New York Community Bancorp, Inc. (



Q4 2011 Earnings Conference Call

January 25, 2012, 09:30 AM ET


Ilene Angarola – Director, IR and Corporate Communications

Joseph Ficalora – President and Chief Executive Officer

Thomas Cangemi – Senior Executive Vice President and Chief Financial Officer


Bob Ramsey – FBR Capital Markets

Matthew Clark - KBW

Richard Weiss – Janney Montgomery Scott

David Hochstim - Buckingham Research

Collyn Gilbert - Stifel Nicolaus

Matthew Kelley - Sterne, Agee

Mark DeVries - Barclays Capital

David Rochester - Deutsche Bank

Bradley Ball - Evercore Partners

Mark Fitzgibbon - Sandler O'Neill & Partners

Tom Alonso - Macquarie

Steven Alexopoulos - J.P. Morgan

Theodore Kovaleff – Horowitz & Associates

Mike Turner - Compass Point



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Good day, everyone, and welcome to New York Community Bancorp’s Fourth Quarter 2011 Earnings Conference Call. Today’s call is being recorded. At this time, all participants have been placed in a listen-only mode.

For opening remarks and introductions, I would like to turn the call over to Ilene Angarola, Director of Investor Relations and Corporate Communications. Please go ahead.

Ilene Angarola

Thank you. Good morning and thank you all for joining the management team with New York Community Bancorp for our first quarterly post-earnings conference call for New Year.

Today’s discussion of our fourth quarter 2011 earnings will be led by our President and Chief Executive Officer, Joseph Ficalora; together with our Chief Financial Officer, Thomas Cangemi. Also, joining us on the call are Robert Wann, our Chief Operating Officer; and John Pinto, our Chief Accounting Officer.

Certain of our comments will contain forward-looking statements, which are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those we currently anticipate due to a number of factors, many of which are beyond our control.

Among those factors are; general economic conditions and trends, both nationally and in our local markets; changes in interest rates, which may affect our net income, prepayment penalty income, mortgage banking income and other future cash flows or the market value of our assets, including our investment securities; changes in deposit flows and in the demand for deposit loan and investment products and other financial services; and changes in legislation, regulation and policy.

You will find more about the risk factors associated with our forward-looking statements beginning on Page 7 of this morning’s earnings release and in our SEC filings, including our 2010 Annual Report on Form 10-K, and our first, second and third quarter 2011 10-Q. The release also includes reconciliations of certain GAAP and non-GAAP earnings and capital measures, which will be discussed during this conference call. If you would like a copy of the earnings release, please call our Investor Relations department at 516-683-4420, or visit us on the web at

To start with the discussion, I’ll now turn this call over to Mr. Ficalora, who will provide a brief overview of our fourth quarter performance before opening the lines for Q&A. Mr. Ficalora?

Joseph Ficalora

Thank you, Ilene and thank you all for joining us this morning, as we discuss our fourth quarter performance, which was notable not only for the continued strength of our earnings and margin, but also for our increased efficiency and high volume of loan production and the continuing improvement of our asset quality. Notwithstanding the decline in market interest rates over the course of the quarter, we generated fourth quarter earnings of $117 million or $0.27 per diluted share. Our earnings provided a 1.23% return on average tangible assets and a 15.89% return on average tangible stockholders equity.

The continued strength of our earnings is reflected in our solid capital position, with tangible stockholders equity representing 7.95% of total assets excluding accumulated other comprehensive loss. Based on our earnings in capital strength, the Board of Directors last night declared our 71


consecutive quarterly cash dividend and our 32


consecutive quarterly cash dividend at $0.25 per share. The dividend will be paid on February 17


, 2012 to shareholders of record at the close of business February 7



The strength of our earnings can be attributed to a combination of factors not at least the least of which was the stability of our net interest income and margin, even as market interest rates continued to decline. On a linked-quarter basis, our net interest income rose $5.3 million to $300.3 million. Our margin meanwhile rose 12 basis points to 3.45%. These increases were largely due to an increase in prepayment penalty income as a decline in market interest rates over the course of the quarter prompted increased activity in our multifamily niche. Specifically, prepayment income added $28.9 million to our net interest income and 33 basis points to our margin in the last three months of the year. This is the highest prepayment income we have ever booked.

While the stability of our net interest income and margin contributed to our fourth quarter earnings, they were not the only factors leading to our strong results. We also reduced our operating expenses by $5.6 million linked quarter and generated strong mortgage banking income of $24.7 million. Reflecting an increase in total revenues and a decline in operating expenses, our efficiency ratio improved to 39.15% in the fourth quarter, reflecting a linked-quarter improvement of 235 basis points.

I would now like to turn to our balance sheet which was notable for a number of reasons, starting with the significant volume of loans we produced. Loans originated for investment totaled $2.4 billion in the fourth quarter, boosting the full-year volume to $9 billion, the highest volume of loans we have produced for a portfolio in our public life. Reflecting this increase, held-for-investment loans grew to $25.5 billion at the end of December, representing a $1.8 billion or 7.7% increase from the balance at year-end 2010.

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