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New York Community Bancorp (NYCB) Stock Gains on Q4 Earnings
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Shares of New York Community Bancorp, Inc. (NYCB - Free Report) gained 1.58% in single-day trading following the fourth-quarter 2017 earnings release on Jan 31, before the market opened. The company reported earnings per share of 26 cents, up from 23 cents recorded in the prior-year quarter. Results include net tax benefit of $42 million related to the Tax Cuts and Jobs Act. The Zacks Consensus Estimate was pegged at 17 cents.
Lower expenses and provisions drove the company’s results. Moreover, higher deposit balances were a tailwind. However, fall in revenues remained on the downside. Also, decline in margin and loans were undermining factors.
The company reported net income available to common shareholders of $128.3 million compared with $113.7 million recorded in the prior-year quarter.
For full-year 2017, the company reported earnings per share of 90 cents, down 10.9% year over year from $1.01. Additionally, net income available to common shareholders for the year decreased 10.9% year over year to $441.6 million.
Revenue Fall Offset by Lower Expenses
For 2017, New York Community Bancorp reported total revenues of $1.35 billion, down 5.6% year over year. However, the figure surpassed the Zacks Consensus Estimate of $1.27 billion.
Total revenues came in at $296.3 million in the quarter, down 14.8% year over year. In addition, the top line lagged the Zacks Consensus Estimate of $300.3 million.
Net interest income was down 14.1% year over year to $271 million. The fall was mainly attributable to increased interest expense aided by rise in cost of funds and lower interest income. Adjusted NIM of 2.37% contracted 29 basis points (bps) year over year.
Non-interest income came in at $25.3 million, down 21.7% on a year-over-year basis. Fall in almost all components of income led to this decline.
New York Community Bancorp reported non-interest expenses of $148.5 million, down 13% from the year-earlier quarter. Lower compensation and benefits, along with general and administrative expenses, mainly led to the fall.
As of Dec 31, 2017, total deposits improved nearly 1% year over year to $29.1 billion. Total loans declined 2.5% year over year to $38.3 billion in the reported quarter.
During the quarter, loan originations for investment came in at $3.1 billion, significantly up 52% year over year. The company has around $2.3 billion of loans in its current pipeline, including $1.6 billion of multi-family loans and $290 million of CRE loans.
Credit Quality: A Mixed Bag
Credit quality for New York Community Bancorp reflected mixed credit metrics. Non-performing non-covered assets jumped 32.3% to $90.1 million, or 0.18%, of total non-covered assets as of Dec 31, 2017, compared with $68.1 million or 0.14% of total non-covered assets as of Dec 31, 2016.
Net charge-offs more than doubled to $3.8 million on a year-over-year basis. Net charge-offs, as a percentage of average loans, expanded 1 basis point year over year to 0.01%.
However, provisions for losses on non-covered loans were $2.9 million, down 43.5% year over year. Allowance for losses on non-covered loans to total non-covered loans was 0.41% compared with 0.42% in the prior-year quarter.
Robust Capital Position
New York Community Bancorp’s capital ratios remained strong. As of Dec 31, 2017, return on average tangible assets and return on average tangible common stockholders’ equity was 1.01% and 11.72%, compared with 1.06% and 13.75%, respectively, as of Dec 31, 2016.
Common equity tier 1 ratio was 11.36% compared with 10.62% as of Dec 31, 2016. Total risk-based capital ratio was 14.32% compared with 12.12% as of Dec 31, 2016. Tier 1 leverage capital ratio was 9.58%, up from 8% as of Dec 31, 2016. Tier 1 risk-based capital ratio was 12.84% up from 10.62% as of Dec 31, 2016.
Our Viewpoint
New York Community Bancorp delivered a decent performance in the fourth 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
Cullen/Frost Bankers (CFR - Free Report) reported positive surprise of 5.8% in fourth-quarter 2017. Adjusted earnings per share of $1.47 handily surpassed the Zacks Consensus Estimate of $1.39. Results excluded $4.0 million or 6 cents per share net-benefit related to the Tax Cuts and Jobs Act.
Top-line strength and lower provisions were reflected in the quarter. Further, increase in loans and deposits, and a strong balance-sheet position were the positives. However, elevated expenses and lower non-interest income remained major drags.
Driven by top-line strength, Texas Capital Bancshares Inc. (TCBI - Free Report) reported a positive earnings surprise of around 2.6% in the fourth quarter. Adjusted earnings per share of $1.19 outpaced the Zacks Consensus Estimate by 3 cents. Results were driven by rise in revenues and lower provisions. Organic growth was reflected, with significant rise in loans and deposit balances. However, escalating expenses remained the undermining factor.
BOK Financial Corporation’s (BOKF - Free Report) fourth-quarter adjusted earnings per share of $1.29 lagged the Zacks Consensus Estimate of $1.34. Nonetheless, the bottom line compared favorably with 76 cents reported in the year-earlier quarter. Results reflected a decline in loans balance, partially offset by improved revenues and lower expenses. Also, improving credit quality and strong capital position acted as tailwinds.
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New York Community Bancorp (NYCB) Stock Gains on Q4 Earnings
Shares of New York Community Bancorp, Inc. (NYCB - Free Report) gained 1.58% in single-day trading following the fourth-quarter 2017 earnings release on Jan 31, before the market opened. The company reported earnings per share of 26 cents, up from 23 cents recorded in the prior-year quarter. Results include net tax benefit of $42 million related to the Tax Cuts and Jobs Act. The Zacks Consensus Estimate was pegged at 17 cents.
Lower expenses and provisions drove the company’s results. Moreover, higher deposit balances were a tailwind. However, fall in revenues remained on the downside. Also, decline in margin and loans were undermining factors.
The company reported net income available to common shareholders of $128.3 million compared with $113.7 million recorded in the prior-year quarter.
For full-year 2017, the company reported earnings per share of 90 cents, down 10.9% year over year from $1.01. Additionally, net income available to common shareholders for the year decreased 10.9% year over year to $441.6 million.
Revenue Fall Offset by Lower Expenses
For 2017, New York Community Bancorp reported total revenues of $1.35 billion, down 5.6% year over year. However, the figure surpassed the Zacks Consensus Estimate of $1.27 billion.
Total revenues came in at $296.3 million in the quarter, down 14.8% year over year. In addition, the top line lagged the Zacks Consensus Estimate of $300.3 million.
Net interest income was down 14.1% year over year to $271 million. The fall was mainly attributable to increased interest expense aided by rise in cost of funds and lower interest income. Adjusted NIM of 2.37% contracted 29 basis points (bps) year over year.
Non-interest income came in at $25.3 million, down 21.7% on a year-over-year basis. Fall in almost all components of income led to this decline.
New York Community Bancorp reported non-interest expenses of $148.5 million, down 13% from the year-earlier quarter. Lower compensation and benefits, along with general and administrative expenses, mainly led to the fall.
As of Dec 31, 2017, total deposits improved nearly 1% year over year to $29.1 billion. Total loans declined 2.5% year over year to $38.3 billion in the reported quarter.
During the quarter, loan originations for investment came in at $3.1 billion, significantly up 52% year over year. The company has around $2.3 billion of loans in its current pipeline, including $1.6 billion of multi-family loans and $290 million of CRE loans.
Credit Quality: A Mixed Bag
Credit quality for New York Community Bancorp reflected mixed credit metrics. Non-performing non-covered assets jumped 32.3% to $90.1 million, or 0.18%, of total non-covered assets as of Dec 31, 2017, compared with $68.1 million or 0.14% of total non-covered assets as of Dec 31, 2016.
Net charge-offs more than doubled to $3.8 million on a year-over-year basis. Net charge-offs, as a percentage of average loans, expanded 1 basis point year over year to 0.01%.
However, provisions for losses on non-covered loans were $2.9 million, down 43.5% year over year. Allowance for losses on non-covered loans to total non-covered loans was 0.41% compared with 0.42% in the prior-year quarter.
Robust Capital Position
New York Community Bancorp’s capital ratios remained strong. As of Dec 31, 2017, return on average tangible assets and return on average tangible common stockholders’ equity was 1.01% and 11.72%, compared with 1.06% and 13.75%, respectively, as of Dec 31, 2016.
Common equity tier 1 ratio was 11.36% compared with 10.62% as of Dec 31, 2016. Total risk-based capital ratio was 14.32% compared with 12.12% as of Dec 31, 2016. Tier 1 leverage capital ratio was 9.58%, up from 8% as of Dec 31, 2016. Tier 1 risk-based capital ratio was 12.84% up from 10.62% as of Dec 31, 2016.
Our Viewpoint
New York Community Bancorp delivered a decent performance in the fourth 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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Performance of Other Banks
Cullen/Frost Bankers (CFR - Free Report) reported positive surprise of 5.8% in fourth-quarter 2017. Adjusted earnings per share of $1.47 handily surpassed the Zacks Consensus Estimate of $1.39. Results excluded $4.0 million or 6 cents per share net-benefit related to the Tax Cuts and Jobs Act.
Top-line strength and lower provisions were reflected in the quarter. Further, increase in loans and deposits, and a strong balance-sheet position were the positives. However, elevated expenses and lower non-interest income remained major drags.
Driven by top-line strength, Texas Capital Bancshares Inc. (TCBI - Free Report) reported a positive earnings surprise of around 2.6% in the fourth quarter. Adjusted earnings per share of $1.19 outpaced the Zacks Consensus Estimate by 3 cents. Results were driven by rise in revenues and lower provisions. Organic growth was reflected, with significant rise in loans and deposit balances. However, escalating expenses remained the undermining factor.
BOK Financial Corporation’s (BOKF - Free Report) fourth-quarter adjusted earnings per share of $1.29 lagged the Zacks Consensus Estimate of $1.34. Nonetheless, the bottom line compared favorably with 76 cents reported in the year-earlier quarter. Results reflected a decline in loans balance, partially offset by improved revenues and lower expenses. Also, improving credit quality and strong capital position acted as tailwinds.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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