New York Community Bancorp Struggles A Year After Buying Failed Bank

A New York bank is under severe pressure nearly one year after absorbing a significant portion of another bank located 30 miles (50 kilometers) away that had failed, as reported by Michelle Chapman for the Associated Press (AP).

The bank reported a surprise loss of $252 million for the fourth quarter, including a provision for credit losses of $552 million, much of it tied to real estate. I Photo: Tdorante10 Wikimedia Commons

Shares of New York Community Bancorp plunged after longtime CEO Thomas Cangemi, who has spent much of this year reassuring investors about the bank’s viability, abruptly stepped down, and the bank postponed a mandatory annual financial disclosure to US regulators due to "material weakness" tied to loans.

Commercial banks like New York Community Bancorp have been severely affected by falling values in the commercial real estate market after the pandemic disrupted work in offices for millions.

The bank reported a surprise loss of $252 million for the fourth quarter, including a provision for credit losses of $552 million, much of it tied to real estate. Its credit rating was downgraded to "junk" by Moody’s.

This pressure has been compounded at the Hicksville, New York, bank because it grew massively almost overnight after absorbing the failed Signature Bank. That put New York Community Bancorp at a new level that requires higher regulatory scrutiny, a transition that has been rocky.

The filing with the US Securities and Exchange Commission (SEC) included a $2.4 billion goodwill impairment charge, meaning that the bank is reassessing the value of its assets.

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