A New York Community Bank stands in Brooklyn, New York City on February 8, 2024.
Spencer Platt | Getty Images
New York Community Bank On Wednesday Posted A quarterly lack of $335 million attributable to a rising tide of bad industrial loans and better expenses, however the lender’s stock rose sharply on its recent performance targets.
The first-quarter loss represented 45 cents per share, compared with net income of $2.0 billion, or $2.87 per share, a yr earlier. Adjusted for costs, including merger-related items, the loss was $182 million, or 25 cents per share, above LSEG’s estimate of a lack of 15 cents per share.
“Since assuming the role of CEO, my focus has been transforming New York Community Bank into a high-performing, well-diversified regional bank,” said CEO Joseph Otting said within the release. “While this year will be a transition year for the company, we have a clear path to profitability over the following two years.”
By the top of 2026, the bank can have higher profitability and better capital levels, said Otting. These include a return on average assets of 1% and a goal common equity Tier 1 capital ratio of 11% to 12%.
The bank’s shares rose 33% in early trading.
Otting took over the helm of the troubled regional bank in early April after a bunch of investors led by former Treasury Secretary Steven Mnuchin injected greater than $1 billion into the lender. NYCB’s troubles began in late January with a disastrous fourth-quarter earnings report, when the corporate shocked analysts with the dimensions of its provisions for loan losses. The bank’s shares plunged attributable to several management changes and downgrades by rating agencies.
NYCB has “identified an opportunity” to sell $5 billion in assets to extend the corporate’s liquidity, Otting told analysts during a conference call. This transaction could possibly be accomplished inside 60 to 70 days and could possibly be announced soon, he added.
The bank had a loan loss provision of $315 million within the quarter, compared with $170 million in the identical period last yr, and said it expects an increased provisioning rate for the rest of 2024.
Non-performing loans rose $370 million to $798 million this quarter from the fourth quarter of 2023, as high rates of interest took a toll on industrial real estate borrowers.
In setting aside future expected credit losses, NYCB assumed the worth of office properties declined by 42% and multifamily properties declined by about 30%, executives said through the analyst conference.
“The office market is pretty tight,” said Otting. “It was a couple of strained office loans that meant the investors just came to us and we had to take over the property.”
The bank will seek to scale back the chance of office and multifamily loans over time by maintaining customer relationships and removing those that would not have deposits with NYCB, Otting said.
The results and targets got here as a relief to analysts who feared NYCB might miss its window to report results. The bank didn’t release its Wednesday earnings release until late Tuesday.
“Overall, we believe the results are better than worst-case fears,” analysts led by Ken Usdin of Jefferies wrote in a note, with a “reasonable” amount of reserve builds.
