New York Community Bancorp (NYCB), the holding company of Flagstar Bank, has agreed to sell mortgage warehouse loans worth around $5bn to JPMorgan Chase Bank (JPMC).
The bank holding company has signed a commitment letter with JPMC, for the transaction.
The sale is expected to be completed in the third quarter of this year, subject to the completion of due diligence, negotiation, and satisfaction of customary closing conditions.
NYCB intends to reinvest the proceeds from the sale into cash and securities, which would strengthen the company’s liquidity profile.
New York Community Bancorp president and CEO Joseph Otting said: “Consistent with my guidance during our recent earnings call, we are moving forward quickly to implement our strategic plan, which focuses on improving our capital, liquidity and loan-to-deposit metrics.
“The mortgage team at Flagstar built a first-class warehouse business, which is reflected in our ability to execute on an accretive transaction with JP Morgan.
“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 from Flagstar.”
NYCB expects the sale would add 65 basis points to its CET1 capital ratio, resulting in a pro-forma CET1 capital ratio of 10.8% as of 31 March 2024.
The bank holding company also anticipates an increase of the ratio of cash and securities to total assets to 24% from 20% as of 31 March 2024, on a pro-forma basis.
In addition, its pro-forma loan-to-deposit ratio is expected to decline to 104% compared to 110% at the end of the first quarter of 2024.
Based in Hicksville, New York, NYCB had $112.9bn of assets, $83.3bn of loans, deposits of $74.9bn, and total stockholders’ equity of $8.4bn, as of 31 March 2024.
Flagstar Bank operates 419 branches, including strong footholds in the Northeast and Midwest and exposure to high-growth markets in the Southeast and West Coast.
The bank has around 100 private banking teams in more than ten cities in the metropolitan New York City region, serving high-net-worth individuals and their businesses.
