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New York Community Bancorp Shares Plummet 40% Following $260 Million Loss Report

New York Community Bancorp (NYCB) saw a significant drop in its shares after reporting a $260 million loss in the fourth quarter of 2023 and reducing its dividend.

New York Community Bancorp (NYCB) has seen a significant decline in its share price following the release of its financial report for the fourth quarter of 2023. The report revealed that NYCB incurred a substantial loss of $260 million during the quarter, a stark contrast to the $164 million gain reported in the same period in 2022.

NYCB's troubles began in March 2023 when Signature Bank, a crypto-friendly institution, officially closed down and was taken over by the New York Department of Financial Services (NYDFS). NYCB stepped in to purchase the non-crypto deposits and loans of the failed bank, viewing it as a strategic and financially attractive opportunity.

The acquisition initially boosted NYCB's stock price, with shares rising to $9.19 on March 21 and reaching a high of $13.87 on July 31. NYCB President and CEO Thomas Cangemi praised the acquisition, stating that it strengthened the bank's balance sheet by adding low-cost deposits and a middle-market business supported by over 130 private banking teams.

However, the recent financial report, revealing a substantial loss for the fourth quarter of 2023, sent NYCB's stock plummeting. NYCB's leadership has taken actions to build capital, including reducing the quarterly common dividend to $0.05 per common share.

Following the announcement of the loss and dividend reduction, NYCB's stock price dropped from $10.37 to a low of $6.34 on January 31 before partially recovering to $7.12 at the time of writing.

The collapse of Signature Bank in 2023 led to discussions about its exposure to cryptocurrency-related risks. FDIC Chairman Martin Gruenberg suggested that the bank's failure was linked to its failure to understand crypto risks. However, other parties disagreed, with NYDFS Superintendent Adrienne Harris asserting that the bank's collapse had nothing to do with its exposure to digital assets.

In response to criticism blaming the bank's collapse on crypto, United States Senator Cynthia Lummis criticized former Signature Bank executive Scott Shay for deflecting blame onto digital assets rather than accepting responsibility for the bank's failure.

NYCB's recent financial setback underscores the challenges it faces in the aftermath of the Signature Bank acquisition and the need to address the issues impacting its financial performance.