New York Community Bancorp, Inc. Reports Fourth Quarter 2019 Diluted Earnings Per Common Share Of $0.20 On Strong Loan Growth And A Higher Net Interest Margin

WESTBURY, N.Y., Jan. 29, 2020 /PRNewswire/ --

New York Community Bancorp, Inc. (NYSE: NYCB) (the "Company") today reported net income for the three months ended December 31, 2019 of $101.2 million, up 2% from the $99.0 million reported for the three months ended September 30, 2019 and down modestly compared to the $101.7 million reported for the three months ended December 31, 2018. For the twelve months ended December 31, 2019, the Company reported net income of $395.0 million, compared to the $422.4 million the Company reported for the twelve months ended December 31, 2018.

Net income available to common shareholders for the fourth quarter of 2019 totaled $93.0 million, up $2.1 million or 2% compared to $90.8 million reported in the third quarter of 2019 and down 1% compared to $93.5 million for the fourth quarter of 2018. For the twelve months ended December 31, 2019, the Company reported net income available to common shareholders of $362.2 million, compared to the twelve months ended December 31, 2018.

On a per share basis, the Company reported diluted earnings per share for fourth quarter 2019 of $0.20, up 5% compared to the $0.19 it reported in both the third quarter of 2019 and the fourth quarter of 2018. For full-year 2019, the Company reported diluted earnings per share of $0.77 versus $0.79 for full-year 2018.

Commenting on the Company's 2019 performance, President and Chief Executive Officer Joseph R. Ficalora stated: "We are pleased with our fourth quarter performance. In many ways, it was the strongest quarter of the year for us and evidences the resiliency of our business model. We were particularly encouraged by the strong rebound in origination activity, which led to solid loan growth during the quarter, as well as the linked-quarter improvement in net interest income and margin. This quarter marks a significant inflection point for the Company in terms of improved fundamentals and we believe it also sets the stage for continued loan growth and margin expansion throughout 2020.

"The loan portfolio increased 4% on a year-over-year basis, in-line with our expectations. This loan growth was driven by growth in both our multi-family and specialty finance portfolios. We also witnessed a rebound in origination volumes during the quarter. In fact, combined, multi-family/CRE originations during the current quarter were the highest level in two years.

"We also saw the net interest margin turn around during the fourth quarter, as it rose five basis points compared to the third quarter, leading to higher net interest income. This was driven by a decline in our overall funding costs and marks the first time since the fourth quarter of 2015 that net interest income and the margin increased. We expect both of these measures to improve throughout the year given our liability sensitive balance sheet, the Federal Reserve's current stance on interest rates, and the significant repricing opportunities within our CD portfolio and wholesale borrowings.

"On the asset quality side, our overall metrics continue to be very strong and remain among the best in the industry. Importantly, we are now six months into the new rent regulation laws in New York State and to date, we are still not seeing any negative asset quality trends in the rent-regulated segment of our multi-family loan portfolio."

DIVIDEND DECLARATION
Reflecting our earnings, asset quality metrics, and strong capital position, the Board of Directors yesterday declared a quarterly cash dividend of $0.17 per share on the Company's common stock.  Based on a closing price of $11.73 as of January 28, 2020, this represents an annualized dividend yield of 5.8%.  The dividend is payable on February 24, 2020 to common shareholders of record as of February 10, 2020.

BALANCE SHEET SUMMARY
At December 31, 2019, total assets were $53.6 billion, up $1.1 billion compared to total assets at September 30, 2019, or 8% on an annualized basis.  The primary driver of the sequential growth was an increase in our loan portfolio, driven by multi-family and commercial and industrial ("C&I") loans.  This was partially offset by a 13% decline in our cash and cash equivalents, while the securities portfolio remained unchanged.  The balance sheet growth during the fourth quarter of 2019 was funded largely through additional wholesale borrowings, while total deposits were up modestly.

On a year-to-date basis, total assets rose $1.7 billion or 3% compared to total assets at December 31, 2018.  Similar to the trends in the fourth quarter, our year-over-year growth was driven by 4% growth in the loan portfolio, as well as 4% growth in total securities.  The loan growth was funded by deposit growth, mainly through certificates of deposits ("CDs"), which increased 17% year-over-year, growth in wholesale borrowings, which rose 3%, and, by a 50% decrease in cash and cash equivalents.

Total loans held for investment increased $1.0 billion compared to September 30, 2019.  As has been the case throughout the year, loan growth occurred in two main areas, our core multi-family portfolio and our specialty finance portfolio, which is part of the C&I portfolio.  On a year-to-date basis, total loans held for investment increased $1.7 billion or 4%, in-line with our projection at the end of 2018.

Total securities, consisting mainly of available-for-sale securities, remained unchanged compared to the previous quarter of 2019, but increased $241.8 million or 4% to $5.9 billion compared to December 31, 2018.  Most of this growth occurred in the first half of 2019.

Total deposits of $31.7 billion were also relatively unchanged compared to the previous quarter, but increased $892.7 million or 3% compared to December 31, 2018.

Borrowed funds increased 27% on an annualized basis to $14.6 billion compared to the previous quarter and 2% compared to December 31, 2018.

Loans
Total loans, net at December 31, 2019 were $41.7 billion, up $1.1 billion compared to September 30, 2019 and up $1.7 billion, or 4% compared to the balance at December 31, 2018.  On an average basis, average total loans held for investment were $40.7 billion, down modestly on a linked-quarter basis, but up $893.6 million or 2% on a year-over-year basis.  For the twelve months ended December 31, 2019, average total loans for investment were $40.4 billion, up $1.3 billion or 3% compared to the twelve months ended December 31, 2018. Both the year-over-year and linked quarter increase in the loan portfolio were the result of growth in the multi-family portfolio, the specialty finance portfolio, and the commercial real estate ("CRE") portfolio.

Multi-family loans increased $1.3 billion or 4% to $31.2 billion at December 31, 2019 compared to December 31, 2018 and rose $892.7 million compared to September 30, 2019. This was partially driven by a strong rebound in origination volumes during the current fourth quarter relative to both the previous quarter and the year-ago quarter. CRE loans rose $83.5 million or 1% to $7.1 billion at December 31, 2019 compared to December 31, 2018 and $96.3 million compared to September 30, 2019.

C&I loans increased $640.5 million or 27% to $3.0 billion at December 31, 2019 relative to December 31, 2018 and $173.4 million compared to September 30, 2019. The largest component of the C&I portfolio are our specialty finance loans. The specialty finance portfolio increased $690.3 million or 36% to $2.6 billion at December 31, 2019 compared to December 31, 2018 and $200.4 million compared to September 30, 2019.

On an average basis, average multi-family loans decreased $203.8 million to $30.2 billion, down 3% annualized compared to the prior quarter, while average CRE loans increased $87.6 million to $7.0 billion or 5% annualized, and the average specialty finance portfolio grew $102.6 million to $2.6 billion, up 17% annualized.

The average loan size for multi-family loans during the current fourth quarter was $6.4 million and for CRE loans it was $6.6 million, both relatively unchanged compared to the previous quarter. The average weighted life of the multi-family portfolio was 2.0 years and for the CRE portfolio, it was 2.3 years, both also in-line with the prior quarter.

Originations
Origination activity rebounded strongly during the final quarter of 2019. The combined multi-family/CRE originations were the highest level since the fourth quarter of 2017.

For the three months ended December 31, 2019, the Company originated $3.3 billion in loans, up 45% compared to the three months ended September 30, 2019 and up 54% compared to the three months ended December 31, 2018. On a year-over-year basis, total originations for the twelve months ended December 31, 2019 were $10.6 billion, up 5% compared to the twelve months ended December 31, 2018.

During the fourth quarter, multi-family originations totaled $2.0 billion, up 69% and 56% compared to the previous quarter and the year-ago fourth quarter, respectively. CRE originations totaled $326.8 million, up 6% and 40%, respectively, while specialty finance originations were up 25% and 52%, respectively, or $161.3 million and $275.1 million, respectively.

In full-year 2019, we originated $6.0 billion of multi-family loans, down 10% compared to full-year 2018; $1.2 billion of CRE loans, up 27%; and $2.8 billion of specialty finance loans, up 46%.

In addition to the strong origination activity during the fourth quarter of 2019, the Company also opportunistically repurchased $770.8 million of primarily multi-family loans it previously originated and participated out to other financial institutions. These loans were originally sold by the Company in order to stay under the SIFI threshold at that time.

Pipeline
Our loan pipeline heading into 2020 is very solid.  The pipeline currently stands at $1.5 billion, of which 66% is new money. The pipeline includes $1.1 billion in multi-family loans, $155 million in CRE loans, and $226 million in specialty finance loans and leases.

Funding

Deposits
Total deposits at December 31, 2019 were $31.7 billion, up $892.7 million compared to December 31, 2018 and up $85.0 million or 1% on an annualized basis compared to the previous quarter. The year-over-year growth was led in large part by growth in CDs. CDs at year-end 2019 totaled $14.2 billion, up $2.0 billion or 17% compared to year-end 2018. However they were down modestly compared to the previous quarter. Interest-bearing checking and money market accounts declined $1.3 billion or 11% compared to December 31, 2018, but rose $269.7 million or 11% on an annualized basis compared to the balance at September 30, 2019.

In 2020, the Company has approximately $14.2 billion of CDs with an average cost of 2.25% that will be maturing and repricing into lower rates.

Borrowed Funds
At December 31, 2019, borrowed funds totaled $14.6 billion, up $349.7 million or 2% compared to December 31, 2018 and up $931.2 million or 27% annualized, compared to the balance as of September 30, 2019. The sequential-quarter increase was primarily used to fund our loan growth during the fourth quarter.

The increase was mostly in our wholesale borrowings, which largely consist of Federal Home Loan Bank of New York advances. Wholesale borrowings rose $349.0 million or 3% compared to December 31, 2018, while they increased $931.0 million on a linked-quarter basis.

The cost of our borrowings declined five basis points on a linked quarter basis to 2.33%. We have approximately $3.7 billion of wholesale borrowings set to mature during 2020 at an average cost of 2.11%.

Asset Quality
Our asset quality remained strong during the fourth quarter of 2019, with total non-performing assets ("NPAs") at $73.5 million or 14 basis points of total assets. Total non-accrual mortgage loans increased $8.6 million to $22.0 million, somewhat offset by a $3.5 million decrease in other non-accrual loans to $39.3 million. Included in this latter amount is $30.4 million of non-accrual taxi medallion-related loans. The increase in non-accrual mortgage loans was primarily related to one CRE loan.

Total repossessed assets rose a modest $577,000 to $12.3 million on a linked-quarter basis. Included in this amount is $10.3 million of repossessed taxi medallions. As of December 31, 2019, our remaining taxi medallion-related loans totaled $55.0 million compared to $61.0 million at September 30, 2019.

Net charge-offs for the fourth quarter of 2019 declined $3.0 million to $3.5 million on a linked quarter basis or 0.01% of average loans. For full year 2019, net charge-offs totaled $19.3 million or 0.05% of average loans compared to $16.5 million or 0.04% of average loans in full year 2018.

The rent-regulated portion of our multi-family loan portfolio totaled $18.7 billion or 60.0% of the overall multi-family portfolio. Credit trends remained strong in this segment of the portfolio. The weighted average LTV for the overall multi-family portfolio was 56.86% at December 31, 2019 and the weighted average LTV for the rent-regulated portion of the portfolio was 53.17%, 369 basis points less than the overall multi-family portfolio.

EARNINGS SUMMARY FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019

Net Interest Income
Net interest income for the three months ended December 31, 2019 increased $6.6 million to $242.5 million or 11% annualized compared to the previous quarter, but was down 2% compared to the fourth quarter of last year. Total interest income in the current fourth quarter declined 3% annualized on a linked quarter basis, but rose 2% on a year-over-year basis. Total interest expense during the fourth quarter dropped $10.4 million or 19% annualized compared to the third quarter of 2019, while it rose 6% compared to the year-ago quarter.

On a year-to-date basis, net interest income declined $73.6 million or 7% to $957.4 million. Total interest income rose $115.5 million or 7% for the twelve months ended December 31, 2019, while total interest expense rose $189.1 million or 29% for the same time period.

Net Interest Margin
The net interest margin ("NIM") for the fourth quarter of 2019 was 2.04%, up five basis points compared to the third quarter of 2019 NIM and was down five basis points relative to the year-ago NIM. The fourth quarter yield on average interest-earning assets declined four basis points to 3.78% on a linked-quarter basis, mainly due to a lower yield on the securities portfolio, but was more than offset by a 10 basis point sequential decline in the overall cost of funds to 1.94%.

Prepayment income for the fourth quarter of 2019 totaled $17.9 million up 26% sequentially and up 89% year-over-year. Prepayment income contributed 14 basis points to this quarter's NIM, up three basis points from the previous quarter and up nine basis points from the year-ago quarter. Excluding the impact from prepayment income, the fourth quarter NIM, on a non-GAAP basis, would have been 1.90%, up two basis points and in-line with expectations.

For the twelve months ended December 31, 2019, the NIM was 2.02%, down 23 basis points compared to the twelve months ended December 31, 2018. The yield on average interest-earning assets rose 12 basis points to 3.80%, while the cost of funds increased by 39 basis points to 2.01%.

Prepayment income for the twelve months ended December 31, 2019 totaled $54.2 million, up 9% relative to prepayment income for the twelve months ended December 31, 2018. Prepayment income added 12 basis points to the full-year 2019 NIM compared to 11 basis points to the full-year 2018 NIM. Excluding the impact from prepayment income, the full-year 2019 NIM, on a non-GAAP basis, would have been 1.90%, down 24 basis points compared to full-year 2018.

Provision for Loan Losses
In the fourth quarter of 2019, the Company reported a provision for loan losses of $1.7 million compared to a provision for loan losses of $4.8 million in the previous quarter and a provision for loan losses of $2.8 million in the year-ago quarter.

On a year-to-date basis, the provision for loan losses was $7.1 million, down $11.2 million or 61% compared to the $18.3 million in 2018. This was due to a lower amount of taxi medallion-related charge-offs in 2019 compared to 2018.

Non-Interest Income
For the three months ended December 31, 2019, non-interest income totaled $17.5 million, down $6.9 million compared to the previous quarter and down $5.6 million compared to the year-ago fourth quarter. Included in the prior quarter of 2019 was a $7.9 million gain on the sale-leaseback of a branch property in Florida. Included in the year-ago quarter was $4.6 million of revenue related to our former wealth management business, Peter B. Cannell & Co., Inc. which was divested in the first quarter of 2019.

For the twelve months ended December 31, 2019, non-interest income totaled $84.2 million, down $7.3 million or 8% compared to the $91.6 million for the twelve months ended December 31, 2018. Included in the full-year 2018 amount was revenue of $20.3 million related to the aforementioned wealth management business, versus no such revenue in full-year 2019. Also included in the full-year 2019 period were net gains on securities of $7.7 million compared to a net loss on securities of $2.0 million in full-year 2018 and the previously discussed branch sale-leaseback gain compared to no such gains in full-year 2018.

Non-Interest Expense
Total non-interest expense for the three months ended December 31, 2019 was $126.1 million compared to $123.3 million in the prior quarter and $134.9 million in the year-ago quarter. The prior quarter included approximately $1.4 million in severance costs. For the twelve months ended December 31, 2019, total non-interest expense was $511.2 million versus $546.6 million for the twelve months ended December 31, 2018. In 2019, non-interest expense included $10.4 million of certain items related to severance costs and branch rationalization costs.

The efficiency ratio for the current fourth quarter was 48.51% compared to 47.37% during the previous quarter and 49.92% during the year-ago quarter.

Income Taxes
Income tax expense for the three months ended December 31, 2019 was $31.0 million compared to $33.2 million in the previous quarter and $30.9 million in the year-ago quarter. This translates into an effective tax rate of 23.43% for the current quarter compared to 25.09% in the previous quarter and 23.27% in the year-ago quarter.

For full-year 2019, income tax expense totaled $128.3 million compared to $135.3 million for full-year 2018. The effective tax rate in 2019 was 24.51% compared to 24.25% in 2018.

About New York Community Bancorp, Inc.
Based in Westbury, NY, 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. At December 31, 2019, the Company reported assets of $53.6 billion, loans of $41.7 billion, deposits of $31.7 billion, and stockholders' equity of $6.7 billion.

Reflecting our growth through a series of acquisitions, the Company operates 238 branches through eight local divisions, each with a history of service and strength: Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, Roosevelt Savings Bank, and Atlantic Bank in New York; Garden State Community Bank in New Jersey; Ohio Savings Bank in Ohio; and AmTrust Bank in Florida and Arizona.

Post-Earnings Release Conference Call
The Company will host a conference call on Wednesday, January 29, 2020, at 8:30 a.m. (Eastern Time) to discuss its fourth quarter and full-year 2019 performance. 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 February 2, 2020 and may be accessed by calling (877) 660-6853 (domestic) or (201) 612-7415 (international) and providing the following conference ID: 13697574. In addition, the conference call will be webcast at ir.myNYCB.com, and archived through 5:00 p.m. on February 26, 2020.

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," "should," 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, 2018 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.
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 periods indicated:

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 and other items 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.

SOURCE New York Community Bancorp, Inc.

Related Links

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