New York munity Bancorp(US:NYCB)2024-10-25 16:25Financial Data and Key Metrics Changes - The net loss attributable to common stockholders was $289 million or $0.79 per share, primarily driven by provisions and expenses for the quarter [24] - The pro forma CET1 ratio, including the impact of the sale of the MSR and third-party origination business, is 11.4%, which is favorable compared to peers [8][14] - The actual GAAP CET1 ratio at the end of the quarter was 10.8% [14] Business Line Data and Key Metrics Changes - C&I loans declined by $1.3 billion or 8% compared to the second quarter due to the runoff of non-core businesses [7] - Retail deposits increased by $2.5 billion or just under 8% this quarter, while Private Bank deposits rose by $1.8 billion or 11% [19] - The company aims to grow its C&I loans from approximately $16 billion to $30 billion over the next three to five years [13] Market Data and Key Metrics Changes - The liquidity position remains strong at over $41 billion, providing approximately 300% coverage to uninsured deposits [9][24] - The company has paid down $9 billion in wholesale borrowings, with an additional $1 billion paid down in October [9][39] Company Strategy and Development Direction - The company is focused on becoming a diversified regional bank, emphasizing consumer, small business, commercial banking, private banking, and commercial real estate [5] - A strategic decision was made to exit certain non-relationship-based businesses to reduce exposure [7] - The company is actively hiring experienced bankers to support its C&I strategy and has added over 30 new hires in the last 90 days [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to manage credit risk and improve the loan portfolio, with proactive measures being taken to address problem loans [10][23] - The company anticipates that non-accrual loans will remain elevated through 2026, but expects to see improvements in 2027 [15][31] - Management highlighted the importance of deposit growth and the positive shift in funding mix as a result of recent strategies [12][19] Other Important Information - The company plans to rebrand its holding company to Flagstar Financial, aligning with its retail banking brand [26] - The company is undergoing a workforce reduction plan that will impact fourth-quarter results [8] Q&A Session Summary Question: Impact of forward rate curve changes on balance sheet positioning - Management indicated that the company is slightly liability-sensitive and will benefit from lower rates, with successful reductions in deposit rates recently [27] Question: Non-accrual loans and potential sales - Management is exploring all opportunities to reduce the non-accrual portfolio, including discounted payoffs and potential sales, but believes they can achieve better outcomes through internal management [28] Question: Credit quality risk and provisioning outlook - Management stated that the provisioning outlook remains unchanged, indicating that risks tied to repricing have been ringfenced through reserves [30] Question: Visibility on projections and confidence levels - Management expressed increased confidence in projections due to improved visibility into portfolio performance and ongoing cost improvements [36] Question: C&I platform development progress - Management indicated that they are in the early stages of building out the C&I platform, with plans to increase headcount significantly [38] Question: Future borrowing levels and pace of reduction - Management expects to match loan growth with deposit growth and gradually reduce broker deposit funding as customer deposits increase [39]