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Tag: Joseph Otting

  • Rescued New York Community Bank to lay off 700 at its Flagstar subsidiary

    Rescued New York Community Bank to lay off 700 at its Flagstar subsidiary

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    Struggling New York Community Bancorp said Friday that it is cutting 700 jobs at its Flagstar subsidiary as it tries to return to profitability after being rescued by investors earlier this year.

    The bank said the cuts amount to 8% of its head count. It’s also selling its mortgage-servicing business to mortgage company Mr. Cooper, which will mean trimming another 1,200 employees from its payroll. Most of those employees will be offered the chance to transfer to Mr. Cooper, NYCB said.

    Shares of Hicksville, New York-based NYCB fell 1.6% to close Friday at $12.18.

    NYCB got a lifeline of more than $1 billion from a group of investors in March of this year its stock plunge by more than 80%.

    The bank has been hammered by weakness in commercial real estate and growing pains resulting from its buyout of a distressed bank.

    That cash infusion brought four new directors to NYCB’s board, including Steven Mnuchin, who served as U.S. Treasury secretary under President Donald Trump. Joseph Otting, a former comptroller of the currency, became the bank’s CEO.

    Under the deal, NYCB was to get investments of $450 million from Mnuchin’s Liberty Strategic Capital, $250 million from Hudson Bay Capital and $200 million from Reverence Capital Partners. Cash from other institutional investors and some of the bank’s management took the total over $1 billion, the bank said in March.

    NYCB was a relatively unknown bank until last year, when it bought the assets of Signature Bank at auction on March 19 for $2.7 billion. Signature was one of the banks that crumbled in last year’s mini-crisis for the industry, where a bank run also sped the collapse of Silicon Valley Bank.

    The sudden increase in size for NYCB meant it had to face increased regulatory scrutiny. That’s been one of the challenges for the bank, which is trying to reassure depositors and investors that it can digest the purchase of Signature Bank while dealing with a struggling real-estate portfolio. Losses in loans tied to commercial real estate forced it to report a surprise loss for its latest quarter, which raised investors’ concern about the bank.

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  • UPDATE 3-NYCB closes $1 bln capital infusion deal, announces reverse stock split

    UPDATE 3-NYCB closes $1 bln capital infusion deal, announces reverse stock split

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    (Adds details on fund raise in paragraph 8)

    March 11 (Reuters) – New York Community Bancorp said on Monday it had closed the $1 billion capital infusion deal that was agreed last week with an investor group and plans to submit one-for-three reverse stock split of its common stock to shareholders.

    Joseph Otting, former Comptroller of the Currency in the Donald Trump administration, was named NYCB’s chief executive last week as part of a $1 billion capital injection from a group of investors that included former U.S. Treasury Secretary Steven Mnuchin.

    The bank said on Monday it had added Otting, Mnuchin, Milton Berlinski and Allen Puwalski as the new directors of the board, while reducing the board strength to 10 members.

    Shares of NYCB rose 5.8% to $3.44 in extended trading on Monday.

    The lender said last week that it was seeing interest from non-bank bidders for some of its loans, and will outline a new business plan in April after the bank had slashed its dividend again and disclosed deposits fell 7%.

    A surprise quarterly loss and a 70% reduction of its dividend in January hammered NYCB’s stock, which came under pressure again in late February after it said it had found “material weakness” in internal controls and revised its loss to 10 times higher than earlier due to a goodwill impairment charge.

    Investment firms Hudson Bay Capital, Reverence Capital Partners, Citadel Global Equities, some institutional investors and certain members of NYCB’s management last week had agreed to participate in the equity investment.

    NYCB said it plans to raise the funds through stocks and warrants and investors will own about 39.6% of the company on a fully-diluted basis after the latest fund raising.

    Several Wall Street analysts have flagged concerns that the lender’s turnaround will likely take a long time as profits remain under pressure from its efforts to boost reserves for potential bad loans in its commercial real estate portfolio. (Reporting by Manya Saini and Nilutpal Timsina in Bengaluru; Editing by Shounak Dasgupta, Rashmi Aich and Sherry Jacob-Phillips)

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