Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk.

July 22, 2010 - New York Community Bancorp (NYB-NYSE) operates as a multi-bank holding company for New York Community Bank and New York Commercial Bank, which offers banking products and services in New York, New Jersey, Ohio, Florida, and Arizona.

Its lending portfolio comprises one- to four-family loans; multi-family loans; commercial real estate loans; acquisition, development, andconstruction loans; commercial and industrial loans; and consumer loans. New York Community Bancorp also provides cash management, online banking, automated teller machine (ATM), and phone banking services.

The company serves small and mid-size businesses, professional associations, government agencies, consumers, and school districts. Asof December 31, 2009, it operated 241 community bank branches, 35 commercial bank branches, and 289 ATM locations.

The company was formerly known as Queens County Bancorp, Inc. and changed its name to New York Community Bancorp, Inc. in November 2000. New York Community Bancorp, Inc. was founded in 1859 and is based in Westbury, New York.

Improvement to the bottom line came from lower funding costs (those interest rates paid on deposits) and lower loan loss reserves. It's also one of the more efficient banks, meaning that it's overhead is a smaller percentage of cost than most other banks.

The bank has been adding other banks to its fold, starting in 2001 with Richmond County Financial, then Roslyn Bancorp in 2003, followed by Long Island Financial in 2005, Atlantic Bank in 2006, PennFed in 2007, Synergy also in 2007. Last year, it purchased AmTrust Bank. Then early in 2010, it added a small institution. The most recent additions added to assets and deposits.

Expect more acquisitions, with an emphasis on smaller banks which can help fill in a region or can simply be added without too much integration complexity. Larger banks, up for sale, tend to attract a lot of buyers and NYB isn't able to negotiate as favorable terms with the FDIC when competition is heavy. Lately, some of the smaller banks have also seen keen interest from buyers so going forward expect higher costs for acquisitions.

Loans in the New York area, specifically in the multifamily sector, have been few and far between. The slow economy prevents apartment owners from expanding existing properties or developers from starting new ones as no one thinks real estate has hit bottom yet. The same thinking pervades the commercial real estate borrowers, a major focus of NYB over the last few years. If, as many economists are predicting, 2011 shows an economic pickup with some substance, expect NYB to benefit by increasing its loan portfolio to both of these groups.

Whenever a bank is under consideration these days, its asset quality is of primary importance. When assets go bad, they take bank capital with them. NYB has a mixed message. It's not reserving as much for loan losses these days, especially comparing the first quarter of 2010 with the last quarter of 2009. That suggests the bank is feeling a little more comfortable about its loans, thinking losses will be fewer going forward. Still, there are more non-performing loans. The saving factor for apartment loans that get behind in their payments is an outright sale to pay off the mortgage because there are always buyers for apartments. That is not the case for commercial properties, especially the empty ones.

More numbers: Market Cap is $7.26 billion. Trailing P/E is 14.47 while Forward P/E is 11.66. Price to book is 1.37. Book value is $12.44. Operating margin for the last 12 months was 56.08% while Profit margin was 45.53%. Return on equity was 9.00% and Return on assets was 1.16%. Beta is a relatively low .75. 52-week change was 51.41% compared to the S&P 500 52-week change of 13.24%. The low was $10.08 and the high was $18.20. There are 435.45 million shares outstanding with a Float of 419.79 million. Insiders own 3.40% while Institutions own 65.10%. The dividend is $1.00 (and has been for 5 years) for a yield of 6.00%. The payout ratio is 86% of earnings but will go down next year if analysts are right.

Income investors will receive a good return from the dividend and have a chance at participating in an economic revival, if it comes in 2011 or whenever. With commercial and apartment lending as an emphasis, the bank will profit nicely when developers and owners feel well enough to begin building again.

- Company Web site: www.myNYCB.com

- Ted Allrich