NYCB Is Making a Comeback

January 31, 2025

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  • Loan and Behold: NYCB is mounting a strong comeback as strategic moves reduce losses and restore investor confidence.

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New York Community Bank was once the talk of the financial world. When interest rates rose and everyone predicted that the dreaded “maturity wall” would tank the global economy NYCB was the poster child for smaller banks overexposed to commercial real estate. After it bought $36 billion worth of Signature Bank’s commercial real estate loan portfolio from its bankruptcy proceedings, analysts became worried that these risky loans would bring down its new owners as well. NYCB’s profits plummeted and their stock fell over 60 percent almost overnight.

Last year NYCB hired a new CEO, one with experience dealing with regulators. He explained that much of the company’s losses came from the regulatory expenses of becoming a Category IV bank. He also said that the portfolio of loans mostly consisted of multifamily properties, which still had good occupancy and had appreciated in value since the pandemic. NYCB was also rolled into its umbrella company Flagstar Financial, giving it the stability of other income streams from personal banking and financial services.

Flagstar announced that it’s losses were subsiding and the once-feared loan portfolio was looking more stable than ever. "We continued to make inroads on reducing our commercial real estate exposure and diversifying our loan portfolio,” the CEO said. He explained that multifamily loans declined only 9 percent over the course of the year, while other CRE loans declined 17 percent. Flagstar has so far been able to stem their losses “through run-off of non-relationship CRE loans, par payoffs, and strategic loan sales.” Shares of Flagstar jumped 16 percent on the news.

The turnaround isn’t just good for Flagstar investors. If NYCB is able to claw its way out of a debt crisis, even while interest rates remain elevated, there is hope that other troubled regional banks may be able to do the same.

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