New York Community Bancorp, Inc. (NYSE:NYCB) Q4 2022 Earnings Call Transcript

We just picked up a big win recently with California, which will be a substantial benefit for the bank once it gets geared up. But again, it’s the timing of it, Matt. If it happened in Q2, Q3. It really is as quick as government gets it up and running and we’re ready to react. It’s been a good business for us, and there’s some fees involved. But more importantly, the average cost of those liabilities are very low, New net to zero in most cases. And John, if you want to talk about some of the trends.

John Pinto: Yes, we’ve tried to model it. It’s been pretty close to the modeling we saw with the economic impact stimulus payments. So there is a tail that will sit around, but the bulk of the deposits to go pretty quickly. and then you have like a slow draw after that. So yes, we will have deposits as of — I would assume at the end of the year, I don’t think it’s going to be that material of a number by then. But the first quarter will still have a really nice average balance then it will start to come down from there.

Matthew Breese: Okay. Understood. And then what are the remaining one-time costs from the deal and the mortgage restructuring? And then could you give us a sense for timing throughout the year when they’ll be taken?

Thomas Cangemi: Well, let Lee talk about the mortgage restructure and John will get into some guesstimatess on what we think we’re going to — we have left. Lee?

Lee Smith: Yes, sure. So the cost with the restructuring that we’ve just actioned, we estimate to be $12 million to $13 million. And that is predominantly severance. But as I mentioned earlier, there are some leases that we need to get out of. So there’s some costs associated with that. There’s a couple of contracts that we are also going to exit. We’re going to isolate that as a restructuring charge, and that we will take that in the first quarter. In addition, we probably need 60 days. That’s what we’re estimating to work off the pipeline, those loans are a lot that are not yet closed of those offices that we’ve closed down. So that will take us through the end of March. And that’s why earlier I mentioned that even though you’re going to start seeing cost savings starting in February, there is noise as a result of the onetime restructuring charge, the runoff of the pipeline and I expect us to have a real clean run rate beginning April 1.

Thomas Cangemi: And then on the merger-related charges, we’ll see some in the next couple of quarters when it comes to primarily severance and just some consulting work to get through the consolidation of the two companies. So you’ll see that as well in the coming quarters. And then there’ll be some charges when we get to Q1 of 2024 when we get to the conversion date.

Matthew Breese: Got it. Okay. Last one for me is just overall capital levels, tangible common equity at 6.4%. Your total risk-based capital ratio is sub-12%. Should we be contemplating any common equity raise or sub-debt raise to bolster these ratios? That’s all I had. Thank you.

Thomas Cangemi: Yeah. Thanks, Matt. I think given where the capital ratios are, and just given the credit nature of the two balance sheets, two legacy bank balance sheets and the limited risk really from a charge-off and in a provisioning perspective, we’re comfortable where the capital ratios are with a common equity Tier 1 ratio over 9%. That’s a good spot for us to be given the loss content in those portfolios. So it’s something we’re going to, of course, continue to manage. And we believe the best use of the capital right now is primarily dividends, then, of course, to fund growth. And then going forward, we can look at other capital initiatives depending on market conditions.