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New York Community (NYCB) Q1 Earnings Meet Mark, Revenues Up Y/Y

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New York Community Bancorp, Inc.’s (NYCB - Free Report) first-quarter 2022 earnings per share (non-GAAP) of 32 cents were in line with the Zacks Consensus Estimate. The bottom line rose 10% year over year.

Results excluded merger-related expenses pertaining to the agreement with Flagstar Bancorp, Inc. (FBC - Free Report) . NYCB and FCB have together announced the extension of their merger to Oct 31, 2022. The companies have also amended their merger agreement in order to include the decision that the combined company's ongoing banking operations will be carried out under a national bank charter. The companies are waiting to obtain necessary approvals from the Federal Reserve Board and the Office of the Comptroller of the Currency for the amended merger agreement.

NYCB’s results were supported by higher revenues, driven by an increase in net interest income (“NII”). Improvement in loans and deposits,  and strong profitability ratios were other tailwinds. However, an increase in expenses and deteriorating credit quality were headwinds.

Net income available to common shareholders, $147 million, increased 7% from the prior-year quarter.

Revenues & Expenses Rise

Total revenues were $346 million, up 4% year over year. The top line beat the Zacks Consensus Estimate of $345.95 million.

NII grew 4% year over year to $332 million. The rise mainly resulted from lower interest expenses.

However, met interest margin of 2.43% was down 5 basis points.

Non-interest income of $14 million remained flat compared with the prior-year quarter.

Non-interest expenses of $141 million increased 7% from the first quarter of 2021. The rise was mainly due to higher compensation and benefits, occupancy and equipment expenses, and a $7-million merger-related expense. Total operating expenses (excluding merger-related expenses) increased 2% to $134 million.

The efficiency ratio was 38.65%, down from 39.87% in the year-ago quarter. A fall in efficiency ratio indicates improving profitability.

Loans & Deposit Balance Climb

As of Mar 31, 2022, total deposits jumped 33% sequentially to $38 billion. Total loans and leases held for investment rose 9% to $46.8 billion.

In the first quarter, total loans originated for investment were $3.5 billion, down 23% sequentially. The decline was mainly due to a 17% decrease in multi-family originations, 47% fall in specialty finance originations, and 33% plunge in other commercial and industrial originations.

The company has $2.5 billion of loans in its current pipeline, including $1.8 billion of multi-family loans, $275 million of commercial real estate loans, $487 million in specialty finance loans, and $31 million in commercial and industrial loans.

Credit Quality Deteriorates

Non-performing assets jumped 71% year over year to $70 million. Net charge-offs were $2 million against net recoveries of $1 million in the prior-year quarter.

Nonetheless, recovery of credit losses was $2 million against provisions of $4 million in the prior-year quarter.

Profitability Ratios Strong, Capital Ratios Weak

As of Mar 31, 2022, return on average assets and return on average common stockholders’ equity were 1.04% and 8.98%, up from 1.03% and 8.63%, respectively, in the year-ago quarter.

The common equity tier 1 ratio was 9.45%, down from 9.84% as of Mar 31, 2021. The total risk-based capital ratio was 12.39%, falling from 13.09% in the year-ago quarter. The leverage capital ratio was 8.33%, down from 8.41% in the year-ago quarter.

Dividend Update

NYCB’s board of directors announced a common stock quarterly dividend of 17 cents per share. The dividend will be paid out on May 19, to its shareholders of record as of May 9, 2022.

Our View

New York Community delivered a decent performance in the first quarter. Higher revenues, strong profitability ratios and a solid balance sheet position remain major tailwinds. In addition, the acquisition of Flagstar Bancorp will lead to improvement in deposits, and is also expected to be accretive to earnings and tangible book value per share.

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. price-consensus-eps-surprise-chart | New York Community Bancorp, Inc. Quote

New York Community 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

UMB Financial (UMBF - Free Report) reported first-quarter 2022 net operating income per share of $2.17, surpassing the Zacks Consensus Estimate of $1.65. The bottom line also compares favorably with the prior-year quarter’s earnings of $1.91.

UMBF’s results were supported by higher revenues driven by an increase in NII and fee income. A solid balance sheet position was another positive. Increased expenses and deteriorating credit quality were headwinds. Capital ratios witnessed a decline.

Northern Trust Corporation (NTRS - Free Report) delivered an earnings beat of 6.63% for first-quarter 2022. Earnings per share of $1.77 surpassed the Zacks Consensus Estimate of $1.66. Moreover, the bottom line improved 4% year over year.

Higher revenues, aided by a rise in fee income and NII, were a driving factor for NTRS. Most credit metrics also marked significant improvements. However, a rising expense base and weak capital ratios were headwinds.