New York Community Bancorp (NYCB) Q3 Earnings call transcript Oct 25, 2024
2min read New York Community Bancorp, a regional bank focusing on consumer, small business, commercial banking, private banking, and commercial real estate, recently held its third quarter 2024 earnings call, revealing significant progress in its transition into a diversified regional bank. The call, led by Chairman, President, and CEO Joseph Otting, provided a comprehensive overview of the company's financial performance and strategic initiatives.
Strategic Initiatives and Financial Highlights
The company has been actively building out its middle market commercial banking and specialized industry lending verticals, hiring over 30 new employees in the last 90 days. This includes the addition of a new Chief Information Officer, Chris Higgins, who brings extensive experience from U.S. Bank and MUFG. These hires are part of the company's efforts to attract top-tier talent and position itself for future growth.
In terms of financial performance, New York Community Bancorp reported a solid deposit growth in both retail and the private bank. The private bank, in particular, saw many customers returning after the disruption earlier in the year, and the bank won new relationships. The private banking deposits are also more moderately priced, with a weighted average cost in the low 2% range.
The company also made strategic decisions to exit certain nonrelationship-based businesses and reduce exposures under large exposures. This led to a decrease in C&I loans by $1.3 billion or 8%, bringing the pro forma CET1 ratio, including the impact of the sale of the MSR and third-party origination business, to 11.4%. This compares favorably to the company's peers and indicates a strong financial position.
Operational Efficiency and Liquidity
The company has been focusing on reducing operating expenses while still investing in key areas like commercial, private banking, and risk infrastructure. It recently announced a workforce reduction plan, which will show up in the fourth quarter results, and took out significant nonpersonnel costs. These efforts are expected to help the company meet its earnings forecast goals by year-end 2027.
In terms of liquidity, the company has a robust liquidity profile, with over $41 billion in total liquidity representing approximately 300% of uninsured deposits. This strong liquidity position has enabled the company to pay down $9 billion in wholesale borrowings and an additional $1 billion in October.
Credit and Risk Management
New York Community Bancorp has been proactively managing its credit and risk management, completing a review of virtually the entire CRE portfolio. By the end of the third quarter, 97% of the total CRE portfolio was reviewed, with significant progress made in reducing nonperforming loans. The company has also been adding talent and resources to its risk management area, building out its risk governance infrastructure.
Looking Ahead
The company's strategic focus on diversifying its business and enhancing its risk management capabilities positions it well for future growth. With a solid financial foundation and a commitment to attracting top talent, New York Community Bancorp is well-positioned to capitalize on opportunities in the consumer, small business, commercial banking, and commercial real estate sectors.
Conclusion
New York Community Bancorp's third quarter 2024 earnings call highlighted the company's strong financial position, strategic initiatives, and commitment to operational efficiency and risk management. With a clear focus on growth and diversification, New York Community Bancorp is well-positioned to navigate the evolving banking landscape and create value for its shareholders.
