A class action lawsuit was filed against New York Community Bancorp (NYSE:NYCB) on February 6, 2024. The plaintiffs (shareholders) alleged that they bought New York Community Bancorp stock at artificially inflated prices between March 1, 2023 and January 30, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought NYCB stock during that period can learn about joining the lawsuit here: https://zlk.com/pslra-1/new-york-community-bancorp-lawsuit-submission-form?wire=16.
New York Community Bancorp is a commercial lender focused on providing multi-family loans on rent-regulated, non-luxury apartment buildings. NYCB also offers other services, including mortgage originations and servicing, and warehouse lending. The bank holding company has grown over the years through a series of acquisitions, including Flagstar Bancorp, Inc. and Signature Bank.
The plaintiffs maintain that the company and two of its senior officers deceived investors by repeatedly lying and withholding vital information about the company’s business practices and prospects during the Class Period. Importantly, the lawsuit maintains that the defendants omitted truthful information about the bank’s net charge-offs and the effect on the company’s office portfolio.
The matter became clear on January 31, 2024, when the company announced its Q4 FY23 results. NYCB reported a net loss of $252 million, blaming it on a $552 million provision for loan losses, stemming mainly from higher net charge-offs and a substantial rise in the ACL (allowance for credit losses) coverage ratio.
In stark contrast, in an annual report filed at the beginning of the Class Period, NYCB stated that its asset quality remained strong and the increase in NPAs (non-performing assets) was mainly related to the Flagstar acquisition. Also, in an April 2023 press release, NYCB stated that “Net charge-offs were zero during first quarter 2023 compared to $2 million during first quarter 2022 and $1 million during fourth quarter 2022.”
As per the class action lawsuit, New York Community Bancorp caused NYCB stock to trade at artificially inflated prices by knowingly and recklessly omitting truthful information about its business performance.
Notably, on January 31, NYCB stock collapsed 37.7%, causing massive damage to shareholders’ returns.
