New York Community Bank reported an additional $2.4 billion in losses with the resignation of its CEO

Community Bank of New York, a lender reeling from mounting real estate-related losses, shared several new bad pieces of news on Thursday: Its fourth-quarter losses were $2.4 billion worse than it previously reported. Its CEO and allied board member are out; The bank identified what it called “material weaknesses in internal controls.”

The sweeping disclosures, made in securities filings late Thursday, were an uncomfortable reminder of the price the bank pays for a rapid expansion strategy that included acquiring an ailing competitor less than one year ago. They sent the bank's already stressed shares another tumble, down more than 20 percent in after-hours trading. The stock has already fallen 54 percent this year.

These ugly developments were the last thing the New York central bank needed after weeks of trying to allay investors' concerns about its financial health. For weeks, there have been questions about the depth of its losses on investments and loans tied to both office buildings and apartments — an area of ​​concern to banks in general, but one the New York central bank is particularly focused on.

Despite its name, the bank has a national presence, partly due to its acquisition of a large portion of Signature Bank, which collapsed during last year's banking crisis. Headquartered on Long Island, New York Mercantile Bank operates more than 400 branches under brands including Flagstar Bank throughout the Midwest and elsewhere. Flagstar is one of the nation's largest residential mortgage servicers, making the bank particularly vulnerable to any weakness in the housing market in an era of persistently high interest rates.

In January, New York Commercial Bank shocked investors and peers when it unexpectedly reported a $252 million loss for the fourth quarter, cut its dividend and set aside a large amount of reserves to cover any future losses. New York Commercial Bank's disclosures on Thursday mean it took an additional $2.4 billion decline for the fourth quarter.

The bank's woes resurface concerns that arose a year ago about how smaller lenders will weather the sharp rise in interest rates since March 2022, although the New York central bank's disclosure last month did not trigger a widespread sell-off.

Last spring, Silicon Valley Bank's financial health problems led to a mass exodus of depositors that ended with its collapse as customers withdrew their money. That spooked investors at other banks that had large portions of deposits that were not protected by the Federal Deposit Insurance Corporation, which backs accounts up to $250,000.

By the time the dust settled, three banks had failed, including First Republic, which was the second-largest U.S. bank to fail by assets. Silicon Valley Bank was sold to First Citizens Bank, Signature to NYCB, and First Republic to JPMorgan Chase.

The New York Mercantile Bank had $83 billion in deposits and more than $100 billion in total assets as of this month. Thursday's filings did not provide more recent numbers, and a spokeswoman did not respond to a request for comment.

The extent of the problems facing the bank – past and future – remains unclear. Its “controls, procedures and internal control over financial reporting were not effective as of December,” its new disclosures said. January 31, 2023,” and the bank promised future updates.

The bank's new CEO, Alessandro Dinello, was appointed executive chairman of its board of directors this month. Mr. DiNello, who ran Flagstar before NYCB bought it in 2022, replaces Thomas R. Cangemi, who had been with the company for nearly three decades. Board member who did not support Dr. DiNello's appointment as CEO resigned around the same time.