New York Community Bancorp, Inc. (NYSE: NYCB) today reported net income for the three months ended December 31, 2020 of $189.7 million, up 64% compared to the $115.8 million we reported for the three months ended September 30, 2020 and up 87% compared to the $101.2 million we reported for the three months ended December 31, 2019. Our fourth quarter and full-year 2020 results were impacted by a $55.3 million and a $68.4 million, respectively, income tax benefit related to the CARES Act. Excluding this benefit, net income on a non-GAAP basis for the three months ended December 31, 2020 was $134.4 million up 16% and 33%, respectively. For the twelve months ended December 31, 2020, net income totaled $511.1 million, up 29% compared to the $395.0 million we reported for the twelve months ended December 31, 2019. On a non-GAAP basis, full-year 2020 net income was $442.7 million, up 12% compared to full-year 2019.

Net income available to common shareholders for the fourth quarter of 2020 totaled $181.5 million, up 69% compared to the $107.6 million we reported in the third quarter of 2020 and up 95% compared to the fourth quarter of 2019. Net income available to common shareholders on a non-GAAP basis for the fourth quarter of 2020 was $126.1 million, up 17% and 36%, respectively. For the twelve months ended December 31, 2020, net income available to common shareholders was $478.3 million, up 32% compared to the previous year. On a non-GAAP basis, net income available to common shareholders totaled $409.9 million, up 13% compared to full-year 2019.

On a per share basis, the Company reported diluted EPS of $0.39 for the fourth quarter of 2020, up 70% compared to the $0.23 we reported in the prior quarter and up 95% compared to the year-ago quarter. Diluted EPS on a non-GAAP basis were $0.27, up 17% compared to the prior quarter and up 35% compared to the year-ago quarter. For full-year 2020, diluted EPS were $1.02 up 32% compared to the $0.77 we reported for full-year 2019. Non-GAAP full-year 2020 diluted EPS were $0.87 per share, up 13% compared to full-year 2019.

Commenting on the Company's performance, President and Chief Executive Officer Thomas R. Cangemi stated: "Overall, we are pleased with our performance during 2020. Despite a challenging operating environment due to the COVID-19 pandemic, the Company produced strong operating results characterized by double-digit EPS growth, continued margin expansion, a strong 23% increase in pre-provision net revenue, and strong origination growth. Loan growth was modest, but this was offset by solid prepayment income. Also, despite a small uptick in operating expenses during the fourth quarter, full-year operating expenses were flat, resulting in a lower efficiency ratio.

"Our asset quality metrics continued to improve as non-performing assets declined and, to date, our loan deferral program has proven to be successful, as virtually all loans eligible to come off deferral have returned to payment status.

"Another positive was the continued improvement in the net interest margin during the current quarter. Excluding the impact of prepayment income, the fourth quarter NIM on a non-GAAP basis was 2.30%, up 10 basis points compared to the third quarter and was up 23 basis points to 2.13% for the full year. Since bottoming during the third quarter of 2019, our non-GAAP NIM has risen 42 basis points.

"The positives weren't limited to our financial performance. Operationally, we also had a very strong year. In 2020, we completed the largest systems conversion in our history, shifted our lenders to a new paperless desktop origination platform, allowing them to process loans without interruption, moved nearly all of our back-office employees to working remotely, and continued to service our customers through our branches and through on-line channels. All of this occurred without disruptions to our customers or our business. Moreover, the fact that this occurred while the country and New York City were still suffering from the impact of the pandemic is a testament to our employees' commitment to the Company. I could not be more proud of how our entire organization came together and rose to the challenge. So a big collective thank you goes out to every one of our 3,000 employees throughout the franchise.

"Lastly, reflecting our earnings growth, capital position, and asset quality metrics, yesterday, our Board of Directors declared a quarterly cash dividend on our common stock of $0.17 per share."

DIVIDEND DECLARATION

The Board of Directors yesterday declared a quarterly cash dividend of $0.17 per share on the Company's common stock. Based on a closing price of $10.96 as of January 26, 2021, this represents an annualized dividend yield of 6.2%. The dividend is payable on February 16, 2021 to common shareholders of record as of February 6, 2021.

BALANCE SHEET SUMMARY

At December 31, 2020, total assets were $56.3 billion, up $2.7 billion or 5% compared to total assets at December 31, 2019. The year-over-year asset growth was driven by loan growth, primarily due to growth in the multi-family and specialty finance portfolios, and an increase in the balance of cash and cash equivalents, offset by a decline in the securities portfolio. Asset growth during the year was funded largely through an increase in both deposits and wholesale borrowings.

On a linked-quarter basis, total assets increased $1.4 billion or 10% annualized compared to September 30, 2020. Unlike the full-year trends, the sequential growth was driven by growth in the securities portfolio and in the level of cash and cash equivalents, while total loans increased only modestly. Our balance sheet growth during the fourth quarter was also funded by an increase in deposit balances and in the level of wholesale borrowings.

Total loans and leases held for investment increased $989.4 million or 2% to $42.9 billion compared to December 31, 2019. Loan growth was centered on two portfolios, the multi-family portfolio and the specialty finance portfolio, while the commercial real estate ("CRE") portfolio declined. On a linked-quarter basis, total loans and leases held for investment increased $54.4 million or 1% annualized compared to September 30, 2020. This was driven by growth in the multi-family portfolio, a decline in the CRE portfolio, while the specialty finance portfolio was relatively flat.

Total securities consisting primarily of available-for-sale securities declined $39.7 million or 1% to $5.8 billion compared to December 31, 2019. Throughout the first nine months of the year, the Company had refrained from adding to its securities portfolio, however, during the current fourth quarter, the Company added $1.0 billion of securities for liquidity purposes. This led to a $579.6 million or an 11% sequential increase in our available-for-sale securities portfolio.

Similarly, the level of cash balances increased on both a year-over-year and linked-quarter basis. At December 31, 2020, cash and cash equivalents totaled $1.9 billion, up $1.2 billion or 163% compared to December 31, 2019, while they increased $489.3 million or 34% compared to the level at September 30, 2020.

At December 31, 2020, deposits totaled $32.4 billion, up $779.7 million or 2% compared to December 31, 2019 and up $731.9 million or 9% annualized compared to September 30, 2020. The deposit trends throughout 2020 have been favorable as CD balances have decreased, while we have had strong growth in other categories such as savings, non-interest bearing accounts, and interest-bearing checking and money market accounts.

Looking ahead, the Company has approximately $10.0 billion of CDs which are scheduled to mature by year-end 2021 with a weighted average interest rate of 0.79%. Of this amount, approximately $4.0 billion of CDs with a weighted average interest rate of 1.07% are scheduled to mature during the first quarter of 2021.

Total borrowed funds at December 31, 2020 increased $1.5 billion or 10% to $16.1 billion compared to December 31, 2019 and rose $400.2 million or 10% annualized compared to September 30, 2020. The Company has $1.0 billion of FHLB-NY advances maturing over the course of 2021 at an average rate of 2.03%, including $325.0 million with an average rate of 2.36% that are maturing during the first quarter of 2021.

Loans

Total multi-family loans increased $1.1 billion or 3% to $32.3 billion compared to the balance at December 31, 2019. On a sequential basis, total multi-family loans rose $136.8 million or 2% annualized compared to September 30, 2020. Growth during the current fourth quarter was impacted by a higher than normal level of loans refinancing away from us, due to market conditions that favored GSE financing. However, this was offset by higher prepayment income during the quarter.

Our specialty finance portfolio continued to grow, as specialty finance loans and leases increased $439.2 million or 17% to $3.1 billion compared to the level at December 31, 2019. On a sequential basis, specialty finance loans and leases were relatively unchanged.

The CRE portfolio declined $245.4 million or 3% to $6.8 billion at December 31, 2020 and it declined $48.8 million or 3% annualized compared to September 30, 2020.

Additionally, at December 31, 2020, the Company had $117.1 million of loans held for sale, relatively unchanged compared to September 30, 2020. All of these loans are part of the Paycheck Protection Program (the "PPP"). At December 31, 2019, the Company did not have any loans designated as held for sale.

During the current fourth quarter, the average size of our multi-family loans was $6.6 million and the average size of our CRE loans was $6.7 million. Both metrics are relatively unchanged compared to the previous quarter. During the year-ago fourth quarter, the average size of our multi-family loans was $6.4 million and for CRE loans it was $6.6 million.

The weighted average life of the multi-family portfolio for the current fourth quarter was 2.3 years compared to 2.0 years for the third quarter of the year, while for the CRE portfolio it was 2.4 years compared to 2.3 years for the third quarter. During the year-ago fourth quarter, the weighted average life of the multi-family portfolio was 2.0 years and for the CRE portfolio it was 2.3 years.

OriginationsFor the three months ended December 31, 2020, loans and leases originated for investment totaled $3.9 billion, exceeding the third-quarter pipeline by $2.1 billion, and up 30% compared to the volumes originated during the three months ended September 30, 2020. Originations increased 17% compared to the $3.3 billion we originated for the fourth quarter of last year. During full-year 2020, the Company originated $12.9 billion, up 21% compared to the $10.6 billion of originations during full-year 2019.

PipelineThe current pipeline stands at $1.5 billion with 61% representing new money. The current pipeline includes $1.1 billion of multi-family loans, $221 million in specialty finance loans and leases, $124 million in CRE loans, and $89 million in C&I loans.

Asset Quality

Loan Deferral UpdateAs previously disclosed, the majority of our full-payment loan deferrals were eligible to come off their six-month deferral period during October and November 2020. Accordingly, as of December 31, 2020, 99% or $6.0 billion of our loan deferrals have returned to payment status. At December 31, 2020, $83.6 million of full-payment deferrals currently remain on deferral and are eligible to come off of their deferral program in the first two months of this year. Additionally, certain loans, representing 6.0% of the total loan portfolio, have been modified and are currently paying interest only.

Non-Performing AssetsThe Company's asset quality remained solid during the fourth quarter and reflects the underlying strength of our core loan portfolio. Non-performing assets ("NPAs") at December 31, 2020 totaled $46.1 million compared to $54.9 million at September 30, 2020, down 16%. This represents eight bp of total assets compared to 10 bp in the previous quarter. Total non-accrual mortgage loans were $17.9 million compared to $18.4 million at September 30, 2020, down 3%, while other non-accrual loans (consisting primarily of non-accrual taxi medallion-related loans) were $19.9 million compared to $26.9 million in the previous quarter, down 26%. Total repossessed assets were $8.3 million at December 31, 2020, down 13% compared to the previous quarter.

Non-performing taxi medallion-related assets totaled $25.1 million at December 31, 2020, down 22% compared to the previous quarter. Excluding the impact from non-performing taxi medallion-related assets, fourth quarter 2020 NPAs on a non-GAAP basis, would have been $21.0 million or four bp of total assets compared to $22.9 million also four bp of total assets as of third quarter 2020.

Allowance for Loan and Lease LossesAt December 31, 2020, the allowance for loan and lease losses ("ALLL") totaled $194.0 million up $5.7 million compared to September 30, 2020 and up $46.4 million compared to December 31, 2019. At December 31, 2020, the ALLL represented 513.55% of non-performing loans and 0.45% of total loans. Both the annual and quarterly increases reflect the Company's adoption of the Current Expected Credit Losses ("CECL") methodology on January 1, 2020 and also reflect a deterioration in forecasted economic conditions since the beginning of the year, arising from the COVID-19 pandemic, and the resultant estimated decreases in property values.

CAPITAL POSITION

The Company's capital position remains strong at both the holding company level and at the Bank level, as all of our regulatory capital ratios continue to exceed regulatory minimums to be classified as "Well Capitalized," the highest regulatory classification.

EARNINGS SUMMARY FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020

Net Interest Income

Net interest income for the three months ended December 31, 2020 increased $26.0 million or 9% compared to the three months ended September 30, 2020 and increased $65.4 million or 27% compared to the three months ended December 31, 2019. Both the quarter-over-quarter and year-over-year improvement in our net interest income were driven by a substantial decline in interest expense. Interest expense for the three months ended December 31, 2020 declined $18.3 million or 13% on a sequential basis, while on a year-over-year basis, interest expense decreased $90.3 million or 43%. The declines were primarily driven by lower funding costs, driven by lower CD rates.

Prepayment income for the three months ended December 31, 2020 totaled $20.9 million, up significantly compared to the previous quarter and up 17% compared to the year-ago quarter. Excluding the impact from prepayment income, net interest income on a non-GAAP basis would have been $287.1 million, up $16.8 million or 6% on a linked-quarter basis and up $62.4 million or 28% on a year-over-year basis.

For the twelve months ended December 31, 2020, net interest income rose $142.7 million or 15% to $1.1 billion compared to $957.4 million for the twelve months ended December 31, 2019. This improvement was also due to lower interest expense, owing to lower funding costs. Interest expense for the twelve months ended December 31, 2020 declined $239.9 million or 28% to $607.9 million.

Net Interest Margin

Our net interest margin ("NIM") increased by double-digits again during the current fourth quarter. For the three months ended December 31, 2020, the NIM increased 18 bp to 2.47% compared to the NIM for the three months ended September 30, 2020, and it increased 43 bp compared to the three months ended December 31, 2019. The quarter-over-quarter and year-over-year improvements were driven by significantly lower funding costs. The Company's overall cost of funds decreased 18 bp to 1.06% compared to the previous quarter and 88 bp compared to the year-ago quarter.

During the current fourth quarter, our average cost of deposits declined to 0.61%, down 24 bp compared to the third quarter of 2020 and down 115 bp compared to the fourth quarter of 2019. The average cost of CDs, which was the primary driver of the lower deposit costs, was 1.04%, down 48 bp compared to the previous quarter and down 133 bp compared to the year-ago fourth quarter. Likewise, the average cost of borrowings declined five bp to 1.92% compared to the previous quarter and 41 bp compared to the year-ago quarter.

Prepayment income contributed 17 bp to this quarter's NIM, up eight bp compared to the contribution in the previous quarter and three bp compared to the year-ago quarter. Excluding the impact from prepayment income, the fourth quarter NIM, on a non-GAAP basis, would have been 2.30%, up ten bp compared to the prior quarter and up 40 bp compared to the year-ago quarter.

For the twelve months ended December 31, 2020, the NIM was 2.24%, up 22 bp compared to the twelve months ended December 31, 2019. The improvement in the full-year NIM was also due to lower funding costs. Prepayment income contributed 11 bp to the 2020 NIM and 12 bp compared to the 2019 NIM. Excluding the impact from prepayment income, the NIM for full-year 2020, on a non-GAAP basis, would have been 2.13%, up 23 bp compared to a NIM, on a non-GAAP basis of 1.90% in full-year 2019.

Provision for Credit Losses

During the current fourth quarter, the provision for credit losses was $11.0 million compared to $13.0 million in the third quarter of the year and $1.7 million in the fourth quarter of 2019. The fourth quarter provision for credit losses exceeded net charge-offs by $5.3 million. For the three months ended December 31, 2020, net charge-offs were $5.7 million or 0.01% of average loans compared to a net recovery of $901,000 in the prior quarter and net charge-offs of $3.5 million in the year-ago quarter or 0.01% of average loans.

For the twelve months December 31, 2020, the provision for credit losses totaled $62.2 million compared to $7.1 million for the twelve months ended December 31, 2019. Net charge-offs for full-year 2020 were $18.8 million or 0.04% of average loans compared to $19.3 million or 0.05% of average loans during full-year 2019.

The majority of charge-offs during both years were related to taxi medallion-related loans.

Pre-Provision Net Revenue ("PPNR") (1)

The tables below details the Company's PPNR for the periods noted.

Non-Interest Income

For the three months ended December 31, 2020, total non-interest income was $15.0 million compared to $13.8 million in the third quarter of 2020 and $17.5 million in the year-ago fourth quarter, up 9% and down 14%, respectively. Compared to the previous quarter, fourth quarter 2020 reflects an improvement in fee income, driven by a continued rebound in retail banking fees and a higher level of other income.

For the twelve months ended December 31, 2020, total non-interest income declined 27% to $61.1 million compared to $84.2 million for the twelve months ended December 31, 2019. The decline is primarily due to lower retail banking fee income, as the Company waived certain fees for its customers as a result of the COVID-19 pandemic. Additionally, the full-year 2019 amount includes net gains on securities of $7.7 million compared to $1.3 million during full-year 2020. Also, during 2019, the Company recorded a $7.9 million gain on sale of a branch property in Florida, compared to no such gain in 2020. This was partially offset by an increase in BOLI income.

Non-Interest Expense

For the three months ended December 31, 2020, non-interest expenses totaled $133.6 million, up $5.1 million or 4% compared to the prior quarter and up $7.5 million or 6% compared to the year-ago quarter. The majority of the increase was in the general and administrative category and was due to the following factors: an increase in our FDIC deposit insurance assessment driven by a downgrade in our internal loan ratings and the write down of the value of taxi medallions that we hold as repossessed assets.

For the twelve months ended December 31, 2020, total non-interest expenses were $511.2 million, unchanged compared to the amount reported for the twelve months ended December 31, 2019. Included in the full-year 2020 amount is a $4.4 million lease termination benefit, while the full-year 2019 amount included certain items related to severance and branch rationalization totaling $10.4 million.

The efficiency ratio for the current fourth quarter was 41.36%, down compared to 43.47% in the previous quarter and to the 48.51% in the prior year's fourth quarter. For the twelve months ended December 31, 2020, the efficiency ratio was 44.02% compared to 49.08% for the twelve months ended December 31, 2019.

Income Taxes

During the current fourth quarter, the Company recorded an income tax benefit of $11.3 million compared to income tax expense of $38.4 million during the third quarter of the year and $31.0 million during the fourth quarter of 2019. The current fourth quarter amount includes a tax benefit of $55.3 million. This benefit reflects all remaining income tax impacts arising from the CARES Act. We do not anticipate any remaining tax impacts due to the CARES Act after the current quarter. The effective tax rate for the quarter was (6.35)%. Excluding the impact of the CARES Act benefit, the effective tax rate on a non-GAAP basis was 24.67% compared to 24.89% in the previous quarter and compared to 23.43% in the year-ago quarter.

For the twelve months ended December 31, 2020, income tax expense totaled $76.7 million compared to $128.3 million for the twelve months ended December 31, 2019. In addition to the tax benefit recorded during the current quarter, the year-to-date income tax expense includes a $13.1 million tax benefit recorded in the first quarter of 2020, related to the Company's tax loss carryback as provided by certain tax provisions for corporations under the CARES Act. Excluding the impact of these tax benefits, the effective tax rate in 2020 on a non-GAAP basis was 24.69% compared to 24.51% in 2019.

About New York Community Bancorp, Inc.

Based in Westbury, NY, New York Community Bancorp, Inc. is a leading producer of multi-family loans on non-luxury, rent-regulated apartment buildings in New York City, and the parent of New York Community Bank. At December 31, 2020, the Company reported assets of $56.3 billion, loans of $42.9 billion, deposits of $32.4 billion, and stockholders' equity of $6.8 billion.

Reflecting our growth through a series of acquisitions, the Company operates 236 branches through eight local divisions, each with a history of service and strength: Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, Roosevelt Savings Bank, and Atlantic Bank in New York; Garden State Community Bank in New Jersey; Ohio Savings Bank in Ohio; and AmTrust Bank in Florida and Arizona.