New York Community Bancorp, Inc. (NYSE:NYCB) Q4 2022 Earnings Call Transcript

John Pinto: Yeah. Well, both on office and really throughout the CRE and portfolio has been unbelievably strong from a credit perspective. We’ve seen no transition into the 30 to 89-day buckets or delinquency buckets, really, no real concerns even that have come out of the deferred loan process that we went through. Payments have been as we would have expected. So we’ve really started to see a little bit of occupancy kick up there as well. So the performance in that portfolio has been better than we originally expected coming out of the pandemic.

Thomas Cangemi: I would just add to John’s comments, a strong sponsorship, a very low LTV, very comfortable with the relationship, long-term relationship, lending tied to some of the multifamily investment as well. So there’s a lot of history there on the NYCB stand-alone. We picked up some commercial real estate from the Flagstar folks as well on office, a lot of material amount is maybe about $1 billion, John, total — is it total, little less than $1 billion.

John Pinto: So, yes, total office is $3.4 billion.

Thomas Cangemi: $3.4 billion. And again, it goes back to the history, as John indicated, we’re not seeing any negative trends and the LTV is relatively low. And in the event that we have to sit down and deal with a situation that has maybe some of credit deterioration. We think we’re well protected as a sponsorship, as well as overall value. I haven’t seen any negative trends speeds. It’s been very, very solid.

Peter Winter: And when those loans come up for refinance, can you just maybe updated LTVs or debt service coverage ratios when they come up for refinance?

Thomas Cangemi: We’ll tell you. I think we had — we have about $1.23 billion that’s coming up in total CRE. That’s not off —

John Pinto: It’s not just off of —

Thomas Cangemi: And that kind of at the 560 coupon, that coupon is probably closer to 7% and change now. And then next year in 2024 is about another $1 billion. So we don’t have a ton of money. Let’s say, it’s 50% of the CRE book over the next two years coming due. And next year, I think it’s a 5% coupon. So, again, we think we have an up rate potential on repricing them. But when you look at the average LTV, I’m not sure if you have that on you, John. It’s a pretty low average LTV.

John Pinto: 56%

Thomas Cangemi: Yes. 56% average LTV.

John Pinto: On office.

Thomas Cangemi: On office. And I think we feel pretty confident that, again, we haven’t seen at all any deterioration. As John indicated, a 30-day bucket, the 50 buckets are all zero.

John Pinto: Zero.

Thomas Cangemi: I feel pretty good about that and given the current environment. But in the event — even during the pandemic, we had a handful of customers that we’re thinking about maybe having issues, and we gave them some balance sheet, we gave them some release and ultimately, we got them to the other side. And in the event there was any maneuverability on our end, we’re very comfortable on exiting the asset class, and there’s plenty of investors, we look at these assets as, we’ll call them unique New York City assets that will be well owned, but would love to be owned by investors that are comfortable on taking the keys from the bank, if necessary. We haven’t had to have that problem, right, so far. But in the event we do, we have low leverage, and we have strong sponsorship. So, hopefully, the sponsors stay strong. And if they have to kick in some more equity if they keep them going, that’s the expectation.

Peter Winter: And they’ve been willing to click in the equity, if needed.