Punish executives who caused the near collapse of New York Community Bancorp, shareholders say
Shareholders expressed displeasure with the leadership of New York Community Bancorp for recent troubles. Credit: Rick Kopstein
Shareholders of New York Community Bancorp on Wednesday asked for punishment for the executives who brought the Hicksville-based lender to the brink of collapse earlier this year.
“Given everything that has transpired since the beginning of the year, what has been done to hold people accountable?” a shareholder asked during the bank’s annual meeting of shareholders.
Joseph M. Otting, appointed CEO and president in March by the investor group that bailed out NYCB, said seven of its nine top executives had been replaced and many of the nine-member board of directors were new.
“Also, employees within the organization were held accountable for material weakness [in NYCB’s portfolio of commercial loans] and other items,” he said during the 45-minute virtual meeting.
NYCB’s branches now use the Flagstar Bank name after the Roslyn Savings Bank, Queens County Savings Bank, New York Community Bank and other brand names were retired in February. On Wednesday, Otting said there were no plans to replace the NYCB name or stock ticker symbol.
Beginning in February, the bank’s stock price tanked — going from $10 per share to under $3 — on news of a $2.4 billion charge against 2023 earnings because of troubled loans for office buildings and rent-regulated apartment buildings. The unexpected charge turning the projected profit into a loss.
On Wall Street, NYCB was being compared with Silicon Valley Bank and Signature Bank, both of which failed last year and were taken over by government regulators. NYCB eventually purchased some Signature assets.
The stock meltdown caused the Feb. 23 resignation of CEO and president Thomas R. Cangemi, who had led NYCB for three years and worked there for 27 years. He was succeeded temporarily by board member Alessandro “Sandro” DiNello who then helped arrange a $1.1 billion cash infusion from the investors’ group in early March.
The group was led by Steven Mnuchin, U.S. Treasury secretary under former President Donald Trump. Mnuchin had Otting, the comptroller of the currency under Trump, named NYCB’s new CEO and president. On Tuesday, Otting also became executive board chairman succeeding DiNello, who remains a board member.
During Wednesday’s meeting, shareholders questioned the lucrative grants of common stock and preferred stock to the investors’ group.
If the group hadn’t stepped in, “the chances of the company surviving would have been in peril,” Otting said.
Shareholders approved nine of the 11 resolutions before them on Wednesday, including a reverse 1-to-3 stock split to reduce the number of shares and hopefully boost their price.
“This perhaps allows certain investors to invest in the stock and increase stock demand that might not otherwise exist at a lower stock price,” said NYCB chief financial officer Craig Gifford.
NYCB shares closed down 2 cents, or less than 1%, to $3.11 per share in New York Stock Exchange trading on Wednesday.
Two resolutions that would have replaced a supermajority vote to change corporate policy with a simple majority failed.
Shareholders of New York Community Bancorp on Wednesday asked for punishment for the executives who brought the Hicksville-based lender to the brink of collapse earlier this year.
“Given everything that has transpired since the beginning of the year, what has been done to hold people accountable?” a shareholder asked during the bank’s annual meeting of shareholders.
Joseph M. Otting, appointed CEO and president in March by the investor group that bailed out NYCB, said seven of its nine top executives had been replaced and many of the nine-member board of directors were new.
“Also, employees within the organization were held accountable for material weakness [in NYCB’s portfolio of commercial loans] and other items,” he said during the 45-minute virtual meeting.
Joseph M. Otting, in 2020, who was appointed CEO and president in March by the investor group that bailed out NYCB, tried to assuage shareholders' concerns. Credit: AP/Alex Brandon
NYCB’s branches now use the Flagstar Bank name after the Roslyn Savings Bank, Queens County Savings Bank, New York Community Bank and other brand names were retired in February. On Wednesday, Otting said there were no plans to replace the NYCB name or stock ticker symbol.
Beginning in February, the bank’s stock price tanked — going from $10 per share to under $3 — on news of a $2.4 billion charge against 2023 earnings because of troubled loans for office buildings and rent-regulated apartment buildings. The unexpected charge turning the projected profit into a loss.
On Wall Street, NYCB was being compared with Silicon Valley Bank and Signature Bank, both of which failed last year and were taken over by government regulators. NYCB eventually purchased some Signature assets.
The stock meltdown caused the Feb. 23 resignation of CEO and president Thomas R. Cangemi, who had led NYCB for three years and worked there for 27 years. He was succeeded temporarily by board member Alessandro “Sandro” DiNello who then helped arrange a $1.1 billion cash infusion from the investors’ group in early March.
The group was led by Steven Mnuchin, U.S. Treasury secretary under former President Donald Trump. Mnuchin had Otting, the comptroller of the currency under Trump, named NYCB’s new CEO and president. On Tuesday, Otting also became executive board chairman succeeding DiNello, who remains a board member.
During Wednesday’s meeting, shareholders questioned the lucrative grants of common stock and preferred stock to the investors’ group.
If the group hadn’t stepped in, “the chances of the company surviving would have been in peril,” Otting said.
Shareholders approved nine of the 11 resolutions before them on Wednesday, including a reverse 1-to-3 stock split to reduce the number of shares and hopefully boost their price.
“This perhaps allows certain investors to invest in the stock and increase stock demand that might not otherwise exist at a lower stock price,” said NYCB chief financial officer Craig Gifford.
NYCB shares closed down 2 cents, or less than 1%, to $3.11 per share in New York Stock Exchange trading on Wednesday.
Two resolutions that would have replaced a supermajority vote to change corporate policy with a simple majority failed.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
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