New York Community Bancorp sells $7.5 billion in assets

Executives of New York Community Bancorp Inc. said Thursday the Hicksville-based lender has strengthened its finances by selling assets and winning new deposits — each valued in the billions of dollars — after nearly going under five months ago.

Joseph M. Otting, the former U.S. comptroller of the currency hired in March to turn around NYCB, said it had raised $7.5 billion this week by disposing of mortgage warehouse loans and a residential mortgage-servicing operation.

Banking behemoth JPMorgan Chase paid $6.1 billion for the mortgage warehouse loans, which are lines of credit given to independent mortgage banks who can use the funds to provide home mortgages. Mr. Cooper, a large mortgage provider, paid $1.4 billion for the mortgage-servicing operation, Otting said in announcing NYCB’s earnings for the April-June period.

NYCB reported a loss of $323 million for the period, compared with a profit of $413 million in April-June 2023. The latter was boosted by NYCB’s purchase of Michigan-based Flagstar Bank and some of the assets of Signature Bank after it was taken over by federal regulators.

NYCB’s loss totaled $327 million in the January-March period.

On Wall Street, investors responded to Thursday’s earnings report by sending NYCB’s stock lower. The bank’s shares closed down 33 cents, or 3%, to $10.61 on the New York Stock Exchange.

"We will have a simpler organization when we've concluded the asset sales and move the company forward," said Otting, the bank's CEO, president and board chairman. He added that between $2 billion and $5 billion in additional assets could be sold this year.

NYCB is "on a path to success," he told stock analysts on a conference call. "We have a firm hand on the steering wheel of the company and are excited to be in the position that we are today."

Otting said NYCB received $4.2 billion in new deposits in the April-June period, an increase of nearly 6% from the January-March period.

The bank's branches now use the Flagstar Bank name after the Roslyn Savings Bank, Queens County Savings Bank, New York Community Bank and other brand names were retired in February.

NYCB's woes began in February when its stock price tanked — going from $10 per share to under $3 — on news of a $2.4 billion charge against its 2023 earnings because of troubled loans for rent-regulated apartments and office buildings. The unexpected charge turned the projected profit into a loss.

At the time, NYCB was being compared with Silicon Valley Bank and Signature Bank, both of which failed last year. Weeks later, NYCB board member Alessandro "Sandro" DiNello helped to arrange a $1.1 billion cash infusion from an investor group led by former Treasury Secretary Steven Mnuchin, who, like Otting, worked in the administration of then-President Donald Trump.

Asked on Thursday if Mnuchin could remain involved with NYCB if he went back into government service, assuming Trump won in November, Otting said Mnuchin has said publicly that he doesn't believe he would have to sell his stake in the bank.

"We value [Mnuchin's] activities and input ... to help us kind of navigate all the activities" of strengthening NYCB, Otting said.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.