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New York Community (NYCB) Q4 Earnings In Line, Revenues Fall

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New York Community Bancorp, Inc. NYCB reported fourth-quarter 2019 earnings per share of 20 cents, in line with the Zacks Consensus Estimate. The figure compared favorably with the prior-year quarter figure of 19 cents.

Lower expenses and higher loans balance drove the company’s performance. Also, decline in provisions was a tailwind. However, fall in revenues remained on the downside. Further, contraction of margin was an undermining factor.

The company reported net income available to common shareholders of $93 million compared with $93.5 million in the prior-year quarter.

In full-year 2019, New York Community Bancorp reported net income available to common shareholders of $362.2 million or 77 cents per share compared with $389.6 million or 79 cents.

Revenues Fall, Loans Rise and Expenses Decline

Total revenues came in at $259.9 million in the quarter, down 3.8% year over year. Also, the top line lagged the Zacks Consensus Estimate of $260.4 million.

In 2019, the company reported total revenues of $1.04 billion, which surpassed the consensus estimate of $1.03 billion. However, the figure was down 7% from 2018.

Net interest income was down 2% year over year to $242.5 million. The fall mainly resulted from elevated interest expenses due to rise in cost of funds, partly muted by higher interest income. Adjusted net interest margin of 1.9% shrunk 14 basis points (bps).

Non-interest income came in at $17.5 million, down 24% on a year-over-year basis. The fall was primarily due to the company’s exit from the wealth management business.

The company reported non-interest expenses of $126.1 million, down 7% from the year-earlier quarter. Lower compensation and benefits, along with occupancy and equipment and reduced general and administrative expenses, chiefly resulted in this fall.

As of Dec 31, 2019, total deposits rose marginally sequentially to $31.7 billion. Total loans increased 3% to $41.7 billion in the reported quarter.

During the fourth quarter, loan originations for investment came in at $3.3 billion, up 45% sequentially. The company had around $1.5 billion of loans in its current pipeline, including $1.1 billion of multi-family loans, $155 million of CRE loans and $226 million in specialty finance loans as of 2019 end.

Credit Quality Worsens

Credit quality for New York Community Bancorp reflected mixed credit metrics. Non-performing assets increased 31% year over year to $73.5 million. Allowance for losses on loans to total loans was 0.35% compared with the year-ago quarter’s 0.4%.

Furthermore, provision for loan losses was $1.7 million compared with $2.7 million in the prior-year quarter. Net charge-offs escalated significantly to $6.5 million.  Net charge-offs, as a percentage of average loans, remained stable at 0.02%.

Capital Position

New York Community Bancorp’s capital ratios remained strong. As of Dec 31, 2019, return on average tangible assets and return on average tangible common stockholders’ equity was 0.81% and 9.89%, compared with 0.82% and 9.82%, respectively, as of Dec 31, 2018.

Common equity tier 1 ratio was 9.91% compared with 10.55% as of Dec 31, 2018. Total risk-based capital ratio was 13.27% compared with 14.16% in year-ago quarter. Leverage capital ratio was 8.66%, down from 8.74%.

Our Viewpoint

New York Community Bancorp delivered a decent performance in the fourth quarter. Lower expenses reflect prudent expense management. In addition to this, we believe its efforts to originate loans for investment will augur well for earnings in the subsequent quarters. Moreover, steady improvement in the economy will support the company’s performance. Nonetheless, declining revenues keep us apprehensive.

New York Community Bancorp, Inc. Price, Consensus and EPS Surprise

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

UMB Financial UMBF reported fourth-quarter 2019 net operating earnings of $1.36 per share, which surpassed the Zacks Consensus Estimate of $1.16. The bottom line also compared favorably with the prior-year quarter’s earnings of 56 cents per share.

Bank of Hawaii Corporation BOH delivered fourth-quarter 2019 positive earnings surprise of 6.6%. Earnings per share of $1.45 surpassed the Zacks Consensus Estimate of $1.36. Further, the bottom line improved 11.5% from the prior-year quarter.

TCF Financial Corporation reported fourth-quarter 2019 adjusted earnings per share of $1.04, beating the Zacks Consensus Estimate as well as the prior-quarter figure of 98 cents.

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