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New York Community (NYCB) Stock Rises 16% as Q1 Earnings Meet
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New York Community Bancorp, Inc. (NYCB - Free Report) acquired Signature Bridge Bank on Mar 19, 2023. Hence, the first-quarter results include 11 days of results from the purchase and assumption of certain assets and liabilities. The full-quarter effect of the Flagstar acquisition was also included.
NYCB‘s first-quarter 2023 earnings per share, as adjusted for merger-related items, of 23 cents is in line with the Zacks Consensus Estimate. The bottom line declined 28% from the prior-year quarter.
A drastic increase in expenses and a rise in provisions negatively impacted the results. However, higher revenues and solid improvement in loans and deposits offered some support. These perhaps led to bullish investor sentiments, as shares of the company have gained 16% following the earnings release.
Net income available to common shareholders, as adjusted (excluding bargain purchase gain) was $159, up 5% from the prior-year quarter.
Revenues & Expenses Rise
Total revenues of $652 million surpassed the Zacks Consensus Estimate of $603 million and grew 88% year over year.
Net interest income (NII) grew 67% to $555 million, mainly due to a full-quarter’s contribution from the Flagstar acquisition. The net interest margin of 2.60% was up 17 basis points.
Non-interest income (excluding a bargain purchase gain of $2 billion related to the Signature Bank transaction) was $97 million, substantially up from $14 million in the prior-year quarter.
Non-interest expenses of $476 million surged drastically. Total operating expenses (excluding merger-related expenses and intangible asset amortization) increased substantially to $394 million.
The efficiency ratio was 60.48%, up from 38.65%. A rise in the efficiency ratio indicates deteriorating profitability.
Loans & Deposit Balance Soar
As of Mar 31, 2023, total deposits improved 44% to $84.8 billion. The increase was mainly due to $31.5 billion of net deposits contributed by the Signature transaction.
Total loans and leases held for investment rose 20% to $82.5 billion. This includes $12 billion of loans, net of PAA, purchased from Signature and organic loan growth of approximately $1.5 billion.
As on Mar 31, 2023, multi-family loans and commercial loans represented 46% and 44% of total loans compared with 55% and 33% as on Dec 31, 2022, respectively. Residential loans represented 7% of total loans.
Credit Quality Deteriorate
Non-performing assets surged substantially year over year to $148 million. Provision for credit losses was $170 million against a benefit of $2 million in the prior-year quarter.
Net charge-offs were zero compared to $2 million in the prior-year quarter.
Solid Profitability Ratios, Capital Ratios – A Mixed Bag
As of Mar 31, 2023, return on average assets and return on average common stockholders’ equity were 8.49% and 92.18%, increasing from 1.04% and 8.98%, respectively, in the year-ago quarter.
The common equity tier 1 ratio was 9.29%, up from 9.06% as of Dec 31, 2022. The total risk-based capital ratio was 11.59%, falling from 11.66%.
The leverage capital ratio was 9.18%, down from 9.70%.
Our View
New York Community’s efforts to expand into the BaaS space and robust loan demand are expected to support financials. Also, the acquisition of Flagstar and Signature Bank has improved its position as one of the largest regional banks and is anticipated to be earnings accretive. Yet, rising costs are likely to hamper hamper bottom line growth.
New York Community Bancorp, Inc. Price, Consensus and EPS Surprise
Bank of Hawaii Corporation (BOH - Free Report) reported first-quarter 2023 earnings per share of $1.14, missing the Zacks Consensus Estimate of $1.23. The bottom line declined 13.6% from the year-ago quarter’s number. Our estimate for the same was $1.16.
BOH's results benefited higher revenue growth and decent loan demand. However, a rise in expenses and provisions was a significant drag.
Associated Banc-Corp’s (ASB - Free Report) first-quarter 2023 earnings of 66 cents per share surpassed the Zacks Consensus Estimate of 63 cents. The bottom line was 40.4%, higher than the prior-year quarter. Our estimate for earnings was 54 cents.
ASB's results were primarily aided by a rise in NII on higher rates. The quarter witnessed increased loans and deposit balances. However, a rise in expenses, higher provisions and lower non-interest income were headwinds.
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New York Community (NYCB) Stock Rises 16% as Q1 Earnings Meet
New York Community Bancorp, Inc. (NYCB - Free Report) acquired Signature Bridge Bank on Mar 19, 2023. Hence, the first-quarter results include 11 days of results from the purchase and assumption of certain assets and liabilities. The full-quarter effect of the Flagstar acquisition was also included.
NYCB‘s first-quarter 2023 earnings per share, as adjusted for merger-related items, of 23 cents is in line with the Zacks Consensus Estimate. The bottom line declined 28% from the prior-year quarter.
A drastic increase in expenses and a rise in provisions negatively impacted the results. However, higher revenues and solid improvement in loans and deposits offered some support. These perhaps led to bullish investor sentiments, as shares of the company have gained 16% following the earnings release.
Net income available to common shareholders, as adjusted (excluding bargain purchase gain) was $159, up 5% from the prior-year quarter.
Revenues & Expenses Rise
Total revenues of $652 million surpassed the Zacks Consensus Estimate of $603 million and grew 88% year over year.
Net interest income (NII) grew 67% to $555 million, mainly due to a full-quarter’s contribution from the Flagstar acquisition. The net interest margin of 2.60% was up 17 basis points.
Non-interest income (excluding a bargain purchase gain of $2 billion related to the Signature Bank transaction) was $97 million, substantially up from $14 million in the prior-year quarter.
Non-interest expenses of $476 million surged drastically. Total operating expenses (excluding merger-related expenses and intangible asset amortization) increased substantially to $394 million.
The efficiency ratio was 60.48%, up from 38.65%. A rise in the efficiency ratio indicates deteriorating profitability.
Loans & Deposit Balance Soar
As of Mar 31, 2023, total deposits improved 44% to $84.8 billion. The increase was mainly due to $31.5 billion of net deposits contributed by the Signature transaction.
Total loans and leases held for investment rose 20% to $82.5 billion. This includes $12 billion of loans, net of PAA, purchased from Signature and organic loan growth of approximately $1.5 billion.
As on Mar 31, 2023, multi-family loans and commercial loans represented 46% and 44% of total loans compared with 55% and 33% as on Dec 31, 2022, respectively. Residential loans represented 7% of total loans.
Credit Quality Deteriorate
Non-performing assets surged substantially year over year to $148 million. Provision for credit losses was $170 million against a benefit of $2 million in the prior-year quarter.
Net charge-offs were zero compared to $2 million in the prior-year quarter.
Solid Profitability Ratios, Capital Ratios – A Mixed Bag
As of Mar 31, 2023, return on average assets and return on average common stockholders’ equity were 8.49% and 92.18%, increasing from 1.04% and 8.98%, respectively, in the year-ago quarter.
The common equity tier 1 ratio was 9.29%, up from 9.06% as of Dec 31, 2022. The total risk-based capital ratio was 11.59%, falling from 11.66%.
The leverage capital ratio was 9.18%, down from 9.70%.
Our View
New York Community’s efforts to expand into the BaaS space and robust loan demand are expected to support financials. Also, the acquisition of Flagstar and Signature Bank has improved its position as one of the largest regional banks and is anticipated to be earnings accretive. Yet, rising costs are likely to hamper hamper bottom line growth.
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
NYCB 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
Bank of Hawaii Corporation (BOH - Free Report) reported first-quarter 2023 earnings per share of $1.14, missing the Zacks Consensus Estimate of $1.23. The bottom line declined 13.6% from the year-ago quarter’s number. Our estimate for the same was $1.16.
BOH's results benefited higher revenue growth and decent loan demand. However, a rise in expenses and provisions was a significant drag.
Associated Banc-Corp’s (ASB - Free Report) first-quarter 2023 earnings of 66 cents per share surpassed the Zacks Consensus Estimate of 63 cents. The bottom line was 40.4%, higher than the prior-year quarter. Our estimate for earnings was 54 cents.
ASB's results were primarily aided by a rise in NII on higher rates. The quarter witnessed increased loans and deposit balances. However, a rise in expenses, higher provisions and lower non-interest income were headwinds.