Big Jump in Mortgage Revenue Helps New York Community Bancorp

New York Community Bancorp Inc. (NYB) on Wednesday posted a 76% first-quarter jump in mortgage banking revenue from a year earlier, as the Westbury, N.Y., bank saw robust growth in multi-family and commercial real estate loans.

The $42 billion-asset bank's first-quarter profits fell 4% from a year earlier, to $118.3 million, or 27 cents a share on the basis of generally accepted accounting principles. That profit beat a consensus of analysts' estimates by a penny a share, according to Thomson Reuters.

Joseph Ficalora, New York Community's chief executive, said the bank originated two large commercial loans in the quarter for a combined $400 million that boosted overall loan growth — and he said he expects making more loans of that size in the future.

"The market is rich with assets of that caliber," Ficalora told analysts during a conference call on Wednesday morning.

Chief Financial Officer Thomas Cangemi attributed the bank's strong mortgage activity to a continuing refinancing wave and an uptick in purchases of apartment buildings at the end of the quarter. Loans for those buildings now account for 70% of New York Community's mortgage volume, compared with 30% volume from refinancings.

"Mortgage banking is going to be robust," Cangemi said during the call. "We have a very strong multi-family pipeline going into the second quarter and we expect to see good loan growth this year. We're seeing a lot of purchase activity in the U.S."

Last month, New York Community announced a novel deal in which it would assume $2.3 billion of deposits from Aurora Bank FSB, the former mortgage arm of Lehman Brothers. Ficalora said he expects the deal to be completed at the end of the second quarter, when New York Community will receive a lump payment of $24 million from Aurora to assume the liabilities.

"This was an attractive opportunity to assume low-cost funding," Ficalora said, adding that he expects his company to see increased merger activity in the year ahead.

"We could do deals in many different places as long as we do the appropriate work in advance," he said. "We don't change our lending profile in any dramatic way as a result of doing any transaction. We can run banks in different states very cost-effectively."

New York Community's noninterest income in the first quarter rose 6% to $62 million, while the net gain on sales of securities plunged nearly 93%, to less than $1 million.

Interest income for the quarter fell 5% compared with a year earlier, to $288.4 million. Executives blamed the downward repricing of the company's interest-earning assets, which outpaced the downward repricing of its deposits and borrowed funds.