Exhibit 99.1
New York Community Bancorp, Inc. Reports
3rd Quarter 2002 Diluted EPS of $0.58; Raises 2002 and 2003
Diluted EPS Estimates to $2.15-$2.17 and $2.52-$2.55
WESTBURY, N.Y.--(BUSINESS WIRE)--Oct. 16, 2002--New York Community
Bancorp, Inc. (Nasdaq: NYCB) today reported third quarter 2002 earnings of
$60.4 million, as compared to $15.6 million for the third quarter of 2001.
Included in the 2001 amount was a net charge of $13.0 million, or $0.15 per
share, primarily stemming from the Company's merger-of-equals with Richmond
County Financial Corp. ("Richmond County") on July 31st(1,2). Excluding this
charge, the Company's diluted earnings per share rose from $0.33 in the third
quarter of 2001 to $0.58 in the third quarter of 2002, signifying an increase of
75.8%.
For the nine months ended September 30, 2002, the Company recorded earnings
of $164.8 million, as compared to $61.9 million for the nine months ended
September 30, 2001. Included in the 2001 amount was a net charge of $2.7
million, equivalent to $0.04 per share(3,4). Excluding this charge, the
Company's diluted earnings per share rose from $0.91 in the first nine months of
2001 to $1.61 in the first nine months of 2002, signifying an increase of 76.9%.
The Company also reported a 33.5% increase in third quarter 2002 cash
earnings to $64.3 million and an 80.6% increase in nine-month 2002 cash earnings
to $190.6 million. On a diluted per share basis, the Company's three- and
nine-month 2002 cash earnings rose 10.9% and 24.8%, respectively, to $0.61 and
$1.86.
Commenting on the quarter, President and Chief Executive Officer Joseph R.
Ficalora stated, "The Company's existing strength, and its capacity to grow
earnings further, is reflected in the solid performance we recorded in the third
quarter of the year. At 4.28% and 4.44% our spread and margin were up 84 and 81
basis points from the year-earlier measures, while our net interest income
totaled $99 million, up 66%. At 2.39% and 19.74%, our returns on assets and
equity continued to be well above the average industry measures and, despite the
significant franchise growth we've achieved through merger transactions, our
efficiency ratio amounted to 27.64%. The extent of the Company's financial
strength is further conveyed by the quality of our assets: at 0.11%, our ratio
of non-performing assets to total assets is at a record low.
1
"Based on our third quarter performance, and our current fourth quarter
expectations, we are raising our diluted earnings per share projections for both
2002 and 2003," Mr. Ficalora said. "Our current projections call for 2002
diluted earnings per share in the range of $2.15 to $2.17, and 2003 diluted
earnings per share in the range of $2.52 to $2.55.
"The Company's capacity to earn has largely been driven by multi-family loan
production and by the solid performance of our growing portfolio. Now totaling
$4.2 billion, multi-family loans continue to be our principal asset, and the
primary source of our ongoing strength in the face of economic unrest. Such
loans represent a solid 79% of current mortgage loans outstanding, and are
quickly approaching the 86% we enjoyed prior to our first merger transaction
nearly two years ago.
"Although a reduction in asset yields led to one- and four-basis point drops
in our spread and margin on a linked-quarter basis, the strength of our
third-quarter measures gives us room to deal with any additional pressure on
asset yields that may come in the months ahead. In addition, we now have
completed the yearlong restructuring of our assets, and our mortgage pipeline is
up to $680 million as of today.
"The consistency of our diluted earnings per share over the last two
quarters provides additional insight into our earnings capacity," Mr. Ficalora
continued. "The calculation of third quarter 2002 earnings per share reflects
the full-quarter impact of 5.9 million shares issued in the second quarter
pursuant to our successful secondary offering.
"At a time of pronounced volatility in the economy and the markets, we
believe that the various qualities that distinguish us from our brethren are the
qualities that investors should be investing in," Mr. Ficalora concluded. "We
are confident in our ability to generate a performance that continues to
distinguish New York Community Bancorp within our industry."
2
Earnings Summary for the Three Months Ended September 30, 2002
The following line items reflect three months of consolidated operations
with Richmond County in the third quarter of 2002, as compared to two months of
consolidated operations in the third quarter of 2001.
Interest Income
In the third quarter of 2002, the Company recorded interest income of $154.3
million, up from $121.0 million in the third quarter of 2001. The 27.5% increase
was driven by a $2.4 billion, or 37.4%, rise in the average balance of
interest-earning assets to $8.9 billion, tempered by a 47-basis point drop in
the average yield to 6.93%. While the lower yield reflects the decline in market
interest rates and the restructuring of the Company's assets, the higher volume
reflects the benefits of its leveraging program, which has capitalized on the
attractive yield curve during the past twelve months.
Reflecting a record volume of mortgage loan production, mortgage and other
loans generated $99.9 million, or 64.7%, of total interest income in the current
third quarter, up $9.7 million, or 10.7%, from the year-earlier amount. The
increase was fueled by a $679.6 million, or 14.6%, rise in the average balance
of loans to $5.3 billion, which offset a 20-basis point decline in the average
yield to 7.50%.
Mortgage-backed securities accounted for $45.4 million, or 29.4%, of total
interest income in the current third quarter, up from $22.2 million, or 18.4%,
in the year-earlier three months. The increase stemmed from a $1.6 billion rise
in the average balance to $2.9 billion, outweighing a 48-basis point drop in the
average yield to 6.15%.
Interest Expense
The Company recorded third quarter 2002 interest expense of $55.5 million,
down $6.1 million, or 9.9%, from the third quarter 2001 amount. While the
average balance of interest-bearing liabilities rose $2.1 billion, or 34.7%, to
$8.3 billion, the increase was largely offset by a 131-basis point reduction in
the average cost of funds to 2.65%. The reduction in interest expense was
supported by three primary factors: a shift in the deposit mix in favor of
low-cost core deposits; the Company's emphasis on the sale of third-party
products in lieu of higher cost deposits; and the downward repricing of CDs
during a period of declining market interest rates.
3
The interest expense derived from CDs fell $17.3 million to $11.5 million,
the result of a $397.2 million decline in the average balance to $1.9 billion
and a 257-basis point decline in the average cost of such funds to 2.40%.
The interest expense derived from other deposits (NOW and money market
accounts, savings accounts, and mortgagors' escrow) fell $1.3 million to $9.8
million, the net effect of an $883.4 million rise in the average balance to $3.3
billion and a 64-basis point reduction in the average cost of such funds to
1.19%. The higher average balance includes a $108.8 million increase in average
non-interest-bearing deposits to $463.0 million.
In connection with the Company's year-long leveraging program, the average
balance of borrowings rose $1.8 billion to $3.6 billion, generating a $12.5
million increase in interest expense to $34.1 million. The higher balance was
tempered, in part, by a 95-basis point reduction in the average cost of
borrowings to 3.80%.
Net Interest Income
Net interest income rose 66.3% to $98.9 million in the current third quarter
from $59.4 million in the third quarter of 2001. The increase was fueled by the
leveraged growth of the Company's interest-earning assets, as the Company
parlayed the increase in short-term borrowings and low-cost core deposits into
the production of multi-family mortgage loans and investments in securities.
These factors also combined to expand the Company's interest rate spread and net
interest margin, which rose 84 and 81 basis points, respectively, to 4.28% and
4.44%.
At $98.9 million, the Company's third quarter 2002 net interest income was
$3.4 million higher than the second quarter 2002 level, and thus contributed to
the year-over-year increase. At the same time, its spread and margin were one
and four basis points lower, respectively, than the linked-quarter measures,
largely reflecting the planned leveraging of the capital raised in the
aforementioned secondary offering. While the restructuring of the balance sheet
also contributed to the modest linked-quarter drop in spread and margin,
management believes that the resultant mix of assets is better positioned to
withstand the pressures of economic adversity and interest rate volatility.
Provision for Loan Losses
The provision for loan losses was suspended in the current third quarter,
consistent with the Company's practice since the third quarter of 1995. The
decision to suspend the provision is indicative of management's current
assessment of the allowance for loan losses, which considers, among other items,
the quality of the loan portfolio.
Other Operating Income
The Company recorded other operating income of $23.6 million in the third
quarter of 2002, as compared to $32.0 million in the third quarter of 2001.
While the 2002 amount included net securities gains of $3.9 million (equivalent
to $2.5 million, or $0.02 per share, on an after-tax basis), the 2001 amount
included net securities gains of $16.4 million and $2.0 million in gains on the
sale of loans and a bank-owned property. Excluding the respective gains, the
Company's other operating income rose to $19.7 million in the current third
quarter from $13.6 million in the year-earlier three months. The 44.6% increase
was boosted by a $2.0 million rise in fee income to $10.8 million and a $4.0
million rise in core other income to $8.9 million.
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Non-interest Expense
The Company recorded non-interest expense of $35.3 million in the current
third quarter and $52.2 million in the third quarter of 2001. In accordance with
its adoption of SFAS Nos. 141 and 142 on January 1, 2002, the Company has
discontinued the amortization of goodwill stemming from its acquisition of Haven
Bancorp ("Haven") on November 30, 2000, but continues to amortize the core
deposit intangible ("CDI") stemming from its merger with Richmond County on July
31, 2001. The amortization of CDI amounted to $1.5 million in the current third
quarter; by comparison, the amortization of goodwill and CDI amounted to $2.5
million in the year-earlier three months.
Operating expense totaled $33.8 million in the current third quarter,
representing 1.34% of average assets, down from $49.7 million, representing
2.72% of average assets, in the third quarter of 2001. Included in the latter
amount was the non-recurring merger-related charge of $22.0 million, recorded in
compensation and benefits. Excluding this charge, the Company's third quarter
2001 operating expense amounted to $27.7 million and its core compensation and
benefits expense amounted to $13.7 million. The Company's third quarter 2002
operating expense thus reflected a $5.3 million increase in core compensation
and benefits expense to $19.0 million; a $722,000 increase in occupancy and
equipment expense to $6.0 million; and a $313,000 increase in other expense to
$1.1 million. These increases were partly offset by a $254,000 decline in
general and administrative ("G&A") expense to $7.7 million.
Reflecting the Company's stringent approach to cost containment, and the
growth of its net interest income, the efficiency ratio improved to 27.64% in
the third quarter of 2002.
Income Tax Expense
The Company recorded income tax expense of $26.8 million in the current
third quarter, up from $23.6 million in the year-earlier three months. The
increase reflects a $47.9 million rise in pre-tax income to $87.1 million and an
effective tax rate of 30.7%, as compared to 60.2% in the year-earlier three
months. The higher effective tax rate in 2001 reflects the aforementioned $3.0
million tax rate adjustment and the non-deductibility of the aforementioned
merger-related expense.
5
Earnings Summary for the Nine Months Ended September 30, 2002
The following line item comparisons reflect nine and two months,
respectively, of consolidated operations with Richmond County in the nine months
ended September 30, 2002 and 2001.
Interest Income
The Company recorded nine-month 2002 interest income of $447.8 million, up
from $283.7 million in the year-earlier nine months. The 57.8% increase was
fueled by a $3.5 billion, or 68.9%, rise in average interest-earning assets to
$8.5 billion, which served to offset a 50-basis point decline in the average
yield to 7.04%. While the lower yield reflects the decline in market interest
rates and the restructuring of the Company's assets, the higher average balance
reflects the record volume of loans produced in the past year, the assets
acquired in the Richmond County merger, and the Company's subsequent investments
in mortgage-backed securities.
Mortgage and other loans produced interest income of $306.0 million,
representing 68.3% of the nine-month 2002 total, up $82.2 million from the
year-earlier amount. The 36.7% increase was fueled by a $1.5 billion, or 39.8%,
rise in the average balance of loans to $5.4 billion, which served to offset a
17-basis point decline in the average yield to 7.55%.
The interest income produced by mortgage-backed securities rose $82.4
million to $114.7 million, representing 25.6% of total interest income in the
current nine-month period. The increase was the net effect of a $1.9 billion
rise in the average balance to $2.5 billion and a 57-basis point reduction in
the average yield to 6.05%.
Interest Expense
In the nine months ended September 30, 2002, the Company recorded interest
expense of $170.4 million, up 11.5% from $152.9 million in the nine months ended
September 30, 2001. The increase was the net effect of a $3.2 billion, or 67.0%,
rise in the average balance of interest-bearing liabilities to $8.0 billion,
tempered by a 142-basis point decline in the average cost of funds to 2.86%. The
lower cost was a function of the identical factors that served to reduce the
average cost of funds in the third quarter: the increasing concentration of core
deposits within the mix of total deposits; the sale of third-party investment
products in lieu of higher cost deposits; and the downward repricing of CDs
during a time of declining interest rates.
6
CDs generated interest expense of $46.2 million, representing 27.1% of the
nine-month 2002 total, down from $80.8 million, representing 52.9%, in the
year-earlier nine months. While the average balance of CDs grew $106.3 million
year-over-year to $2.1 billion, the increase was largely tempered by a 252-basis
point decline in the average cost of such funds to 2.99%.
Other deposits (as previously defined) generated nine-month 2002 interest
expense of $29.1 million, representing 17.1% of the total, up from $22.4
million, representing 14.6%, the nine-month 2001 amount. The increase was the
net effect of a $1.5 billion rise in the average balance to $3.2 billion and a
49-basis point decline in the average cost to 1.20%. Included in the higher
average balance was a $213.2 million increase in average non-interest-bearing
deposits to $463.5 million.
Borrowings generated interest expense of $95.0 million, representing 55.8%
of the nine-month 2002 total, up from $49.7 million, representing 32.5%, in the
first nine months of 2001. The increase was the net effect of a $1.8 billion
rise in the average balance to $3.1 billion, reflecting the Company's leveraging
program, and a 108-basis point decline in the average cost of such funds to
4.07%.
Net Interest Income
The Company's net interest income rose 112.1% to $277.4 million in the
current nine-month period from $130.8 million in the nine months ended September
30, 2001. In addition to the benefit of the Richmond County merger, the increase
reflects the leveraged growth of the Company's interest-earning assets,
primarily in the form of multi-family loans and securities.
The Company's spread and margin showed similar year-over-year improvement,
expanding 92 and 89 basis points, respectively, to 4.18% and 4.36% in the
current nine-month period.
Other Operating Income
Other operating income totaled $71.4 million in the first nine months of
2002 and $71.6 million in the comparable period in 2001. Included in the 2001
amount were net securities gains of $25.3 million and gains of $11.4 million on
the sale of one-to-four family loans and a bank-owned property. In comparison,
the 2002 amount includes net securities gains of $11.7 million, equivalent, on
an after-tax basis, to $7.6 million, or $0.07 per share.
7
Excluding the respective gains, the Company recorded core other operating
income of $59.7 million in the current nine-month period, as compared to $34.9
million in the year-earlier nine months. The increase reflects an $8.3 million
rise in fee income to $32.8 million and a $16.5 million rise in core other
income to $26.9 million.
Non-interest Expense
The Company recorded non-interest expense of $105.3 million in the current
nine-month period, as compared to $92.2 million in the first nine months of
2001. While the 2002 amount includes CDI amortization of $4.5 million, the 2001
amount includes CDI and goodwill amortization of $5.4 million combined. The
difference reflects the Company's January 1, 2002 adoption of SFAS Nos. 141 and
142 and the resultant discontinuation of the amortization of goodwill as of that
date.
Operating expense totaled $100.8 million, representing 1.38% of average
assets, in the current nine-month period, as compared to $86.7 million,
representing 2.10%, in the nine months ended September 30, 2001. Included in the
2001 amount was the aforementioned non-recurring charge of $22.0 million;
excluding this charge, nine-month 2001 operating expense totaled $64.7 million,
and compensation and benefits expense totaled $31.2 million.
The higher level of operating expense in the first nine months of 2002 thus
reflects a $23.4 million increase in core compensation and benefits expense to
$54.6 million; a $5.3 million increase in occupancy and equipment expense to
$17.7 million; a $5.3 million increase in G&A expense to $24.3 million; and a
$2.1 million increase in other expense to $4.2 million. The increase in
operating expense and the modest decline in other operating income were
sufficiently offset by the rise in net interest income to produce an improvement
in the efficiency ratio to 28.91%.
Income Tax Expense
The Company recorded income tax expense of $78.6 million in the current
nine-month period, up from $48.3 million in the first nine months of 2001. The
increase reflects a $133.2 million rise in pre-tax income to $243.4 million and
a decline in the effective tax rate to 32.3% from 43.8%. The higher effective
tax rate in 2001 reflects the aforementioned $3.0 million tax rate adjustment
and the non-deductibility of the merger-related expense. Management anticipates
that the effective tax rate for the twelve months ended December 31, 2002 will
range between 32.0% and 32.5%.
8
Balance Sheet Summary
Loans
The Company recorded total assets of $10.0 billion at September 30, 2002, up
from $9.2 billion at December 31, 2001. Asset growth was driven by a record
level of mortgage loan production, with nine-month 2002 originations totaling
$1.9 billion, including $462.9 million in the third quarter of the year.
Multi-family loan originations represented $345.2 million, or 74.6%, of
third quarter 2002 production, and $1.5 billion, or 78.8%, of production
year-to-date. The Company's continued focus on multi-family loans is further
reflected in the growing balance of such loans within the mix of mortgage loans
outstanding. Multi-family loans represented 79.0% of total mortgage loans at the
close of the third quarter, up from 61.6% at December 31, 2001. At September 30,
2002, the average loan in the portfolio had a principal balance of $1.7 million
and a loan-to-value ratio of 58.0%.
The yearlong rise of multi-family loans was accompanied by a significant
yearlong reduction in the portfolio of one-to-four family loans. While the
portfolio of multi-family loans rose $901.2 million, or 27.7%, since year-end
2001 to $4.2 billion, the portfolio of one-to-four family loans declined $887.9
million to $430.4 million at the current quarter's end. The latter decline
primarily reflects the second quarter 2002 securitization of one-to-four family
loans totaling $572.5 million, consistent with management's focus on
establishing a more risk-averse asset mix. In contrast to multi-family loans,
one-to-four family loans thus represented 8.2% of quarter-end mortgage loans
outstanding; as new one-to-four family loans are typically originated on a
conduit basis, the portfolio of such loans is unlikely to reflect organic
growth.
The growth in multi-family loans was further offset by declines of $23.8
million and $14.8 million, respectively, in commercial real estate and
construction loans to $538.1 million and $137.6 million, at September 30, 2002.
The net effect was a $25.2 million reduction in total mortgage loans outstanding
to $5.3 billion at that date.
The portfolio of other loans declined $31.5 million from the year-end 2001
level to $85.5 million at September 30, 2002. The reduction reflects the
Company's practice of originating such loans on a conduit basis, as well as the
sale of home equity loans in the second quarter of the year.
Asset Quality
The quality of the Company's loans was clearly conveyed by the continued
absence of any net charge-offs, and by the balance of non-performing loans and
assets recorded at September 30, 2002. Non-performing loans declined $2.7
million and $6.5 million, respectively, to $11.0 million, from the levels
recorded at June 30, 2002 and December 31, 2001. The balance of non-performing
loans at September 30, 2002 was equivalent to 0.21% of loans, net, down from
0.26% and 0.33%, respectively, at the prior period-ends. Included in the
September 30, 2002 amount were mortgage loans in foreclosure totaling $9.3
million and loans 90 days or more delinquent totaling $1.7 million.
9
Foreclosed real estate also declined, to $121,000, from $145,000 and
$249,000, respectively, at June 30, 2002 and December 31, 2001. Non-performing
assets thus totaled $11.1 million at September 30, 2002, down $2.7 million and
$6.6 million, respectively, from the levels recorded at the earlier dates. The
September 30, 2002 amount was equivalent to 0.11% of total assets, as compared
to 0.14% and 0.19%, respectively.
In the absence of any net charge-offs or provisions for loan losses, the
allowance for loan losses was maintained at $40.5 million, representing 367.90%
of non-performing loans and 0.76% of loans, net. Management assesses the
adequacy of the loan loss allowance on a regular basis, and considers, among
other factors, the historic and current quality of the loan portfolio.
Securities and Mortgage-backed Securities
The leveraged growth of the Company is partially reflected in the higher
balance of securities available for sale and held to maturity at September 30,
2002. Throughout the year, the Company has taken advantage of the yield curve to
enhance its earnings with investments in securities with favorable yields.
Available-for-sale securities rose $660.4 million from the December 31, 2001
level to $3.0 billion, while securities held to maturity rose $257.3 million to
$460.5 million.
The increase in securities available for sale reflects the Company's second
quarter 2002 securitization of one-to-four family loans totaling $572.5 million,
as well as new investments in securities. Mortgage-backed securities represented
$2.7 billion of the $3.0 billion total, while trust-preferred securities
represented $187.5 million. The portfolio of securities held to maturity largely
consisted of trust-preferred securities, totaling $202.2 million, and Federal
Home Loan Bank of New York stock, totaling $176.5 million. The remainder of the
portfolio consisted of corporate bonds and preferred stock.
The growth in securities available for sale and held to maturity was partly
offset by an $8.7 million reduction in the portfolio of mortgage-backed
securities held to maturity. While the Company continues to invest in such
assets, they typically are classified as available for sale.
10
Goodwill and Core Deposit Intangibles
The Company recorded goodwill of $624.5 million at September 30,
2002, up $9.9 million from the level recorded at December 31, 2001.
The increase was primarily due to the Company's first quarter 2002
acquisition of the remaining 53% equity interest in Peter B. Cannell &
Co., Inc., an investment advisory firm.
Pursuant to the Company's adoption of SFAS Nos. 141 and 142 on January 1,
2002, the amortization of goodwill has been discontinued; however the
amortization of CDI will continue at a rate of $1.5 million per quarter through
2011. Accordingly, the balance of CDI declined $4.5 million to $53.0 million at
September 30, 2002 from the level recorded at December 31, 2001.
Sources of Funds
The Company's continuing emphasis on low-cost core deposits is reflected in
its deposit mix at September 30, 2002. Core deposits totaled $3.3 billion at
that date, representing 63.8% of total deposits, as compared to $3.0 billion, or
55.8%, at December 31, 2001. The increase in core deposits stemmed from a $226.5
million rise in NOW and money market accounts to $1.2 billion; a $349,000 rise
in savings accounts to $1.6 billion; and an $11.6 million rise in
non-interest-bearing accounts to $466.8 million.
The growth of core deposits was offset by a decline of $547.9 million in the
balance of CDs. CDs totaled $1.9 billion at September 30, 2002, representing
36.2% of total deposits, as compared to $2.4 billion, representing 44.2%, at
year-end 2001. The net effect of the drop in CDs and the rise in core deposits
was a $309.4 million reduction in total deposits to $5.1 billion.
The decline in CDs was partially due to the Company's ongoing focus on the
sale of investment products through its branch network. Such products offer
customers higher yields than traditional banking products, while generating
revenues for the Company. The decline in CDs also reflects the divestiture of 14
in-store branches during the second quarter of 2002. With the opening of a
traditional branch office in July 2002 and another currently in the approval
process, the Company will have 110 banking offices serving metropolitan New York
and New Jersey in early 2003.
The decline in deposits was largely offset by an increase in the balance of
borrowings at quarter's end. Reflecting the yearlong implementation of an
aggressive leveraging program, borrowings rose $944.1 million to $3.5 billion
from the balance recorded at December 31, 2001. Included in the 2002 amount were
FHLB borrowings of $1.8 billion, reverse repurchase agreements of $1.5 billion,
and trust-preferred securities of $187.8 million.
11
Stockholders' Equity
Stockholders' equity rose to $1.2 billion at September 30, 2002 from $983.1
million at December 31, 2001. The 2002 amount was equivalent to 12.26% of total
assets and a book value of $11.88 per share, based on 103,623,122 shares. The
increase in stockholders' equity reflects nine-month cash earnings of $190.6
million and net proceeds of $147.5 million stemming from the sale of 5,865,000
shares in the Company's secondary offering on May 14, 2002. At the same time,
the level of stockholders' equity was reduced by the distribution of cash
dividends totaling $57.7 million and the allocation of $71.3 million toward the
repurchase of 2,597,016 shares over the nine-month period. Under the Board of
Directors' current share repurchase authorization, there were 719,771 shares
still available for repurchase at September 30, 2002.
Forward-looking Statements and Associated Risk Factors
This release, and the associated post-earnings conference call and web cast,
contain certain forward-looking statements with regard to the Company's
prospective performance and strategies within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. The Company intends such forward-looking statements to
be covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995, and is
including this statement for purposes of said safe harbor provisions.
Forward-looking statements, which are based on certain assumptions, and
describe future plans, strategies, and expectations of the Company, are
generally identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or other similar expressions. The Company's
ability to predict results or the actual effects of its plans and strategies are
inherently uncertain. Accordingly, actual results may differ materially from
anticipated results. Factors that could have a material adverse effect on the
operations of the Company and its subsidiaries include, but are not limited to,
changes in market interest rates, general economic conditions, legislation, and
regulation; changes in the monetary and fiscal policies of the U.S. Government,
including policies of the U.S. Treasury and the Federal Reserve Board; changes
in the quality or composition of the loan or investment portfolios; changes in
deposit flows, competition, and demand for financial services and loan, deposit,
and investment products in the Company's local markets; changes in local real
estate values; changes in accounting principles and guidelines; war or terrorist
activities; and other economic, competitive, governmental, regulatory,
geopolitical, and technological factors affecting the Company's operations,
pricing, and services.
Specific factors that could cause future results to vary from current
management expectations are detailed from time to time in the Company's SEC
filings, which are available at the Company's web site, www.myNYCB.com.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this release. Except as required
by applicable law or regulation, the Company undertakes no obligation to update
these forward-looking statements to reflect events or circumstances that occur
after the date on which such statements were made.
12
(1) In the third quarter of 2001, the Company recorded a merger-related
charge of $22.0 million and a tax-rate adjustment-related charge of $3.0
million, which was offset by combined after-tax gains of $12.0 million
on the sale of securities, loans, and a bank-owned property.
(2) The Company's third quarter 2002 earnings include three months of
consolidated operations with Richmond County, versus two months in the
third quarter of 2001.
(3) In the first nine months of 2001, the net charge recorded in the third
quarter was further offset by after-tax gains of $23.1 million on the
sale of securities and loans in the first quarter of the year.
(4) The Company's nine-month 2002 and 2001 earnings include nine and two
months of consolidated operations with Richmond County, respectively.
13
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
(in thousands)
September 30, December 31,
2002 2001
(unaudited)
------------- -------------
Assets
Cash and due from banks $ 114,781 $ 168,449
Money market investments 28,452 10,166
Securities held to maturity
(estimated market value of
$466,747 and $203,647,
respectively) 460,485 203,195
Mortgage-backed securities
held to maturity (estimated
market value of $43,614 and
$51,119, respectively) 42,116 50,865
Securities available for sale 3,035,206 2,374,782
Mortgage loans:
Multi-family 4,156,361 3,255,167
1-4 family 430,437 1,318,295
Commercial real estate 538,141 561,944
Construction 137,596 152,367
------------- -------------
Total mortgage loans 5,262,535 5,287,773
Other loans 85,451 116,969
Less: Unearned loan fees (5,648) (3,055)
Allowance for loan losses (40,500) (40,500)
------------- -------------
Loans, net 5,301,838 5,361,187
Premises and equipment, net 75,683 69,010
Goodwill, net 624,518 614,653
Core deposit intangible, net 53,000 57,500
Deferred tax asset, net 13,125 40,396
Other assets 291,023 252,432
------------- -------------
Total assets $10,040,227 $9,202,635
============= =============
Liabilities and Stockholders'
Equity
Deposits:
NOW and money market accounts $ 1,174,857 $ 948,324
Savings accounts 1,639,588 1,639,239
Certificates of deposit 1,860,002 2,407,906
Non-interest-bearing accounts 466,758 455,133
------------- -------------
Total deposits 5,141,205 5,450,602
------------- -------------
Official checks outstanding 10,656 87,647
Borrowings 3,450,898 2,506,828
Mortgagors' escrow 39,051 21,496
Other liabilities 167,350 152,928
------------- -------------
Total liabilities 8,809,160 8,219,501
------------- -------------
Stockholders' equity:
Preferred stock at par $0.01
(5,000,000 shares authorized;
none issued) -- --
Common stock at par $0.01
(150,000,000 shares authorized;
108,224,425 shares issued;
107,274,197 and 101,845,276 shares
outstanding at September 30, 2002
and December 31, 2001, respectively) 1,082 1,082
Paid-in capital in excess of par 1,013,263 898,830
Retained earnings
(substantially restricted) 222,278 167,511
Less: Treasury stock (950,228
and 6,379,149 shares,
respectively) (24,011) (78,294)
Unallocated common
stock held by ESOP (20,866) (6,556)
Common stock held by SERP (3,113) (3,113)
Unearned common stock held
by RRPs (41) (41)
Accumulated other comprehensive
income, net of tax effect 42,475 3,715
------------- -------------
Total stockholders' equity 1,231,067 983,134
------------- -------------
Total liabilities and
stockholders' equity $10,040,227 $9,202,635
============= =============
14
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2002 2001 2002 2001
---------- --------- ---------- ---------
Interest Income:
Mortgage and other loans $ 99,862 $ 90,180 $305,991 $223,787
Securities 8,754 7,944 26,465 22,077
Mortgage-backed securities 45,353 22,206 114,670 32,300
Money market investments 377 684 654 5,523
---------- ---------- ---------- ---------
Total interest income 154,346 121,014 447,780 283,687
---------- ---------- ---------- ---------
Interest Expense:
NOW and money market
accounts 4,403 4,264 11,994 11,214
Savings accounts 5,434 6,842 17,126 11,163
Certificates of deposit 11,519 28,864 46,247 80,842
Borrowings 34,130 21,604 95,045 49,682
Mortgagors' escrow 3 1 12 13
---------- ---------- ---------- ---------
Total interest expense 55,489 61,575 170,424 152,914
---------- ---------- ---------- ---------
Net interest income 98,857 59,439 277,356 130,773
Provision for loan losses -- -- -- --
---------- ---------- ---------- ---------
Net interest income
after provision for
loan losses 98,857 59,439 277,356 130,773
---------- ---------- ---------- ---------
Other Operating Income:
Fee income 10,816 8,805 32,799 24,527
Net securities gains 3,903 16,354 11,685 25,300
Other 8,887 6,864 26,898 21,805
---------- ---------- ---------- ---------
Total other operating
income 23,606 32,023 71,382 71,632
---------- ---------- ---------- ---------
Non-interest Expense:
Operating expense:
Compensation and benefits 18,982 35,656 54,635 53,198
Occupancy and equipment 6,043 5,321 17,712 12,410
General and administrative 7,748 8,002 24,322 19,011
Other 1,076 763 4,168 2,111
---------- ---------- ---------- ---------
Total operating expense 33,849 49,742 100,837 86,730
---------- ---------- ---------- ---------
Amortization of core
deposit intangible
and goodwill 1,500 2,482 4,500 5,446
---------- ---------- ---------- ---------
Total non-interest expense 35,349 52,224 105,337 92,176
---------- ---------- ---------- ---------
Income before income taxes 87,114 39,238 243,401 110,229
Income tax expense 26,756 23,631 78,593 48,283
---------- ---------- ---------- ---------
Net income $ 60,358 $ 15,607 $164,808 $ 61,946
========== ========== ========== =========
Earnings per share $0.58 $0.18 $1.63 $0.90
Diluted earnings per
share $0.58 $0.18 $1.61 $0.87
========== ========== ========== =========
15
NEW YORK COMMUNITY BANCORP, INC.
NET INTEREST INCOME ANALYSIS
(dollars in thousands)
Three Months Ended September 30,
---------------------------------
2002
---------------------------------
Average
Average Yield/
Balance Interest Cost
------------- -------- -------
Assets:
Interest-earning assets:
Mortgage and other loans, net $ 5,324,162 $ 99,862 7.50 %
Securities 609,915 8,754 5.74
Mortgage-backed securities 2,948,337 45,353 6.15
Money market investments 32,184 377 4.65
------------- -------- -------
Total interest-earning assets 8,914,598 154,346 6.93
Non-interest-earning assets 1,192,603
-------------
Total assets $10,107,201
=============
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
NOW and money market accounts $ 1,140,190 $ 4,403 1.53 %
Savings accounts 1,659,270 5,434 1.30
Certificates of deposit 1,906,057 11,519 2.40
Borrowings 3,567,339 34,130 3.80
Mortgagors' escrow 30,686 3 0.04
------------- -------- -------
Total interest-bearing liabilities 8,303,542 55,489 2.65
Non-interest-bearing deposits 462,981
Other liabilities 117,523
-------------
Total liabilities 8,884,046
Stockholders' equity 1,223,155
-------------
Total liabilities and stockholders'
equity $10,107,201
=============
Net interest income/interest rate
spread $ 98,857 4.28 %
======== =======
Net interest-earning assets/net
interest margin $ 611,056 4.44 %
============= =======
Ratio of interest-earning assets to
interest-bearing liabilities 1.07 x
=======
Three Months Ended September 30,
---------------------------------
2001
---------------------------------
Average
Average Yield/
Balance Interest Cost
----------- -------- -------
Assets:
Interest-earning assets:
Mortgage and other loans, net $4,644,558 $ 90,180 7.70 %
Securities 404,761 7,944 7.79
Mortgage-backed securities 1,329,680 22,206 6.63
Money market investments 109,726 684 2.47
----------- -------- -------
Total interest-earning assets 6,488,725 121,014 7.40
Non-interest-earning assets 832,914
-----------
Total assets $7,321,639
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
NOW and money market accounts $ 824,892 $ 4,264 2.05 %
Savings accounts 1,211,617 6,842 2.24
Certificates of deposit 2,303,219 28,864 4.97
Borrowings 1,804,426 21,604 4.75
Mortgagors' escrow 19,031 1 0.02
----------- -------- -------
Total interest-bearing liabilities 6,163,185 61,575 3.96
Non-interest-bearing deposits 354,198
Other liabilities 65,744
-----------
Total liabilities 6,583,127
Stockholders' equity 738,512
-----------
Total liabilities and stockholders'
equity $7,321,639
===========
Net interest income/interest rate
spread $ 59,439 3.44 %
======== =======
Net interest-earning assets/net
interest margin $ 325,540 3.63 %
=========== =======
Ratio of interest-earning assets to
interest-bearing liabilities 1.05 x
=======
16
NEW YORK COMMUNITY BANCORP, INC.
NET INTEREST INCOME ANALYSIS
(dollars in thousands)
Nine Months Ended September 30,
---------------------------------
2002
---------------------------------
Average
Average Yield/
Balance Interest Cost
----------- --------- --------
Assets:
Interest-earning assets:
Mortgage and other loans, net $5,421,713 $305,991 7.55 %
Securities 523,568 26,465 6.76
Mortgage-backed securities 2,533,921 114,670 6.05
Money market investments 22,801 654 3.83
----------- --------- --------
Total interest-earning assets 8,502,003 447,780 7.04
Non-interest-earning assets 1,270,401
-----------
Total assets $9,772,404
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
NOW and money market accounts $1,069,407 $ 11,994 1.50 %
Savings accounts 1,667,570 17,126 1.37
Certificates of deposit 2,069,431 46,247 2.99
Borrowings 3,125,106 95,045 4.07
Mortgagors' escrow 42,983 12 0.04
----------- --------- --------
Total interest-bearing liabilities 7,974,497 170,424 2.86
Non-interest-bearing deposits 463,531
Other liabilities 223,748
-----------
Total liabilities 8,661,776
Stockholders' equity 1,110,628
-----------
Total liabilities and stockholders'
equity $9,772,404
===========
Net interest income/interest rate
spread $277,356 4.18 %
========= ========
Net interest-earning assets/net
interest margin $ 527,506 4.36 %
=========== ========
Ratio of interest-earning assets to
interest-bearing liabilities 1.07 x
========
Nine Months Ended September 30,
---------------------------------
2001
---------------------------------
Average
Average Yield/
Balance Interest Cost
------------ --------- -------
Assets:
Interest-earning assets:
Mortgage and other loans, net $3,877,189 $223,787 7.72 %
Securities 331,396 22,077 8.91
Mortgage-backed securities 652,347 32,300 6.62
Money market investments 171,495 5,523 4.31
------------ --------- -------
Total interest-earning assets 5,032,428 283,687 7.54
Non-interest-earning assets 487,055
------------
Total assets $5,519,483
============
Liabilities and Stockholders'
Equity:
Interest-bearing liabilities:
NOW and money market accounts $ 754,449 $ 11,214 1.99 %
Savings accounts 740,116 11,163 2.02
Certificates of deposit 1,963,119 80,842 5.51
Borrowings 1,290,772 49,682 5.15
Mortgagors' escrow 27,026 13 0.06
------------ --------- -------
Total interest-bearing liabilities 4,775,482 152,914 4.28
Non-interest-bearing deposits 250,324
Other liabilities 56,528
------------
Total liabilities 5,082,334
Stockholders' equity 437,149
------------
Total liabilities and
stockholders' equity $5,519,483
============
Net interest income/interest rate
spread $130,773 3.26 %
========= =======
Net interest-earning assets/net
interest margin $ 256,946 3.47 %
============ =======
Ratio of interest-earning assets
to interest-bearing liabilities 1.05 x
=======
17
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data)
(unaudited)
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------------------
2002 2001 2002 2001
--------------------------------------------------
REPORTED EARNINGS
DATA:
Earnings $60,358 $15,607 $164,808 $61,946
Earnings per share 0.58 0.18 1.63 0.90
Diluted earnings per
share 0.58 0.18 1.61 0.87
Return on average
assets 2.39 % 0.85 % 2.25 % 1.50 %
Return on average
stockholders'
equity 19.74 8.45 19.79 18.89
Return on average
tangible
stockholders'
equity 44.25 45.65 76.10 62.66
Operating expense to
average assets 1.34 2.72 1.38 2.10
Interest rate spread 4.28 3.44 4.18 3.26
Net interest margin 4.44 3.63 4.36 3.47
Efficiency ratio 27.64 54.39 28.91 42.85
Shares used for EPS
computation 103,696,080 85,249,996 101,343,591 68,861,790
Shares used for
diluted EPS
computation 104,774,887 87,668,449 102,350,677 70,831,863
CASH EARNINGS DATA:
Earnings $64,250 $48,146 $190,606 $105,535
Earnings per share 0.62 0.56 1.88 1.53
Diluted earnings per
share 0.61 0.55 1.86 1.49
Return on average
assets 2.54 % 2.63 % 2.60 % 2.55 %
Return on average
stockholders'
equity 21.01 26.08 22.88 32.19
Operating expense to
average assets 1.28 1.43 1.31 1.48
Efficiency ratio 26.31 28.71 27.59 30.24
At September At December
30, 31,
---------------------------
2002 2001
------------- -------------
BALANCE SHEET DATA:
Book value per share $11.88 $10.05
Tangible book value per share 5.34 3.18
Regulatory leverage capital ratio 7.45 % 5.95 %
Stockholders' equity to total assets 12.26 10.68
Shares used for book value computation 103,623,122 97,774,030
Total shares issued and outstanding 107,274,197 101,845,276
ASSET QUALITY RATIOS:
Non-performing loans to loans, net 0.21 % 0.33 %
Non-performing assets to total assets 0.11 0.19
Allowance for loan losses to non-
performing loans 367.90 231.46
Allowance for loan losses to loans, net 0.76 0.76
CONTACT: New York Community Bancorp, Inc.
Ilene A. Angarola, 516/683-4420
18