Updated March 12th, 2024 at 07:56 IST

NYCB finalises $1 billion capital infusion deal, announces reverse stock split

Following these developments, NYCB experienced a 5.8% surge in its share price during extended trading on Monday, reaching $3.44.

Reported by: Business Desk
NYCB capital infusion | Image:Wikimedia Commons
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NYCB capital infusion: The New York Community Bancorp successfully concluded a significant capital infusion deal worth $1 billion, as disclosed by the company on Monday. The transaction, which had been agreed upon last week with an investor group, marks a pivotal moment for the bank amidst ongoing strategic adjustments.

Joseph Otting, the former Comptroller of the Currency during the Trump administration, assumed the role of NYCB's chief executive officer last week, coinciding with the infusion of capital from a consortium of investors, which notably includes former US Treasury Secretary Steven Mnuchin.

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In tandem with the capital infusion, NYCB has announced a one-for-three reverse stock split of its common stock, subject to shareholder approval. Furthermore, the bank has appointed Otting, Mnuchin, Milton Berlinski, and Allen Puwalski as new members of its board of directors, consolidating the board to 10 members.

Following these developments, NYCB experienced a 5.8 per cent surge in its share price during extended trading on Monday, reaching $3.44.

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In addition to these structural changes, NYCB indicated that it had received interest from non-bank entities for some of its loans. The bank plans to unveil a new business strategy in April, following recent challenges, including a reduction in dividends and a decline in deposits.

NYCB's stock faced significant setbacks earlier this year, with a surprise quarterly loss and a substantial dividend reduction in January. In late February, the bank disclosed "material weakness" in internal controls, exacerbating concerns. However, investment firms such as Hudson Bay Capital, Reverence Capital Partners, Citadel Global Equities, along with institutional investors and certain members of NYCB's management, expressed confidence in the bank's prospects through their participation in the equity investment.

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The capital raise, which involves stocks and warrants, is expected to result in investors owning approximately 39.6 per cent of NYCB on a fully-diluted basis.

Despite these positive developments, several Wall Street analysts caution that NYCB's turnaround may be protracted, citing ongoing pressures on profits stemming from efforts to bolster reserves for potential loan losses in its commercial real estate portfolio.

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(With Reuters inputs.)

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Published March 12th, 2024 at 07:56 IST