On Friday, January 30, The Queens Courier sat down for a one-on-one interview with New York Community Bancorp Inc., Chair, President and CEO Joseph Ficalora at his Westbury, Long Island office.
With assets of $42.2 billion at the end of December 2009, New York Community Bancorp Inc., is the holding company for New York Community Bank, a New York State-chartered savings bank serving customers throughout Metro New York, New Jersey, Florida, Ohio and Arizona; and New York Commercial Bank, a New York State-chartered commercial bank serving consumers and businesses in the New York City boroughs of Manhattan, Queens and Brooklyn, and the counties of Nassau, Suffolk and Westchester. In New York, the company operates 123 branches of the Community Bank through four local divisions with Queens County Savings Bank operating 33 branches in Queens.
Q. The last few years have been very difficult economic times. Do you think the worst is behind us?
“The crisis is far from over. I think the unfortunate reality is that many of the systemic problems that brought us to the realizations that occurred in 2008 and 2009 haven’t been resolved and therefore the likelihood that this very fragile environment will re-slip is extremely high.
“The vulnerability of the U.S. economy and for that matter the world economy today is greater than it was in 2008. The reason why it is just as vulnerable today as it was then is the major systemic problems have not been resolved and the inherent risks have been significantly worsened by the events that have occurred.”
Q. What needs to be done to stem the tide?
“You cannot solve this problem without stabilizing the accounting rules, without stabilizing the ownership of housing in a way that actually creates less loss.”
Q. Why has New York Community Bank weathered the economic storm so well?
“Our business model is different. We have done very well for decades because our business model isn’t dependent on market values whereas most other lenders are dependent on market values. We’re not typically a house lender; we’re a multi-family lender.”
Q. In the past year New York Community Bank acquired AmTrust bank, which had operations in Ohio, Florida and Arizona. Recently, New York Community Bancorp Inc., reported a 66 percent increase in net income for the fourth quarter of 2009 compared with the same time last year – $170.2 million, or 45 cents per share, compared with $102.2 million, or 30 cents per share.
“That was the result of the deal. The deal explicitly was accretive to our issuance of nearly $900 million worth of stock. So, we actually in the fourth quarter increased our capital by $1 billion. We increased our overall ratios of performance as a result of the consolidation. We increased our earnings. Our spreads widened. Our net interest income went up. Our total earnings went up.”
Q. What do you believe are some potential opportunities for the bank this year?
“We will more likely than not lose some money on some of the outstanding loans that we have, but we will lose materially less money than everybody else. In 30 years we have lost no money on our principal asset, which is our niche loan in NYC is rent-controlled, rent-stabilized. When you think about where we are today, we are going to be able to make a lot of good loans in the New York market when the New York market actually begins to trade.”
Q. The President has talked a great deal about putting a cap on bonuses Wall Street pays out. Mayor Michael Bloomberg and Governor David Paterson have spoken out against this. What do you think?
“You cannot put pressure on the largest payers’ payrolls in New York City to not pay bonuses without adversely affecting the city. All this nonsense about you shouldn’t have these bonuses being paid hurts the City of New York and the State of New York. At a time when tax revenues are needed most, this will reduce income tax, property sales tax as a result of trade and sales tax as a result of buying things locally in all the markets that are served by people that are working in New York City.”
Q. What do you see as some items that can make a difference to help turn the economy in the right direction?
“We need to devise a means by which collateral would in fact be more readily secured and valued to the benefit of the lender. We have to stabilize the valuation of real estate …Tax incentives for buyers are good. Tax incentives for lenders are good. Those two things combined can create a positive economic motivation for buyers under reasonable rules and docs to buy a house…We need to be focused on creating buyers – legitimate buyers – and mitigating loss. In order to expand the economy we need more buyers than sellers of housing of all real estate.
Q. Although the prospects for the near future may not look too promising, do you think Queens and the City of New York have reasons to hope for the future?
“Absolutely, I think there’s absolute certainty that the City of New York has a greater likelihood of coming through this cycle well than most other places in the world. As we go through this cycle there is going to be a continuing strong desire for those that have financial discretion – where they can put their money – to put their money in New York.”