Moving through the credit crisis
Here's a breakdown of New York Community's most important figures: P>
A net loss of $155 million in the second quarter of 2008 reflected prepayment fees and other expenses incurred when the company repaid $4 billion in wholesale borrowings and replaced them with lower-cost funding. That has been paying off, with New York Community's net interest spread increasing over the past year to an annualized 3.04% in the first quarter of 2009, according to SNL Financial. The spread had gotten to as low as 1.90% in the second quarter of 2008, which reflected the prepayments of borrowings, as well as a hostile interest-rate environment.
Looking at loan quality, the nonperforming-assets ratio increased during the first half of 2008 but was still a relatively low 1.03%. Net charge-offs (actual loan losses) have been extraordinarily low, with the annualized net charge-off ratio peaking at just 0.16% in the second quarter. For 2008, the charge-off ratio was 0.03%, and the company had no charge-offs over the preceding 10 years.Multifamily mortgages comprised 71% of total loans and nearly half the company's total assets as of June 30, as New York Community has traditionally focused on loans secured by apartment buildings with a preponderance of rent-stabilized or rent-controlled apartments. Since these buildings have many units with below-market rents, building managers tend to have steady cash flows and, thus, New York Community can boast of strong loan quality. Also mitigating risks are conservative underwriting standards, with an average loan-to-value, or LTV, ratio of 61% on multifamily mortgages and an average LTV of 54% for commercial real estate loans, according to the company.