New York Community Bancorp was sued on Tuesday by shareholders in a proposed class action after the lender posted unexpected commercial real estate loan losses and slashed its dividend, causing its stock price to fall by more than half, Reuters reported. In a complaint filed in Brooklyn federal court, shareholders said the bank defrauded them by failing to disclose it would need to set aside more money for credit losses, and cut its dividend to preserve capital. Led by Tennessee resident Walter Lemm, shareholders said the bank had since last March instead offered an "unrealistically positive assessment of the Company and its financial well-being and prospects," inflating its stock price. New York Community Bancorp did not immediately respond to a request for comment. Chief Executive Thomas Cangemi and Chief Financial Officer John Pinto are also defendants. The Hicksville, N.Y.-based lender, which operates about 400 branches under several names, surprised investors last Wednesday with a $260 million fourth-quarter loss, as it set aside more money for losses in offices and apartment buildings. It attributed the 71% dividend cut to a need to boost capital to meet regulatory requirements, after its takeover last spring of the failed Signature Bank in a government-arranged auction boosted overall assets to well above $100 billion. New York Community Bancorp's problems have spurred concern about other midsized lenders exposed to commercial real estate.
