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NEW YORK COMMUNITY BANCORP, INC. (NYCB)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 was another transitional quarter: total revenues were $623M, net loss attributable to common was $(289)M (diluted EPS $(0.79)), and net interest margin compressed to 1.79% as deposit costs rose and nonaccruals weighed on NII .
  • Funding mix improved: deposits rose $4B to $83B (+5%) while wholesale borrowings fell 31% to $19.3B, driving the loan-to-deposit ratio down to 86% from 110% in Q1; liquidity stood “over $41B” with ~299% uninsured deposit coverage (surprise positive) .
  • Credit costs remained elevated: provision was $242M and net charge-offs $240M, with NPL ratio up to 3.54% from 2.61% in Q2; ACL coverage increased to 1.87% of loans .
  • Management guided: provisions for FY24 raised to $1.1–$1.2B; NIM has likely bottomed in Q3 with Q4 similar, then improvement through 2025; FDIC assessments ~+$100M annually in 2025–2026; workforce reduction actions to reduce opex (new catalysts) .
  • Name change catalyst: holding company rebranded to Flagstar Financial (FLG) at quarter-end; CFO confirmed MSR and broker business sale expected to close in early November (process milestone) .

What Went Well and What Went Wrong

What Went Well

  • Funding rebalanced: deposits +$4B to $83B, retail +$2.5B (+8%) and Private Bank +$1.8B (+11%); wholesale borrowings down ~$8.6B to $19.3B; loan-to-deposit ratio improved to 86% (“positive shift in funding mix”) .
  • Liquidity and capital strengthened: total liquidity “over $41B” (~300% coverage of uninsured deposits) and CET1 10.76% (pro-forma 11.4% including MSR sale benefit) .
  • CRE de-risking: ~$1B CRE payoffs at par in Q3 (34% from substandard), and 97% of CRE portfolio reviewed; >90% of repriced multi‑family loans paid off at par or remain current (favorable borrower performance) .

Management quotes:

  • “We made significant progress on each of our strategic priorities... utilized... liquidity to pay down a significant amount of wholesale borrowings” .
  • “Liquidity remains extremely strong at over $41 billion... approximately 300% coverage to uninsured deposits” .
  • “Approximately $2.1 billion of our multi-family reached their repricing date… over 90% have either paid off at par or remain current” .

What Went Wrong

  • Earnings pressure: net interest income fell to $510M (−8% q/q; −42% y/y) and NIM to 1.79% (−19bp q/q), primarily due to higher deposit costs and nonaccruals .
  • Elevated credit costs and nonaccruals: provision $242M; NPLs rose to $2.514B (3.54% of loans); net charge-offs $240M, with CRE and multi‑family driving losses .
  • Higher operating expenses: operating expenses $661M (+4% q/q), FDIC insurance +8% q/q to $98M; CFO guided FDIC assessments to remain elevated in 2025–2026 (headwind) .

Financial Results

MetricQ3 2023Q2 2024Q3 2024
Total revenues ($USD Millions)$1,042 $671 $623
Net interest income ($USD Millions)$882 $557 $510
Non-interest income ($USD Millions)$160 $114 $113
Provision for credit losses ($USD Millions)$62 $390 $242
Net income (loss) attributable to common ($USD Millions)$199 $(333) $(289)
Diluted EPS ($USD)$0.81 $(1.14) $(0.79)
Net interest margin (%)3.27% 1.98% 1.79%
Efficiency ratio (%)56.15% 95.05% 105.96%

Segment/Portfolio Mix

Loans Held for Investment ($USD Millions)Dec 31 2023Jun 30 2024Sep 30 2024
Multi-family$37,265 $36,011 $35,140
CRE & ADC$13,382 $13,178 $12,482
One-to-four family first mortgage$6,061 $5,790 $5,247
Commercial & Industrial$25,254 $17,819 $16,474
Other loans$2,657 $1,754 $1,773
Total LHFI$84,619 $74,552 $71,116

KPIs – Funding and Capital

MetricQ2 2024Q3 2024
Total deposits ($USD Billions)$79.0 $83.0
Wholesale borrowings ($USD Billions)$27.871 $19.310
CET1 ratio (Company) (%)9.54% 10.76%
Liquidity coverage of uninsured deposits (%)~310% ~299%
Book value per common share ($)$22.47 $19.43
Tangible book value per common share ($)$20.89 $18.18

KPIs – Credit Quality

MetricQ2 2024Q3 2024
NPLs to total loans (%)2.61% 3.54%
NPAs to total assets (%)1.65% 2.21%
Total non-accrual loans ($USD Millions)$1,944 $2,514
Total ACL ($USD Millions)$1,326 $1,328
Total ACL % of total loans (%)1.78% 1.87%
Net charge-offs ($USD Millions)$349 $240
Net charge-offs to avg loans (%)0.42% 0.31%

Non-accrual Loans by Category

Category ($USD Millions)Dec 31 2023Jun 30 2024Sep 30 2024
Multi-family$138 $794 $1,504
Commercial real estate$128 $753 $692
One-to-four family$95 $108 $39
Acquisition, development & construction$2 $18 $21
Commercial & industrial$43 $250 $235
Total non-accrual LHFI$428 $1,944 $2,514

Loan-to-Deposit Ratio

MetricQ1 2024Q3 2024
Loan-to-deposit ratio (%)110% 86%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Provision for credit losses ($USD Billions)FY 2024Lower (not quantified) $1.1–$1.2 (raised) Raised
Net interest margin (%)Q4 2024–FY 2025Not specifiedBottomed in Q3; Q4 similar; increases through 2025 Clarified trajectory
FDIC assessment expense ($USD Millions)FY 2025–2026Not specified~+$100 per year due to criticized/classified loans Added cost headwind
Deposits (Retail and Private Bank)Q4 2024Not specifiedRetail flat to slightly positive; Private Bank growth positive (less strong than Q3) New commentary
Wholesale borrowingsOct 2024 onwardOngoing reductionPaid down additional $1B in October; gradual further reductions in 2025 as brokered CDs roll Updated actions
Operating expense run-rateFY 2025–2026Not specified~$200M/year efficiency improvements expected; more to come New efficiency target
Q4 one-time charges ($USD Millions)Q4 2024Not specified~$100 from mortgage exit and severance New one-time items
MSR & third-party origination saleNov 2024Expected by SeptClosing early November (slight delay) Timeline updated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Funding & liquidityLiquidity $28B (Q1) rising to >$33B, pro-forma ~$40B (Q2) Liquidity “over $41B”; ~299% uninsured deposit coverage Improving liquidity coverage
DepositsResilient post-capital raise (Q1); deposits +$4.2B in Q2 Deposits +$4B; Retail +$2.5B; Private Bank +$1.8B Continued growth; pricing being reduced
CRE portfolio review & de-riskingExpanded review to 75% by Q2; charge-offs elevated 97% reviewed; ~$1B payoffs at par; >90% repriced MF current/payoff Ongoing de-risking; NPLs elevated through 2026
Nonaccruals & credit costsNPLs 0.97%→2.61% (Q1/Q2); provision rising NPLs 3.54%; provision $242M; FY24 guide raised Elevated near-term; tapering expected in 2025
C&I strategy buildoutMgmt hires; strategic plan outlined (Q1/Q2) >30 hires; goal to reach $30B C&I in 3–5 years Building; deposit/loan growth expected late 2025
Risk management infrastructureStrengthened board/exec team (Q1/Q2) Additional OCC-experienced hires; first/second/third line build-out Strengthening controls
FDIC assessmentsNot emphasized (Q1/Q2)~$100M annual headwind in 2025–2026 New sustained cost headwind
Corporate actionsReverse split (Q2); sales of mortgage assets planned Name change to FLG; MSR sale closing early Nov Rebranding; portfolio simplification

Management Commentary

  • CEO: “We made significant progress on multiple fronts towards our goal of becoming a diversified regional bank… second consecutive quarter of strong deposit growth… utilized liquidity to pay down wholesale borrowings.”
  • CEO: “Our CRE exposure continues to decline through… par pay-offs… of the $2.1B of multi-family loans that have repriced this year, over 90% have paid off at par or remain current.”
  • CFO: “Pro-forma CET1 ratio is 11.4%… We expect [MSR sale] transaction will close in the next couple of weeks… margin has bottomed in the third quarter; similar in the fourth, increasing through 2025.”
  • CCO: “We had just over $1B in CRE payoffs in the third quarter… approximately 34% were related to our substandard portfolio… 97% of the total CRE portfolio reviewed.”

Q&A Highlights

  • Rate sensitivity and deposit betas: Slightly liability-sensitive; brought down premium deposit rates by 60–75bp; modeled 50 beta on interest-bearing deposits; spot savings ~5% and falling .
  • Nonaccrual trajectory and provisioning: NPLs expected to remain elevated through 2026 due to repricing windows; FY24 provision raised to $1.1–$1.2B; charge-offs slightly lower in Q4 then tapering in 2025 .
  • Balance sheet strategy and Category 4 standards: Plan is not to shrink below $100B simply to exit enhanced standards; expect relatively flat balance sheet with mix shift from CRE/MF to C&I .
  • Operating expense and FDIC costs: Workforce reduction and process/technology efficiencies to deliver ~$200M/year savings; FDIC assessment nondeductible and volatiles tax rate .
  • Borrowings and funding: Additional $1B wholesale borrowing paydown in October; plan to let brokered CDs roll in 2025 and replace with customer deposits .

Estimates Context

  • S&P Global consensus estimates were unavailable via our data connector for NYCB this quarter; as a result, we cannot quantify beats/misses versus Street for EPS or revenue at this time (system mapping error) [SpgiEstimatesError].
  • Given raised FY24 provisions, elevated FDIC costs in 2025–2026, and NIM bottoming in Q3, Street EPS estimates for 2025–2026 likely need downward revision near term, with recovery path tied to CRE repricing and C&I growth (per management guidance) .

Key Takeaways for Investors

  • Funding shift is a clear positive: deposits +$4B and wholesale borrowings −31% to $19.3B drove loan-to-deposit ratio to 86% and bolstered liquidity and capital—supports NIM recovery in 2025 as deposit pricing normalizes .
  • Credit remains the swing factor: NPLs up to 3.54% and provisions elevated, with management signaling nonaccruals remain high into 2026 due to repricing windows—expect continued headline volatility around credit and ACL coverage .
  • Margin inflection setup: management believes NIM has bottomed; Q4 similar to Q3, then lift through 2025 driven by CRE/MF repricing—watch deposit betas and nonaccrual trajectory to validate the margin path .
  • Cost actions provide cushion: workforce reductions and process improvements target $200M/year savings; one-time Q4 charges ($100M) are a near-term drag but set up 2025 run-rate improvement .
  • FDIC assessment headwind is material: ~$100M annual nondeductible cost in 2025–2026 compresses earnings and moves tax rate—factor this into EPS and valuation frameworks .
  • Strategic pivot to C&I: >30 senior hires; plan to grow C&I loans to ~$30B over 3–5 years with relationship deposits (2:1 loans-to-deposits goal), suggesting medium-term balance sheet rebasing and fee opportunities .
  • Corporate identity and portfolio simplification: rebranding to FLG and MSR/third-party origination sale closing early November—expect continued simplification and capital optimization narrative as catalysts .

Citations:

  • Q3 2024 8-K press release:
  • Q3 2024 earnings call transcript:
  • Q2 2024 8-K press release:
  • Q1 2024 8-K press release:

Note on estimates: S&P Global consensus data was unavailable for NYCB via our connector this quarter (tool error).