Regional lender New York Community Bancorp (NYCB) reminded again Friday that commercial real estate problems are not entirely in the rearview mirror of U.S. banks.
The Hicksville, New York-based regional lender posted higher provisions for credit losses and loan write-offs in the third quarter than Wall Street expected. It also reported its fourth consecutive quarterly loss of $280 million and pushed back its goal of becoming profitable by a year to 2026.
The stock fell more than 8% on Friday morning. As of Friday morning, it is down 66% since the start of the year.
NYCB is a major lender for office buildings and rent-regulated apartment complexes, especially in New York City. With $114 billion in assets, it is one of the 30 largest banks in the country.
Stock prices began plunging in January after the bank set aside more money to cover real estate loan losses partly tied to its New York City-area apartment complexes.
NYCB was able to calm the market with an emergency injection of shares from a group that also included former Treasury Secretary Steven Mnuchin. A new team began reducing the bank’s exposure to commercial real estate while selling businesses, cutting costs and laying off employees.
Earlier this year, the bank pledged to make a profit or break even by 2025 as part of its turnaround.
But on Friday the bank pushed that forecast to 2026, while also cutting the revenue it expects in that breakthrough year.
“The company is going through tremendous change, and that commercial bank will do better in 2026 and 2027 from an earnings, structure and franchise value perspective,” Janney analyst Chris Marinac told Yahoo Finance. “It will simply be more expensive for them to make the switch in 2025.”
NYCB isn’t the only bank still clawing its way through commercial real estate costs.
Wells Fargo (WFC) CEO Charlie Scharf said Thursday that his bank could lose $2 billion to $3 billion on its commercial real estate loan portfolio and that the problems are expected to materialize over the next three to four years.
“We’re going to lose two to three billion dollars, it’s a lot of money,” Scharf said at an event in Washington on Thursday. “On the other hand, we all made reservations for it.”
Two weeks ago, Wells announced it had a $2.42 billion provision for future credit losses.
Scharf said concerns about commercial real estate are waning, however, as interest rates begin to fall again, and most of the problems are concentrated in office buildings that are emptier than before the pandemic.
