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A year after Silicon Valley Bank failed, another regional lender flashes warning signs

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Regional lender New York Community Bank finds itself in an apparently worsening predicament, just as the anniversary of last year’s banking turmoil nears.


Shares of the troubled lender plunged 25% Friday to below $4 apiece after NYCB restated recent quarterly earnings lower by $2.4 billion, formally replaced its CEO and delayed the release of a key annual report.


The most worrying development, though, is directly tied to investors’ fears about commercial real estate and shortfalls the bank reported in a key aspect of its business: NYCB said that poor oversight led to “material weaknesses” in the way it reviewed its portfolio of loans.


The disclosure is a “significant concern that suggests credit costs could be higher for an extended period,” Raymond James analyst Steve Moss said Thursday in a research note. “The disclosures add to our concern about NYCB’s interest-only multi-family portfolio, which may require a long workout period unless interest rates decline.”