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New York Community (NYCB) Beats on Q3 Earnings, Stock Falls

New York Community Bancorp, Inc.NYCB reported third-quarter earnings per share of 21 cents, which surpassed the Zacks Consensus Estimate of 17 cents. However, the reported figure declined 19% from 26 cents earned in the prior-year quarter.

Shares of New York Community lost 2.1% in the full-day trading session, reflecting investors' pessimism toward lower net interest income and higher expenses reported by the company. Higher provision for loan losses during the quarter was another headwind. However, increased revenues and strong capital position were the positives.

The company's results reflected an upsurge in non-interest income and a strong capital position. However, lower net income available to common shareholders came in at $102.3 million, down 18% year over year.

Rise in Revenues Partially Offset by Higher Expenses

New York Community's total revenues came in at $385.3 million surpassing the Zacks Consensus Estimate of $313.6 million. Also, revenues were up 7% from the prior-year quarter.

Net interest income declined 13% year over year to $276.3 million. The fall was mainly attributable to lower interest income and higher interest expenses. Moreover, net interest margin contracted 38 basis points from the year-ago quarter to 2.53%.

Non-interest income increased significantly year over year to $108.9 million. The main reason for the rise is net gain on covered loans and mortgage banking operations and absence of FDIC indemnification expenses, partially offset by lower mortgage banking income.

Non-interest expenses increased slightly on a year-over-year basis to $162.2 million. Rise in operating expenses was partially offset by no merger-related expenses.

As of Sep 30, 2017, total loans were $37.5 billion, down 3.7% from the previous quarter. Further, total deposits remained stable at $28.9 billion sequentially.

Credit Quality Deteriorates

As of Sep 30, 2017, non-performing non-covered assets were $84.7 million, down 7% from the previous quarter. However, net charge-offs reported were $40.4 million compared with recovery of $0.41 million in the prior quarter.

Also, provision for loan losses on non-covered loans was $44.6 million, up from $1.2 million in the prior-year quarter. Recovery of losses on covered loans was nil compared with $1.3 million reported in the prior-year quarter.

Capital & Profitability Ratios

Capital ratios of New York Community displayed a strong financial position. As of Sep 30, 2017, total risk-based capital ratio climbed to 14.57% from 11.72% in the year-ago quarter. Further, common equity tier 1 ratio was 11.53%, up from 10.25% in the year-ago quarter.

The company's profitability ratios declined. Return on average tangible stockholders' equity was 10.69%, down from 13.79% in the prior-year quarter. Return on average assets came in at 0.91% compared with 1.02% in the year-ago quarter.

Our Viewpoint

New York Community's net interest margin continues to decline as rising rate environment affects its liability sensitive balance sheet. As a result, its net interest income remains under pressure. Also, deteriorating credit quality is an added concern.

New York Community Bancorp, Inc. Price and EPS Surprise

New York Community Bancorp, Inc. Price and EPS Surprise | New York Community Bancorp, Inc. Quote

Currently, New York Community carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Driven by top-line strength, Texas Capital Bancshares Inc. TCBI reported earnings per share of $1.12, outpacing the Zacks Consensus Estimate by a penny. Moreover, the bottom line came in 28.7% higher than the prior-year quarter figure of 87 cents.

First Horizon National Corporation FHN reported third-quarter 2017 adjusted earnings per share of 32 cents, surpassing the Zacks Consensus Estimate by 6.7%. Further, the figure reflects an increase of nearly 22% from the year-ago quarter.

Webster Financial WBS reported third-quarter 2017 earnings per share of 67 cents, which surpassed the Zacks Consensus Estimate of 64 cents. The reported figure was up 24.1% from 54 cents earned in the prior-year quarter.

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New York Community Bancorp, Inc. (NYCB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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