New York munity Bancorp(US:NYCB)2024-11-08 21:12Financial Performance - The Company reported a net loss of $280 million for Q3 2024, an improvement from a net loss of $323 million in Q2 2024, with a loss per diluted share of $0.79 compared to $1.14 in Q2 2024[20]. - For the first nine months of 2024, the Company experienced a net loss of $930 million, a significant decline from a net income of $2.6 billion in the same period of 2023, resulting in a loss per diluted share of $3.16 compared to earnings of $10.84 per diluted share in 2023[22]. - Included in the Q3 2024 results were $37 million of merger-related expenses, contributing to the overall net loss[20]. - The Company reported a $121 million reduction in the bargain purchase gain from the Signature transaction during the first nine months of 2024[22]. - Total non-interest income for the first nine months of 2024 was $236 million, a significant decrease from $2.6 billion in the same period of 2023, primarily due to the impact of the Signature transaction[47]. - Total non-interest expenses for the first nine months of 2024 were $2.1 billion, up 15% from $1.85 billion in the same period of 2023, largely due to increased FDIC insurance expenses[52]. - The company reported a net unrealized loss on securities available for sale of $468 million, improved from a loss of $581 million[173]. - The company experienced a net increase in cash, cash equivalents, and restricted cash of $11,542 million, compared to an increase of $5,047 million in the previous year[184]. Capital and Liquidity - The Company raised $1.05 billion in equity capital in March 2024 to stabilize its financial position after experiencing significant stock price declines and customer deposit withdrawals[18]. - The sale of the warehouse lending portfolio, valued at approximately $6 billion, was completed in Q3 2024, enhancing liquidity and increasing capital ratios by approximately 70 basis points[19]. - The Company expects the sale of its mortgage servicing activities, completed on October 31, 2024, to further increase its common equity Tier 1 capital ratio by approximately 60 basis points in Q4 2024[19]. - The company’s total liquidity reached $41.4 billion as of September 30, 2024, an increase of $11.6 billion from $27.9 billion at December 31, 2023[127]. - The company has total liquidity of $41.4 billion, exceeding uninsured deposits by $24.8 billion[132]. - The company significantly increased its on-balance sheet liquidity during 2024 to meet Category IV prudential standards, which require maintaining a liquidity buffer equal to the 30-day stress horizon[159]. Loan Portfolio and Credit Losses - The Company faced significant loan portfolio stress due to declines in the office sector and inflation in the multi-family sector, impacting its financial performance[18]. - A $2.3 billion increase in nonaccrual loans led to a reversal of previously accrued interest income[36]. - Provision for credit losses for Q3 2024 totaled $242 million, down from $390 million in Q2 2024, reflecting lower charge-offs due to fewer larger-balance office property downgrades[39]. - For the first nine months of 2024, provision for credit losses increased to $947 million from $281 million in the same period of 2023, driven by risk rating downgrades in commercial real estate and multi-family loans[41]. - Total non-accrual loans reached $2.514 billion at September 30, 2024, an increase of $2.086 billion from December 31, 2023[111]. - The allowance for credit losses on loans and leases increased to $1.3 billion, up $272 million from $1.0 billion at December 31, 2023[118]. - The allowance for credit losses to total loans held for investment ratio rose to 1.78% at September 30, 2024, compared to 1.17% at December 31, 2023[120]. Deposits and Funding - The customer deposit base stabilized and grew substantially in Q2 and Q3 2024 due to returning private banking customers and promotional programs for retail customers[18]. - Total deposits increased by $1.5 billion to $83.0 billion as of September 30, 2024, following a stabilization after a $9.7 billion deposit attrition earlier in the year[59]. - Total brokered deposits increased to $12.771 billion as of September 30, 2024, up from $9.462 billion on December 31, 2023, representing a 35.5% growth[129]. - Uninsured deposits amounted to $16.6 billion as of September 30, 2024, a decrease following credit rating downgrades in early 2024[133]. - Certificates of deposit stood at $29.3 billion and long-term debt at $14.3 billion as of September 30, 2024[136]. Asset Management - Total assets increased by $0.3 billion to $114.4 billion as of September 30, 2024, compared to $114.1 billion at December 31, 2023[56]. - Total loans and leases held for investment decreased by $13.5 billion to $71.1 billion as of September 30, 2024, primarily due to the sale of the warehouse lending portfolio[57]. - The securities portfolio increased by $1.4 billion to $10.5 billion as of September 30, 2024, with over 90% classified as low credit risk U.S. government agency bonds[58]. - The average yield on investment securities increased by 48 basis points due to the replacement of lower rate securities with higher rate securities[37]. - The net unrealized loss on securities available for sale was $468 million as of September 30, 2024, down from $581 million at December 31, 2023[87]. Regulatory and Compliance - The effective tax rate for Q3 2024 was 16.34%, down from 23.69% in Q2 2024, primarily due to a lower book loss related to the provision for credit losses[53]. - The company is subject to a supervisory stress test every other year, with the first test applicable in 2026[159]. - The company has identified material weaknesses in internal control over financial reporting, with remediation progress ongoing as of September 30, 2024[169]. - Proposed amendments to the Basel III Capital Rules may require the company to calculate risk-based capital ratios under both current and expanded approaches, with potential impacts being evaluated[167]. Strategic Initiatives - The company is strategically diversifying its loan portfolio to shift from multi-family loans to other loan sectors[70]. - The company is curtailing future originations of loans secured by rent-regulated properties to mitigate exposure[70]. - The company announced the sale of its residential mortgage servicing business for approximately $1.3 billion, expected to increase common equity tier 1 ratios by about 60 basis points[165]. - The company completed a business acquisition that resulted in the fair value of tangible assets acquired amounting to $37,526 million[186]. - The Company is assessing the impact of new accounting standards, including ASU 2023-07, which improves segment reporting disclosures, effective January 1, 2024[199].