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

The interest income produced by securities, meanwhile, rose $11.9 million to $93.7 million, the result of a $473.3 million increase in the average balance to $6.5 billion and a 33-basis point rise in the average yield to 5.80%.

The linked-quarter increase in fourth quarter 2007 interest income was exceeded by a $2.3 million increase in interest expense to $244.7 million, the net effect of a $365.7 million rise in the average balance of interest-bearing liabilities to $24.7 billion and a two-basis point reduction in the average cost of funds to 3.93%. Although the interest expense produced by interest-bearing deposits declined $6.7 million over the course of the quarter, the interest expense produced by borrowed funds rose $9.0 million during this time. The reduction in deposit-driven interest expense was the result of a $379.8 million decline in the average balance of interest-bearing deposits to $12.1 billion and a 12-basis point decline in the average cost of such funds to 3.38%. The increase in the interest expense produced by borrowed funds was the result of a $745.5 million increase in the average balance to $12.6 billion and a three-basis point rise in the average cost of such funds to 4.45%.

The year-over-year comparison of the Company's fourth quarter 2007 net interest income reflects substantial improvement, despite a $4.2 million reduction in prepayment penalty income during this time. Net interest income rose $13.6 million year-over-year, as a $31.5 million increase in interest income exceeded a $17.9 million increase in interest expense.

The year-over-year growth of net interest income in the current fourth quarter was fueled by a $1.3 billion increase in interest-earning assets, coupled with an 18-basis point increase in the average yield. As the yield curve moved from inverted to flat midway through the year, and then began to grow steeper, the yields on the Company's loans and securities began to increase. In addition, the Company repositioned its balance sheet in the second quarter, replacing certain lower-yielding assets that had been acquired with loans and securities featuring higher yields. As a result, the interest income produced by loans and securities rose $5.8 million and $23.3 million in the current fourth quarter, as the respective average balances rose $247.2 million and $918.9 million, and the respective average yields rose four and 72 basis points, year-over-year.

During this time, the interest expense produced by the Company's interest-bearing liabilities rose $17.9 million, as the average balance grew $1.2 billion and the average cost rose 10 basis points. While the interest expense from borrowed funds rose $19.9 million year-over-year, the impact was somewhat tempered by a $2.0 million decline in the interest expense produced by interest-bearing deposits. The increase in the interest expense produced by borrowed funds was the result of a $1.2 billion rise in the average balance, together with a 23-basis point rise in the average cost of such funds. The reduction in the interest expense produced by interest-bearing deposits was the net effect of a $62.4 million rise in the average balance and a nine-basis point reduction in the average cost.