The mood was practically giddy when the heads of two regional banks hosted a town hall in the spring of 2021.
The industry’s long drought in mergers was ending, and two lenders below the public’s radar, New York Community Bancorp and Flagstar, were poised to become more formidable by joining forces.
“I look at it as a blank page,” NYCB’s Thomas Cangemi said. “I call it a Picasso that we’re going to paint together.”
Three years later, the lender known for catering to New York City landlords is in serious trouble. Last week, it revealed major weaknesses in its ability to monitor risks and replaced Cangemi as CEO with the second fiddle at that town hall, Flagstar’s Sandro DiNello. Investors are worried the new boss will set aside even more money to cover souring loans, on top of a $552 million hit that shocked the market in January. Credit raters have slashed it to junk and its shares have cratered 73% this year.
Max Abelson | Yahoo Finance