©Reuters. FILE PHOTO: A man walks past a closed branch of the New York Community Bank in New York City, U.S., January 31, 2024. REUTERS/Mike Segar/File Photo
(Reuters) -New York Community Bancorp (NASDAQ:) said on Monday it has closed on a $1 billion capital infusion deal agreed to last week with a group of investors and plans to file a one-for-three stock split of the its ordinary shares to shareholders.
Joseph Otting, a former comptroller of the currency in the Donald Trump administration, was named CEO of NYCB last week as part of a $1 billion capital injection from a group of investors that included the former U.S. secretary US Treasury Steven Mnuchin.
The bank said Monday it added CEO Otting, Mnuchin, Milton Berlinski and Allen Puwalski as new board directors, while reducing the board’s strength to 10 members.
NYCB shares rose 5.8% to $3.44 in extended trade.
The lender said last week it was seeing interest from non-bank bidders for some of its loans, and will outline a new business plan in April after the bank cut its dividend again and disclosed deposits fell by 7 %.
A surprise quarterly loss and a 70% dividend cut in January hammered NYCB shares, which came under pressure again in late February after it said it found “material weaknesses” in internal controls and revised its loss 10 times higher than previously expected. to a write-down of goodwill.
Investment firms Hudson (NYSE:) Bay Capital, Reverence Capital Partners, Citadel Global Equities, some institutional investors and some members of NYCB management had last week agreed to participate in the equity investment.
The developments related to the capital injection came almost a year after the collapse of Silicon Valley Bank Signature bank (OTC:), which precipitated the regional banking crisis in the United States and undermined market confidence in some regional lenders.
Earlier this month, NYCB said it had total deposits of $77.2 billion as of March 5, down from $83 billion at the beginning of February. About 19.8% of deposits were uninsured. The bank also cut its quarterly dividend to 1 cent per share, lower than the 5 cents announced in January.
While the turmoil has led to deposit outflows, NYCB has the lowest concentration of uninsured deposits and has previously disclosed that it has enough liquidity to offer its customers extended deposit insurance.
Several Wall Street analysts have expressed concern that the lender’s turnaround will likely take a long time as profits remain under pressure due to its efforts to boost reserves for potential bad debts in its commercial real estate portfolio.