New York Community (NYCB) Stock Rises 8.2% on Q2 Earnings Beat

New York Community Bancorp, Inc.’s NYCB shares gained 8.2%, following the release of second-quarter 2020 results. Its earnings per share of 21 cents surpassed the Zacks Consensus Estimate of 19 cents. Also, the figure compared favorably with the prior-year quarter figure of 19 cents.

Higher revenues drove the company’s performance. Also, the expansion of margin came as a tailwind. Capital position remained strong. However, a rise in expenses and lower fee income negatively impacted the company. Also, results were affected by a drastic rise in provisions due to the impacts of the COVID-19 outbreak.

The company reported net income available to common shareholders of $97.1 million compared with $89 million in the prior-year quarter.

Revenues and Expenses Rise, Loans Remain Stable

Total revenues were $281.3 million in the quarter, up 10% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $276.2 million.

Net interest income was up 12% year over year to $265.9 million. The rise mainly resulted from lower interest expenses, resulting from lower funding costs. Adjusted net interest margin of 2.09% increased 20 basis points (bps).

Non-interest income was $15.4 million, down 13% on a year-over-year basis. The fall was primarily due to lower fee-based and other income.

The company reported non-interest expenses of $123.6 million, slightly up from the year-earlier quarter. Higher compensation and benefits chiefly resulted in the rise.

As of Jun 30, 2020, total deposits declined 1% sequentially to $31.7 billion. Total loans remained almost stable at $42.3 billion in the reported quarter.

During the second quarter, loan originations (excluding PPP loan originations) were $3.3 billion, increased 21% sequentially. The company had $2.2 billion of loans in its current pipeline, including $1.5 billion of multi-family loans, $189 million of CRE loans and $447 million in specialty finance loans.

Credit Quality: A Mixed Bag

Credit quality for New York Community Bancorp reflected mixed credit metrics. Provision for loan losses was $17.6 million compared with $1.8 million in the prior-year quarter.

Non-performing assets remained stable year over year at $63.2 million. Net charge-offs declined significantly to $3.8 million. Net charge-offs, as a percentage of average loans, fell 1 bp to 0.01% from the year-ago quarter.

Profitability and Capital Ratio Strong

New York Community Bancorp’s capital ratios remained strong. As of Jun 30, 2020, return on average assets and return on average common stockholders’ equity was 0.78% and 6.31% compared with 0.75% and 5.79%, respectively, in the year-ago quarter.

Common equity tier 1 ratio was 9.77% compared with 10.02% as of Jun 30, 2019. Total risk-based capital ratio was 13.13% compared with 13.46% in the year-ago quarter. Leverage capital ratio was 8.42%, down year over year from 8.64%.

Our Viewpoint

New York Community Bancorp delivered an impressive performance in the second quarter. Higher revenues, aided by the expansion of margin, and strong capital position remain key tailwinds. In addition to this, we believe its efforts to originate loans for investment will augur well for earnings in the subsequent quarters.

New York Community Bancorp, Inc. Price, Consensus and EPS Surprise

 

New York Community Bancorp, Inc. Price, Consensus and EPS Surprise

New York Community Bancorp, Inc. price-consensus-eps-surprise-chart | New York Community Bancorp, Inc. Quote

New York Community Bancorp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

UMB Financial UMBF reported second-quarter 2020 net operating income of $1.33 per share, which easily surpassed the Zacks Consensus Estimate of 32 cents. The reported figure also compares favorably with the prior-year quarter’s earnings of $1.17.

TCF Financial Corporation TCF reported second-quarter 2020 adjusted earnings per share of 54 cents, beating the Zacks Consensus Estimate of 47 cents. However, the figure declined 5.3% from the prior quarter.

Bank of Hawaii Corporation BOH delivered an earnings surprise of 3.2% in second-quarter 2020. Earnings per share of 98 cents surpassed the Zacks Consensus Estimate of 95 cents. However, the bottom line compares unfavorably with $1.40 reported in the prior-year quarter.

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