New York munity Bancorp(NYCB) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported diluted earnings per share (EPS) of $0.35, marking a 43% increase year-over-year, and a non-GAAP diluted EPS of $0.33, up 57% year-over-year, exceeding consensus estimates by $0.03 or 10% [8][11] - The net interest margin for the second quarter was 2.5%, up 2 basis points sequentially, with prepayment income increasing 35% to $27 million [9][10] - Pre-provision net revenue (PPNR) totaled $218 million, up 38% year-over-year, while the efficiency ratio improved to 37% from 40% in the previous quarter [11] Business Line Data and Key Metrics Changes - Total loans held for investments increased by $449 million or 4% annualized to $43.6 billion, with the multifamily portfolio growing by $345 million or 4% annualized [14] - Total deposits were $34.2 billion, relatively unchanged on a linked-quarter basis, but average deposits increased by $2.3 billion or 14% compared to March 31 [12][13] Market Data and Key Metrics Changes - The company reported a significant decline in COVID-19 related deferrals to $1 billion or 2% of total loans, down from $7.4 billion or 17% a year ago [16] - Rent collections in the non-luxury, rent-regulated multifamily market in New York City remained stable, indicating a positive outlook for the local economy [16] Company Strategy and Development Direction - The company is focused on growing deposits through various strategies, including expanding into the Banking as a Service space through partnerships with fintech companies [13][14] - The planned merger with Flagstar Bancorp is expected to create significant value, with double-digit EPS accretion and immediate tangible book value creation [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the local economy and the performance of the multifamily market, anticipating a notable improvement as the New York City Metro Region fully reopens [16] - The company expects to continue margin expansion and loan growth, projecting mid-single-digit growth for the year [24][41] Other Important Information - The integration teams for the merger with Flagstar have been formed, and key decisions regarding technology platforms and services have been made [17][18] - The company is actively working on enhancing operational efficiencies through technology initiatives, including automation and artificial intelligence [67] Q&A Session Summary Question: Margin expectations and loan pricing - Management indicated that interest rates have changed significantly, but they anticipate margin expansion of 3 to 5 basis points in Q2, with ongoing improvements expected [24][25] Question: Update on the mortgage banking market - Management believes the mortgage market remains strong, with expectations for consistent mortgage revenue streams and guidance for gain on sale revenues [28][29] Question: Activity levels in multifamily - Management noted that while activity has been slow, they expect growth opportunities in the second half of the year, projecting a 5% growth rate for the multifamily portfolio [39][41] Question: Share buyback timing post-merger - Management indicated that share buybacks could be on the near-term horizon, depending on market conditions and capital generation from the merger [93][94]