Exhibit 99.1
New York Community Bancorp, Inc. Reports a 66% Increase in 2002
Diluted EPS to $2.22; Raises 2003 Diluted EPS Estimates to a Range of
$2.65 - $2.67
WESTBURY, N.Y.--Jan. 22, 2003--New York Community Bancorp, Inc.
(NYSE:NYB) today reported net income of $229.2 million for the twelve
months ended December 31, 2002, up 119.4% from $104.5 million for the
twelve months ended December 31, 2001. On a diluted per share basis,
the Company's 2002 earnings rose to $2.22 from $1.34, signifying a
66.0% increase, while providing returns on average assets and
stockholders' equity of 2.29% and 19.95%.(1)
The year-over-year earnings increase was supported by a 51.5% rise
in fourth quarter 2002 net income to $64.4 million from $42.5 million
in the fourth quarter of 2001. On a diluted per share basis, the
Company's fourth quarter 2002 earnings rose to $0.62 from $0.43,
representing a 44.2% increase, while providing an ROA and ROE of 2.40%
and 20.39%.
The Company also recorded significant cash earnings growth in the
current year and fourth quarter. For the twelve months ended December
31, 2002, the Company's cash earnings rose $110.7 million, or 74.3%,
to $259.7 million, equivalent to a 31.9% increase in diluted cash
earnings per share to $2.52. For the three months ended December 31,
2002, the Company's cash earnings rose $25.7 million, or 59.1%, to
$69.1 million, equivalent to a 50.0% increase in diluted cash earnings
per share to $0.66.(2)
Commenting on the Company's 2002 performance, President and Chief
Executive Officer Joseph R. Ficalora stated, "The Company's ability to
generate significant earnings was overtly demonstrated in 2002. With a
66% increase in diluted earnings per share, we exceeded our own
earnings growth record, and set the stage for further growth in 2003.
We achieved a new record for loans produced, with originations of $2.6
billion, and realized a 60% rise in total revenues."
"The growth in our earnings primarily stemmed from the successful
implementation of two key business strategies," Mr. Ficalora noted:
-- "We completed the strategic restructuring of our
interest-earning assets, underscoring our focus on the
multi-family market, and reducing our exposure to credit
and interest rate risk. Of the $2.6 billion of mortgage
loans we produced, $2.1 billion were secured by
multi-family buildings, most of which are New York-based
and rent-controlled or -stabilized. Notwithstanding the
visible presence of others vying for product, the record
volume of loans we produced over the past four quarters
attests to our stature as a leading lender in New York's
multi-family market niche. Multi-family loans totaled $4.5
billion at year-end, up $1.2 billion, reflecting a
year-over-year increase of 38%. Concurrently, and
indicative of our decidedly risk-averse nature, we reduced
our portfolio of one-to-four family loans by more than
$1.1 billion to $266 million at December 31st.
-- "We leveraged our balance sheet profitably by taking
strategic advantage of the favorable yield curve and
market conditions that prevailed throughout the year.
Acting opportunistically, we parlayed the increase in
borrowings into the record volume of mortgage
originations, while significantly boosting our portfolio
of securities available for sale. At $2.6 billion,
mortgage originations were more than double the prior-year
volume, while securities available for sale rose to $4.0
billion, a 66% increase.
"The benefits of these strategies are conveyed in the following
items, each one a key component of our 66% year-over-year diluted EPS
growth:
-- Net interest income rose 81% to $373 million;
-- Our interest rate spread expanded to 4.12%, up 74 basis
points;
-- Our net interest margin widened to 4.31%, up 72 basis
points;
-- Fee income rose 35% to $47.4 million;
-- Other income rose 33% to $37.4 million;
-- Our efficiency ratio improved to 25.50%; and
-- Our return on average tangible stockholders' equity rose
520 basis points to 48.44%.
"Our fourth quarter results contributed meaningfully to the growth
in our 2002 earnings, despite the pressures imposed by the
replenishment of our interest-earning assets in a declining rate
environment:"
-- "Net interest income rose 28% year-over-year to $95.9
million;
-- Our spread expanded to 4.05%, up 37 basis points;
-- Our margin widened to 4.22%, a 39-basis point increase;
-- Fee income rose 39% to $14.6 million;
-- Other income rose 69% to $10.5 million; and
-- Our efficiency ratio improved to 26.10%.
"While a linked-quarter comparison reflects some compression of
our fourth quarter net interest income, spread, and margin," Mr.
Ficalora added, "these were not unexpected, particularly in view of
the leveraged growth of our balance sheet, our active share repurchase
program, and the issuance of Bifurcated Option Note Unit Securities
(BONSUSES(SM) Units) with a 6% coupon on November 4th. The coupon
reduced our spread and margin by nine basis points--a strictly
temporary impact, given that the proceeds were fully invested and
leveraged by the end of the year.
2003 Diluted Earnings Per Share Expected to Range From $2.65 to
$2.67
"Based on the strength of the year's results, our demonstrated
ability to generate loans, and our current revenue and expense
projections, we are currently expecting that our 2003 diluted earnings
per share will range from $2.65 to $2.67. With the restructuring of
our balance sheet now complete, we would expect our 2003 performance
to be supported by the following:
-- "Continued net interest income growth, despite declines in
spread and margin, as we continue to generate multi-family
loans within our local market niche. As of today, our pipeline
holds mortgage loans in excess of $681 million, a solid start
to what we expect to be another productive year.
-- "An increase in other sources of revenues, primarily in the
form of fee income, as we upgrade our branch network and add
four new banking offices over the course of the year. As a
result, we anticipate that other operating income will range
between $85 million and $88 million.
-- "The continued suspension of our provision for loan losses,
reflecting the ongoing quality of our assets and the level of
coverage provided by our loan loss allowance."
-- "Notwithstanding significant software and network
enhancements, and improvements to several branches, operating
expense is expected to stabilize in the range of $147 million
to $150 million, reflecting an efficiency ratio of
approximately 30%.
-- "An effective tax rate of 32% to 33%, as we continue to
realize the benefits of the tax planning strategies
implemented in the second half of 2002.
"In short, we believe that our 2002 strategies, and the
performance they engendered, have set a solid foundation on which to
build our earnings in 2003," Mr. Ficalora said. "We believe we are
well positioned to capitalize on the challenges facing our market, and
are prepared to act opportunistically, as we have in the past, on our
shareholders' behalf."
Earnings Summary for the Twelve Months Ended December 31, 2002 and
2001
Interest Income
The Company recorded interest income of $599.5 million in the
current twelve-month period, up $176.2 million, or 41.6%, from the
level recorded in 2001. The increase was driven by a $2.9 billion, or
51.0%, rise in the average balance of interest-earning assets to $8.7
billion, and tempered by a 46-basis point reduction in the average
yield to 6.92%. During the year, the Company actively restructured its
asset mix, by taking several actions: selling longer term assets of
lesser quality; reducing the balance of one-to-four family loans
through sales and securitizations; and, at the same time, increasing
its production of multi-family loans and its investments in
securities. The replenishment of the asset mix with multi-family loans
and securities yielding market rates of interest contributed to both
the higher average balance and the lower yield.
Mortgage and other loans generated interest income of $403.4
million, up $77.5 million, or 23.8%, from the 2001 amount. The
increase was fueled by a $1.2 billion, or 27.4%, rise in the average
balance to $5.4 billion, and tempered by a 22-basis point drop in the
average yield to 7.49%. The higher average balance stemmed primarily
from the record level of multi-family loan originations, which was
tempered by the reduction in one-to-four family loans through
securitizations, repayments, and sales. The modest decline in the
average yield on loans--despite the substantial reduction in
one-to-four family credits yielding above-market rates of interest--is
indicative of the favorable structure of the Company's multi-family
loans.
At the same time, mortgage-backed securities generated interest
income of $151.7 million, up $90.4 million from the year-earlier
amount. The increase was fueled by a $1.6 billion rise in the average
balance to $2.6 billion, and tempered by a 42-basis point decline in
the average yield to 5.85%. The lower yield is indicative of the lower
interest rate environment and the surge in prepayments over the course
of the year. The Company increased its portfolio of mortgage-backed
securities in connection with its leveraging program, which has
capitalized on the favorable yield curve and provided significant cash
flow for future loan growth.
Interest Expense
The Company recorded 2002 interest expense of $226.3 million, as
compared to $217.5 million in 2001. The $8.8 million, or 4.0%, rise
was attributable to a $2.6 billion increase in the average balance of
interest-bearing liabilities to $8.1 billion and was significantly
offset by a 120-basis point decline in the average cost to 2.80%. The
restructuring of the Company's asset mix was paralleled by a
restructuring of its deposits, with core deposits accounting for 61.5%
of average deposits in the current twelve-month period as compared to
49.6% in 2001. In addition to the increase in core deposits, the
higher average balance reflects the Company's yearlong leveraging
program and the issuance of trust-preferred securities in the fourth
quarter of the year. The lower cost is indicative of the lower
interest rate environment, the shift of funds away from CDs into
alternative investment products, and the increase in core deposits
within the deposit mix.
Borrowings accounted for $130.4 million of total interest expense
in the current twelve-month period, as compared to $75.7 million in
the year-earlier twelve months. The increase was the net effect of a
$1.7 billion rise in the average balance to $3.3 billion and an
85-basis point decline in the average cost to 4.01%. The higher
balance is indicative of the Company's leveraging program, and also
reflects the issuance of trust-preferred securities in December 2001
and November 2002.
CDs generated total interest expense of $58.4 million in 2002,
down $49.7 million, or 46.0%, from the level recorded in 2001. The
reduction was the combined result of a $70.9 million decline in the
average balance to $2.0 billion and a 227-basis point decline in the
average cost of such funds to 2.89%. While the reduction in cost is
indicative of the lower interest rate environment, the lower balance
is indicative of the Company's strategic focus on core deposits and
the sale of third-party investment products in lieu of CDs. In
management's experience, the intentional reduction in "hot money CDs"
provides better cost control during periods of lower market interest
rates, and even greater cost control during periods of increasing
market interest rates.
Other deposits generated combined interest expense of $37.4
million, up from $33.7 million in 2001. The increase was the net
effect of a $1.2 billion rise in the combined average balance to $3.3
billion and a 48-basis point decline in the average cost to 1.14%.
Reflected in the higher average balance was a $164.3 million rise in
non-interest-bearing deposits to $463.1 million, despite the
divestiture of 15 in-store branches in the second quarter of the year.
Net Interest Income
The Company recorded net interest income of $373.3 million in the
current twelve-month period, representing a year-over-year increase of
$167.4 million, or 81.4%. The growth in net interest income was
accompanied by significant year-over-year expansion of the Company's
interest rate spread and net interest margin: at 4.12%, the Company's
2002 spread was 74 basis points wider than the 2001 measure; at 4.31%,
its margin was 72 basis points wider than the same measure in 2001.
Provision for Loan Losses
The provision for loan losses was suspended in 2002, based upon
management's current assessment of the allowance for loan losses,
which considers, among other items, the quality of the Company's
loans. At December 31, 2002, the Company recorded non-performing loans
of $16.3 million, down from $17.5 million at December 31, 2001. The
2002 amount was equivalent to 0.30% of loans, net, down three basis
points from the year-end 2001 measure, despite a nine-basis point
increase from the measure recorded at September 30, 2002. The
linked-quarter increase primarily reflects three loans totaling $4.1
million with an average loan-to-value ratio of approximately 49%.
Other Operating Income
The Company recorded other operating income of $101.8 million in
2002, up $11.2 million, or 12.4%, from the level recorded in 2001.
Included in the 2002 amount were pre-tax net securities gains of $17.0
million, as compared to $27.5 million in the year-earlier twelve
months. On an after-tax basis, net securities gains contributed $11.0
million, or $0.11 per diluted share, to the Company's twelve-month
2002 earnings, and $17.9 million, or $0.23 per diluted share, to its
twelve-month 2001 results. The decline in net securities gains was
offset by a $12.4 million, or 35.3%, rise in fee income to $47.4
million and by a $9.4 million, or 33.5%, rise in other income to $37.4
million.
Non-interest Expense
The Company recorded 2002 non-interest expense of $139.1 million,
as compared to $121.2 million in 2001. Operating expense accounted for
$133.1 million of the 2002 total and represented 1.33% of average
assets; by comparison, operating expense accounted for $112.8 million
of the 2001 total and represented 1.76% of average assets.
Included in the 2001 amount was a non-recurring merger-related
charge of $22.0 million, which was recorded in compensation and
benefits expense. The after-tax impact of this charge on the Company's
2001 earnings amounted to $14.3 million, or $0.18 per diluted share.
Excluding the $22.0 million charge, the Company's 2001 core operating
expense totaled $90.8 million, including core compensation and
benefits expense of $41.1 million.
The Company's 2002 operating expense thus reflects a $30.9 million
rise in core compensation and benefits expense to $72.1 million; a
$4.6 million rise in occupancy and equipment expense to $23.2 million;
a $4.2 million rise in general and administrative ("G&A") expense to
$31.8 million, and a $2.5 million rise in other expense to $5.9
million. The across-the-board increase generally reflects the
full-year effect of staffing, operating, and marketing a branch
network with 109 full-service branches. While the Company divested
itself of 15 in-store branches in the second quarter, it also opened
four new banking offices during 2002. To a lesser extent, the increase
in operating expense reflects the addition of Peter B. Cannell & Co.,
Inc. ("PBC"), an investment advisory firm. The Company acquired a 47%
equity interest in PBC in the Richmond County merger and acquired the
additional 53% equity interest on January 3, 2002.
The year-over-year growth in operating expense was offset by the
growth of net interest income and other operating income to produce an
improvement in the efficiency ratio to 25.32%. In 2001, the Company
recorded an efficiency ratio of 35.03%, excluding the non-recurring
merger-related charge from operating expense. On a cash earnings
basis, i.e., subtracting from operating expense the costs associated
with the amortization and appreciation of shares held in the Company's
Employee Stock Ownership Plan ("ESOP"), the efficiency ratio improved
to 25.50% from 27.51%.
In accordance with its adoption of SFAS Nos. 141 and 142 on
January 1, 2002, the Company discontinued the amortization of goodwill
stemming from its acquisition of Haven Bancorp on November 30, 2000,
but continued to amortize the core deposit intangible ("CDI") stemming
from its merger with Richmond County on July 31, 2001. The
amortization of CDI amounted to $6.0 million in 2002; by comparison,
the amortization of goodwill and CDI amounted to $8.4 million in 2001.
Income Tax Expense
The Company recorded income tax expense of $106.8 million in 2002,
up $36.0 million from the level recorded in 2001. The increase
reflects a $160.8 million rise in pre-tax income to $336.0 million and
a decline in the effective tax rate to 32% from 40%.
While the implementation of certain tax planning strategies in
2002 contributed to the lower effective tax rate, the higher rate in
2001 partly reflects the non-deductibility of certain plan-related
expenses in connection with the Richmond County merger and a tax
adjustment in the amount of $3.0 million.
Earnings Summary for the Three Months Ended December 31, 2002 and
2001
Interest Income
The Company recorded interest income of $151.7 million in the
current fourth quarter, up $12.1 million, or 8.7%, from the level
recorded in the fourth quarter of 2001. The increase was fueled by a
$1.3 billion, or 16.0%, rise in the average balance of
interest-earning assets to $9.1 billion, and tempered by a 45-basis
point drop in the average yield to 6.68%. While the higher balance
largely reflects the leveraged growth of the Company's securities
investments, the lower yield reflects the downward repricing of
certain assets in the declining rate environment.
The interest income produced by loans totaled $97.4 million, down
$4.7 million from the fourth quarter 2001 amount. While the average
balance was essentially flat, having grown a modest $1.6 million, the
increase was offset by a 36-basis point decline in the average yield
to 7.38%. The contribution of average loans to interest income
reflects the reduction in one-to-four family loans through
securitizations, sales, and a robust level of prepayments, and the
concurrent increase in multi-family loans at lower market interest
rates.
Mortgage-backed securities generated fourth quarter 2002 interest
income of $37.0 million, up $8.0 million, or 27.5%, from the
year-earlier amount. The increase stemmed from an $860.0 million, or
44.0%, rise in the average balance to $2.8 billion, tempered by a
68-basis point decline in the average yield to 5.26%.
The interest income generated by investment securities rose $8.9
million, or 110.8%, to $16.9 million, fueled by a $446.8 million, or
89.6%, rise in the average balance to $945.5 million and a 72-basis
point increase in the average yield to 7.17%. The higher balance and
yield primarily reflect the Company's opportunistic investment of
leveraged funds into corporate bonds and trust-preferred securities
featuring highly attractive yields.
Interest Expense
The Company recorded fourth quarter 2002 interest expense of $55.8
million, down $8.7 million, or 13.5%, from the year-earlier amount.
The reduction was the net effect of a $979.3 million rise in the
average balance of interest-bearing liabilities to $8.4 billion and an
82-basis point decline in the average cost to 2.63%. While core
deposit growth contributed to the higher average balance, the increase
was primarily due to the Company's leveraging program and to the
issuance of BONUSES Units in the fourth quarter of the year.
Borrowings thus generated fourth quarter 2002 interest expense of
$35.3 million, up $9.3 million from the level recorded in the
year-earlier three months. The increase was the net effect of a $1.3
billion rise in the average balance to $3.6 billion and a 52-basis
point decline in the average cost to 3.85%.
The interest expense produced by CDs fell $15.1 million, or 55.3%,
to $12.2 million from the level recorded in the fourth quarter of
2001. The reduction was the combined result of a $601.1 million
decline in the average balance to $1.9 billion and a 179-basis point
drop in the average cost to 2.56%. The decline in the average balance
reflects the Company's emphasis on core deposits and third-party
investment products, while the lower cost is indicative of the decline
in market interest rates.
Other deposits generated combined interest expense of $8.3
million, down $3.0 million from the level recorded in the fourth
quarter of 2001. The reduction was the net effect of a $318.4 million
rise in the average balance to $3.4 billion and a 50-basis point drop
in the average cost to 0.99%. Reflected in the higher average balance
was a $17.5 million rise in non-interest-bearing deposits to $461.7
million.
Net Interest Income
The Company's net interest income rose $20.9 million to $95.9
million in the current fourth quarter, signifying a year-over-year
increase of 27.8%. Powered by the significant rise in interest-earning
assets, the growth in net interest income was accompanied by
meaningful spread and margin expansion. At 4.05%, the spread was up 37
basis points from the year-earlier measure; at 4.22%, the margin was
up 39 basis points.
On a linked-quarter basis, net interest income declined $3.0
million, while the spread and margin declined by 23 and 22 basis
points, respectively. While leveraging and share repurchases were
contributing factors, the compression also reflects the 6% coupon
connected to the BONUSES Units offering. The proceeds of the offering
were not fully invested or leveraged until later on in the quarter,
thus exaggerating the impact of the coupon temporarily.
Other Operating Income
The Company reported other operating income of $30.4 million in
the current fourth quarter, up $11.5 million, or 60.3%, from the
year-earlier amount. Excluding net securities gains of $5.3 million
and $2.2 million in the respective quarters, other operating income
rose 50.1% to $25.1 million in the fourth quarter of 2002 from $16.7
million in the fourth quarter of 2001. On an after-tax basis, net
securities gains contributed $3.4 million, or $0.03 per share, to the
Company's fourth quarter 2002 earnings, and $1.5 million, or $0.01 per
share, to its fourth quarter 2001 results.
Fee income contributed significantly to the year-over-year rise in
other operating income, having grown $4.1 million, or 39.0%, to $14.6
million from the year-earlier amount. At the same time, other income
rose $4.3 million to $10.5 million, signifying an increase of 69.0%.
On a linked-quarter basis, the Company's other operating income
rose $6.8 million, reflecting a $3.8 million, or 35.4%, rise in fee
income; a $1.6 million, or 18.1%, rise in other income; and a $1.4
million, or 35.8%, rise in net securities gains.
Non-interest Expense
The Company recorded non-interest expense of $33.7 million in the
current fourth quarter, as compared to $29.0 million in the fourth
quarter of 2001. Operating expense accounted for $32.2 million of the
2002 amount, and represented 1.20% of average assets, as compared to
$26.0 million, representing 1.15% of average assets, in the
year-earlier three months. While occupancy and equipment and G&A
expense declined $715,000 and $1.1 million, respectively, to $5.5
million and $7.5 million, these reductions were offset by higher
compensation and benefits and other expense. Compensation and benefits
rose $7.5 million to $17.5 million, while other expense rose $487,000
to $1.7 million. The reductions in occupancy and equipment and G&A
expense reflect the aforementioned divestiture of 15 branches and the
lower costs associated with the operation and marketing of the branch
network, as a result. The increase in compensation and benefits
expense was primarily related to the amortization and appreciation of
shares held in the Company's ESOP and to the addition of PBC.
Income Tax Expense
The Company recorded income tax expense of $28.2 million in the
current fourth quarter, up from $22.5 million in the fourth quarter of
2001. The $5.7 million increase reflects a rise in pre-tax income to
$92.6 million from $65.0 million and a decline in the effective tax
rate to 30% from 35%. The decline in the effective tax rate reflects
the benefit of certain tax planning strategies implemented during the
second half of 2002.
Balance Sheet Summary
Loans
The Company recorded total assets of $11.3 billion at December 31,
2002, up from $9.2 billion at December 31, 2001. The 22.9% increase
was partly powered by the record level of multi-family loan
originations, a key component of the Company's balance sheet
restructuring plan. The Company originated total mortgage loans of
$2.6 billion in 2002, more than double the $1.2 billion produced in
2001. Multi-family loans represented $2.1 billion, or 80.3%, of the
current year's production, as compared to $791.3 million, or 68.8%, in
the year-earlier twelve months. In the fourth quarter of 2002,
mortgage originations totaled $685.0 million; of these, $578.4
million, or 84.4%, were multi-family loans.
Reflecting the volume of loans produced during 2002, the portfolio
of multi-family loans rose $1.2 billion, or 38.1%, to $4.5 billion at
the end of December from the balance recorded at the prior year-end.
At December 31, 2002, multi-family loans accounted for 83.1% of total
mortgage loans outstanding, in contrast to 61.6% at December 31, 2001.
The average loan in the portfolio at year-end 2002 had a principal
balance of $1.9 million, with an average loan-to-value ratio of 58.2%.
Another key component of the Company's balance sheet restructuring
program was a significant reduction in the year-end 2002 balance of
one-to-four family loans. To reduce its exposure to credit and
interest rate risk, the Company sold one-to-four family loans totaling
$180.4 million over the course of four quarters, and securitized
$572.5 million in the second quarter of the year. Reflecting loan
sales, securitizations, and an increase in prepayments, the balance of
one-to-four family loans declined to $265.7 million from $1.3 billion
at December 31, 2001. While the Company continues to originate
one-to-four family loans, it does so on a conduit basis, selling them
to a third party shortly after closing.
The growth in multi-family loans was further offset by reductions
of $28.6 million and $35.4 million in the respective balances of
commercial real estate and construction loans. The net effect of these
declines, the decline in one-to-four family loans, and the growth in
multi-family loans outstanding was a $122.6 million increase in total
mortgage loans to $5.4 billion. With a pipeline of approximately
$681.0 million three weeks into the first quarter, and the balance
sheet restructuring now completed, the Company anticipates that its
2003 loan production will contribute significantly to both loan and
earnings growth.
Asset Quality
At December 31, 2002, the Company recorded non-performing assets
of $16.5 million, or 0.15% of total assets, up from $11.1 million, or
0.11%, at the close of the trailing quarter, but down from $17.7
million, or 0.16%, at December 31, 2001. Non-performing loans
accounted for $16.3 million, $11.0 million, and $17.5 million of the
respective totals, and were equivalent to 0.30%, 0.21%, and 0.33% of
loans, net.
The linked-quarter rise in non-performing assets reflects a $2.6
million increase in mortgage loans in foreclosure to $11.9 million and
a $2.7 million increase in loans 90 days or more delinquent to $4.4
million, including a $2.2 million multi-family loan. Fully secured by
an apartment complex in Philadelphia, where 2.0% of the Company's
mortgage loans are located, the loan is not expected to result in any
loss to the Bank. Foreclosed real estate rose $54,000 to $175,000 from
the September 30, 2002 total, while, at the same time, declining
$74,000 from the December 31, 2001 amount.
Despite the rise in non-performing loans, no net charge-offs were
recorded, and none are expected to result from the increase at this
time. In the absence of any net charge-offs or loan loss provisions,
the allowance for loan losses was maintained at $40.5 million,
equivalent to 247.83% of non-performing loans and 0.74% of loans, net,
at year-end 2002.
Securities and Mortgage-backed Securities
The leveraged growth of the balance sheet is nowhere more apparent
than in the growth of the portfolios of securities available for sale
and held to maturity at December 31, 2002. The available-for-sale
securities portfolio grew $1.6 billion year-over-year to $4.0 billion,
signifying a 66.4% increase, while the securities held to maturity
portfolio grew $496.3 million to $699.4 million, a better than
two-fold rise. Mortgage-backed securities, with an average life of 2.4
years, represented $3.6 billion, or 91.0%, of the year-end 2002
available-for-sale portfolio. In addition to new investments, the
growth in securities available for sale reflects the aforementioned
securitization of one-to-four family loans totaling $572.5 million.
The portfolio of held-to-maturity securities largely consisted of
investment grade corporate bonds, trust-preferred securities, and
Federal Home Loan Bank of New York stock.
Goodwill and Core Deposit Intangible
The Company recorded goodwill of $624.5 million at December 31,
2002, up $9.9 million from the level recorded at December 31, 2001.
The increase was primarily due to the Company's acquisition of the
remaining 53% equity interest in PBC on January 3, 2002.
In connection with the Company's adoption of SFAS Nos. 141 and 142
on January 1, 2002, the amortization of goodwill was discontinued;
however, the amortization of CDI continued at a rate of $1.5 million
per quarter in 2002. Accordingly, the balance of CDI declined $6.0
million from the December 31, 2001 level to $51.5 million at the
current year-end.
Sources of Funds
The restructuring of the balance sheet reflected in the changing
mix of assets is also reflected in the changing mix of
interest-bearing liabilities. The growth in core deposits that began
with the Company's acquisition of Haven Bancorp, Inc. on November 30,
2000 continued throughout 2002 as it did in 2001. Core deposits
totaled $3.3 billion at the current year-end, representing 62.9% of
total deposits, as compared to $3.0 billion, representing 55.8%, at
December 31, 2001.
The growth in core deposits reflects a $249.7 million rise in NOW
and money market accounts to $1.2 billion; a $4.5 million rise in
savings accounts to $1.6 billion; and a $10.1 million rise in
non-interest-bearing accounts to $465.1 million. The increase in core
deposits was partly tempered by the divestiture of 15 in-store
branches in the second quarter of 2002.
In keeping with management's emphasis on the sale of third-party
investment products, the balance of CDs declined to $1.9 billion,
representing 37.1% of total deposits, from $2.4 billion, representing
44.2%, at year-end 2001. The decline in CDs also reflects the
aforementioned divestiture of 15 in-store branches, which was partly
offset by the addition of three branches on Staten Island and one in
Nassau County over the course of the year. With the opening of two
more banking offices slated for the second quarter, the Company will
have 112 banking offices serving the metro New York region and New
Jersey within the first half of 2003.
The significant growth in assets was primarily supported by
leveraged funding in the form of Federal Home Loan Bank ("FHLB")
advances, repurchase agreements, and the issuance of trust-preferred
securities. At December 31, 2002, the Company's borrowings totaled
$4.6 billion, as compared to $2.5 billion at December 31, 2001. FHLB
advances accounted for $2.2 billion of the 2002 total, while
repurchase agreements accounted for $2.0 billion of that amount.
Trust-preferred securities totaled $368.8 million, including $182.5
million stemming from the fourth quarter 2002 BONUSES Units offering.
Stockholders' Equity
The Company recorded stockholders' equity of $1.3 billion at
December 31, 2002, up 34.6% from $983.1 million at December 31, 2001.
The 2002 amount was equivalent to 11.70% of total assets and a book
value per share of $12.97, based on 102,058,843 shares. At the same
time, the Company's tangible stockholders' equity more than doubled to
$647.5 million, signifying a 99.5% rise in tangible book value per
share to $6.34.
In addition to twelve-month cash earnings of $259.7 million, the
increase in stockholders' equity includes net proceeds of $147.5
million stemming from the Company's secondary offering of common stock
on May 14, 2002 and $89.9 million, representing the warrant portion of
the net proceeds generated by the sale of BONUSES Units on November 4,
2002. In addition to deploying $78.4 million of its capital during the
year into cash dividends, the Company allocated $120.0 million toward
the repurchase of 4,337,534 shares. Under the Board of Directors'
current stock repurchase authorization, 3,979,253 shares were still
available for repurchase at December 31, 2002.
New York Community Bancorp, Inc. is the holding company for New
York Community Bank and the seventh largest thrift in the nation,
based on current market capitalization. The Bank serves its customers
through a network of 110 banking offices in New York City, Long
Island, Westchester County, and New Jersey, and operates through six
divisions: Queens County Savings Bank, Richmond County Savings Bank,
CFS Bank, First Savings Bank of New Jersey, Ironbound Bank, and South
Jersey Bank. In addition to operating the largest supermarket banking
franchise in the metro New York region, with 54 in-store branches, the
Bank is the largest producer of multi-family loans for portfolio in
the city of New York. Additional information about the Company and its
financial performance is available at www.myNYCB.com.
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 "plan,"
"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.
(1) The Company's 2002 earnings include twelve months of
consolidated operations with Richmond County Financial Corp.
("Richmond County"), as compared to five months in 2001.
(2) A reconciliation of cash earnings to reported earnings appears
on the Financial Highlights page of this release.
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
(in thousands)
December 31, December 31,
2002 2001
------------ -----------
Assets
Cash and due from banks $ 96,497 $ 168,449
Money market investments 1,148 10,166
Securities held to maturity (estimated
market value of $717,564 and $203,647,
respectively) 699,445 203,195
Mortgage-backed securities held to maturity
(estimated market value of $38,489 and
$51,119, respectively) 36,947 50,865
Securities available for sale 3,952,130 2,374,782
Mortgage loans:
Multi-family 4,494,332 3,255,167
1-4 family 265,724 1,318,295
Commercial real estate 533,327 561,944
Construction 117,013 152,367
------------ -----------
Total mortgage loans 5,410,396 5,287,773
Other loans 78,787 116,968
Less: Unearned loan fees (5,111) (3,054)
Allowance for loan losses (40,500) (40,500)
------------ -----------
Loans, net 5,443,572 5,361,187
Premises and equipment, net 74,531 69,010
Goodwill 624,518 614,653
Core deposit intangible 51,500 57,500
Deferred tax asset, net 9,508 40,396
Other assets 323,296 252,432
------------ -----------
Total assets $ 11,313,092 $ 9,202,635
============ ===========
Liabilities and Stockholders' Equity
Deposits:
NOW and money market accounts $ 1,198,068 $ 948,324
Savings accounts 1,643,696 1,639,239
Certificates of deposit 1,949,138 2,407,906
Non-interest-bearing accounts 465,140 455,133
------------ -----------
Total deposits 5,256,042 5,450,602
------------ -----------
Official checks outstanding 11,544 87,647
Borrowings 4,592,069 2,506,828
Mortgagors' escrow 13,749 21,496
Other liabilities 116,176 152,928
------------ -----------
Total liabilities 9,989,580 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; 108,244,425 shares
issued; 105,664,464 and 101,845,276
shares outstanding at December 31, 2002
and 2001, respectively) 1,082 1,082
Paid-in capital in excess of par 1,104,899 898,830
Retained earnings (substantially
restricted) 275,097 167,511
Less: Treasury stock (2,559,961 and
6,379,149 shares, respectively) (69,095) (78,294)
Unallocated common stock held by
ESOP (20,169) (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 34,852 3,715
------------ -----------
Total stockholders' equity 1,323,512 983,134
------------ -----------
Total liabilities and stockholders' equity $ 11,313,092 $ 9,202,635
============ ===========
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
For the For the
Three Months Ended Twelve Months Ended
December 31, December 31,
(Unaudited)
--------------------- --------------------
2002 2001 2002 2001
---------- ---------- ---------- ---------
Interest Income:
Mortgage and other loans $ 97,415 $ 102,137 $ 403,407 $ 325,924
Securities 16,943 8,037 43,407 30,114
Mortgage-backed securities 37,000 29,019 151,670 61,319
Money market investments 369 424 1,023 5,947
-------- --------- --------- ---------
Total interest income 151,727 139,617 599,507 423,304
-------- --------- --------- ---------
Interest Expense:
NOW and money market
accounts 3,890 3,957 15,884 15,171
Savings accounts 4,408 7,310 21,534 18,473
Certificates of deposit 12,178 27,255 58,425 108,097
Borrowings 35,349 26,003 130,394 75,685
Mortgagors' escrow 2 48 14 62
-------- --------- --------- ---------
Total interest expense 55,827 64,573 226,251 217,488
-------- --------- --------- ---------
Net interest income 95,900 75,044 373,256 205,816
Provision for loan losses -- -- -- --
-------- --------- --------- ---------
Net interest income after
provision for loan losses 95,900 75,044 373,256 205,816
-------- --------- --------- ---------
Other Operating Income:
Fee income 14,643 10,534 47,443 35,061
Net securities gains 5,301 2,239 16,986 27,539
Other 10,494 6,210 37,391 28,015
-------- --------- --------- ---------
Total other operating
income 30,438 18,983 101,820 90,615
-------- --------- --------- ---------
Non-interest Expense:
Compensation and benefits 17,450 9,942 72,084 63,140
Occupancy and equipment 5,518 6,233 23,230 18,643
General and administrative 7,518 8,600 31,841 27,610
Other 1,739 1,252 5,907 3,364
-------- --------- --------- ---------
Total operating expense 32,225 26,027 133,062 112,757
-------- --------- --------- ---------
Amortization of core
deposit intangible and
goodwill 1,500 2,982 6,000 8,428
-------- --------- --------- ---------
Total non-interest expense 33,725 29,009 139,062 121,185
-------- --------- --------- ---------
Income before income taxes 92,613 65,018 336,014 175,246
Income tax expense 28,191 22,497 106,784 70,779
-------- --------- --------- ---------
Net income $ 64,422 $ 42,521 $ 229,230 $ 104,467
======== ========= ========= =========
Earnings per share $ 0.62 $ 0.43 $ 2.25 $ 1.36
Diluted earnings per
share $ 0.62 $ 0.43 $ 2.22 $ 1.34
======== ========= ========= ========
NEW YORK COMMUNITY BANCORP, INC.
NET INTEREST INCOME ANALYSIS
(dollars in thousands)
Three Months Ended December 31,
--------------------------------
2002
--------------------------------
Average
Average Yield/
Balance Interest Cost
------------ -------- -------
Assets:
Interest-earning assets:
Mortgage and other loans, net $ 5,281,927 $ 97,415 7.38%
Securities 945,522 16,943 7.17
Mortgage-backed securities 2,813,736 37,000 5.26
Money market investments 47,584 369 3.10
------------ -------- ------
Total interest-earning assets 9,088,769 151,727 6.68
Non-interest-earning assets 1,650,422
------------
Total assets $ 10,739,191
============
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
NOW and money market accounts $ 1,197,528 $ 3,890 1.29%
Savings accounts 1,638,834 4,408 1.07
Certificates of deposit 1,883,996 12,178 2.56
Borrowings 3,642,061 35,349 3.85
Mortgagors' escrow 52,766 2 0.02
------------ -------- ------
Total interest-bearing liabilities 8,415,185 55,827 2.63
Non-interest-bearing deposits 461,659
Other liabilities 598,796
------------
Total liabilities 9,475,640
Stockholders' equity 1,263,551
------------
Total liabilities and stockholders'
equity $ 10,739,191
============
Net interest income/interest rate
spread $ 95,900 4.05%
======== ======
Net interest-earning assets/net
interest margin $ 673,585 4.22%
============ ======
Ratio of interest-earning assets to
interest-bearing liabilities 1.08x
======
Three Months Ended December 31,
--------------------------------
2001
--------------------------------
Average
Average Yield/
Balance Interest Cost
----------- --------- -------
Assets:
Interest-earning assets:
Mortgage and other loans, net $ 5,280,363 $ 102,137 7.74%
Securities 498,725 8,037 6.45
Mortgage-backed securities 1,953,783 29,019 5.94
Money market investments 101,816 424 1.67
----------- --------- ------
Total interest-earning assets 7,834,687 139,617 7.13
Non-interest-earning assets 1,194,404
-----------
Total assets $ 9,029,091
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
NOW and money market accounts $ 950,478 $ 3,957 1.65%
Savings accounts 1,601,023 7,310 1.81
Certificates of deposit 2,485,053 27,255 4.35
Borrowings 2,362,612 26,003 4.37
Mortgagors' escrow 36,718 48 0.52
----------- --------- ------
Total interest-bearing liabilities 7,435,884 64,573 3.45
Non-interest-bearing deposits 444,206
Other liabilities 159,288
-----------
Total liabilities 8,039,378
Stockholders' equity 989,713
-----------
Total liabilities and stockholders'
equity $ 9,029,091
===========
Net interest income/interest rate
spread $ 75,044 3.68%
========= ======
Net interest-earning assets/net
interest margin $ 398,803 3.83%
=========== ======
Ratio of interest-earning assets to
interest-bearing liabilities 1.05x
======
NEW YORK COMMUNITY BANCORP, INC.
NET INTEREST INCOME ANALYSIS
(dollars in thousands)
Twelve Months Ended December 31,
---------------------------------
2002
--------------------------------
Average
Average Yield/
Balance Interest Cost
------------ --------- --------
Assets:
Interest-earning assets:
Mortgage and other loans, net $ 5,386,479 $ 403,407 7.49%
Securities 638,424 43,407 6.80
Mortgage-backed securities 2,593,767 151,670 5.85
Money market investments 38,838 1,023 2.63
------------ --------- ------
Total interest-earning assets 8,657,508 599,507 6.92
Non-interest-earning assets 1,358,579
------------
Total assets $ 10,016,087
============
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
NOW and money market accounts $ 1,101,701 $ 15,884 1.44%
Savings accounts 1,660,327 21,534 1.30
Certificates of deposit 2,022,691 58,425 2.89
Borrowings 3,255,407 130,394 4.01
Mortgagors' escrow 45,449 14 0.03
------------ --------- ------
Total interest-bearing liabilities 8,085,575 226,251 2.80
Non-interest-bearing deposits 463,059
Other liabilities 318,222
------------
Total liabilities 8,866,856
Stockholders' equity 1,149,231
------------
Total liabilities and stockholders'
equity $ 10,016,087
============
Net interest income/interest rate
spread $ 373,256 4.12%
========= ======
Net interest-earning assets/net
interest margin $ 571,933 4.31%
============ ======
Ratio of interest-earning assets to
interest-bearing liabilities 1.07x
======
Twelve Months Ended December 31,
--------------------------------
2001
-------------------------------
Average
Average Yield/
Balance Interest Cost
---------- -------- -------
Assets:
Interest-earning assets:
Mortgage and other loans, net $ 4,227,982 $ 325,924 7.71%
Securities 373,229 30,114 8.07
Mortgage-backed securities 977,706 61,319 6.27
Money market investments 153,219 5,947 3.88
----------- --------- ------
Total interest-earning assets 5,732,136 423,304 7.38
Non-interest-earning assets 664,749
-----------
Total assets $ 6,396,885
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
NOW and money market accounts $ 803,456 $ 15,171 1.89%
Savings accounts 955,343 18,473 1.93
Certificates of deposit 2,093,602 108,097 5.16
Borrowings 1,558,732 75,685 4.86
Mortgagors' escrow 29,449 62 0.21
----------- --------- ------
Total interest-bearing liabilities 5,440,582 217,488 4.00
Non-interest-bearing deposits 298,795
Other liabilities 82,218
-----------
Total liabilities 5,821,595
Stockholders' equity 575,290
-----------
Total liabilities and stockholders'
equity $ 6,396,885
===========
Net interest income/interest rate
spread $ 205,816 3.38%
========= ======
Net interest-earning assets/net
interest margin $ 291,554 3.59%
=========== ======
Ratio of interest-earning assets to
interest-bearing liabilities 1.05x
======
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
For the For the
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- --------------------
(dollars in thousands,
except per share data) 2002 2001 2002 2001
-------- -------- -------- --------
REPORTED EARNINGS
DATA:
Earnings $ 64,422 $ 42,521 $ 229,230 $ 104,467
Earnings per share 0.62 0.43 2.25 1.36
Diluted earnings
per share 0.62 0.43 2.22 1.34
Return on average
assets 2.40% 1.88% 2.29% 1.63%
Return on average
stockholders' equity 20.39 17.19 19.95 18.16
Return on average
tangible
stockholders' equity 43.86 53.56 48.44 43.24
Operating expense to
average assets 1.20 1.15 1.33 1.76
Interest rate spread 4.05 3.68 4.12 3.38
Net interest margin 4.22 3.83 4.31 3.59
Efficiency ratio 26.10 28.55(1) 25.32 35.03(1)
Shares used for EPS
computation 103,307,471 97,948,137 101,752,638 76,727,717
Shares used for
diluted EPS
computation 104,651,456 99,410,997 103,064,607 78,054,538
CASH EARNINGS DATA:
Earnings $ 69,104 $ 43,436 $ 259,710 $ 148,972
Earnings per share 0.67 0.44 2.55 1.94
Diluted earnings per
share 0.66 0.44 2.52 1.91
Return on average
assets 2.57% 1.92% 2.59% 2.33%
Return on average
stockholders' equity 21.88 17.56 22.60 25.90
Efficiency ratio 23.30 27.43 25.50 27.51
RECONCILIATION OF CASH
EARNINGS TO REPORTED
EARNINGS:
Reported earnings $ 64,422 $ 42,521 $ 229,230 $ 104,467
Additional
contributions to
tangible stockholders'
equity:
Amortization and
appreciation of
stock-related
benefit plans 1,286 (2,751) 5,903 22,775
Associated tax
benefits 1,133 -- 15,861 11,000
Dividends on
unallocated
ESOP shares 763 685 2,716 2,302
----------- ---------- ---------- ----------
Total additional
contributions to
tangible
stockholders' equity 3,182 (2,066) 24,480 36,077
Amortization of core
deposit intangible
and goodwill 1,500 2,981 6,000 8,428
----------- ---------- ---------- ----------
Cash earnings $ 69,104 $ 43,436 $ 259,710 $ 148,972
=========== ========== =========== ==========
Cash earnings per
share $ 0.67 $ 0.44 $ 2.55 $ 1.94
Diluted cash
earnings per
share 0.66 0.44 2.52 1.91
=========== ========== =========== ==========
At December At December
31, 31,
-------------------------
2002 2001
------------- ------------
BALANCE SHEET DATA:
Book value per share $ 12.97 $ 10.05
Stockholders' equity to total assets 11.70% 10.68%
Tier 1 regulatory leverage capital ratio 7.45(2) 5.95
Shares used for book value computation 102,058,843 97,774,030
Total shares issued and outstanding 105,664,464 101,845,276
ASSET QUALITY RATIOS:
Non-performing loans to loans, net 0.30% 0.33%
Non-performing assets to total assets 0.15 0.19
Allowance for loan losses to non-performing
loans 247.83 231.46
Allowance for loan losses to loans, net 0.74 0.76
(1) Excludes certain non-recurring items that were primarily incurred
in connection with the merger with Richmond County on July 31,
2001.
(2) Excludes the proceeds of the BONUSES Units issued on November 4,
2002. The Federal Reserve has determined that the BONUSES Units in
their current form do not meet Federal Reserve approval for Tier 1
capital treatment.
CONTACT: New York Community Bancorp, Inc., Westbury
Investor Relations:
Ilene A. Angarola, 516/683-4420