- NYCB plummeted as much as 47% Wednesday after a WSJ report said the lender was seeking to raise capital.
- The volatility caused trading in the stock to halt multiple times in Wednesday's trading session.
- NYCB stock has plummeted 82% in 2024 amid loan-loss concerns and disclosure of control issues.
New York Community Bankcorp stock plummeted as much as 47% on Wednesday following news that the lender was seeking to raise equity capital.
Shares were trading $1.86 at 1:45 p.m. in New York, down from Tuesday's closing price of $3.22.
The regional bank is looking for investors to participate in a fresh equity raise, according to The Wall Street Journal. Shares of the bank have shed over 82% year-to-date, weighed down by real-estate loan worries, leadership shake-ups, and disclosure of internal control issues.
As losses extended through the day, trading was halted several times for volatility.
NYCB's issues cropped up this year when the lender reported weak results for the fourth-quarter and highlighted a concerning exposure to commercial real estate. Given forecasts that the property sector is at risk of a wave of defaults, the stock plummeted on fears that the bank could be saddled with weakening commercial property loans.
Specifically, the bank set aside $552 million to cover loan losses. Led by co-op and office loans, debts unlikely to be recovered totaled $185 million in the fourth quarter.
Confidence in the stock tumbled again last week when the lender surprised investors with a CEO change and disclosed "material weaknesses'' in internal controls around how it reviews loans. Cited problems included a lack of oversight and risk assessment.
The turmoil at the bank has prompted comparisons to last year's banking-system mayhem, during which three lenders collapsed. That included the Silicon Valley Bank, which failed after the value of its long-term bond portfolio plummeted in the wake of aggressive rate hikes by the Fed.
NYCB took on the assets of Signature Bank, one of the lenders that collapsed last spring. The acquisition also added to its dilemma, as its boosted size made NYCB subject to higher regulatory scrutiny.