Profits dip at Westbury bank firm

New York Community Bancorp's first-quarter earnings missed Wall Street's expectations Tuesday as the Westbury-based company reported slightly lower profits. Operating earnings fell to $117.2 million in the first quarter compared to $125.9 million during the same period a year ago as fewer people refinanced and purchased one- to four-family homes.

The bank posted earnings per share of 27 cents, falling below analysts' consensus estimates by 4 cents or 12.3 percent, according to Bloomberg Data.

"The decline in refinancing activity and the purchase of new homes was largely due to an increase in residential mortgage interest rates in the past two quarters, which led to further weakness in the housing market," bank president and chief executive Joseph Ficalora said in an investors' call Tuesday.

The bank's average balance of loans declined by $602.9 million to $28.5 billion in the first quarter of this year compared to the last quarter of 2010. The bank increased its provision for loan losses, money set aside for bad loans, by $6 million to a total of $26 million compared to the first quarter of 2010.

The bank's stock plunged on the news Tuesday, closing 80 cents down to $16.28 per share, a 4.68 percent decline.

Janney Capital Markets analyst Rick Weiss called the plunge an "overreaction."

"Our enthusiasm for the company and stock remains intact because franchise value and core earnings are driven by lending on rent controlled/stabilized properties in the New York City metropolitan area, which is in good shape," Weiss wrote in an analyst's report. "Multifamily lending, when properly underwritten, affords superior asset quality and much less interest rate volatility than single-family residential loans."

Ficalora said that multifamily loan productions increased by $112.1 million over the previous quarter to $1.1 billion, the highest volume it has seen since 2004. The increase was primarily due to refinancings, he said.

The bank is the 22nd largest bank holding company in the nation, with assets totaling $41 billion. Its two subsidiaries have 276 branches in New York, New Jersey, Ohio, Florida and Arizona.