NYCB Shares Plunge Following $260M Loss and Dividend Cut After Signature Bank Acquisition
Summary:
Following its acquisition of the defunct crypto-friendly Signature Bank last year, New York Community Bancorp (NYCB) suffered a significant drop in shares after revealing a $260 million loss for Q4 2023, as well as a decrease in its dividend. The company's CEO, Thomas Cangemi, attributed this to "decisive actions to build capital." The news led to a 40% slump in NYCB shares. This development comes amid disagreements about whether Signature Bank's failure was related to its involvement with digital assets.
In a surprising turn of events, New York Community Bancorp (NYCB) shares took a major plunge after the banking institution disclosed a loss amounting to $260 million in Q4 2023, alongside a decrease in its dividend. The rout comes after NYCB acquired the bankrupt crypto-friendly Signature Bank just last year. Signature Bank's operations officially came to a standstill in March 2023, following intervention by the New York Department of Financial Services (NYDFS). The NYCB jumped at the opportunity and purchased the insolvent bank's non-crypto loans and deposits a week after its closure.
On March 20, it was announced by the United States Federal Deposit Insurance Corporation (FDIC) that Signature Bank's 40 branches were to function under the aegis of Flagstar Bank. The latter is a completely owned subsidiary of NYCB.
NYCB's stocks experienced a surge to $9.19 on March 21 after the Signature Bank's takeover. They even ascended to a peak of $13.87 on July 31. NYCB's president and CEO, Thomas Cangemi, hailed the liabilities and assets of Signature Bank as "financially and strategically intriguing." He saw the purchase as a golden opportunity. He stated that it fortified their fiscal health by incorporating substantial amounts of affordable deposits and a medium-scale trade augmented by over 130 private banking units.
However, a hefty sell-off vanquished all gains procured from the Signature Bank acquirement. On Jan. 31, NYCB declared its Q4 2023 performance, revealing losses of $260 million for the quarter, a sharp decline from the $164 million profit in the same quarter of the previous year. Thomas Cangemi, president, and CEO of NYCB reported having taken decisive steps to accumulate capital, including slashing its quarterly common dividend to $0.05 per common share.
The fallout saw NYCB shares slump by 40% following the quarterly report's release. The shares plummeted from $10.37 to hit a low of $6.34 on Jan. 31 before slightly bouncing back to $7.12. As of the current writing time, the stock price stands at $6.49, as per data from the stock analysis website, TradingView.
In an update on the earlier episode, FDIC Chairman Martin Gruenberg opined in a May 2023 hearing that Signature Bank went under due to its lack of understanding of the risks linked to crypto. Others, however, repudiated any connection between digital assets and the bank's collapse. On April 5, Adrienne Harris, the superintendent of NYDFS, stated categorically that Signature Bank's failure had no links with its exposure to digital assets. Furthermore, in May, United States Senator Cynthia Lummis chastised former Signature Bank executive Scott Shay. She criticized the executive's attempt to pin the blame on digital assets for the bank's downfall and avoid shouldering any responsibility himself.
Published At
2/1/2024 11:58:13 AM
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