New York Community Bancorp in Hicksville will have a long road to return to profitability.
The $113 billion-asset company lost $327 million in the first quarter after posting a $2.7 billion loss a quarter earlier. The first quarter included a $315 million loan-loss provision.
“While this year will be a transitional year for the company, we have a clear path to profitability over the following two years,” Joseph Otting, the company’s new president and CEO, said in a press release.
Executives said a deal to sell $5 billion of noncore assets is possible, though they did not disclose any details.
The company said in a presentation that it expects to set aside $750 million to $800 million this year to cover potential loan losses.
The goal is to return to profitability next year, then have “significantly higher profitability and higher capital levels” by the end of 2026, he said, including a 1% return on average earnings and return on average tangible common equity between 11% and 12%.
Otting said the company completed an in-depth review of its loan portfolio, including the top 250 multifamily loans, 50 biggest office loans, and the 50 biggest non-office commercial real estate loans.
“We anticipate an elevated level of loan-loss provision over the remainder of 2024,” Otting warned.
Nonperforming loans rose by 86% from the end of last year, to $798 million, largely because of an increase in nonperforming multifamily and CRE loans. Nonperforming assets increased by 83% over that period, to $811 million.
New York Community had $10 million of net chargeoffs in the first quarter tied to multifamily loans, or double what it had a quarter earlier.