New York munity Bancorp(US:NYCB)2023-01-31 15:49Financial Data and Key Metrics Changes - The company reported a fully diluted EPS of $1.23 for the full year 2022, relatively unchanged from $1.24 in 2021, with net income available to common stockholders totaling $603 million compared to $585 million in 2021 [45][21] - The net interest margin improved by six basis points to 2.28% compared to the prior quarter, with a margin of 2.24% excluding prepayment income, up nine basis points [27][45] - Non-interest-bearing deposits increased to 21% of total deposits from 9% prior to the merger announcement [24] Business Line Data and Key Metrics Changes - Multi-family loans increased by $3.5 billion or 10% to $38.1 billion compared to 2021, with virtually all growth being organic [3] - Specialty finance loans rose by $912 million or 26% during the year to $4.4 billion [3] - The mortgage business is expected to face challenges in 2023, with annual originations volume projected to decline by 25% year-over-year to $1.8 trillion [25] Market Data and Key Metrics Changes - Manhattan direct asking rents in Q4 decreased by 0.6% from Q3 to $74.29 per square foot, while the office availability rate increased by 18.7% [13] - Manhattan retail average asking rents recorded a 2.2% uptick quarter-over-quarter to $607 per square foot, marking the first increase since Q4 2016 [13] Company Strategy and Development Direction - The company is transitioning to a commercial banking model, focusing on higher-margin businesses and optimizing its mortgage platform [15][21] - A significant restructuring of the mortgage business is underway, with a reduction in retail home lending offices by 69% and a decrease in mortgage origination headcount to less than 800 FTEs [44] - The company plans to allocate more capital to higher-margin businesses and improve its interest rate sensitivity through the merger [43][22] Management's Comments on Operating Environment and Future Outlook - Management anticipates two more interest rate hikes in the short term, with a potential pause and adjustments expected towards November [6] - The company remains optimistic about its credit quality, with NPAs to total assets at 17 basis points and NPLs on total loans at 20 basis points [28] - The management expressed confidence in the long-term success of the mortgage business despite current challenges, emphasizing a commitment to maintaining a strong market position [26] Other Important Information - The company declared a quarterly cash dividend of $0.17 per share, reflecting a dividend yield of approximately 7% [30] - The rebranding of the company will officially roll out in late 2023, with full operational use expected in Q1 2024 [31] Q&A Session Summary Question: Why is the systems conversion taking until Q1 2024? - Management indicated that the conversion is a substantial undertaking, requiring careful planning and integration of new technology systems [53][77] Question: What is the outlook for total fee income in Q1? - The company expects Q1 gain on loan sales to be between $18 million and $22 million, with additional fee income from servicing [89] Question: How will the company manage its balance sheet sensitivity to interest rates? - The company is currently slightly liability-sensitive but has the capacity to pivot quickly depending on market conditions [82][83] Question: What are the expectations for loan growth in 2023? - The company anticipates average loan growth of 5% for 2023, with a focus on maintaining a conservative approach to lending [72][107] Question: What is the strategy for deposit funding post-merger? - The company aims to reduce dependency on non-traditional funding and focus on core deposits, leveraging its enhanced market position [66][185]