New York Community Bancorp's CEO Discusses Q1 2012 Results - Earnings Call Transcript

New York Community Bancorp Inc. (NYB)

Q1 2012 Earnings Call

April 18, 2012 9:30 am ET

Executives

Joseph Ficarola – President, Chief Executive Officer

Thomas Cangemi – Senior Executive Vice President, Chief Financial Officer

Ilene Angarola – Director of Investor Relations and Corporate Communications

Analysts

Bob Ramsey – FBR Capital Markets

Brad Ball – Evercore Partners

Mark Fitzgibbon – Sandler O’Neill

Rick Weiss – Janney

Collyn Gilbert – Stifel Nicolaus

Moshe Orenbuch – Credit Suisse

Matthew Kelley – Sterne Agee

David Hochstim – Buckingham Research

Mark DeVries – Barclays

Dave Rochester – Deutsche Bank

Josh Levin – Citigroup

Steven Alexopoulos – JP Morgan

Ken Bruce – Bank of America

Theodore Kovaleff – Horwitz & Associates

Presentation

Operator

Good day everyone and welcome to New York Community Bancorp’s First Quarter 2012 Earnings conference call. Today’s call is being recorded and 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 of New York Community Bancorp for our quarterly post-earnings release conference call. Today’s discussion of our first quarter 2012 earnings will be led by our President and Chief Executive Officer, Joseph Ficarola, 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 these 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 policies. You will find more about the risk factors associated with our forward-looking statements on Page 7 of this morning’s earnings release and in our SEC filings, including our 2011annual report on Form 10-K.

The release also includes reconciliations with certain GAAP and non-GAAP earnings and capital measures which will be discussed during the 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 ir.mynycb.com.

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

Joseph Ficarola

Thank you, Ilene, and thank you all for joining us this morning as we discuss our performance in the first quarter of 2012. As I stated in the earnings release, we were very pleased to report diluted GAAP and operating earnings per share of $0.27, which is consistent with the amounts recorded in the fourth quarter of 2011 and on an operating basis in the first quarter of last year. I would also note that our cash earnings equaled $0.29 per diluted share in the current first quarter and added $9.9 million more to our tangible capital than our GAAP earnings alone. At the end of the first quarter, tangible stockholders’ equity totaled $3.1 billion and represented 7.79% of tangible assets, excluding accumulated other comprehensive loss.

Based on the continued strength of our earnings and that of our capital position, the Board of Directors last nigh declared our 33 rd consecutive quarterly cash dividend of $0.25 per share. The dividend will be paid on May 17 to shareholders of record at the close of business on May 7.

The consistency of our earnings speaks well to our business model given the degree to which the Bank earns and in general has been expected to decrease as the downward re-pricing of interest-earning assets has outpaced the downward re-pricing of interest-bearing liabilities. While we ourselves were not exempt from experiencing such pressure, I’m pleased to say that linked quarter reduction in our net interest margin, excluding prepayment penalty income, was a modest eight basis points. This was in line with our expectations and the range we provided in last quarter’s conference call.

The impact of the modest decline in our margin on our first quarter earnings was largely offset by the volume of loans we produced over the course of the quarter and by the increase in income from mortgage banking activity. First – loan originations totaled $4.6 billion in the quarter, including 2.1 billion of loans held for investment and 2.5 billion of loans held for sale. Multi-family loans accounted for $1.1 billion of loans produced for investment and commercial real estate loans accounted for $916 million of the remaining amount.

Reflecting the volume of loans we originated, the portfolio of loans held for investment grew $1 billion or 4% on a constant basis to $26.6 billion on March 31. We also were very pleased with the volume of loans produced for sale during the quarter and by the contribution of such activity to our bottom line. Mortgage banking activity generated first quarter income of $35.2 million, exceeding the trailing quarter by 10.5 million and the year earlier amount by 15.2 million or 76.4%.

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