NYCB - Earnings call transcript Q1 2018 | Flagstar Financial, Inc.

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Operator

Good morning and thank you all for joining the management team of New York Community Bancorp for its first quarter 2018 conference call. Today’s discussion of the company’s first quarter 2018 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 company’s Chief Accounting Officer, John Pinto. 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 these 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 September forward-looking morning’s the quarterly will period the Form XX, associated risk the its XX-K ended You and report XXXX. XX-Q annual earnings release maybe also conference call. this includes GAAP The during of release and non-GAAP discussed certain reconciliations financial measures that

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

reminder, a being At As call today’s recorded. in this is are participants a time, all listen-only mode.

to chance the ask discussion, Ficalora prepared the please at line a provide a opening have will of who following be go Ficalora, time. ahead. Q&A that during I management’s will You company’s will Instructions given Mr. will performance overview to before over brief for questions now start the the Mr. turn To Q&A. remarks. call the

Joseph Ficalora

our was as current of our XX.XX% for quarter. quarter compared reported This assets equity common the average first XXXX quarter, per a and on for ago tangible a months we into On joining average have basis, share discuss X.XX% return XX.XX% ago quarter diluted X.XX% for operator first thank XX, March in X.XX% common ended compared and tangible average the Earlier three in on morning, return tangible translates the performance. compared XXXX year assets to to return stockholders on year the equity $X.XX of to quarter of was compared we of while to all stockholders X.XX% in you, the XXXX. common the return in first average X.XX% a Thank X.XX% on first you this this first the earnings us XXXX. of morning quarter

our to a share dividend common for payable on Directors dividend the the XX We X.X%. $X.XX of Based May is is as May on dividend record declared announced of also The closing yield quarter. as X. cash annualized price, shareholders Board of per common yesterday’s

through growth I Now, of will sheet only of organic has the in company’s last XXXX, the carried This balance discussed into and XXXX. half began the the of growth of the quarter. some the strategy. take resumption highlights middle we you second Since have year over of

first XXXX performance off marking quarter our of quarter third sheet Our the consecutive picked up performance growth. fourth where balance quarter left

grow our During to loan the quarter, we continue portfolio.

expenses retail asset net relatively held and rates stellar. operating quality despite deposit The margin interest declined up increase sharp well remained further. in Our a

growth increasing our first loan first million our loans Turning held total of portfolio year $XXX for loan to quarter an on investment annualized basis. X% continued the or into the with

quarter, business. loans last and or $X.X in $XXX first prior ago from of multifamily the loan or the quarter year was by million growth Total core billion driven X% growth quarter. this As multifamily X% our quarter an rose annualized rate from

specialty year-over-year billion by basis, multifamily originations for strong solid Our fourth in during loan the in first was loans XX% a growth XX% seasonally up investment the The finance our another reflects quarter quarter, during quarter but growth year-over-year volumes in volumes. growth origination We $X.X driven originated loans held on quarter. in business. down from and this the

$XXX loans, finance billion million loans. $XXX Our multifamily million pipeline $X.X of specialty $X CRE currently stands of at billion and of including loans

current without reaching the stood to end on the at assets the consolidated ability of sheet based quarter by has approximately threshold quarter, $X the the total $XXX we the the course pass regulatory average in to anticipated SIFI balance the of average the XXXX billion the sheet This us our as SIFI of fourth and balance Given grow the company room increase reform ample threshold grow assets. gives for total wait over to billion. trailing to

Moving quarter. our to quality, metrics on this quality again asset strong were asset

our loans quarter, average net loans were X.XX% total or unchanged the first the million of $X.X charge-offs During were non-performing quarter. to relatively prior or compared

Our to points basis at of XX $XX million total points XX NPAs of assets basis compared or declined or million the $XX XXXX. modestly to end

Third, net margin down points current interest X.XX%, came a X in on at the the basis margin front, on basis. sequential quarter’s

the quarter. interest compared the prepayment have from XX at Excluding net in would in X.XX% basis the fourth X.XX% point income, contribution to margin come

and first last remainder December last drive margin to non-interest be wide there increase also grow operating addition, two total year level believe expenses, extracting on quarter point was operating by XX our $X XXXX. savings opportunities the savings the to in and in level expenses of had The overall the existing compared declined or or year-over-year will thus cost retail the from are of In continued We million the quarter $XX in the efficiency further impacted improvement expenses in deposit mortgage basis XX% improvements the expenses, the rate year. impact lower business and our the non-interest Reflecting as the year reduce to industry XX% additional of X% on quarter in to of and XX% our the Four, ratio banking of leverage. the linked improved from fourth first operations. us our the balance we from and executing quarter XX.XX% increases of continued of million March, to and to that fourth our throughout successfully cost quarter rates. sheet efforts compared result the compared

increase a billion plateau. to bring moved a month, vote. Finally, onto House the from on the legislation Senate Committee you the for provision bill their The existing for passed Services which front full know $XXX Financial the included threshold $XX to regulatory House billion as last to to SIFI has now approval the relief regulatory it

open the We line are same House in now in the to that it that your would the it receive operator did questions. On hopeful the support I the as bipartisan will for Senate. note, ask

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

Operator

Fitzgibbon you. with comes first Sandler Thank of Please Our your line with O'Neill. Mark question. the Instructions] proceed [Operator question from

Mark Fitzgibbon

Good morning.

Joseph Ficalora

morning, Good Mark.

Mark Fitzgibbon

I First you they what decline? sort quarter, about for the that linked were million items down of expenses were the drove from had that is G&A major on question $XX

Thomas Cangemi

a from the so I and first a probably number guide expected. with the I’d to that grind there had X.XX, say done big last XXX is type quarter would so high flat would picture, but next guidance our and run-rate $XXX XXXX around we It’s Good mortgage related would Cangemi. than probably X.XX banking us was regarding quarter Tom quarter doing? the rate. is down is was year have coming finished high how first between we further exit department insurance original morning, that run say at of banking, it’s completely reduction give X.XX was million mortgage Obviously, the had that for year, successful. with on it million X.XX – the continue precision Mark. around quarter banking to expense couple the by I of into to from overlapped expenses. mortgage are execution the Typically, from our expectation you very the of to The here, better so probably off

and that news we as think we to some expenses the down opportunity. grind I the continue see we our good So bank is manage

high expenses like more our and QX extract as call, clearly, to of what continuing but are said we previous the $XXX QX. to the run-rates. dollars the years transaction conservative cost they trying down the went in quarter related here, If hopefully be be high in quarter other the million first previous are I should in get year’s expenses being out in from quarter benefit and so less I couple reductions were We embedded the looking previous call we was in the consulting conference through as that Astoria we another

Mark Fitzgibbon

of sort while the thinking And rate we you couple hikes? based outlook, how are Okay. margin about then more the margin stay of on on

Thomas Cangemi

I down expectation driven would XX another now like and with say another but right in solely my to that’s hike be flat, will rate an June. of it’s guide

the the the quarter another And XXXX. of Fed end hike consensus going X% also we first a year. are anticipated We with Fund rate modeling just into have at with of rate

down are the retail the coming that and in we the U.S. dive XX is that to seeing increase predominantly deposits due So, due borrowing the throughout are driven costs down clearly,

Operator

Thank you.

Securities. Our next question proceed with of Wedbush question. Peter Please your comes from with Winter the line

Peter Winter

Good morning, Peter.

Thomas Cangemi

morning. Good

Peter Winter

Just margin balance follow unit the the what’s side up core on happening the of a on sheet from asset perspective? and

Thomas Cangemi

smaller We quarter in closings in basis this previous say missed the as had obviously very by closings our end the about quarter closed wait we is of to the securities balance X continue loan our the keep sheet towards late opted quarter. points, back good SIFI the We was to guide market. final opportunities. Most did out would I of by So the the news we transition. for invest and we which

We are we previous optimistic the number we $XXX will becomes aggressively as number grow collect billion conference calls more that there, when but in here. the

more than to about XXX amount a right a are would double which be those have than X.X% We higher and ago. X%, yields points securities that now about year assets, they basis were

really haven’t positive us. funds put where a to that’s So, those we

approve movement cash in that excess some ahead. bill along the bit put the the we and that event with which the Senate, growing in little balance to House back quarters use on sitting anticipate and are foreseeable here the more we is margin will does we sheet. hopefully held a active So, money real to also the In the be there

wrong We do we to crossover to in the have want not that a do be mindful CRE quarter.

in sheet, obviously for will per So, fourth we balance change couple transition million the don’t let’s event that to the people. be and next the to grow of us $XXX that million quarters of into quarter the will we reason, the say, put if were some $XXX quarter

have pipeline, up strong growth, we net loan projects CRE our flexibility very multifamily were clearly, loans allocating there. So, quarter, good towards we growth are X%. our multifamily But very

loan as balance active growing As be the in particular security the far as X% in the is quarter, net discussed side. see cap will reasonable raised the to get the obviously anticipate as when XXX sheet, on I and growth do expected they previous more on we

Joseph Ficalora

The after was the going bill than bill been being was way written, written the billion $XX has before versus important be consequence thing of written. to billion bigger $XXX recognize the is bill the to could a different there

the be to being little detrimental wanted was be regard. which a timing language the a more possibility restraint Absent that restraint of in that we there on that becomes being prepared So grow. that or speed based the are on that way will they with little could

Thomas Cangemi

be see next us the few grow will plan. for quarter, every clear, that you that’s Hopefully quarters the will

Operator

you. Thank

of comes question. proceed your with question next Zerbe from Ken line with Our the Please Stanley. Morgan

Ken Zerbe

the at about are are changed, I said your that, the questions, you you I I the saying Two SIFI let’s lot gets securities I just going will securities again to point, strategy with is rate, raised Tom securities, CDs start what mean threshold Thanks. SIFI that one, growth a – it’s putting because you the great. what for threshold after SIFI of first growth you Hi, this funding guess say through the how growth back funding found raised? release, that are

Thomas Cangemi

the cash strategy of abundance there right. right. Well, And the on two was current is sitting and strategies, liquidity, I mean

So we notes. treasury have have we bills, short-term

return have $X.X and earning a lower work. of we well as to put We money cash we over await billion very

markets share growth. have loss from with most the replacement money of loans we we wholesale towards loan market. put are FDIC. resources those now sheet, given look picture more previous Big of We in products the balance for sold market. the NYCB is is the retail viable wholesale the Right we the year been of at more, we alternative and target that grow retail and that strategy allocating the the cost as exited the the will the This

is company growing be the these raising right will so the the our than we cost from position borrowing to current transaction, market Until strategy. announce of the a which that’s So for book deposits. funds depository is example, actively in CD retail the were wholesale lower market, in now actually significantly a

Operator

Thank you.

Christopher Marinac proceed of question. Our FIG with comes Partners. Please from next with question line the your

Christopher Marinac

Thanks. morning. Good

Thomas Cangemi

Good morning.

Christopher Marinac

low off the were market? there for of relative question, or keep could able just last option it not deposits funding be cost that your sort just leveraging a in on customer therefore being to wholesale you Tom pay So additional be

Thomas Cangemi

all table say the to good sources. options I deposit bringing would on

on the been side. bank have focused asset We generation

beyond. the growth the The going are than deposit more be expectations expensive the very a to be has growth need. and in right market on and the market. wholesale focused generations funded to has the We XXXX funding in retail – And company less are

in-market the in will Remember, markets. very be we So, many deposits. we active are in

and adequate price Ohio, ensure the ability in good a New regionally had in are nice that continue nice we We we so our mix we are New have mid The growth as that seeing and and CD right quarter CDs we book in we to to Florida, have pickup in Arizona, deposit York our is now, to we Jersey, news funding. they are continued.

So hope CD XX market. significant as some were the able showing at do of those on continue reinvestment very the to the on of am some points be a points probably through amount side were have pay-down be, growth savings but basis we borrowings what plus we to borrowings. year. also to basis as profound expectations cost It’s XX is borrowing the we the And about we more above give significant coming not going to throughout could guidance that successful. I those

Christopher Marinac

then and was had the this level the anything about in it. perspective a QX? a follow-up Got quick unusual seasonal quarter And prepayments that there from just on on you

Thomas Cangemi

is say for us $XX.X we loan that security will was total $XX.X prepay Obviously, not I a it at But prepaid million, million, at about activity, significant don’t of that’s look slow. some if but related. the you was number. seasonally prepayment control

we environment until news in good up favorable of prepayments is and but right was then very coming fact optimistic see a in slight saw apps the January hope So in have now. the future, a that very jump that in to we back February. rate about for higher bit little which We a better the

are that So tipping where is rate. higher point so a will question we towards a more loan for year more change dramatically previous X%, past current X-year for year. customers significant today in where the than weeks base. every There look you couple to option to we and be trading, of at the offering twice from the weeks, estate the now X-year higher loan the no X Commercial multifamily. the be raised we prepay that X-year current customer treasuries hovering our let’s rates mature, the say close that’s past our X.XX% believe to the are react typical real when eight could to and as viable And it’s becomes is

customer is base, to prepayment. year the slowest when with So but are can’t elevated about quarter we bullish activity. no We question QX guarantee the comes prepayment happens what typically the of it

Christopher Marinac

helpful. That’s

Thomas Cangemi

Sure.

Operator

Thank you.

of next question Rochester Dave with line Our from Please Deutsche comes proceed with question. Bank. the your

Joseph Ficalora

morning, Good Dave.

Dave Rochester

Good morning.

wondering real then at rate Just are borrowings a quick one on mentioned the to what above just rate at point and CDs. XX pricing was bps what’s roll-off XX NIM, you You the this rolling the guys there?

this in at So, just was actual seeing? rate borrowings where point that the you that curious the CDs and are

Thomas Cangemi

Yes.

remainder about is the quarter quarter about next QX about So, and we $XXX in for billion. end year the of the second $X.X it coming quarter have $X.X in is fourth the the of – $X goes back off the to billion for for for this billion – about million year X.XX%

year was and coming that approximately another in billion have year this So due we next coming XXXX. $X.X

bonds an it’s of So, expectation they due. dealing these ongoing as with come

have been pushing We out. money

X.XX for the rate this been current reasonable So, going that’s a look the billion so already story a of market since close, moved example, the what lot of restructurings to was market. added X.XX, moved we has to you of loans rate expectation since long at when not money at rate compared $X.XX

bank these and actively we risk franchise, offset customers. deposits So for retail in longer. rather for have being what see the pushing some liabilities by we But our interest by of very been managing profitability our out rate the the

retail deposit push bring the accounts. at level core to a in So, there has been

Dave Rochester

Yes.

seeing so you where CD is now? are pricing – So,

Thomas Cangemi

X.XX From depending duration. on X.XX to the

Dave Rochester

Got it.

Thomas Cangemi

months and But think don’t ready Following yet. XX are look occasionally month to customers XX I X as well. X, go general, I we X, at think the years in

the the standard industry So, shorter term pretty U.S. much not it’s maturities, which throughout is still type

Dave Rochester

So, type X-year like or stuff? be XX would more the that month is $X.XX

Thomas Cangemi

depending like more markets. to say XX XX I’d on

X various $X.XX, trading tax-free at line, treasury choose to. can treasury and get are we in at direct and years go the state are you is X markets. $X.XX if We If X.X% in they year to

and typically to what going a be is rates Mark happens it’s this rise. when So, competitive short-term deposit

Joseph Ficalora

rates into biggest have that as you keep Yes, raise rates rollover don’t of losing you you new are offerings typically, the you then deposits low where raise you know? as basically bulk as maturing, possible in and rate rates the

Dave Rochester

duration that the borrowings at on the on what’s then those general rolling rate into this And Right. are point? in you

Thomas Cangemi

life moved there average X.X there. at on we So going say, a the of over the over. were approximately some I we that and years look been would beginning attractive market, X the the we the past like moved X.XX, about I quarter, this was year tranche we into portable fortuitous has mentioned at billion optionality half, depending previously very

So, The the we for and portable are funding cost able been right straightforward to most expensive bolus our now. stock get very has of X-year low type transaction.

available to of tranche depending tranche in the – type structures. into we tranche in So first optionality wanted out close, going – what’s of to have the bullet the bonds for that there type so, some convertible bank we the on opted X-year, with X-year the form previous in first of second

Dave Rochester

be this mid guess would high point? to I Xs those And like Okay. at

Thomas Cangemi

X% at you low had X.XX, Like I closed, the a X from ago. year said, the money probably first long term $X below of much vast – that in billion was majority so years

Dave Rochester

securities balances chunk in point? of this maturities Got to the help quarter, just to a just some these seem of be it. interest NIM the into to some this fund or borrowings that cash of elevated then pretty using at And what’s that deploying defend your

Thomas Cangemi

there we you the and opportunity loans securities very, evaluating the plan. on an going to be be are the X% We believe sheet, the we are had as very have cautiously have market. to very a balance which assets that is going we securities being cautious company. that is That’s to Obviously, public

on positioned So, put we growth. are to

will growth. slow grew QX We a at look we significant. quarter, is loan where is typically multifamily the which X% net pipeline,

rates company higher moves rising to the into at its time yield. funding going investable and we the a as the we the product getting short-term So, are much evaluate deploy interest on cash in same loan tick market, are securities on

are cash So, for term we are example, were that X-month a are in, ago. they equivalents treasuries year X-month that or high loans cash than and getting dramatically

very points to get build we and been cautious are the stuck because duration put not don’t for we have SIFI event a the that, once going gradually in portfolio be the to money in will and but the but regular the will but year, reason here, some to on this the feel want we last that quarter, it’s going is news trap we one the relief ongoing we picked So securities XXX comfortable, you we threshold, we basis get here that time up good expect market. ago year we accelerate

up loan so north be of from gets to the side. reasonable to should you XXX it’s are we coupons. the at side, and upward that more the higher, the So, are loan than spreads, anywhere have news favorable I industry and re-pricing far are as movement the a an years, market X% favorable market right, on loans that the spread are – be going needs to we been to but seeing XXX to good spread our probably on as as X a say would Rates some

bottom. If at you the at the are, our look coupons where coupons are

accelerate in recovery portfolio, in to so So we in we actual so the of maybe look to and order too recovery the coupon will the or in with portfolio going elevated it’s the they dynamic month is that event pressure. have seeing the yield, every the bottomed see a now current activity that that’s you mortgage and U-shape forward late. V-shape good market, coupon, to has coupons believe exciting to this some offset a XXXX their we current the the the prepayment news quarter margin and every be off X.X% before X% In lock it its realized to customer is

awaiting opportunity. that believe a that’s viable for real option occasionally We We are us.

Dave Rochester

– hike, are we I you you have a the NIM know thinking June the you in are guide your assuming hike includes expecting for obviously that are XQ also that pressure given just XQ? that about March similar had,

Thomas Cangemi

to was NIM, be it I able a past guidance No, good the don’t go quarter try. one on

Dave Rochester

know, tried. I just I

Thomas Cangemi

they first it into work is don’t following think first to I up you the raise quarter are the rate the the quarter as going of over of sensitive. see landscape, reality one see we then June X% change at the that’s are same senses kind the crystal one Fed on Fund and end quarter Fed maybe Again, September, a summer this – year. and the XXXX, in to that’s it, the tomorrow was if and possibility the you the we of it in in X% are I year economic going but that we now liability And next depending another get have but Funds, have and ‘XX then pattern could on don’t ball obviously more the we

model We are the should it’s the at the competitive best on have wholesale expensive this funding we going offset financing opportunity on type expensive to when an out The deposits of be in the look real lot model in to some costs. side and costs for they of retail the which a of our dynamic a borrowing us more market. funding hard funding are clearly and to working

more change NIM are favorably. guidance on successful the could We our own that

Dave Rochester

Thanks Okay, guys. great.

Operator

you. Thank

from next Jaffray. Breese your Our question with comes proceed of with Matthew Please line the Piper question.

Matthew Breese

guys. morning Good

Thomas Cangemi

Matt. Good morning

Matthew Breese

going the guidance that had sure I points, wanted to quarter, guide, core next the for correct is down accurate? it on is XX make NIM basis Just I

Thomas Cangemi

that say XX, Can you again, yes… it would repeat I

Matthew Breese

because... and is it Got that

Thomas Cangemi

that’s prepayment a any excluding NIM And activity. activity, prepayment that is just

Matthew Breese

Right.

So, used just that basis points, have…? because want a prior sense to is ramp X than I quarters, higher it that’s you be get a to

Thomas Cangemi

to on nature of due and are we market we we for billion had of XX, into to response those decided are of the assuming on March the the guiding so the June. the side. have have that. fact funds put tomorrow evaluate cash. deposit to successful the XXX% they that very, quarter are deployment of the coming cash didn’t change are previous wholesale Right, that get the view the cash happens decision sitting two be will sure we reinvestment to so work we rate are side on plus the going is have, deployment. We and have March won’t cost My in hike we and lower. $X securities that’s the depending into to as business what down impact depending right collective increases of on also the and a That’s in rate June, we the that how very securities conservative on market, on reasonable so We December you And a we abundance

Matthew Breese

Right.

want contributes and of being isolate So, $X XX, bit, of used to so just components greater variables I to the billion a to that the the borrowings much just little compression? re-priced understand better to how X be from margin increase

Thomas Cangemi

specificity. into get that $X billion It’s Yes. about wouldn’t I much quarter. per

We the XXX of average quarter is have that’s QX, bit entire for fourth little that’s of in for quarter the $X.X breakdown year is which billion, it’s million quarter gave I the reprieve XXXX like by and you the $XXX a so coming. a

is I believe but again in due so coming middle some higher due I smaller have as quarter, say costs the year amount. of We a this lower much and which towards the would coming costs the

that’s deposits forward for be are the bringing obviously, the this we very opportunity that offset could going some focused to be the rollover the of wholesale we margin of that an be on bank, and of pressure. to repo at of retail should we market a we the cost, that given some as have that, lot higher So, deposit bank, feel wholesale can to going offset market a but a

Matthew Breese

to you I curve do on ability takeaway? impact of equal you flat that’s think yield maintain margin is all used an the that margin having or manage [ph] your compression, the mean

Thomas Cangemi

that the the more before sheet between to balance of strong, a is at sheet. rate the good you but days see difference was have timing prepayment activity, pipeline realization pipeline is I the coming X% will offering. we that close on we the balance the think loans a the the news coming call to was is accelerated current it exciting – to higher of XX these into There lack XX

So, X% coming rate in our the to current mean, of I at now. tomorrow current is that’s securities loan easily have right pipeline. And is close north quarter, for the offering X.XXish put the around but we Markets book can the X%. closing the

So the more see an be I have and activity to prepayment as customer base, hopefully will of acceleration we there activity. resonated will

encouraged we gets are the paid is is people we a about in line. chatter And lot file drive what So, every time and from refinance. when that by hearing are our lending such that we right of there the few to bottom get should a that

Matthew Breese

or a incremental should loan funding billion that side, the to to lower about market, think attractiveness versus obviously deposit deposit that of then deposit be loan XXX%, on the what forward thinking as the us the loans, about And be? will funding okay. just is the you give the or market to strategy, at a ratio just Right, as the we color maintenance going wholesale curious of some dollars ratio of

Thomas Cangemi

mathematics the Again, pretty is simple.

We are doing commercial estate real multifamily.

we X% our are the very a same the We here growth is grow adjustment may asset previous grow are reality have seasonal model, – on active focused time, between to to the mix, higher at quality, the we QX with XX%. opportunity in sheet year yields. At loan this to that’s is have is net looking the balance we a The very finance business I which unique in very business our asset business reasonable be we of prepayment that – said quarter have not run-rate. growing XX% just proud XX% going especially should

some here like have we we deploy. cash to obviously, So, would

plans lower very very but by curve. us company of cautious, now, future rates being many If back to widen. – compared decisions That’s to given are get the deploy a to going to hiring but will there the going to customers the where occasionally drag for artificially into have for there now. it favorable the end have components I opportunity our curve, are right we event I to the is it where specifics into in a their because It’s closing am respect and We into the awaiting real think stays are of business not an short end is comp to in the move, the margin curve make if that that does, are. how

multifamily we on the on As bottomed coupon quarter, I said in the XXth. increase out previous

up coupons. there time the we we upside The yields over funds V-shape. are and question with rate asset a U-shape it’s of obviously get will of keeping upside the we a a from That’s cost the not has seeing month. Eventually, are is the long U-shape should cost our There or XX-year is and up funds. dynamic, downtick month, should CRE V-shape. going now, potential. Right not on a gone but thinking on hopefully on opportunity to pace stabilize multifamily be Each very be – favorable a it’s U-shape. So, it recovery every

Matthew Breese

had. Understood. Thank you very That’s I all much.

Operator

you. Thank

your the line from question. proceed Our of with Please UBS. question with comes Brock next Vandervliet

Joseph Ficalora

morning, Good Brock.

Brock Vandervliet

was have I Good other provision, factor? – your but medallions some taxi million morning. that prepared missed the remarks, may $X.X Could this for in you or

Thomas Cangemi

specific will So we had and million, that pure CRE being We we and is down, loan total that’s books, the a one loan. the this, was loan we expect that had asset million one the was off to quality is $X.X pristine we charge loan, other the ABC loans, about $X.X as to one about good and it had portfolio a two an – define ABC stellar. news the CRE

far related to As taxi medallion, was medallions. charges taxi about $X.X it million insignificant as of

relevant. Our is obviously taxi medallion portfolio

balance the than sheet our current So, smaller competitors. about we is total the is all-in It’s industry, $XX the valuation dramatically like portfolio. our million to a for valuation which X.XXish in have around our exposure

are we trends So, positive medallion. in the seeing

that have time, we the we have We was first price actual the purchase and April and pending closed actually we for two sales. X.XX in actually sold one

So, that’s encouraging.

but but assets, getting that on that close of done see define I really as some we transacted two good exit encouraging on going the in rid have years any some it’s to to of pending and repossessed expectation are value, as we actually stabilization. haven’t We repossessed have am the much portfolio. news from one not these far

Brock Vandervliet

within you CRE the said so was and And is other what one? it. the Got there –

Thomas Cangemi

As an construction. loan ABC

Brock Vandervliet

the it, okay. Any CRE on other Got color loan?

Thomas Cangemi

as $XX Just this on our non-performing situation great loans metrics. portfolio I $XX as – call rollout The a have mark out so percentage as is far sheet, of billion a a It’s de proud you the quality expect for fact it’s but such side, for currently. the non-performing question stellar. very see asset any unique anomaly We typical are is to that of of medallion the it a we big a right of non-performing will don’t our balance an the million performing are called and multifamily uptick the amount we CRE medallion at that minimis assets. on multifamily news

Brock Vandervliet

you. Thank Okay.

Thomas Cangemi

to case probably the will quarters provision business in depending be well new medallion your that into a going possibility these ahead. such the So, on

Brock Vandervliet

it. Got

Operator

Thank line KBW. proceed you. Collyn comes next of Gilbert Please with question. the your from Instructions] [Operator with Our question

Collyn Gilbert

gentlemen. morning Good Thanks.

Joseph Ficalora

morning Good Collyn.

Collyn Gilbert

curious talking materially you wanting moves and whatever level rates do higher, be, to level the what in just might do like going that higher refinance like the the you said about in it’s you refinancing and the Tom, to case late of pricing slowdown rate that think think is what is cause the before made before comment to that’s activity? when kind loan borrowers too come

Thomas Cangemi

went probably give around to down January where at towards quarter, mid-Xs, in we and market come to could what February going lot of X.XXs we you were specificity rates the in volatility beginning am that the that and down end are X, lower X, took I activity back we north around the creates higher. the a rates January, the in rates plus of are back happens of were of

are a getting a lot chat, We of of discussion. lot

very now. are right lenders Our active

coupon with something We average for XXX the they are to have moving that coupon to The is market financing, basis to they a realized are is lock average of it that another in. always portfolio X lower points next taking waiting, wait rates is years typically meaningful the round rate. a higher now, activity as a try for do will people or time

slowed believe January, rates are So, we again. the it happened I flurry and this that days pleased twice. very activity February backed We in down in the raised XX up of is on in past flurry

often, So – X-year in [indiscernible] multifamily papers it for current our now, share would right I the quarter.

you If X%. current market commercial higher are at we Those are coupons. look the close the X%, than to portfolio to X.XX% of meaningfully

been news rates, will flurry for believe and fact the benefit very activity a saw are be an positive a in of if company. that that has January. new continues we about that of good ongoing higher that bullish at flurry activity recently we the We the So

Joseph Ficalora

balance not been over impact have have volumes to is many and though that we XX that and erratic we interest in any there it’s is a on prepayment. are given might rates we consistently and different directional it’s that public very we be very never so company therefore the told decisions try Prepayment determinable. years as time and that prepay. have anticipate of quarter, as do are factors the erratic Prepay everyone anticipate many, not tried very CDs Collyn, dollar are to made for

Collyn Gilbert

start that estate to really that, that am activities there slowing, to real into rate I that Okay. broader gauge, mean that and tying seems just see follow is that? the commentary demand And slowing, so what’s just to is so right, activity, – it’s much but to impossible be starts trying demand discussion gauge just demand of loan what’s market I sort trigger to

Thomas Cangemi

of the we curve. bear in it is government [indiscernible] to market portfolio that that north of Collyn, at end back back impacts impact customers The the does that a XX-year is have the now tends playing lenders. the – and market fact X% to that mind does bring agency the typically of of

there So to existing government locked the your of option funding seeing type and longer of have fact portfolio lenders. forward We the higher structure was is very in what favorable a lenders. for an to that look of is term we that because portfolio back continuing environment rate or go

of slight portfolio of lenders. our pleased So event are for movement of we curve we And favorable lenders. this a back see to the is are typically in portfolio end

Joseph Ficalora

rather are all. is thing change at not in a And in And people here. clearly are is participants, are government consistently, in in market. belong a again our and no aggressively our There The active in ordinarily government market that but market another that that maybe there the players market government markets and the is is an little in demonstrated that there is the question atypical do our other our market player in erratic. are our not some that people market our

way not therefore we compete available the So, the is we what people from be consistent will in change with ahead the compete consistent perspective, but which in period over marketplace. our the and from will

Thomas Cangemi

Collyn, Joe’s commentary our growth on that the will core would our very it’s clearly pipeline I X%, current just add loan is to continue. And a talked multi-family net growth, story to feel that in the going given business model. X% we of about expectations be now confident We

go but to will years bit what’s minimum, a in previous growing the book. loan As we happened but which balance more, I the will along, start sheet call a were accelerated in little continue depending We growing at not were the we will Washington, we on X that mentioned we assets. selling down it

in market We the currently. selling assets of not are

Collyn Gilbert

building on securities building is on as yield terms – to mixed are yield, you you healthy have to you still get purchases that hold Okay, seems what going purchasing in when be are of for really occurring in to your the LCR, your as securities that’s then perhaps book? bit And trying but and like helpful. kind of long side, you a for I of of hear securities a it book off there sense security $X.XX securities just dilution messaging can is going new some just start blended yielding that to seeing

Thomas Cangemi

there are On which does benefits impact pay markets amount are borrowings the bank. our enjoy of that’s our sizable we our a yield we – Right, of portfolio look that the very home at assets, will portfolio that of kind bank have they At at time, we we dramatically substantial obviously, dividends some are portfolio, at a total X.XX smaller very of norms. it have home than which you being is historical spas bank, which X% loan sizable the current call at the of the mortgage-related have, portfolio home and of held dividend, that higher. portfolio you a that we and look loan if the we member a when of same yields

bank, that were So, absent we a increase the try loan if the to paid. dividend home portfolio, to gets that’s

opportunity increase securities portfolio to an have in yields We the the as well.

and rate duration. as previous X% on very the We the we you of In the year. to from when impact see fed. the much to to So, risk be to with XXX We basis least should decide a And ex lot keep that’s cash will we that this it we change. the to anywhere we to a And will at the positive continue the balance that close in environment, $X.XX sheet. revise, for investment. how predominantly our it the in short-term continue $X.XX this cash and cash you securities portion deploy what your we rate money we bank take have range example, meantime, environment instruments, in can was or current are the call the at portfolio. depending a this is kind positive of than tomorrow a change think from portfolio do home our of able higher a this that is much loan double on It’s points want duration to about just

Collyn Gilbert

there. helpful. Thank I will leave it Okay, you. that’s

Thomas Cangemi

Sure.

Operator

you. Thank

line James. Please the Our question. next proceed question with comes William Wallace of with from Raymond your

William Wallace

morning, Good guys. Thanks.

Joseph Ficalora

Good morning, Will.

William Wallace

those April off buyers? for Good in going this you morning. balance or taxi, the follow-ups. financing just sale pending are the I on that did have two are sheet on quick your the One you sales, the

Thomas Cangemi

off would potential were but customers. these to actually new – was – We new they Finance. say sheet, the like and balance

put a So, is least is the pending be to it with are that opportunities transaction for we more two pleased looking what at able good And to it then. financed news I financing. we and is are we have and people as It discussed. XXX%

William Wallace

to two And the about XXX different Tom, expense I down talking you heard non-interest think things in million a I about then when Okay. you of are apologize said guidance, couple I the was maybe second half? I thought heard heard, but then there and out to more I heard take from in back I flat opportunity quarter then the thought I I there,

Thomas Cangemi

typically I guidance Wallace. give don’t long-term

and picture, big high taxes. the first is given year the the So, like quarter the liabilities and quarter payroll typically of

We I run in So, we for that very reasonable, long-term to we $X.XX between achieve you be $X.XX $X.XX, that, we year, around QX, think so the range the could I is $X.XX think don’t are we $X.XX expense QX, want but to maybe better, the that out rest to give or and out don’t year. $X.XX, got last $X.XX the you we even give come think it able to call of but guidance $X.XX going side. achieve guidance, around on maybe in if I long-term

We focused. are laser

Astoria. the from the hope benefit to during that. of We operations the of We spent was continue large lot We to to improve money expectation of institution. want to a on spent institution. A be monies the ready leverage being closing

was In and found not was $X.XX company’s was state. platform. happens, be in some major we a It consulting but see savings, going try change see happen, it’s that put to CCARs place. but us large a a We debt. line mortgage some fees the reduction the you will get will You but we of closing forward. operation of Cleveland. fairly will have going finish there the event, every think It the that material, in the in didn’t Obviously, the be were We to dramatic to cost of deal. operations efficiencies deal remember,

$XX had We We have of billion that. servicing. PBM exited new

$XX that alone. business. to the run of There between that we on lot a to is the cost are that $XX servicing of million million out of We out tune

and – between are that very set to feel and a have up for year ratio balance sheet to efficiency then bullish we ratio can XX get was get somewhere So, much because goal us we growing lower we efficiency the we back by end XX% is was leverage. our XX% operating

back So, getting the to norm historical core we how we is what operate. are

the to XXs landscape but going our new this it’s be somewhere run we franchise we not given product the to mix. in but be not are acknowledged saying the low mid XXs, definitely in We we are that, XXs, in should a

William Wallace

very you much, Thank Tom.

Thomas Cangemi

Sure.

Operator

you. Thank questions. would any Ficalora I to There to time, this At for remarks. turn the call no closing are further over Mr. like back

Joseph Ficalora

a X Thank this and for show the the that of end months to good when for chatting again X taking time ended to XX, start you Thank you. again that XXXX join with we will results to XXXX. us our the forward think July is We off discuss and morning. you performance look to June our

Operator

concludes conference. your This you. today’s Thank Thank you for participation.

You may disconnect day. your lines a wonderful and have

Flagstar Financial (FLG) 25 Apr 182018 Q1 Earnings call transcript