New York Community Bancorp, Inc.
) reported third-quarter 2013 cash earnings of 28 cents per
share, outpacing the Zacks Consensus by two cents. However,
results were below the prior-year quarter figure of 32 cents.
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Better-than-expected results came at the back of lower than
expected expenses. Improvement in credit quality was positive but
capital ratios showed mixed trend. However, lower revenues remain
a lingering concern.
Considering amortization and price appreciation of shares held in
stock-related benefit plans as well as amortization of core
deposit intangibles, the company reported net income of $114.2
million or 26 cents per share. Taking into account the impact of
comparable items, earnings came in at $128.8 million or 29 cents
per share in the prior-year quarter.
Quarter in Detail
Total revenue was $478.4 million, down 8.8% from the year-ago
quarter. The decline was primarily due to fall in interest as
well as non-interest income.
New York Community Bancorp's net interest income increased 3.3%
year over year to $294.2 million, mainly due to a fall in
interest expense. However, net interest margin was 3.04% in the
quarter, down 13 basis points year over year.
Non-interest income came in at $50.7 million, down 37.9% year
over year. The decline was mainly due to substantially lower
mortgage banking income, partly offset by higher FDIC
Non-interest expense totaled $146.2 million, down 1.5% from the
prior-year quarter. The decline stemmed from lower general and
administrative costs, partly offset by rise in compensation and
benefit expenses as well as occupancy and equipment expenses.
Credit quality continued to improve at New York Community
Nonperforming non-covered loans were 0.43% of total non-covered
loans as of Sep 30, 2013, down from 0.60% as of Jun 30, 2013. At
the end of Sep 2013, nonperforming non-covered assets to total
non-covered assets was 0.46%, marking a decline from 0.61% at the
end of the prior quarter.
Allowance for losses on non-covered loans to total non-covered
loans were 0.48%, marginally decreasing from 0.50% at the end of
the prior quarter.
The ratio of net charge-offs to average loans on a non-annualized
basis was 0.01%, down from 0.03% in the preceding year. Provision
for loan losses on non-covered loans was $5.0 million in the
reported quarter, down from $10.0 million in the prior-year
quarter. On the other hand, provision for loan losses on covered
loans was $9.5 million in the reported quarter, rising year over
year from $2.8 million.
Capital ratios marginally declined in the reported quarter. As of
Sep 30, 2013, stockholders' equity to total assets was 12.45%,
down from 12.87% as of Jun 30, 2013. Moreover, tangible
stockholders' equity to tangible assets was 7.48%, declining from
7.74% from the earlier quarter.
However, book value per share increased to $12.92 as of Sep 30,
2013, compared with $12.90 in the prior quarter.
Along with the earnings release, New York Community Bancorp's
board of directors declared a quarterly dividend of 25 cents per
share, payable on Nov 19 to shareholders of record at the close
of business on Nov 7.
Performance of Peers
Among other companies in the same industry,
Washington Federal Inc.
) fiscal fourth-quarter 2013 earnings (ended Sep 30) came in at
41 cents per share, beating the Zacks Consensus Estimate by a
nickel. Also, this compared favorably with 33 cents earned in the
year-ago quarter. Better-than-expected results were driven by
increase in net interest income and other income, partially
offset by higher operating expenses.
Hudson City Bancorp Inc.
) reported third-quarter 2013 operating earnings of 9 cents per
share, in line with the Zacks Consensus Estimate. However, this
compares unfavorably with the prior-year quarter figure of 11
cents. Quarterly results at Hudson City mainly came on the back
of increased non-interest income and lower provision for loan
losses. Further, decreased expenses and a strong capital position
were the tailwinds for the quarter. However, a decline in the top
line due to lower net interest income was a negative.
We believe that New York Community Bancorp's diverse revenue
stream and robust asset quality will benefit its financials,
going forward. Further, strong liquidity and a sound dividend
policy will boost investors' confidence in the stock.
However, an unsettled economy, persistent low interest rate
environment and stringent regulations remain matters of concern.
New York Community Bancorp currently carries a Zacks Rank #3
(Hold). Among other companies in the same industry,
First Defiance Financial Corp.
) is expected to report third-quarter 2013 earnings on Oct