New York Community Bancorp (NYCB) announced on Feb. 7 that Alessandro DiNello would be acting as the bank’s new executive chairman. What it didn’t say until this Tuesday is that DiNello is now officially the boss, with NYCB’s CEO reporting directly to him.
The $116 billion lender clarified this change in a new filing yesterday with the Securities and Exchange Commission, noting that it had changed its bylaws to make it happen. The bank also disclosed that another board member, Toan Huynh, resigned on Feb. 6.
“DiNello will serve as the company’s principal executive officer and be the most senior executive officer of the company,” according to the filing.
The new disclosure is the latest twist in a two-week-long saga roiling one of the country’s top 30 banks. NYCB’s stock began falling on Jan. 31 when it surprised analysts by slashing its dividend and reporting a net quarterly loss of $252 million.
The Hicksville, N.Y.-based lender announced that day it had set aside $552 million for future loan losses, well above estimates, to account for weaknesses tied to office properties and multifamily apartments.
Pressure on the bank mounted as its stock continued to drop, and Moody’s downgraded NYCB’s credit rating to junk. The ratings agency cited “multi-faceted financial, risk-management and governance challenges” as its reasoning for the downgrade.
To reassure investors, the bank shared updated financial information showing it had gained deposits since the end of 2023 and that its liquidity was ample.
It also announced on Feb. 7 that DiNello had become executive chair, saying in a press release that DiNello “will work alongside” CEO Thomas Cangemi and other senior executives “to improve all aspects of the bank’s operations.”
DiNello was previously the CEO of Troy, Mich.-based Flagstar Bank, which NYCB purchased at the end of 2022. He had been serving as non-executive chair since the acquisition.
The decision to purchase Flagstar and absorb assets from the failed Signature Bank in 2023 pushed NYCB above $100 billion in assets, a threshold that brought heightened scrutiny from regulators. NYCB has said those tighter requirements are what led to decision to slash its dividend and set aside more for future loan losses.
DiNello used a Feb. 7 conference call to assure analysts that the bank had the situation under control. He said that “we’ll be laser-focused” on reducing the bank’s commercial real estate concentration and that NYCB’s No. 1 priority is “building confidence” with Wall Street about its deposits and liquidity.
The comments did briefly halt a free fall in the company’s stock that had been deepening with each day. After the stock began falling again DiNello and other board members purchased roughly $873,000 of NYCB shares, and that vote of confidence also helped push the stock up at the end of last week.
NYCB disclosed Tuesday that it had changed its bylaws to appoint DiNello as executive chair, with the CEO reporting to him. It also said that any removal of DiNello or failure to re-elect him as executive chair over the next 24 months will require the “affirmative vote of at least 75% of the entire board.”
It also said Huynh, who had served as a director of Flagstar since December 2020, notified the board of her decision to resign and “that she is pursuing other interests.”
The board approved the bylaw changes and DiNello’s appointment on Feb. 6. One analyst asked DiNello on the Feb. 7 conference call whether his move to executive chair had been planned the week before, when NYCB announced its dividend cut.
“I am not going to talk about what discussions we may have had,” DiNello said, and “I don’t know why that matters, when that decision was made.”
“The fact is we made that decision and here we are and we are ready to answer any questions you have about our plans for the organization going forward.”
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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