NYCB Delays Achieving Profitability Target to 2026
New York Community Bank Reports Q3 Loss and Adjusted Profit Projections
New York Community Bank (NYCB) has announced its financial results for the third quarter, revealing a significant loss and adjustments to its profit projections.
In the third quarter, the bank recorded a loss of $280 million, a stark contrast to the profits it reported in previous quarters. This loss was partly due to a provision for credit losses amounting to $242 million during the quarter, bringing the total for the first three quarters of the year to $947 million.
The bank's non-accrual loans also saw an increase, totaling $2.5 billion in the third quarter. Additionally, NYCB has recorded $188 million in multifamily net charge-offs this year.
In response to these financial challenges, NYCB has made a decision to reduce its workforce by approximately 1,900 employees. This reduction is partly due to the sale of the mortgage servicing and third-party origination business to mortgage firm Mr. Cooper.
Despite these setbacks, the bank's CFO, Craig Gifford, remains optimistic. He noted that the new management team has gained better visibility into the business with each month that passes. Gifford also expects the bank to continue identifying "efficiency opportunities" and reducing costs.
In an effort to strengthen its risk infrastructure, NYCB has hired veterans from the Office of the Comptroller of the Currency (OCC) in recent months. The bank has also made a number of hires to bolster its commercial and industrial lending business.
NYCB has adjusted its projection for return on average tangible common equity in 2026 from 7.5% to 8% to 4.5% to 5%. The bank has also pushed back its projection to turn a profit, now targeting 2026 instead of 2025.
The bank has made a strategic decision to lower its commercial real estate loans from $45 billion to $30 billion by 2027. This move is part of a larger strategy to rebalance its loans following the Federal Reserve's recent rate cut.
Looking ahead, NYCB is forecasting higher non-interest expense ranges for 2025 and 2026. The bank expects to post a loss for 2025, and its profit expectations for 2026 have been whittled down to 75 cents to 80 cents per share.
Despite these challenges, Otting, who ran the OCC from 2017 to 2020, stated that the bank has built a strong bridge to its regulators. He noted that the bank was "not ready to be regulated by the OCC" earlier this year, but has since made significant strides in strengthening its risk infrastructure and financial position.
The search results do not specify who led NYCB in 2020, so this information is not available from the provided sources. However, it is clear that the bank is making significant changes to position itself for long-term success. The bank has moved one large office transaction to be held for sale, and expects it to close in November.
In conclusion, NYCB's third-quarter financial results reveal a challenging period for the bank, but the management team remains optimistic about the bank's future. The bank is making strategic decisions to rebalance its loans, strengthen its risk infrastructure, and position itself for long-term success.
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