New York Community Bancorp Inc. offered three versions of its first-quarter earnings, but all were below what it earned in the quarter a year earlier.
On Wednesday the $27.1 billion-asset Westbury, N.Y., company reported earnings of $70 million on an operating basis, $71.9 million on a cash basis, and $66.4 million on the basis of generally accepted accounting procedures - all well short of the $90.1 million it earned a year earlier.
Joseph R. Ficalora, New York Community's chief executive and president, said in a conference call with analysts that increases in interest paid on deposits and prepayments in its multifamily loan portfolio hurt the results.
Positive trends in the quarter "are nonetheless overshadowed by the continuing contraction of our net interest margin," he said.
The net interest margin shrank by 23 basis points from the fourth quarter and a whopping 89 basis points from a year earlier, to 2.14%. But New York Community said margin pressure would be lifted when it buys Atlantic Bank of New York this week for $400 million in cash.
Atlantic's asset sensitivity balances New York Community's liability sensitivity, Mr. Ficalora said.
"Prepayments are always good for us," but more than $8 million of the $10.2 million of first-quarter prepayments was booked as noninterest income, he said. Booking that $8 million as interest income would have raised the margin by as much as 8 basis points, he said.
New York Community's operating earnings dropped 23% from a year earlier and 1.3% from the fourth quarter, to $70 million, or 26 cents a share, which fell short of the average estimate by a penny, according to Thomson Financial.
Anthony R. Davis, an analyst with BankAtlantic Bancorp Inc.'s Ryan Beck & Co. Inc., said New York Community went with the "cafeteria approach" in reporting results to cater to different investors' tastes.
New York Community also recorded an after-tax loss of $3.6 million, because of an accounting change for four interest rate swaps it has had on its books since 2003. Mr. Ficalora said three of the swaps were revalued at fair-value hedges, and the fourth was reclassified as a trading position.
The accounting change did not affect the company's cash flow.
Net interest income was flat from the fourth quarter and fell 19% from a year earlier, to $128.7 million. Noninterest income rose 4.6% from the fourth quarter but fell 14.7% from a year earlier, to $27.3 million.
The loan book grew 6.5% from the fourth quarter, to $18.1 billion, and core deposits grew 1.6%, to $12.3 billion.
The average first-quarter yield of New York Community's money market accounts was 3%, or 62 basis points higher than in the fourth quarter. The average yield of its certificates of deposit rose 49 basis points, to 3.72%.
Mr. Ficalora said New York Community does not plan to lead the market in changing its rates, "so anticipating rates here would not be good to do."
