New York Community Bancorp, Inc. Reports 4th Quarter 2007 Diluted Cash Earnings Per Share of $0.25 and Diluted GAAP and Operating Earnings Per Share of $0.21

Business Wire, Jan 29, 2008

In October 2007, Visa completed a reorganization in contemplation of its initial public offering ("IPO"), which is expected to occur in 2008. As part of that reorganization, New York Community Bank and the former Synergy Bank, along with many other banks across the nation, received shares of common stock of Visa, Inc. Visa claims that all of the Visa U.S.A. member banks are obligated to share with it in losses stemming from certain litigation against it and certain other named member banks (the "Covered Litigation").

Visa is expected to set aside a portion of the proceeds from its IPO in an escrow account to fund any judgments or settlements that may arise out of the Covered Litigation, and plans to reduce the amount of shares to be allocated to the Visa U.S.A. member banks by amounts necessary to cover such liability. Nevertheless, Visa member banks are expected to record a liability for the fair value of their related contingent obligation to Visa, based on their percentage membership interest. Therefore, the Company has determined that it should establish a non-cash pre-tax charge of $1.0 million for the Covered Litigation based on the combined membership interests of the Community Bank and Synergy Bank. The estimation of the Company's proportionate share of any potential losses related to the Covered Litigation involves a great deal of judgment.

In accordance with generally accepted accounting principles, the Company has not yet recognized any value for its common stock ownership interest in Visa, Inc.

Net Interest Income

Notwithstanding the linked-quarter reduction in prepayment penalty income, the Company recorded net interest income of $154.4 million in the fourth quarter of 2007, a modest decline from $154.9 million in the third quarter of the year. While prepayment penalty income fell $12.6 million to $4.5 million over the course of the quarter, the impact was substantially softened by a linked-quarter rise in average interest-earning assets and by the Company's ability to contain or reduce its funding costs during this time.

In addition to the interest-earning assets acquired in the Synergy transaction, the linked-quarter growth in the Company's average interest-earning assets reflects the aforementioned increase in the volume of loans produced. The reduction in the average cost of funds reflects the strategic run-off of higher-cost funding sources during the quarter, and a decline in the cost of the Company's interest-bearing deposits in the wake of actions taken by the Federal Open Market Committee.

Interest income rose $1.9 million to $399.1 million over the three months ended December 31, 2007, the net effect of a $462.0 million rise in the average balance of interest-earning assets to $26.4 billion and a seven-basis point decline in the average yield to 6.04%. The linked-quarter decline in the average yield was attributable to the aforementioned reduction in prepayment penalty income during the quarter. Similarly, the interest income produced by loans rose modestly to $302.7 million, as a $786.6 million rise in the average balance to $19.8 billion was tempered by a 25-basis point drop in the average yield to 6.12%.