New York Community Bancorp, Inc. Reports 1Q 2015 Diluted Non-GAAP Cash Earnings Per Share of $0.29 (1) and Diluted GAAP Earnings Per Share of $0.27

New York Community Bancorp, Inc. (NYSE:NYCB) (the “Company”) today reported GAAP earnings of $119.3 million, or $0.27 per diluted share, for the three months ended March 31, 2015, as compared to $131.2 million, or $0.30 per diluted share, in the trailing quarter and $115.3 million, or $0.26 per diluted share, in the year-earlier three months.

The Company also reported cash earnings of $129.0 million, or $0.29 per diluted share, for the current first quarter, which contributed an additional $9.7 million to tangible stockholders’ equity at March 31st. (1)(2)

Commenting on the Company’s strong financial results, President and Chief Executive Officer Joseph R. Ficalora stated, “We are very pleased with our first quarter 2015 performance, which was highlighted by the linked-quarter growth of our net interest income and margin, the exceptional quality of our assets, and the effective management of our balance sheet.

“Largely reflecting an increase in property transactions, prepayment penalty income rose $8.3 million sequentially, to $30.1 million, and added 28 basis points to our margin in the first quarter of this year. As a result, our net interest income rose $9.1 million to $292.8 million, and our margin rose seven basis points to 2.68%.

“Our measures of asset quality were also worthy of mention. At the end of March, non-performing non-covered assets represented 0.29% of total non-covered assets, and non-performing non-covered loans represented 0.19% of total non-covered loans. In addition, we’ve now had net recoveries for four consecutive quarters, bringing the twelve-month total to $1.3 million.

“We also achieved our objective of maintaining our assets below the current SIFI threshold; in fact, our assets fell $307.5 million to $48.3 billion at the end of March. While calls of securities contributed to the reduction, the three-month decline was largely due to the sale of loans. Consistent with the strategy we talked about early in the first quarter, we sold $553.3 million of loans—including $410.5 million of multi-family—while clearly retaining our dominant role in our primary lending niche. Notwithstanding the sale of such loans, which was largely through participations, multi-family loans accounted for $23.5 billion of our quarter-end loans held for investment—and for $1.7 billion of the loans we produced in the first three months of this year.

“I would also note that during this time, despite the decline in assets, we generated solid earnings of $119.3 million, or $0.27 per diluted share.”

Board of Directors Declares $0.25 per Share Dividend Payable on May 22, 2015

“In view of our earnings and capital strength, the Board of Directors last night declared our 45th consecutive quarterly cash dividend of $0.25 per share. The dividend will be payable on May 22, 2015 to shareholders of record as of May 11th,” Mr. Ficalora said.

Balance Sheet Summary

The Company recorded total assets of $48.3 billion at March 31, 2015, a $307.5 million reduction from the balance at December 31st. Total loans accounted for $35.7 billion, or 74.0%, of the current quarter-end balance, while total securities accounted for $7.0 billion, or 14.4%.

Loans

Covered Loans

Primarily reflecting repayments, covered loans (i.e., the loans acquired in the Company’s FDIC-assisted transactions) fell $87.2 million from the year-end 2014 balance to $2.3 billion, representing 6.6% of total loans, at the end of March. In the three months ended March 31, 2015, accretion on the covered loan portfolio was $35.6 million, as compared to $35.9 million and $34.7 million, respectively, in the three months ended December 31, and March 31, 2014.

Non-Covered Loans Held for Investment

Non-covered loans held for investment totaled $33.0 billion at the close of the current first quarter, a $12.6 million reduction from the balance at December 31st.

The following table summarizes the Company’s production of loans held for investment in the three months ended March 31, 2015, December 31, 2014, and March 31, 2014:

Multi-family loans represented $23.5 billion of loans held for investment at the end of the current first quarter, reflecting a $381.3 million decrease from the balance at December 31st. In addition to the modest decline in originations, the decline in multi-family loans reflects an increase in property transactions and refinancing activity (which resulted in higher prepayment penalty income), and the sale of $410.5 million of multi-family loans.

Commercial real estate ("CRE") loans represented $7.8 billion of loans held for investment at the end of the current first quarter, a $188.6 million increase from the balance at December 31st. While originations of CRE loans rose sequentially and year-over-year, the growth of the portfolio was partially offset by the sale of $97.6 million of CRE loans in the first three months of 2015.

The following table provides additional information about the Company’s multi-family and CRE loan portfolios at March 31, 2015 and December 31, 2014:

Also included in the March 31st balance of loans held for investment were acquisition, development, and construction (“ADC”) loans, which rose $50.3 million sequentially to $308.1 million; one-to-four family loans, which fell $33.9 million sequentially to $105.1 million; and other loans, which rose $163.7 million sequentially to $1.3 billion. Included in other loans at the end of March were specialty finance loans and leases of $633.6 million, reflecting a modest linked-quarter increase, and other commercial and industrial (“C&I”) loans of $628.5 million, reflecting a $151.9 million linked-quarter rise. The latter increase largely reflects the transfer of certain other C&I loans in the amount of $158.5 million from “held for sale” to “held for investment” in the first quarter of this year.

Non-Covered Loans Held for Sale

Non-covered loans held for sale totaled $351.5 million at the end of the current first quarter, a $27.9 million reduction from the balance at December 31st. All of the Company’s loans held for sale were one-to-four family loans at March 31st.

In the three months ended March 31, 2015, the volume of loans originated for sale totaled $1.5 billion, exceeding the volume produced in the trailing and year-earlier quarters by $517.5 million and $855.4 million, respectively. The increase in the production of one-to-four family loans held for sale was largely due to the lower level of residential mortgage interest rates in the first three months of this year.

In the first quarter of 2015, the average balance of loans held for sale was $593.0 million, as compared to $738.5 million and $230.6 million, respectively, in the trailing and year-earlier three months.

Pipeline

The Company currently has a loan pipeline of approximately $3.4 billion, including loans held for investment of approximately $2.2 billion and one-to‐four family loans held for sale of approximately $1.2 billion.

Asset Quality

The following discussion pertains only to the Company's portfolio of non-covered loans held for investment (excluding purchased credit-impaired loans) and non-covered other real estate owned ("OREO").

The Company’s asset quality reflected continued improvement in the three months ended March 31, 2015:

• Non-performing non-covered assets totaled $133.4 million at the end of the current first quarter, a $5.5 million decrease from the balance at December 31st. Partly reflecting the transfer of a non-performing multi-family loan to OREO, non-performing loans declined $13.9 million during this time to $63.1 million, offsetting the impact of an $8.4 million increase in OREO to $70.3 million.
• Non-performing non-covered assets represented 0.29% of total non-covered assets at the end of the current first quarter, while non-performing non-covered loans represented 0.19% of total non-covered loans. At December 31, 2014, the respective measures were 0.30% and 0.23%.
• The Company recorded net recoveries of $766,000 and $113,000, respectively, in the three months ended March 31, 2015 and December 31, 2014, in contrast to net charge-offs of $2.6 million in the first quarter of last year.

The following table summarizes the Company’s non-performing non-covered loans and assets at March 31, 2015, December 31, 2014, and March 31, 2014:

The following table presents the Company's asset quality measures at or for the three months ended March 31, 2015, December 31, 2014, and March 31, 2014:

Loans 30 to 89 days past due totaled $6.8 million at the end of the current first quarter, a $569,000 increase from the balance recorded at December 31, 2014. While multi-family and CRE loans 30 to 89 days past due rose $1.1 million and $1.8 million, respectively, over the course of the quarter, the impact was largely offset by reductions in the balances of one-to-four family and other loans 30 to 89 days past due. The net effect of the increase in loans 30 to 89 days past due and the decline in non-performing assets was a $4.9 million reduction in total delinquencies at March 31, 2015.

Securities

Securities represented $7.0 billion, or 14.4%, of total assets at the end of the current first quarter, a $135.9 million reduction from the balance at December 31st. The linked-quarter decline was attributable to repayments and, to a lesser extent, calls of securities. At March 31st, government-sponsored enterprise (“GSE”) obligations represented 95.5% of total securities, consistent with the percentage at the end of 2014.

Securities held to maturity accounted for $6.8 billion, or 97.5%, of total securities at the end of the current first quarter, and were down $137.8 million from the balance at December 31st. Available-for-sale securities accounted for the remaining $175.7 million of the March 31st balance, and were up $1.9 million from the balance at year-end.

Funding Sources

Reflecting the Company’s deposit-gathering efforts, deposits rose $602.7 million from the December 31st balance to $28.9 billion at March 31st. Reflecting both deposit growth and the decline in total assets, deposits represented 60.0% of total assets at the end of the current first quarter, as compared to 58.3% of total assets at the end of 2014.

The linked-quarter rise in deposits was primarily due to a $646.8 million increase in savings accounts to $7.7 billion, together with a $448.2 million rise in non-interest-bearing accounts to $2.8 billion. NOW and money market accounts also rose during this time, by $79.9 million, to $12.6 billion at March 31st. The benefit of these increases was partly offset by a $572.2 million decline in certificates of deposit (“CDs”) to $5.8 billion.

During this time, borrowed funds fell $962.1 million to $13.3 billion, reflecting a like decline in wholesale borrowings to $12.9 billion. Borrowed funds represented 27.5% of total assets at the end of the current first quarter, a reduction from 29.3% at the end of 2014.

Stockholders’ Equity

Stockholders’ equity totaled $5.8 billion at the end of the current first quarter, a $13.0 million increase from the balance recorded at December 31st. Excluding goodwill and core deposit intangibles (“CDI”) from the respective balances, tangible stockholders’ equity rose $14.6 million to $3.4 billion at March 31st. (2)

Reflecting the new capital rules under Basel III that took effect on January 1, 2015, the regulatory capital ratios for both New York Community Bank and New York Commercial Bank continued to exceed the federal requirements for “well capitalized” classification, as indicated in the table on the last page of this release.

Earnings Summary for the Three Months Ended March 31, 2015

The Company generated GAAP earnings of $119.3 million in the current first quarter, as compared to $131.2 million in the trailing quarter and $115.3 million in the first quarter of 2014. The respective amounts were equivalent to $0.27, $0.30, and $0.26 per diluted share.

Net Interest Income

Net interest income rose $9.1 million sequentially and $8.6 million year-over-year to $292.8 million in the three months ended March 31, 2015. The linked-quarter rise was the net effect of a $6.1 million increase in interest income to $428.9 million and a $3.0 million reduction in interest expense to $136.1 million. The year-over-year increase was the net effect of a $13.6 million increase in interest income and a $5.0 million increase in interest expense. Although the Company’s net interest margin dropped four basis points year-over-year, it rose seven basis points linked-quarter, to 2.68% in the first quarter of 2015.

The following factors contributed to the linked-quarter increases in net interest income and net interest margin:

• Prepayment penalty income contributed $30.1 million to net interest income in the current first quarter, up $8.3 million from the level recorded in the fourth quarter of 2014. The increase was largely attributable to an increase in property transactions and refinancing activity in the Company’s multi-family lending niche. Similarly, prepayment penalty income contributed 28 basis points to the Company’s current first-quarter margin, as compared to 20 basis points in the fourth quarter of last year. Absent the contributions of prepayment penalty income in the respective quarters, the margin would have declined one basis point in the first quarter of 2015.
• Interest-earning assets averaged $43.5 billion in the current first quarter, a $112.8 million decrease from the average balance in the trailing three-month period. The decrease was the net effect of a $175.6 million rise in the average balance of loans to $36.0 billion, and a $288.4 million decrease in the average balance of securities and money market investments to $7.5 billion. Notwithstanding the decrease in the average balance of interest-earning assets, the average yield rose eight basis points linked-quarter, as the average yields on loans and on securities and money market investments rose six and 14 basis points, respectively, to 4.06% and 3.43%. The decline in the average balance of interest-earning assets was not unexpected, given the steps taken by management to limit asset growth in the quarter; the increase in the average yield was primarily due to the aforementioned rise in prepayment penalty income, in addition to yield maintenance fees received on securities that prepaid in the first three months of this year.
• Interest-bearing liabilities averaged $40.2 billion in the current first quarter, down $108.1 million from the average balance in the fourth quarter of 2014. The decrease was the net effect of a $108.8 million decline in the average balance of interest-bearing deposits to $26.0 billion and a nominal increase in the average balance of borrowed funds to $14.2 billion. The average cost of funds was 1.37% in both the current first and trailing quarters, as the average cost of interest-bearing deposits rose a single basis point to 0.63% linked-quarter, and the average cost of borrowed funds declined by a like amount to 2.72%. The modest increase in the cost of interest-bearing deposits also was not unexpected, given management’s focus on increasing core deposits and the related increase in interest rates paid on such accounts.

The following factors contributed to the year-over-year increase in net interest income and the modest decline in net interest margin:

• Prepayment penalty income rose $9.8 million year-over-year and contributed nine basis points more to the current first-quarter margin than it contributed to the margin in the first quarter of last year.
• Average interest-earning assets rose $2.0 billion year-over-year, as a $2.9 billion increase in the average loan balance more than offset the impact of a $976.6 million decline in the average balance of securities and money market investments. The benefit of the increase in the average balance of interest-earning assets exceeded the impact of a five-basis point reduction in the average yield on such assets, as the benefit of a 14-basis point rise in the average yield on securities and money market investments was partially offset by the impact of a 13-basis point decline in the average yield on loans.
• Average interest-bearing liabilities rose $1.6 billion year-over-year, as the average balance of interest-bearing deposits rose $2.4 billion, and the average balance of borrowed funds fell $803.3 million. The impact of the increase in the average balance of interest-bearing liabilities was somewhat tempered by the benefit of a one-basis point decline in the average cost of funds. While the average cost of interest-bearing deposits and borrowed funds rose five and ten basis points, respectively, from the year-earlier level, the average cost of interest-bearing liabilities was favorably impacted by declines in the average balances of CDs and borrowed funds.

(Recovery of) Provision for Loan Losses

(Recovery of) Losses on Non-Covered Loans

Reflecting management’s assessment of the adequacy of the allowance for losses on non-covered loans, the quarter’s net recoveries, and the linked-quarter decline in the non-covered loan balance, the Company recovered $870,000 from the allowance for non-covered loan losses in the first quarter of 2015. In the trailing and year-earlier quarters, no provision or recovery was recorded for losses on non-covered loans.

Provision for (Recovery of) Losses on Covered Loans

Reflecting a modest decrease in the cash flows expected from certain pools of acquired loans covered by FDIC loss-sharing agreements, the Company recorded an $877,000 provision for covered loan losses in the first three months of 2015. In the trailing and year-earlier quarters, the Company recovered $200,000 and $14.6 million, respectively, from the allowance on covered loan losses, reflecting an increase in expected cash flows from the covered loan portfolio. The provision recorded in the current first quarter was partly offset by FDIC indemnification income of $702,000, while the recoveries in the trailing and year-earlier quarters were partly offset by FDIC indemnification expense of $160,000 and $11.7 million, respectively. The FDIC indemnification income and expense were recorded in non-interest income in the respective periods, as discussed below.

Non-Interest Income

Non-interest income totaled $52.2 million in the current first quarter, a linked-quarter decrease of $18.2 million and a year-over-year increase of $15.0 million. In the fourth quarter of 2014, non-interest income included the recovery of $17.3 million on a security that had been written off in 2009. No comparable recovery was recorded in the current first quarter or the year-earlier three months. In the first quarter of 2014, non-interest income included a $3.9 million gain on the sale of Class B Visa shares; no comparable gain was recorded in the three months ended March 31, 2015 or December 31, 2014.

In addition to the recovery in the trailing quarter, the linked-quarter decrease in non-interest income largely reflects a decline in net securities gains. Net securities gains totaled $211,000 in the current first quarter and $8.7 million in the trailing three months. The impact of this linked-quarter decline was only somewhat tempered by the following factors: a $4.9 million increase in gains on the sale of loans to $5.9 million (recorded in “other” income); the $862,000 difference between the FDIC indemnification income recorded in the current first quarter and the FDIC indemnification expense recorded in the fourth quarter of last year; and a $2.0 million increase in mortgage banking income to $18.4 million, as income from originations rose $6.8 million to $15.5 million, and servicing income fell $4.8 million to $2.9 million.

The year-over-year increase in non-interest income was attributable to the same factors that tempered the linked-quarter decline: Mortgage banking income rose $3.8 million in the current first quarter, as income from originations rose $11.7 million and exceeded the impact of a $7.9 million decline in servicing income to the level noted above. In addition, the Company recorded FDIC indemnification income of $702,000 in the current first quarter, in contrast to FDIC indemnification expense of $11.7 million in the year-earlier three months. Furthermore, other non-interest income rose $7.9 million year-over-year to $17.8 million, primarily reflecting the aforementioned gains on the sale of loans. The benefit of these increases was tempered by the impact of a $4.7 million decline in net securities gains.

Non-Interest Expense

Non-interest expense totaled $156.8 million in the current first quarter, reflecting a linked-quarter increase of $8.7 million and a year-over-year increase of $10.5 million. Operating expenses accounted for $155.3 million of non-interest expense in the current first quarter, reflecting increases of $9.0 million and $11.3 million, respectively, over the corresponding periods.

While occupancy and equipment expense and general and administrative expense were relatively stable, compensation and benefits expense rose $9.0 million sequentially and $11.5 million year-over-year, to $87.2 million, in the three months ended March 31, 2015. Both increases include a $1.7 million increase in pension expense and $4.0 million of severance expenses; in addition, the linked-quarter increase reflects a $3.6 million increase in payroll taxes, while the year-over-year increase also reflects the impact of normal salary increases.

Income Tax Expense

Income tax expense fell $6.2 million sequentially and $5.5 million year-over-year to $68.9 million in the three months ended March 31, 2015. The respective declines were due, in part, to a drop in pre-tax income, which fell $18.1 million and $1.5 million, respectively, to $188.2 million in the first quarter of this year. Meanwhile, the effective tax rate was 36.62% in the current first quarter, as compared to 36.39% and 39.24%, respectively, in the trailing and year-earlier three months. In the first quarter of 2014, the level of income tax expense was increased by a one-time charge of $4.5 million in connection with the enactment of new tax laws by the State of New York.

About New York Community Bancorp, Inc.

One of the largest U.S. bank holding companies, with assets of $48.3 billion, New York Community Bancorp, Inc. is a leading producer of multi-family loans on rent-regulated buildings in New York City and the parent of New York Community Bank and New York Commercial Bank. With deposits of $28.9 billion and 272 branches in Metro New York, New Jersey, Florida, Ohio, and Arizona, the Company also ranks among the largest depositories in the United States.

Reflecting its growth through a series of acquisitions, the Community Bank operates through seven local divisions, each with a history of service and strength: Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, and Roosevelt Savings Bank in New York; Garden State Community Bank in New Jersey; Ohio Savings Bank in Ohio; and AmTrust Bank in Florida and Arizona. Similarly, New York Commercial Bank operates 18 of its 30 New York-based branches under the divisional name Atlantic Bank. Additional information about the Company and its bank subsidiaries is available at www.myNYCB.com and www.NewYorkCommercialBank.com.

Post-Earnings Release Conference Call

As previously announced, the Company will host a conference call on Wednesday, April 29, 2015, at 8:30 a.m. (Eastern Daylight Time) to discuss its first quarter 2015 performance and strategies. The conference call may be accessed by dialing (866) 952-1906 (for domestic calls) or (785) 424-1825 (for international calls) and providing the following access code: 1Q15NYCB. A replay will be available approximately two hours following completion of the call through midnight on May 3rd, and may be accessed by calling (800) 374-0934 (domestic) or (402) 220-0680 (international) and providing the same access code. In addition, the conference call will be webcast at ir.myNYCB.com, and archived through 5:00 p.m. on May 27, 2015.

Forward-Looking Statements

This earnings release and the associated conference call may include forward‐looking statements by the Company and our authorized officers pertaining to such matters as our goals, intentions, and expectations regarding revenues, earnings, loan production, asset quality, capital levels, and acquisitions, among other matters; our estimates of future costs and benefits of the actions we may take; our assessments of probable losses on loans; our assessments of interest rate and other market risks; and our ability to achieve our financial and other strategic goals.

Forward‐looking statements are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. Additionally, forward‐looking statements speak only as of the date they are made; the Company does not assume any duty, and does not undertake, to update our forward‐looking statements. Furthermore, because forward‐looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in our statements, and our future performance could differ materially from our historical results.

Our forward‐looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of our loan or investment portfolios; changes in competitive pressures among financial institutions or from non‐financial institutions; our ability to retain key members of management; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may acquire into our operations, and our ability to realize related revenue synergies and cost savings within expected time frames; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties and/or are beyond our control.

Greater detail regarding some of these factors is provided in the Risk Factors section of our Form 10‐K for the year ended December 31, 2014 and in other SEC reports we file. Our forward‐looking statements may also be subject to other risks and uncertainties, including those we may discuss in this news release, on our conference call, during investor presentations, or in our SEC filings, which are accessible on our website and at the SEC’s website, www.sec.gov.

- Financial Statements and Highlights Follow ‐

NEW YORK COMMUNITY BANCORP, INC.
RECONCILIATIONS OF GAAP EARNINGS AND NON-GAAP EARNINGS (CASH EARNINGS)
(unaudited)

Although cash earnings are not a measure of performance calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe that they are important because of their contribution to tangible stockholders’ equity. (Please see the discussion and reconciliations of stockholders’ equity and tangible stockholders’ equity that appear under “Reconciliations of GAAP and Non-GAAP Financial Measures” on page 11 of this release.)

We calculate cash earnings by adding back to GAAP earnings certain items that have been charged against them but that are added to, rather than subtracted from, tangible stockholders’ equity. For this reason, we believe that cash earnings, although non-GAAP, are useful to investors seeking to evaluate our financial performance and to compare our performance with that of other companies in the banking industry that also report cash earnings.

Cash earnings should not be considered in isolation or as a substitute for net income, cash flows from operating activities, or other income or cash flow statement data calculated in accordance with GAAP. Moreover, the manner in which we calculate cash earnings may differ from that of other companies reporting non-GAAP measures with similar names.

Reconciliations of our GAAP and cash earnings for the three months ended March 31, 2015, December 31, 2014, and March 31, 2014, follow:

NEW YORK COMMUNITY BANCORP, INC.
RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL MEASURES
(unaudited)

Although tangible stockholders’ equity, adjusted tangible stockholders’ equity, tangible assets, and adjusted tangible assets are not calculated in accordance with GAAP, management uses these non-GAAP financial measures in their analysis of our performance. We believe that these non-GAAP financial measures are an important indication of our ability to grow both organically and through business combinations, and, with respect to tangible stockholders’ equity and adjusted tangible stockholders’ equity, our ability to pay dividends and engage in various capital management strategies.

Tangible stockholders’ equity, adjusted tangible stockholders’ equity, tangible assets, adjusted tangible assets, and the related non-GAAP financial measures should not be considered in isolation or as a substitute for stockholders’ equity, total assets, or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate these non-GAAP financial measures may differ from that of other companies reporting non-GAAP measures with similar names.

Reconciliations of our stockholders’ equity, tangible stockholders’ equity, and adjusted tangible stockholders’ equity; total assets, tangible assets, and adjusted tangible assets; and the related measures at or for the three months ended March 31, 2015, December 31, 2014, and March 31, 2014, follow: