Preferred Play on N.Y. Community Bancorp
New York Community's challenge will be to continue improving its net-interest spread over the coming quarters as well as its earnings. The company consistently posted returns on average assets exceeding 1% through 2005, and returns on equity approaching 20% in 2002 and 2003.
At New York Community Bancorp, each BONUS consists of one trust-preferred share of New York Community Capital Trust V and a warrant to purchase about 2.5 common shares for $50, or about $20 each, at any time before May 7, 2051.
The company has the option of redeeming the warrants if common shares trade at 125% of the conversion price for 20 of the previous 20 trading days.The BONUS units trade on the New York Stock Exchange under the symbol "NYB.PRU" and have a par value of $50 and a 6% coupon. New York Community's common shares peaked at $35.57 on March 1, 2004, according to Bloomberg data, but investors holding the BONUS shares weren't allowed to exercise the warrants until Nov. 4, 2007, after which the stock peaked at $22 on Sept. 19, 2008. The exchange offer expires Aug. 25, and the exchange ratio will be set Aug. 21. The ratio will be 2.4953 common shares plus $10 divided by the daily volume-weighted average price of the common shares for the five trading days ending Aug. 21. Based on an average closing price of $11.31 for the five trading sessions through Thursday, the exchange ratio would be 0.8842 plus 2.4953 shares, or 3.3777 common shares for each BONUS unit.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV