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New York Community (NYCB) Raises $1.05B in Equity Capital
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New York Community Bancorp, Inc. (NYCB - Free Report) has closed the previously announced transaction to raise $1.05 billion from a group of investors, including Liberty Strategic Capital, Hudson Bay Capital and Reverence Capital Partners.
Per NYCB management, "The completion of this major equity raise demonstrates the confidence these strategic investors have expressed in the turnaround currently underway at the Company and allows us to execute on our strategy from a position of strength. Our Company enters this next phase with an enhanced balance sheet and liquidity position."
Per deal terms, the bank will issue 76,630,965 shares of common stock at $2 per share, 192,062 shares of series B convertible preferred stock and 256,307 shares of series C preferred stock. In addition, investors will receive 7-year warrants to purchase non-voting, common-equivalent stock of NYCB, representing $315 million of underlying shares of common stock.
As a result of the deal, if all shares are converted into common stock, the bank will issue an aggregate of 525 million shares of common stock and the group of investors will own 39.6% of NYCB on a fully diluted basis.
Accordingly, the company plans to submit to shareholders a one-for-three reverse stock split of its common stock and increase the number of its authorized common shares to at least 1,700,000,000.
Following the $1-billion cash infusion announcement, New York Community’srating view has been changed to "review for upgrade" from "review for downgrade" by Moody’s Investors Service — a division of Moody’s Corporation (MCO - Free Report) .
The capital raise will increase NYCB's common equity tier 1 ratio to 10.3% (on a proforma basis), assuming the full conversion of the preferred equity to common, from 9.2% reported as of Dec 31, 2023. Per MCO, NYCB's "planned capital raise could help stabilize its franchise following the tumultuous series of events that have occurred in recent weeks, and could improve its creditworthiness."
Over the past six months, NYCB shares have lost 72.1% compared with the industry’s 1.7% decline.
Image Source: Zacks Investment Research
Currently, NYCB carries a Zacks Rank #5 (Strong Sell).
Truist Financial’s (TFC - Free Report) decision to divest its remaining 80% stake in Truist Insurance Holdings (“TIH”) triggered reactions from two major credit rating agencies — Fitch Ratings and Moody's Investors Service.
Fitch Ratings downgraded TFC's long-term issuer default rating to 'A' from 'A+' alongside lowering the Viability Rating to 'a' from 'a+.' The rating agency viewed this transaction as a near-term credit positive but acknowledged the constraints that this narrower business mix places on Truist's business and earnings prospects.
Meanwhile, Moody's placed Truist’s long-term ratings on review for a downgrade. The firm cited concerns over TFC's reduced diversification post-sale, increased reliance on net interest income and heightened earnings volatility.
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New York Community (NYCB) Raises $1.05B in Equity Capital
New York Community Bancorp, Inc. (NYCB - Free Report) has closed the previously announced transaction to raise $1.05 billion from a group of investors, including Liberty Strategic Capital, Hudson Bay Capital and Reverence Capital Partners.
Per NYCB management, "The completion of this major equity raise demonstrates the confidence these strategic investors have expressed in the turnaround currently underway at the Company and allows us to execute on our strategy from a position of strength. Our Company enters this next phase with an enhanced balance sheet and liquidity position."
Per deal terms, the bank will issue 76,630,965 shares of common stock at $2 per share, 192,062 shares of series B convertible preferred stock and 256,307 shares of series C preferred stock. In addition, investors will receive 7-year warrants to purchase non-voting, common-equivalent stock of NYCB, representing $315 million of underlying shares of common stock.
As a result of the deal, if all shares are converted into common stock, the bank will issue an aggregate of 525 million shares of common stock and the group of investors will own 39.6% of NYCB on a fully diluted basis.
Accordingly, the company plans to submit to shareholders a one-for-three reverse stock split of its common stock and increase the number of its authorized common shares to at least 1,700,000,000.
Following the $1-billion cash infusion announcement, New York Community’srating view has been changed to "review for upgrade" from "review for downgrade" by Moody’s Investors Service — a division of Moody’s Corporation (MCO - Free Report) .
The capital raise will increase NYCB's common equity tier 1 ratio to 10.3% (on a proforma basis), assuming the full conversion of the preferred equity to common, from 9.2% reported as of Dec 31, 2023. Per MCO, NYCB's "planned capital raise could help stabilize its franchise following the tumultuous series of events that have occurred in recent weeks, and could improve its creditworthiness."
Over the past six months, NYCB shares have lost 72.1% compared with the industry’s 1.7% decline.
Image Source: Zacks Investment Research
Currently, NYCB carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Rating Actions of Other Companies
Truist Financial’s (TFC - Free Report) decision to divest its remaining 80% stake in Truist Insurance Holdings (“TIH”) triggered reactions from two major credit rating agencies — Fitch Ratings and Moody's Investors Service.
Fitch Ratings downgraded TFC's long-term issuer default rating to 'A' from 'A+' alongside lowering the Viability Rating to 'a' from 'a+.' The rating agency viewed this transaction as a near-term credit positive but acknowledged the constraints that this narrower business mix places on Truist's business and earnings prospects.
Meanwhile, Moody's placed Truist’s long-term ratings on review for a downgrade. The firm cited concerns over TFC's reduced diversification post-sale, increased reliance on net interest income and heightened earnings volatility.