New York munity Bancorp(US:NYCB)2020-10-28 20:38Financial Data and Key Metrics Changes - The company reported diluted earnings per common share of $0.23 for Q3 2020, representing a 21% increase year-over-year and a 10% increase sequentially [8] - Net interest income rose 6% to $282 million compared to Q2 and was up 19% compared to Q3 2019 [17] - The provision for credit losses decreased to $13 million from $18 million in the prior quarter and $21 million in Q1 2020 [28] - Total non-interest expenses were $129 million, up 4% compared to both the previous and year-ago quarters [19] Business Line Data and Key Metrics Changes - Total loans increased to $42.8 billion, up $523 million or 5% annualized compared to Q2, driven by growth in the multi-family portfolio [21] - The multi-family loan portfolio grew by $504 million or 6% annualized compared to Q2, attributed to increased refinancing activity and market share gains [22][23] - Specialty finance loans and leases increased by $138 million compared to Q2, with a year-to-date growth of $438 million [23] Market Data and Key Metrics Changes - As of October 22, deferrals represented 7.3% of total loans, down from 14.4% as of June 30, 2020 [13] - The company experienced a significant decline in loans on deferral, with 95% of $3.1 billion of eligible loans returning to payment status [12] - Rent collections in the non-luxury rent-regulated multi-family segment returned to pre-pandemic levels, with vacancy rates below 3% [27] Company Strategy and Development Direction - The company aims to continue double-digit margin expansion, driven by a substantial decline in funding costs [15][50] - The focus remains on conservative underwriting guidelines and proactive borrower outreach to manage credit risk effectively [13][39] - The company is optimistic about future loan performance and expects to maintain strong asset quality metrics [54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of loan deferrals and the overall strength of the loan portfolio, anticipating continued positive trends [40][44] - The company acknowledged the challenges posed by the New York City economy but remains optimistic about the multi-family sector's resilience [41][48] - Management indicated that the provision for credit losses would likely remain low if the macroeconomic environment continues to improve [43] Other Important Information - The Board of Directors declared a $0.17 cash dividend per common share, translating to an annualized dividend yield of 8.2% [31] - The company is focused on maintaining operational efficiency, with total expenses expected to be around $507 million for 2020, lower than initial projections [81][100] Q&A Session Summary Question: What is the outlook for the remaining $3 billion in deferrals? - Management reported that 97% of the initial $3 billion in deferrals have been paid, with optimism about future collections and no anticipated second round of deferrals [37][40] Question: How is the company addressing concerns about the New York City economy? - Management acknowledged the challenges but emphasized strong performance in the multi-family sector and low loan-to-value ratios, indicating confidence in refinancing capabilities [41][62] Question: What is the margin outlook for Q4 and beyond? - Management expects continued double-digit margin expansion in Q4, driven by lower funding costs and stable loan yields [50][53] Question: Can you provide details on the company's office exposure? - Management highlighted that office exposure remains a concern, with $800 million in deferrals, but expressed confidence in the ability to manage these loans effectively [112][114] Question: What are the expectations for specialty finance growth? - Management is optimistic about continued growth in the specialty finance portfolio, particularly in auto lending, with zero loans on deferral [75][78]