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New York Community (NYCB) Q1 Earnings Beat on Solid Revenues

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New York Community Bancorp, Inc.’s NYCB shares gained 4.5% following the release of first-quarter 2021 results. Earnings per share of 29 cents surpassed the Zacks Consensus Estimate of 27 cents. Also, the figure compared favorably with the prior-year quarter figure of 20 cents.

Higher revenues drove the company’s performance. Also, margin expansion and significant improvement in credit quality were tailwinds. Capital position remained strong. However, a rise in expenses and lower fee income negatively impacted the company.

The company reported net income available to common shareholders of $137.4 million compared with $92.1 million in the prior-year quarter.

Revenues and Expenses Jump, Loans And Deposits Rise

Total revenues were $332.1 million in the quarter, up 27.1% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $324.3 million.

Net interest income was up nearly 30% year over year to $317.7 million. The rise mainly resulted from lower interest expenses. Adjusted net interest margin of 2.48% rose 47 basis points (bps).

Non-interest income was $14.4 million, down 14.7% on a year-over-year basis. The fall was primarily due to loss on securities, lower fee income and bank-owned life insurance.

The company reported non-interest expenses of $125.5 million, up 5.5% from the year-earlier quarter. Higher occupancy and equipment, and general and administrative expenses, partially offset by lower compensation and benefits, chiefly resulted in the rise.

As of Mar 31, 2021, total deposits rose 5.4% sequentially to $34.2 billion. Total loans increased nearly 2% to $43.1 billion in the reported quarter.

During the first quarter, loan originations were $2.5 billion, down 34% sequentially. The company has $1.7 billion of loans in its current pipeline, including $1.3 billion of multi-family loans, $34 million of CRE loans, $202 million in specialty finance loans and $103 million in commercial and industrial loans.

Credit Quality Strengthens

Credit quality for New York Community Bancorp reflected improvement. Non-performing assets decreased 29.7% year over year to $41.3 million.

Furthermore, provision for loan losses was $3.6 million compared with $20.6 million in the prior-year quarter.

Net recoveries came in at $0.52 million compared to $10.2 million net charge-offs in the prior-year quarter. Net charge-offs, as a percentage of average loans, declined 2 bps from 0.02% in the year-ago quarter.

Strong Profitability and Capital Ratio

New York Community Bancorp’s capital ratios remained strong. As of Mar 31, 2021, return on average assets and return on average common stockholders’ equity was 1.03% and 8.63%, compared with 0.75% and 5.95%, respectively, in the year-ago quarter.

Common equity tier 1 ratio was 9.84% compared with 9.8% as of Mar 31, 2020. Total risk-based capital ratio was 13.09% compared with 13.16% in the year-ago quarter. Leverage capital ratio was 8.41%, down from 8.47%.

Recent Developments

Alongside first-quarter results, the company announced its entry into an all-stock merger agreement with Flagstar Bancorp, Inc. FBC. The merger, which will boost New York Community Bancorp’s transformation strategies through geographical as well as product diversification, is expected to be 16% accretive to its 2022 estimated EPS and tangible book value per share.

As per the agreement’s terms, Flagstar shareholders will receive 4.0151 shares of New York Community Bancorp for each Flagstar share owned. The total transaction value based on closing prices as of Apr 23, 2021, is approximately $2.6 billion. The new company will possess over $87 billion in assets and handle nearly 400 branches in nine states and 87 loan-production offices across 28 states.

The combined company will maintain the Flagstar Bank brand in the Midwest. New York Community Bancorp’s president and CEO Thomas R. Cangemi will be the president and chief executive officer of the combined company as well. The transaction is expected to close by the end of 2021, subject to customary approvals.

Our Viewpoint

New York Community Bancorp delivered an impressive performance during the January-March quarter. Higher revenues, aided by the expansion of margin, and a solid capital position remain key tailwinds. In addition to this, we believe the bank’s efforts to originate loans for investment will augur well for earnings in the subsequent quarters. However, elevated expenses, along with lower fee income, remain concerns.

New York Community Bancorp, Inc. Price and EPS Surprise

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

New York Community Bancorp, Inc. price-eps-surprise | New York Community Bancorp, Inc. Quote

New York Community Bancorp currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here..

Performance of Other Banks

Washington Federal’s WAFD second-quarter fiscal 2021 (ended Mar 31) earnings of 56 cents per share surpassed the Zacks Consensus Estimate of 49 cents. Further, the figure reflects a year-over-year rise of 19.1%.

Commerce Bancshares Inc.’s CBSH first-quarter 2021 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 96 cents. Also, the bottom line surged significantly from the 42 cents earned in the prior-year quarter.

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Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report

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