New York Community Bancorp, Inc. (NYSE:NYCB) shares are trading higher after it agreed to sell around $5 billion in mortgage warehouse loans to JPMorgan Chase Bank, N.A. of JPMorgan Chase & Co. (NYSE:JPM).
After the deal closes, the company projects that the transaction will add 65 basis points to the CET1 capital ratio, resulting in a pro-forma CET1 capital ratio of 10.8% as of March-end.
The New York Community expects to reinvest sale proceeds into cash and securities. On a pro-forma basis, the ratio of cash and securities to total assets is projected to improve to 24% from 20% as of March-end.
Also, the bank's pro-forma loan-to-deposit ratio is anticipated to decline to 104% compared to 110% at the end of the first quarter 2024.
President and Chief Executive Officer Joseph Otting said, "Consistent with my guidance during our recent earnings call, we are moving forward quickly to implement our strategic plan, which focuses on improving our capital, liquidity, and loan-to-deposit metrics."
"The mortgage team at Flagstar built a first-class warehouse business, which is reflected in our ability to execute on an accretive transaction with JP Morgan. The mortgage business remains an important business for the Company and we will continue to provide our mortgage customers and partners the same great service that they have come to expect from Flagstar."
The sale is expected to close in the third quarter of 2024, subject to the completion of due diligence, negotiation of definitive documentation, and satisfaction of customary closing conditions.
As of March-end, New York Community had $112.9 billion of assets, $83.3 billion of loans, deposits of $74.9 billion, and total stockholders' equity of $8.4 billion.
Investors can gain exposure to the stock via SPDR S&P Regional Banking ETF (NYSE:KRE) and Royce Quant Small-Cap Quality Value ETF (NASDAQ:SQLV).
Price Action: NYCB shares are up 5.91% at $4.12 premarket at the last check Wednesday.
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