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January 28
A surge in lending to apartment building owners in the New York area offset a decline in home mortgage revenue at New York Community Bancorp Inc. in the fourth quarter.
Paying less money to borrow from depositors and wholesale sources also helped drive the Westbury thrift's net income up 10.5% from the prior quarter, to $149.8 million. Year-earlier net income of $154.9 million reflected a $140 million gain on the purchase of the failed AmTrust Bank in Cleveland in December 2009.
The $41.2 billion-asset company's results improved in two crucial areas, Chief Executive Joseph Ficalora told analysts: making more money on new loans and losing less money on old, bad ones.
Interest collected from business-property mortgages and other loans rose 5%, or $19 million, from the prior quarter as more New York-area landlords took out loans to buy properties or refinance existing loans at lower rates.
Fees from borrowers paying down their loans early rose to $11.2 million from $4 million in the prior quarter. Production of new so-called multifamily loans — essentially mortgages on apartment buildings — rose 73% quarter to quarter. Nearly three fourths of New York Community's loans are multifamily loans. The bulk of them are in New York City, where vacancy rates and property values tend to hold up better than in other parts of the country.
The loan demand enabled New York Community to invest in fewer lower-yielding securities. That, coupled with lower funding costs, drove its net interest margin 25 basis points higher from the previous quarter, to 3.61%.
"Properties are actually changing hands," Ficalora said. "We're expecting to be earning more in quarters ahead. And we're expecting to be paid more."
Its credit costs fell, too, with net chargeoffs and nonperforming loans declining 17% and 5%, respectively, from the previous quarter. New York Community stayed relatively healthy during the downturn because it had fewer bad loans than other banks. Its chargeoff ratio of 0.05% of average loans and nonperforming loan ratio of 2.23% are lower than the ratios at other banks of its size.
Noninterest income (fees from originating loans and gains on securities sales, among other things) was soft, largely due to a slowdown in home mortgage refinancings and the loss of servicing rights to a portfolio of AmTrust mortgages owned by the government. Home mortgage banking fees declined 47% from the prior quarter, to $40.4 million. New York Community's mortgage banking income surged in the third quarter, which surprised market watchers because it is a new line it entered when it bought AmTrust, which had a division that made home loans for sale to the federal housing agencies.
New York Community's total noninterest income was down 3.6% from the prior quarter and 25% from a year earlier, to $103.3 million.
