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New York Community (NYCB) Tumbles 8% as Q3 Earnings Lag
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New York Community Bancorp, Inc.’s (NYCB - Free Report) shares slumped 8% in response to its lower-than-expected third-quarter 2021 results. Earnings per share (non-GAAP) of 31 cents missed the Zacks Consensus Estimate of 33 cents. Nonetheless, the bottom line rose 35% year over year.
Results excluded merger-related expenses pertaining to the agreement with Flagstar Bancorp, Inc.
While an increase in expenses and only moderate loan growth were headwinds, higher net interest income and non-interest income supported the results. Margin expansion and provision benefits were other tailwinds.
Net income available to common shareholders of $140 million jumped 31% from the prior-year quarter.
Revenues & Expenses Rise
Total revenues were $333 million, up 13% year over year. The top line lagged the Zacks Consensus Estimate of $353 million.
Net interest income grew 13% year over year to $318 million. The rise mainly resulted from lower interest expenses.
Net interest margin of 2.44% rose 15 basis points (bps).
Non-interest income was $15 million, up 7%. The rise was primarily driven by higher fee income.
Non-interest expenses of $135 million increased 5%. Higher compensation and benefits, and a $6-million merger-related expense resulted in the rise. This was partially offset by lower occupancy and equipment, and general and administrative expenses. Adjusted non-interest expenses remained flat at $129 million.
The efficiency ratio was 38.84%, down from 43.47% in the year-ago quarter. A fall in the efficiency ratio indicates improving profitability.
Loans & Deposit Balance Climb
As of Sep 30, 2021, total deposits improved 1.3% sequentially at $34.6 billion. Total loans rose marginally to $43.5 billion.
In the third quarter, loan originations were $3 billion, down 4% sequentially. The decline was driven by a 14% fall in multi-family originations, offset by a 31% rise in specialty finance originations.
The company has $1.9 billion of loans in its current pipeline, including $1.4 billion of multi-family loans, $131 million of commercial real estate loans, $338 million in specialty finance loans and $33 million in commercial and industrial loans.
Credit Quality Improves
Non-performing assets plunged 33% year over year to $37 million. Recovery of credit losses was $1 million against a provision of $13 million in the prior-year quarter.
Net charge-offs were nil compared with net recoveries of $1 million in the prior-year quarter.
Profitability and Capital Ratios Strong
As of Sep 30, 2021, return on average assets and return on average common stockholders’ equity was 1.04% and 8.69% compared with 0.85% and 6.92%, respectively, in the year-ago quarter.
The common equity tier 1 ratio was 9.92% compared with 9.69% as of Sep 30, 2020. The total risk-based capital ratio was 13.11% compared with 13.02% in the year-ago quarter. The leverage capital ratio was 8.50%, down from 8.43%.
Our View
New York Community delivered a solid performance in the third quarter. Higher revenues, aided by the expansion of margin, and a solid capital position remain major tailwinds. In addition, the acquisition of Flagstar Bancorp will lead to improvement in market share.
New York Community Bancorp, Inc. Price, Consensus and EPS Surprise
BancorpSouth Bank delivered net operating earnings of 68 cents per share that beat the Zacks Consensus Estimate of 67 cents. However, the bottom line compares unfavorably with the 69 cents reported in the year-ago quarter.
Bank of Hawaii Corporation (BOH - Free Report) reported third-quarter 2021 earnings per share of $1.52, surpassing the Zacks Consensus Estimate of $1.34. Also, the bottom line compares favorably with the 95 cents reported in the prior-year quarter.
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New York Community (NYCB) Tumbles 8% as Q3 Earnings Lag
New York Community Bancorp, Inc.’s (NYCB - Free Report) shares slumped 8% in response to its lower-than-expected third-quarter 2021 results. Earnings per share (non-GAAP) of 31 cents missed the Zacks Consensus Estimate of 33 cents. Nonetheless, the bottom line rose 35% year over year.
Results excluded merger-related expenses pertaining to the agreement with Flagstar Bancorp, Inc.
While an increase in expenses and only moderate loan growth were headwinds, higher net interest income and non-interest income supported the results. Margin expansion and provision benefits were other tailwinds.
Net income available to common shareholders of $140 million jumped 31% from the prior-year quarter.
Revenues & Expenses Rise
Total revenues were $333 million, up 13% year over year. The top line lagged the Zacks Consensus Estimate of $353 million.
Net interest income grew 13% year over year to $318 million. The rise mainly resulted from lower interest expenses.
Net interest margin of 2.44% rose 15 basis points (bps).
Non-interest income was $15 million, up 7%. The rise was primarily driven by higher fee income.
Non-interest expenses of $135 million increased 5%. Higher compensation and benefits, and a $6-million merger-related expense resulted in the rise. This was partially offset by lower occupancy and equipment, and general and administrative expenses. Adjusted non-interest expenses remained flat at $129 million.
The efficiency ratio was 38.84%, down from 43.47% in the year-ago quarter. A fall in the efficiency ratio indicates improving profitability.
Loans & Deposit Balance Climb
As of Sep 30, 2021, total deposits improved 1.3% sequentially at $34.6 billion. Total loans rose marginally to $43.5 billion.
In the third quarter, loan originations were $3 billion, down 4% sequentially. The decline was driven by a 14% fall in multi-family originations, offset by a 31% rise in specialty finance originations.
The company has $1.9 billion of loans in its current pipeline, including $1.4 billion of multi-family loans, $131 million of commercial real estate loans, $338 million in specialty finance loans and $33 million in commercial and industrial loans.
Credit Quality Improves
Non-performing assets plunged 33% year over year to $37 million. Recovery of credit losses was $1 million against a provision of $13 million in the prior-year quarter.
Net charge-offs were nil compared with net recoveries of $1 million in the prior-year quarter.
Profitability and Capital Ratios Strong
As of Sep 30, 2021, return on average assets and return on average common stockholders’ equity was 1.04% and 8.69% compared with 0.85% and 6.92%, respectively, in the year-ago quarter.
The common equity tier 1 ratio was 9.92% compared with 9.69% as of Sep 30, 2020. The total risk-based capital ratio was 13.11% compared with 13.02% in the year-ago quarter. The leverage capital ratio was 8.50%, down from 8.43%.
Our View
New York Community delivered a solid performance in the third quarter. Higher revenues, aided by the expansion of margin, and a solid capital position remain major tailwinds. In addition, the acquisition of Flagstar Bancorp will lead to improvement in market share.
New York Community Bancorp, Inc. Price, Consensus and EPS Surprise
New York Community Bancorp, Inc. price-consensus-eps-surprise-chart | New York Community Bancorp, Inc. Quote
New York Community 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
BancorpSouth Bank delivered net operating earnings of 68 cents per share that beat the Zacks Consensus Estimate of 67 cents. However, the bottom line compares unfavorably with the 69 cents reported in the year-ago quarter.
Bank of Hawaii Corporation (BOH - Free Report) reported third-quarter 2021 earnings per share of $1.52, surpassing the Zacks Consensus Estimate of $1.34. Also, the bottom line compares favorably with the 95 cents reported in the prior-year quarter.