May 29, 2024
NY Community Bank Drops 40% After $260M Loss
Latest Cryptocurrency News

NY Community Bank Drops 40% After $260M Loss

New York Community Bancorp (NYCB), which acquired the failed Signature Bank in 2023, witnessed a share price decline after reporting a $260 million loss in Q4 2023 and reducing dividends. The collapse of Signature Bank led to its takeover by the New York Department of Financial Services (NYDFS) in March 2023, with NYCB purchasing non-crypto deposits and loans. The FDIC announced that Signature Bank’s branches would operate as Flagstar Bank, a NYCB subsidiary.

NYCB’s stock initially rose following the acquisition, reaching $9.19 on March 21 and hitting a high of $13.87 on July 31. CEO Thomas Cangemi considered Signature Bank’s assets and liabilities strategically attractive, strengthening the balance sheet. However, a recent sell-off reversed the stock’s gains. In Q4 2023, NYCB reported a $260 million loss, prompting decisive actions to build capital, including reducing the quarterly common dividend to $0.05 per share.

The announcement led to a stock drop from $10.37 to a low of $6.34 on Jan. 31, slightly recovering to $7.12 and currently standing at $6.49. FDIC chairman Martin Gruenberg attributed Signature Bank’s collapse to a failure to understand crypto risks in May 2023. NYDFS superintendent Adrienne Harris disagreed, stating the collapse had nothing to do with digital assets on April 5, 2023. U.S. Senator Cynthia Lummis criticized former Signature Bank executive Scott Shay for blaming the collapse on crypto, emphasizing his failure to accept responsibility.

This financial downturn highlights the challenges and controversies surrounding failed banks and their dealings with cryptocurrency, impacting stock prices and regulatory perceptions. The aftermath of Signature Bank’s collapse continues to be a subject of scrutiny and differing perspectives within the financial and regulatory spheres.

The fluctuating stock performance of NYCB reflects the complexities and consequences of merging with a failed crypto-friendly bank, shedding light on the broader landscape of financial institutions navigating the evolving crypto industry.

Image by ededchechine on Freepik

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