This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Banks At Risk of a Commercial Real Estate Double Dip

Stocks in this article: NYB FBP BPOP SNV BXS

5. New York Community Bancorp

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Shares of New York Community Bancorp (NYB) are down 20% year-to-date.

The bank is a big lender in the multi-family mortgages business in the New York region, with an emphasis on apartment buildings that feature below market rents. Multi-family loans totaled $16.9 billion as of the first quarter of 2011.

Total commercial real estate exposure stood at about $23 billion in the first quarter or 626% of capital (Tier1 Capital plus loan loss reserves), placing it among the banks with the biggest concentrations in commercial real estate, by that measure. Nonperforming CRE loans stood at 15.1% of total capital. About $388 million worth of multi-family loans were classified as non-accruals.

Peter Winter at BMO Capital says that despite its seemingly high level of nonperforming commercial mortgage assets, historically, New York Community Bank has had a very low charge off rate, partly because of its underwriting standards. "Their average loan-to-value is under 60% - that's a lot of equity. They lend based on cash flow and not market value of the property. Because of the equity in the building and because there is cash flow, the charge-offs are low," he said. "They also focus on the rent control market which is high in demand especially during such weak economic conditions when there is demand for cheaper rental apartments. The vacancy rates are low," he added.

The bank has tried to manage delinquent loans through concessions such as such as rate reductions, extension of maturity dates, and forbearance agreements. As of March 31, 2011, loans on which concessions were made with respect to rate reductions amounted to $258.8 million; loans on which maturities were extended amounted to $55.8 million; and loans in connection with which forbearance agreements were reached amounted to $56.7 million.

However, the lower spreads on the multi-family mortgages has been a point of concern for some analysts. "Although the very solid pipeline of multifamily even at tighter spreads could be cause for the market to get more excited over NYB, the final wrinkle to the NYB story over at least the near term is that refinance activity in the company's core multifamily book is very strong, " analysts at JPMorgan noted in a report in May. "As a result of strong refi activity, despite a very strong pipeline of business, management guided to expect mid-single-digit loan growth in 2011."

13 analysts rate the stock a buy, eight rank it a hold and only one has a sell rating on the stock.

2 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,675.44 +2.84 0.02%
S&P 500 2,053.39 +1.57 0.08%
NASDAQ 4,760.00 +2.1210 0.04%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs