04:24 PM EST, 03/06/2024 (MT Newswires) -- Shares of New York Community Bancorp (NYCB) swung between gains and losses in volatile trade Wednesday as the regional bank announced a $1.05 billion capital raise and a new chief executive.

Under the terms of the deal, Liberty Strategic Capital will invest $450 million, with Hudson Bay Capital and Reverence Capital Partners injecting $250 million and $200 million, respectively. Other institutional investors and certain members of the company's management team are also expected to make investments.

The investors will buy shares of New York Community Bancorp's ( NYCB/PU ) common stock at $2 apiece and get convertible preferred shares with a conversion price of $2. Investors will additionally receive 60% warrant coverage to purchase non-voting, common-equivalent stock with an exercise price of $2.50 per share. The transaction is expected to close on or around March 11, subject to regulatory approvals required for new roles of former Comptroller of the Currency Joseph Otting and Alessandro DiNello at the bank.

In connection with the capital raise, the bank agreed to add four new directors to its board, including Otting and former Treasury Secretary Steven Mnuchin. It named Otting as chief executive and DiNello as non-executive chairman. Liberty Strategic Capital is led by Mnuchin.

"In evaluating this investment, we were mindful of the bank's credit risk profile," Mnuchin said. "With the over $1 billion of capital invested in the bank, 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."

The stock was halted earlier in Wednesday's session after plunging more than 40% to below $2 per share intraday on reports that the company was considering a capital raise. The stock closed up 7.5% to $3.46. It started the year above $10.

New York Community Bank last week said that it found material weakness in the company's internal controls related to loan reviews and that it had named then-Executive Chairman DiNello as CEO. In early February, Moody's downgraded the bank's long-term credit ratings.

The bank said Wednesday that Allen Puwalski from Hudson Bay and Milton Berlinski, managing partner of Reverence Capital, will also join New York Community Bancorp's ( NYCB/PU ) board.

"Our new leadership team, with the support of the reconstituted board, will continue to take the actions that are necessary to improve earnings, profitability and drive enhanced value for shareholders," DiNello said.

Price: 3.26, Change: +0.04, Percent Change: +1.24