NYCB sells $5 billion loan book to JPMorgan, an ‘important first step’ in turnaround
(Muh Turd Polishing 101….remember Munchkins put money into this too)
New York Community Bancorp’s stock gave back recent gains Wednesday on the heels of a $5 billion loan sale to JPMorgan Chase & Co., which marks a fresh move in the bank’s plan to turn a profit.
Jefferies analyst Casey Haire said the deal for JPMorgan Chase JPM to acquire the mortgage-warehouse loans marks an “important first step to restore credibility” as NYCB looks to reverse recent losses. NYCB’s stock NYCB, -5.63% fell 4% on Wednesday as it gave back recent gains. The stock is up 1.8% in the past week and ahead by 31.5% in the past month.
Measured against its starting point for 2024, however, the stock remains 62% lower for the year after a surprise loss and a material-weakness disclosure earlier this year.
The loan sale marks “incremental progress from the train wreck back in February and March,” Janney analyst Chris Marinac said in an email to MarketWatch. On Wednesday, Jefferies reiterated a hold rating and a stock-price target of $3.50 for NYCB on the heels of the bank’s loan-sale deal, which is expected to close in the third quarter.
JPMorgan’s NYCB loan purchase resembles a smaller-scale version of the bank’s work with other banks to provide $30 billion in capital to struggling First Republic Bank last year, according to a source familiar with the bank. JPMorgan ended up buying First Republic in a government-led transaction.
JPMorgan’s Commercial & Investment Bank is adding the NYCB loan portfolio to its sizeable loan-securitization business, while providing capital to a commercial client that was shedding a noncore business at a competitive market price, the source said. Common-equity Tier 1, or CET1, ratios reflect a lender’s capital against its assets, which include cash and stock and other liquid holdings. Meanwhile, NYCB’s loan-to-deposit ratio will go down to 104% from 110% as the loan sale to JPMorgan increases the bank’s liquidity profile.
Even at 104%, however, the bank will still be “meaningfully above” the average loan-to-deposit ratio of its peer group, Jefferies noted.
https://www.marketwatch.com/story/nycbs-loan-sale-to-jpm-praised-as-important-first-step-in-turnaround-1d9fded3