New York Community Bancorp in the first quarter partially offset a slowdown in residential lending with more fees from New York apartment-building owners who repaid loans early.
As result, the Westbury, N.Y. thrift's net income declined 18% from the prior quarter and less than 1% from a year earlier, to $123.2 million.
New York Community's home-mortgage income fell by more than half from the prior quarter as it originated $2.4 billion fewer home loans to sell to the federal housing agencies.
It became more involved in home mortgages last year after buying AmTrust Bank of Cleveland, once a top ranked residential lender with a large wholesale division. That unit enabled it to generate a lot of fee income in the second half that made up for soft demand for its core product, mortgages on New York apartment buildings. (AmTrust/NYCB ranks seventh among all wholesale funders, according to figures compiled by National Mortgage News.)
Joseph Ficalora, the chief executive of the $41 billion-asset lender, told analysts in a conference call that demand is picking up for apartment-building loans, which account for about 60% of its $28.5 billion of loans.
"We see some very large production," Ficalora said, noting that New York Community has about $1.8 billion of apartment-building loans in the process of closing. "There is a growing marketplace in our niche, and we are going to see more activity. We are going to see more prepayments; we are going to see more production."
He said the company had its best quarter for originations to apartment-building owners since the third quarter of 2004.
More of those owners refinanced their loans in the first quarter in anticipation of higher rates, which eased margin pressure by adding $19.6 million of loan prepayment income, about 30% more than in the prior quarter, he said.
Apartment-building loans expanded by $92 million, or less than 1%, from yearend. Commercial real estate loans grew modestly, too. But runoff of construction and development loans and falling balances of home loans held for sale shrank total loans by nearly 2% from the fourth quarter.
The mortgage production slowdown hurt loan and fee income and margins. Lower rates collected on a $4.8 billion portfolio of securities hurt, too.
