(Reuters) -New York Community Bancorp (NYCB) posted its fourth straight quarter of loss on Friday as the regional lender that has been struggling with its exposure to commercial real estate (CRE) market set aside more funds to cover potential loan defaults.
Shares in NYCB fell 7% before the bell on Friday.
Office properties have struggled to recover from the pandemic-led lockdowns as delinquencies rise, while elevated refinancing costs have added to the woes, hurting mortgage payments in the sector.
NYCB’s provisions for credit losses jumped nearly four-fold to $242 million in the third quarter from a year ago. Its stock, which has lost 63% of its value this year, dipped before the bell.
Ballooning charge-offs – debt written off as unlikely to be recovered – have led regional lenders to increase provisions to cover the CRE sector.
Net charge-offs totaled $240 million compared with $349 million, in the prior quarter ended June 30.
The large CRE exposure has also prompted the lender to shake-up its management and face heightened regulatory scrutiny.
“Our CRE exposure continues to decline through a combination of par pay-offs and proactively managing problem loans,” CEO Joseph Otting said in a statement.
Meanwhile, net interest income – the difference between what a bank earns off loans and pays out on deposits – fell 42% to $510 million.
The lender had earlier this month vowed to significantly cut costs under a broad turnaround plan and had announced it would cut 700 jobs, representing 8% of its total workforce.
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.
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.
(Reporting by Niket Nishant and Manya Saini in Bengaluru; Editing by Arun Koyyur)
