New York Community's profits fall on rising deposit costs

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Rising deposit costs ate into loan growth at New York Community Bancorp, resulting in lower third-quarter profits.

The $51.2 billion-asset company’s net income fell 3.6% to $98.6 million from the same quarter last year. Earnings per share of 20 cents matched the mean estimate of analysts surveyed by FactSet Research Systems.

Net interest income rose 7.1% to $248.3 million. The average yield on interest-earning assets rose 8 basis points to 3.67%.

But deposit costs increased. The average yield on interest-bearing liabilities, which includes both deposits and borrowed funds, climbed 49 basis points to 1.7%. The rise in deposit costs continued a trend from last quarter.

Certificates of deposit grew 30% to $11.4 billion and borrowed funds, which are more expensive than CDs, climbed 12% to $13.8 billion. Meanwhile, noninterest-bearing deposits dropped 8% to $2.5 billion.

As a result of the spike in liability costs, the net interest margin narrowed 37 basis points to 2.16%.

Total loans held for investment rose 6% to $39.8 billion as multifamily loans increased 9% to $29.6 billion.

“Since the beginning of 2018, we have grown our loan portfolio by $1.5 billion, with most of this growth occurring over the past two quarters," CEO Joseph Ficalora said in a news release. Ficalora said that the bank has accelerated its loan growth since Congress passed a law earlier this year that raised the threshold for determining if a bank is systemically important from $50 billion to $250 billion.

Noninterest income, excluding an $82 million gain from the prior-year quarter, fell 14.8% to $22.9 million on lower income from bank-owned life insurance.

Noninterest expenses fell 17% to $134.4 million on lower salaries and administrative expenses. Income taxes fell by more than half, to $30 million.

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