N.Y. Community Bancorp is a Feast or Famine

NEW YORK ( TheStreet) -- New York Community Bancorp ( NYCB) continues to look for a transformative deal to boost earnings and help the company maintain its industry-leading dividend on common shares.

The company, which is based in Westbury, N.Y., and operates under several local bank names, including Queens County Savings Bank, pays a quarterly dividend of 25 cents a share. That translates to a very high dividend yield of 7.51%, based on Wednesday's closing price of $13.32.

For investors, New York Community has been a fascinating play, not only because of the outsized dividend but because opinion is so divided about the company's ability to maintain the dividend since it pays out most of its earnings. Some analyst have been predicting a dividend for over five years but the company has managed to keep paying out 25 cents a share for 37 consecutive quarters.

The bank focuses on multi-family lending in the New York City area, concentrating on apartment buildings with below-market rents, leading to a long-term record for very strong asset quality. New York Community Bancorp has also expanded over a long period by acquiring local competitors. The company expanded its regional footprint beyond New York and New Jersey to include Ohio, Florida and Arizona, through its last major acquisition of the failed AmTrust Bank of Cleveland, in December 2009.

New York Community Bancorp on Wednesday reported first-quarter net income of $118.7 million, or 27 cents a share, compared to $122.8 million, or 28 cents a share, in the second quarter, and $118.3 million, or 27 cents a share, in the first quarter of 2012.

Net interest income declined to $275.2 million in the first quarter from $290.0 million the previous quarter and $288.4 million a year earlier. Net interest income was boosted by $19.9 million in loan prepayment penalty fees during the first quarter. Prepayment fees boosted net income by $39.3 million in the fourth quarter and $17.5 million during the first quarter of 2012. The company in the fourth quarter booked $17.9 million in prepayment fees on a single borrower relationship, with the prepayment of $545.5 million in multifamily mortgage loans.

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