New York Community (NYCB) Reports Loss in Q2, Stock Tanks 3%

Core Viewpoint - New York Community Bancorp (NYCB) reported a significant net loss in the second quarter of 2024, primarily due to increased provisions for credit losses and declining revenues [11][12]. Financial Performance - NYCB reported a second-quarter 2024 loss per share of $1.05, wider than the Zacks Consensus Estimate of a loss of 38 cents, compared to earnings of $1.41 in the same quarter last year [1] - The net loss available to common shareholders was $333 million, a decline from a net income of $405 million in the prior-year quarter [2] - Quarterly revenues were $671 million, a decline of 44.2% from the prior-year quarter, missing the Zacks Consensus Estimate of $701.4 million [3] - Non-interest income was $114 million, down from $302 million reported in the year-ago quarter, attributed to reductions in loan administration income, loan sales, and lower fee income [4] - Net interest income (NII) was $557 million, down 38.1% from the prior-year quarter, with a net interest margin of 1.98%, declining from 3.21% in the previous quarter [13] Expense and Efficiency - The efficiency ratio was 95.05%, up from 48.26% in the year-ago quarter, indicating deteriorating profitability [5] - Non-interest expenses increased by 6.7% year over year to $705 million, driven by the impact of the Signature Bank transaction and higher professional fees [14] Credit Quality - The provision for credit losses was $390 million, significantly up from $49 million in the prior-year quarter, with net charge-offs of $349 million compared to a net recovery of $1 million in the prior-year quarter [6] - Non-performing assets rose to $1.96 billion, a significant increase from $246 million as of June 30, 2023 [16] Capital Ratios - As of June 30, 2024, the common equity tier 1 (CET1) ratio was 9.54%, up from 9.45% as of March 31, 2024, while the total risk-based capital ratio declined to 12.78% from 13.09% in the prior quarter [7] - The leverage capital ratio decreased to 7.53% from 7.90% [17] Recent Developments - NYCB's bank subsidiary, Flagstar Bank, announced plans to sell its residential mortgage servicing business to Mr. Cooper Group Inc. for $1.4 billion, expected to close in Q4 2024, which is anticipated to increase the CET1 ratio by approximately 60 basis points [18] - The company aims to simplify its business model through this sale, although rising expenses across various components may hinder bottom-line growth [19]