SAN DIEGO, Jan. 10, 2025 (GLOBE NEWSWIRE) -- A class action lawsuit has been filed on behalf of all persons who acquired New York Community Bancorp, Inc. (“NYCB”) common stock in exchange for FlagstarBank N.A. (“Flagstar”) securities in connection with the December 2022 merger between the two companies, charging the combined company, Flagstar Financial, Inc., and certain of its current and former officers and directors with violations of the federal securities laws (collectively, “Defendants”).
Investors that acquired NYCB shares pursuant to the merger have until February 18, 2025 to seek appointment as lead plaintiff of the Flagstar class action lawsuit.
If you acquired NYCB shares in the Flagstar merger, and you wish to obtain additional information or serve as lead plaintiff in this lawsuit, you may submit your information and contact us here: https://dicellolevitt.com/securities/new-york-community-bancorp-2/.
You can also contact DiCello Levitt attorneys Brian O’Mara or Hani Farah by calling (888) 287-9005 or emailing investors@dicellolevitt.com. Those who inquire by email are encouraged to include their mailing address, telephone number, and the number of shares purchased.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice.
Case Allegations
Prior to the merger, Flagstar was a holding company for Flagstar Bank, a federally chartered stock savings bank with $29.4 billion in assets, while NYCB, one of the nation’s largest regional banks, specialized in commercial real estate lending. When the banks merged, Flagstar stockholders received NYCB shares in exchange for their Flagstar shares under a stock-for-stock exchange agreement. NYCB’s corporate name was changed to Flagstar Financial, Inc. in October 2024.
The Flagstar class action lawsuit alleges that the offering documents promoting the merger contained materially false and misleading statements, including overstating NYCB’s income from operations, goodwill, and total assets, while understating expenses and losses. Furthermore, Defendants misrepresented the quality and effectiveness of NYCB’s underwriting and risk management systems, stating they were “rigorous,” “stringent,” and “conservative,” despite significant weaknesses and risks in its loan portfolio.
Following the merger, the true state of NYCB’s financial condition started to emerge. On January 31, 2024, NYCB announced a $252 million net loss for the fourth quarter of 2023 due to a $552 million provision for loan losses, far exceeding analyst expectations. This announcement led to a 38% drop in NYCB’s stock price. Subsequent revelations included ineffective internal controls, poorly managed risk assessments, and material weaknesses in internal loan reviews. These issues caused further stock price declines, credit rating downgrades, and leadership changes, including executive removals and restructuring.
By March 2024, NYCB reported a $2.4 billion impairment of goodwill from historical transactions and disclosed its systemic internal control failures. These developments caused NYCB’s stock price to plummet, ultimately leading to halted trading and significant losses for shareholders, including Flagstar investors that received NYCB shares in the merger.
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