New York Community Bancorp Inc. (NYCB) reported significant financial changes in its latest 10-Q filing for the nine months ended September 30, 2024. The company experienced a net loss of $930 million, a stark contrast to a net income of $2.626 billion for the same period in 2023. This decline was attributed to increased provisions for credit losses, which rose to $947 million from $281 million year-over-year, primarily due to downgrades in commercial real estate and multi-family loans.

Total interest income for the nine months increased to $4.595 billion, up from $4.044 billion in 2023, while total interest expense surged to $2.904 billion from $1.707 billion, reflecting rising costs associated with interest-bearing deposits and borrowed funds. The net interest income fell to $1.691 billion, down from $2.337 billion, resulting in a net interest margin of 2.01%, down from 3.05% in the previous year.

The average balance of loans and leases held for investment decreased to $71.1 billion, down from $84.6 billion at the end of 2023, largely due to the sale of the warehouse lending portfolio and strategic reductions in commercial and industrial loans. The company’s total deposits increased to $83 billion, up from $81.5 billion, following a capital raise of $1.05 billion in March 2024, which helped stabilize deposits after a significant attrition of $9.7 billion earlier in the year.

Strategically, NYCB has been focusing on diversifying its loan portfolio to reduce its concentration in commercial real estate. The company completed the sale of its warehouse lending portfolio for approximately $6 billion in Q3 2024 and is in the process of selling its residential mortgage servicing business for about $1.3 billion, expected to enhance capital ratios by approximately 60 basis points.

The company also reported a significant increase in non-accrual loans, which rose to $2.514 billion, up from $428 million at the end of 2023. This increase was driven by updated financial information indicating credit weakness. The allowance for credit losses increased to $1.3 billion, reflecting a ratio of 1.78% of total loans held for investment.

In terms of operational changes, NYCB has seen significant turnover in its executive management and Board of Directors, with new appointments aimed at enhancing governance and oversight. The company is actively working to remediate identified weaknesses in its internal controls over financial reporting, particularly concerning loan rating classifications and the allowance for credit losses.

Overall, NYCB's financial performance reflects a challenging environment marked by increased credit losses and strategic shifts aimed at stabilizing and diversifying its operations.