New York Community Bancorp secures $1bn equity boost following Q4 2023 losses
New York Community Bancorp (NYCB), the parent company of Flagstar Bank, is set to secure $1.05 billion in equity capital from a group of investors and has made several high-profile appointments to its board of directors.
NYCB raises $1bn after $2.7bn Q4 2023 loss
The significant investment comes after NYCB posted a loss of $2.7 billion over Q4 2023, which it attributes largely to a $2.4 billion goodwill impairment charge tied to certain legacy transactions, alongside “material weaknesses” in its loan review processes.
To land the raise, NYCB intends to issue and sell shares of its common stock and convertible preferred stock, each at a price of $2.00 per share.
The main investors involved in the deal are Liberty Strategic Capital, which will invest $450 million; Hudson Bay Capital, which will put forward $250 million; and Reverence Capital Partners, whose investment will total $200 million.
They will be joined by Citadel Global Equities, alongside other unspecified institutional investors and certain members of NYCB’s management.
Participating investors are also to receive warrants with a coverage of 60% and an exercise price set at a 25% premium of $2.50 per share.
Advised by Jefferies LLC, NYCB says it expects to close the transaction “on or around” 11 March, subject to certain closing conditions and regulatory approvals.
Backing up the board
As part of the investment, NYCB will reduce its board to nine members, consisting of four new directors including Steven Mnuchin, managing partner of Liberty Strategic Capital and the former 77th Secretary of the Treasury; Allen Puwalski of Hudson Bay Capital; Milton Berlinski, managing partner of Reverence Capital Partners; and Joseph Otting, the former 31st Comptroller of the Currency, who is set to now serve as CEO of NYCB.
Otting replaces Alessandro DiNello as CEO, who himself only took on the role last week after former CEO Thomas Cangemi stepped down. DiNello will instead take up the position of non-executive chairman on the board.
The new board appointments will sit alongside existing board members Marshall Lux, Peter Schoels, Jennifer Whip and David Treadwell.
