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N.Y. Community Bancorp is a Feast or Famine

The first-quarter net interest margin narrowed to 2.95% in the first quarter from 3.15% the previous quarter and 3.24% a year earlier. The margin was also boosted by prepayment income, by 21 basis points in the first quarter, 43 basis points in the fourth quarter and 20 basis points in the first quarter of 2012. In the fourth quarter, there was a

New York Community Bancorp CEO Joseph Ficalora said in the company's earnings release that "excluding prepays entirely, the difference between our current first and fourth quarter 2012 margins is a linked-quarter increase of two basis points. The stability of our margin, absent the impact of prepayment penalty income, was largely attributable to the growth of our average interest-earning assets to $37.1 billion, and a 20-basis point reduction in our average cost of funds to 1.61%."

"The linked-quarter decline [in interest expense] was largely due to the repositioning of $6.0 billion of borrowed funds that began late in the fourth quarter and continued in the first two weeks of 2013," Ficalora said.

New York Community Bancorp's average loans grew to $31.6 billion in the first quarter from $30.9 billion the previous quarter and $29.1 billion a year earlier.

The company's mortgage banking income declined to $26.1 million during the first quarter from $32.6 million in the fourth quarter and $35.2 million in the first quarter of 2012. Most regional banks saw a softening of mortgage revenue in the first quarter, as application volume declined and gain-on-sale spreads declined.

The bank's first-quarter earnings were boosted by $16.6 million in gains on securities sales.

A Positive Take on New York Community Bancorp's Stock

KBW analyst Collyn Gilbert in March upgraded New York Community Bancorp to an "outperform" rating from "market perform," and raised her price target for the shares to $15 from $13, saying in a report that "an acquisition for NYCB could prove to be a positive catalyst for the shares."

At a conference in March, Ficalora said "we are an acquirer of banks, [and] we are likely to do a highly accretive deal," according to a transcript provided by Thomson Reuters. With $44.5 billion as of March 31, a sizable deal would move the bank over the $50 threshold to be considered a "systemically important financial institution." This would subject New York Community to additional regulatory supervision, including annual Federal Reserve stress tests through the Capital Plan Review (CapPR).
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