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New York Community (NYCB) Q2 Earnings Beat, Stock Rises 5.1%
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New York Community Bancorp, Inc.'s (NYCB - Free Report) second-quarter 2023 diluted earnings per share, as adjusted for merger-related items, of 47 cents surpassed the Zacks Consensus Estimate of 32 cents. The bottom line increased 34.3% from the prior-year quarter.
Shares of the company have gained 5.1% following the earnings release. High revenues and solid improvement in deposit balance and decent loan growth offered some support. However, a drastic increase in expenses and a rise in provisions were headwinds.
Net income available to common shareholders, as adjusted, was $345 million, up considerably from the prior-year quarter.
Revenues & Expenses Rise
Total revenues of $1.2 billion surpassed the Zacks Consensus Estimate of $851.6 million and grew drastically from $377 million year over year.
Net interest income (NII) grew substantially year over year to $900 million, mainly due to a full quarter’s contribution from the Flagstar acquisition and the Signature transaction. The net interest margin of 3.21% was up 69 basis points.
Non-interest income (including a bargain purchase gain of $141 million related to the Signature Bank transaction) was $302 million, significantly up from $18 million in the prior-year quarter.
Non-interest expenses of $661 million surged drastically year over year. Total operating expenses (excluding merger-related expenses and intangible asset amortization) increased substantially to $515 million.
The efficiency ratio was 48.46%, up from 35.57% year over year. A rise in the efficiency ratio indicates deteriorating profitability.
Loans & Deposit Balance Soar
As of Jun 30, 2023, total deposits improved 4.4% to $88.5 billion sequentially. The increase was mainly due to a rise in non-interest-bearing deposits.
Total loans and leases held for investment rose marginally to $83.3 billion sequentially. The growth was driven by the rise in commercial loan portfolios.
As of Jun 30, 2023, multi-family loans represented 45% of total loans compared with 46% as of Mar 31, 2023. Commercial loans represented 44% of total loans, unchanged from the last quarter. Residential loans and other loans represented 7% and 3% of total loans for this quarter, respectively.
Credit Quality Deteriorates
Non-performing assets were $246 million, which surged 60.8% from the figure reported as of Dec 31, 2022. Provision for credit losses was $49 million compared to provisions of $9 million in the prior-year quarter.
Net recoveries were $1 million compared with $7 million of net recoveries in the prior-year quarter.
Profitability & Capital Ratios Improves
As of Jun 30, 2023, return on average assets and return on average common stockholders’ equity were 1.36% and 15.58%, increasing from 1.10% and 10.18%, respectively, in the year-ago quarter.
The common equity tier 1 ratio was 9.58%, up from 9.06% as of Dec 31, 2022. The total risk-based capital ratio was 11.94%, which rose from 11.66%.
The leverage capital ratio was 7.37%, down from 9.70%.
Our View
New York Community’s efforts to expand into the BaaS space and decent 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
BOK Financial Corporation’s (BOKF - Free Report) second-quarter earnings per share of $2.27 missed the Zacks Consensus Estimate of $2.28. Nonetheless, the bottom line increased 15.8% from the prior-year quarter.
Results were aided by an improvement in net interest revenues, driven by higher rates and loan growth. Also, total fees and commissions witnessed a rise in the quarter under review. However, an increase in expenses and provisions were a matter of concern for BOKF.
BankUnited, Inc.'s (BKU - Free Report) second-quarter 2023 earnings per share of 78 cents missed the Zacks Consensus Estimate of 79 cents by a penny. The bottom line also declined 4.9% from the prior-year quarter.
BKU's results were adversely impacted by an increase in operating expenses, lower deposit and loan balance and a decline in NII. However, higher non-interest income and lower provisions for credit losses acted as tailwinds.
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New York Community (NYCB) Q2 Earnings Beat, Stock Rises 5.1%
New York Community Bancorp, Inc.'s (NYCB - Free Report) second-quarter 2023 diluted earnings per share, as adjusted for merger-related items, of 47 cents surpassed the Zacks Consensus Estimate of 32 cents. The bottom line increased 34.3% from the prior-year quarter.
Shares of the company have gained 5.1% following the earnings release. High revenues and solid improvement in deposit balance and decent loan growth offered some support. However, a drastic increase in expenses and a rise in provisions were headwinds.
Net income available to common shareholders, as adjusted, was $345 million, up considerably from the prior-year quarter.
Revenues & Expenses Rise
Total revenues of $1.2 billion surpassed the Zacks Consensus Estimate of $851.6 million and grew drastically from $377 million year over year.
Net interest income (NII) grew substantially year over year to $900 million, mainly due to a full quarter’s contribution from the Flagstar acquisition and the Signature transaction. The net interest margin of 3.21% was up 69 basis points.
Non-interest income (including a bargain purchase gain of $141 million related to the Signature Bank transaction) was $302 million, significantly up from $18 million in the prior-year quarter.
Non-interest expenses of $661 million surged drastically year over year. Total operating expenses (excluding merger-related expenses and intangible asset amortization) increased substantially to $515 million.
The efficiency ratio was 48.46%, up from 35.57% year over year. A rise in the efficiency ratio indicates deteriorating profitability.
Loans & Deposit Balance Soar
As of Jun 30, 2023, total deposits improved 4.4% to $88.5 billion sequentially. The increase was mainly due to a rise in non-interest-bearing deposits.
Total loans and leases held for investment rose marginally to $83.3 billion sequentially. The growth was driven by the rise in commercial loan portfolios.
As of Jun 30, 2023, multi-family loans represented 45% of total loans compared with 46% as of Mar 31, 2023. Commercial loans represented 44% of total loans, unchanged from the last quarter. Residential loans and other loans represented 7% and 3% of total loans for this quarter, respectively.
Credit Quality Deteriorates
Non-performing assets were $246 million, which surged 60.8% from the figure reported as of Dec 31, 2022. Provision for credit losses was $49 million compared to provisions of $9 million in the prior-year quarter.
Net recoveries were $1 million compared with $7 million of net recoveries in the prior-year quarter.
Profitability & Capital Ratios Improves
As of Jun 30, 2023, return on average assets and return on average common stockholders’ equity were 1.36% and 15.58%, increasing from 1.10% and 10.18%, respectively, in the year-ago quarter.
The common equity tier 1 ratio was 9.58%, up from 9.06% as of Dec 31, 2022. The total risk-based capital ratio was 11.94%, which rose from 11.66%.
The leverage capital ratio was 7.37%, down from 9.70%.
Our View
New York Community’s efforts to expand into the BaaS space and decent 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
BOK Financial Corporation’s (BOKF - Free Report) second-quarter earnings per share of $2.27 missed the Zacks Consensus Estimate of $2.28. Nonetheless, the bottom line increased 15.8% from the prior-year quarter.
Results were aided by an improvement in net interest revenues, driven by higher rates and loan growth. Also, total fees and commissions witnessed a rise in the quarter under review. However, an increase in expenses and provisions were a matter of concern for BOKF.
BankUnited, Inc.'s (BKU - Free Report) second-quarter 2023 earnings per share of 78 cents missed the Zacks Consensus Estimate of 79 cents by a penny. The bottom line also declined 4.9% from the prior-year quarter.
BKU's results were adversely impacted by an increase in operating expenses, lower deposit and loan balance and a decline in NII. However, higher non-interest income and lower provisions for credit losses acted as tailwinds.