New York Community Bank shares double after it announces vital $1 billion investment and new leadership – rebounding from a 40% plunge earlier in the day
- Shares of New York Community Bank rallied after news of a $1 billion capital increase
- Shares had fallen 40 percent before the announcement
- The bank appointed the former comptroller of the currency as its new CEO
New York Community Bank’s stock price soared this afternoon after the struggling lender announced a $1 billion capital raise and new leadership.
NYCB agreed to a deal with several investment firms in exchange for equity in the regional bank, it announced Wednesday afternoon.
These companies include Hudson Bay Capital, Reverence Capital Partners and Liberty Strategic Capital, led by former US Treasury Secretary Steven Mnuchin.
The bank also appointed Joseph Otting, the currency’s former comptroller, as its new CEO.
The bank’s shares initially fell this morning after reports it was looking for a cash injection to correct poor performance.
New York Community Bank is facing a crisis due to deteriorating commercial real estate lending
The bank on Wednesday announced a $1 billion investment from a combination of companies including Liberty Strategic Capital, led by former US Treasury Secretary Steven Mnuchin.
But after announcing that it had successfully found funding, the share price recovered above the $3.18 level it was at when markets opened in the morning.
Shares hit a low of $1.76 at 12:30 PM ET, but had risen to $3.30 by 3:00 PM.
The bank, with 420 branches and hundreds of thousands of customers, has faced a crisis in recent months after the quality of its commercial real estate loans deteriorated and rating agencies downgraded its credit rating to junk.
Businesses are giving up their downtown offices and retail spaces – after Covid normalized working from home and caused the decline of downtown shopping.
This left commercial building owners unable to pay lenders such as New York Community Bank (NYCB). About 16 percent of the loans are for the acquisition, development and construction of commercial real estate.
The bank’s share price first started falling in late January after the bank cut its dividend and posted a surprise loss.
On the last day of the month they fell 38 percent from $10.38 to $5.47.
Then last week, the Long Island-based bank announced that it had identified “material deficiencies” in its internal controls related to loan assessments.
Covid normalized working from home and catalyzed the decline of downtown shopping
Its shares fell further after it restated its fourth-quarter results to report losses 10 times higher than before, citing a $2.4 billion charge related to pre-2007 purchases.
Losses since January are now about 82 percent.
On Thursday, the bank also announced that its executive chairman, Alessandro DiNello, would assume the role of president and CEO, effective immediately.
New York Community Bank did not immediately respond to DailyMail.com’s request for comment Wednesday afternoon.