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.

"Astoria was always a great de" New York Community CEO Joseph Ficalora said, adding that it was just taking too long to get the deal completed.
New York Community President and CEO Joseph Ficalora said that 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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Jackie Stewart

Jackie Stewart covers community banks and mergers and acquisitions for American Banker.