If Joseph Ficalora ever writes a book about how New York Community Bancorp Inc. has fared better than most rivals in the recession, he might call it "A Tale of Two Banks."

"In 'the worst of times,' we lend more money on favorable terms. Unlike the banking sector as a whole, we actually do best during a credit cycle downturn," the chairman and chief executive of the $42.2 billion-asset lender said in an interview last week. "We are on the verge of a 'best of times' for us."

Ficalora's outlook on the Westbury company's prospects is bullish, to say the least. He said the next three years could be the most promising ever for doing what NYCB does best — buying other banks and using their deposits to fund its main business of lending money to the owners of rent-controlled apartments in New York. That is historically a sound market that has been lucrative for the company, whose profits rose more than 400% last year, to nearly $400 million.

Market watchers for the most part say Ficalora's optimism is warranted. New York Community — with about 276 branches in New York, New Jersey, Florida, Ohio and Arizona — has stayed profitable and never took federal aid. Its troubled loans have risen like at every other bank, but its actual loan losses have been enviably low in comparison to other regional players. Its acquisition of the failed AmTrust Bank in Cleveland in December is already adding to the bottom line and positions the company to grow in new markets like Florida, Ohio and Arizona.

"They are going to roll up a bunch of additional failed banks in these markets," said Matthew Kelley, an analyst with Sterne Agee & Leach. "They have a history of doing deals. This is an acquisition-driven model, and right now you can acquire on the cheap."

New York Community's prospects for loan growth back home are promising, too.

A large number of New York apartment buildings are poised to come to market in the months ahead. One-time rivals like North Fork Bancorp and Independence Community Bank Corp. are essentially out of the game now that takeovers have shifted their priorities, and the scores of alternative lenders that flooded New York during the credit boom have receded.

The company is in "a very favorable position. There are not a lot of other banks right now that can speak to good top-line growth potential. And I think [New York Community] can," said Collyn Bement Gilbert, an analyst with Stifel, Nicolaus & Co. "These next three years … they will be in a position to rival when they have done their best."

She said the company's chargeoffs should remain low, even though its level of past-due loans rose sharply last year. That is because rent-controlled apartments have low vacancy rates and steady cash flow. When a loan goes bad, recovery rates are high because there tends to be a lot of demand for foreclosed properties in New York. New York Community also tends to structure its loans based on the actual rents a property charges, she said, whereas some lenders with looser standards underwrite a loan based on potential market rates.

It has a "huge" opportunity to grow loans, Gilbert said, because there is a massive amount of securitized apartment loans in New York that were issued at unsustainable terms during the credit boom by hedge funds, brokers and other types of nonbank lenders. Borrowers won't be able to retire those loans as they mature, so the holders will have to foreclose on the credits and sell the properties.

Ficalora said New York Community has an opportunity to ramp up its current 15% share of the New York-area multifamily market because its borrowers are the "guys positioned to buy when the properties come to the market place."

"We are on the beginnings of a down-turning credit cycle in the New York real estate market," he said. "We have a huge amount of money to deploy."

Some analysts have expressed concerns that the company's core portfolio — some $16.7 billion of multifamily loans — could be vulnerable to losses because the New York real estate market became so overheated from 2005 to 2007. The worry is that it may have to charge off credits on buildings that have fallen in value since then. It also has surprisingly low reserves — about $128 million at the end of last year — when compared to other companies of its size.

For his part, Ficalora said New York Community will surely take some lumps, but its main portfolio has proven to be exceptionally resilient in prior downturns. He said the company hasn't charged off a multifamily home loan in its core New York market in some 30 years. New York Community charged off abut $30 million in loans in all of 2009 while booking about $557 million in nonaccrual loans. A year earlier, it had $6.2 million in chargeoffs and $102 million in nonaccruals.

Ficalora has said its risks in expanding into other markets are limited because basic retail banking tends to be the same everywhere. The biggest risks in banking tend to come from lending, and New York Community has said it has no intention of lending in new markets it enters. Its main goal is to fund its core lending business.

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