US Markets
Wednesday, May 1st, 2024 2:15 pm EDT
Key Points
- New York Community Bank reported a quarterly loss of $335 million due to soured commercial loans and increased expenses, although its stock surged following the announcement of new performance targets.
- CEO Joseph Otting emphasized the bank’s transformation into a high-performing regional institution and outlined a clear path to profitability over the next two years, aiming for higher profitability and capital levels by the end of 2026.
- Otting, who assumed the CEO role in April, revealed plans to sell $5 billion in assets to enhance liquidity levels, potentially closing the transaction within 60 to 70 days, as part of efforts to stabilize the bank’s financial position.
New York Community Bank reported a quarterly loss of $335 million, driven by a surge in troubled commercial loans and increased expenses. The loss, amounting to 45 cents per share, starkly contrasted with the $2.0 billion net income, or $2.87 per share, from a year ago. Adjusted for merger-related charges, the loss stood at $182 million, or 25 cents per share, exceeding the 15 cents per share loss estimate from LSEG. CEO Joseph Otting, who assumed the role recently, emphasized the bank’s transformation into a high-performing regional entity, despite the current transitional phase. Otting outlined a clear trajectory towards profitability over the next two years, projecting improved profitability and capital levels by the end of 2026. This includes targeting a return on average earning assets of 1% and a common equity tier 1 capital level of 11% to 12%. Otting’s leadership commenced following a substantial infusion of funds exceeding $1 billion by an investor group led by former Treasury Secretary Steven Mnuchin. The bank’s challenges began with a turbulent fourth-quarter earnings report, leading to significant stock declines amid management changes and rating downgrades. Despite the losses, shares of the bank surged by 20% in premarket trading, reflecting optimism about the bank’s future prospects. Otting also disclosed plans to enhance liquidity levels by selling $5 billion in assets, a move expected to be completed within 60 to 70 days, potentially bringing stability and bolstering confidence in NYCB’s financial position.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/01/nycb-shares-jump-after-new-ceo-gives-two-year-plan-for-clear-path-to-profitability.html
