New York Community's 2Q profit declines as net interest margin shrinks

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New York Community Bancorp in Westbury, N.Y., reported lower second-quarter earnings despite recording a large gain on the sale of some securities.

The $48.3 billion-asset company said Wednesday that it earned $107 million in the quarter, down about 15% from a year earlier. President and CEO Joseph Ficalora said in a press release that results were affected by several factors, including higher short-term interest rates caused the net interest margin to decline.

The company has been holding below $50 billion of assets, the threshold at which additional regulatory scrutiny kicks in, by selling loans. It has been looking for a large acquisition to boost it over but a deal for Astoria Financial fell through last year. It is also selling its mortgage banking business and its residential assets covered by a loss-share agreement with the Federal Deposit Insurance Corp. Those deals are expected to close in the third quarter.

Net interest income declined about 9%, to $294 million year over year. Multifamily loans outstanding fell almost 1%, to $26.9 billion from the first quarter while the commercial real estate portfolio remained relatively flat at $7.5 billion during the same period. The net interest margin dropped 34 basis points to 2.65% year over year.

Noninterest income jumped 34%, to $50.4 million from a year earlier, as mortgage banking income increased almost 18%, to $8.2 million. The company also recorded a $26.9 million gain on sale from selling a portion of the securities portfolio after reclassifying it as available for sale from held to maturity.

Noninterest expenses totaled $163.8 million, up almost 2% as compensation and benefits increased 8%, to $92.9 million from a year earlier.

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