New York Community Bancorp Inc.’s stock dropped about 5% on Thursday after the lender said it had a loss in the second quarter and more charge-offs than expected, mostly on loans for office and multifamily properties that it doesn’t expect to be paid back.
The bank does have some good points.
New York Community Bank (NYSE:NYC) said that deposits went up and that it could get up to $5 billion from selling assets.
The NYCB also said that the mortgage-servicing business of its Flagstar Bank unit had been sold to Mr. Cooper Group Inc.
COOP 7.01% for $1.4 billion to improve its financial health and narrow its focus on lending to businesses. That deal to sell a $5.9 billion portfolio of loans to JPMorgan Chase & Co. is also over. JPM 0.23 %
NYCB CEO Joseph Otting said in a statement, “Our second-quarter performance shows the ongoing steps management is taking during this transitional year as we reposition the bank for long-term success.”
NYCB’s stock was down 54 cents to $10.41, but it had recovered some of the earlier losses as the stock market as a whole rose.
This year, the bank’s provision for credit losses was only $49 million. In the second quarter, it rose to $390 million, more than the $315 million it set aside in the first quarter.
The bank said, “The provision shows a rise in charge-offs, mostly office loans, and the ongoing effects of market conditions on the multifamily portfolio as higher interest rates and inflationary effects persist.”
NYCB said its charge-offs went up to $349 million, from $81 million in the previous quarter. This was a lot more than the $90.6 million average estimate from FactSet analysts.
The bank said it lost $333 million, or $1.14 per share, in the second quarter. This was after making $405 million, or $1.66 per share, in the same time last year. The bank lost $335 million, or $1.36 per share, in the first quarter.
The adjusted loss for the three months ending June 30 was $1.05 per share, which was less than the 40 cents a share loss that analysts had predicted.
Sales dropped 44% to $671 million, which was less than the $722.5 million that analysts had predicted. New York City Bank made $633 million in the first quarter.
One good thing about the quarter was that total deposits went up 4% from the previous quarter to $3.7 billion. The bank may also sell business units to bring in another $2 billion to $5 billion.
So far in 2024, NYCB’s stock is down 64%. This is because the company reported a surprise loss earlier this year and changed its ownership structure with money from Steven Mnuchin’s private-equity firm. As of March, Joseph Otting was named CEO of the business.
On July 11, NYCB finished a 3-for-1 reverse stock split.
