NYCB Shares Plunge 42% Before Rebound on $1 Billion Capital Raise
New York Community Bancorp (NYCB) made headlines on Wednesday as its stock experienced a dramatic plunge of 42% before staging a rebound following the announcement of a $1 billion capital raise.
The bank also unveiled a leadership shake-up, featuring former Treasury Secretary Steven Mnuchin as one of the new board members.
In a press release issued on Wednesday afternoon, NYCB confirmed that it had struck a deal with several investment firms, including Liberty Strategic Capital (led by Mnuchin), Hudson Bay Capital, and Reverence Capital Partners, to raise over $1 billion in exchange for equity in the bank.
As part of the agreement, Mnuchin and Joseph Otting, former comptroller of the currency, would join the board of directors, with Otting taking over as CEO.
Following the announcement, NYCB’s stock experienced a sharp rebound, although trading remained highly volatile throughout the day.
The shares briefly halted trading, surging nearly 30% before retracing some gains when trading resumed.
Ultimately, the stock closed the day up over 7% after several additional halts.
The capital raise and leadership changes come after NYCB faced a challenging start to the year.
In late January, the bank disclosed a significant increase in its allowance for potential loan losses, primarily attributed to its exposure to commercial real estate.
Moody’s Investors Service subsequently downgraded NYCB’s credit rating to junk status, and the bank appointed former Flagstar bank CEO Alessandro DiNello as executive chairman.
Last week, NYCB revealed the identification of material weaknesses in its internal loan review controls and announced DiNello’s brief tenure as CEO before transitioning to nonexecutive chairman, as stated in
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