New York Community Bancorp Reports Strong Lending Volume

  • Meets estimates with third-quarter earnings of 27 cents.
  • Portfolio loans grow at annualized pace of 10.4%.
  • Mortgage banking income doubles from second quarter.

WESTBURY, N.Y. ( TheStreet) -- New York Community Bancorp ( NYB) on Wednesday reported third-quarter net income of $119.8 million, or 27 cents a share, matching the consensus estimate among analysts polled by Thomson Reuters.

The results compared to net income of $119.5 million, or 27 cents a share, in the second quarter, and $135.6 million, or 31 cents a share, in the third quarter of 2010.
New York Community Bancorp CEO Joseph R. Ficalora

Third-quarter mortgage banking revenue more than doubled from the previous quarter, to $24.3 million, but it was down from $76.5 million a year earlier.

Total noninterest income for the third quarter was $58.1 million, declining from $58.9 million the previous quarter, however, during the second quarter, New York Community reported several extraordinary items, including a $9.8 billion in gain from the disposition of its insurance premium financing subsidiary, Standard Funding Corp., and $7.6 million in Federal Deposit Insurance Corp. indemnification income, connected with acquisitions of failed banks.

Third-quarter net interest income was $295 million, declining from $301.9 million the previous quarter but increasing from $286.2 million a year earlier.

CEO Joseph Ficalora said that "While the decline in market interest rates contributed to a modest linked-quarter decline in net interest income, the drop in residential mortgage interest rates sparked a meaningful increase in mortgage banking revenues."

The CEO also said that "our portfolio of non-covered held-for-investment loans grew at an annualized rate of 10.4% to $25.1 billion, linked-quarter, largely reflecting growth in our multi-family and commercial real estate loan portfolios."

The company's third-quarter net interest margin was 3.33%, declining from 3.50% the previous quarter, but down only slightly from 3.36% a year earlier. The higher margin during the second-quarter reflected $25.8 million in prepayment revenue, which declined to $13.7 million in the third quarter.

Ficalora said that the "net interest margin declined a single basis point during the third quarter, absent the impact of prepayment penalties."

The third-quarter return on average assets was 1.25% increasing from 1.23% in the second quarter, but declining from 1.43% a year earlier.

While New York Community's provision for losses on non-covered by FDIC loss-sharing agreements loan losses increased to $18 million during the third quarter from $15 million in the second quarter, the provision was down from $32 million a year earlier, and Ficalora said that "balances of non-performing loans, delinquencies, and net charge-offs all declined," adding that as of Sept. 30, "non-performing non-covered loans represented 1.44% of total loans--the lowest level in ten quarters--as the balance fell $86.1 million, or 17.1%, from the balance at the end of June."

The company reported a Sept. 30 ratio of tangible stockholders equity to tangible assets of 7.80%. Ficalora said "Reflecting our earnings capacity and the strength of our capital position, the Board of Directors last night declared our 31st consecutive quarterly cash dividend of $0.25 per share."

New York Community Bancorp's shares were down 28% through Tuesday's close at $12.87. Based on the quarterly payout of 25 cents, the shares had an industry-leading dividend yield of 7.77%.

Out of 17 analysts covering New York Community, seven rate the shares a buy, nine have neutral ratings, and one analyst recommends selling the shares. Based on a median 12-month price target of $15, the shares have 17% upside potential.

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-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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