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) -- Even though

New York Community Bancorp



share price has risen 57% over the past year, its well-supported dividend payout, rising earnings and strong asset quality makes this an excellent stock for long-term investors.

New York Community's shares have a 5.91% dividend yield, based Friday's closing price of 16.93 and a quarterly payout of 25 cents. While there was some concern among investors and analysts over a year ago that the company's dividend wasn't well supported, the company's earnings improvement - springing in part from its government-assisted acquisition of deposits and some assets from

AmTrust Bank

after its failure in December 2009 - has taken care of that problem.

The company was featured among


10 Banks With Real Earnings Improvement

, which homed-in on holding companies with improved earnings irrespective of the reserve releases that have driven earnings increases for most large banks over the past two quarters.

As discussed in a profile of the company as part of


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Best In Class

series, New York Community Bank's traditional focus is on making multifamily loans in the New York City area, concentrating on apartment buildings that are either rent-stabilized or rent-controlled. This particular market niche has led to a remarkably stable track record for minimal loan losses over the years. Another interesting quality of New York Community is that its board of directors is actively involved in assessing the properties collateralizing the company's larger loans. This is not the norm for bank boards, as evidenced by so many regulatory orders handed down through the credit crisis.

Through the credit crisis, New York Community's annualized ratio of net charge-offs to average loans has remained quite low, peaking at 0.26% during the second quarter, compared to the national aggregate net charge-off ratio of 2.64% reported by the Federal Deposit Insurance Corporation.

New York Community earned $135.6 million, or 31 cents a share, during the third quarter, increasing from $98.6 million, 28 cents a share, during the third quarter of 2009. The biggest year-over-year improvement was new mortgage banking fee income of reflecting $76.5 million in mortgage banking income.

Another bright spot for New York Community is continued high efficiency. A bank's efficiency ratio is essentially its noninterest expense divided by its interest and noninterest income, and New York Community's third-quarter efficiency ratio of 35.82% was third-best among the largest 50 U.S. bank and thrift holding companies, according to SNL Financial. It followed

Hudson City Bancorp


with an efficiency ratio of 22.55% and

Washington Federal


, at 32.19%.

New York Community Bancorp didn't take government bailout assistance from through the Troubled Assets Relief Program, or TARP. The company's tangible common equity ratio as of September 30 was 7.59%, rising from 6.03% a year earlier, despite the dividend payout.

Following the company's third-quarter earnings release, David Darst of Guggenheim Securities reiterated his buy rating on the shares and $19 price target, citing the bank's "improving fee income growth." His earnings estimate for 2011 is $1.40 a share, which is a forward price-to-earnings ratio of 12.1 based on Friday's close.

So how do you play New York Community Bancorp? The shares aren't particularly cheap, but one way to play it is to begin with a reasonable position and genuine long term commitment - meaning several years - while enjoying the near-6% yield and building the position on the inevitable market dips.


10 Banks with Real Earnings Improvement >>

Most Large Banks Ready for Stress Tests, Dividends >>

10 Banks Likely to Boost Dividends in Q1 >>

10 Banks With Earnings Upside Potential >>


Written by Philip van Doorn in Jupiter, Fla.

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Philip van Doorn


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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.