NYCB shares slump after lender flags "material weakness" in internal controls

Investing.com -- Shares in New York Community Bancorp (NYSE:NYCB) tumbled in premarket U.S. trading on Friday after the embattled regional lender said it had found "material weaknesses" in company controls related to an internal loan review.

In a regulatory filing on Thursday, NYCB said that although it was conducting an ongoing investigation, it expects to disclose in its annual report that controls over its financial reporting "were not effective" as of the end of last year.

The firm added that it will provide a plan to address these issues when it files its 2023 report with the U.S. Securities and Exchange Commission in 15 days.

Concerns have been swirling around NYCB -- and the relative health of similar regional banks -- since it announced a fourth-quarter loss in January that stemmed in large part from elevated provisions linked to commercial real estate loans. On Thursday, NYCB revealed that the fourth-quarter loss was actually over 10 times greater than what it had previously stated.

The company also announced an executive-level shake-up, with Alessandro DiNello succeeding Thomas Cangemi as President and Chief Executive Officer. Marshall Lux, most recently a senior partner at Boston Consulting Group, was also tapped to serve as the new President Director of NYCB's board.

"While we’ve faced recent challenges, we are confident in the direction of our bank and our ability to deliver for our customers, employees and shareholders in the long-term," DiNello said in a statement.

NYCB's market value would fall by around $1 billion should the premarket losses hold through the session.