Lemm, Jr. v. New York Community Bancorp, Inc.

On May 7, 2024, Labaton Keller Sucharow was appointed lead counsel in a securities class action against New York Community Bancorp, Inc. (NYCB or the Company) (NYSE: NYCB) and certain NYCB officers (collectively, Defendants).  The action assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and U.S. Securities and Exchange Commission Rule 10b-5 promulgated thereunder, on behalf of all persons or entities who purchased or otherwise acquired NYCB securities between March 1, 2023 and January 30, 2024, inclusive (the Class Period).

NYCB is a large commercial-real estate lender in the New York City market area, where it specializes in rent regulated, non-luxury apartment buildings.  NYCB is engaged in several national businesses, including multi family lending, mortgage originations and servicing, and warehouse lending.  The Company’s specialty finance loans and leases are generally made to large corporate obligors that participate in stable industries nationwide, and its warehouse loans are made to mortgage lenders across the country.  On January 31, 2024, before the market opened, NYCB announced its fiscal fourth quarter 2023 financial results.  The Company reported a fourth quarter net loss of $252 million due to “a $552 million provision for loan losses,” which was “primarily attributable to higher net charge-offs” and “a significant increase in the ACL [allowance for credit losses]” coverage ratio.  Additionally, the Company disclosed that it would cut its quarterly dividend to $0.05 per common share.  The Company further explained that these actions were “necessary enhancements” after NYCB “crossed th[e] important threshold [of becoming a $100 billion bank] sooner than anticipated as a result of the Signature transaction.”  Crossing this $100 billion threshold subjected NYCB to enhanced banking standards and requirements.  On this news, NYCB’s stock price fell $3.90, or 37.57%, to close at $6.47 per share on January 31, 2024, on unusually heavy trading volume.

The Complaint alleges the Company misled investors by failing to disclose to investors: (1) that the Company was experiencing higher net charge-offs and deterioration in its office portfolio; (2) that, as a result, NYCB was reasonably likely to incur higher loan losses; (3) that, as a result of the foregoing and NYCB’s status as Category IV bank, the Company was reasonably likely to increase its allowance for credit losses; (4) that the Company’s financial results would be adversely affected; (5) that, to preserve capital, the Company would reduce quarterly common dividend to $0.05 per common share; and (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

U.S. Magistrate Judge James R. Cho appointed Boston Retirement System lead plaintiff in the consolidated action because Boston Retirement System demonstrated that its chief rival for lead plaintiff status, which suffered a greater financial loss, had “atypical trading patterns” that subjected it to unique defenses and rendered it incapable of adequately representing the class.

The case is Lemm, Jr. v. New York Community Bancorp, Inc., No. 1:24-cv-00903 (E.D.N.Y.).  Labaton Keller Sucharow represents lead plaintiff Boston Retirement System.