The new leader of New York Community Bancorp is making the case for shareholders to back steps needed to fully recapitalize the Hicksville company.
Joseph Otting, a former Comptroller of the Currency, said in a regulatory filing that addressing the $114 billion-asset company’s issues will not occur overnight – but it is doable.
“We understand that regaining your trust and confidence will take time and consistent results,” he said in the proxy statement for this year’s annual meeting.
“We are confident … that the steps we are taking are the right ones,” he added “We have a dedicated leadership team, a talented workforce, strong liquidity and a clear vision for the future. I believe we will emerge from this challenging period a more resilient, successful bank with a more diverse, balanced business model and a stronger risk management framework.”
Shareholders have been asked to approve a measure increasing the number of authorized shares to accommodate a roughly $1 billion infusion led by former Treasury Secretary Steven Mnuchin. A portion of the investment involves preferred stock that will eventually convert into common stock.
Otting provided more details on what led New York Community to report a large fourth-quarter loss, pointing to credit deterioration tied to changes in New York state legislation and on-site work policies, the company’s rent-regulated multifamily portfolio and its Manhattan-based office portfolio.
Otting also referred to unnamed challenges tied to the company’s growth through acquisitions.
“We are not taking these challenges lightly,” Otting said.
New York Community has conducted a deep-dive of it loan portfolio and re-rated certain loans, added $10 billion of on-balance sheet liquidity, and enhanced its internal audit and risk management frameworks.
“In addition, the board … was reconstituted with five new directors, including myself and former Treasury Secretary Mnuchin, who is now the board’s lead independent director,” Otting added.
Separately, the proxy statement revealed that New York Community fell short of certain criteria to pay short-term incentive awards and that former CEO Thomas Cangemi forfeited his unvested equity awards, which had a market value of roughly $9.5 million.
Cangemi, who stepped down in February, did receive a nearly $1.3 million base salary last year.