JPMorgan is giving a lift to another troubled regional bank

JPMorgan Chase (JPM) is offering renewed support to another troubled regional lender, a year after it helped calm a mini-banking crisis.

Shares of New York Community Bancorp (NYCB) rose as much as 5% in premarket trading on Wednesday, after announcing Tuesday evening that JPMorgan Chase has agreed to purchase $5 billion in mortgages.

The stock changed course after the market opened on Wednesday, falling 2%.

NYCB has sought to offload certain assets in an effort to strengthen its capital and liquidity.

Chase CEO Jamie Dimon looks on as he attends the seventh Chase CEO Jamie Dimon looks on as he attends the seventh

JPMorgan Chase CEO Jamie Dimon on May 13, outside Paris. LUDOVIC MARIN/Pool via REUTERS (via REUTERS/Reuters)

This is far from the first time the nation's largest bank has tried to act as a stabilizing force for a struggling lender.

Last year, JPMorgan led an attempted rescue of San Francisco regional bank First Republic, with a group of banks contributing $30 billion in deposits.

Weeks later, JPMorgan bought most of First Republic's assets from the FDIC after the lender filed for bankruptcy on May 1.

A security guard stands outside a First Republic Bank branch in San Francisco, California, U.S., April 28, 2023. REUTERS/Loren ElliottA security guard stands outside a First Republic Bank branch in San Francisco, California, U.S., April 28, 2023. REUTERS/Loren Elliott

A branch of First Republic Bank in San Francisco. REUTERS/Loren Elliott (REUTERS/Reuters)

NYCB, one of the nation's 30 largest banks, began to falter on Jan. 31 when it surprised analysts by cutting its dividend and setting aside more for credit losses.

Unrest intensified after the company revealed weaknesses in its internal controls and its fourth-quarter loss widened tenfold to $2.7 billion.

The battle fueled concerns that growing weakness in commercial real estate could spread to other banks.

The lender caught a break in early March when a team of investors led by former Treasury Secretary Steven Mnuchin gave the bank a $1 billion capital injection and overhauled management with experienced bankers.

FILE PHOTO: A sign is pictured above a New York Community Bank branch in Yonkers, New York, U.S., January 31, 2024. REUTERS/Mike Segar/File PhotoFILE PHOTO: A sign is pictured above a New York Community Bank branch in Yonkers, New York, U.S., January 31, 2024. REUTERS/Mike Segar/File Photo

A New York community bank in Yonkers, NY. REUTERS/Mike Segar/File photo (Reuters/Reuters)

The new CEO outlined a “clear path to profitability over the next two years” earlier this month.

That CEO, Joseph Otting, said Tuesday evening in announcing the sale of JPMorgan that “we are making rapid progress in implementing our strategic plan.”

Chris Marinac, an analyst for NYCB for Janney, called the loan sale “incremental progress” in the credit situation.

“NYCB probably still has several quarters of this process, so there is still a lot of work ahead,” Marinac said via email, referring to the bank's credit situation.

David Hollerith is a senior reporter for Yahoo Finance, covering banking, cryptocurrency and other areas of finance.

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