New York Community Bancorp (NYCB) has completed the sale of approximately $5.9 billion in mortgage warehouse loans to JPMorgan Chase. This transaction marks a significant step in NYCB’s strategy to enhance its liquidity and capital base as it seeks to return to profitability over the next two years.
Details of the Deal
- Transaction Amount: The sale involved about $5.9 billion in mortgage warehouse loans.
- Additional Sale: NYCB anticipates closing on an additional $200 million of mortgage warehouse loans soon, pending necessary customer approvals.
- Impact on NYCB: The sale expected to add around 70 basis points to NYCB’s Common Equity Tier 1 (CET1) capital ratio, bolstering the bank’s financial stability.
Background
- Previous Announcement: In May, NYCB had disclosed an agreement to sell about $5 billion in mortgage warehouse loans to JPMorgan Chase.
- Nature of Warehouse Loans: Mortgage warehouse loans lines of credit extended to lenders, allowing them to provide mortgages. These loans are repaid when the lender sells the mortgages to investors.
Strategic Implications
The sale strengthens NYCB’s liquidity and capital, supporting its efforts to improve profitability. This move aligns with the bank’s ongoing turnaround strategy, which focused on stabilizing its financial position and achieving long-term growth.
Next Steps
- Pending Transactions: NYCB expected to finalize the sale of the remaining $200 million in mortgage warehouse loans shortly.
- Regulatory and Customer Approvals: The additional transaction is contingent upon receiving the necessary approvals from customers and regulatory bodies.
This transaction underscores New York Community Bancorp proactive measures in managing its capital and liquidity, crucial for its planned return to profitability.