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New York Community (NYCB) Q4 Earnings Beat, Stock Down 3.3%

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New York Community Bancorp, Inc. (NYCB - Free Report) posted fourth-quarter 2020 earnings per share of 27 cents, inching past the Zacks Consensus Estimate of 26 cents. The figure also compares favorably with the prior-year quarter figure of 20 cents, up 35%.

Higher revenues drove the company’s performance. Also, the expansion of margin was a tailwind. Capital position remained strong. However, results were affected by rise in provisions due to the impact of the COVID-19 pandemic. In addition, a rise in expenses and lower fee income hurt the company, disappointing investors which prompted a 3.3% share-price depreciation post earnings release.

Including certain one-time items, the bank reported net income available to common shareholders of $181.5 million or 39 cents per share compared with the prior-year quarter’s $93 million or 20 cents.

In full-year 2020, New York Community Bancorp reported net income available to common shareholders of $478.3 million or $1.02 per share compared with the prior year’s $362.2 million or 77 cents.

Revenues Climb, Expenses Rise, Loans Increase

In 2020, the company reported net revenues of $1.16 billion, which surpassed the consensus estimate of $1.15 billion. Also, the figure was up 12.6% from 2019.

Net revenues came in at $322.9 million in the fourth quarter, up 24.2% year over year. Moreover, the top line surpassed the Zacks Consensus Estimate of $313.6 million.

Net interest income went up 27% year on year to $307.9 million during the reported quarter. This rise was mainly aided by lower interest expenses, resulting from reduced funding costs. Adjusted net interest margin of 2.30% expanded 40 basis points (bps).

Non-interest income came in at $15 million, down 14.3% on a year-over-year basis. The fall was primarily due to lower fee-based and other income, partly offset by net gains on securities.

The company reported non-interest expenses of $133.6 million, up 5.9% from the year-earlier quarter. Higher occupancy and equipment, along with general and administrative expenses and compensation and benefits, chiefly resulted in this upside.

As of Dec 31, 2020, total deposits increased 2% sequentially to $32.4 billion. Total loans inched up marginally to $42.8 billion in the reported quarter.

During the December-end quarter, loan originations (excluding PPP loan originations) were $3.9 billion, up 30% sequentially. The company had $1.5 billion of loans in its current pipeline, including $1.1 billion of multi-family loans, $124 million of CRE loans, $89 million of C&I loans and $221 million in specialty finance loans.

Credit Quality: A Mixed Bag

Credit quality for New York Community Bancorp reflects mixed credit metrics. Provision for loan losses was $11 million compared with the prior-year quarter’s $1.7 million.

Non-performing assets slid 37% year over year to $46.1 million. Net charge-offs were $5.7 million compared with the $3.5 million recorded in the prior-year quarter. Net charge-offs, as a percentage of average loans, remained stable year over year at 0.01%.

Profitability and Capital Ratio Strong

New York Community Bancorp’s capital ratios remained strong. As of Dec 31, 2020, return on average assets and return on average common stockholders’ equity was 1.38% and 11.60% compared with the 0.77% and 6.01% recorded, respectively, seen in the year-ago quarter.

Common equity tier 1 ratio was 9.72% compared with 9.91% as of Dec 31, 2019. Total risk-based capital ratio was 12.97% compared with the year-ago quarter’s 13.27%. Leverage capital ratio was 8.52%, down year over year from 8.66%.

Our Viewpoint

New York Community Bancorp delivered an impressive performance during the October-December 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 and provisions, along with lower fee income, remain concerns.
 

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 Banks

Synovus Financial (SNV - Free Report) reported fourth-quarter adjusted earnings of $1.08 per share, handily beating the Zacks Consensus Estimate of 82 cents, aided by solid fee income. Also, the reported figure came in 15% higher than the prior-year quarter tally. Results were driven by rising fee income and lower provisions. Moreover, strong deposit and loan balances stoked organic growth. However, upswing in expenses and lower net interest income were undermining factors.

Texas Capital Bancshares (TCBI - Free Report) reported adjusted earnings per share of $1.14 in the fourth quarter, inching past the Zacks Consensus Estimate of $1.13. Nevertheless, results compared unfavorably with the prior-year quarter’s $1.23. Rise in fee income and lower expenses were driving factors. Yet, fall in net interest income along with pressure on margin were deterrents. Further, results reflect decline in both loans and deposit balances. In addition, provision for credit losses escalated.

First Republic Bank delivered an earnings surprise of 5.3% for the October-December period on solid top-line strength. Earnings per share of $1.60 exceeded the Zacks Consensus Estimate of $1.52. Additionally, the bottom line climbed 15.1% from the year-ago quarter. Results were supported by an increase in net interest income and fee income. Furthermore, the company’s balance-sheet position was strong during the quarter. Nonetheless, higher expenses and elevated provisions were offsetting factors.

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