(Reuters) -New York Community Bancorp (NYCB) posted its fourth straight quarter of losses on Friday as the regional lender, struggling with its exposure to the commercial real estate (CRE) market, set aside more cash to cover potential loan defaults .
Shares in NYCB fell 7% before the bell on Friday.
Office properties have struggled to recover from the pandemic-induced lockdowns as delinquencies rise, while higher refinancing costs have exacerbated the woes, hurting mortgage payments across the sector.
NYCB’s provisions for credit losses nearly quadrupled to $242 million in the third quarter compared to a year ago. The stock, which has lost 63% of its value this year, fell before the bell.
Mounting charge-offs – debts written off because they are unlikely to be recovered – have prompted regional lenders to increase their provisioning to cover the CRE sector.
Net charge-offs totaled $240 million, compared to $349 million in the prior quarter ended June 30.
The high exposure to CREs has also prompted the lender to shake up its management and face heightened scrutiny.
“Our exposure to CRE continues to decline through a combination of par payments and proactively managing problem loans,” CEO Joseph Otting said in a statement.
Meanwhile, net interest income – the difference between what a bank earns on loans and pays out on deposits – fell 42% to $510 million.
The lender had earlier this month pledged to significantly cut costs as part of a broad recovery plan and announced it would cut 700 jobs, representing 8% of its total workforce.
In addition, another 1,200 employees will leave the bank as it completes the divestiture of its mortgage servicing and third-party lending businesses.
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)
