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New York Community Bancorp and its chief risk officer parted ways shortly before the regional US lender reported larger than expected losses from real estate lending that hammered the bank’s stock.
Nicholas Munson had been NYCB’s head of risk since 2019 but left the bank early this year, according to people familiar with the matter and his LinkedIn page, which was recently deleted.
Munson, who previously worked for GE Capital and Goldman Sachs, could not be reached for comment. NYCB said: “We can confirm that Nick Munson left the company in early 2024.”
NYCB declined to comment as to whether a new executive had stepped into the CRO role. The reasons for Munson’s departure could not be confirmed.
His departure, which the bank had not previously disclosed, sheds further light on the period leading up to NYCB’s announcement last week that it had suffered losses from real estate loans that were far higher than analysts had anticipated.
The fallout from NYCB’s losses, which coincided with similar disclosures by banks in Europe and Asia, hit the wider US regional banking sector and rekindled concerns about lenders’ exposure to US commercial real estate. Shares of most regional banks have yet to fully recover from the collapse of Silicon Valley Bank and a handful of other regional institutions in an industry crisis last year.
NYCB shares plunged nearly 40 per cent last week after it surprised investors with a loss for the final three months of 2023 and higher provisions for future loan losses, especially for lending tied to real estate.
The stock lost further ground on Monday, closing down more than 10 per cent, following comments over the weekend from Federal Reserve chair Jay Powell saying that some smaller and regional banks have “concentrated exposures” in commercial real estate that “are challenged”.
“It feels like a problem we’ll be working on for years,” Powell said about the exposure of regional banks to commercial real estate, particularly offices, that are less valuable than they were before the Covid-19 pandemic. “It’s a sizeable problem.”
In a research note on Monday, Bank of America analysts said they had “several conversations” with the NYCB management team over the past 48 hours.
“While there is clearly pressure on the bank’s commercial real estate (CRE) borrowers, we believe 4Q marked a confluence of events that led to a worse than expected update,” BofA banking analysts wrote in the note.
NYCB’s share price tumble has reawakened investor scrutiny of regional banks after turmoil swept across the industry early last year. SVB, whose failure sparked the crisis last March, was without a chief risk officer for much of 2022.
NYCB bought the operations of Signature Bank, another lender that collapsed last year, in a deal arranged by the Federal Deposit Insurance Corp.
