Board of Directors
Declares a $0.17 per Common Share Dividend
1Q 2017
Highlights
- Earnings:
- Net income available to common
shareholders totaled $104.0 million, providing a 0.85% return on
average assets and a 6.76% return on average common stockholders’
equity.
- The return on average tangible assets
was 0.90% in the quarter, and the return on average tangible common
stockholders’ equity was 11.20%.(1)
- Net Interest
Margin:
- The Company’s margin declined 15 basis
points ("bps") to 2.71% in the quarter, largely reflecting a
nine-basis point decline in the contribution of prepayment income
to 11 bps.
- Excluding prepayment income (i.e., on a
non-GAAP basis), the margin would have declined six bps
sequentially.(2)
- Capital
Position:
- In March, the Company issued $515
million of preferred stock.
- The benefit is reflected in the
Company’s regulatory capital measures, with its tier 1 risk-based
capital ratio rising to 12.23%, total risk-based capital ratio
rising to 13.72%, and leverage capital ratio rising to 9.24% at
quarter-end.
- In addition, common stockholders’
equity represented 12.58% of total assets, and tangible common
stockholders’ equity represented 7.99% of tangible assets at that
date.(1)
- Asset
Quality:
- Non-performing non-covered assets
represented $70.4 million, or 0.15%, of total non-covered assets at
3/31/2017.
- Non-performing non-covered loans
represented $60.1 million, or 0.16%, of total non-covered
loans.
- Net charge-offs represented 0.01% of
average loans.
- Balance Sheet
Management:
- Assets totaled $48.8 billion at
3/31/2017, bringing the four-quarter average to $49.1 billion at
that date.
- Non-covered loans held for investment
represented $37.3 billion of the quarter-end total, comparable to
the balance at 12/31/2016.
- Loan originations totaled $2.2 billion
in the quarter, including $1.7 billion of held-for-investment
loans.
New York Community Bancorp, Inc. (NYSE:NYCB) (the “Company”)
today reported earnings of $104.0 million, or $0.21 per diluted
common share, for the three months ended March 31, 2017.
__________
(1)
“Tangible assets” and “tangible common
stockholders’ equity” are non-GAAP financial measures. Please see
the discussion and reconciliations of these non-GAAP measures to
the comparable GAAP measures on page 13 of this release.
(2)
“Adjusted net interest margin” is a
non-GAAP financial measure. Please see the discussion and
reconciliation of this non-GAAP measure to the comparable GAAP
measure beginning on page 7 of this release.
Commenting on the Company’s performance, President and Chief
Executive Officer Joseph R. Ficalora stated, “The quarter’s results
were indicative of the trend we’ve seen since mid-November, when
the level of market interest rates began to rise. The volatility of
market interest rates has constrained the growth of our assets and
our prepayment income, as fewer borrowers have opted to purchase
new properties or refinance, and as the Company has become more
selective in its lending activities.
“Yet despite these particular challenges, we generated first
quarter earnings of $104.0 million, equivalent to $0.21 per diluted
common share. We also enhanced our stockholders’ equity and
regulatory capital levels through the issuance of $515 million of
preferred stock. At 12.23% and 13.72%, our tier 1 and total
risk-based capital ratios now exceed those of our regional bank
peers.
“Our first quarter performance also reflects the consistent
quality of our assets. Non-performing non-covered assets
represented 0.15% of total non-covered assets, despite a
linked-quarter increase in non-accrual New York City taxi medallion
loans. Absent taxi medallion loans, which totaled $24.4 million,
non-performing non-covered loans would have amounted to $35.8
million at March 31st.
“The quality of our loan portfolio is furthermore reflected in
the absence of any net charge-offs on the loans that comprise the
bulk of our held-for-investment loans. In other words, in the first
three months of 2017, our portfolios of multi-family, commercial
real estate, and specialty finance loans and leases generated no
losses. The same can be said of our portfolios of acquisition,
development, and construction, and one-to-four family loans.
“While operating efficiently is another traditional focus, our
operating expenses continued to rise in the first three months of
this year. The increase in expenses was expected, as previously
stated, given the rising cost of regulatory compliance and the
related investment in our intellectual capital and infrastructure
as we continue our preparations to become a SIFI bank. In
connection with these increases, and others, and the decline in net
interest income, our efficiency ratio was substantially higher this
quarter than it has been in the past. At the same time, the level
of non-interest income we recorded was comparatively stable, with
mortgage banking income rising sequentially as well as
year-over-year.”
Board of Directors Declares $0.17 per
Common Share Dividend Payable on May 19, 2017
“Reflecting our earnings and our capital position, the Board of
Directors last night declared a quarterly cash dividend of $0.17
per common share. The dividend is payable on May 19, 2017 to common
shareholders of record as of May 8th, and represents a dividend
yield of 4.9% based on yesterday’s closing price,” Mr. Ficalora
said.
BALANCE SHEET SUMMARY
The Company recorded total assets of $48.8 billion at the end of
the first quarter, down $102.0 million from the balance at December
31, 2016. Loans, net, and securities represented $39.0 billion and
$3.7 billion, respectively, of the March 31st balance and were down
$334.8 million and $124.7 million, respectively, from the year-end
balances.
For the four quarters ended March 31, 2017, the Company’s total
consolidated assets averaged $49.1 billion, below the current SIFI
threshold of $50.0 billion.
Loans
Covered Loans
Primarily reflecting repayments, covered loans, net, fell $93.2
million to $1.6 billion, representing 4.1% of total loans, net, at
March 31, 2017.
Accretion on the covered loan portfolio totaled $31.6 million
and $33.3 million, respectively, in the current and year-earlier
three-month periods.
Non-Covered Loans Held for Investment
Non-covered loans held for investment, net, totaled $37.2
billion at the end of the current first quarter, comparable to the
balance at December 31st. In addition to a decrease in
originations, loan growth was tempered by prepayments and by sales
of participations totaling $214.9 million, as compared to $320.1
million in the trailing three-month period.
Multi-family loans and commercial real estate (“CRE”) loans
accounted for $122.2 million and $92.7 million, respectively, of
loans sold during the first quarter, as compared to $246.4 million
and $70.3 million, respectively, of loans sold in the trailing
three months.
The following table summarizes the Company’s production of loans
held for investment for the three months ended March 31, 2017,
December 31, 2016, and March 31, 2016:
For the Three Months Ended March 31,
December 31, March 31, (in thousands)
2017 2016 2016 Mortgage Loans Originated
for Investment: Multi-family $ 954,613 $
1,154,934 $ 1,580,787 Commercial real estate 250,342 287,754 81,423
One-to-four family 43,859 55,857 75,207 Acquisition, development,
and construction 12,919 26,328 39,145 Total
mortgage loans originated for investment $ 1,261,733 $ 1,524,873 $
1,776,562
Other Loans Originated for Investment: Specialty
finance $ 269,164 $ 358,811 $ 197,212 Other commercial and
industrial 122,155 140,910 170,359 Other 885 846
910 Total other loans originated for investment $ 392,204 $
500,567 $ 368,481 Total loans originated for investment $ 1,653,937
$ 2,025,440 $ 2,145,043
The following table provides additional information about the
Company’s multi-family and CRE loan portfolios at March 31, 2017,
December 31, 2016, and March 31, 2016:
(dollars in thousands)
March 31,2017
December 31,2016
March 31,2016
Multi-Family Loan Portfolio: Loans outstanding $27,053,626
$26,961,486 $26,423,675 Percent of total held-for-investment loans
72.5 % 72.1 % 73.0 % Average principal balance $5,491 $5,454 $5,353
Weighted average life 3.3
years
2.9 years 2.9 years
Commercial Real Estate Loan
Portfolio: Loans outstanding $7,536,268 $7,727,258 $7,679,780
Percent of total held-for-investment loans 20.2 % 20.7 % 21.2 %
Average principal balance $5,636 $5,644 $5,355 Weighted average
life 3.1
years
3.4 years 3.3 years
The March 31st balance of loans held for investment also
reflects the following linked-quarter increases:
- One-to-four family loans rose $35.9
million sequentially to $417.0 million, primarily reflecting the
production of prime jumbo hybrid loans. One-to-four family loans
represented 1.1% of total loans held for investment, a modest rise
from the ratio at December 31st.
- Acquisition, development, and
construction loans rose a modest $1.8 million to $382.3 million,
representing 1.0% of total held-for-investment loans, at the end of
March.
- Other loans rose $8.9 million
sequentially to $1.9 billion, representing 5.2% of the March 31st
balance, consistent with the percentage at December 31st. The
increase was primarily the net effect of a $13.3 million rise in
specialty finance loans and leases to $1.3 billion and a $3.3
million decline in other commercial and industrial loans to $629.9
million. The latter balance included New York City taxi medallion
loans of $146.7 million, representing 0.39% of the total
held-for-investment loan portfolio.
Non-Covered Loans Held for Sale
The Company originated loans held for sale of $560.2 million in
the current first quarter, a $507.2 million decrease from the
trailing-quarter volume and a $338.9 million decrease from the
volume at March 31, 2016. The decline in production was
attributable to the rise in residential mortgage interest rates
since last November, which resulted in a decline in refinancing
activity. As a result, the balance of loans held for sale fell
$193.2 million sequentially to $216.0 million, representing 0.55%
of total loans, net, at March 31, 2017. The impact is also
reflected in the average balance of loans held for sale in the
current first quarter ($267.4 million), as compared to the average
balances in the trailing and year-earlier three-month periods
($537.8 million and $348.1 million, respectively).
Pipeline
The Company has approximately $2.0 billion of loans in its
current pipeline, including loans held for investment of
approximately $1.6 billion and one-to-four family loans held for
sale of approximately $400 million.
Asset Quality
The following discussion pertains only to the Company's
portfolio of non-covered loans held for investment (excluding
purchased credit-impaired, or “PCI,” loans) and non-covered other
real estate owned ("OREO").
Non-performing non-covered assets represented $70.4 million, or
0.15%, of total non-covered assets at the end of the current first
quarter, as compared to $68.1 million, or 0.14%, at December 31,
2016. While non-covered OREO fell $1.3 million sequentially to
$10.3 million, non-performing non-covered loans rose $3.7 million
to $60.1 million, representing 0.16% of total non-covered
loans.
The rise in non-performing non-covered loans was driven by an
increase in non-accrual New York City taxi medallion credits, which
are included in “other” non-accrual non-covered loans. At March 31,
2017, non-accrual taxi medallion loans rose to $24.4 million from
$15.2 million and $6.4 million, respectively, at December 31, 2016
and March 31, 2016. The increase in other non-performing
non-covered loans was, to a large degree, tempered by a $7.6
million reduction in non-performing non-covered mortgage loans to
$31.2 million.
The following table presents the Company’s non-performing
non-covered loans and assets at March 31, 2017, December 31, 2016,
and March 31, 2016:
(in thousands)
March 31,2017
December 31,2016
March 31,2016
Non-Performing Non-Covered Assets:
Non-accrual non-covered mortgage loans: Multi-family $11,555
$13,558 $15,900 Commercial real estate 3,327 9,297 11,863
One-to-four family 10,093 9,679 11,172 Acquisition, development,
and construction 6,200 6,200 -- Total non-accrual non-covered
mortgage loans $31,175 $38,734 $38,935 Other non-accrual
non-covered loans (1) 28,969 17,735 10,298 Total non-performing
non-covered loans $60,144 $56,469 $49,233 Non-covered other real
estate owned 10,259 11,607 15,414 Total non-performing non-covered
assets $70,403 $68,076 $64,647 (1) Includes
$24.4 million, $15.2 million, and $6.4 million, respectively, of
non-accrual non-covered New York City taxi medallion loans.
The following table presents the Company's asset quality
measures at March 31, 2017, December 31, 2016, and March 31,
2016:
March 31,2017
December 31,2016
March 31,2016
Non-performing non-covered loans to total
non-covered loans 0.16 % 0.15 % 0.14 % Non-performing non-covered
assets to total non-covered assets 0.15 0.14 0.14
Allowance for losses on non-covered loans
to non-
performing non-covered loans (1)
253.88 277.19 302.77
Allowance for losses on non-covered loans
to total
non-covered loans (1)
0.41 0.42 0.41 (1) Excludes the allowance for
losses on PCI loans.
The following table summarizes the Company’s net charge-offs
(recoveries) for the three months ended March 31, 2017, December
31, 2016, and March 31, 2016:
For the Three Months Ended March 31,
December 31, March 31, (dollars in thousands)
2017 2016 2016 Charge-offs:
Multi-family $ -- $ -- $ -- Commercial real estate --
-- -- One-to-four family -- -- 46 Acquisition, development, and
construction -- -- -- Other (1) 5,830 2,258
148 Total charge-offs $ 5,830 $ 2,258
$ 194
Recoveries: Multi-family $ -- $ -- $ --
Commercial real estate (15 ) (19 ) (712 ) One-to-four family -- (2
) -- Acquisition, development, and construction (100 ) -- (167 )
Other (88 ) (648 ) (248 ) Total recoveries $
(203 ) $ (669 ) $ (1,127 ) Net charge-offs (recoveries) $ 5,627
$ 1,589 $ (933 ) Net charge-offs (recoveries) to
average loans (2) 0.01 % 0.00 % (0.00 )%
(1) Includes New York City taxi medallion
loans of $2.9 million, $2.3 million, and $78,000, respectively, in
the three months ended March 31, 2017, December 31, 2016, and March
31, 2016. (2) The measures for the three months ended March 31,
2017, December 31, 2016, and March 31, 2016 are non-annualized.
The following table presents the Company’s non-covered loans 30
to 89 days past due at March 31, 2017, December 31, 2016, and March
31, 2016:
(in thousands)
March 31,2017
December 31,2016
March 31,2016
Non-Covered Loans 30 to 89 Days Past Due:
Multi-family $ 8 $ 28 $ 760 Commercial real estate 1,202 --
-- One-to-four family 792 2,844 380 Acquisition, development, and
construction -- -- -- Other (1) 14,465 7,511
2,045 Total non-covered loans 30 to 89 days past due $ 16,467 $
10,383 $ 3,185 (1) Includes New York City taxi
medallion loans of $13.3 million, $6.8 million, and $1.4 million,
respectively, at March 31, 2017, December 31, 2016, and March 31,
2016.
Securities
Primarily reflecting prepayments, securities declined $124.7
million from the year-end 2016 balance to $3.7 billion,
representing 7.6% of total assets, at March 31, 2017. Included in
the latter amount were securities held to maturity of $3.6 billion
and securities available for sale of $50.2 million.
Funding Sources
In the three months ended March 31, 2017, deposits fell $161.4
million to $28.7 billion, primarily reflecting a $422.7 million
decline in NOW and money market accounts to $13.0 billion. The
latter reduction was largely offset by a $220.9 million rise in
non-interest-bearing accounts to $2.9 billion, together with a
$55.4 million increase in savings accounts to $5.3 billion.
Certificates of deposit (“CDs”) had little impact on the decrease
in total deposits, amounting to $7.6 billion at both March 31, 2017
and December 31, 2016. CDs represented 26.3% of total deposits at
the end of the first quarter, and deposits represented 58.8% of
total assets at that date.
The balance of wholesale borrowings fell to $12.9 billion at the
end of the current first quarter from $13.3 billion at December
31st. Reflecting this reduction, borrowed funds fell $459.9 million
sequentially to $13.2 billion, representing 27.1% of total assets
at that date.
Stockholders’ Equity
Largely reflecting the capital raised through the aforementioned
preferred stock offering, total stockholders’ equity rose $523.4
million from the year-end 2016 balance to $6.6 billion at the
current first quarter-end. Common stockholders’ equity represented
12.58% and 12.52%, respectively, of total assets at March 31, 2017
and December 31, 2016, and a book value per common share of $12.57
at each of those dates.
Excluding goodwill of $2.4 billion and core deposit intangibles
(“CDI”) of $54,000 from the balances of both common stockholders’
equity and total assets, tangible common stockholders’ equity rose
$20.4 million sequentially to $3.7 billion, representing 7.99% of
tangible assets and a tangible book value per common share of $7.58
at March 31, 2017. At the end of last year, and excluding goodwill
of $2.4 billion and CDI of $208,000 from both common stockholders’
equity and total assets, tangible common stockholders’ equity
totaled $3.7 billion, representing 7.93% of tangible assets and a
tangible book value per common share of $7.57.(1)
In addition, the regulatory capital ratios for the Company and
its subsidiary banks continued to exceed the regulatory
requirements for “well capitalized” classification, as indicated in
the table located on the last page of this release.
EARNINGS SUMMARY FOR THE THREE MONTHS
ENDED MARCH 31, 2017
Net income available to common shareholders (“net income”)
totaled $104.0 million in the current first quarter, equivalent to
$0.21 per diluted common share. In the trailing and year-earlier
quarters, net income totaled $113.7 million and $129.9 million, and
was equivalent to $0.23 and $0.27 per diluted common share,
respectively. The sequential and year-over-year declines were
primarily due to a decrease in net interest income, as further
discussed below.
Net Interest Income
The Company recorded net interest income of $294.9 million in
the current first quarter, a $20.6 million decrease from the
trailing-quarter level and a $32.9 million decrease from the
year-earlier amount.
Linked-Quarter Comparison
The linked-quarter decline in net interest income was
attributable to a variety of factors, including an increase in our
cost of funds, as short-term interest rates rose in the quarter; a
decline in the yield on our interest-earning assets as a rise in
market interest rates reduced loan demand and the level of
prepayment income; and a resultant decline in the size of our
average balance sheet. Details of the linked-quarter decline
follow:
- Interest income fell $16.2 million
sequentially to $399.1 million in the current first quarter as a
$14.5 million decline in the interest income from loans to $358.4
million combined with a $1.7 million decline in the interest income
from securities to $40.7 million. Prepayment income contributed
$12.1 million to interest income in the current first quarter,
reflecting a linked-quarter reduction of $9.9 million.
- The decline in the interest income from
loans was driven by a $597.2 million decrease in the average
balance to $39.1 billion and a nine-basis point decline in the
average yield to 3.67%. While the decline in the average balance
was largely market-driven, the decrease in the average yield was a
function of the drop in prepayment income. Prepayment income
contributed $9.6 million to the interest income on loans,
reflecting an $8.7 million linked-quarter decrease, and contributed
10 basis points to the average yield on loans, a decline of eight
basis points.
- While the average yield on securities
rose two basis points linked quarter, the benefit was exceeded by
the impact of a $166.3 million decline in the average balance to
$4.3 billion. The increase in the average yield was indicative of
the rise in market interest rates during the quarter, while the
decline in the average balance was largely due to repayments, as
well as management’s current focus on restraining asset growth.
Furthermore, prepayment income contributed $2.5 million to the
interest income on securities in the current first quarter, a $1.3
million decrease, and contributed 24 basis points to the average
yield, a 10-basis point decline.
- As a result, the average balance of
interest-earning assets fell $763.5 million sequentially to $43.4
billion and the average yield on such assets fell eight basis
points to 3.68%.
- Interest expense rose $4.4 million
sequentially to $104.2 million, as a $3.5 million increase in the
interest expense on interest-bearing deposits combined with a more
modest increase in the interest expense on borrowed funds.
- Specifically, the interest expense on
interest-bearing deposits rose to $48.7 million, as an $87.7
million rise in the average balance to $26.2 billion combined with
a six-basis point rise in the average cost of such funds to 0.75%.
In addition, the interest expense on borrowed funds rose to $55.6
million as the benefit of a $592.9 million decline in the average
balance to $13.4 billion was exceeded by the impact of a 12-basis
point increase in the average cost to 1.68%.
- As a result, the average balance of
interest-bearing liabilities fell $505.3 million sequentially to
$39.5 billion and the average cost of funds rose eight basis points
to 1.07% in the first three months of this year.
Year-Over-Year Comparison
The following factors contributed to the year-over-year
reduction in net interest income:
- Interest income fell $24.7 million
year-over-year as a $22.4 million decline in the interest income
from securities was coupled with a $2.3 million decline in the
interest income from loans. Prepayment income contributed $23.7
million to interest income in the year-earlier first quarter,
exceeding the current first-quarter amount by $11.6 million.
- The year-over-year reduction in the
interest income from securities was driven by a $1.8 billion
decline in the average balance and a 32-basis point drop in the
average yield. While the decline in the average balance reflects
the high volume of securities calls and repayments, the decline in
the average yield reflects a 58-basis point reduction in the
contribution of prepayment income from 82 basis points in the first
quarter of 2016.
- The decline in the interest income from
loans was the net effect of a $631.4 million rise in the average
balance and an eight-basis point decline in the average yield. In
addition, prepayment income contributed $11.0 million to the
interest income from loans and 11 basis points to the average yield
on such assets in the year-earlier quarter, exceeding the current
first-quarter amounts by $1.5 million and one basis point,
respectively.
- As a result, the average balance of
interest-earning assets fell $1.2 billion from the year-earlier
level and the average yield fell 12 basis points.
- Interest expense rose $8.3 million
year-over-year as the interest expense on deposits rose $7.9
million and the interest expense on borrowed funds rose a far more
modest amount.
- The year-over-year rise in interest
expense stemming from deposits was due to a 12-basis point rise in
the average cost of such funds, together with an $87.3 million rise
in the average balance. The modest increase in the interest income
from borrowed funds was driven by a 21-basis point rise in the
average cost of such funding and tempered by a $1.7 billion decline
in the average balance from the year-earlier amount.
- As a result, the average balance of
interest-bearing liabilities fell $1.6 billion and the average cost
of funds fell 13 basis points year-over-year.
Net Interest Margin
The direction of the Company’s net interest margin was
consistent with that of its net interest income, and generally was
driven by the same factors as those described above. At 2.71%, the
margin was 15 basis points narrower than the trailing-quarter
measure and 23 basis points narrower than the margin recorded in
the first quarter of last year. The respective reductions were due,
in part, to a decline in prepayment income from the levels recorded
in the trailing and year-earlier quarters, as reflected in the
following table:
(dollars in thousands)
March 31, 2017
December 31,2016
March 31,2016
Total interest income $ 399,119 $ 415,348
$ 423,810
Prepayment income: From loans $
9,566 $ 18,243 $ 11,034 From securities 2,548
3,814 12,696 Total prepayment income $ 12,114
$ 22,057 $ 23,730
Net interest margin (including the
contribution
of prepayment income)
2.71 % 2.86 % 2.94 % Less:
Contribution of prepayment income to
net
interest margin:
From loans 9 bps 17 bps 10 bps From securities 2
3 12
Total contribution of prepayment income to
net
interest margin
11 bps 20 bps 22 bps
Adjusted net interest margin (i.e.,
excluding
the contribution of prepayment income)
(1)
2.60 % 2.66 % 2.72 % (1) “Adjusted net
interest margin” is a non-GAAP financial measure as more fully
discussed below.
While our net interest margin, including the contribution of
prepayment income, is recorded in accordance with GAAP, adjusted
net interest margin, which excludes the contribution of prepayment
income, is not. Nevertheless, management uses this non-GAAP measure
in its analysis of our performance, and believes that this non-GAAP
measure should be disclosed in our earnings releases and other
investor communications for the following reasons:
1. Adjusted net interest margin gives investors a
better understanding of the effect of prepayment income on our net
interest margin. Prepayment income in any given period depends on
the volume of loans that refinance or prepay, or securities that
prepay, during that period. Such activity is largely dependent on
external factors such as current market conditions, including real
estate values, and the perceived or actual direction of market
interest rates. 2.
Adjusted net interest margin is among the
measures considered by current and prospective investors, both
independent of, and in comparison with, our peers.
Adjusted net interest margin should not be considered in
isolation or as a substitute for net interest margin, which is
calculated in accordance with GAAP. Moreover, the manner in which
we calculate this non-GAAP measure may differ from that of other
companies reporting a non-GAAP measure with a similar name.
Provision for (Recovery of) Loan
Losses
Provision for Losses on Non-Covered Loans
Reflecting management’s assessment of the adequacy of the
allowance for non-covered loan losses, the Company recorded a $1.8
million provision for non-covered loan losses in the current first
quarter, as compared to $5.2 million and $2.7 million in the three
months ended December 31, 2016 and March 31, 2016,
respectively.
Recovery of Losses on Covered Loans
Reflecting an increase in the cash flows expected from certain
pools of acquired loans covered by FDIC loss-sharing agreements,
the Company recovered $5.8 million, $1.7 million, and $2.9 million
from the allowance for covered loan losses in the three months
ended March 31, 2017, December 31, 2016, and March 31, 2016,
respectively.
The recoveries recorded in the respective quarters were largely
offset by FDIC indemnification expense of $4.6 million, $1.3
million, and $2.3 million, which was recorded in “Non-interest
income” in the respective periods.
Non-Interest Income
Non-interest income totaled $32.2 million in the current first
quarter, down $202,000 from the trailing-quarter level and $3.1
million from the year-earlier amount.
The linked-quarter decline was driven by reductions in various
revenue sources, including a $1.5 million decrease in bank-owned
life insurance (“BOLI”) income to $6.3 million, and more modest
reductions in fee income and net securities gains to $7.9 million
and $2.0 million, respectively. In addition, the sale of loans
generated a first-quarter loss of $266,000 in contrast to a
$688,000 gain in the trailing quarter, and FDIC indemnification
expense rose $3.3 million sequentially. The combined impact of
these factors was largely offset by a $6.5 million increase in
mortgage banking income to $9.8 million in the three months ended
March 31, 2017.
The year-over-year decline in non-interest income reflects a
similar combination of factors, including a $3.0 million reduction
in BOLI income, a $2.3 million increase in FDIC indemnification
expense, and the $6.0 million difference between the current
first-quarter loss on loan sales and the year-earlier first-quarter
gain. These reductions were somewhat offset by a $5.6 million
increase in mortgage banking income and a $1.8 million increase in
net securities gains.
The following table summarizes our mortgage banking income for
the periods indicated:
For the Three Months Ended March 31,
December 31, March 31, (in thousands)
2017 2016 2016 Mortgage Banking Income:
Income from originations $ 4,975 $
6,901 $ 13,613 Servicing income (loss) 4,789
(3,640 ) (9,475 ) Total mortgage banking income $ 9,764
$ 3,261 $ 4,138
As reflected in the preceding table, the year-over-year increase
in mortgage banking income was largely driven by the $14.3 million
difference between the servicing income recorded in the current
first quarter and the year-earlier servicing loss. The loss was
primarily due to a change in modeling assumptions used by the
Company’s mortgage banking division for the valuation of mortgage
servicing rights. In contrast, the higher level of income from
originations recorded in the year-earlier first quarter was
attributable to the higher volume of loans sold, as well as higher
sales margins, and to the reversal of $5.9 million from the
representation and warranty reserve on one-to-four family loans
held for sale during that time.
Non-Interest Expense
Non-interest expense totaled $166.9 million in the current first
quarter, a $3.7 million decrease from the trailing-quarter level
and an $8.5 million increase from the year-earlier amount.
Merger-related expenses added $6.0 million and $1.2 million,
respectively, to non-interest expense in the trailing and
year-earlier quarters; there were no comparable expenses in the
first quarter of 2017.
The bulk of the Company’s non-interest expense consists of
operating expenses, which totaled $166.8 million in the current
first quarter, as compared to $164.2 million and $156.4 million,
respectively, in the earlier periods. The linked-quarter increase
was largely driven by a $5.3 million rise in compensation and
benefits expense to $95.6 million, and tempered by a $3.1 million
decline in general and administrative (“G&A”) expense to $46.2
million. The rise in compensation and benefits expense was due to a
combination of factors, including the payment of payroll taxes, the
addition of senior-level staff in certain back-office departments,
normal salary increases, and certain incentive compensation. The
decline in G&A expense was largely due to a reduction in
advertising expenses, together with a decrease in legal fees.
Occupancy and equipment expense rose modestly from the
trailing-quarter level, totaling $25.1 million in the first three
months of 2017.
The year-over-year rise in compensation and benefits expense was
substantially greater, as a $6.3 million increase in compensation
and benefits expense was coupled with a $4.9 million increase in
G&A expense. While the year-over-year rise in compensation and
benefits expense was generally attributable to the same factors as
the linked-quarter increase, the year-over-year rise in G&A
expense was largely attributable to higher FDIC insurance premiums
and professional fees. The impact of these increases on the
Company’s operating expenses was modestly tempered by a $756,000
decrease in occupancy and equipment expense.
Income Tax Expense
Income tax expense totaled $60.2 million in the current first
quarter, a modest rise from the trailing-quarter level and a $14.7
million reduction from the year-earlier amount.
While pre-tax income fell $9.6 million sequentially, to $164.2
million, the effective tax rate rose to 36.67% in the current first
quarter from 34.55% in the trailing three-month period. The level
of the effective tax rate in the trailing quarter reflects the
deductibility of certain merger-related expenses following the
termination of the merger agreement with Astoria Financial
Corporation in December 2016. In the first quarter of 2016, pre-tax
income was $40.7 million higher than the current first-quarter
level, and the effective tax rate was modestly lower at 36.58%.
About New York Community Bancorp,
Inc.
One of the largest U.S. bank holding companies, with assets of
$48.8 billion, New York Community Bancorp, Inc. is a leading
producer of multi-family loans on non-luxury, rent-regulated
apartment buildings in New York City, and the parent of New York
Community Bank and New York Commercial Bank. With deposits of $28.7
billion and 255 branches in Metro New York, New Jersey, Florida,
Ohio, and Arizona, the Company also ranks among the largest
depositories in the United States.
Reflecting its growth through a series of acquisitions, the
Community Bank currently operates through seven local divisions,
each with a history of service and strength: Queens County Savings
Bank, Roslyn Savings Bank, Richmond County Savings Bank, and
Roosevelt Savings Bank in New York; Garden State Community Bank in
New Jersey; Ohio Savings Bank in Ohio; and AmTrust Bank in Florida
and Arizona. Similarly, New York Commercial Bank currently operates
18 of its 30 New York-based branches under the divisional name
Atlantic Bank. Additional information about the Company and its
bank subsidiaries is available at www.myNYCB.com and
www.NewYorkCommercialBank.com.
Post-Earnings Release Conference
Call
As previously announced, the Company will host a conference call
on Wednesday, April 26, 2017, at 8:30 a.m. (Eastern Daylight Time)
to discuss its first quarter 2017 performance and strategies. The
conference call may be accessed by dialing (877) 407-8293 (for
domestic calls) or (201) 689-8349 (for international calls) and
asking for “New York Community Bancorp” or “NYCB”. A replay will be
available approximately three hours following completion of the
call through 11:59 p.m. on April 30, 2017 and may be accessed by
calling (877) 660-6853 (domestic) or (201) 612-7415 (international)
and providing the following conference ID: 13658110. In addition,
the conference call will be webcast at ir.myNYCB.com, and archived
through 5:00 p.m. on May 24, 2017.
Cautionary Statements Regarding
Forward-Looking Information
This earnings release and the associated conference call may
include forward-looking statements by the Company and our
authorized officers pertaining to such matters as our goals,
intentions, and expectations regarding revenues, earnings, loan
production, asset quality, capital levels, and acquisitions, among
other matters; our estimates of future costs and benefits of the
actions we may take; our assessments of probable losses on loans;
our assessments of interest rate and other market risks; and our
ability to achieve our financial and other strategic goals.
Forward-looking statements are typically identified by such
words as “believe,” “expect,” “anticipate,” “intend,” “outlook,”
“estimate,” “forecast,” “project,” and other similar words and
expressions, and are subject to numerous assumptions, risks, and
uncertainties, which change over time. Additionally,
forward-looking statements speak only as of the date they are made;
the Company does not assume any duty, and does not undertake, to
update our forward-looking statements. Furthermore, because
forward-looking statements are subject to assumptions and
uncertainties, actual results or future events could differ,
possibly materially, from those anticipated in our statements, and
our future performance could differ materially from our historical
results.
Our forward-looking statements are subject to the following
principal risks and uncertainties: general economic conditions and
trends, either nationally or locally; conditions in the securities
markets; changes in interest rates; changes in deposit flows, and
in the demand for deposit, loan, and investment products and other
financial services; changes in real estate values; changes in the
quality or composition of our loan or investment portfolios;
changes in competitive pressures among financial institutions or
from non-financial institutions; our ability to obtain the
necessary shareholder and regulatory approvals of any acquisitions
we may propose; our ability to successfully integrate any assets,
liabilities, customers, systems, and management personnel we may
acquire into our operations, and our ability to realize related
revenue synergies and cost savings within expected time frames;
changes in legislation, regulations, and policies; and a variety of
other matters which, by their nature, are subject to significant
uncertainties and/or are beyond our control.
More information regarding some of these factors is provided in
the Risk Factors section of our Form 10-K for the year ended
December 31, 2016 and in other SEC reports we file. Our
forward-looking statements may also be subject to other risks and
uncertainties, including those we may discuss in this news release,
on our conference call, during investor presentations, or in our
SEC filings, which are accessible on our website and at the SEC’s
website, www.sec.gov.
- Financial Statements and Highlights Follow
-
NEW YORK COMMUNITY BANCORP, INC. CONSOLIDATED
STATEMENTS OF CONDITION March 31,
December 31, 2017 2016 (in thousands,
except share data) (unaudited)
Assets Cash and cash
equivalents $ 984,296 $ 557,850 Securities: Available-for-sale
50,224 104,281 Held-to-maturity 3,642,104
3,712,776 Total securities 3,692,328 3,817,057 Loans held
for sale 215,981 409,152 Non-covered mortgage loans held for
investment: Multi-family 27,053,626 26,961,486 Commercial real
estate 7,536,268 7,727,258 One-to-four family 416,982 381,081
Acquisition, development, and construction 382,289
380,522 Total non-covered mortgage loans held for
investment 35,389,165 35,450,347 Other non-covered loans:
Commercial and industrial 1,918,380 1,908,308 Other loans
22,944 24,067 Total non-covered other loans
held for investment 1,941,324 1,932,375
Total non-covered loans held for investment 37,330,489 37,382,722
Less: Allowance for losses on non-covered loans (154,450 )
(158,290 ) Non-covered loans held for investment, net
37,176,039 37,224,432 Covered loans 1,599,101 1,698,133 Less:
Allowance for losses on covered loans (17,906 )
(23,701 ) Covered loans, net 1,581,195
1,674,432 Total loans, net 38,973,215 39,308,016 Federal
Home Loan Bank stock, at cost 577,943 590,934 Premises and
equipment, net 379,304 373,675 FDIC loss share receivable 221,158
243,686 Goodwill 2,436,131 2,436,131 Core deposit intangibles, net
54 208
Other assets (includes $17,292 and
$16,990, respectively, of other real estate owned
covered by loss sharing agreements) 1,560,135
1,598,998
Total assets $ 48,824,564 $
48,926,555
Liabilities and Stockholders’
Equity Deposits: NOW and money market accounts $ 12,972,381 $
13,395,080 Savings accounts 5,335,783 5,280,374 Certificates of
deposit 7,562,207 7,577,170 Non-interest-bearing accounts
2,856,175 2,635,279 Total deposits
28,726,546 28,887,903 Borrowed funds:
Wholesale borrowings 12,854,500 13,314,500 Junior subordinated
debentures 358,952 358,879 Total
borrowed funds 13,213,452 13,673,379 Other liabilities
237,215 241,282 Total liabilities
42,177,213 42,802,564 Stockholders’ equity:
Preferred stock at par $0.01 (5,000,000
shares authorized):
Series A (515,000 shares issued and outstanding) 503,116 --
Common stock at par $0.01 (900,000,000
shares authorized;
488,953,712 and 487,067,889 shares issued;
and
488,953,712 and 487,056,676 shares
outstanding, respectively)
4,890 4,871 Paid-in capital in excess of par 6,045,979 6,047,558
Retained earnings 149,425 128,435 Treasury stock, at cost (11,213
shares at December 31, 2016) -- (160 ) Accumulated other
comprehensive loss, net of tax: Net unrealized loss on securities
available for sale, net of tax (1,336 ) (753 )
Net unrealized loss on the non-credit
portion of other-than-temporary impairment losses,
net of tax
(5,222 ) (5,241 ) Pension and post-retirement obligations, net of
tax (49,501 ) (50,719 ) Total accumulated other
comprehensive loss, net of tax (56,059 ) (56,713 )
Total stockholders’ equity 6,647,351 6,123,991
Total liabilities and stockholders’ equity $
48,824,564 $ 48,926,555
NEW YORK
COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share data)
(unaudited)
For the Three Months Ended March 31,
Dec. 31, March 31, 2017
2016 2016 Interest Income:
Mortgage and other loans $358,402 $372,883 $360,723
Securities and money market investments 40,717 42,465
63,087 Total interest income 399,119 415,348 423,810
Interest Expense: NOW and money market accounts
19,709 16,395 14,619 Savings accounts 6,810 6,981 10,208
Certificates of deposit 22,131 21,746 15,890 Borrowed funds 55,552
54,706 55,227 Total interest expense 104,202
99,828 95,944 Net interest income 294,917
315,520 327,866 Provision for losses on non-covered loans 1,787
5,175 2,721 Recovery of losses on covered loans (5,795 ) (1,659 )
(2,897 ) Net interest income after provision for (recovery of) loan
losses 298,925 312,004 328,042
Non-Interest Income: Mortgage banking income 9,764 3,261
4,138 Fee income 7,860 8,185 7,923 Bank-owned life insurance 6,337
7,807 9,336 Net (loss) gain on sales of loans (266 ) 688 5,775 Net
gain on sales of securities 1,979 2,934 163 FDIC indemnification
expense (4,636 ) (1,327 ) (2,318 ) Other income 11,134
10,826 10,220 Total non-interest income 32,172
32,374 35,237
Non-Interest Expense:
Operating expenses: Compensation and benefits 95,554 90,206 89,304
Occupancy and equipment 25,059 24,706 25,815 General and
administrative 46,176 49,290 41,270 Total
operating expenses 166,789 164,202 156,389 Amortization of core
deposit intangibles 154 397 846 Merger-related expenses --
6,003 1,213 Total non-interest expense 166,943
170,602 158,448 Income before income taxes 164,154
173,776 204,831 Income tax expense 60,197 60,043
74,922
Net income available to common shareholders
$103,957 $113,733 $129,909
Basic earnings per common
share $0.21 $0.23 $0.27
Diluted
earnings per common share $0.21 $0.23 $0.27
NEW YORK COMMUNITY BANCORP,
INC.
RECONCILIATIONS OF CERTAIN GAAP AND
NON-GAAP FINANCIAL MEASURES
(unaudited)
While stockholders’ equity, total assets, and book value per
share are financial measures that are recorded in accordance with
U.S. generally accepted accounting principles (“GAAP”), tangible
stockholders’ equity, tangible assets, and tangible book value per
share are not. Nevertheless, it is management’s belief that these
non-GAAP measures should be disclosed in our earnings releases and
other investor communications for the following reasons:
1.
Tangible stockholders’ equity is an
important indication of the Company’s ability to grow organically
and through business combinations, as well as its ability to pay
dividends and to engage in various capital management
strategies.
2.
Returns on average tangible assets and
average tangible stockholders’ equity are among the profitability
measures considered by current and prospective investors, both
independent of, and in comparison with, the Company’s peers.
3.
Tangible book value per share and the
ratio of tangible stockholders’ equity to tangible assets are among
the capital measures considered by current and prospective
investors, both independent of, and in comparison with, its
peers.
Tangible stockholders’ equity, tangible assets, and the related
non-GAAP profitability and capital measures should not be
considered in isolation or as a substitute for stockholders’
equity, total assets, or any other profitability or capital measure
calculated in accordance with GAAP. Moreover, the manner in which
we calculate these non-GAAP measures may differ from that of other
companies reporting non-GAAP measures with similar names.
The following table presents reconciliations of our common
stockholders’ equity and tangible common stockholders’ equity, our
total assets and tangible assets, and the related GAAP and non-GAAP
profitability and capital measures at or for the three months ended
March 31, 2017, December 31, 2016, and March 31, 2016:
At or for the Three Months
Ended
March 31, December 31, March 31,
(dollars in thousands)
2017 2016 2016 Total
Stockholders’ Equity $6,647,351 $6,123,991 $5,984,800 Less:
Goodwill (2,436,131 ) (2,436,131 ) (2,436,131 ) Core deposit
intangibles (54 ) (208 ) (1,753 ) Preferred stock (503,116 ) --
--
Tangible common stockholders’ equity
$3,708,050 $3,687,652 $3,546,916
Total Assets
$48,824,564 $48,926,555 $48,515,572 Less: Goodwill (2,436,131 )
(2,436,131 ) (2,436,131 ) Core deposit intangibles (“CDI”) (54 )
(208 ) (1,753 )
Tangible assets $46,388,379 $46,490,216
$46,077,688
Average Common Stockholders’ Equity
$6,151,286 $6,123,550 $5,973,381 Less: Average goodwill and CDI
(2,436,286 ) (2,436,559 ) (2,438,438 )
Average tangible common
stockholders’ equity $3,715,000 $3,686,991 $3,534,943
Average Assets $48,736,309 $49,388,513 $49,951,947 Less:
Average goodwill and CDI (2,436,286 ) (2,436,559 ) (2,438,438 )
Average tangible assets $46,300,023 $46,951,954 $47,513,509
Net Income Available to Common Shareholders(1)
$103,957 $113,733 $129,909 Add back: Amortization of CDI, net of
tax 92 238 508
Adjusted net income
available to common shareholders(2) $104,049 $113,971 $130,417
GAAP MEASURES: Return on average assets 0.85 % 0.92 %
1.04 % Return on average common stockholders’ equity 6.76 7.43 8.70
Common stockholders’ equity to total assets 12.58 12.52 12.34 Book
value per common share $12.57 $12.57 $12.29
Non-GAAP
MEASURES: Return on average tangible assets 0.90 % 0.97 % 1.05
% Return on average tangible common stockholders’ equity 11.20
12.36 14.89 Tangible common stockholders’ equity to tangible assets
7.99 7.93 7.70 Tangible book value per common share $7.58 $7.57
$7.28 (1) To calculate our returns on average
assets and average common stockholders’ equity for a period, we
divide the net income available to common shareholders generated
during that period by the average assets and the average common
stockholders’ equity recorded during that time. (2) To calculate
our returns on average tangible assets and average tangible common
stockholders’ equity for a period, we adjust the net income
available to common shareholders generated during that period by
adding back the amortization of CDI, net of tax, and then divide
that adjusted net income by the average tangible assets and the
average tangible common stockholders’ equity recorded during that
time.
NEW YORK COMMUNITY BANCORP, INC. NET
INTEREST INCOME ANALYSIS LINKED-QUARTER AND YEAR-OVER-YEAR
COMPARISONS
(unaudited)
For the Three Months Ended March 31,
2017 December 31, 2016 March 31,
2016 Average Average
Average Average Yield/
Average Yield/ Average Yield/ (dollars
in thousands)
Balance Interest Cost
Balance Interest Cost Balance
Interest Cost Assets: Interest-earning assets:
Mortgage and other loans, net $ 39,069,323 $ 358,402 3.67 % $
39,666,550 $ 372,883 3.76 % $ 38,437,915 $ 360,723 3.75 %
Securities and money market investments 4,349,028
40,717 3.77 4,515,294 42,465 3.75
6,176,122 63,087 4.09 Total
interest-earning assets 43,418,351 399,119 3.68 44,181,844 415,348
3.76 44,614,037 423,810 3.80 Non-interest-earning assets
5,317,958 5,206,669 5,337,910 Total assets $
48,736,309 $ 49,388,513 $ 49,951,947
Liabilities and
Stockholders’ Equity: Interest-bearing deposits: NOW and money
market accounts $ 13,213,490 $ 19,709 0.60 % $ 13,242,362 $ 16,395
0.49 % $ 13,285,335 $ 14,619 0.44 % Savings accounts 5,250,724
6,810 0.53 5,327,346 6,981 0.52 6,863,220 10,208 0.60 Certificates
of deposit 7,687,089 22,131 1.17
7,493,925 21,746 1.15 5,915,482 15,890
1.08 Total interest-bearing deposits 26,151,303
48,650 0.75 26,063,633 45,122 0.69 26,064,037 40,717 0.63 Borrowed
funds 13,395,369 55,552 1.68 13,988,313
54,706 1.56 15,063,985 55,227
1.47 Total interest-bearing liabilities 39,546,672 104,202
1.07 40,051,946 99,828 0.99 41,128,022 95,944 0.94
Non-interest-bearing deposits 2,735,560 2,990,053 2,647,331 Other
liabilities 218,726 222,964 203,213 Total
liabilities 42,500,958 43,264,963 43,978,566 Stockholders’ equity
6,235,351 6,123,550 5,973,381 Total
liabilities and stockholders’ equity $ 48,736,309 $ 49,388,513 $
49,951,947 Net interest income/interest rate spread $ 294,917 2.61
% $ 315,520 2.77 % $ 327,866 2.86 % Net interest margin 2.71
% 2.86 % 2.94 %
Ratio of interest-earning assets to
interest-
bearing liabilities
1.10 x 1.10
x
1.08 x
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(unaudited)
For the Three Months Ended March 31,
December 31, March 31, (in thousands,
except share and per share data)
2017 2016
2016 PROFITABILITY MEASURES: Net income available to
common shareholders $103,957 $113,733 $129,909 Basic earnings per
common share 0.21 0.23 0.27 Diluted earnings per common share 0.21
0.23 0.27 Return on average assets 0.85 % 0.92 % 1.04 % Return on
average tangible assets (1) 0.90 0.97 1.10 Return on average common
stockholders’ equity 6.76 7.43 8.70 Return on average tangible
common stockholders’ equity (1) 11.20 12.36 14.76 Efficiency ratio
(2) 50.99 47.20 43.07 Operating expenses to average assets 1.37
1.33 1.25 Net interest rate spread 2.61 2.77 2.86 Net interest
margin 2.71 2.86 2.94 Effective tax rate 36.67 34.55 36.58 Shares
used for basic common EPS computation 486,511,756 485,337,734
484,605,397 Shares used for diluted common EPS computation
486,511,756 485,337,734 484,605,397 Common shares outstanding at
the respective period-ends 488,953,712 487,056,676 486,929,814 (1)
Please see the reconciliations of these non-GAAP
measures with the comparable GAAP measures on page 13 of this
release. (2) We calculate our efficiency ratio by dividing our
operating expenses by the sum of our net interest income and
non-interest income.
March 31,2017
December 31,2016
March 31,2016
CAPITAL MEASURES: Book value per common share $12.57 $12.57
$12.29 Tangible book value per common share (1) 7.58 7.57 7.28
Common stockholders’ equity to total assets 12.58 % 12.52 % 12.34 %
Tangible common stockholders’ equity to tangible assets (1) 7.99
7.93 7.70 (1) Please see the reconciliations of these
non-GAAP measures with the comparable GAAP measures on page 13 of
this release.
March 31,2017
December 31,2016
March 31,2016
REGULATORY CAPITAL RATIOS: (1) New York Community
Bancorp, Inc. Common equity tier 1 ratio 10.79 % 10.62 % 10.27
% Tier 1 risk-based capital ratio 12.23 10.62 10.27 Total
risk-based capital ratio 13.72 12.12 11.79 Leverage capital ratio
9.24 8.00 7.60
New York Community Bank Common equity tier 1
ratio 12.65 % 11.23 % 10.08 % Tier 1 risk-based capital ratio 12.65
11.23 10.08 Total risk-based capital ratio 13.10 11.71 11.31
Leverage capital ratio 9.55 8.45 8.03
New York Commercial
Bank Common equity tier 1 ratio 14.90 % 14.14 % 14.30 % Tier 1
risk-based capital ratio 14.90 14.14 14.30 Total risk-based capital
ratio 15.94 15.15 14.96 Leverage capital ratio 10.82 10.53 10.46
(1) The minimum regulatory requirements for
classification as a well-capitalized institution are a common
equity tier 1 capital ratio of 6.50%; a tier 1 risk-based capital
ratio of 8.00%; a total risk-based capital ratio of 10.00%; and a
leverage capital ratio of 5.00%.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170426005210/en/
New York Community Bancorp, Inc.Investors:Ilene A. Angarola,
516-683-4420orMedia:Kelly Maude Leung, 516-683-4032
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