New York Community Bancorp (NYSE:NYCB) is optimistic that looser banking regulations are coming, which could translate into higher profits and more room to grow. In this clip, Industry Focus: Financials host Michael Douglass and financials specialist Matt Frankel discuss the bank's latest results and what investors should watch.

A full transcript follows the video.

This video was recorded on Feb. 2, 2018.

Michael Douglass: Let's turn to a couple of other news items. Two -- small is a relative term, I suppose, but, smaller -- banks reported earnings, and we figured we'd hop into those. The first is New York Community Bancorp. This one, New York Community Bancorp has long been a bank that people like, particularly because it has a nearly 5% dividend yield. And frankly, I thought earnings looked pretty good.

Matt Frankel: Yeah, they had a very good quarter. Loans were up 9% year over year, their earnings were up 20%, they actually got a benefit from tax reform, whereas most banks took a big hit. And they clarified their optimism that the key regulatory threshold where a bank become what's called a SIFI, a systemically important financial institution, there's a bill that's going to be voted on that would raise it from $50 billion in assets, which, New York Community Bank is at $49.1 billion, all the way up to $250 billion, which would pretty much get that concern out of the picture for them. Before they were close to the limit, they had an efficiency ratio of about 36%, which is remarkable for a bank. Internet banks generally don't even get that good. And now they're in the 50% range. So, if this passes, it could definitely be a big catalyst going forward. And the fact that the bank seems so optimistic about it, I think investors are definitely taking it as a good sign.

Douglass: Yes. And one of the key things we should mention here is, when a bank becomes a SIFI, it triggers a great deal of additional regulatory oversight and compliance. And that costs money and time and effort. New York Community Bancorp, one of the reasons their dividend yield is so high is because they've been deliberately trying to find ways to stay under that $50 billion threshold. So, if the threshold does increase, then suddenly they can take the brakes off of their growth, and continue to reinvest more cash into the business, hopefully give out more loans, all that sort of stuff, so that they can then continue to grow up toward whatever their natural number is. Which is probably not as big as $250 billion, but probably bigger than $50 billion.

Frankel: It's worth mentioning that banks have been on fire over the past year and a half.

Douglass: Oh, yeah.

Frankel: Bank of America more than doubled in price. New York Community has gotten crushed. And one of the biggest reasons is uncertainty about the bank's future. When will they go over the $50 billion cap, what will it mean, is it going to be through an acquisition, is it just going to happen naturally and blindside investors? The big theme here is that some of these questions are finally starting to be answered. And the answer is the best possible scenario, that it might not matter at all.

Douglass: Yeah. A lot of good stuff there. I think, personally, New York Community Bancorp is one of the few smaller banks that I would really consider investing in personally.

Frankel: Yeah, it's one of the few that are actually in my portfolio. I have Bank of America and that one.

Douglass: Nice. And Bank of America is not quite as small. [laughs]

Frankel: No, that's why we say, "relatively small." Compared to Bank of America ...

Douglass: It's tiny.

Frankel: ... it's 2% of its size. But $50 billion of assets is not a tiny bank.

Douglass: Right. What's a few billion dollars between friends?

Matthew Frankel owns shares of Bank of America and New York Community Bancorp. Michael Douglass has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.