JPMorgan sees more questions than answers after NYCB capital raise

JPMorgan keeps a Neutral rating on New York Community Bancorp after the company announced it is raising $1.05B in equity combined from institutional investors including former U.S. Treasury Secretary Steve Mnuchin’s Liberty Strategic Capital, Hudson Bay, and Reverence Capital, among others. The firm estimates the deal will result in a 40% tangible book value reduction from $10.89 at the end of 2023 to the $6.40 range. With sophisticated equity investors providing a $1B capital injection into New York Community at $2 per share, for investors whose option is to purchase the stock at the market price, which closed at $3.46, there remains more question than answers at this juncture, the analyst tells investors in a research note. JPMorgan says that while the injection of capital is a positive signal, “this story remains a work in progress.”