NYCB to sell $5B in mortgage warehouse loans to JP Morgan Chase

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Hicksville-based New York Community Bancorp has agreed to sell about $5 billion in loans to JP Morgan Chase, according to a company statement. 

The sale of mortgage warehouse loans is aimed at shoring up the institution’s financial profile and boosting its liquidity, according to banking observers. 

The move was welcomed by investors as NYCB’s stock rose 3.4 percent to $4.02 on Tuesday. The company’s stock had dropped by 62 percent this year after concerns about its exposure to New York commercial real estate and Moody’s Investors Service downgraded NYCB’s credit rating to junk status in February. 

“We are moving forward quickly to implement our strategic plan, which focuses on improving our capital, liquidity and loan-to-deposit metrics,” NYCB’s newly minted CEO Joseph Otting said in the statement. “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.” 

Otting was appointed CEO in March after NYCB secured $1 billion equity injection from the investment firm run by former Treasury Secretary Steven Mnuchin and other funds. 

The loan sale to JP Morgan is expected to close in the third quarter. 

NYCB has gone through some major changes in the last couple of years. The company acquired Flagstar Bancorp in 2022, creating a regional banking company that ranked among the top 25 banks in the country in total assets. Last year, NYCB agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal. The deal included the purchase of $38.4 billion in Signature Bank’s assets and the 40 branches of Signature Bank became Flagstar Bank.