NYCB is set to sell nearly $5 billion:
EMBATTLED regional lender New York Community Bancorp (NYCB) announced on Tuesday (May 14) that it has agreed to sell approximately $5 billion in mortgage warehouse loans to JPMorgan Chase.
The deal enhances NYCB’s liquidity and capital as it undertakes a critical turnaround to achieve profitability within the next two years.
NYCB anticipates that the transaction will increase its CET1 capital ratio by 65 basis points and improve its liquidity profile, as the sale proceeds will be reinvested into cash and securities, the company stated.
On a pro-forma basis, the ratio of cash and securities to total assets is expected to increase to 24 percent from 20 percent as of March 31, the bank reported. Additionally, its pro-forma loan-to-deposit ratio is projected to decrease to 104 percent from 110 percent at the end of the first quarter.
The sale of these loans follows NYCB’s commitment to reduce its balance sheet by trimming non-core assets.
The bank had announced plans to lower its exposure to the commercial real estate sector, its primary business, from nearly $47 billion at the end of March to around $30 billion. This sector has been adversely affected by higher borrowing costs and lower occupancy rates.
