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SAN DIEGO, Jan. 10, 2025 (GLOBE NEWSWIRE) -- A class action lawsuit has been initiated for the benefit of all individuals who exchanged their Flagstar Bank N.A. ("Flagstar") securities for common stock of New York Community Bancorp, Inc. ("NYCB") during the merger that took place in December 2022. The lawsuit accuses the merged entity, Flagstar Financial, Inc., along with several of its current and former executives and board members, of breaching federal securities regulations (hereinafter referred to as "Defendants").
Investors who obtained NYCB shares as a result of the merger have until February 18, 2025, to apply for the role of lead plaintiff in 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 [email protected]. Those who inquire by email are encouraged to include their mailing address, telephone number, and the number of shares purchased.
No class has yet received certification. Until a class is officially certified, you do not have legal representation unless you hire an attorney yourself. You have the option to choose your own legal counsel.
Allegations in the Case
Before the merger took place, Flagstar operated as a holding company for Flagstar Bank, which was a federally chartered stock savings bank boasting $29.4 billion in assets. Meanwhile, NYCB, recognized as one of the largest regional banks in the United States, focused primarily on commercial real estate lending. Following the merger, Flagstar shareholders exchanged their shares for NYCB shares as part of a stock-for-stock exchange agreement. In October 2024, the corporate name of NYCB was officially changed to Flagstar Financial, Inc.
The class action lawsuit against Flagstar claims that the documents used to promote the merger included significant falsehoods and misleading information. This includes inflated figures regarding NYCB's operational income, goodwill, and overall assets, alongside a downplaying of expenses and losses. Additionally, the defendants allegedly misrepresented the quality and efficiency of NYCB's underwriting and risk management systems, describing them as "rigorous," "stringent," and "conservative," even though there were considerable weaknesses and risks present in its loan portfolio.
After the merger, the actual financial health of NYCB began to come to light. On January 31, 2024, the bank reported a staggering net loss of $252 million for the fourth quarter of 2023, primarily driven by a $552 million provision for loan losses, which significantly surpassed analysts' predictions. This news triggered a dramatic 38% plunge in NYCB's stock value. Following this, additional disclosures revealed shortcomings in internal controls, inadequate risk management practices, and significant deficiencies in the internal loan review process. These problems contributed to further declines in stock prices, downgrades in credit ratings, and shifts in leadership, including the dismissal of top executives and organizational restructuring.
As of March 2024, NYCB announced a $2.4 billion impairment of goodwill related to past transactions and revealed serious deficiencies in its internal controls. These revelations triggered a sharp decline in NYCB's stock price, resulting in halted trading and considerable losses for shareholders, notably including Flagstar investors who had received NYCB shares as part of the merger.
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