UPDATED, May 7, 2020, 10:05 a.m.: New York Community Bank announced that 12.6 percent of its $38.8 billion loan portfolio is currently in deferral, but residential rent collections were better than expected.
More specifically, 25 percent of the bank’s $7 billion commercial real estate portfolio and 9.6 percent of its $31.3 billion multifamily portfolio are in deferral.
The bank reported net income of $92.1 million for common shareholders in the first quarter, up 3 percent year over year and down 1 percent from the fourth quarter of 2019. Its president, Joseph Ficalora, assured its investors on a Wednesday earnings call that its multifamily borrowers have not been hit as hard as others.
“Based on our market intelligence, April rent collections on rent-regulated buildings in our portfolio are estimated to be 80 to 85 percent [of normal levels],” Ficalora said. “On market rent properties it is even higher.”
Rent-regulated apartments represent $18.7 billion, or 60 percent, of the bank’s total multifamily portfolio.
Overall, the bank is optimistic about its position in the market and predicted that due to the coronavirus crisis, it will be able to increase its market share relative to other multifamily lenders.
“When the market is stressed, we get a greater share of the market,” said Ficalora. “We do believe in the environment ahead, many of the lenders in our niche will lend less and we will lend more.”
New York Community Bank was one of the first banks to offer a forbearance program for its borrowers. Those whose cash flows are impacted by the health crisis were given two options: six months of interest-only and escrow payments, or deferral of principal and interest for six months, payable at maturity.
The rate of deferrals varies across asset types. Just 6 percent of residential buildings with more than 100 units are in deferral. But smaller and mixed-use buildings with retail components are experiencing much higher rates of deferral, according to the bank’s officials.
For now, larger multifamily buildings are a relative safe haven in the bank’s portfolio. But that may change if planned rent strikes are carried out in May. New York tenant groups announced their intent to withhold rent en masse earlier in April, and have since received support from numerous politicians.
UPDATE: This story has been corrected to clarify that 25 percent of NYCB’s commercial real estate portfolio is in deferral.