Nycb: Quality Assets, High Efficiency & Generous Dividend Add To Upside

744 words - 3 pages

With assets of over $47 billion, New York Community Bancorp (NYCB) is the twentieth largest banking holding company in the U.S. and a leading provider of multi-family loans in the New York City.

After making at high $17.39 early this year, the bank stock has significantly corrected over the last few months. Nevertheless, I believe the pullback has created a opportunity for the investors to buy (or buy more) of this exceptional bank for the following three reasons.

Assets quality
Almost every bank says it’s a conservative lender along with number of other things, but a bank is as good as its assets, i.e. the loans it makes, the securities it holds etc. After all, they are things that ...view middle of the document...

Efficiency
New York Community Bancorp is remarkably efficient. Its efficiency ratio - percent of revenues consumed by operating expenses – figures in low-40% range, blowing away some of the most prominent names in the industry.

NYCB’s franchise expansion has mainly stemmed from mergers and acquisitions, the bank doesn’t engage in de novo branch development. Its lending activities, particularly multi-family and commercial real estate (CRE), are both broker-driven. So the borrower pays fees to the mortgage brokerage firm, consequently reducing NYCB’s overheads. Likewise, third-party providers typically develop other products and services for the bank as well.

Paying above-market rates is usually how banks acquire deposits, however NYCB acquires deposits mainly through earning-accretive acquisitions.

Nearly 14% of NYCB’s 272 branches are located in-store, where rental space is less costly, thus enabling it to supplement the services provided by traditional branches more efficiently.

Generous dividend
Quarterly cash dividends form a significant component of NYCB’s commitment to building value for its investors.

Not only is New York-base lender...

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