NYCB Stock Jumps After Selling $5B of Loans to JPMorgan

Shares in New York Community Bancorp (NYCB) surged nearly 6% in premarket trading on Wednesday after the embattled regional bank announced a deal to sell around $5 billion of mortgage warehouse loans to JPMorgan Chase (JPM). The move is part of NYCB’s strategy to bolster its liquidity and capital position as it works towards returning to profitability.

Key Takeaways

• NYCB shares jumped nearly 6% in premarket trading Wednesday morning after the bank agreed to sell $5 billion of mortgage warehouse loans to JPMorgan Chase.
• The deal is expected to add 65 basis points to NYCB’s common equity tier 1 capital ratio and improve its liquidity profile.
• NYCB shares may face resistance near $5.80 but could retest recent lows near $2.70 if the price falls below the 50-day moving average.

The sale of the mortgage warehouse loans is anticipated to increase NYCB’s common equity tier 1 (CET1) capital ratio by 65 basis points, bringing the pro-forma ratio to 10.8% as of March 31 this year. The proceeds from the transaction will be reinvested into cash and securities, further enhancing the bank’s liquidity profile.

NYCB’s CEO, Joseph Otting, who took over in April, is focused on reducing the bank’s exposure to New York’s commercial real estate sector and transforming it into a more diversified regional bank. This strategic shift comes after NYCB faced challenges earlier this year, including cutting its dividend, increasing loan-loss provisions, and addressing internal control weaknesses.

Chart Analysis

After a sharp decline in late January, NYCB shares have been on a downward trend for several months. However, the stock has recently shown signs of recovery, reclaiming the 50-day moving average. Investors should keep an eye on key price levels as the stock continues to exhibit volatility.

If NYCB shares continue to climb, the $5.80 level could act as a resistance point, potentially leading to selling pressure. On the other hand, if the stock fails to hold above the 50-day moving average, there is a possibility of retesting recent lows around $2.70.

As of early Wednesday morning, NYCB shares were trading at $4.12, up 5.9% from the previous close.

Conclusion

The sale of mortgage warehouse loans to JPMorgan represents a significant step for NYCB in strengthening its financial position and liquidity. As the bank continues its turnaround efforts under new leadership, investors should closely monitor key price levels to gauge the stock’s performance amid ongoing market volatility.

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as investment advice. The author does not own any securities mentioned in this article.

Original Article: NYCB Stock Jumps After Selling $5B of Loans to JPMorgan