(Bloomberg) — New York Community Bancorp Inc.’s write-offs and provisions for potential loan losses fell in the first quarter compared with the previous three months, which could help ease commercial real estate concerns that have plagued the lender since its last reporting track results.
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The Hicksville, New York-based lender took a $315 million provision for potential loan losses, higher than analysts’ expectations of nearly $250 million but still less than the $552 million of the previous quarter and the highest estimates. NYCB also took more bad loan write-offs than estimated in the first quarter, with net charge-offs totaling $81 million, but they too were below the fourth quarter’s total.
“Since taking on the role of CEO, my focus has been on transforming New York Community Bank into a high-performing, well-diversified regional bank,” Chief Executive Officer Joseph Otting, who took the helm of the company in early April, said in a statement . “While this year will be a transition year for the company, we have a clear path to profitability over the following two years.”
Shares were up 4.5% at 7:14 a.m. in early New York trading. The stock had plunged 74% this year through Tuesday.
The lender’s total deposits stood at $74.9 billion at the end of March, down from the $77.2 billion reported in an investor update earlier this month. Questions about levels increased during the quarter as the bank struggled with rapid management changes, credit downgrades, stock volatility and bank exits.
The company forecast a full-year loss of 50 cents to 55 cents per diluted share before returning to profitability next year. The forecast also included credit loss provisions of $750 million to $800 million for 2024.
“We expect an increased loan loss provision for the remainder of 2024 as market and interest rate conditions may impact borrower performance in certain portions of our loan portfolio,” Otting said in the statement.
NYCB was a relative winner among regional banks last year after acquiring parts of the failed Signature Bank. That changed in January, when an earnings shock sent share prices into a tailspin and eventually prompted the lender to seek a quick capital injection.
The lender, which has long specialized in rent-regulated New York apartment buildings, spooked investors when its fourth-quarter earnings report included a sharp dividend cut, higher provisions for loan losses than analysts expected and a surprise loss per share. The stock plunged a record 38% in a day on concerns about deterioration in the lender’s home loan portfolio.
In the weeks that followed, NYCB announced that it had identified material weaknesses in its internal credit underwriting controls and had changed its CEO. As the stock plunged, a group of investors led by former Treasury Secretary Steven Mnuchin intervened to inject more than $1 billion in capital into the lender.
Otting was installed as CEO – the bank’s second head replacement in a matter of days – and Mnuchin and other investors joined the board. Otting was quick to shake up NYCB’s top brass, including naming a new chief financial officer and head of commercial real estate lending.
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