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New York Community Bancorp posted a wider-than-expected loss in the third quarter on a drop in net interest income, continued costs related to its merger with Flagstar Bancorp and the sale of its mortgage warehouse business.
During the three months ended Sept. 30, the company reported a net loss of $280 million, or 79 cents per share, compared with a profit of $207 million, or 81 cents a share, a year ago. Analysts polled by S&P had estimated the third-quarter loss would be $141 million.
Net interest income fell 42% from a year ago to $510 million due to higher average interest-bearing liabilities and an increase in the cost of funds. The drop was partially offset by growth in average interest-earning assets, New York Community said.
The net interest margin fell to 1.79% from 3.27% in the year-ago quarter.
Noninterest income slid to $113 million from $160 million a year ago. Included in non interest income was $23 million in fees and costs associated with the sale of the mortgage warehouse business, which closed in late July, the bank said.
Deposits rose 5% to $83 billion. Chairman, President and CEO Joseph Otting said the Private Bank division saw strong growth as customers returned to Flagstar and as New York Community forged new relationships.
New York Community used part of its liquidity from its deposit growth to pay down some of its wholesale borrowings, which fell 31% from a year ago to $19 billion. "This positive shift in our overall funding mix will help reduce our overall funding costs," Otting said.
New York Community has been trying to cover potentially bad loans. Between the fourth quarter of 2023 and the second quarter of 2024, its provisions for credit losses totaled $1.2 billion. In the third quarter, the provisions added up to $242 million, down from $390 million in the second quarter but still nearly quadruple the $62 million it set aside a year ago.
Net charge-offs also fell from the second quarter, to $240 million from $349 million, but well ahead of the year-ago amount of $24 million. The charge-offs included about $45 million taken on non-accrual loans that were moved to held for sale, New York Community said.
The charge-offs represented 0.31% of average loans outstanding in the third quarter, up from 0.03% a year ago.
Otting said New York Community took substantial charge-offs across its multifamily and commercial real estate portfolio. "Our CRE exposure continues to decline through a combination of par pay-offs and proactively managing problem loans," he said.
Total CRE loans fell 6% from a year ago, and of the $2.1 billion of multifamily loans that have repriced this year, more than 90% have paid off at par or remain current, Otting said.
New York Community's share price fell 4.6% in premarket trading to $10.97.
It's been an unsettled — and often excruciatingly difficult — nine months at New York Community, the Long Island-based parent company of Flagstar Bank. In late January and well into February, its stock price tanked amid troubles with commercial real estate loans, deficiencies in internal controls and
He and his new management team worked to draft a new strategic plan for New York Community. The overhaul includes simplifying its business model by selling non-core divisions.
In July, the company announced plans to sell the
The company said last week that it has laid off about 800 employees, or 8% of its workforce, and expects to terminate the employment of about 1,200 more when the Mr. Cooper sale is finalized.
There's more change to come. The bank is ditching New York Community Bancorp as the name of its holding company and
New York Community acquired Troy, Michigan-based Flagstar Bancorp in late 2022 as part of a strategy to diversify its loan portfolio. A few months later, as the spring 2023 banking crisis was unfolding, it
The pair of deals pushed New York Community's total assets
