NYCB shares jump after new CEO gives two-year plan for ‘clear path to profitability’

New York Community Bank (NYCB) has reported a significant financial loss of $335 million for the first quarter of 2023.

This loss has been attributed to an increase in non-performing commercial loans and higher expenses.

Despite this, NYCB’s stock price has surged following the announcement of new performance targets set by the bank’s CEO, Joseph Otting.

Otting, who took over as CEO in April after an investment of over $1 billion by a group led by former Treasury Secretary Steven Mnuchin, has outlined a plan to transform NYCB into a profitable and diversified bank by 2026.

His goals include increasing profitability, enhancing capital levels, and targeting a specific return on assets and common equity tier 1 capital levels.

To achieve these targets, NYCB plans to sell up to $5 billion in assets, a move that is expected to improve liquidity.

The bank’s stock has responded positively to these announcements, with a substantial rise in premarket trading.

The financial loss for the first quarter was significantly wider than the analyst estimate of a 15 cents per share loss.

This loss amounted to 45 cents per share, compared to a $2.0 billion gain in the same period a year earlier.

However, after adjusting for merger-related charges, the loss narrowed to $182 million or 25 cents per share.

Overall, NYCB is undergoing a transitional period, and the implementation of its new strategic plan under Otting’s leadership will be crucial in determining its future success.

While the bank faces challenges in managing its loan portfolio and expenses, the announcement of performance targets and potential asset sales has instilled some optimism among investors.