Shares of New York Community Bancorp. (NYCB) experienced a significant decline of over 40% on Wednesday amidst reports of the regional bank seeking a cash infusion. Both Reuters and The Wall Street Journal revealed that NYCB was exploring options with outside investors to bolster its balance sheet. The stock had already dropped sharply before the reports surfaced, prompting concerns about the bank's financial stability.

As of Wednesday, NYCB had not responded to CNBC's request for comment regarding the cash infusion news. Share trading was halted, indicating a pending announcement, when shares were down 42%. The stock's value has reached below $2 per share after kicking off the year above $10.

These developments mark the latest in a turbulent start to the year for NYCB, which had recently appointed a new CEO. The bank had announced in late January that it would substantially increase its allowance for potential loan losses, particularly due to concerns over its exposure to commercial real estate.

Moody's Investors Service then downgraded NYCB's credit rating to junk status shortly thereafter. Responding to the evolving situation, former Flagstar bank CEO Alessandro DiNello was named executive chairman. Last week, NYCB disclosed "material weaknesses in the company's internal controls related to internal loan review" and announced DiNello as the new CEO.

The troubles faced by NYCB bear similarities to those encountered by Silicon Valley Bank, Signature Bank, and First Republic, which all collapsed in 2023. These regional banks struggled as higher interest rates caused the devaluation of older Treasury holdings and prompted depositors to relocate their funds.

With the US economy exhibiting unexpected strength and inflation surpassing the Federal Reserve's 2% target, traders have scaled back their expectations for interest rate cuts this year. This "higher-for-longer" rate environment may further stress banks including NYCB and impact the commercial real estate sector, which plays a vital role in the operations of NYCB and other regional lenders.

The challenges faced by NYCB appear to have caught both regulators and investors off guard. NYCB had acquired a significant portion of Signature Bank from the Federal Deposit Insurance Corporation in March of last year. The recent struggles now necessitate careful attention from regulators and investors alike.

This article was written based on information from Reuters, The Wall Street Journal, and CNBC's reporting.