New York Community Bank’s equipment finance outstandings represented nearly 27% of the bank’s overall commercial and industrial portfolio in fourth-quarter 2023 as a result of the lender’s acquisition of Melville, N.Y.-based equipment financier Signature Financial last March.
NYCB reported that the unpaid principal balance for its equipment finance sector was $6.8 billion in Q4, accounting for 26.8% of the company’s overall commercial and industrial portfolio.
Before closing the 2023 deal with Signature Bank — the parent company of Signature Financial — NYCB didn’t provide equipment financing information and didn’t break out specific numbers in its Q4 2022 earnings report. The company did include equipment financing, alongside asset-backed and dealer floor loans, as part of its overall specialty finance loans sector. These accounted for a combined $4.4 billion in net book value in 2022, or roughly 36% of NYCB’s commercial and industrial portfolio last year.
Before the acquisition, Signature Financial originated $2.3 billion in new business volume in 2022 and managed $5.3 billion in assets. At that time, it was the 29th-largest equipment financier, according to the Monitor 100 index.
“What is happening on credit is the company has certain loans that are no longer pristine under higher interest rates,” Janney Montgomery Scott Director of Research Christopher Marinac told Equipment Finance News. “NYCB needs to set aside reserves for possible losses on these loans and this creates less earnings/EPS. It’s more precaution for stress testing as a large bank and their actual realized credit losses may still be low (and well below reserve levels).”
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