Not for the first time this young year, troubled lender New York Community Bancorp (NYSE: NYCB) had a lousy day on the stock market Tuesday. The company’s shares lost 22% of their value, plunging to a more than 25-year low. This was on a day when the S&P 500 index landed in positive territory, creeping up at a 0.2% pace.
Apparent regulatory pressure
The latest blow to New York Community Bancorp came after hours on Monday. A Bloomberg report said the bank’s surprise dividend cut and sharply higher provisioning it showed in its fourth quarter were directly influenced by pressure from a federal regulator.
Citing unidentified “people with direct knowledge of the matter,” Bloomberg said that New York Community Bancorp executives had held “behind-the-scenes conversations” with officials at the government’s Office of the Comptroller of the Currency (OCC), which is the branch of the Department of the Treasury tasked with supervising the nation’s banks and federal savings associations.
Neither the bank nor the OCC had publicly commented on the Bloomberg story as of this writing.
On Monday, New York Community Bancorp had confirmed media reports that Chief Risk Officer Nicholas Munson had departed the company. According to Bloomberg, his departure actually occurred “in the months before” the bank reported the dividend cut and the increase in provisioning when reporting its fourth-quarter earnings. Former chief audit executive Meagan Belfinger also left the bank at that time, Bloomberg wrote.
New York Community Bancorp did not publicly announce the departure of either executive at the time they left, which raises concerns about its transparency with investors. The alleged meetings with an important federal agency that Bloomberg reported are also cause for concern. It seems there’s much more to the story of the bank’s sudden decline in fortunes, so investors would be wise to avoid it for now.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why New York Community Bancorp Stock Plummeted Today was originally published by The Motley Fool