A New York Community Bank stands in Brooklyn on February 08, 2024 in New York City.
Spencer Platt | Getty Images
Embattled lender New York Community Bancorp is seeking cash infusion and gauging investor interest in its stock, a person familiar with the matter told Reuters on Wednesday.
Shares of the bank tumbled nearly 32% amid multiple trading halts for volatility. NYCB did not immediately respond to a Reuters request for comment.
NYCB has been under pressure since it posted a surprise fourth-quarter loss on Jan. 31, due to higher provisions tied to its exposure to the beleaguered commercial real estate (CRE) sector, and cut its dividend. It has pledged to reduce its exposure to CRE.
Last week, the bank also disclosed it had identified “material weaknesses” in internal controls tied to its review of loans.
The weaknesses were related to “ineffective oversight, risk assessment and monitoring activities”, but it would not impact its financial results for fiscal 2023, the bank had said.
Internal controls are processes to ensure the accuracy and reliability of a company’s financial reports.
Several Wall Street analysts have previously flagged concerns that the lender’s exposure to CRE could also require it to build additional capital reserves to absorb potential losses on loans.
“We believe this review of internal controls could lead to additional CRE-related reserve building, particularly related to the company’s NYC rent-regulated multifamily exposure,” brokerage Wedbush wrote in a note earlier this month.
The bank also revised its quarterly loss to $2.7 billion, citing a $2.4 billion goodwill impairment, and replaced its CEO.
“We do not see a sale as likely outcome for NYCB,” Citigroup analyst Keith Horowitz wrote in a note last week after the bank’s disclosure. “In our view, NYCB is on its own to figure out how to course correct.”
The capital infusion news was first reported by the Wall Street Journal.
This story originally appeared on CNBC
