New York Community Bancorp stock sinks further after report it’s trying to raise cash
NEW YORK (AP) — Shares of troubled New York Community Bancorp plunged again Wednesday to below $2, and the regional bank beset by falling values in commercial real estate and acquisitions has now lost 80% of its value this year.
Shares of the bank tumbled 42.2% to $1.86 before they were halted at 12:34 p.m. Eastern time, pending news. A report from The Wall Street Journal on Wednesday said the lender is considering raising cash through the sale of stock in order to shore up confidence in it.
NYCB officials did not immediately respond to a request for comment.
Such moves can strengthen a bank’s balance sheet, but they can also send a signal that frightens investors and customers. Last year, the banking industry saw how quickly a run can begin in this new era where customers can spread worries quickly through chatrooms and pull their money through a mobile banking app without having to go to a branch. That led to the collapses of several banks, including Signature Bank.
NYCB acquired much of Signature Bank’s assets, and the resulting increase in its size meant it had to face increased regulatory scrutiny. That’s been one of the bank’s challenges, which have been rattling investors since it warned
NYCB said this year that found significant weakness in how it internally reviews loans, caused by ineffective oversight, risk assessment and monitoring activities. Many of those issues are being tied to Signature, which put the bank into a new regulatory class with stricter oversight. It also replaced its longtime chief executive officer.
Several financial analysts still say NYCB’s troubles appear relatively unique to the bank and downplayed the risk of contagion in the banking sector. But weakness in commercial real estate is a looming challenge for all kinds of banks, as changes in how people work following the pandemic leave many office buildings with more vacancies.