I own both, they're both well capitalized (HCBK is slightly better by most Tier 1 ratios), but I'm adding NYB because they have better net profit margins going forward (300 to 400 basis points higher than HCBK's), earn almost as much net profit ($M) but with considerably fewer shares outstanding, and pay better dividends.
I also think their commercial orientation is a better business model (vice HCBK's residential-only approach) longer term as the economy recovers --loss provisions, notably on the commercial side, have always been low for NYB and I expect they'll fall off considerably as we enter 2011. Actual charge offs at both HCBK and NYB are far below what the street has expected and I expect that trend to continue for both institutions.
I especially like NYB's acquisitive model where it utilizes key FDIC loss-sharing arrangements. NYB's footprint is considerably larger (2x HCBK's), but HCBK has strategically positioned many of its branches in high income areas too.
For those interested in looking at more detailed comparisons of these two securities, I'd recommend the FDIC's FFIEC (Fed Fin Institutions Examination Council) database sites............
Both banks are solid strong buys.
Well said and good luck to you, with your intellectual pursuits (accounting degree) and in your investing pursuits.
It will be interesting for both of us to see where HCBK stands, relative to NYB stock price, in one to years from now. Again, good luck in all of your pursuits.
With all due respect, you are the only interested in accounting, on this board. We are all interested in stock prices, dividends, and making good investments. Granted, accounting formulates part, (not all), of the equation, with making good investment decisions, but plenty of value investors ( I consider myself a value investor/trader versus growth investor, although I agree with the statement that "value and growth is a distinction without a difference,") have used accounting to pick stocks, only to see them get cheaper and cheaper and sometimes go bankrupt. So, again, using accounting solely to pick stocks is not the Shangri-La of investment success.
With the exception of accounting, you have not really given us any good qualitative (non-accounting) reasons why HCBK is an exceptional investment over NYB. So, you want accounting we want non-accounting reasons.
As I said, and now you said, to paraphrase, "Let time takes it's course, and let us see who is right or correct in their respective stock pick." Good luck to you and all.
Congratulations on graduating with an "A" average in accounting. Without getting into the technical numbers of accounting ( I am a health care professional and not an accountant), suffice it to say, that a stock price and ultimate value of public company, is based on much more than "numbers." Generally speaking, you are making the point that HCBK is undervalued, compared to NYB, because of various financial values, that you quote. Whether your analysis is correct or incorrect will be determined, as time goes by.
Qualitatively speaking, I prefer NYB over HCBK, for all of the various reasons that I have given, in previous posts, and whether I am right or wrong, will also be determined, as time goes by.
I appreciate your lengthy explanation on loss provisions and on earnings improving as the recession is over, etc...
I think the bottom line and "point," is that many feel that NYB will be a better investment than HCBK, both in current income and in long term appreciation, and you feel that HCBK will be the better investment. You have given your reasons (via accounting) and other have given their reasons (NYB) via accounting and qualitative reasons.
Time will tell which company turns out to be the better investment but I don't believe either one of us is going to convince the other about our preference.
I disagree with your analysis. Banks take loss provisions for actual loan losses that they feel they will incur. In other words, the the amount of money that they take in loss provisions is assumed to be GONE, LONG GONE, NEVER COMING BACK. Therefore, your assumption is that when the recession is over, the loss provisions that HCBK took, for it's non-performing loans, is going to be returned to them, in the form if being added on to it's earnings, and I could not disagree more. Do you have any historical record to back up or demonstrate, in the past, how much money HCBK has been able to return to it's earnings, based on taking "too much" loan loss reserves?
As to NYB increasing it's earning via acquisitions versus HCBK growing it's earnings internally, via partly adding loss loan reserves back to earnings, I must say that I would rather have NYB's business model. In fact, I have put my money where my mouth is, as I own alot of NYB stock and no HCBK stock, at the moment.
Lastly, with it's most recent acquisitions in the Florida, Arizona and Ohio area, NYB has now diversified, geographically, it's deposit base, as well as provided itself the ability to add on a few "bolt on" acquisitions of other banks, in those geographic areas, which in turn should provide much growth in the future. With HCBK predominantly centered in New Jersey and New York (i think), it is really depended upon the tri-state area for it's growth and therefore lacks diversification, should the local economy really sour.
The CEO of NYB, Joseph Ficalora, has repeatedly stated that NYB only reserves money for ACTUAL losses that they feel they will incur. I understand that HCBK has reserved more money than NYB, for losses, but NYB has a different business model than HCBK, and loans that go non performing, in NYB's portfolio, are eventually converted back to performing, and therefore, NYB incurs very little loss on their TEMPORARY non performing loans. However, in reality, NYB is over-reserved for their losses, based on their historical record of loan losses.
So, we are comparing apples to oranges, as HCBK and NYB have very different business models and loans that are non-performing, for NYB, rarely go to actually being losses, whereby non-performing loans for HCBK and other thrifts, usually do go or become actual losses, and hence, the reason why HCBK reserves more money, than NYB.
This business lending phenomena is something that many analysts have had trouble with, when assessing NYB's loss loan reserves, until they (the analyst) begins to understand NYB's business lending model, as well as when they observe NYB's past loan loss history.
Since Ron Hermance was not on Mad Money boasting about how well his bank is doing,pumping to Cramer,they must be performing worse than expected.
Who cares what you think about NYB?You must be a Toronto Maple Leafs fan,lol.
That's what makes a market. You believe a certain stock is going up and I believe the same certain stock, is going down. You are entitled to your opinion, as am I, but in the long run, it does not matter what our opinions are. Instead, we will just have to wait and see who performs better - NYB or HCBK - to determine whose opinion ended up being fact.
Good luck to you and I will keep my NYB versus HCBK. Who knows, I may just eventually invest in HCBK, sometime in the future.
As a shareholder of NYB since the IPO and experiencing 9 splits since 1993 and also a trader of blocks in the interim, its no wonder I would be trumpeting the value of being in this stock.
I currently own a healthy position with each quarterly dividend increasing it by about 1000 shares so it is not surprising I am bullish on NYB. To me it's a no-brainer. Good luck.