By Manya Saini and Niket Nishant
(Reuters) – New York Community Bancorp (NYSE:NYCB) on Friday delayed its goal of turning profitable by a year to 2026 as the regional lender struggles to cut its exposure to commercial real estate, while selling non-core businesses and cutting costs.
NYCB was aiming to breakeven or make a profit of 5 cents per share in 2025, but now expects to report a per share loss of 30 cents to 35 cents, sending its shares down 10% before the bell.
The lender posted its fourth straight quarter of loss as mortgage payments take a hit from office properties struggling to recover from the pandemic-led lockdowns and elevated refinancing costs adding to the woes.
Its third-quarter loan-loss provision jumped nearly four-fold to $242 million. Ballooning charge-offs – debt written off as unlikely to be recovered – have led regional lenders to increase provisions to cover the CRE sector.
“On the asset quality front, we have completed 97% of our annual review of the multi-family and commercial real estate portfolios and have taken substantial charge-offs across the portfolio,” CEO Joseph Otting said.
Currently, multi-family apartment blocks comprise 47% of NYCB’s $71.1 billion loan book, with a big share on buildings with controls on how much landlords can raise rents, which has dimmed their appeal.
The lender had earlier this month decided to cut 700 jobs, representing 8% of its total workforce, as part of its turnaround plan.
Additionally, 1,200 more employees are set to leave the bank as it completes the divestiture of its mortgage servicing and third-party origination business.
Even in 2026, NYCB expects a smaller profit of 75 cents to 80 cents per share, compared with its prior forecast of $1.25 to $1.30.
MOUNTING LOSSES
Since posting a surprise fourth-quarter loss on Jan. 31 due to CRE exposure, NYCB has been under pressure, forcing it to shake-up its top management and face intense regulatory scrutiny.
After reporting a bigger third-quarter loss than market expectations on Friday, it now expects to end the year with a bigger annual loss than initially expected.
On a per-share basis, it expects full-year loss of $3 to $3.10 compared with the prior view of $2.20 to $2.30.
Net charge-offs totaled $240 million compared with $349 million, in the prior quarter ended June 30.
Meanwhile, net interest income – the difference between what a bank earns off loans and pays out on deposits – slumped 42% to $510 million.
NYCB posted a net loss available to common shareholders of $289 million, or 79 cents per share, compared with a profit of $199 million, or 81 cents per share, a year ago.
On an adjusted basis, per share loss of 69 cents in the third quarter, was bigger than analysts’ estimates of 40 cents, according to data compiled by LSEG.
(This story has been refiled to fix syntax in the headline)