J.P. Morgan Neutral On New York Community Bank

J.P. Morgan Chase & Co. is out with a research report on New York Community Bank NYB after it reported earnings, and it has a Neutral rating and a $15 price target on shares. In a note to clients, J.P. Morgan Chase & Co. writes, "NYB reported 2Q11 EPS of $0.27, or $0.26 excluding one-timers, which was a penny short of our estimate and $0.02 below consensus. The shortfall vs. our estimate was on expenses coming in higher than expected. The real story of the quarter, however, was that NYB saw significant pressure on the core NIM in 2Q. Although the very solid pipeline of multifamily loans could be cause for the market to get more excited over NYB, very competitive pricing on this product is putting intense pressure on NYB's core NIM. With NYB seeing existing loans refinance as well as new money loans being added to the portfolio in the mid to low 4% range, we see sustained pressure on the core NIM given that portfolio loan yields were 5.70% (down 14 bps sequentially). On the call management guided to a range of 5-10 basis points around the current NIM and expressed that it believed the bank's core NIM was close to a bottom. The risk to this view is that interest rates continue to stay very low, or drift even lower. Heading into 2H11/2012, we see headwinds to the profit picture at NYB and remain Neutral." Shares of NYB lost 8 cents yesterday to close at $15.00.