New York Community Bancorp (NYSE:NYCB) has raised $1 billion in investment from an investor consortium to bolster financial stability. Notably, shares of the bank holding company are down about 66% year-to-date amid concerns over its credit risk profile due to rising provisions for losses. Further, NYCB slashed its dividend to shore up capital, which didn’t sit well with investors. Nonetheless, its stock closed more than 7% higher on March 6 after it secured funding.
More on the Capital Raise
NYCB said that investors include former treasury secretary Steven Mnuchin’s Liberty Strategic Capital, Citadel Global Equities, Hudson Bay Capital, Reverence Capital Partners, along with other institutional investors and select members of the bank’s management. Liberty plans to inject $450 million, while Hudson Bay and Reverence will contribute $250 million and $200 million, respectively.
Moreover, NYCB announced that it will appoint four new directors to its Board, including Steven Mnuchin, Allen Puwalski from Hudson Bay, J Milton Berlinski from Reverence Capital, and Joseph Otting, the former Comptroller of the Currency. Additionally, Otting will become the new CEO and Alessandro DiNello will be appointed as the non-executive chairman.
Is NYCB a Good Stock to Buy?
The strategic investment involving the former treasury secretary and ex-comptroller of the currency and the reconstitution of the Board is a “positive endorsement,” noted the non-executive chairman Sandro DiNello. He added that the fund infusion is expected to fortify NYCB’s balance sheet, improve liquidity, enable it to deliver higher earnings, and enhance shareholders’ value.
NYCB stock has 13 Holds and one Sell recommendation for a Hold consensus rating. Analysts’ average price target of $5.71 implies 65.03% upside potential from current levels.
While analysts are sidelined on NYCB stock, these ratings were set before the lender secured the funding. This raises the possibility that NYCB stock might see an upward adjustment in ratings from analysts in the coming days.
