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New York Community Bancorp (NYCB) Q1 Earnings as Expected

Zacks Equity Research

New York Community Bancorp, Inc. NYCB reported first-quarter 2019 earnings per share of 19 cents, in line with the Zacks Consensus Estimate. However, the figure compares unfavorably with the prior-year quarter figure of 20 cents.

Lower expenses and benefit provision drove the company’s performance. Moreover, higher deposit and loan balances were a tailwind. However, fall in revenues remained on the downside. Also, decline in margin was an undermining factor.

The company reported net income available to common shareholders of $89.4 million compared with $98.3 million recorded in the prior-year quarter.

Revenue Fall Offset by Lower Expenses

Total revenues came in at $266.1 million in the quarter, down 9.2% year over year. In addition, the top line lagged the Zacks Consensus Estimate of $267.2 million.

Net interest income was down 10.7% year over year to $241.3 million. The fall mainly resulted from elevated interest expense due to rise in cost of funds, partly offset by higher interest income. Adjusted NIM of 1.95% shrunk 34 basis points (bps) year over year.

Non-interest income came in at $24.8 million, up 8.3% on a year-over-year basis. Net gain on securities mainly led to this upsurge.

New York Community Bancorp reported non-interest expenses of $138.8 million, slightly down from the year-earlier quarter. Lower compensation and benefits along with occupancy and equipment expenses mainly led to this downside. However, elevated general and administrative expenses were on the downside.

As of Mar 31, 2019, total deposits improved nearly 3% sequentially to $31.6 billion. Total loans inched up 1% sequentially to $40.4 billion in the reported quarter.

During the quarter, loan originations for investment came in at $2 billion, down 6% sequentially. The company has around $1.5 billion of loans in its current pipeline, including $833 million of multi-family loans and $314 million of CRE loans.

Credit Quality: A Marked Improvement

Credit quality for New York Community Bancorp reflected mixed credit metrics. Non-performing assets declined 20% to $71.3 million, or 0.14%, of total assets as of Mar 31, 2019, compared with $88.8 million or 0.18% of total assets as of Mar 31, 2018.

Net charge-offs slumped 69.2% year over year to $2 million.  Net charge-offs, as a percentage of average loans, contracted 2 basis points year over year to 0.00%.

Further, provision for loan losses was a benefit of $1.2 million compared with provision of $9.6 million in the prior-year quarter. Allowance for losses on loans to total loans was 0.39% compared with 0.41% in the year-ago quarter.

Robust Capital Position

New York Community Bancorp’s capital ratios remained strong. As of Mar 31, 2019, return on average tangible assets and return on average tangible common stockholders’ equity was 0.79% and 9.74%, compared with 0.92% and 10.21%, respectively, as of Mar 31, 2018.

Common equity tier 1 ratio was 10.27% compared with 11.46% as of Mar 31, 2019. Total risk-based capital ratio was 13.83% compared with 14.43% as of Mar 31, 2018. Tier 1 leverage capital ratio was 8.68%, down from 9.50% as of Mar 31, 2018. Tier 1 risk-based capital ratio was 11.64% down from 12.93% as of Mar 31, 2018.

Our Viewpoint

New York Community Bancorp delivered a decent performance in the first quarter. Lower expenses reflect prudent expense management. At the same time, a strengthening capital position and lower provisions are anticipated to favor the company’s prospects for the near term. In addition to this, we believe its efforts to originate loans for investment will augur well for earnings in the subsequent quarters. Also, steady improvement in the economy will support the future performance of the company.

Nevertheless, we remain apprehensive owing to several issues, including lower revenues.
 

New York Community Bancorp, Inc. Price, Consensus and EPS Surprise

New York Community Bancorp, Inc. Price, Consensus and EPS Surprise | New York Community Bancorp, Inc. Quote

New York Community Bancorp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

People's United Financial Inc. PBCT recorded first-quarter 2019 operating earnings of 33 cents per share, in line with the Zacks Consensus Estimate. The reported figure improved 10%, year over year

Riding on higher revenues, Citizens Financial Group, Inc. CFG delivered a positive earnings surprise of 4.5% in first-quarter 2019. Adjusted earnings per share came in at 93 cents, beating the Zacks Consensus Estimate of 89 cents. Also, the reported figure improved 19.2% year over year. Results excluded one-time items of $4 million or 1 cent per share.

BOK Financial BOKF posted a positive earnings surprise of 5.5% in first-quarter 2019. Earnings per share of $1.54 outpaced the Zacks Consensus Estimate of $1.46. The bottom line, however, compared unfavorably with the prior-year quarter’s reported tally of $1.61. Results included certain one-time items.

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