New York Community Bancorp, Inc. Reports 3Q 2009 Diluted GAAP Earnings per Share of $0.28, Diluted Operating EPS of $0.26, and Diluted Cash EPS of $0.33(1)(2)

Wed. October 28, 2009; Posted: 08:00 AM

WESTBURY, N.Y., Oct 28, 2009 (BUSINESS WIRE) -- NYB | Quote | Chart | News | PowerRating -- --3Q 2009 Performance Highlights

--Substantial Net Interest Income Growth: Net interest income rose 24.5% year-over-year and 4.0% linked quarter, to $226.4 million.

--Substantial Net Interest Margin Expansion: The margin rose 49 basis points year-over-year and 11 basis points linked-quarter to 3.17%.

--Strong Cash Earnings Growth: Cash earnings rose 19.4% year-over-year, to $114.3 million, equivalent to a $0.05, or 17.9%, rise in diluted cash earnings per share to $0.33.(2)

--Solid Operating Earnings: Despite an increase in FDIC insurance premiums and the provision for loan losses, operating earnings rose 6.4% year-over-year, to $90.2 million, equivalent to a $0.01 increase in diluted operating earnings per share to $0.26.(1)

--Strong Operating Efficiency: At 35.85%, the operating efficiency ratio reflected linked-quarter and year-over-year improvements of 87 and 216 basis points, respectively.(3)

--Continued Loan Production at Substantial Spreads: Loans grew at an annualized rate of 4.6% in the quarter, reflecting third quarter originations of $921.1 million. Together, multi-family and commercial real estate loan originations totaled $705.8 million and featured an average yield that was 338 basis points above the average five-year Constant Maturity Treasury rate.

--Above-Average Asset Quality: Net charge-offs equaled 0.03% of average loans in the quarter, as compared to 0.81% for the SNL Bank & Thrift Index. Non-performing assets represented 1.45% of total assets at the end of September, as compared to the Index measure of 3.05%.(4)

--Reduced Securities Portfolio: Securities represented 16.6% of total assets at quarter-end, the lowest level since the second quarter of 2001.

--Increasing Capital Strength: Excluding accumulated other comprehensive loss, net of tax ("AOCL"), the ratio of adjusted tangible stockholders' equity to adjusted tangible assets equaled 6.25% at September 30, 2009. Including AOCL, the ratio of tangible stockholders' equity to tangible assets equaled 6.03%.(5)

--Please Note: All footnotes to the text are located at the end of this release.

New York Community Bancorp, Inc. (NYSE: NYB | Quote | Chart | News | PowerRating) (the "Company") today reported that its third quarter 2009 GAAP earnings rose $40.5 million, or 69.8%, year-over-year to $98.6 million, representing an $0.11, or 64.7%, increase in diluted GAAP earnings per share to $0.28. Operating earnings rose to $90.2 million, or $0.26 per diluted share, in the current third quarter from $84.8 million, or $0.25 per diluted share, in the third quarter of 2008. (1)

The Company's third quarter 2009 GAAP earnings were increased by a $13.3 million, or $0.04 per diluted share, adjustment to income tax expense, primarily reflecting the resolution of various tax audits, and by a $3.4 million, or $0.01 per diluted share, after-tax gain on the exchange of its Bifurcated Option Note Unit SecuritiES(SM) ("BONUSES units") in August 2009. These contributions to third quarter 2009 GAAP earnings were partly offset by a non-cash after-tax charge of $7.9 million, or $0.02 per diluted share, for the other-than-temporary impairment ("OTTI") of certain investment securities. In the third quarter of 2008, the Company's GAAP earnings were reduced by non-cash after-tax OTTI charges of $26.7 million, equivalent to $0.08 per diluted share.

The Company also reported cash earnings of $114.3 million, or $0.33 per diluted share, in the current third quarter, which added $15.7 million, or 16.0%, more to tangible capital than its third quarter GAAP earnings alone. (2) (5)

Commenting on the Company's current third quarter performance, Chairman, President, and Chief Executive Officer Joseph R. Ficalora stated, "Although the local economy continues to be anemic, we generated solid GAAP, cash, and operating earnings during the last three months. Notably, our cash earnings rose more than 19% to $114.3 million, tantamount to a five cent, or 18%, rise in diluted cash earnings per share.(2) Operating earnings also rose year-over-year, to $90.2 million, equivalent to a penny increase in diluted operating earnings per share. Furthermore, these increases occurred despite a $14.6 million rise in our provision for loan losses and an $8.0 million increase in our FDIC insurance premiums. Year-to-date, FDIC insurance premiums totaled $37.1 million, including the special assessment, an increase from $2.4 million in the first nine months of 2008. (1)

"Earnings growth was largely driven by a year-over-year increase in net interest income, as the average balance of interest-earning assets rose in tandem with a decline in our funding costs. While the average yield on interest-earning assets fell 25 basis points, to 5.60% from the year-earlier level, the average cost of funds declined 79 basis points, to 2.58%. Similarly, our net interest margin rose to 3.17% in the quarter, despite the adverse impact of lower prepayment penalty income and the reversal of interest on loans that transitioned to non-accrual status. In fact, our current third quarter margin was 11 basis points higher than the trailing-quarter measure and 49 basis points higher than the measure recorded in the third quarter of last year.

"In addition, our operating efficiency ratio improved to 35.85% in the current third quarter, despite the higher level of FDIC insurance premiums. (3)

"Another third quarter highlight was the strengthening of our tangible capital position, with tangible stockholders' equity equaling 6.25% of tangible assets, a nine-month increase of 31 basis points, excluding accumulated other comprehensive loss. Including AOCL in the calculation, the ratio improved 37 basis points to 6.03%.(5) These improvements were attributable to the strength of our cash earnings and the aforementioned exchange of BONUSES units, plus the issuance of 5.9 million common shares totaling $64.7 million through the direct purchase component of our Dividend Reinvestment and Stock Purchase Plan."

Board of Directors Declares $0.25 per Share Dividend, Payable on November 17th

"In view of our growing capital strength, and the increased contribution of our cash earnings, the Board of Directors last night declared a quarterly cash dividend of $0.25 per share, payable on November 17th to shareholders of record at the close of business on November 6th.

"Turning to asset quality, non-performing loans represented 2.00% of total loans at the end of September, yet our third quarter net charge-offs--at $6.4 million--represented a mere 0.03% of average loans. This significant difference between the volume of non-performing loans and the volume of net charge-offs is consistent with our past performance, as is the degree to which our measures of asset quality compare favorably with those of our industry as a whole. In the third quarter of 2009, the ratio of net charge-offs to average loans was 0.81% for the SNL Bank & Thrift Index, and the ratio of non-performing loans to total loans for the Index was 4.13% at quarter-end.

"While we continue to be distinguished by the well below-average level of our net charge-offs, we increased our loan loss allowance by recording a third quarter loan loss provision of $15.0 million. As a result, the allowance for loan losses grew to $106.7 million at the end of the quarter, an $8.6 million increase from the trailing quarter-end amount.

"Although certain economic data suggests that the recession has ended, the Metro New York region we serve continues to be under duress. Notwithstanding that the linked-quarter percentage increase in non-performing loans was substantially less than the two prior linked-quarter increases, we have yet to turn the corner with regard to asset quality. That said, our demonstrated ability to generate operating and cash earnings against this challenging backdrop is one of the many qualities that make this company unique. With the capital and the capacity to withstand this credit cycle, we expect to see continued earnings growth in the quarters ahead," Mr. Ficalora said.

Earnings for the Nine Months Ended September 30, 2009

For the nine months ended September 30, 2009, the Company reported GAAP earnings of $243.7 million, or $0.70 per diluted share, in contrast to a loss of $24.3 million, or $0.08 per diluted share, in the first nine months of 2008. During this time, the Company's nine-month operating earnings rose $36.9 million, or 16.0%, to $266.9 million, equivalent to an $0.08, or 11.6%, increase in diluted operating earnings per share to $0.77.(1)

In addition, the Company reported cash earnings of $303.1 million in the current nine-month period, equivalent to diluted cash earnings per share of $0.88. (2)

The Company's nine-month 2009 GAAP earnings reflect the impact of OTTI charges recorded in both the second and third quarters, together with the impact of the FDIC special assessment recorded during this time. After-tax, the OTTI charge and the FDIC special assessment equaled $32.1 million and $8.9 million, equivalent to $0.09 and $0.03 per diluted share, respectively. The impact of these items was tempered by the benefit of an adjustment to income tax expense of $14.3 million, or $0.04 per diluted share.

In addition to including after-tax OTTI charges of $56.5 million, the Company's nine-month 2008 GAAP earnings were reduced by an after-tax debt repositioning charge of $199.2 million and a $2.3 million after-tax litigation settlement charge. Combined, the three charges reduced the Company's nine-month 2008 GAAP earnings by $258.0 million, or $0.78 per diluted share. A gain on debt redemption and a gain relating to the Company's membership interest in Visa added $0.01 to its diluted GAAP earnings per share in the same period.

Balance Sheet Summary at September 30, 2009

The Company recorded total assets of $32.9 billion at the end of September, a $24.3 million increase from the June 30th balance and a $417.6 million increase from the balance at December 31, 2008.

Loans

Loans represented $23.0 billion, or 70.1%, of total assets at the close of the third quarter, representing a three-month increase of $261.6 million and a nine-month increase of $846.5 million. Multi-family loans represented $16.5 billion, or 71.5%, of the September 30, 2009 total, and were up $249.3 million and $746.9 million, respectively, over the three- and nine-month periods. Commercial real estate ("CRE") loans accounted for $4.9 billion, or 21.2%, of the loan portfolio at the end of September and were up $100.3 million and $322.4 million, respectively, over the three- and nine-month periods.

At September 30, 2009, the average multi-family loan had a principal balance of $4.0 million and the average CRE loan had a principal balance of $2.7 million. The multi-family and CRE loan portfolios had average loan-to-value ratios ("LTVs") of 61.0% and 54.4%, respectively, at the close of the quarter, and expected weighted average lives of 4.0 years and 3.6 years, respectively.

The remainder of the loan portfolio at September 30, 2009 consisted of one- to four-family loans of $226.4 million; acquisition, development, and construction ("ADC") loans of $666.2 million; and other loans of $800.2 million, representing 1.0%, 2.9%, and 3.5%, of total loans, respectively. Reflecting management's focus on reducing these portfolios during a prolonged period of economic weakness, the balance of one- to four-family loans was down $14.0 million and $39.9 million, respectively, over the three- and nine-month periods, while the balance of ADC loans declined $59.9 million and $110.4 million, respectively, during these times. Similarly, the balance of other loans at the end of September was down $14.1 million and $72.5 million, respectively, from the balances recorded at June 30, 2009 and December 31, 2008. Included in the September 30th balance of other loans were commercial & industrial ("C&I") loans of $674.2 million, reflecting a nine-month decline of $38.2 million.

The nine-month increase in total loans was the net effect of originations totaling $2.6 billion and repayments totaling $1.8 billion, including third-quarter originations and repayments of $921.1 million and $660.2 million, respectively. Multi-family and CRE loans accounted for $1.4 billion and $511.0 million, respectively, of the Company's year-to-date originations, and for $561.6 million and $144.2 million, respectively, of loans produced in the third quarter of 2009.

At the present time, the Company has a pipeline of approximately $807 million, including approximately $566 million of multi-family loans and approximately $137 million of CRE loans.

Asset Quality

The Company recorded net charge-offs of $6.4 million in the current third quarter, as compared to $9.2 million and $1.1 million, respectively, in the trailing quarter and year-earlier three months. Net charge-offs represented 0.03% of average loans in the current third quarter, as compared to 0.04% and 0.01%, respectively, in the earlier periods. In addition, the Company's ratio of net charge-offs to average loans was substantially lower than the 0.81% average for the SNL Bank & Thrift Index.(5) Multi-family loans and CRE loans accounted for $1.4 million and $321,000 of the current third quarter's net charge-offs, with ADC and other loans accounting for $1.0 million and $3.7 million, respectively.

Although non-performing assets rose on a linked-quarter basis, the magnitude of the percentage increase was substantially smaller than the linked-quarter increases in the first and second quarters of this year. At September 30, 2009, non-performing assets represented $475.7 million, or 1.45%, of total assets, as compared to $341.6 million, or 1.04%, at the end of June. Included in the respective amounts were non-performing loans of $460.4 million and $340.2 million, and other real estate owned ("ORE") of $15.3 million and $1.5 million, respectively. Multi-family loans accounted for $277.0 million of non-performing loans at the end of the quarter, with CRE loans and ADC loans accounting for $69.1 million and $81.3 million, respectively. The remainder consisted of one- to four-family loans of $14.2 million and other loans of $18.8 million.

The increase in ORE was primarily attributable to the foreclosure of a $13.6 million apartment complex, located in southern New Jersey, which the Company has placed under new management. The property is in the process of being readied for sale.

Loans 30 to 89 days delinquent totaled $221.2 million at the end of September, a $58.0 million increase from the trailing quarter-end amount.

The significant difference between the volume of non-performing loans recorded and the actual losses realized in the final disposition of such loans or the underlying properties has been a long-standing distinction between the Company and its industry. Accordingly, the Company believes that the significant increase in non-performing loans it has experienced in recent quarters will not necessarily result in a comparable increase in losses. Nonetheless, in view of the severity of the credit cycle, the Company recorded a $15.0 million provision for loan losses in the current third quarter, bringing the nine-month loan loss provision to $33.0 million. The third quarter provision was $3.0 million higher than the provision recorded in the trailing quarter and $14.6 million higher than the year-earlier amount. Reflecting a nine-month loan loss provision of $33.0 million and nine-month net charge-offs of $20.7 million, the allowance for loan losses rose from $94.4 million at the end of December to $106.7 million at September 30, 2009.

Securities

Securities accounted for $5.5 billion, or 16.6%, of total assets at the end of September, down from $5.6 billion, or 17.2% of total assets, at the close of the second quarter and from $5.9 billion, or 18.2% of total assets, at December 31, 2008. Government-sponsored enterprise ("GSE") securities represented approximately 90% of the securities portfolio at each of the respective period-ends.

The three- and nine-month declines in the securities portfolio reflect declines in the balances of held-to-maturity securities and securities available for sale. Held-to-maturity securities totaled $4.6 billion at the end of September, signifying reductions of $147.7 million and $249.0 million, respectively. Available-for-sale securities totaled $813.0 million at the end of September, and were down $36.1 million and $197.5 million, respectively, over the three- and nine-month periods.

Although the reduction in securities was primarily due to repayments, it also reflects the Company's assessment in the current and trailing quarters of certain pooled trust preferred and other debt securities as other-than-temporarily impaired, due to the deferral of interest payments on the underlying collateral. The OTTI that was recognized in the current third quarter contributed to a $6.8 million, or 23.8%, linked-quarter decline in the after-tax net unrealized loss on securities and a nine-month decline of $15.5 million, or 41.7%.

Funding Sources

In addition to the cash flows generated through loan and securities repayments, the Company's funding primarily stems from deposits and borrowed funds. Depending on the availability and attractiveness of certain funding facilities, the Company typically has refrained from pricing its retail deposits at the higher end of the market in order to contain its funding costs. While the Company has the capacity to increase deposits through its extensive branch network, it opted to utilize certain wholesale funding to enhance its liquidity during the quarter when such funding was more attractively priced.

Deposits totaled $14.5 billion at the end of September, representing a three-month increase of $113.8 million and a nine-month increase of $92.3 million. While certificates of deposit ("CDs") declined $275.8 million and $1.0 billion, respectively, to $5.8 billion, these reductions were exceeded by three- and nine-month increases in NOW and money market accounts, savings accounts, and non-interest-bearing accounts.

NOW and money market accounts totaled $4.7 billion at the end of September, a $260.2 million increase from the June 30th balance and an $865.7 million increase from the balance at December 31, 2008. Savings accounts rose $124.7 million to $2.9 billion over the course of the quarter, and were up $249.3 million from the balance recorded at year-end. Non-interest-bearing accounts totaled $1.1 billion at the end of September, and were up $4.8 million and $3.5 million, respectively, over the three- and nine-month periods.

Borrowed funds totaled $13.9 billion at the end of September, down $195.1 million from the June 30th balance, and up $367.2 million from the balance at December 31, 2008. The linked-quarter decline was the result of a $146.4 million reduction in wholesale borrowings to $12.8 billion and a $48.8 million decline in junior subordinated debentures to $435.2 million. The latter reduction was attributable to the aforementioned BONUSES unit exchange.

The nine-month increase in borrowed funds was largely due to a $416.1 million increase in wholesale borrowings, which exceeded the impact of the reduction in junior subordinated debentures stemming from the third quarter 2009 BONUSES unit exchange. Included in wholesale borrowings at September 30, 2009 were Federal Home Loan Bank of New York ("FHLB-NY") advances of $8.1 billion and repurchase agreements of $4.2 billion, up $366.1 million and down $285.0 million, respectively, from the balances at year-end 2008.

Stockholders' Equity

Stockholders' equity totaled $4.3 billion at the end of September, a linked-quarter increase of $129.9 million and a $121.3 million increase from the balance recorded at December 31, 2008. The September 30, 2009 amount was equivalent to 13.20% of total assets and a book value per share of $12.21. At June 30, 2009 and December 31, 2008, stockholders' equity was equivalent to 12.81% and 13.00% of total assets, while book value per share equaled $12.21 and $12.25 per share, respectively.

The Company calculates book value per share by excluding the number of unallocated Employee Stock Ownership Plan ("ESOP") shares from the number of shares outstanding. At September 30, 2009, June 30, 2009, and December 31, 2008, the Company's book values per share were calculated on the basis of 355,457,472; 344,742,899; and 344,353,808 shares, respectively. The number of shares at the end of September includes 4.8 million shares that were issued in connection with the exchange of 1.4 million BONUSES units and 5.9 million shares totaling $64.7 million that were issued through the direct purchase feature of the Company's Dividend Reinvestment and Stock Purchase Plan ("DRP").

Tangible stockholders' equity equaled $1.8 billion at the end of September, as compared to $1.7 billion at each of the earlier period-ends. The September 30, 2009 amount was equivalent to 6.03% of tangible assets, a 44-basis point increase from the June 30th measure and a 37-basis point increase from the measure at year-end 2008. Excluding AOCL from the calculation, the Company's adjusted tangible stockholders' equity represented 6.25% of adjusted tangible assets at the end of September, as compared to 5.83% and 5.94%, respectively, at June 30, 2009 and December 31, 2008. The increase in these tangible capital measures was due to the increase in cash earnings, the aforementioned exchange of BONUSES units, and the aforementioned issuance of shares through the Company's DRP. (5)

The Company's subsidiary banks also reported solid levels of capital at the end of September, and continued to exceed the requirements for classification as "well capitalized" institutions under the FDIC Improvement Act. At September 30, 2009, New York Community Bank had a leverage capital ratio of 7.41%, exceeding the minimum required for "well capitalized" classification by 241 basis points. At the same time, New York Commercial Bank had a leverage capital ratio of 10.84%, exceeding the minimum required for such classification by 584 basis points.

Earnings Summary for the Three Months Ended September 30, 2009

The Company recorded third quarter 2009 GAAP earnings of $98.6 million, up from $56.4 million and $58.1 million, respectively, in the trailing and year-earlier three months. GAAP earnings per share rose to $0.28 in the current third quarter from $0.16 and $0.17, respectively, in the earlier periods.

Operating earnings rose to $90.2 million in the current third quarter from $89.1 million and $84.8 million, respectively, in the trailing quarter and year-earlier three months. Diluted operating earnings per share equaled $0.26 in the three months ended September 30, 2009 and in the trailing quarter, up from $0.25 in the three months ended September 30, 2008. (1)

The Company's third quarter 2009 operating earnings exclude the benefit of the $13.3 million, or $0.04 per diluted share, adjustment to income tax expense that primarily stemmed from the resolution of various tax audits, and the $3.4 million, or $0.01 per diluted share, after-tax gain on the exchange of its BONUSES units in August 2009. Also excluded from current third quarter 2009 operating earnings was the impact of the non-cash after-tax charge of $7.9 million, or $0.02 per diluted share, for the OTTI of certain trust preferred securities. (1)

The Company's operating earnings for the second quarter of 2009 and the third quarter of 2008 exclude the impact of non-cash after-tax OTTI charges of $24.2 million and $26.7 million that were equivalent to $0.07 and $0.08 per diluted share, respectively. (1)

Net Interest Income

The Company recorded net interest income of $226.4 million in the current third quarter, as compared to $217.6 million and $181.9 million, respectively, in the trailing and year-earlier three months. The linked-quarter and year-over-year increases were driven by a combination of factors, including an increase in the average balance of loans; a reduction in the cost of retail and wholesale funding; and the extinguishment of certain trust preferred securities in connection with the aforementioned BONUSES unit exchange.

Year-over-Year Comparison

Interest income rose $4.5 million year-over-year, to $402.9 million as a $1.5 billion increase in the average balance of interest-earning assets to $28.8 billion exceeded the impact of a 25-basis point reduction in the average yield to 5.60%.

The interest income produced by loans rose $10.3 million year-over-year, to $327.1 million, as the average balance rose $1.7 billion to $22.8 billion, more than offsetting the impact of a 27-basis point drop in the average yield on such assets, to 5.75%. The increase in the interest income produced by loans occurred despite a $1.6 million decline in prepayment penalty income to $2.3 million, as the economic environment continued to inhibit refinancing activity. The interest income on loans was also reduced by the reversal of interest income on loans that moved to non-accrual status during the current three-month period.

The interest income produced by securities and money market investments fell $5.8 million year-over-year to $75.8 million, as the average balance declined $214.3 million to $6.0 billion, and the average yield on such assets fell 20 basis points to 5.06%.

Interest expense fell $39.9 million year-over-year to $176.6 million, as the impact of a $1.7 billion increase in the average balance of interest-bearing liabilities was exceeded by the benefit of a 79-basis point decrease in the average cost of funds, to 2.58%. In addition to the historically low level of the federal funds rate, the lower cost reflects the strategic run-off of higher-cost CDs and the Company's strategic exchange of BONUSES units for common stock in August of this year. In connection with the exchange, trust preferred securities totaling $48.6 million with a rate of 6.0% were extinguished, contributing to the reduction in the average cost of borrowed funds.

While the average balance of borrowed funds rose $1.5 billion year-over-year, to $14.3 billion, the average cost of such funds fell 45 basis points, to 3.62%, year-over-year. As a result, the interest expense produced by borrowed funds totaled $130.0 million in the current third quarter, comparable to the $130.1 million produced by borrowed funds in the year-earlier three months.

The interest expense produced by interest-bearing deposits totaled $46.5 million in the current third quarter, a $39.9 million reduction from the year-earlier amount. While the average balance rose $113.0 million year-over-year, to $12.9 billion, the impact of this increase was substantially exceeded by the benefit of a 125-basis point drop in the average cost of such funds to 1.43%.

CDs accounted for $35.5 million of the interest expense generated by deposits, representing a year-over-year reduction of $31.8 million, or 47.3%. The reduction was the result of a $1.1 billion decline in the average balance of such deposits, coupled with a 146-basis point decline in the average cost to 2.40%. At September 30, 2009, $4.9 billion of CDs with an average interest rate of 2.05% were scheduled to mature in the next four quarters. As a result, the Company currently expects to see a further decline in the cost of such funds during that time, absent an increase in the federal funds rate.

NOW and money market accounts produced $7.4 million of the interest expense generated in the current third quarter, a $6.0 million decrease year-over-year. Although the average balance of NOW and money market accounts rose $1.1 billion to $4.3 billion, the average cost of such funds fell 100 basis points to 0.69% during the same time.

Similarly, the interest expense produced by savings accounts fell $2.1 million to $3.7 million, the net effect of a $61.9 million increase in the average balance and a 32-basis point drop in the average cost to 0.52%.

Including average non-interest-bearing accounts of $1.1 billion and $1.3 billion, respectively, in the current and year-earlier third quarters, the average cost of deposits equaled 1.31% and 2.44% in the three months ended September 30, 2009 and 2008.

The same factors that contributed to the year-over-year increase in third quarter 2009 net interest income contributed to the expansion of the Company's interest rate spread and net interest margin during this time. At 3.02%, the Company's current third quarter spread was 54 basis points higher than the year-earlier measure and, at 3.17%, its margin was up 49 basis points. Prepayment penalty income contributed four basis points to the current third quarter margin, as compared to five basis points in the year-earlier three months.

Linked-Quarter Comparison

On a linked-quarter basis, net interest income rose $8.8 million, the result of a $1.2 million increase in interest income and a $7.5 million reduction in interest expense.

The linked-quarter rise in interest income was the net effect of a $336.6 million increase in the average balance of interest-earning assets and a five-basis point decrease in the average yield. While the average balance of loans rose $380.9 million over the course of the quarter, the average yield on such assets held steady at 5.75%. As a result, the interest income produced by loans rose $5.5 million on a linked-quarter basis, exceeding the impact of a $4.2 million decline in the interest income produced by securities and money market investments. The latter decline was attributable to a 25-basis point decrease in the average yield on such assets, coupled with a $44.4 million decrease in the average balance of such funds.

The linked-quarter reduction in interest expense was the net effect of a $475.0 million increase in the average balance of interest-bearing liabilities and an 18-basis point reduction in the average cost of funds. The interest expense produced by borrowed funds rose $1.4 million, as a $569.1 million increase in the average balance exceeded the impact of a 15-basis point drop in the average cost of such funds. The interest expense produced by interest-bearing deposits also declined, by $8.9 million, the result of a $94.1 million reduction in the average balance and a 28-basis point decline in the average cost.

The interest expense produced by CDs fell $9.1 million linked-quarter, as the average balance declined $441.0 million and the average cost of such funds fell 44 basis points. This reduction in CD-generated interest expense was tempered by modest increases in the interest expense produced by NOW and money market accounts and savings accounts, as the average balances of such funds rose $235.4 million and $111.5 million, respectively, more than offsetting average cost reductions of four and one basis points. Including average non-interest-bearing deposits of $1.1 billion and $1.2 billion, the average cost of deposits declined to 1.31% in the current third quarter from 1.56% in the second quarter of this year.

In addition, the Company's interest rate spread rose 13 basis points linked-quarter, while its margin rose 11 basis points.

Provision for Loan Losses

The provision for loan losses is based on management's assessment of the adequacy of the loan loss allowance. This assessment is made periodically and considers several factors, including the current and historical performance of the loan portfolio and its inherent risk characteristics; the level of non-performing loans and charge-offs; local economic conditions; the direction of real estate values; and current trends in regulatory supervision.

The Company recorded a $15.0 million provision for loan losses in the current third quarter, exceeding the trailing quarter amount by $3.0 million and the third quarter 2008 amount by $14.6 million. Reflecting the provision and net charge-offs recorded in the current third quarter, the allowance for loan losses rose $8.6 million from the June 30, 2009 balance to $106.7 million at September 30, 2009.

For additional information about the provision for loan losses and the loan loss allowance, please see the discussion of asset quality earlier in this release.

Non-interest Income

The Company has three primary components of non-interest income: fee income, income from bank-owned life insurance ("BOLI"), and other income, primarily consisting of revenues from the sale of third-party investment products and revenues from the Company's investment subsidiary, Peter B. Cannell & Co., Inc. ("PBC"). The non-interest income from these three ongoing revenue sources totaled $22.6 million in the current third quarter, as compared to $22.0 million and $24.8 million in the trailing and year-earlier three months, respectively.

The year-over-year decrease was primarily due to a $1.4 million decline in other income to $6.0 million as revenues from PBC and the sale of third-party investment products fell $372,000 and $950,000, respectively, year-over-year. The year-over-year declines in fee income and BOLI income were more modest, with fee income falling $720,000 to $9.7 million and BOLI income dropping $107,000, to $6.9 million during this time. The linked-quarter rise reflects modest increases in fee income, BOLI income, and other income.

In the third quarter of 2009, the combined revenues from the three ongoing components of non-interest income were tempered by a $13.3 million OTTI charge. However, the Company also recorded a $5.7 million gain on the extinguishment of trust preferred securities in connection with the exchange of BONUSES units during this time. As a result, the Company recorded total non-interest income of $15.1 million in the third quarter of 2009.

In the second quarter of 2009, the combined revenues from fee income, BOLI income, and other income were exceeded by OTTI charges of $39.7 million; similarly, the Company recorded OTTI charges of $44.2 million in the third quarter of 2008. As a result, the Company recorded non-interest losses of $17.7 million and $19.3 million in the three months ended June 30, 2009 and September 30, 2008, respectively.

Non-interest Expense

In the current third quarter, non-interest expense totaled $95.5 million, down $11.9 million from the trailing-quarter level, and up $11.1 million from the level recorded in the third quarter of 2008. Operating expenses accounted for $90.1 million of non-interest expense in the current third quarter, representing a linked-quarter reduction of $11.9 million and an $11.5 million increase from the year-earlier amount.

In the second quarter of 2009, the Company's operating expenses were increased by an FDIC special assessment of $14.0 million; an additional $801,000 was recorded for this purpose in the third quarter of 2009. Reflecting the FDIC special assessment, general and administrative ("G&A") expense totaled $26.3 million in the current third quarter, down $12.7 million on a linked-quarter basis and up $8.1 million year-over-year. The year-over-year increase was largely due to the increase in FDIC insurance premiums.

Compensation and benefits expense totaled $46.1 million in the current third quarter, up $1.0 million and $3.3 million, respectively, from the levels recorded in the trailing and year-earlier three months. The linked-quarter increase in compensation and benefits expense was partly offset by a $207,000 reduction in occupancy and equipment expense to $17.7 million. Year-over-year, occupancy and equipment expense rose $115,000.

Largely reflecting the increase in net interest income, the Company's operating efficiency ratio improved to 35.85% in the current third quarter from 36.72% and 38.01%, respectively, in the trailing and year-earlier three months.(3)

Income Tax Expense

The Company recorded income tax expense of $32.4 million in the current third quarter, as compared to $24.0 million and $19.7 million, respectively, in the trailing and year-earlier three months. While pre-tax income rose $53.1 million year-over-year and $50.5 million linked quarter, to $131.0 million, the level of income tax expense recorded in the current third quarter reflects a downward adjustment of $13.3 million, primarily in connection with the resolution of various tax audits during this period. Similarly, the effective tax rate declined to 24.73% in the current third quarter, from 29.85% and 25.38%, respectively, in the trailing and year-earlier three months.

About New York Community Bancorp, Inc.

With assets of $32.9 billion at September 30, 2009, New York Community Bancorp, Inc. is the 24th largest bank holding company in the nation and a leading producer of multi-family loans in New York City, with an emphasis on apartment buildings that feature below-market rents. The Company has two bank subsidiaries: New York Community Bank, with 177 branches serving customers throughout Metro New York and New Jersey; and New York Commercial Bank, with 35 branches serving customers in Manhattan, Queens, Brooklyn, Long Island, and Westchester County in New York.

Reflecting its growth through a series of acquisitions, the Community Bank operates through five local divisions: Queens County Savings Bank in Queens, Roslyn Savings Bank on Long Island, Richmond County Savings Bank on Staten Island, Roosevelt Savings Bank in Brooklyn, and Garden State Community Bank in New Jersey. Similarly, the Commercial Bank operates 18 of its branches under the name Atlantic Bank. Information about the Company and its bank subsidiaries is available at www.myNYCB.com and www.NewYorkCommercialBank.com.

Post-Earnings Conference Call

The Company will host a conference call on October 28, 2009 at 9:30 a.m. (ET) to discuss its third quarter 2009 performance and strategies. The conference call may be accessed by dialing 800-862-9098 (for domestic calls) or 785-424-1051 (for international calls) and providing the following access code: 3QNYCB. A replay will be available approximately two hours following completion of the call through midnight on November 2nd, and may be accessed by calling 800-374-1375 (domestic) or 402-220-0682 (international) and providing the same access code. The conference call will also be webcast, and may be accessed by visiting the Company's web site, www.myNYCB.com, clicking on "Investor Relations," and following the prompts. The webcast will be archived through 5:00 p.m. on November 25, 2009.

Forward-looking Statements and Associated Risk Factors

This release, like many written and oral communications presented by New York Community Bancorp, Inc. and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of said safe harbor provisions.

Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of the words "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "seek," "strive," "try," or future or conditional verbs such as "will," "would," "should," "could," "may," or similar expressions. Our ability to predict results or the actual effects of our plans or strategies is inherently uncertain. Accordingly, actual results may differ materially from anticipated results.

There are a number of factors, many of which are beyond our control, that could cause actual conditions, events, or results to differ significantly from those described in our forward-looking statements. These factors include, but are not limited to: general economic conditions and trends, either nationally or in some or all of the areas in which we and our customers conduct our respective businesses; conditions in the securities and real estate markets or the banking industry; changes in interest rates, which may affect our net income, prepayment penalty income, and other future cash flows, or the market value of our assets, including our investment securities; changes in real estate values, which could impact the quality of the assets securing the loans in our portfolio; changes in the quality or composition of our loan or securities portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; changes in our customer base or in the financial or operating performances of our customers' businesses; changes in the demand for our deposit, loan, and investment products and other financial services in the markets we serve; changes in deposit flows and wholesale borrowing facilities; changes in our credit ratings or in our ability to access the capital markets; changes in our estimates of future reserves based upon the periodic review thereof under relevant regulatory and accounting requirements; changes in our capital management policies, including those regarding business combinations, dividends, and share repurchases, among others; our ability to retain key members of management; changes in legislation, regulation, and policies, including, but not limited to, those pertaining to banking, securities, taxation, environmental protection, and insurance, and the ability to comply with such changes in a timely manner; additional FDIC special assessments or required assessment prepayments; changes in accounting principles, policies, practices, or guidelines; changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board of Governors; our timely development of new lines of business and competitive products or services in a changing environment, and the acceptance of such products or services by our customers; operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to industry changes in information technology systems, on which we are highly dependent; any interruption or breach of security resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems; any interruption in customer service due to circumstances beyond our control; potential exposure to unknown or contingent liabilities of companies we have acquired or target for acquisition; the outcome of pending or threatened litigation, or of other matters before regulatory agencies, or of matters resulting from regulatory exams, whether currently existing or commencing in the future; environmental conditions that exist or may exist on properties owned by, leased by, or mortgaged to the Company; war or terrorist activities; and other economic, competitive, governmental, regulatory, and geopolitical factors affecting our operations, pricing, and services.

In addition, it should be noted that we routinely evaluate opportunities to expand through acquisition and frequently conduct due diligence activities in connection with such opportunities. As a result, acquisition discussions and, in some cases, negotiations, may take place at any time, and acquisitions involving cash, debt, or equity securities may occur.

Furthermore, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control.

Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date of this release. Except as required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

- Financial Statements and Highlights Follow -

NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
(in thousands, except share data)
                                                                      September 30,          December 31,
                                                                      2009                   2008
                                                                      (unaudited)
Assets
Cash and cash equivalents                                             $    153,838           $    203,216
Securities available for sale:
Mortgage-related                                                           701,245                833,684
Other                                                                      111,750                176,818
Total available-for-sale securities                                        812,995                1,010,502
Securities held to maturity:
Mortgage-related                                                           2,611,438              3,164,856
Other                                                                      2,030,597              1,726,135
Total held-to-maturity securities                                          4,642,035              4,890,991
Total securities                                                           5,455,030              5,901,493
Mortgage loans:
Multi-family                                                               16,472,509             15,725,654
Commercial real estate                                                     4,873,403              4,551,025
Acquisition, development, and construction                                 666,196                776,559
1-4 family                                                                 226,413                266,307
Total mortgage loans                                                       22,238,521             21,319,545
Other loans                                                                800,205                872,667
Total loans                                                                23,038,726             22,192,212
Less: Allowance for loan losses                                            (106,659   )           (94,368    )
Loans, net                                                                 22,932,067             22,097,844
Federal Home Loan Bank of New York stock, at cost                          423,028                400,979
Premises and equipment, net                                                207,622                217,762
Goodwill                                                                   2,436,401              2,436,401
Core deposit intangibles, net                                              71,205                 87,780
Other assets                                                               1,205,277              1,121,431
Total assets                                                          $    32,884,468        $    32,466,906
Liabilities and Stockholders' Equity
Deposits:
NOW and money market accounts                                         $    4,684,607         $    3,818,952
Savings accounts                                                           2,881,393              2,632,078
Certificates of deposit                                                    5,770,801              6,796,971
Non-interest-bearing accounts                                              1,131,100              1,127,647
Total deposits                                                             14,467,901             14,375,648
Borrowed funds:
Wholesale borrowings                                                       12,759,176             12,343,064
Junior subordinated debentures                                             435,227                484,216
Other borrowings                                                           669,517                669,430
Total borrowed funds                                                       13,863,920             13,496,710
Other liabilities                                                          212,108                375,302
Total liabilities                                                          28,543,929             28,247,660
Stockholders' equity:
Preferred stock at par $0.01 (5,000,000 shares authorized; none            --                     --
issued)
Common stock at par $0.01 (600,000,000 shares authorized;                  3,558                  3,450
355,842,337 and 344,985,111 shares issued, respectively; 355,839,733
and 344,985,111 shares outstanding at the respective dates)
Paid-in capital in excess of par                                           4,297,006              4,181,599
Retained earnings                                                          109,609                123,511
Treasury stock (2,604 and 0 shares at the respective dates)                (28        )           --
Unallocated common stock held by ESOP                                      (1,212     )           (1,995     )
Accumulated other comprehensive loss, net of tax:
Net unrealized loss on securities and non-credit portion of                (17,619    )           (32,506    )
other-than-temporary impairment ("OTTI") losses, net of tax
Net unrealized loss on securities transferred from available for           (4,092     )           (4,706     )
sale to held to maturity, net of tax
Pension and post-retirement obligations, net of tax                        (46,683    )           (50,107    )
Total accumulated other comprehensive loss, net of tax                     (68,394    )           (87,319    )
Total stockholders' equity                    4,340,539       4,219,246
Total liabilities and stockholders' equity  $ 32,884,468    $ 32,466,906

NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                                                  For the Three Months Ended                        For the Nine Months Ended
                                                                  Sept. 30,        June 30,       Sept. 30,         Sept. 30,          Sept. 30,
                                                                  2009             2009           2008              2009               2008
Interest Income:
Mortgage and other loans                                          $   327,120      $  321,640     $   316,780       $   970,477        $   940,164
Securities and money market investments                               75,816          80,056          81,619            234,261            253,859
Total interest income                                                 402,936         401,696         398,399           1,204,738          1,194,023
Interest Expense:
NOW and money market accounts                                         7,380           7,314           13,346            22,257             40,658
Savings accounts                                                      3,687           3,565           5,814             11,468             17,688
Certificates of deposit                                               35,482          44,617          67,274            132,822            209,647
Borrowed funds                                                        130,027         128,615         130,086           387,331            452,142
Total interest expense                                                176,576         184,111         216,520           553,878            720,135
Net interest income                                                   226,360         217,585         181,879           650,860            473,888
Provision for loan losses                                             15,000          12,000          400               33,000             2,100
Net interest income after provision for loan losses                   211,360         205,585         181,479           617,860            471,788
Non-interest Income (Loss):
Total loss on OTTI of securities                                      (22,550 )       (51,073 )       (44,160 )         (73,623   )        (93,755   )
Less: Non-credit portion of OTTI recorded in other comprehensive      9,275           11,345          --                20,620             --
income (before taxes)
Net loss on OTTI recognized in earnings                               (13,275 )       (39,728 )       (44,160 )         (53,003   )        (93,755   )
Fee income                                                            9,682           9,282           10,402            28,255             31,196
Bank-owned life insurance                                             6,914           6,728           7,021             20,482             20,900
Net gain on sale of securities                                        --              --              --                --                 568
Gain on debt exchange/repurchases                                     5,717           --              --                5,717              926
Other                                                                 6,034           6,007           7,405             18,086             26,671
Total non-interest income (loss)                                      15,072          (17,711 )       (19,332 )         19,537             (13,494   )
Non-interest Expense:
Operating expenses:
Compensation and benefits                                             46,093          45,045          42,769            133,560            129,175
Occupancy and equipment                                               17,700          17,907          17,585            54,343             52,507
General and administrative                                            26,274          38,975          18,224            88,002             58,214
Total operating expenses                                              90,067          101,927         78,578            275,905            239,896
Debt repositioning charge                                             --              --              --                --                 285,369
Amortization of core deposit intangibles                              5,412           5,476           5,757             16,575             17,610
Total non-interest expense                                            95,479          107,403         84,335            292,480            542,875
Income (loss) before income taxes                                     130,953         80,471          77,812            344,917            (84,581   )
Income tax expense (benefit)                                          32,380          24,023          19,748            101,207            (60,233   )
Net Income (Loss)                                                 $   98,573       $  56,448      $   58,064        $   243,710        $   (24,348   )
Basic earnings (loss) per share                                   $   0.28         $  0.16        $   0.17          $   0.70           $   (0.08     )
Diluted earnings (loss) per share                                 $   0.28         $  0.16        $   0.17          $   0.70           $   (0.08     )

NEW YORK COMMUNITY BANCORP, INC.
RECONCILIATION OF GAAP AND OPERATING EARNINGS
(unaudited)
Although operating earnings are not a measure of performance
calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"), we believe that operating earnings are an
important indication of our ability to generate earnings through
our fundamental banking business. Since operating earnings exclude
the effects of certain items that are unusual and/or difficult to
predict, we believe that our operating earnings provide useful
supplemental information to both management and investors in
evaluating the Company's financial results.
Operating 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 our operating
earnings may differ from that of other companies reporting measures
with similar names.
Reconciliations of the Company's GAAP and operating earnings for the
three months ended September 30, 2009, June 30, 2009, and September
30, 2008 and for the nine months ended September 30, 2009 and 2008
follow:

For the Three Months Ended For the Nine Months Ended Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30, (in thousands, except per share data) 2009 2009 2008 2009 2008 GAAP Earnings (Loss) $ 98,573 $ 56,448 $ 58,064 $ 243,710 $ (24,348 ) Adjustments to GAAP earnings (loss): Loss on OTTI of securities 13,275 39,728 44,160 53,003 93,755 Gain on debt exchange/repurchases (5,717 ) -- -- (5,717 ) (926 ) FDIC special assessment

For full details on New York Community Bancorp (NYB) click here. New York Community Bancorp (NYB) has Short Term PowerRatings of 5. Details on New York Community Bancorp (NYB) Short Term PowerRatings is available at This Link.

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