NYCB: Quality Assets, High Efficiency & Generous Dividend Add to Upside
627 WordsFeb 22, 20182 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.
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 will drive future profitability or lead to a rout of a bank. Therefore, a bank’s growth at the cost of assets quality is deemed unsustainable. Nevertheless, that’s something that you wouldn’t have to worry about with NYCB. The bank doesn’t write bad loans.
As indicated in the chart above, the bank has been distinguished by its low level of net charge-offs, even in downward credit cycles. . During the Great Recession, i.e. between 2007 and 2010, NYCB’s net charge-off never crossed more than 0.21% of its average loans in any of those years. That is significantly better than industry averages that ranged between 0.68% and 2.89% during the same period.
In terms of non-performing loans to total loans, NYCB, again, has markedly outdone its peers. Both these metrics have seen further