New York Community Bank Tries to Reassure Markets After $1 Billion Rescue

Original Article:

Source: Link

A new management team at New York Community Bank is working to reassure investors after the struggling lender announced a $1 billion cash infusion led by the former Treasury Secretary Steven Mnuchin. On Thursday, the bank’s beaten-down shares jumped after executives gave investors new information about the state of the company and details about its rescue plan announced the day before. The company’s leaders, including Joseph Otting, the longtime banking executive and close ally of Mr. Mnuchin who this week took over as chief executive, said that the bank’s deposits had fallen over the past month by more than $4 billion, or 7 percent. They also announced a cut to the dividend, the second this year, to just one cent per share. The bank’s balance sheet will be “fortified” by the cash injection, Mr. Otting said on a call with analysts and investors, and along with a boardroom overhaul and plans to reduce the lender’s large exposure to the shaky commercial real estate market, “we have several levers to pull if needed as we continue to strengthen the foundation,” he added. The bank’s share price rose more than 10 percent at the start of trading on Thursday, before settling to a 7 percent gain. That still left the stock down about 60 percent since the beginning of the year, as the bank has stumbled from one crisis to another, reporting billions in write-downs and raising concerns about the accuracy of its previous financial reports. The bank’s stock spiraled and its bonds were downgraded by credit-rating agencies.