Troubled lender New York Community Bancorp is seeking an infusion of cash and gauging investor interest in its stock, people familiar with the matter told Reuters on Wednesday.
The bank’s stock price fell 42% to $1.86 amid multiple trading suspensions due to volatility. New York CB did not respond to Reuters’ request for comment.
NYCB posted an unexpected fourth-quarter loss on Jan. 31 due to higher provisions and lower dividends related to its exposure to the beleaguered commercial real estate (CRE) sector. under pressure. The company is committed to reducing its exposure to CRE.
The bank also said last week that it had identified “material weaknesses” in its internal controls related to loan review.
The bank said the weakness is related to “effective supervision, risk assessment and monitoring activities” but does not affect its financial results for fiscal 2023.
Internal control is a process that ensures the accuracy and reliability of a company’s financial reporting.
Several Wall Street analysts have previously raised concerns that lenders’ exposure to CRE could require them to build additional capital reserves to absorb potential loan losses. .
“This review of internal controls could lead to further increases in CRE-related reserves, particularly related to the company’s New York City rent-regulated multifamily exposure,” brokerage firm Wedbush said in a note earlier this month. I think there is,” he said.
The bank also revised its quarterly loss to $2.7 billion due to a $2.4 billion goodwill impairment charge and replaced its CEO.
“We do not believe a sale of NYCB is a likely outcome,” Citigroup analyst Keith Horowitz wrote in a note last week after the bank’s disclosure. “Our view is that NYCB will find a way to course correct itself.”
News of the capital injection was first reported by the Wall Street Journal.
