Proceeds from its $5 billion sale of Flagstar Bank’s warehouse loans will be reinvested into cash and securities by parent company New York Community Bancorp, Inc., (NYCB) it announced.
NYCB entered into a contract earlier this week with JPMorgan Chase Bank’s (JPMC) Securitized Products Group for the sale, which is expected to close in about 60 days.
"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,” NYCB President and CEO Joseph Otting said in a statement to media. “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 acquired Flagstar Bank at the end of 2022.
In a letter to impacted lenders, Flagstar President of Mortgage Lee Smith and Director of Mortgage Finance Jeff Neufeld said business will continue uninterrupted during the transaction.
“The sale of these loans is accretive to both capital and liquidity and allows us to continue down the path of building a well-diversified, high performing regional bank,” it read. “Flagstar remains committed to mortgage and continuing to provide a best-in-class service to its origination, servicing and MSR lending customers and partners.”
The partnership with JPMC represents a shared commitment to excellence, company officials went on to add.
“With a talented team, strong brand power and a reputation for a high caliber of service, we are confident J.P. Morgan is the right partner and you will experience the same level of service you have come to expect.”
NYCB expects the transaction with JPMC to add 65 basis points to its CET1 capital ratio to 10.8% as of March 31. Meanwhile, its share of total assets will improve to 24% from 20% at March 31. Loan-to-deposit ratio is expected to decline to 104% from 110% at the end of Q1 2024.
