New York City’s largest multi-family lender performance for the second quarter shows that the city’s rental market has recovered.
New York Community Bank reported 4 percent annual growth in its multi-family loan portfolio last quarter to $ 32.6 billion. During the same period, the number of loans issued to family families jumped by 42 percent to $ 2.1 billion, leading to an overall increase in the number of loans by 21 percent.
Rent collection by the bank’s loan recipients, meanwhile, remained stable at pre-pandemic levels, and loan deferrals fell to $ 1 billion at the end of June, down 86 percent from $ 7.4 billion in the same quarter last year. The deferral declined for several quarters until there was a sharp drop in the second quarter.
“We don’t have full deferred clients right now, which is great,” said NYCB President and CEO Thomas Kangemi, adding that he expects deferrals to continue to decline.
Multi-family loans, which account for more than 60 percent of the company’s $ 1.4 billion loan portfolio, boosted overall growth this quarter. The bank’s net profit rose 45 percent year-over-year to $ 152 million, while revenues jumped 23 percent to $ 347 million.
Kangemi called the opening of Manhattan a catalyst for the firm’s lease portfolio recovery. Rentals have increased as tenants returned into the city, devouring supplies.
The CEO said he is confident New York Community Bank will be able to grow its multi-family portfolio by 5 percent over the next year.
Kangemi, who took over as CEO Joe Ficalor in December, said the bank had achieved its goals.
“Since my appointment as CEO, one of my main initiatives has been to raise additional deposits from our multi-family and commercial real estate borrowers,” Kangemi said. “These initiatives are starting to bear fruit.”
Commercial bank lending creates long-term problems.
Kangemi admitted that “we need to work in the office and retail,” as a result, loans fell 12 percent from the previous quarter to $ 215 million and 1 percent YTD.
The firm has about $ 500 million in commercial loans that are in jeopardy of default, but Kanjemi told analysts during the call that the firm has enough capital to stave off losses for the bank.
While demand among tenants rose, office landlords had to struggle. In the second quarter 17 percent of all office space was vacant.
The chief executive pointed to the firm’s merger with Michigan-based bank Flagstar in late April as a means of offsetting this decline by diversifying its portfolio of banks and expanding into the Florida, Phoenix and Michigan markets, where Flagstar is having success.
“Given the larger balance sheet, we will have the opportunity to profit from a range of businesses and increase market share,” Kangemi said. He named direct and indirect family lending, warehouse mortgage lending, mortgage banking, and commercial and industrial lending as growth areas.