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New York Community (NYCB) Q3 Earnings In Line, Stock Down
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New York Community Bancorp (NYCB - Free Report) reported third-quarter 2018 earnings per share of 20 cents, in line with the Zacks Consensus Estimate. However, the bottom line compares unfavorably with 21 cents recorded in the prior-year quarter.
Shares of the company declined 3.4% in single-day trading following the earnings release on Oct 24, before market opened. This is perhaps a reflection of investors’ bearish sentiments on revenue decline. However, lower expenses, and higher loans and deposit balances were the tailwinds. Also, capital position remained strong during the quarter.
New York Community Bancorp reported net income available to common shareholders of $98.6 million compared with $102.3 million recorded in the prior-year quarter.
Decline in Expenses & Higher Loan Originations Offset Lower Revenues
Total revenues came in at $272.4 million in the third quarter, down 29.3% year over year. Further, the top line missed the Zacks Consensus Estimate of $285.1 million.
Net interest income was down 9.7% year over year to $249.5 million. The fall was mainly due to elevated interest expenses, resulting from rise in cost of funds. Adjusted net interest margin of 2.08% contracted 29 basis points (bps) year over year.
Non-interest income came in at $22.9 million, down 79% on a year-over-year basis. This sharp drop was due to a $82 million gain included in the year-ago quarter related to the sale of covered loans and mortgage banking operations. Excluding this one-time gain, the company witnessed a fall in insurance.
New York Community Bancorp reported non-interest expenses of $134.4 million, down 17.1% from the year-earlier quarter. A plunge in compensation and benefits, along with general and administrative expenses, mainly led to this.
As of Sep 30, 2018, total deposits improved 4.2% to $30.3 billion from Dec 31, 2017. Additionally, total loans inched up 3.7% to $39.7 billion at the end of the reported quarter.
During the quarter, loan originations for investment came in at $2.5 billion, up 10% year over year. The company has around $1.3 billion of loans in its current pipeline, including $800 million of multi-family loans, $163 million of CRE loans and $316 million in specialty finance loans.
Credit Quality Improves
Non-performing assets declined 20% to $67.8 million or 0.14% of total loans as of Sep 30, 2018, compared with $84.7 million or 0.18% as of Sep 30, 2017.
In addition, net charge-offs plunged 95% to $2.2 million on a year-over-year basis. Net charge-offs, as a percentage of average loans, shrunk 10 bps to 0.01%.
Further, provisions for losses on non-covered loans were $1.2 million, down 97% from the year-ago quarter. Allowance for losses on non-covered loans to total non-covered loans was 0.40%, down 2 bps year over year.
Capital Position
Common equity tier 1 ratio was 11.07%, compared with 11.54% in the comparable period last year. Total risk-based capital ratio was 13.89% compared with 14.59% as of Sep 30, 2017. Also, leverage capital ratio was 9.26%, down from 9.40% on Sep 30, 2017.
Our Viewpoint
New York Community Bancorp failed to put up an impressive performance in the July-September quarter. Lower revenues are particularly a 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
Driven by top-line strength, Synovus Financial’s (SNV - Free Report) third-quarter 2018 results reported a positive earnings surprise of 3.3%. Adjusted earnings of 95 cents per share beat the Zacks Consensus Estimate of 92 cents. Also, the reported figure came in 46.2% higher than the prior-year quarter tally.
UMB Financial (UMBF - Free Report) recorded a positive earnings surprise of 3.6% in third-quarter 2018. Net operating earnings of $1.16 per share beat the Zacks Consensus Estimate of $1.12. The reported figure compares favorably with the prior-year quarter’s earnings of 98 cents.
Huntington Bancshares (HBAN - Free Report) reported third-quarter 2018 earnings per share of 33 cents, beating the Zacks Consensus Estimate by a penny. Also, the figure came in 43% higher than the prior-year quarter.
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New York Community (NYCB) Q3 Earnings In Line, Stock Down
New York Community Bancorp (NYCB - Free Report) reported third-quarter 2018 earnings per share of 20 cents, in line with the Zacks Consensus Estimate. However, the bottom line compares unfavorably with 21 cents recorded in the prior-year quarter.
Shares of the company declined 3.4% in single-day trading following the earnings release on Oct 24, before market opened. This is perhaps a reflection of investors’ bearish sentiments on revenue decline. However, lower expenses, and higher loans and deposit balances were the tailwinds. Also, capital position remained strong during the quarter.
New York Community Bancorp reported net income available to common shareholders of $98.6 million compared with $102.3 million recorded in the prior-year quarter.
Decline in Expenses & Higher Loan Originations Offset Lower Revenues
Total revenues came in at $272.4 million in the third quarter, down 29.3% year over year. Further, the top line missed the Zacks Consensus Estimate of $285.1 million.
Net interest income was down 9.7% year over year to $249.5 million. The fall was mainly due to elevated interest expenses, resulting from rise in cost of funds. Adjusted net interest margin of 2.08% contracted 29 basis points (bps) year over year.
Non-interest income came in at $22.9 million, down 79% on a year-over-year basis. This sharp drop was due to a $82 million gain included in the year-ago quarter related to the sale of covered loans and mortgage banking operations. Excluding this one-time gain, the company witnessed a fall in insurance.
New York Community Bancorp reported non-interest expenses of $134.4 million, down 17.1% from the year-earlier quarter. A plunge in compensation and benefits, along with general and administrative expenses, mainly led to this.
As of Sep 30, 2018, total deposits improved 4.2% to $30.3 billion from Dec 31, 2017. Additionally, total loans inched up 3.7% to $39.7 billion at the end of the reported quarter.
During the quarter, loan originations for investment came in at $2.5 billion, up 10% year over year. The company has around $1.3 billion of loans in its current pipeline, including $800 million of multi-family loans, $163 million of CRE loans and $316 million in specialty finance loans.
Credit Quality Improves
Non-performing assets declined 20% to $67.8 million or 0.14% of total loans as of Sep 30, 2018, compared with $84.7 million or 0.18% as of Sep 30, 2017.
In addition, net charge-offs plunged 95% to $2.2 million on a year-over-year basis. Net charge-offs, as a percentage of average loans, shrunk 10 bps to 0.01%.
Further, provisions for losses on non-covered loans were $1.2 million, down 97% from the year-ago quarter. Allowance for losses on non-covered loans to total non-covered loans was 0.40%, down 2 bps year over year.
Capital Position
Common equity tier 1 ratio was 11.07%, compared with 11.54% in the comparable period last year. Total risk-based capital ratio was 13.89% compared with 14.59% as of Sep 30, 2017. Also, leverage capital ratio was 9.26%, down from 9.40% on Sep 30, 2017.
Our Viewpoint
New York Community Bancorp failed to put up an impressive performance in the July-September quarter. Lower revenues are particularly a 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
Driven by top-line strength, Synovus Financial’s (SNV - Free Report) third-quarter 2018 results reported a positive earnings surprise of 3.3%. Adjusted earnings of 95 cents per share beat the Zacks Consensus Estimate of 92 cents. Also, the reported figure came in 46.2% higher than the prior-year quarter tally.
UMB Financial (UMBF - Free Report) recorded a positive earnings surprise of 3.6% in third-quarter 2018. Net operating earnings of $1.16 per share beat the Zacks Consensus Estimate of $1.12. The reported figure compares favorably with the prior-year quarter’s earnings of 98 cents.
Huntington Bancshares (HBAN - Free Report) reported third-quarter 2018 earnings per share of 33 cents, beating the Zacks Consensus Estimate by a penny. Also, the figure came in 43% higher than the prior-year quarter.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>