NYCB: US Office & Resi Are Key Issues, Contagion Limited To Small Group Of Issuers

NYC Bancorp (NYCB US) misses its annual report deadline and dumps the CEO, finding new inadequacies in risk controls, apparently only since 31-Jan results. Aside from schadenfreude, this is not a EUR issuer, but the credit issues raised here look idiosyncratic rather than systemic. Unhelpful for issuers like Aareal, PBB, Helaba, BAER, Canadian and US regional banks but contagion should be limited in the near-term.

• Annual report filing: NYCB reported unaudited results on 31-Jan but, yesterday, indicated it is not able to file its 10K (audited annual report). This both relates to impairments now needed on the Signature Bank deal (surprise) but also it’s found “material weaknesses” in risk assessment and “ineffective oversight”. Mgmt expects to meet the 15-day grace period allowed, so filing by 15-Mar-24, we believe.
• Management change: Alessandro Dinello is the new CEO, having been non-exec chair since 2022 (he was CEO of Flagstar, which NYCB acquired) and exec chair since 7-Feb. Thomas Cangemi steps down but remains on the board. In addition, Marshall Lux (an ex-mgmt consultant who did a risk job at Chase Consumer for 2yrs in the noughties) is the new “presiding director”.
• Missing an SEC deadline and dumping the CEO is not a good look. The over-complex board composition does not look like best practice to us either. The concentrated exposures to US office and rent-controlled residential are the key problems and this has been examined with almost every bank that’s reported through this results season already.