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New York Community Bancorp (NYSE:NYCB) is raising more than $1B from a group of investors led by former Treasury Secretary Steven Mnuchin's firm, the company said on Wednesday.
Joseph Otting, a former Comptroller of the Currency, will become NYCB's CEO. Alessandro DiNello, who was named last Thursday, is non-executive chairman. The company is also reconstituting its board, adding Mnuchin, Otting, Allen Puwalski from Hudson Bay, and Milton Berlinski of Reverence.
Other investors include Hudson Bay Capital, Liberty Strategic Capital, Reverence Capital, and Citadel Global Equities.
DiNello said the investment is "a positive endorsement of the turnaround that is underway and allows us to execute on our strategy from a position of strength. We enter this next chapter with a strong balance sheet and liquidity position supported by a diversified and retail focused deposit base."
Under terms of the deal, New York Community Bancorp (NYCB) will sell to the investors shares of common stock at a price of $2.00 per share and a series of convertible preferred stock with a conversion price of $2.00, for an aggregate investment of $1.05B. The investors will also get 60% warrant coverage to purchase non-voting, common-equivalent stock with an exercise price of $2.50 per share, a 25% premium to the price paid on the common stock.
With the $1B investment, "we believe we now have sufficient capital should reserves need to be increased in the future to be consistent with or above the coverage ratio of NYCB's large bank peers," Mnuchin said.
The transaction is expected to close on March 11. NYCB said it will host a conference call on March 7 at 8:00 a.m. ET to discuss the equity capital raise.
NYCB stock sank 42% on Wednesday before the stock was halted at 12:34 PM pending news. After a string of trading halts, shares surged to positive territory, only to halt again at +9.3% at 3:18 PM.
Since the news, the SPDR S&P Regional Banking ETF (KRE) edged down, slipping 0.1% at 3:21 PM ET.
Overall, NYCB's board will be reduced to nine members and will include Mnuchin, Otting, Puwalski, Berlinksi, DiNello, Marshall Lux, Peter Schoels, Jennifer Whip, and David Treadwell.