Flagstar Financial (FLG) 25 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Joseph Ficalora	President and Chief Executive Officer
Thomas Cangemi	Chief Financial Officer
Robert Wann	Chief Operating Officer
John Pinto	Chief Accounting Officer
Ebrahim Poonawala	Bank of America Merrill Lynch
Mark Fitzgibbon	Sandler O'Neill Partners
Kenneth Zerbe	Morgan Stanley
Collyn Gilbert	KBW
David Rochester	Deutsche Bank
Erik Zwick	Stephens
Stephen Moss	FBR
Christopher Marinac	FIG Partners
Matthew Breese	Piper Jaffray
Steven Alexopoulos	JP Morgan
William Wallace	Raymond James

Call transcript

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Operator

Good morning, and thank you all for joining the management team of New York Community Bancorp for its quarterly conference call. Today's discussion of the Company's third quarter 2017 performance will be led by President and Chief Executive Officer, Joseph Ficalora; together with Chief Operating Officer, Robert Wann; Chief Financial Officer, Thomas Cangemi; and John Pinto, the Company's Chief Accounting Officer. Certain comments made on this call will contain forward-looking statements that are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those the Company currently anticipates due to a number of factors, many of which are beyond its control. Among those factors are: General economic conditions and trends, both nationally and in the Company's local markets; changes in interest rates, which may affect the Company's net income, prepayment income and other future cash flows or the market value of its assets, including its investment securities; changes in the demand for deposit, loan and investment products and other financial services; and changes in legislation, regulation and policies.

XXXX about in factors and for this SEC including more Company's with in the find Form filings, statements on June forward-looking morning's its quarterly will period the Form XX, associated risk the its XX-K ended You and report XXXX. XX-Q annual earnings release may also this conference during includes GAAP The discussed of release and non-GAAP be certain reconciliations financial measures that call.

at Company's XXX-XXX-XXXX copy of visit this release, Investor If Relations would the department like a you or please ir.mynycb.com. morning's call

As today's To is this ahead. go recorded. start Q&A. XXXX Ficalora, brief being the to quarter before turn third a who performance over for a Mr. now overview opening call Ficalora, reminder, Company's line [Operator of will provide please discussion, Instructions] I call the Mr. will the

Joseph Ficalora

Net and income available three from a $XXX.X thank declined performance. quarter prior third all net return income million, you into discuss quarter second us of the reported the for reported XXXX we $XXX.X as This assets of year. this period average a Company the X.XX% you, $XXX.X share. average shareholders and on common common on stockholders' to common from or month Thank X% million X% million Sherry, X.XX% we morning in also translates our return the $X.XX to Earlier per the morning, this joining equity. down

average common X.XX%, tangible Our tangible stockholders' was on XX.XX%. average tangible - was assets return a our our equity return on and basis, on tangible

The night's will to the quarter, November yield X.X% $X.XX of Board be Directors XX, record X, a for XXXX. paid common that dividend as based closing per on share dividend the announced dividend of a yesterday, price. of also on last shareholders XXXX We November representing declared

Now results. our quarterly turning to

by influenced was quarter the items. several during performance Our

transaction of Corporation. First closing which benefits, in our of Freedom including we lower quarter. in to so fourth the Mortgage billion beginning including was of FDIC Capital end in portfolio, quarter, residential at $XX sale at the to under MSR the Company the transaction, expenses liquidity affiliate closed principal one-to-four our of to with our closed had mortgage resulted the proceeds September, Earlier the unpaid In covered and This of expect This low business, during yields our seeing banking aggregate an quarter. balance the start foremost share we the loss on connection with excess agreements in of Cerberus we $X.X assets cash Management. received approximately having invested at this billion. the sale family

end will forward. at cash the overall into position higher-yielding billion, stood the of $X.X quarter which going at Our be reinvested assets

consistent As of and announcement, our a we generated transactions accretive a ratios compared with transactions are two us growth stated levels objectives to focus through of $XX on including the these to acquisition. time basis, million and regulatory On our capital of capital, each combined strategic core with were at these allow model, business increasing at gain XX. pretax June overall the the to Company's

million related quality provision the medallion asset losses to a the we about $XX On loan side, taxi for recorded portfolio. of

million. stands total medallion-related at now exposure $XXX Our taxi

reported from estate the remained portfolios the multi-family Aside the our of Absent the asset medallion would medallion related core and commercial strong. Company portfolio, quality have quarter. real recoveries charge-offs, this net

our portfolio we core fact, in since XXXX. aggregate recorded year-end net recoveries In have

some saw positive during On trends the lending the quarter. front, we

standards. conditions reflects improved previous XX% strict originations from while market our $X.X to including loan multi-family the in demand, to CRE growth originations. increased quarter, The billion held-for-investment we originations historically to in growth XX% rose and continue growth Our and XX% underwriting adhere

annualized investment the loan of no for loans on grew years prepayments, did After non-covered growth, enjoy by three an this of during growth increase total modest some quarter. While we basis. nearly held offset X% nearly was

for Our at quarter last one-to-four to billion quarter. included loans billion, $X.X million million $XXX $X.X originated mere this pipeline multi-family of compared stands Of family note, loans. currently pipeline the sale of including a particular $XX

quarter's sale, This Company. bodes the for last strongest in is family the pipeline the one-to-four two ahead. years this originated pipeline Excluding well loans quarters for the for

Given where average the quarter the sheet $X.X Company threshold our have balance assets. $XX of without by grow to stands the flexibility approximately based today, on we billion SIFI the breaching total four the billion trailing

tax Finally, the reform. changes we as a be would for line note, with now Company the that your the for the these made potential whole. regulatory both progress are on encouraged front, will operator We a beneficial the regulatory On the positive being regarding I ask questions. industry believe and open to and to

We will time remaining, to please but within later free all get today do this the week. our to don't, we call Operator. of you or if us best feel to

Operator

Instructions] [Operator Our from Poonawala Bank Ebrahim question first from America. of is

Ebrahim Poonawala

in can seen start on like pipeline you pickup if result the have of demand refi that strongest Joe. the in guess, a first active, you strength where have you you two in or I that's getting is years, pipeline? activity the you the So changes to being in loan more talked market about seen a growth, One, led

Joseph Ficalora

in because think to that we gain to share to the gaining as market that best banks with different desire say I market, our different regard have are is the opinions it's share. we positioning such

and we product our in ahead, we As be balance sheet. in expect want present to will of we period that highly competitive have the development we to the most look the that

Ebrahim Poonawala

think loan well balance have we think capacity. we right growth next as year? you into you plus billion about growth, Understood. in Like And when to about rate the mentioned $X what XQ is about about sheet think growth of

Thomas Cangemi

It's Cangemi. Tom

future, be we the will core seen there this that expected $XX is growth indicated. given sheet flexibly towards the the that quarter, with let's business than Mr. and in quarter, feel can in the threshold. managing time We should billion quarter we we the XXXX and for, to we as balance we going where that path time, we to Ficalora proceeds that the positioning we that At - we beyond. grow say, ourselves in balance This growth have previous are forward, cash confident below fourth book. continue our sheet the same the third from foreseeable were be expectation Having growth in redeploy discussed resume believe mid-single-digit the going we quarter's some As of forward the our quite have some first the reform growth transactions. to into have greater

XXXish to Now yield off XXX, about that came be needs redeployed. that a

we of where we we back it's are normalized that's at to lowest the today, portfolio this current to as start to So as managed At total the Company. X.XX% be stand a securities position to yields as we a some public will our restore rise, securities putting investment of in been money assets, levels.

what well we far portfolio. as total securities so need to and clearly to it's can the double we that be, easily still be So below as norm industry below

Joseph Ficalora

for closed So in within the billions dollars. of transaction, room us gain reallocation Ebrahim, the the on us we niche. risk plenty assets of by to no billions by would our Had is There of is in our dollars of the there have in by transaction. last niche we share growing inherent grown

clearly the focused We we balance of but restructuring have delayed our in are event. in on any been accomplishing that sheet,

Ebrahim Poonawala

into in that you timing just Or down investments any $X.X of on home probably debt expect manage Tom, loan a that of to securities? in of much do cash? plans goes short talk run have the any to paying Federal of bank the that quickly and deploy your can you cash, to cash, about the how billion little you point how Understood. the And bit

Thomas Cangemi

about have $X so bank advances. Sure, that year have we coming unique of coming we year-end billion next due billion about that's liability home book at flexibility $X.X and predominantly given due loan

respect Joe current fair priority and and So to to duration. overtime. to At redeployment into same foreseeable our will as see time, money need start and the we say putting to the the conditions loan work evaluate market we continued growth the loan The it's we would growth, future. indicated, that expect be, going this market to the in

in loan expected flattening the been curve. current opened curve should that we subject little the and securities yield yield saw and we growth, we speak. between very The it's past to up months. we over redeployment still it's mode but growth So difficult, Obviously, as bit, three the be very, a a has

Ebrahim Poonawala

view do we or on is what best like that, in based stable, from Fed your as see margin of the X.XX% stay pressure just on sort still the December? And do rates you quarter, potentially raises this again

Thomas Cangemi

give you As guidance give the know, guidance. we for I elongated quarter. don't will some

high well. because guidance probably down forecasting probability modeling obviously we balance expectations but rate hikes a for we just as XXXX, not is a there rate the are that forward XXXX about on giving the is still that reinvestment predominately we are I'm hike that have for as the sheet drag of and of XX/XX/XXXX. QX additional of $X.XX Our

Operator

next O'Neill is from Fitzgibbon Partners. from question Our Mark Sandler

Mark Fitzgibbon

what Tom, of a run operating businesses mortgage quarter rate could of might expenses out fourth those you be in good with through there? the help us think for

Thomas Cangemi

to mortgage manage, million will we of we out The $XX overall assets we could, that short operation going we inclusive FDIC believe in is time forward. say, conservatively about exciting be right This going to flesh I size P&L an of that the the order. estimate expense

lines norms. on are in pressure. a forward, to under previous lower the of XXXX, that's as guidance, $XX brings we for six, could SIFI-ready a that manage historical past know, long-dated seven in margins our the time, do same confident mode, We a are not run about We feel towards make So Mark, savings highly million. more expenses quarter, exiting still you institution. work belt But of the which with our I businesses. said, million going are portfolio is we that give that There spent by of that tightening the to being we over that's I lot don't sure and but years beginning be initiatives more cost At $XXX us the being the quarter, money rate. the a want than

should So we that's between rate. better forward, fourth well at run rate less than are a level as hoping going fees a efficiencies we have lower quarter the run that as consulting probably technology

$XXX - update that take million is further, we will would in So lower quarters I it year not next but even ahead. for the number

Mark Fitzgibbon

or And something you reduce of million away, a the do cost raised, in you that $X were Tom, could million, quarter $X sort much threshold think another it neighborhood? is if operating how right SIFI

Thomas Cangemi

embedded that the million, total. in franchise. million, the to don't now to because and expenses money lot are But, have have is $XXX we That's $XXX of forward. confident spent that probably close going to I $XXX a side, sunk consulting lot on sunk these cost clearly, say that a million I would in you we feel cost, highly be want within this specific

built we to be I things. see think able sheet. to efficient we we as the will I able be don't the streamline added more being what grow being aspect technology costs to use additional balance of

Our efficiency model. high ratio business is our for way too

lines have We very model, we ancillary of are a don't a simplistic and/or products. businesses of business lot

we the restore growth, quarter, the annualize as be able balance that's we $XXX $XXX again, - So that's year, sheet a at million, clearly, operating grow you sheet probably our and $XXX leverage million a within $XXX a million conservative should to if see significant million balance number.

drive able costs So in the using the cost put to place. further those we sunk just of benefits that should we down be

Mark Fitzgibbon

of wonder you if a with share rates us average lastly, I CRE pipeline? could multi-family the And just

Thomas Cangemi

Yes.

for the in pipeline expectation we than the I that's the XXX, have under is the and going is is that's say coming So be probably pipeline. XXX, all-in X/X market. currently in CRE multi we the expecting approximately around - an would are pipeline now, tighter that's XXX just portfolio the current right to that

the positive points starts you back benefit spreads is what getting But on rates. it's that signal. to relatively been we bleed that's hope so when of and widen, look the the the to basis actual a interesting neutral As is payoffs, of higher start

that so change. point, And when at X you the basis look with

Operator

Our next question Stanley. from Morgan with is Zerbe Ken

Kenneth Zerbe

the loan go Just comments. wanted to growth back to

in and think know quarter, about I you the versus guys when growth second to accelerating down I of last what it sort reality. you expectations talked half, And is sort of you might come did. loan

function five, quarter, actually You have was but balances so that I it think growth. slower it double-digit of in. modeled up growth loan expectations, get past bit loan slower growth it's the I this once a could than reaccelerated kind the sounds say growth of I potentially your think you I mid-single-digit like Tom, a slower you in where a I took you those guess, markets? to Is may was than the heard just

Thomas Cangemi

So, Ken, that historically. say have loan grown I would we book always our

below where to portfolio SIFI been pattern the to were about predominantly we X.X-year we paper sold stay $X transactions, We of three, over multi-family have the marketplace. managing been billion participation our threshold, in and that's which

back, pretty The remember, year look account the much, space, that a add So XX%. it York call, transaction year-over-year. CRE XX% what we close that when was you we if was But single-digit within and into City what you prior multi-family take volume it's that, XX% to to grower. New down to high were down at

there activity. decline in So been noticeable is a

the of obviously, a relatively stable, change which seen in has lot that it you X.X% really while, the a Now haven't move coupon lot. see a product. moved rate probably hasn't for our we principal environment to been X% rates, a When has whole in interest activity. been could

and bank. get see customers clearly, significant next activity have you come where with table to financing to So if rise, the the their start will rates will to

Joseph Ficalora

a out going be our the providing a not product this we that words, of the we is at many many provide dollars, can more refinanced. case get, the taking in that as new for product obviously a an is money seeing of that reality with is matter expectation not values cases of dollars to other there a are When extraordinarily end the And if we that And parties also is loan. when other a people In go also would compete The what is there just transition. we people here today. are they and we that it's of provide, high, there cycle. too matter Ken, get market result, portfolio.

rates, market there is So moment some evolves a an result, when aggressive in when dollars. dollar not a are as the big. dollars. is a and taking those that we, that with being in is providing. of to taking higher the availability with in transition marketplace when win time there with people time dollars, And period to question, market is the this are are No But adjustment, the fact, we opportunity

Kenneth Zerbe

Got out it. quarter? participate your of guys loans this And any did you

Thomas Cangemi

It the very . the our we I will grow end growth, The was growth is the said, have previous small. in I an the see slight to million, restore in of insignificant growth will $XX-some-odd amount, in here goal mean, you as QX and calls, [indiscernible] QX, is landscape, going the $XX And then XXXX backwards, moving on current for And real feel not that with been momentum the normalized some are focus number. more the we growth we positive threshold. regulatory we Company. looking about past are on there at talking billion that

time, that So same and billion, be trip At this grow $X.X some $X quarter there we are will that's flexibility hopeful changes there. on over. have not the sheet can so we balance billion, the we the so

not putting billion I'm even next still we just is, on $X saying the So our quarters, over. that's quarter, won't three a which statistically trip for number,

mid-XXXX We before will it be - be will that happens.

SIFI good have loan a to designation. fail we show the flexibility to under of lot growth big too designated being So a without

Kenneth Zerbe

last portfolio just perform that nonaccrual taxi, portfolios you any put not that taxi on reason yours other have nonaccrual different entire large have on Is put question then that banks on there the the or Understood. to this would And status. quarter? some of chose

Thomas Cangemi

Yes.

it So to at is we down brought every taxi, a We believe of adjustment transaction level Ken, the it looked $XXX,XXX. a the a took there we we activity look of lot sizable that at portfolio, this south quarter. obviously, We quarter. to

$XXX,XXX-ish is a $XXX,XXX. for like is cost $XXX,XXX-ish, all-in our think I disposition valuation, collateral probably

are the largest million So $XXX number believe, within is book it's the industry, that probably industry, we most and that, lower we not have. player a the in than we that is about

lot are of a here, paying. still our forward going customers Now

good that this to that is levels, there is other some assets and have want that there in out a start we at these financing be to able people hearing at out financing be moving there, made the business, to And there and return be these are We we assets. levels. of may

on we release We can repossession down taken road. have have million $X that the $X in we now million, that readily about probably

is the the we given feel this view that these to closer think but getting months the positive took level this book. very within seems focused is more activity of some we I we level and a like moving no bottom, off a So few are assets past the guarantee, about there

Joseph Ficalora

question, no portfolio a the our of performing vast level. much majority is at There is higher

for payments the flows the allow fact, at to that these So are than cash levels adjustments higher made, be are. in significantly

Operator

next with question Gilbert Our is from Collyn KBW.

Collyn Gilbert

a on pipeline. Just the question

indicated have this So billion $X.X know quarter. it's obviously you I guys at

of noise of pull-through look resi we is rate out, to as pipeline forward? - where the is selling do Now rate without kind start normalized the you on loans, think a really your pull-through

Thomas Cangemi

for Look, north announced Collyn, in pipeline, a of What that us you our we we known close usually long time. have number.

the it's you pipeline historically, look very but as our are fourth the if quarters obviously, So typically, we to numbers, fourth quarter, public a current that's present active.

that we see is, very pipeline. a what on Based strong the So we hope pipeline stronger it's growth. report loan

Ficalora Mr. the since pipeline two indicated, we As had years. have highest it's

but moving it's the typically most fourth fourth right in is it's So the direction, quarter, and the quarter for Company. active quarter

Collyn Gilbert

Okay, that the surprised to like I and shift. going NIM guess of of growth okay. caution sounded the that you outlook back given into in you delivering kind outlook, what year. NIM by then the have message to I'm just Tom. a next that, And, It do might here And as are tying flexibility mix the your

we kind that guidance really effect growth Now balance kind on everything done needed earnings to help it the were lower of these of what changes. like of would on it where to happen have lot I recognizing not achieved all a kind pressures to going I loan have a was is would now. but sounds sounds shift again, have the that, a and mean, that's your deploy minimum, I assuming you cause mix offset other the like neutral all sheet think at to think we than of that

Thomas Cangemi

the here back see the obviously there. benefits thought Collyn, I and end that we some just are of is some a whole, the to guess of starting process hasn't moved curve

back and have, we our will dramatically to movements our say, numbers let's the at end securities and deploy follow a short-term the much end be able book will you change portfolio in yields. front because If these shift, higher to loan on parallel starts

that past X.X%, the have we hits dramatically change what bank refinancing. running between as things as that the multiple we in well seen the and X%, customer's sentiment on years So are is both for X.XX%,

we and in some a end, where we towards lot - treasury clearly, one higher are the be That have So that's today, XX/XX the us, short obviously, XX are rates. have we in year movements just in good of December. possibly meeting at because seeing technical taken year, rate actually the pain our will showing in next hikes Fed we model, expected have we the coming next for

easily that. is do is for the be can parallel what of So question shift, we five that year land The a the year. the between much Company, manage is the our impact will I curve, more a it we think going game-changer because and in forward, the end XX how back and

Collyn Gilbert

simplistically, cash, accretion alone coming think, next just should reinvestment loan what where of you billion-or-so I are the regardless would guess year? new $X or curve have sitting though, of just earning that cash suggest, in I X%, over fact just mean, where originations like the about I the thinking - NIM just got of

Thomas Cangemi

not I'm year. next going [indiscernible] to

Joseph Ficalora

of the we assumption but good And what everything that's factored. I is think impact a

Thomas Cangemi

which long-term at two, But, out month of again, the tomorrow X% X%, or of of timing can we better the or north later, the put would value for of and be reinvestment, Company. it south

cautious. being So very we are

into a QX. pipeline have strong that we very loan going We are

next We are good year. for hopeful growth some

time, We that into the to manage put SIFI, much at our yield into will it's either non-SIFI that LCR have it too have than acknowledging At the easily product. this portfolio like can't We we We be portfolio. higher have low. that the core or will we X.XX%, we We deploy liquidity. are - to build can eligible, are same XXX. assets, securities

expect expect to securities to very as So and growth but see loan partially deploy being growth. as when we that, cautious growth we we you are from would well

Joseph Ficalora

ago. consequence Collyn, escaping there not our balance is had proven balance sheet to the of benefit by to the the and of we to no since positive didn't during end get a for and restructuring is the a fact that were XXXX. have do a we last that literally And that. earnings year. the of Company that doing literally overwhelmingly time structured sheet occur transaction That's We long

thing the of a not been the if place think in will the I that our and in will, we our just dramatically, enjoy, be is ahead. important is be we able normal model delayed should model broken, that business So it's here attributes to you period

Collyn Gilbert

such for the an of Okay. to just And all, here part obviously, story - important then tying that okay. right, dividend, the you the that's whole

about earnings if that you settling you next we sort you general, thinking address just thinking ratio? if what look that? rate year, I for at the the how be out might the at in And of put could now So about on could are lower are maybe dividend how a pressure mean, payout

Joseph Ficalora

the that the have important constantly and we in a will that high expectation ensure a structuring towards. target the will perform we, every fact, way and is think that dividend thing our is manage I that we point

one be continue the and country already are the to of as we payers defined So expect strongest in dividend so. to

Thomas Cangemi

peer approaching would at are look and as just our I that, if total north capital XX%, almost our of here, a now levels add we the approaching comps Collyn, group, capital above looking base we XX%. - comps, in of And, of at X/XX, right to risk you leverage the are capital

we we grow, the we but to that's the So as having capital grow this so believe have we and will earnings haven't of in a improve. grown while, obviously reason part capital,

identifying as be banking that real. to in going portfolio be going is is operations mortgage my - very XXXX. The as covered operating reduction well indicated other drop would are As expense be we a for previous to efficiency commentary, meaningful

be benefit, have will reinvestment to will we which to which you going those pull into should and ability XXXX, have operating to pay going overtime, to able help levers continue to out are earnings dividend. are triggers our see us that you improvement going So solidify

Collyn Gilbert

Okay, something just than curious lower just question. in second on from linked-quarter quarter be caused basis What to the that occupancy about to it have One Was should up that? XX, okay. XX a been? housekeeping expense was there that

Thomas Cangemi

guess, I into utilized. depreciation mostly a reallocating being My here another so resource would have Hicksville in say, that given higher we location, we our are Hicksville, that's headquarters

was we have depreciation put PP&E, We notes more brought in there, that the so from expenses there side. on

Joseph Ficalora

But [indiscernible] yes.

Thomas Cangemi

my be quarter-over-quarter. $XX for I XXX down forecasted my around XXX, mortgage guess, came And to of not think again, the for XXX exit so guidance XXXX XXX, QX that's expenses of than on better estimates quarter. at we in was the of the slightly off last my my I guess our range, the reduction beginning so businesses. driven cost And predominantly will - million

Operator

Our question Dave is with Rochester from Bank. Deutsche next

David Rochester

you do you to prep SIFI more expense much the need think guys How do spending year? on for Just next front.

Thomas Cangemi

is there think Yes. quite spent of news I The David. good we dollars, that a bit

clearly, other not If is So regulatory structure SIFI again, by a we plans possibility a we I you process. SIFI. don't to have. to don't It's institution. a forced SIFI the well we that goal that. forward. that cost is be SIFI. I'm we been possible clearly, Company anything, But we designated billion not move will been not no being have a that's from a SIFI institution. is have were other substantial But, $XX the if holding institution have SIFI dissolving. we If here, as be institution, above the some as given a driven institution These be operating we our SIFI are the evaluating are from the to to happens, a but to be will flexibility be for a offset it's that operating Clearly, nothing there going that of hopeful lot of spent envision anticipate as longer that leverage AIG here. substantial banks I Again, amount money a - get amount

SIFI we should institution. don't we So feel we a that be

some can So other levers not designated line are landscape have like that up that are I a in $XX not, billion above pull we billion I the think political operate SIFI we will other the we think that think the here, within as If to we sand institutions that our that we current shaping marketplace disappear. is believe hopefully $XX way institution. are hopeful

Joseph Ficalora

Yes.

to that think of that billion government is wrong. important it's recognize relevance I everyone the in has trigger indicated $XX

So and even house, they've this. lines, in of fact, the the vote in themselves, on the the are majority all the been divided Party. Senate The party people said the in changed that in has advocating be regulators this are, the Democratic Senate that

change So optimistic the a positive that I be there period think it's very will in ahead.

David Rochester

maybe you now, sounds is the So and of can it like for that hold exercise... kind of maybe you sort plan can put that on spending

Thomas Cangemi

hold. don't I on think it's Dave,

and for time be think comfortable the balance we the continue leverage over will operating we the the didn't had of and because we And expenses very deal consolidation. now crossing balance sheet absorbed come will in were have as to had to get leverage. being spend it's spending that and the said, dollars with we close so lower consolidation through With were we operating We we forward. operating grow and - sheet midst leverage going the much I the transaction. grow so as the want we dollar the the Astoria expenses,

get we in savings outlook for I some fourth quarterly guidance you on XXXX. the should quarter, So the based more gave

my sheet not leverage, because and growing grow then we and in have on excess operating connection statement, other back on Going sheet. should liquidity the expenses are you the assets, and have the balance the ability to we FDIC to assets reinvestment exit the with of the see balance

David Rochester

cash And extra have compliant be right you now? would today okay. just the sheet I'm balance the Yes, with you curious, all LTR in

Thomas Cangemi

We are.

are. We

are compliant to we We a LTR be SIFI were if institution.

David Rochester

expecting Yes, could what year? December Tom, for December are in okay. be that factoring more How hike know, the NIM? hike impact the hikes And I model. of you rate your on in And guys are you many about in talked you next the

Thomas Cangemi

are into will trying you the guidance. going not public Dave, guidance, back but I you ... to me you give that tell giving I'm So to

Joseph Ficalora

right, we You that, recognize didn't Dave? think would

Thomas Cangemi

But you, we tell I will are model. simplistic a business

We the are see follow spreads the curve. We can you are. multi-family CRE, and consensus business, predominantly a Bloomberg single-line where

changes, adjust as that modeling curve on we basis. our monthly a So

are Bloomberg consensus. we forecasting So

David Rochester

How And one versus will borrowing you last do in Okay. quick. earnings next just over just for pay real year? earmark you the investment think assets one cash down much

Thomas Cangemi

be to going dependent the all it's Yes, on marketplace.

$X at coming have another versus We XX/XX, so coming we down throughout about have about flexibility billion due XXXX, billion spending. due $X.X paying

to sure we manage we have may depending curve. guidelines. the there, market If happens within flexibility curve our shape to and decide So to And we it's conditions, on on Board-established flat, the we limits stay the the that's and depending - obviously, starts curve the clearly, but depends mandate, obviously, If of so along. want dramatically, of make may on shorten up all have due, move those we And opt It a to as our can curve, coming make we money we to go we Dave. much of steepen shape exposure. liability lot longer. decisions the the some

Operator

Stephens. with Our Erik question from Zwick next is

Erik Zwick

as or guide. First the another line - the come maybe you quick other that million move comp just expense would lower in of $XX show that fourth up there well? to expect benefits improvement on quarter and to Would follow most are categories

Thomas Cangemi

down overall, would costs. most will but in that I in mean, majority comp off be mostly we the be driven I of say, would sure. the vast area, I categories, think,

Erik Zwick

shift, what changes quarter-over-quarter on Maybe and noted preference. And deposits the customer it. then for end your the is or what are then two-part And it a deposits, the expectations were forward? you your going taking mix Got shift flat question. is pricing growth place. on One, balances driving

Thomas Cangemi

wholesale liabilities. again, wholesale cost. of have We a So we around lot moved retail the at some into same

wholesale wholesale we really we in retail, some retail growth had nice out as the customer just So liabilities some came due, but the our it so taking deposit, market some a We lead in were wash. CD in there institution. was had

Erik Zwick

your deposit growth forward? Got it. expectations And for going

Thomas Cangemi

growth deposit the we balance on I love depending it with the mean, to obviously, growth. would fund of sheet,

would Astoria in reality did the And The Hate deal don't is that not from like we the to fact. have franchise. close. to that, retail we clearly, pending. So repeat deal the funding but a bring that's

fund of So utilization depending retail and to with would our on we like deposits. market funding, conditions

Operator

Our with next is question from FBR. Moss Steve

Stephen Moss

commentary on that last bank what potential thoughts the acquisition next XX within months? are the following your was a up wondering, I for on there,

Joseph Ficalora

Well, execute as I would no and we define There try which would say large would with transaction. a say transaction our with specifically is execute that the that is. to as that would we circumstances marketplace on opportunity. that I to on the a very we you serious there be have under weak is to a currency rich effort it expectation needs

currency Our a weak has been on relative never basis. this

sale ways, currency our reality a could we enhance deal currency. big on are So The that so in our running do a a is some we greatly will small deal.

larger a horizon. timing So execute clearly uncertain, then situated I likelihood is of ahead is well on execute exact benefit on something is very deal that that get and we the but period on the for a And think bank, smaller from it that the deal. is the deal, that that the choose

Stephen Moss

margin? And each helpful. in basis the five does X to continue Fed points Okay, the is wondering - isolation, impact about each just to be then from hike that's to

Thomas Cangemi

keep that It really some portfolio if right $X of between, would cash. going moved it's so billion it we that's and hike that impacted. lot to a liabilities [indiscernible] the offset keep quarter, obviously, it we some is to yields, going are a driven so goal of material. dependent have between year they in I We we in more basis liquidity is The have rate cash. now bump But be would benefit of so getting will three future then, not was not four for Last three to longer points, this forward, are I as basis for points. four say would to higher say,

base, retail-driven, wholesale wholesale so ability of instantaneous. three your impacted. four customer say would our points. the they not are you so are have about to liabilities now to as I Some basis Obviously, is manage the more Retail,

Stephen Moss

next Okay. that the year, FHLB year towards part coming And back borrowings billion then $X is the on? the that or due early in of is

Thomas Cangemi

restructuring of billion entire at $X.X about the It's throughout slump quarter, end XXXX say, quarter, The yes, of ratably. throughout billion, the year. coming XXX-ish big are lot going now our did so we of into with around at average. would transaction this those coming the those the on back, the years due. liabilities Cost that of is from And are a I end coming entirety, Astoria the a $X.X few

Operator

Our FIG with next Marinac Christopher question from is Partners.

Christopher Marinac

bit beta but these a a you the and, it the does to model does permit several beta. little Tom, high? on general, business of thinking previous you deposit questions, the be follow this deposit certain next quarters on of are inherently I beta, deposit beta wanted cause up Just in that to covered know

Thomas Cangemi

side. we the simplistic So retail are on very

that We don't franchise. liabilities. are it liability model. market type in banking the marketplace. We have deposit We to the the not pay We are we people in predominantly do bring in commercial thrift the retail gathering through take the

We ambitious shifting will retail. front that wholesale in on probably more be from to

considered to significant some so wholesale they are be liabilities funding. are that stickier-type into have more going We move that we retail can

So case, be versus less the if that's wholesale because customers will impact are impactful you the rising going rates the in to bringing markets. of

traditionally, are gather substantial more There right been about their lenders mix That's that push not we do we pretty a we is job and to have there out clearly, that our and can tend better real been customer is that enough fruit all base years. low-lying much deposits. that from doing liabilities. we rising a of or estate assets that's product So has in, now. rate go think these have wealthy we do customers to and for we lot environment, somewhat a the the But, I as have to talking shift a successful, CDs, have of a large

I Now we that is low-lying think fruit that's there some where can on. work

Christopher Marinac

what to. then To the also Joe buying become as from some you small more acquisition, terms in extent branches potential a of alluded perhaps do branches for critical

Thomas Cangemi

Clearly, side, opportunity funding river is it. on look there across the at if at look going market, everything. to to If the that we came of course, are we

depository that of transaction. of M&A we a we One type transaction any is or could to lot have dramatically a an wholesale have benefits we either easily of change do, transaction the financing

we You and points was benefit close, on liabilities. wholesale there the not significant stable basis taking combination, Astoria offsetting to our a to the was attributes just business that XXX that that would can of have more did would one there any substantial previous potential shift retail. benefit on wholesale transaction with by save close the core a deposit probably to That's happen by really

Joseph Ficalora

acquired decades, I acquired banks, in the of and we proven not branches for have think a we branches, it's have fact, acquisition the get we banks.

than model, are and So one a what there component makes in way franchise. lo what the deal, we getting is are important of actually acquisition. doing we choice in enhance opportunities to our the our of behold, approach next better a very plenty franchise And by

Operator

is JPMorgan. with Alexopoulos next Steven Our question by

Steven Alexopoulos

out Tom, the in it cash. us relatively to reasonable sounds $X you what is might that billion? Can of of portfolio think terms the quarter like deploying fourth remain plan the add you patient about excess of to you securities help terms in the

Thomas Cangemi

loss patient ago. share, not we just that So, are it given exited Stephen, not we long was that the

the pretty it's that, fresh. So of timing

environment. So at we want the to look

to we are that our core core put in in out business. going publicly is resume and Our our said product, it to we growth our goal

reasonable sense the are - securities the that the to At we sit best institution. portfolio. all same anymore, retaining We the are we cash. to That's of on run can't time, not avenue. have selling assets this makes level we just We restore a

some are in of form to We securities. deploy going

are year the work curve. any We of be would enthusiasm the the be, interesting are going It's to If been and the the given we to faster. change that very advantage, we way, cash reality but flattening more a be put will happens money the very some cautious tell would yield our curve. In would we have with more deploying XX active. term, towards shape to the short me being in environment of to where the

So putting would work. more if be money does that to aggressive in we change,

Steven Alexopoulos

degree the Tom, cash more are to yield you duration looking of work But to some securities here, you at? and what put do

Thomas Cangemi

they relatively within short we The is question depending expectations HQLAX on Again, depending curve going of it to long the it. to keep it of do qualification - are keep our adjustment bonds. or on go be government has some and the feature securities, HQLAX, all that versus we

are we that. So evaluating

time, that money of not to to that sub-X% redeploy. been But and so XXX end is the think securities would you At work we at we just the patient. attractive, our as I a put build going is the that but we loan we portfolio, sub-X%, in want have is not in said, is something Sitting the same are long-duration, by money the reluctant as we opinion, XXX bit rather with December waiting acknowledge world. my very, to book. to little being

Steven Alexopoulos

assets of given the around billion, $X you you add $XX.X walk And and can yes. SIFI Yes, not terms in the threshold, billion of trip already comments can plus you are cross the I'm I line how and SIFI mean, could you know of not significant what you are through, add such assets about, threshold. time I me sure level talking a don't

Thomas Cangemi

divide $X.X billion average $XX.X reported Go billion, So order so an to over you that average my be simple out billion. numbers to to have four this on four, last that by balance math. put and over that back to would quarter. trip in again, just the is sheet really of comes $XX to next In

the So quarter, billion. let's put in fourth we assume $X.X on this quarter -

As of would designated we be XX/XX, SIFI.

impact you on a over So can fourth the next six I depending but the the deployment putting in billion the XXXX, have on but that we the We obviously, put again, quarters not growth. next until mid-XXXX. end of quarters trip securities don't for put on billion again, million and envision three so on loan and I will quarter $X in some for flexibility. over you $X.X $XXX quarter, could mean, trip

the high year Market's be activity restore to back little we back SIFI fourth is next than over clearly, which digits. which not portfolio the single-digit think to us. bit a And we current uncommon seen net threshold. but, grow balance because for loan so trip historical have flexibility high norms, and transactional should not the the the being this have that we single growth of on quarter grower, a what loan So to average I sheet like our under - softer look

Steven Alexopoulos

question, are there is that expect of terms over Joe, SIFI hearing know we plugged final should And I threshold, Washington. into are just What fairly anything a near... you you billion the $XX in

Joseph Ficalora

Yes.

think in that are chain in [indiscernible] it people a to clear to begin that, there and said that very be open that at going I very the have Chicago number guess, that going I is was high very, the the changed, news with is was I are that last in made an number expectations, good meaning decision two. that their that week,

serious be consequences by been driven very recognition, he It determines Tarullo there candidly I years that two is billion, to that $XXX will analysis that has in is expectation So of that, departed, not that should risk. wide in change imminent. individual a a reason there of by changes reality billion, the be by that think and is and be And also $XXX billion. that before good openly reaching change The to for there period consequence there there that's be believe discussed that the bank should needs administrative change driven plateau size. $XXX is

a a bigger that of having structure and bank when as we $X So classic today we the same example were had are in risk billion is we significantly size.

the a be in that those that period hard and ahead, know believe be ours. to changes, the So I there period and all to to changes when, will exactly beneficial as there is bank in think good reason it's ahead, will such

Operator

Our next Piper with Jaffray. question is from Matthew Breese

Matthew Breese

to securities portfolio. of lot go the of at to of low X% today and end wanted even Just between assets a the the peers Obviously, XX%. are them

want ratio you longer just $XX do So envision How at for sense cross being? portfolio point to you which perhaps do that where the do a big you be? term get billion, that to I at wanted

Thomas Cangemi

SIFI know, As flexibility. LCR subject a different add LCR different to consequences, be perspective Being we would LCR, Being we toward should we a to which the would have there more institution, expect is requirements. modify versus a defining you and LCR. non-SIFI,

that recall, double securities say we So to portfolio part the to be and peer. was And that fair happened. just in of the the to still slightly light clearly, some reduce here portfolio respect industry would our strategy easily it's from from payoff downsizing

cull over years. the happened substantial had few have We past that

and - as it acquisition get managing strategy. to So on when focus any would in trying helped us changes the on clarity were we threshold, foresee our us SIFI we assist -

and So clearly, X% be it's to from lower it's to lowest doubling to much be it been. ever not it more XX%. going the normalized here, and needs It's to starts

is doubling norm. So the and clearly reasonable something probably that's below still industry

Joseph Ficalora

risk the change, better circumstance, thing that In factor. vulnerable fact and think But important is be we of there value Securities in our is deemed performing profile changed to the stabilizing are assets a could I portfolio have than dramatically. that the the recognize is to bank, no securities to rate escaping the in securities. they be

that fact, a and in years. very rate for in that's, short stable of of perform well very fact, have result change, extraordinarily That's three very, a we, assets period desirable. As

I So as the risk profiles which structured are than bank needs the a we. that's other have of banks' sheets, such different think higher balance of needs that

$X we in we big of as Tarullo, fact, were the was structured are, basically as billion by that we one points we were when In the same size. as are made

reality the different have the therefore, by sheet is is institution. we a has securities are high-risk profile assets that bank the that offset and balance that in than So the unique our numbers of present

Thomas Cangemi

regulatory a in the liquidity it based we if with were mandates just focus to be government on would market, on So that, Matt, expectations. follow up to on securities, all be

Matthew Breese

just into out you or things? time about proceeds over to a X or those for pay using loans do the little the goes envision of what borrowings, Understood. cash securities And frame of if then bit, thinking those three cash regardless

Thomas Cangemi

a of comment. somewhat repetitive Seems

going are very to proactive. We be

more goal put we Our dramatically, steepens to growth. active. is the shape curve Depending if of the curve, loan be on into the will

growth, high to We like We back last to have growing a loan have our some nice loan We off go want to patient. some do to the well. to to have we flexibility prefer got liquidity here have net you would so book. question, are and we single-digit being as that as

now. meantime, and market as half, very in purchases, deposit we if may to rates We and aggressively. will CRE in have fund accelerate flush would, on the XXXX. liquidity see right we spike spike say, let's of in is little you well that the back the In there a rate, And the will may we interest if in activity - the side multi-family a be

within activity So haven't seen we we that. will have managing portfolio, an our to influx of but our deal

And begin. X.X% product precipitously mix. X-year offering until a So activity really it's our that higher, will been X.XX%, relatively moves from

market talked the City. It's been, in space the estate as volume for about, it's New real within marketplace. we York within the very down-volume commercial been a activity overall So

putting are we We construction loans, on are conservative. not

space. talked Our of any the activity portfolio. portfolio is in performing a fabulous, of as down lack matter we It's delinquencies the has slowed dramatically within about

Matthew Breese

right. spread? from or any has then ten-year And it's quite corresponding September some movement in the today, up seen you Have the recently, yields seen to movement a Right, bit. multi-family

Thomas Cangemi

you I say were would they So right now, of September where they view aggregate at security of materially. spreads where an within the the spreads yields are look in have to right? market, tightened and tightened, have if beginning

been a There curve it's of of lot point a goes tightening and at chasing least up, you is back rates not higher yields. the - which stays is yields, to of is end basis a to benefit a basis on has there benefit. the that's level current the So risen, hope say, going these point not not as money at with, let's when unusual, the the that unexpected, spread but see and consistent that we get

haven't So an though not whole of on a XXX. marketplace. within tightening multi-family XX X/X the Security because lot side even is I broken maybe material moved year would the has movement the say yields the

Matthew Breese

have other Understood. And the deposit just cost been deposits on the of have higher, side, been higher. trends then

about increase kind we of what think of is funds, least... do of As expecting be think cost incremental you this that at should we pace in

Thomas Cangemi

is the rate think within that's going its the and And I hike market, is the there market. December think the Fed within is deposit December. an marketplace in that the something offered No, I has to expectation our competition marketplace do

the within raise is deposit the December thrift of funding of through our type competition, model. mix there is as which built-in think a traditionally I

move be So is rate in think going have up side. funding can to December, another don't a there we if I bump the in

within within of XXX-to-XXX-type deposits year the are retail I that at range that in think franchise. everyone's X

year-end. will Fed of indicative our think where of kind be I that's funds at

Operator

question James. is from next Raymond Our Wallace William with

William Wallace

to month, to far the curve prior sorry portfolio the have beat into curious the horse, on I'm I'm over slight the the but securities if dead a proceeds in you so move invested question, in past analyst October?

Thomas Cangemi

Yes, not. we have

going We have continues, said current have been Mr. were be patient. we as encouraged but may patient, we be extremely very more have active, that We been by to think, we clearly, we cautious, I the from are That marketplace. I to JPMorgan, been patient. Steven

William Wallace

current remain the that five basis or And point guidance quarter, the margin that you any the patient does for for investment Okay. curve quarter? that does compression under consider consider this in

Thomas Cangemi

growth. the expectation Remaining patient loan with of

So that pressure. margin of may obviously, that [indiscernible] offset we some can And happen.

more active. be may spike, we we As rates see

William Wallace

perfect. Right,

if upside steepen? continues potential to is curve there for So the

Thomas Cangemi

We attempted conservative, to intent. be the that was

William Wallace

I the past to there right? Tom, you you made of early get in to believe $XX the Q&A related might over quarters, about was you Understood. million able out that you thought moves the said is that system the have expense that be two of on

Thomas Cangemi

Yes, another believe, that, that's drop, $XX a next is $XX million, $XX of we year, that's quarter add again, which conservative linked still, you estimate, running million million off conservative. for annualize

lot didn't have a believe that, we get the reduction practice spent cross. the of operating in we and lot Obviously, to over that happen, a ready substantial the into The as it we spent what substantial we transaction, a So spent active to we dollars or be forward, in-place cross. six SIFI-ready some are benefits spent We we money, we very of in good of be established leverage getting will going SIFI previous consulting, past should managing are were to we bottom be as years. our deal a for didn't money management indicated, we five of on but going amount years, line. almost risk

William Wallace

is - $XX Right. $XX a of that's But the additional correct? change in million, the barrier, outside SIFI so the million that

Thomas Cangemi

assuming again to be have are is could for business as that hopeful AIG about the business But to we are still right? - de-designated usual. but that, that commentary, way, being we rules that's back the [indiscernible] we as SIFI changed, my Yes, haven't talking and But SIFI. usual so a that, by we going be will Wallace, prepare bank, a

as thinking will the are, we there to hopefully, forward, be as to opportunity $XX that rational and at be not will we given the not, So going can alternatives, structure other north of identified be have institutions we billion that and able corporate be at look who least are be are if itself. designated other SIFI

are forward. SIFI. That's We that we are designated why a a an have potentially as a That's option holding - Do have we Company? bank going Company. holding to bank we something to stay as as

William Wallace

of Right. $XX you think get think And to that early is out could about just XXXX? million something pretty difference, you the so kind in

Thomas Cangemi

That's the goal.

William Wallace

just And then, last question. one Right.

Thomas Cangemi

sheet. point, my opportunity, balance reinvestment the to back growing Going expenses, lower operating leverage,

Joseph Ficalora

that's our grasp. within All

William Wallace

say, per Tom, clarity, taxi at And just portfolio $XXX,XXX now then your hear medallion? carried for I you did about is

Thomas Cangemi

we $XXX,XXX activity that September down when large so some about our [indiscernible] and collateral less disposition a of a and looked we at sell, are to we [indiscernible] and the to look, value you collateral transactions, activity few Yes, XXX. value cost given took it

saying we not there. we have are think wrong, people higher good or I'm place in right So values. a

a on balance We so $XXX this book major there million $XX think of we are billion we some player have sheet, not a south in business. It's flexibility $XXX,XXX.

Operator

is with KBW. from follow-up a Collyn Gilbert question last question our And

Collyn Gilbert

Tom, pull-through so, and your growth. the loan with to I'm just that trying pipeline your mid-single-digit alright, rate, just - to the struggling just connect back I'm to on point

a So in? couple of time, that pull-through, how come quarters I mean to over the like fold does does billion that take $X in

Thomas Cangemi

retention our off, we Collyn, Again, retain [indiscernible] what goes we think past closed between don't split been there have the have every In don't versus [indiscernible]. are XX-XX we we always it's pipeline, quarters, ever are not that that closed loans pipeline. a have few loan. what our away paying loans But I stays,

market, in As conservative aggressive there we the are lender. City indicated, is a Joe going on an New lending York

pulled being So pipeline, said, always the we essence, have we pull with pipeline that. have will through, we always that our and through exceeded in

about own that average within growth portfolio XXX. right book our internal is the have have portfolio coming that's we now yield So we on XXX. expectations, is The the

have the four. that change between favorable. look the payoffs, good actual news seen change we closer you So between bleed see like the that to at coupon. to very and loans spread higher on the points, the has current We payoff. it's when Right been coming And now, are and the originations that four than basis originations very,

previous So points it to basis XXX used years. in be

hopeful now. not need we are customers move coming down so that's and neutrality, So what moved within to do and to we portfolio mix, have the yield down rates the more our are to market right will has business Again, so rates really see higher our there. higher is the come we product rates but at markets, within

Operator

over turn the the would have to like we closing back session. I to of the question-and-answer remarks. Ladies end call reached for and gentlemen, management

Joseph Ficalora

morning. of again three join the taking will last forward chatting to during look for this months you the XXXX. January, Thank for ended the again when we week December our performance to time discuss us with XX, We you

Operator

Thank concludes you. This today's conference.

You at Thank time. you your your lines may disconnect this for participation.

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