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New York Community (NYCB) Q4 Earnings Meet, Stock Up 5.2%

Zacks Equity Research

New York Community Bancorp NYCB reported fourth-quarter 2018 earnings per share of 19 cents, in line with the Zacks Consensus Estimate. However, the bottom line compared unfavorably with 26 cents recorded in the prior-year quarter.

Shares of the company gained 5.2% in single-day trading following the earnings release on Jan 30, before the market opened. Perhaps investors are optimistic about the decline in expenses, along with higher loans and deposit balances during the quarter. However, fall in revenue components came as major headwind.

New York Community Bancorp reported net income available to common shareholders of $93.5 million compared with $128.3 million recorded in the prior-year quarter.

For full-year 2018, the company reported net income of $389.6 million or 79 cents per share, down from $441.6 million or 90 cents per share.

Decline in Expenses & Higher Loans Offset Lower Revenues

Total revenues came in at $270.3 million in the fourth quarter, down 8.8% year over year. The reported figure matched the Zacks Consensus Estimate.

For full-year 2018, the company reported net revenues of $1.12 billion, down 16.7% on a year-over-year basis. The figure came in line with the Zacks Consensus Estimate.

Net interest income was down 8.8% year over year to $247.2 million. The fall was mainly due to elevated interest expenses, resulting from rise in cost of funds. Adjusted net interest margin of 2.04% contracted 33 basis points (bps).

Non-interest income came in at $23.1 million, down 9% on a year-over-year basis. This drop was due net loss on securities and lower other income.

New York Community Bancorp reported non-interest expenses of $134.9 million, down 9.1% from the year-earlier quarter. A plunge in compensation and benefits, along with general and administrative expenses, mainly led to this.

As of Dec 31, 2018, total deposits improved 1.5% to $30.8 billion from Sep 30, 2018. Additionally, total loans inched up nearly 1% to $40 billion at the end of the reported quarter.

During the quarter, loan originations for investment came in at $2.2 billion, down 12% sequentially. The company has around $1.1 billion of loans in its current pipeline, including $800 million of multi-family loans, $94 million of CRE loans and $182 million in specialty finance loans.

Credit Quality Improves

Non-performing assets declined 38% to $56.3 million or 0.11% of total loans as of Dec 31, 2018, compared with $90.1 million or 0.19% as of Dec 31, 2017.

In addition, net charge-offs plunged 31.4% to $2.6 million on a year-over-year basis.  Net charge-offs, as a percentage of average loans, came flat at 0.01%.

Further, provisions for losses on non-covered loans were $2.8 million, down 5.3% from the year-ago quarter. Allowance for loan losses to total loans was 0.40%, down 1 bps year over year.

Capital Position

Common equity tier 1 ratio was 10.60%, compared with 11.36% a year ago. Total risk-based capital ratio was 14.23% compared with 14.32% as of Dec 31, 2017. Also, leverage capital ratio was 8.74%, down from 9.58% on Dec 31, 2017.

Our Viewpoint

New York Community Bancorp failed to put up an impressive performance in the fourth quarter. However, persistent decline in revenues is a major concern. Furthermore, rising interest rates continue to hamper the top line owing to the company’s liability-sensitive balance sheet.

Nevertheless, lower expenses reflect prudent expense management. At the same time, a strengthening capital position is anticipated to favor the company’s near-term prospects. In addition, we believe its efforts to originate loans for investment will augur well for earnings in the subsequent quarters.

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 Industry Participants

UMB Financial UMBF recorded a negative earnings surprise of 49.5% in fourth-quarter 2018. Net operating earnings of 56 cents per share lagged the Zacks Consensus Estimate of $1.11. The reported figure compares unfavorably with the prior-year quarter’s earnings of 95 cents.

Reflecting top-line strength, Northern Trust Corporation’s NTRS fourth-quarter 2018 earnings per share of $1.80 outpaced the Zacks Consensus Estimate of $1.71. The earnings figure also compares favorably with $1.51 recorded in the year-ago quarter.

Hilltop Holdings Inc.’s HTH fourth-quarter 2018 earnings per share of 30 cents missed the Zacks Consensus Estimate of 43 cents. However, the figure compares favorably with the prior-year quarter’s earnings of 14 cents per share (including the impact of Tax Act).

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