Flagstar Financial (FLG) 31 Oct 192019 Q3 Earnings call transcript

Company Profile

Participants

Sal DiMartino	Director of Investor Relations
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
Steve Moss	B. Riley
Mark Fitzgibbon	Sandler O'Neill
Steven Duong	RBC Capital Markets
Peter Winter	Wedbush Securities
Ken Zerbe	Morgan Stanley
Steven Alexopoulos	JPMorgan
Moshe Orenbuch	Crédit Suisse
Collyn Gilbert	KBW
Christopher Marinac	FIG Partners

Call transcript

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Sal DiMartino

Good morning. This is Sal DiMartino, Director of Investor Relations. Thank you all for joining the management team of New York Community Bancorp for today's conference call.

Today's discussion of the company's third quarter 2019 performance will be led by President and Chief Executive Officer, Joseph Ficalora; and Chief Financial Officer, Thomas Cangemi; together with Chief Operating Officer, Robert Wann; and 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. number subject to and the control. differ anticipates to are cause that company statements of due results many actual materially a forward-looking to beyond uncertainties risks could currently which Such are factors, its of from those these may conditions its trends, affect services; and market net investment for and prepayment the flows and general the in both changes value in other economic the local income investment the assets, including legislation, company's company's changes of demand markets; securities; are: or deposits, products future interest its in factors nationally Among and and in and rates, cash which regulation and loans other policies. financial income, changes

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

As a call recorded. being Instructions] reminder, is [Operator today's

To turn over Mr. brief Ficalora, please the who will I to opening a start company's overview will for call provide performance the Q&A. Mr. discussion, Ficalora, of before the line now the go ahead.

Joseph Ficalora

in highlight stabilization interest the both per X economic given reported company's the quarter. earnings third quarter was from income. operating our results months The unchanged We're net ended XXXX and main diluted quarter June and third months in pleased X September share with the XX, for you interest our our and interest backdrop rate for XX, during performance net the place this margin as us XXXX, of joining the quarter morning, XXXX. Earlier discuss Thank ended of the the we we today performance. $X.XX common

rate of our which the we cut the quarter, on sheet, forward. With cost, so balance twice far the to sensitive during for positive see probability the FOMC a high given are lowering starting liability short-term another and benefit later funding is going us interest rates our today,

financials X.XX%, the for was very net margin the were We X down our At to for quarter. in interest expectations. point only our the quarter third to the margin pleased previous with compared line now Turning quarter. and our with basis

was the to the impact would income the $XX.X same have asset interest to the X cost which compared X.XX%, At net million stable the down prepayments, XX% quarter also to our unchanged rose margin as remained previous Excluding declined previous from time, been relatively basis point million, funding modestly. our quarter. $XXX of compared while yields

to quarter the income, this interest an lower. continue net as and inflection margin our and trend improvements funding that marks believe costs we interest net point further expect We in

nearly was held On loan loans quarter the at X% side, the led up finance or our But linked the specialty declined lending an compared to portfolio basis, modestly. on $XXX investment million by level loan multifamily annualized for a total and our on portfolios. X/XX/XXXX, basis

them refinanced to criteria. underwriting our credit loans other us multifamily away willing quarter, financial of the During from institutions given stringent with were number we were provide extend, to a as willing than more

$XX.X the pipeline remains billion on last loan strong annualized our basis, quarter. balances average X% the into year. However, loan the an quarter increased prior notwithstanding, of average to to That very compared heading

multifamily to approximately yield pipelines of and billion, on pipeline compared current is The the was end quarter. XX% at Our the weighted up CRE the second $X.X X.X%. the pipeline average

at funding. Looking our

let the during roll positive modest funding in relatively quarters. detailed strategically impact lower-cost less instead deposit our other quarter higher-cost have upcoming quarter, retail more but approximately a sources. billion impact As will This had our a and only on we press deposits expensive in cost deposits meaningful deposits institutional our on to to the in release, as Opting lower this off. were focus decided $X.X

these most mature CDs. under over short of of in addition, term are our In deposit growth CDs in has been one the year. year and majority The past centered

interest proactively Given this provide cost environment, Moreover, us deposit lower aggressively five forward. this manage positively to costs relationships. We been costs and wholesale benefit going borrowing the funding our rate quarters. to impacted benefit the should our to from continue we reducing a over by higher interest lower rates. market are have next continue Likewise, should

Moving on our to expenses.

As this on quarters, expenses and have you our six declined over past been extremely focused we know, further. quarter the operating our reducing operating expenses

on down this to XXX to rate. quarter's to quarter the run in second million, down to compared of annualized the would of related on items XX% compared have prior ratio Compared would quarter. our prior basis run certain efficiency severance basis a peak $X.X been expenses cost adjusted been operating annualized and points X% XX.XX%, quarter down annualized are expense the million $XXX Excluding non-GAAP million, total noninterest based have our rate XXXX, of $XXX

during On remained quality asset the the solid quality front, quarter. asset third metrics our

totaled were assets, $XX basis nonperforming loans. XX or million $XX while XX assets million loans basis total points or Nonperforming points total of of

rate of at new passage More for was total weighted The any in the not importantly, laws our portfolio negative portfolio rent-regulated are for of our was LTV average June. multifamily the weighted September XX.XX% we credit of the XX.XX%. the seeing XXXX, portfolio this control portion multifamily portion LTV in trends average XX, rent-regulated after while

price, on will common shareholders line of record also The we declared the On a be X%. Board ask the yield morning, Based note, would this Directors payable Lastly, represents $X.XX of I the closing now common per your November to an of of that that the XX this dividend quarter. cash for November to on announced yesterday's dividend annualized share operator open XX. questions. as dividend for

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

Operator

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

Ebrahim Poonawala

So I first question. guess

in quarter with in just If really didn't could margin mentioned of terms outlook, you deposit of runoff Tom, sort show terms of in cost. the funding start side the this in -- up Joe the the

if could margin for flowing one, XQ? little bit So us we as should of think cost the into XXXX interest-bearing give the into a October would liabilities through your on sense helpful; the expectations heading of ahead maybe about in all quarter expect magnitude this you the you a be the and fourth of what cut that and just of:

Thomas Cangemi

obviously, Sure, I that we're Ebrahim. pleased say our still holds. would guidance that

the margin see in quarter. expansion fourth will starting We

over a years. far shift a the multiple that's significant fundamentals So been decline as of as the constant

as far favorable the one guidance that's up of what's but for recall middle to today's NII next interesting We're one-and-done. which basis fourth guidance points metrics. as for and year. the -- balance sheet likely, our margin quarter, have of we a the probably an will the say going from a year very conservatively be X our in as update have in not and as expected up. two three, QX looking more at is the shift quarter, additional Obviously, So forecasted had well with you let's same margin will be we anywhere we're reductions in rate cut,

a for flat far continuation on to the expansion So a XXXX that's as very based well of bode as curve. margin throughout every quarterly going XXXX, quarter

seeing meaningful can more we're margin. -- one steepen a to XXXX benefit clearly, curve the the curve So first that's margin see does environment every quarter scenarios, yield the of way. in one that of the pretty quarter, even today powerful flat But with possibly a another assuming with throughout cut yield you the and in expansion

Ebrahim Poonawala

Got it. X And points basis you fourth you of the Tom? expect expansion is said what in quarter,

Thomas Cangemi

also was what quarters is talked the an in we X Yes. well, QX with the with up up for as that. one consistent NII additional Conservatively, additional -- one a favorable going previous for adjustment with rate outlook quarter about with which is --

another So is to going help rate that cut as well. having

Ebrahim Poonawala

And you quarters? assume at the X.XX%. at about should next the over that? billion debt What is what's five repricing -- for mentioned we that What $X

Thomas Cangemi

let's options, you're the say Xs, looking you're X.XX%. at without So would looking -- at say X.XX% right upper using I now say any to let's

did that was like If you period. low a X-year finite some put throughout against summer ones, rate over X.XX% we financed and restructuring options the we that the

So clearly, than coming what's due. rate more attractive a much

$X.X at XXXX, have look coming if due $X.X $X.X that's total the billion approximately in million -- billion fourth you about X.XX%. of X.XX% and We a about a quarter at at

we for coming CDs. foresee clearly cost So the that But there upside loan is opportunity the the I for the on here funds home having real more think advantage bank is on due. liability repricing of

majority substantial the due. have of We coming had we in X know all Joe's year. commentary, I vast our CDs within CDs

CD have around months short about offering a offering so morning, out the We three long just lowered going our X.XX%. end is X.X%. the best in and we the rates markets Money of X.XX% at XX offering end the month this is

cost to were going on one will tightening. meaningfully funds beta be clearly when rate that that's had risk of rates catalysts -- environment. this XXXX for So We in the our adjust and significant of

income cost would have net far as Now lower going some of an of we as to that beta interest us back result of coming higher easing strategy as benefit deposits. this FOMC, that to favorably

Ebrahim Poonawala

Got to it. And just growth. loan moving

loan negative during slightly the had we growth So quarter.

in the I this like XX% activity in is to something talk down -- us Sales morning. Just reading was terms boroughs. XX%, of X

looking of getting XXXX to gives loan what what's into the this and happening of terms and given market landscape? in the confidence X% Just with year you competitive growth

Thomas Cangemi

Yes.

that is outside about conservative when at I had dollars real that finance we the standards we a we're credit. think bank indication of Ficalora's in underwriting Mr. willing of of not to bonds our fact see yield are what commentary the

rate, That current we third sub-XX% XX% refi lot clear because credit the dollars. was to not So had going XX% We absolute our to our sacrifice that. absolute it's much underwriting We're lower dollars, do not rate. in standards about a to That saw to typically going refi be number very and portfolio. dollars. with It's clearly, in to quarter. really a close we're of of

strong refinance had one said, this growing after that mindful With -- nicely being changed. year-end the law one rent control they're month for quarter going a very is and us. to we're be as quarter very that such But

people purchase the there's had figure marketplace very activity. to directional as trying move. obviously, little far So as We've their

on activity, the absolute us math So we're of work willing because away for doesn't significant refi we're that to because support underwriting absent the cautious. not standards, just dollars purchase

said, rent being that with the it's reg. one quarter only However, post

a So bit tick that quarter here. fourth such we eventually activity little think should the up

has And The to the slope pipeline billion, of curve. that $X year we a in strong north the place curve environment billion. in of a typically belly are yield relatively especially $X.X five is the refinance

a the offering a appropriate we're at event opportunities, agency any portfolio what's towards where little that the very look backs off them customers bit So attractive the for dollars.

as end lower would level some this reassess We expectations. growth if we'll growth And you this. we're slightly I would the is see given around at growing year. like We us to be our of say growth X.X% in So year, the of simple the next annualized. math, year. as rate But dominance may this X%, to by do reasonable mid-single-digit our the Obviously, like X/XX space. growth of for hold

Joseph Ficalora

There's we is value as they is. people, no at have pay class than of in question higher The know many assets. property this the the change of that value there's not a loan owners is that nonperforming been sit there material will are today, reality a assets. a And

have value. properties in had readjustments So

performing the We we lend have portfolio existing because a at values. totally

buildings our many sector are peers in So being nonperforming have we're Many going of down. to Values assets. this be not are But foreclosed. jeopardized.

in will So giving the stress losses by us to past, There's our will overzealous many of likely during many dollars. in that the front were of be segment in going and and be us to the periods down taken and between peers continue have of as lenders levels clearly period we're widening stretch a this this too refinancing market.

to those not going cash lent have today, nonperforming likely because gone on as than dollars lose assets are the other we flows. Street The already to assets not, existing or more those foreclosed. lenders at All We're looking

regardless -- typically going lend that's the because In they turn, money. turn we we in ahead. more period why So the cycle every begin, reasons of money in lose every less continue to cycle

in some So are money, a actually much they're lender this we cycle. business. driven out others of in Whereas cases, lose so

So that the future is on horizon.

headlines excessive to are be losses There their lenders in So values loser. down. are the not going as are that headlines. niche We're going Expect at portfolio. looking this in significant a already among to go

the a will We be funding source cycle. through

Operator

comes question from next Riley. with Steve Moss Our B.

Stephen Moss

On buildings? loans where away, the wondering And refinanced rent-controlled located. those that were just were or they nonrent-controlled

Thomas Cangemi

rent-regulated. majority rent-controlled, that so of I am going -- vast our the portfolio assume is to

it's lower clearly very during mix. the curve active. the environment wide a obviously level So a The But quarter. yield was government at isn't

of to -- a a had the active. lower opportunity financing we much were So for were cost through get very government lower they that and them

as had also annual demand pent their government the with up cash. showing We as far out

been smaller these institutions to credits So there the sense cash where didn't And are that of a they're there's agency. buildings lot work flow some interesting clearly some levels of at going enough, the really for expectations. taking make

the So we're interest lose rate. to on credit going not

it lose short be will that these dollars. dollars tell We on I would loans of left of and you because most us to absolute

Stephen Moss

Okay. then And loan on spreads.

have change thoughts where are in control? rent spreads where updated they any to Just given wondering the today as if go and you could

Thomas Cangemi

Yes.

rent I regulatory been for since think a is changes, that what's meaningful there's exciting us of the widening spread. the here

year. during around consistently points were today, of place in that Great that environment crisis XXX being XXX although the of and was much laws five Historically, was like control things aggressive rent the at when were looking different at right very So The we're more the XXX. than before basis the where at Recession,

of in So than it nice still forward, That that XX-year. year, X.XX% given you coming the -- spread, XXX widened those this in were we summer -- as previous had be so due the for money customers back $X.X next law when very the we're year, different company. our over the the to -- about spreads substantial higher have model of we're the multifamily there that spreads at that no our rent spreads still five amount loans meaningful rate, a And about billion excited which was given a basis But we that that. years. that seven margins, a year, that's much indicated for rates have look does that that opportunistic economic spreads, economic an in points favorably question that going are impacted is we we're current And loans have for somewhat. change benefit seeing our offering

Stephen Moss

That's helpful. And then one question. last

most repricing, it's than CD of less the On in a year.

wondering particular Just to a it's there's if out spread or quarter? weighting evenly if any

Thomas Cangemi

around XX say almost average like would a per month. it's $X It's going $XX I billion next $XX.X over with It's an rate about Yes. be significant months. billion X.XX%. billion to benefit, the of

We X.XX% in in had year last XXXX. offering was now. our recall That you of Xs If that highest time this is offering. the back a October offering

going So the past out right are highest rate X.XX%. we're months yields offering XX is that that now

strategy, customer think rates. they our up well by So are very I continue an to the reality is to that and which from these shorter-term deposits, eventually, easing probably end roll X.XX% bucket if X.XX% month type portfolio. ranges going the that all the lower three to just within to five will holding into be down they interest it way buckets, And

Operator

Our next question Sandler Fitzgibbon O'Neill. comes with from Mark

Mark Fitzgibbon

similar level expense it a at costs operating think XXXX front. can XXXX? the to to I'm curious on Is hold that in you reasonable

Thomas Cangemi

on Ficalora rise, in run Mark, tight opening We've discussion had indicated under Mr. control. into going $XXX substantial a and we've when that SIFI. as expenses million been keeping had very rate we a his CCAR proactive

operating $XXX we Now anticipated low level leverage. that's behind still if sheet the forward, us met we'll target was at growth has million get the significant this We XXXs always and hold the even been tight our target. with balance that going target,

I quarter over year So on been somewhere I be stable complete we and a time. But significant next $XXX as conversion in we've been focus calendar the quarter. year don't envision our between will and it's estimating to again, the around more increase throughout efficiencies consistently million guess $XXX we for million million XXXX number. fourth cost $XXX

that margin fresh with revenue ratio, leverage But a growth expansion, which see is operating XXs. for on into hopefully, you'll the us. and of low efficiency XX%, a below Right the we're level air breath now

expansion have which the definitely come efficiency from lot And ratio. growth, do revenue far will the We as NII as to a us the benefit for work margin more on side revenue side. and will

result bottom next the So efficiency XX% to between will somewhere a to can run an line. good, XX%, very year. obviously, we be ratio That XX%

expansion, all credit future a will the first I and no that is So margin for time be don't long a EPS question very volume want credit of to extremely we more growth book the in [indiscernible] Obviously, holding but discussion. time importantly operating in leverage predict well. our

Assuming should 'XX. growth that continues to at we hold, very EPS add you strong look some versus when 'XX

Mark Fitzgibbon

can And can... lot transactions since the multifamily the us sense And values buildings. give you of then a change how But have you that regulations? secondly, a been think for much there in I in how changed rent haven't you know multifamily yet

Joseph Ficalora

Yes. it XXX-unit there building changes the a the building. The of where been People is overly appropriate trade It's product but accomplish the some likely reassessing values. in the nature it's the and saw sale building, of on had disappear reality That's exact XX-unit buyers period not easy is have market to time depends for for valuations. a building. who for

reality values is already nonperformance. loans that and are gone all So to the some existing down have

You're not actually has the that losses there significant devalued. is generated a financial valuation. that those that going kinds statement already of to know see shows or market change until We in otherwise

we are speculation. important not driven The by by for that us market cash at is are flows levels thing that

Thomas Cangemi

was add it's that Mark, just Joe's cap we lowest the not would Tom. Hey, more in to saw Manhattan commentary I likely rate market.

the LTV is market. Our Manhattan lowest

presentation public has which current our XX.X% it we'll for Manhattan -- and So XX LTVs. disclosure this portfolio, that nonrent-regulated, our investor that rent that's out are on our material Page a morning give entire those our market LTV, on rent-regulated includes,

bit hot cap in moved. rates really about actual had on throughout much anywhere rate boroughs is had is cap as interest as U.S., think movement guess you in is probably cap XX properties of of of gauge the far rates some the value, general even little that this question the But XX has area different a dynamics absence movement streets the of of in and environment, from when points reasonable. type uniqueness basis depending my no a each that rate you and Manhattan, to in there's transactions lots So the the but how to

an Bronx But change to opportunity giving cash good upside And given to transactions upside want They're a of of head Manhattan. that is expect the the for their that tax the absence next They're flow based scratching long-term lot in buy for sense wouldn't Predominantly, on Bronx the versus as in will generational the when have adjustment of portfolio defer potential makes can hurdle substantial insulated versus and basis on built potential assets is in there their a cash clearly, the can to I in for rates disclosures the dynamics portfolio. a is XXXX benefits what buy But their and value. appraises. buyers rate up we're trying returns. NYCB's the in cap that them, at from a Now holders is well property for flow about you figure transaction. of they there adjustment be what's the come price basis tax-driven to stuff to out truly exchange see an works our is transactions. on Manhattan that adjustment

Mark Fitzgibbon

And guys. then lastly,

to quarters? coming Given the prepayment portfolio average shortened life of continue and do will expect rise your up, income the penalty in you CRE multifamily

Thomas Cangemi

know lot Mark, been competitors gone, our a we we consistent. be excited year. mean of think pretty been saying can relatively have have prepay I is I that but the it throughout

consistent, within range and are that like to million than quarter, we would $XX-type $XX levels seems prepay So a long are reset. like billion we're million excited $X.X ago. has mid-quarter been that waited of to portfolio. here it's the maturity the indicated it's so lower minutes we loans to refi few have we reasonable a in have the given of expect -- XXXX, In These normally I time to a have that and they

those X.XX. that go prepayment the rate have loans if choose market. have but lot to it, a will to they not A X% of penalties So goes they'll with to

benefit will They're points X the to X%. to a go after somewhere yield. be to going to event going that not the go the basis for at they're be XXX market, asset meaningful to us starts will to In years. curve which So steepen,

have now we good So costs rising. the XXXX still good margin costs down, have to loan borrowing deposit of benefits a This down and yields coming because opportunity both be could that. going for to

Operator

from Markets. question Duong Capital next Our comes RBC Steven with

Steven Duong

to getting they Just back just you us some color this were do give that alternative the dynamic how And offering? on see playing you Can for? terms out long lenders. the

Joseph Ficalora

revaluation we're this continue There's over at market is the cycle the of no turn. a beginning ahead. of going The to question period

paying in As that are on there today I mentioned, are loans. their fact many not properties

and out the marketplace. about lenders of turn, So there market of have doesn't yet. They're values a devaluing a may and of of talking months are lot X consequence foreclosures the it many. normal not of necessarily be, you're the there Those are lenders turn but Those there trigger portfolios that lend cycle X just cycle matter not today. may is loans -- that month, down. the is is months, on revaluation X In aware nonperforming the reality have nonpayment, it. of future They what

So that lenders, whoever that valuable. is new valuable. be, know know the And the may lower because new at less their their they are values are less asset trade, buys owners assets

lent the thing cash market consistency cycle. is during the We've not than which What the than The value. everybody trade so us lent is our on why never actual do competitors for That's we change. different flows. important the We've always take else on better makes us no risk. with we're

actually understand the value the which that The our of portfolio. consistency taking asset we're fundamental with into we

in this losses going So of prospectively, the niche. reality is, see, evidence you're to significant

much The change was is what the extraordinarily relationship to meaningful the that versus citizens how the of bad between changes trade political adverse That we're last Go selling values is are in citizens. year. has tenants The like of lost? The and this value year parties. that to of reality decision check Look, significant relationship difference is estate owners. between has what that going tenants owner. know by been the want be for this that to given real future the over You is just money how change value are properties occurred, benefit were governed owners the changed a the discernible.

Steven Duong

Understood. heard right. just say make I Did that it you was to sure want your And then you guys putting I just want Was -- -- are on X.XX%. right? to coupon

Joseph Ficalora

Yes. The the pipeline portfolio -- at actual [indiscernible] average I We're our for actual that's coupon, current the all portfolio. of approximately of think X.XX%. looking loans is about

Thomas Cangemi

right pipeline running now X.XX%. current is portfolio yes, X.XX%. coupon of say I'd X.XX%, about at the -- for about Pipeline's about is rate --

healthy So X.XX%. current a nice spread treasury versus the curve.

Steven Duong

Very quarter? nice. What was it last

Thomas Cangemi

last a X%, X%. X%, close to closer probably to So quarter's it's

to shift going yield dynamic precise, the on we're off XX-year bucket. We I/O have But portfolio -- X.XX% with yes -- of X.XX%. significant today more year one, start back could added that our to curve obviously, five a more that's X.XX% was bode be lenders the program steepen, think get be the versus getting spread customers to I to had of in that could from customers to and the the starts curve the towards last that XXX given government environment the well if

Steven Duong

that can you us just then that's the coming vintage what was and off? Great -- XXXX was coming remind

Thomas Cangemi

the that yield. one to of say that at most be $X.X vast is scheduled mean will X.XX% And I that billion, that's about talked number the majority XXXX I would we a significant. XXXX of vintage. that's reprice It's that

Operator

Wedbush Winter question Our with Securities. Peter from comes next

Peter Winter

bit deposit lower guys going can just a the strategy you forward? your cost, deposit you about little talk As

Thomas Cangemi

Yes.

out is billion threshold the because multiple $XX this growing to aggressive for focused. mean with sheet. that issue we the balance very be coming obviously, had time we have to long were for the the Peter, So, we rate first in pretty fund the And environment in dealt I time of we rising years.

dealing were a base So we low-cost growing. rate rising we environment, a in with very deposit and on were proactive

was risk it, us because had were should high What's we environment combination for easing the retaining the everyone call the market is market customer to the very that we a, the neutral market So of end environment. had aggressively. the in retention we at in benefit tightening and at the changed in type beta a of today that we what

sticking good to the as we these in bid respect far it's of So that We environment. us very deposits out benefits exit wanted very were customer that very the targeting cost strategically are as to high what of QX, nicely. see today the this relationships success in money

if for Fed those looking for and with whatnot, Fed they for were X/X. example, So funds we were provider flat plus warehousing funds a mortgage a

we that So money versus XXX XXX. borrow of

nicely those funding, those on X.X So the base, very have out get exit adjustments been mama really talking retail customer, to towards our to strategy true significant are the cost focus the is higher and the the growing deposit for which deposits neighborhood past years.

an nature we that multiple with of have looking do really coming opportunity to of going that's ongoing and so that, be more So there, its of hands that's but real our have by from for us fundings at phenomenon years. much commercial clearly, all the side. That's to for those for into the concept like of estate on focus the company and have We going reinvestment customers franchise. an forward. commercial over retail we we're putting real most time. risk, -- less But we deposits the There's

Peter Winter

with that you'll next And maturing mostly? retain is year, the CDs the expectation

Thomas Cangemi

going into want the We is see very I rate -- pretty of maybe a Like actually proactive morning. it daily with and move reduced very middle been performing CDs. if of we're on I I basis said our we're XX% product we've the few more X.XX%, times much expectation. tracking we're and X-month to but the us adjustments. been this don't a previously, range. it's It you Fed Yes, nicely, was they the and FOMC absolutely. go the the within rate And highest losing of cut mean lower.

go to are along you want you X.XX%. if So

very So we're being year, where we all lower repriced X.XX%. as now, and as your sub-X% still we our last X.XX%, at taking were indicated, XXXX. go aggressively was money That's all into I rate offering

drop quarter XXXX it'll the steepens yield us will funds our be at significantly better a is. every will flat the margin If expansion. course, of assuming -- which that, question next no currently that's where envision We only growth, assuming for expansion there's benefit it the curve throughout So stays end margin short EPS year, the curve.

Peter Winter

separately, Got you especially update if value. just an can I give on it. your then was the improvement the wondering with environment, And M&A in Joe,

Joseph Ficalora

suited I'd large say to there they to look would question We and their can there out choices regard entity. that better part model there's very that people smart are be compare business well a do with at are viable, banks no recognize of make. that be

question having active dialogue there's to cycle join and are that best team. others cycle to the with the regard of the difference equity there turn a So and turn. many during to This the beginning because in marketplace widens us happens and performance the we with people like join to times of would no between are we're be

banks not as that I've aware have yet is embedded there So of. many but their The are aware today in of, that indicated, may losses they be portfolio Street

the values. particular, in this never not lender. having nonperforming of in on we is market are that occurring. The There something, There of not nonperformance their evident have is the class that but large has the assets lent to Values necessarily to trade evident evident reality the assets are in foreclosures because is day-to-day are is changed. quite the assets, The them are nonperformance which So already changed. to future market. we

and the is performance Bank charged Prospectively, X,XXX a So we're off basis of off period over about peers place not very compares of year's the XX X,XXX That That same that over an basis not meaningful our XX be time and a the extended XXX of in By is to public we a points That example, same charged exact Thrift points. that's to the XXX performance. basis having have. others our of compared That losses happening. see points. SN thing Index life, have difference over charged is kinds years, points we a years, basis in going good period performance time. prospectively, to in X,XXX.

Operator

Zerbe next from Morgan Our question comes Ken Stanley. with

Ken Zerbe

guys nonbanks? you I from way a even out this those think multifamily -- that about I don't the to refi-ed if extra guess, quantify loans way, Tom, there the that to came know income prepayment is

Thomas Cangemi

Quantify in or... dollar amount

Ken Zerbe

just... Yes, I'm amounts would be fine. dollar

Thomas Cangemi

the So, Ken, pleased we that it that categorize I we're opportunity. getting would are say prepayment we

with They're you're I rapidly. loans. are getting less we they're is have coming they back more one, think so to uniqueness two where is cash at getting because you very that a seasoned of years -- roll not multifamily the This date, economics their coming as they have as get turn, matter maturity I very of next or right? low closer repricing rate. go of a a like real to slug X, estate indicated, repricing at you substantial due So a commercial closer both to and year, the we

of we That's go to get north beneficial. to them from somewhere, hopefully, So X.X%. a X.XX% will

to they us, minute going last which they're not for going as is and they're wait However, don't be to the to X% if very point refinance interest temporary. paying be paying be with they going rates, type

loan, per as on prepay had So but we percentage I a of we're of good We've lot see you still say had would less prepay because that categorization basis a been activity. can the originations. active has the

strong every refi because the but not in more you have growth. away have quarter, of us been very origination from when and indicated it's it's dollars Our numbers going

lower as tend are prepays more percentage be they're to the seasoned because basis that loans prepaying. a However,

Ken Zerbe

it. Got

And in in the thinking Okay. as were October sticking they -- being back they as just aggressive XQ? Are with nonbanks. with still

Thomas Cangemi

of We I do means policy. No. getting they matter to as financing. I a to the the I/O would categorize customers want typically our of attractive program second is very a not government other if mortgage say allow that go for and/or

if about a first lending, our We lean LTV. on lower at we're you focus how lender. we So look think

the type -- these say then multiple understand When lender can years, to the this goes support. files. would for in building elsewhere multiple have we for dollar multiple, that a portfolio refinancing dynamics our information that in say, of really get, bid. We it That information. know I A what is building. actually being have We customers -- we So cycles, their our let's

have again, to for more They're culture conservative going get to we're to be get trying be dollars. extremely a impeccable they to ensure that we may an to as And matter credit opportunity have financing, quality. going to of looking

move trying could more the these that government to dollars I/O some to and customers get absolute drive will perspective, government. importantly at So it those that an facilitating of the

to to back start However, and than when go going portfolio on end, five tend year lender rates government bit attractive to an a as back the they spike little seven alternative structure, process. a the is which through the

Joseph Ficalora

necessarily can't But at It lend disappear. to fewer to they will during is and portfolios. before. is are looking reality always nonperforming that government properties, in as these aggressively but turn you not lenders because lending market. selling the buying readily fact be failed under. lenders they remember are that people in We get the There the in fewer funding all and XXXX. and other cycle The Fannnie the lenders evident Freddie as know are that up went

be reporting in we losses People be lend the example this more as that be last in even more valuation the the cycle, the market X in period look we in on every because we the the see losses. to portfolios quarter People fact, to not land performing next cycle, going market ahead, are are actual. this that taking lend as to are prospective with We, going we fully market year are quarter, have valuation. those you're So don't won't change egregious losses. going prospective on of In see the things: after, to We year. and in reporting next in

downturn York on valuation market. significant makes performance of a us is And in the reality of very the periods. adverse is are the what the we So verge large during different a New of segment

Ken Zerbe

maybe then question. understood. it, one And last Got

sort similar time? or acceleration of in NIM basis and is of when any NIM, XXXX guidance the should deceleration quarter. XXXX, we about improvement of obviously, of higher think the NIM over you the But I we your In terms understand of the two is in guidance, expect progress terms points as there a we Or over don't give the but fourth pace course of kind year?

Thomas Cangemi

say multiple the higher rate in would a will I that adjustments the back be XXXX. all took it Yes. end acceleration given that of place we have

to bode the So that's well very side XXXX. coming liability what's on due going for

We're will curve, quarter. with I'm that's seeing phenomenon all cost the had -- going We assets a going think earn I of And we've XXXX. but the that magnitude quarter assets, quarterly each -- the a to believe a north to -- quarter curve, you in give in XX peaked but our of going deposit the tangible That's had every higher. specific a points forward. in to we margin way throughout be margin. a So money. scenario at on different second flat always on have not reasonable pressure can we're guidance, running traditional on basis were X%. going increase of I'm to of seeing sloping uptick lot inverted numbers not make something curve, scenarios be not meaningful we're margin XXXX.

current the well rate going curve. And of over trended we'll now enjoy environment That's to where short given way of our benefits down cost. deposit the the We eight of back years. of benefits the risk peak beta going lower on we're the seven, the the end get

think be I So going it's meaningful. to

look And funding meaningful able acquisitions. company's growing slightly due time, lot the of there. its if we're historically, deposit over at be borrowings We as well and it the different to base have a through obviously, mix coming will

transaction So some closed haven't quite a had we time. in

a in in into with spot retail our and change funding so sources franchises. were battling -- business going CCAR. as via SIFI that we're to deposit still very change able other mix That's entity. model the a always we're behind unique public So us. through That's But other through we

strong, next on we're pleased. So or EPS this sure patient volume growth credit. credit margin And is make the the will In we're we're be up appropriate we as book right up to making time. going the the said, that at a very year margin be year optimistic year, -- credit, loans Joe very holding

Operator

comes Our next from JPMorgan. Alexopoulos Steven with question

Steven Alexopoulos

So called on quarter? in at If or exiting these the Who guys competition are the out decline first quarter-over-quarter banks the look seeing deposits. you we several you from relationships. that nonbanks? large Were

Thomas Cangemi

A players, say at the looking from cadre these largest banks of in the are types would of I that country relationships. that Steven. many

We've player been mortgage relationship, the example player business. of a were while. business in the for a for out small So a there. we're We

we've their that expected what they were So lost us. economics given of relationship what the just expectation and from

let's they on when different However, they of economics to what say major partner. a as its share player, a type latch

of in and some smaller providers that are looking of through bringing went -- So the in mortgage large States. the time, people community aggressively lot funding that largest mobile the banks At the on one that's are optimizing same one relationships opportunity. United of at the a

too flat. plus funds And expensive again, X/X us. funds Fed like just Fed that's said versus I And for

than of lines there's this create cadre we in partnerships. value institutions not business different But have have business. not residential those they been can there's a to to past unique where JPMorgan players, can large enjoying proposal for business better forth the we're put the world. mortgage-related the that them mortgage Because of other and that So a so players much they are

Steven Alexopoulos

Okay. originations. then the trying I'm understand the pipeline and And between connection to

the the last $X.X originations at loans from million prior multifamily higher in billion quarter quarter, much billion were billion loans just look those have from quarter. for the a right pipeline connect if this in So we X? $X.X last to percentage quarter. pipeline closed? Do away XQ, But big $X.X you you multifamily you of do saw down a How not increase $XXX

Thomas Cangemi

that the as No. We actually loan far -- we anticipated closed for we total origination. quarter, as our

refi-ed that in a lot with these I think stay loans said commentary, like I opening And us. typically loans our would are of away.

the make in these sense. know back However, didn't They're economic buildings. I the portfolio. to our whole we dollars And that of lot go concept

that's goes those $XX information. it not going the types for million, to $XX be away relationships. on lend shouldn't not but of -- if million, it's it $XX We we're million, financial have

environment had not been hasn't going an significant dynamics there. is having a below a growth in be the normal ongoing a rate XX% why portfolio go dynamics on to that But interesting assuming there's quarter-over-quarter. retention that's So of us for typical trend. I'm XX%,

very pointing that's the meaningful have out There's why activity. However, purchase little didn't we growth.

So going relatively you be away pipeline take activity, dollars a lack to refinance strong because very and originations, flat. of of purchase you're of

Joseph Ficalora

difference that months. close It not The for that It's on it be prospective made pipeline quarter let's to say, what come begun. reality to into day a and the within out to happens whenever is stays The just might have pipeline quarter. expect by loan during a XX-day that last a driven last real. pipeline It's is pipeline So during period. to was date. what is not is driven of X we of, close says available go loan that process. the The pipeline by the the pipeline quarter this not every is that the in

So relationships don't close. that individual amount misunderstand. These are time are isolated, These not fixed a to to will take varying date. of a loans

Thomas Cangemi

in other remember less on I just all origination cadre time that can't our it we expand that. previous be number loans indicated, the of than historically we was the what as the reported closed I where pipeline. though previous could Yes, Joe a our We've will reported pipeline from a even pipelines.

the the have -- versus closing You numbers. I the of timing the season But have ever holiday the the don't right holidays we clearly remember now, impact missing pipeline Jewish numbers closings.

I at pipeline again, $X.X think billion. least $X.X So our reported we'll is close billion,

Steven Alexopoulos

agencies, more which terms, offering are... refi-ed now it are right, longer are like they of Tom, to seems seems customers going in loams the away, terms being

Thomas Cangemi

agencies, our both, wouldn't this moving seen very some be conservative Steven. clear. side. of before the they say players that of some the happen I The into mistakes. dollar agencies, on Again, exiting, when combination I'd very banks been we're now big smaller see space. book business, that they both. other of this players they growing that make There's these this a are appetite. Combination We've movie have

deal be Let's smaller that. mindful that tone played we mission hope mistakes they have of they as on overall But down banks and have their to to try with statement. making

have This they're and customers This a are market. going substantial in cash not off period is flows. after impact change especially when to where post a still credit, the their was rent regulation XX sacrifice to coming only this meaningful days to assessing is the take going going We're changed.

Some opportunity. going figure and But customers to adjusted trying are proceeds. control and to as city and has buildings their a put XXXX rent may other the for this out take their their they're portfolios where to markets change cash may sell clearly, flows, been go their dollar customers multibillion

Joseph Ficalora

the should fund is previously government the are federal have that restrain to and to not multifamily early and federal funding likely There's does Freddie excesses this their a loans. Freddie. players tried meaningful government are and life not in try Fannie there of and excesses prospectively reality in of The restrain no be to Fannie administration question the the [indiscernible] again

Let's they the from can money dominate have a or is bankrupt recognize steal Fannie marketplace. treasury. the do XXXX, They and In to went they Freddie took and not license immune. overlend, not certainly

is in the do treasury. change decision just moment and Fannie can less. in activity going the So Freddie for we're to no legitimate The driving and this says, which and by is is There their the a There's that reason Fannie made prospectively profitability entity to take be a a market. reality moment that a in Freddie in Freddie Fannie time to government particular, in restrained. is time -- no

Steven Alexopoulos

a want strategy? they did the well reacting even way in just ask on M&A deal MOE we If deals matter. one doesn't M&A deal The question well-priced to have or stocks past, thinking the our commentary follow-up really it change your at more the as I whether small none of long-term earlier. reacted that not a of the really are look broadly, it's them for acquirers Good. larger Doesn't M&A deals.

Joseph Ficalora

deal, going we've be evidences Substantively, do to a deal certainly the we a understand doing have bank. do going deals. solid. if high do to created street be reasons have we not not going deal for to expectations, not a it's what better I will sized, trade a done be Every ever we We has it's create be And it's better create to confidence bank. that to think bad it better a bank.

we a bank could But the reason over in of in do do the denied ability a economics how deal, We're fact not doing we Astoria, very the have many since the the were particular been The substantive better the historically So we to to for valued. is better for times. valued we've the have value that as best-performing a know small currencies a even last though create we shareholders? We prospectively to is, decide deal. and created of deal. do accidentally that. many, issue relationships could we deal very not period stock, close done We've big been

the deal. that it. good of a have us create. So a you'll It open see bank we do we the because news be for know the When good is opportunity to will you good it, deal

we be will because better deal bank do. of Our the

Thomas Cangemi

whether We're tangible very down haven't Joe's protected -- as to is book many have just value comment transaction. that We've there's we to value. discussion book announced creation. I been evaluate obviously additional been been on not going value dilution. that tangible Steven, There the been clear opportunities. book would deals about one tangible other We're go

it that understands book a think well I the value, that, for and if think meaningful And also meaningful, So we our value. that's marketplace will our bodes strategy. I have book tangible something to benefit

Operator

question next Our Suisse. Crédit with from Moshe Orenbuch comes

Moshe Orenbuch

my guess all we at looking And standpoint, -- that to that's that next Most of I don't asked I re-asking from a should kind billion agreed the from year, I And rate the retention to got should of of we signals time. of -- Tom, GSE how to of about limited, are so XX% that rate going process guess long that you've mean triggers retention but think fairness at have a before have been alluded rate kind takes of see in I $X the pieces comments, the you've is, alluded and be is you that market that repricing that they that risk of you a questions recognizing your given that? -- questions been have times I few the the a question mean -- -- some to of or those -- XX%? terms guess. of

I bit just mean you talk that how do progresses? think little a you can So

Thomas Cangemi

transaction, factor. to type NYCB. does say amortization would when long-term a inclined this obviously structure, interest-only sometimes to at we're an also lender very attractive be comes the play it players When but five that seven, a I really more product which Moshe, mix. you tend interest-only not a year We're traditional rate environment we have product, to not

the So been very provider has with from I/O we've dealing who shying government a attractive being away versus structure. the I/O

in at third what So have the of if quarter, the rates shape happened depending come look on you down the significantly. curve,

-- It rally structure year particular made to the that that bucket financing go given attractive long equivalent five very XX-year. out a to the in the get and

was the the in surprised the risk So then see investors the players spread doing we're XX government putting players, through liquidity. an up. the competition. I which few this interesting the much of smaller the dynamic shown of really portfolio years is through It loan. shown some went also a of smaller up that that was But haven't what's pricing past taking to the year some have in DUS and providing what program seller over taking was is basically alternative whatnot the It is and offering and on the attractive government are the on a and and --

competition backed expected, traditional off, our a be for more benefit publicly which getting of Some has is us to share. should which

ends here what's a are the lot event forward comfortable from a on and government coming to people more becomes building And make unique other to want But have opportunity we feel going curve of based our money on you we been I But where think role the next a perspective at underwriting. we undue more very our loans year the an decision, So it's dynamics. you played have We seeing attractive where [indiscernible] of the flow risk. a valued a taking in is in here a portfolios provider. depending definitely year, seven up cash I/O may bit and that are bucket. if put be the little historically, that

a to and long But that, a of for nuances the rate XX% term. control place market, early of I it wouldn't that. possibility call laws call yet, with the is coming type the rent do the it's a there we've been that way this refinance think of I doing to too trend was something So timing into some

to XX%. between been it's Historically, XX%

trend, and growth that's to we'll we're that still, just we're company's So to a expansion. our we're have mean it year and monitoring hope going going EPS growth, standards. deal real to sacrifice I the let's doesn't and that but something underwriting And any not absent next going margin with. become be

EPS much You leverage some becomes story. throw powerful operating and more it growth,

grow we we we out closer So the a around majority believe we can will year. know that historically next be we XX% book we are X% -- the to between do We year, get towards feel as color but the there. been quarter, fourth of we'll the and the we more is that some we end report in in have But market. quarter the And fourth always have that reality January.

portfolio the are and We in player the to we're the market. committed market,

spreads should the our do consensus widened, better going on control We're a of that has with to change have getting be be dynamic market. and think not aggressive the I maybe rent to something We spread side. it. in the economics

longer So -- many the XXX, is it's the too. are think larger of XXX more And banks I XXX. those that's spreads like no at

for that this have be we repricing with there of should will bode the growth. in well without and you that current opportunity, think coupon we So and portfolio the of a more

how growth expectations up. mean, all to I possibility is pans run year. of year away. these realm hope out a the this loan have as of We're end out we not but for We the mid-single-digit the is hope running we wrapped the up the growth. growth next bank we'll and monitor of almost little So obviously, see around refi's at year, We'll to that to hold bit portfolio X%.

Operator

Our next with from comes question Gilbert KBW. Collyn

Collyn Gilbert

Just balance sheet, on Tom.

loan those gave So you, unfold? to as forward how growth anticipate this you're are the a at on securities, seeing talk where hold lot Just they you those color expecting obviously, about going of what side. quarter? segments Cash you levels to do just

Thomas Cangemi

Yes.

now. too we right much So have cash

out low put put it we've -- been low on to work, to going security to treasure reluctant yields. and we're So very very

opportunity through been the the three We in over of mindful four least we third quarter been said securities market. had it We've want came the in that. of a is That's significant. portfolio. a But was hold or we've calls at strategy past minimum, at securities So lot the that to, the an months. that

So we replaced it.

hold structure, at grow was to it and steepening mean off book on callable XXX in the XXX. securities further was think structured to XX%, want to I that the We paper, paper. on the I there like XX%. curve, more of put to event portfolio rolled we a not between

going some So we be but there, do to have patient. work to we're

which is characteristic have that risk is rate about we rates then portfolio third that to fixed the on so the other that's -- but interest for reasons. the yields predominantly declining, two rate fully government floating raised, in out And third negatively did of I portfolio think it's respect impact as rate. were security

So we work. opportunistically, hope there that and more we'll a we if is put sloping money evaluate that curve, to

Collyn Gilbert

Okay.

on side. CDs then just And helpful. the That's Okay.

I had you heard that that their correctly? highest rate you're paying you So indicated is if now X.XX%,

Thomas Cangemi

category, the X.XX% you if want X.XX% to to month the want year, three Well, who more category. for to an in nine in and it's at go attractive out something you look rate it's month It's if of someone one wants short. go relatively But X.XX%.

basis ago, that's were doing lower we significantly what than year lower. XXX So a points about

So pretty is a within coming entire portfolio our year. much due

about that's the it's gravitate five to customers per the is structure, than $X term. repricing month rate month and/or coupon. significantly lower And three we're new within So seeing billion the the month current which

Collyn Gilbert

offering? your was what And

Thomas Cangemi

X.XX% money. month for three

Collyn Gilbert

no. no, No,

Sorry, I it to did point throughout just third wanted the been offering quarter. And the quarter? that it what majority earlier drop Like the of you had you where offering rates? in to you at compare were those to what

Thomas Cangemi

below rate to the probability I rate probably we've adjusted within We've we've I'd active adjusted a as higher, X%. mean a will that's morning, So this adjustments they frank, points the given with FOMC been pretty we there say cut. adjust. XX anticipate as our basis be be -- little

why be very to We said money knowing the probably. some going this took quarter in, leaving lot We until accordingly. deposit year sheet growing that in we're of with outflow the a We're proactive. deposits up aggressively, in significant deposit the which balance manage probably We expectations second X% on banks. money we is had demand, retail type we'll in to start we're end outflow. So of knowing the loan growth, going budget we took the around high-cost QX,

Collyn Gilbert

Okay.

next a But obviously, mean NIM big as unreasonable side indicated, year. appreciate not you guys X.XX% for obviously, Okay. thought the part I it's guidance funding or achieve to core the NIM big NIM it giving look I -- at of a the refinancing story, year? driver you as we X.XX% that's on could acceleration. of the dynamic necessarily And of earnings. I and NIM is is think drive like mean next you of going to end by the it

Thomas Cangemi

curve, Collyn. it's don't unreasonable depending on the the I of shape think

but XXXX view give flat a don't forward basis. of to we again, bullish a curve happen on quarter So based margin up on the I've yield pretty throughout every a envisioning going environment. going quarterly I'm guidance, what's

So slope a be will that and let's even get better.

Operator

next Our question Partners. FIG from Christopher with comes Marinac

Christopher Marinac

give I Is on -- your going if want ratios? relief and you a positive deposit on ask curious regulatory less the to liquidity just that that's by-product? about to changes of And the wholesale. retail some mix towards more

Thomas Cangemi

declining traditional our the is to think our significant I when home tightening that are $XXX retail our we low, lot rates had a have have a position from we'd indicated, of the customers are, going the nothing negative top rates we a how always are Like model. model, to which I this reality negative very because tend impact million go our environment. don't that and to like rising. platform. a get it's business we the line but of back. price of cycles, the been When confident We get institution. revenues who thrift has we is We about fund towards the greatly we new. We loan liability-sensitive more This in bank liabilities structure, through Again, that most a rate commercial because ran by-product given be vary benefits paid

Christopher Marinac

at do in get that Joe, mentioned LTV how values? every general. just valuations year? community's look New you the reset a And quarter? changes the on good. Sounds York Does Do time had What's you frame and LTVs you in once

Joseph Ficalora

Yes. market. time. we're that the constantly We all the no question reassessing do There's that

Thomas Cangemi

Let be That's LTV. clear. current the me just

we financial an information customers. from our statements and on our receive annual We those we LTVs on financial So basis, an revaluate update basis. annual

Christopher Marinac

Okay. Great. your XX% chunk, a meaningful I weighting. XX% loans a risk think, And there's of still have

going to not that's So change.

Thomas Cangemi

the improvement No, but had always of no, opportunities. you known no. sweet we've spot question risk manager. slight weight kind XX% as a actually That's a been think there's We've no when quarter-over-quarter

because, you mostly our determinant a in mindful metrics aggressively we were talk as let's the against capital, weighted those XXX% we're -- versus loans. can market, risk more government when think -- say if obviously, So have risk-weighted of about lending I/O of the other are very capital we

Joseph Ficalora

of owners of come over to we have most dollars, property They know to get us best the time. periods The Yes. course us the long never. don't

Operator

At this over the time, management to would turn I comments. for to like back call closing

Joseph Ficalora

ended for time the the We NYCB. discuss to our end for the performance and you will again you months look and forward January, with at join taking when for your in December three to morning of interest us Thank this we chatting XX again XXXX. XX,

Operator

teleconference. today's you. This does Thank conclude

this may have your day. time, lines disconnect great You at a and

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