NYCB to sell $5B worth of loans to JPMorgan

Shares of New York Community Bancorp (NYCB) are trading higher during Wednesday's morning trading session, boosted by the bank's announcement of a loan sale. The regional lender has reached an agreement to sell approximately $5 billion worth of loans to JPMorgan Chase (JPM).

This strategic move, as stated by the bank's CEO, is directly linked to efforts aimed at "improving our capital liquidity and loan-to-deposit metrics."

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This post was written by Angel Smith

Video transcript

Let's take a look at a New York community Bank court because shares are rising after announcing it has agreed to sell about $5 billion worth of loans to JP.

Morgan.

Now the company's CEO is saying in a statement, Quote.

We are moving forward quickly to implement our strategic plan, which focuses on improving our capital liquidity and loan to deposit metrics.

And when you take a look at the reaction in shares, you're looking at gains of just about 3% here in the pre market.

The reason why here it's largely viewed as the fact that this is going to strengthen, UH, NY CBS capital ratios here going forward.

That was largely the assessment here from the streets.

Still, lots of questions just about the stability of this business, the headwinds that New York Community Bank Corp faces when it comes to their exposure to the to New York, specifically New York's, uh, commercial real estate sector there and what exactly that pressure could put on their business here in the short term.

But again, this announcement, not a surprise management pretty much signalled it here in the last earnings were, but again, at least, the Street is looking at this as a bit of good news because of that capital allocation, and the street should be looking at this for what it is.

It's a liquidity play, and the company has talked about that, making sure that they're trying to bolster their liquidity profile.

Right now, it seems like the proceeds of the sale is actually going to be reinvested into assets, including cash and securities.

So looking at where, ultimately the the results of that sale are able to really bolster the capital ratio for this company.

And that's where investors should expect to hear more from the executives about this longer term plan that the company is talking about.

But this ultimate commitment letter, plus with JP MC Rather and the proposed transaction with pure efforts to just try and get into a better liquidity profile going forward here