On Thursday, New York Community Bank revealed a 7% reduction in its deposits during the tumultuous month leading up to the announcement of a capital injection exceeding $1 billion.

This infusion of funds, orchestrated by a group of investors spearheaded by former Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital, provided a critical financial boost.

As of March 5, the bank’s deposits stood at $77.2 billion, a decline from the $83 billion recorded on February 5, just a day prior to Moody’s Investors Service downgrading the bank’s credit ratings to junk status.

In response to its financial challenges, NYCB announced a second reduction in its quarterly dividend this year, dropping it to 1 cent per share from 5 cents, reflecting an 80% decrease.

The bank had previously paid a 17-cent dividend until a surprise fourth-quarter loss triggered a series of negative developments for the Long Island-based institution, CNBC reported.

Before the crucial lifeline from private equity investors, led by Mnuchin’s Liberty Strategic Capital, was unveiled on Wednesday, NYCB’s stock had experienced a decline due to concerns about its loan portfolio and deposit base.

Over a little more than a month, the bank underwent two CEO changes, faced two rounds of rating agency downgrades, and disclosed deepening losses.

At its lowest point, NYCB’s stock plummeted below $2 per share on Wednesday, marking a more than 40% decrease before rebounding and finishing the day higher.

The subsequent capital injection has generated optimism, providing the bank with a window of opportunity to address lingering uncertainties related to its exposure to New York-area multifamily apartment loans and the “material weaknesses” identified in its loan review process disclosed the previous week.

Written by B.C. Begley