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NNew York Community Bancorp fell as much as 32% on reports that the beleaguered regional bank is trying to raise equity capital to restore confidence.
Bankers are gauging investor interest in buying the stock, The Wall Street Journal reported Wednesday, citing people familiar with the matter. Representatives for the company did not immediately respond to calls and messages seeking comment.
The company’s stock has lost more than three-quarters of its value this year after NYCB cut its dividend and set aside higher than expected loan loss reserves. The company announced last week that it had replaced its chief executive officer and identified “significant weaknesses” in the way it tracks loan risk.
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NYCB is the primary lender to apartment owners subject to New York’s strict rent laws, and there are limits to how much revenue it can generate. It also provided funding to local offices struggling with vacancies in the work-from-home era.
Credit rating agencies have downgraded the company to junk status, and Moody’s Investors Service expects the bank may set aside more capital over the next two years to protect against loan deterioration.
Some of the pressure on NYCB has been exacerbated by its rapid growth through acquisitions in recent years. The acquisition of rival financial firms Flagstar Bancorp and parts of Signature Bank nearly doubled the company’s size. As assets ballooned beyond $100 billion, NYCB faced stricter capital requirements for so-called Category IV banks given their systemic importance.
The New York-based bank’s stock fell to $2.23 at 12:16 p.m. New York time, extending its decline this year to 78%.
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