NYCB New York Community Bancorp Inc

SIMPLIFYING AND STRENGTHENING BALANCE SHEET THROUGH SALE OF NON-CORE BUSINESSES

CONTINUED IMPROVEMENT IN CAPITAL LEVELS AND LIQUIDITY PROFILE

ALLOWANCE FOR CREDIT LOSSES IMPROVED TO 1.78% COMPARED TO 1.56% LAST QUARTER AS COMPANY PROACTIVELY ADDRESSING CREDIT RISK IN LOAN PORTFOLIO

DEPOSITS INCREASED 5.6% SEQUENTIALLY INCLUDING GROWTH IN KEY FOCUS AREAS

HICKSVILLE, N.Y., July 25, 2024 /PRNewswire/ -- New York Community Bancorp, Inc. (NYSE: NYCB) ("the Company") today reported its results for the second quarter of 2024.  The Company reported a net loss of $323 million for second quarter 2024 and a net loss available to common stockholders of $333 million or $1.14 per diluted share.  As adjusted for merger-related expenses, the Company reported a net loss of $298 million for second quarter 2024 and a net loss available to common stockholders of $308 million or $1.05 per diluted share.  Per share results reflect the 1-for-3 reverse stock split effective July 12, 2024.

CEO COMMENTARY 

Commenting on the Company's second quarter performance, Chairman, President, and Chief Executive Officer, Joseph M. Otting stated, "Our second-quarter performance reflects the ongoing actions management is taking during this transitional year as we reposition the Bank for long-term success.  During the quarter, we expanded our comprehensive review of the loan portfolio beyond the top 350 commercial real estate and multi-family loans to encompass 75% of these two portfolios and increased our loan loss provision and charge-off levels, accordingly.  This puts us in a better position to resolve these loans at a future date.

"We also continued to simplify our business model by agreeing to sell certain parts of our mortgage business, including our mortgage servicing rights to Mr. Cooper, one of the leading mortgage companies in the country.  This comes on the heels of closing on the sale of our mortgage warehouse business earlier this week.  In addition to simplifying our business model, collectively these two transactions also bolster our liquidity profile and result in higher capital ratios.

"We meaningfully increased our liquidity position and capital levels during the quarter.  Our liquidity position improved to over $33 billion during the quarter, significantly higher than last quarter.  Including the proceeds from the sale of the mortgage warehouse business, pro-forma liquidity was nearly $40 billion resulting in over a 300% coverage on our uninsured deposits.  Additionally, capital remains strong with our pro-forma CET1 capital ratio at 11.2% following the sale of our two businesses and the conversion of our Series B Preferred Stock.

"One of the main contributors to the improved liquidity profile this quarter was deposit growth.  Deposits grew $4.2 billion during the quarter, up nearly 6% compared to the previous quarter.  Importantly, this deposit growth occurred in key focus areas for the Bank, including our retail franchise and private banking.

"In addition, we continue to build out and strengthen our management team.  Earlier this week, we announced the appointment of nine seasoned leaders to the executive management team, including a new President of Commercial and Private Banking and a new Chief Credit Officer.  Like our previous additions to the management team, each of these new individuals come from high-performing organizations with very strong risk cultures. 

"I am confident that the actions we are taking will be instrumental in transforming the Company into a well-diversified regional bank with a strong balance sheet, robust capital, and meaningful earnings power.

"Lastly, I would like to thank all of our teammates for their hard work and dedication to the Bank and our customers.  Each one contributes to the success of the organization and I am proud of their commitment to the Company."

NET INCOME (LOSS) | NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS

The Company reported a second quarter 2024 net loss of $323 million compared to a net loss of $327 million in the prior quarter and net income of $413 million in second quarter 2023.  Net loss available to common stockholders for second quarter 2024 was $333 million, or $1.14 per diluted share, compared to a net loss of $335 million, or $1.36 per diluted share, in the prior quarter, and net income available to common stockholders of $405 million, or $1.66 per diluted share, in second quarter 2023.  As adjusted for merger-related expenses, the net loss for the quarter ended June 30, 2024 was $298 million and net loss available to common stockholders was $308 million, or $1.05 per diluted share.

The prior quarter's net loss and diluted EPS included a reduction to the bargain purchase gain of $121 million.  As adjusted for this item and for merger-related expenses, the net loss for the three months ended March 31, 2024 was $174 million and the net loss available to common stockholders was $182 million or $0.74 per diluted share.  Net income for the three months ended June 30, 2023 included an additional bargain purchase gain of $141 million arising from the Signature transaction.  As adjusted for this item and for other merger-related items from both the acquisition of Flagstar Bank and the Signature transaction, net income was $353 million and net income available to common stockholders was $345 million or $1.41 per diluted share.

For the six months ended June 30, 2024, the Company reported a net loss of $650 million compared to net income of $2.4 billion for the six months ended June 30, 2023.  Net loss available to common stockholders for the six months ended June 30, 2024 was $668 million or $2.48 per diluted share compared to net income available to common stockholders of $2.4 billion for the six months ended June 30, 2023 or $10.10 per diluted share.

Net loss and diluted EPS for the six months ended June 30, 2024 included a reduction of $121 million in the bargain purchase gain arising from the Signature transaction.  As adjusted for this item and for other merger-related expenses, net loss was $472 million and net loss available to common stockholders was $490 million or $1.82 per diluted share.  Net income and diluted EPS for the six months ended June 30, 2023 included a bargain purchase gain of $2.1 billion arising from the Signature transaction.  As adjusted for this item and for merger-related expenses, net income for the six months ended June 30, 2023 totaled $519 million and net income available to common stockholders totaled $503 million or $2.12 per diluted share.

EARNINGS SUMMARY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

Net Interest Income, Net Interest Margin, and Average Balance Sheet

Net Interest Income

Net interest income for the three months ended June 30, 2024 totaled $557 million, down $67 million, or 11%, compared to first quarter 2024, and down $343 million or 38%, compared to the second quarter of 2023.  The decrease from first quarter 2024 is primarily driven by a 30 basis points reduction in the net interest margin and higher average interest-bearing liabilities, partially offset by higher average cash balances and to a lesser extent, higher average investment securities balances.  Net interest income was also negatively impacted by interest income reversals on new non-accrual loans during second quarter 2024.  The decline relative to the second quarter of 2023 was driven by a 123 basis point decrease in the net interest margin because of higher average interest-bearing liabilities.  This decline was partially offset by a significant increase in average cash balances and average investment securities reflecting our ongoing strategy to proactively improve our liquidity.

For the six months ended June 30, 2024, net interest income decreased $274 million or 19% to $1.2 billion compared to $1.5 billion for the six months ended June 30, 2023.  This decrease was primarily the result of an 81 basis point decline in the net interest margin along with a 17% increase in average interest-bearing liabilities partially offset by growth in average interest-earnings assets, principally average cash and investment securities balances.

Net Interest Margin

The net interest margin for the second quarter 2024 was 1.98%, down 30 basis points compared to first quarter 2024 and down 123 basis points compared to second quarter 2023.  The 30 basis points reduction compared to first quarter 2024 was mainly driven by a 33 basis point increase in the average cost of funds with the average rate paid on deposits up 29 basis points along with an increase in average borrowings and the impact from a deposit mix shift to higher cost certificates of deposits and a promotional high yield savings account.  The 123 basis points decline compared to second quarter 2023 was primarily due to a higher cost of funds, which increased 142 basis points with the average cost of borrowings increasing 181 basis points and the average cost of interest-bearing deposits increasing 117 basis points, along with an increase in average interest-bearing liabilities.  This was partially offset by higher earning asset yields, which increased 14 basis points to 5.48%.

For the six months ended June 30, 2024, the net interest margin was 2.13%, down 81 basis points compared to the six months ended June 30, 2023.  The year-over-year decrease was primarily the result of the impact of higher interest rates and competition on our cost of funds. The average cost of funds rose 142 basis points to 4.36% driven by a 180 basis point increase in the average cost of borrowings and a 128 basis point increase in the average cost of deposits, along with an increase in average interest-bearing liabilities.  This was partially offset by higher asset yields, which increased 40 basis points to 5.50% along with an increase in average interest-earning assets.

Average Balance Sheet

Average loan balances decreased $0.9 billion, or 1%, to $83.2 billion compared to the previous quarter primarily driven by lower multi-family, commercial real estate, and commercial and industrial loan balances.  On a year-over-year basis, average loans declined $575 million or 1% driven by declines of multi-family, commercial real estate, and C&I loans, offset by growth in residential loans.  Average cash balances increased $3.5 billion or 25% to $17.9 billion compared to the previous quarter, reflecting strong deposit growth which was used to proactively manage our liquidity.  Average cash balances on a year-over-year basis declined $396 million or 2%.  Average securities increased $518 million or 4% to $12.1 billion compared to the previous quarter.

Average interest-bearing liabilities increased $3.0 billion, or 3% to $88.2 billion on a quarter-over-quarter basis primarily driven by higher average borrowed funds which increased $2.9 billion to $28.6 billion, while average interest-bearing deposits were flat at $59.6 billion.

For the six months ended June 30, 2024, average loans increased $6.2 billion or 8% to $83.7 billion primarily due to growth in residential one-to-four family loans, offset by declines in the multi-family and commercial real estate portfolios.  Average cash balances increased $4.8 billion or 43% to $16.1 billion while average securities increased $1.5 billion or 15% to $11.8 billion.

For the six months ended June 30, 2024, average interest-bearing liabilities increased $12.9 billion or 17% to $86.7 billion driven by growth in average deposits and average borrowings.  Average interest-bearing deposits rose $6.0 billion or 11% due to our promotional deposit campaign during the current quarter and higher levels of brokered deposits. Average borrowed funds increased $6.9 billion to $27.2 billion.

Provision for Credit Losses

For the three months ended June 30, 2024, the provision for credit losses totaled $390 million compared to a $315 million provision for the three months ended March 31, 2024 and a $49 million provision for the second quarter of 2023. The provision reflects an increase in charge-offs, principally office loans, and the continuing impact of market conditions on the multi-family portfolio as higher interest rates and inflationary impacts persist.

Net charge-offs totaled $349 million for the three months ended June 30, 2024, compared with $81 million for the three months ended March 31, 2024 and a net recovery of $1 million for three months ended June 30, 2023.  Net charge-offs on a non-annualized basis represented 0.42% and 0.10% of average loans outstanding for the three months ended June 30, 2024, and for the three months ended March 31, 2024, respectively. 

For the six months ended June 30, 2024, the provision for credit losses totaled $705 million compared to $219 million for the six months ended June 30, 2023.  The six months ended June 30, 2023 amount includes a $132 million initial provision for credit losses for the acquired portion of the Signature loan portfolio.

Net charge-offs totaled $430 million for the six months ended June 30, 2024, compared with a net recovery of $1 million for the six months ended June 30, 2023. 

Pre-Provision Net Revenue

The tables below detail the Company's PPNR and related measures, which are non-GAAP measures, for the periods noted:

For the three months ended June 30, 2024, pre-provision net loss totaled $34 million compared to a pre-provision net loss of $66 million for the three months ended March 31, 2024 and pre-provision net revenue of $541 million for the three months ended June 30, 2023.  Excluding the impact of merger-related and restructuring expenses and bargain purchase gain, pre-provision net revenue was zero for the three months ended June 30, 2024, compared to $98 million for the three months ended March 31, 2024 and $509 million for the three months ended June 30, 2023.

For the six months ended June 30, 2024, pre-provision net loss was $100 million compared to pre-provision net revenue of $2.7 billion for the six months ended June 30, 2023.  Excluding the impact of merger-related and restructuring expenses and the bargain purchase gain, pre-provision net revenue for the six months ended June 30, 2024 totaled $98 million, compared to $772 million for the six months ended June 30, 2023.

Non-Interest Income

In second quarter 2024, non-interest income totaled $114 million compared to $9 million in first quarter 2024 and $302 million in second quarter 2023.  Excluding the bargain purchase gain in the previous quarter and in the year-ago quarter, non-interest income in second quarter 2024 was $114 million, down $16 million or 12% compared to first quarter 2024 and was down $47 million or 29% compared to second quarter 2023.

The linked-quarter decline was driven by a reduction in net loan administration income, lower net return on MSR, and slightly lower gain on loan sales and securitizations, partially offset by higher fee income.  The year-over-year decrease was driven by reductions in net loan administration income, net gain on loan sales and securitizations, net return on MSR, and lower fee income.

For the six months ended June 30, 2024, non-interest income totaled $123 million compared to $2.4 billion for the six months ended June 30, 2023.  Excluding the bargain purchase gain adjustment in both periods, non-interest income for the six months ended June 30, 2024 was $244 million compared to $258 million for the six months ended June 30, 2023, a $15 million or 5% decline.

The year-over-year decline was driven by a decrease in net loan administration income, lower net gain on loan sales and securitizations, and a reduction in net return on MSRs.  This was partially offset by increased other income.  Net loan administration income totaled $11 million for the six months ended June 30, 2024, compared to $46 million for the six months ended June 30, 2023.  The decline was largely due to a decline in subservicing income related to the Signature transaction.  Net gain on loan sales and securitizations was $38 million compared to $45 million for the first six months of 2023, down 16% due to lower transaction volumes.  The net return on MSRs was $40 million compared to $47 million.

Non-Interest Expense

For the quarter ended June 30, 2024, total non-interest expenses were $705 million, up $6 million or 1% compared to the previous quarter and up $44 million or 7% compared to the year-ago quarter.  Excluding merger-related and restructuring expenses and intangible amortization expense, total operating expenses for the quarter ended June 30, 2024 were $638 million, up $17 million or 3% compared to the previous quarter and up $123 million or 24% compared to the year-ago quarter.

The linked-quarter increase was driven by a $38 million or 13% increase in other expenses, largely professional fees, partially offset by a $21 million or 6% decrease in compensation and benefits expense attributable to seasonal factors and lower salary expenses due to less private banking teams.  The year-over-year increase was largely due to the impact of the Signature transaction which occurred in late March 2023 and higher professional fees.

For the six months ended June 30, 2024, total non-interest expenses were $1.4 billion, up $267 million or 23% compared to the six months ended June 30, 2023.  Excluding merger-related and restructuring expenses and intangible asset amortization, total operating expenses for the six months ended June 30, 2024 were $1.3 billion, up $352 million or 39% compared to $907 million for the six months ended June 30, 2023.  The increase was largely due to the Signature transaction and higher professional fees.

Income Taxes

For the three months ended June 30, 2024, the Company reported a benefit for income taxes of $101 million compared to a benefit for income taxes of $54 million for the three months ended March 31, 2024 and a provision for income taxes of $79 million for the three months ended June 30, 2023.  The increased tax benefit was driven by the loss recognized in the current quarter. The effective tax rate for the three months ended June 30, 2024, was 23.69% compared to 14.32% for the three months ended March 31, 2024, and 16.17% for the three months ended June 30, 2023.

For the six months ended June 30, 2024, the Company reported an income tax benefit of $155 million compared to a provision for income taxes of $80 million for the six months ended June 30, 2023.  The effective tax rate for the six months ended June 30, 2024 was 19.25% compared to 3.21% for the six months ended June 30, 2023.

ASSET QUALITY

Non-Performing Assets

At June 30, 2024, total non-accrual loans were $1.94 billion, up $1.1 billion compared to March 31, 2024 and up $1.71 billion compared to June 30, 2023.   Both the linked-quarter and year-over-year increases were primarily attributable to an increase in non-accrual commercial real estate and multi-family loans, along with an increase in non-accrual C&I loans.  Non-accrual loans to total loans held-for-investment was 2.61% at June 30, 2024 compared to 0.97% at March 31, 2024 and 0.28% at June 30, 2023.  Total non-performing assets were $1,961 million at June 30, 2024 compared to $811 million for the previous quarter end and $246 million in the year-ago quarter.  Non-performing assets to total assets was 1.65% at June 30, 2024 compared to 0.72% at March 31, 2024 and 0.21% at June 30, 2023.

Total Allowance for Credit Losses

The total allowance for credit losses was $1,326 million at June 30, 2024 compared to $1,288 million at March 31, 2024 and $628 million at June 30, 2023.  The year-over-year increase is due to incremental reserve build reflecting changes in market conditions and interest rates.  Total ACL to total loans held for investment was 1.78% as of June 30, 2024 compared to 1.56% at March 31, 2024 and 0.75% at June 30, 2023.  During the second quarter, the Company transferred approximately $5.1 billion of mortgage warehouse loans from held-for-investment to held-for-sale, which had a positive impact on the ACL coverage.

CAPITAL POSITION

The Company's regulatory capital ratios continue to exceed regulatory minimums to be classified as "Well Capitalized," the highest regulatory classification. The table below depicts the Company's and the Bank's regulatory capital ratios at those respective periods.

About New York Community Bancorp, Inc.

New York Community Bancorp, Inc. is the parent company of Flagstar Bank, N.A., one of the largest regional banks in the country. The Company is headquartered in Hicksville, New York. At June 30, 2024, the Company had $119.1 billion of assets, $82.4 billion of loans, deposits of $79.0 billion, and total stockholders' equity of $8.4 billion.

Flagstar Bank, N.A. operates over 400 branches, including a significant presence in the Northeast and Midwest and locations in high growth markets in the Southeast and West Coast. Flagstar Mortgage operates nationally through a wholesale network of approximately 3,000 third-party mortgage originators. In addition, the Bank has approximately 90 private banking teams located in over 10 cities in the metropolitan New York City region and on the West Coast, which serve the needs of high-net worth individuals and their businesses.

Post-Earnings Release Conference Call

The Company will host a conference call on July 25, 2024 at 8:00 a.m. (Eastern Time) to discuss its second quarter 2024 performance. The conference call may be accessed by dialing (888) 596-4144 (for domestic calls) or (646) 968-2525 (for international calls) and providing the following conference ID: 5857240.  The live webcast will be available at ir.myNYCB.com under Events.

A replay will be available approximately three hours following completion of the call through 11:59 p.m. on July 29, 2024 and may be accessed by calling (800) 770-2030 (domestic) or (609) 800-9909 (international) and providing the following conference ID: 5857240. In addition, the conference call webcast at ir.myNYCB.com will be archived through 5:00 p.m. on August 22, 2024.

Investor Contact:  Salvatore J. DiMartino  (516) 683-4286
Media Contact:  Steven Bodakowski  (248) 312-5872

Cautionary Statements Regarding Forward-Looking Information

This earnings release and the associated conference call may include forward‐looking statements by the Company and our authorized officers pertaining to such matters as our goals, beliefs, intentions, and expectations regarding (a) revenues, earnings, loan production, asset quality, liquidity position, capital levels, risk analysis, divestitures, acquisitions, and other material transactions, among other matters; (b) the future costs and benefits of the actions we may take; (c) our assessments of credit risk and probable losses on loans and associated allowances and reserves; (d) our assessments of interest rate and other market risks; (e) our ability to execute on our strategic plan, including the sufficiency of our internal resources, procedures and systems; (f) our ability to attract, incentivize, and retain key personnel and the roles of key personnel; (g) our ability to achieve our financial and other strategic goals, including those related to our merger with Flagstar Bancorp, Inc., which was completed on December 1, 2022, our acquisition of substantial portions of the former Signature Bank through an FDIC-assisted transaction, and our ability to fully and timely implement the risk management programs institutions greater than $100 billion in assets must maintain; (h) the effect on our capital ratios of the approval of certain proposals approved by our shareholders during our 2024 annual meeting of shareholders; (i) the conversion or exchange of shares of the Company's preferred stock; (j) the payment of dividends on shares of the Company's capital stock, including adjustments to the amount of dividends payable on shares of the Company's preferred stock; (k) the availability of equity and dilution of existing equity holders associated with amendments to the 2020 Omnibus Incentive Plan; (l) the effects of the reverse stock split; and (m) transactions relating to the sale of our mortgage business and mortgage warehouse business.

Forward‐looking statements are typically identified by such words as "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "should," "confident," and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. Additionally, forward‐looking statements speak only as of the date they are made; the Company does not assume any duty, and does not undertake, to update our forward‐looking statements. Furthermore, because forward‐looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in our statements, and our future performance could differ materially from our historical results.

Our forward‐looking statements are subject to, among others, the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities, credit and financial markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of our loan or investment portfolios, including associated allowances and reserves; changes in future allowance for credit losses, including changes required under relevant accounting and regulatory requirements; the ability to pay future dividends; changes in our capital management and balance sheet strategies and our ability to successfully implement such strategies; recent turnover in our Board of Directors and our executive management team; changes in our strategic plan, including changes in our internal resources, procedures and systems, and our ability to successfully implement such plan; changes in competitive pressures among financial institutions or from non‐financial institutions; changes in legislation, regulations, and policies; the imposition of restrictions on our operations by bank regulators; the outcome of pending or threatened litigation, or of investigations or any other matters before regulatory agencies, whether currently existing or commencing in the future; the success of our blockchain and fintech activities, investments and strategic partnerships; the restructuring of our mortgage business; the impact of failures or disruptions in or breaches of the Company's operational or security systems, data or infrastructure, or those of third parties, including as a result of cyberattacks or campaigns; the impact of natural disasters, extreme weather events, military conflict (including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas, the possible expansion of such conflicts and potential geopolitical consequences), terrorism or other geopolitical events; and a variety of other matters which, by their nature, are subject to significant uncertainties and/or are beyond our control. Our forward-looking statements are also subject to the following principal risks and uncertainties with respect to our merger with Flagstar Bancorp, which was completed on December 1, 2022, and our acquisition of substantial portions of the former Signature Bank through an FDIC-assisted transaction: the possibility that the anticipated benefits of the transactions will not be realized when expected or at all; the possibility of increased legal and compliance costs, including with respect to any litigation or regulatory actions related to the business practices of acquired companies or the combined business; diversion of management's attention from ongoing business operations and opportunities; the possibility that the Company may be unable to achieve expected synergies and operating efficiencies in or as a result of the transactions within the expected timeframes or at all; and revenues following the transactions may be lower than expected. Additionally, there can be no assurance that the Community Benefits Agreement entered into with NCRC, which was contingent upon the closing of the Company's merger with Flagstar Bancorp, Inc., will achieve the results or outcome originally expected or anticipated by us as a result of changes to our business strategy, performance of the U.S. economy, or changes to the laws and regulations affecting us, our customers, communities we serve, and the U.S. economy (including, but not limited to, tax laws and regulations).

More information regarding some of these factors is provided in the Risk Factors section of our Annual Report on Form 10‐K/A for the year ended December 31, 2023, Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, and in other SEC reports we file. Our forward‐looking statements may also be subject to other risks and uncertainties, including those we may discuss in this news release, on our conference call, during investor presentations, or in our SEC filings, which are accessible on our website and at the SEC's website, www.sec.gov.

- Financial Statements and Highlights Follow -

NEW YORK COMMUNITY BANCORP, INC.
RECONCILIATIONS OF CERTAIN GAAP AND NON-GAAP FINANCIAL MEASURES
(dollars in millions)

While stockholders' equity, total assets, and book value per share are financial measures that are recorded in accordance with U.S. generally accepted accounting principles ("GAAP"), tangible stockholders' equity, tangible assets, and tangible book value per share are not. Nevertheless, it is management's belief that these non-GAAP measures should be disclosed in our earnings releases and other investor communications for the following reasons:

1. Tangible stockholders' equity is an important indication of the Company's ability to grow organically and through business combinations, as well as its ability to pay dividends and to engage in various capital management strategies.
2. Returns on average tangible assets and average tangible stockholders' equity are among the profitability measures considered by current and prospective investors, both independent of, and in comparison with, the Company's peers.
3. Tangible book value per share and the ratio of tangible stockholders' equity to tangible assets are among the capital measures considered by current and prospective investors, both independent of, and in comparison with, its peers.