Shares of New York Community Bancorp (NYSE:NYCB) rose more than 4% in premarket trading Thursday after the company received a crucial financial lifeline following Wednesday’s stock price crash.
NYCB plummeted over 40% yesterday following reports that it was seeking a financial boost. But the stock was shored up shortly afterward, following reports that the struggling bank is securing over $1 billion in financial support.
Liberty Strategic Capital, helmed by ex-Treasury Secretary Steven Mnuchin, contributed a major share of $450 million. The rest of the capital infusion came from Hudson Bay Capital, Reverence Capital Partners, and Citadel Global Equities, among other institutional backers and certain executives of the bank.
The bank also announced that it would be appointing former Comptroller of the Currency Joseph Otting as a board member and the new CEO. In addition, Mnuchin, along with representatives from Hudson Bay and Reverence Capital, will join NYCB’s board.
In the aggregate $1.05 billion equity fundraising effort, New York Community will distribute shares of common stock and convertible preferred stock at a price of $2.00 per share. Moreover, investors are granted 60% warrant coverage for acquiring non-voting stock equivalents at an exercise price of $2.50 per share.
The stock closed 7.45% higher on Wednesday at $3.46, after falling as low as $1.7 during the session.
“While the announced capital raise and new Board/CEO is one positive step forward for NYCB in its journey to recovery, there is more to be done including closing of the transaction,” analysts said in a note.
“Even with shares trading at ~0.54x 2024e TBV (post-raise) or at a 54% discount to peers, we stay on the sidelines with key questions around the risk and return profiles of the company still to be addressed,” they added.