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New York Community (NYCB) Receives $1B Equity Capital Raise
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New York Community Bancorp (NYCB - Free Report) will raise more than $1 billion from a group of investors led by former Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital, Hudson Bay Capital and Reverence Capital Partners.
Liberty, Hudson Bay and Reverence will invest $450 million, $250 million and $200 million, respectively.
Per deal terms, the bank will sell its shares of common stock at $2 per share and a series of convertible preferred stock with a conversion price of $2 for an aggregate investment of $1.05 billion. Investors will also get warrants with an exercise price of $2.50 per share.
The equity-investment deal is likely to close around Mar 11, 2024.
Per Mnuchin, “In evaluating this investment, we were mindful of the bank’s credit risk profile.” He continued, “With the over $1 billion of capital invested in the bank, we believe we now have sufficient capital should reserves need to be increased in the future to be consistent with or above the coverage ratio of NYCB’s large bank peers.”
Earlier this week, New York Community announced the widening of its fourth-quarter 2023 loss to $2.7 billion due to a new $2.4-billion goodwill impairment charge. Simultaneously, the company said that it identified “material weaknesses” in its loan review process.
The bank is a major lender to owners of residential buildings in New York. It is subject to tough New York rent laws, limiting the revenues it can generate.
Following the acquisitions of Flagstar Bancorp and parts of Signature Bank, which almost doubled the bank’s size, NYCB now faces more stringent capital requirements.
However, with the worsening commercial real estate scenario, the bank is predicted to set aside more money for troublesome loans. Hence, the capital influx will help the company to absorb potential loan loss.
NYCB shares have declined 66.7% in the past six months compared with the industry’s 3.7% fall.
Image Source: Zacks Investment Research
NYCB presently carries a Zacks Rank #5 (Strong Sell).
BK’s earnings estimates for 2024 have moved marginally upward over the past week. In the past year, its shares have risen 12%.
The Zacks Consensus Estimate for NTRS’s current-year earnings has moved marginally north over the past week. Its shares have declined 12.3% in the past year.
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New York Community (NYCB) Receives $1B Equity Capital Raise
New York Community Bancorp (NYCB - Free Report) will raise more than $1 billion from a group of investors led by former Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital, Hudson Bay Capital and Reverence Capital Partners.
Liberty, Hudson Bay and Reverence will invest $450 million, $250 million and $200 million, respectively.
Per deal terms, the bank will sell its shares of common stock at $2 per share and a series of convertible preferred stock with a conversion price of $2 for an aggregate investment of $1.05 billion. Investors will also get warrants with an exercise price of $2.50 per share.
The equity-investment deal is likely to close around Mar 11, 2024.
Per Mnuchin, “In evaluating this investment, we were mindful of the bank’s credit risk profile.” He continued, “With the over $1 billion of capital invested in the bank, we believe we now have sufficient capital should reserves need to be increased in the future to be consistent with or above the coverage ratio of NYCB’s large bank peers.”
Earlier this week, New York Community announced the widening of its fourth-quarter 2023 loss to $2.7 billion due to a new $2.4-billion goodwill impairment charge. Simultaneously, the company said that it identified “material weaknesses” in its loan review process.
The bank is a major lender to owners of residential buildings in New York. It is subject to tough New York rent laws, limiting the revenues it can generate.
Following the acquisitions of Flagstar Bancorp and parts of Signature Bank, which almost doubled the bank’s size, NYCB now faces more stringent capital requirements.
However, with the worsening commercial real estate scenario, the bank is predicted to set aside more money for troublesome loans. Hence, the capital influx will help the company to absorb potential loan loss.
NYCB shares have declined 66.7% in the past six months compared with the industry’s 3.7% fall.
Image Source: Zacks Investment Research
NYCB presently carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
A couple of better-ranked stocks from the banking space are The Bank of New York Mellon (BK - Free Report) and Northern Trust (NTRS - Free Report) . BK sports a Zacks Rank of 1 (Strong Buy) while NTRS carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
BK’s earnings estimates for 2024 have moved marginally upward over the past week. In the past year, its shares have risen 12%.
The Zacks Consensus Estimate for NTRS’s current-year earnings has moved marginally north over the past week. Its shares have declined 12.3% in the past year.