the merger with Flagstar in December 2022, where DiNello served as CEO for nearly ten years, the bank announced last year that he would take on the role of non-executive chair for two years.
Shares of New York Community Bancorp dropped 9.5% in pre-market trading on Wednesday as the market anticipated another difficult session. This downturn follows analysts highlighting concerns over “governance risks” within the bank.
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The move away from NYCB’s stock accelerated after the bank unexpectedly reported a quarterly loss last week, along with substantial provisions for likely nonperforming loans in the commercial real estate sector, causing industry-wide repercussions.
On Tuesday, NYCB announced its search for new candidates to fill the roles of Chief Risk Officer (CRO) and Chief Audit Executive, following reports by Bloomberg about the recent departures from these positions. In the interim, NYCB has stated that these critical roles are being temporarily managed by “qualified personnel.”
J.P. Morgan, which had previously kept its “overweight” rating on the bank amidst last week’s earnings turbulence, expressed surprise that NYCB had not directly communicated the departures, especially of the CRO. As a result, the investment bank has downgraded NYCB’s stock to “neutral” and significantly reduced its price target from $11.5 to $5.5.
