This Day On The Street
Continue to site right-arrow
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!

New York Community Bancorp Downgraded by KBW

Stocks in this article: NYCB

NEW YORK (TheStreet) -- "We believe the best source of investor return for NYCB shares is its attractive dividend yield of 6.0%, as it pays investors to wait for the NYCB's next move, whatever that might ultimately be."

That's what KBW analyst Collyn Gilbert wrote in a note to clients on Wednesday when she cut her rating for New York Community Bancorp (NYCB) to "market perform" from "outperform," after the company reported its fourth-quarter results. The main reason for the downgrade was that the bank's share price was getting close to the analyst's $17 price target, but Gilbert also lowered her 2014 earnings estimate of NYCB to $1.04 from $1.09 and here 2015 EPS estimate to $1.19 from $1.27.

New York Community Bancorp has primarily been a dividend story for investors for quite a long time. The company pays a quarterly dividend of 25 cents a share, for a yield of 6.11%, based on Tuesday's closing price of $16.36. That's one of the highest dividend yields for any publicly traded U.S. bank. For many years, some analysts have continually questioned the bank's ability to continue paying out most of its earnings, but New York Community has paid the 25-cent dividend for 40 consecutive quarters.

Among the analysts who are negative on NYCB is Sterne Agee analyst Matthew Kelley, who on Wednesday reiterated his "underperform" rating for the bank, with a price target of $14.00. While he didn't discuss the dividend, Kelley in a note to clients wrote, "With profitability levels (ROA) expected to contract, the shares are overvalued vs. regional bank peers at 15.5x 2015E EPS (peers 14.4x), in our view."

Shares of New York Community declined 2.2% on Wednesday, after the company reported fourth-quarter earnings of $120.2 million, or 27 cents a share, compared to $114.2 million, or 26 cents a share, in the third quarter, and $122.8 million, or 28 cents a share, during the fourth quarter of 2012. The main factor in the sequential earnings improvement was a recovery of $5.8 million that had previously been added to reserves to cover loans with partial guarantees by the Federal Deposit Insurance Corp. acquired in 2010 along with the deposits and branches of the failed AmTrust Bank of Cleveland. During the third quarter, the bank had added to $9.5 million to reserves for covered loans.

Provisions for losses on non-covered loans declined to $3.0 million during the fourth quarter from $5.0 million the previous quarter and a year earlier. The bank's credit quality was very strong with nonperforming loans making up 0.35% of non-covered loans as of Dec. 31, reflecting NYCB's focus on making loans secured by apartment buildings in the New York City area with below-market rents.

New York Community's net interest income rose to $297.3 million in the fourth quarter from $294.3 million the previous quarter and $290.0 million a year earlier. The bank's average loans grew 4.5% sequentially and 4.7% year-over-year to $32.4 million in the fourth quarter. The bank's growth in loans and securities investments was strong enough to outweigh a narrowing net interest margin. The fourth-quarter margin was 2.92%, down from 3.04% the previous quarter and 3.15% a year earlier.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

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