New York Community Bancorp's CEO Presents at Barclay's Americas Select Franchise Conference (Transcript)

| About: New York (NYCB)

New York Community Bancorp Inc. (NYSE:NYCB)

Barclay's Americas Select Franchise Conference

May 22, 2013 8:30 am ET


Joseph R. Ficalora - Chief Executive Officer, President, Director, Chief Executive Officer of New York Commercial Bank, Chief Executive Officer of New York Community Bank, President of New York Community Bank, President of New York Commercial Bank, Director of New York Community Bank and Director of New York Commercial Bank


Mark C. DeVries - Barclays Capital, Research Division

Mark C. DeVries - Barclays Capital, Research Division

Okay, good afternoon. Thank you for joining us. I'm pleased to have Joe Ficalora joining us from New York Community Bank. Joe has been the CEO since the founding of NYCB over 20 years ago now. And Joe has been a regular at our conference. We can always rely on him to provide some really good interesting color. So with that, I'll introduce Joe. We look forward to your comment.

Joseph R. Ficalora

Thank you, Mark. Some of you, I think, have heard this presentation before. The good news is, it's very much the same. This business model is very consistent. Actually, it's been pretty much the same for better than 40 years. We've only been public, as mentioned, for about 20. And then these are some of the larger metrics with regard to the company.

So we're about $44.5 billion today in assets. That makes us about the 20the largest bank in the United States. We have about $25.5 billion in deposits and about 274, 275 branches. We're actually opening a new branch right now.

We have multi-family loans of about $19.2 billion that probably represents the largest portfolio of loans in the New York market, and we've been doing that for 40-plus years. That is our principal asset, multi-family.

Our market cap is just about $6 billion at March 31, and our total return on investment exceeds 3,436%. That's the result of 9 stock splits in actuality if someone were to purchase 100 shares of our stock. As the result of the split, we have 2,700 shares. So our dividend represents $2,700 for every 100 shares that were purchased.

These are the 5 states that we actually do business in. They're not necessarily related to each other, but the way we do business is very well. These states actually are assessed each and every quarter to determine how effectively they provide services -- retail banking services. And by far, the most efficient banking operations that we do are in the state of Florida. And the second most efficient operations are in the state of Arizona, and New York and Ohio are about equivalent. And then New Jersey, today, happens to be the least efficient.

So our first quarter performance metrics. Our earnings were about $119 million for the quarter. On a cash earnings basis, and cash earnings is what actually adds to our overall capital, is about $129 million. That's about $0.29 per share. And our return on average tangible assets on a cash basis is about 1.26%. Our return on average tangible stockholders' equity is in excess of 16%, and our net interest margin is at about 2.95%. The efficiency ratio, on a cash earnings basis, is 41.67%.

Our March 31 balance sheet reflects the continued strength and the consistency in the way we do our business. As you could see here, our loans represent about 71% of our total assets, while securities at March 31 were at about 12.3%. They took deposits to total assets to be about 57.2%, and our core deposits represent about 66% of total deposits. Our wholesale borrowings are at about 28.8%.

Our asset quality measures compare very favorably to those of the industry as a whole. As you could see here, nonperforming loans were at about 0.69%, nonperforming assets at about 0.64% and our net charge-offs for the quarter were at 0.02%.

We continue to maintain a strong capital position at March 31. We have a 7.75% capital ratio and our tangible stockholders' equity is at $3.2 billion. On the individual bank basis, our leverage capital ratio is, at the Community Bank, 8.31%; and at the Commercial Bank, 11.26%; while Tier 1 capital is at 12.40% and 16.53%, respectively. Total capital ratio, therefore, is at 13.14% and 17.05% at the Commercial Bank.

The business model has been very consistent over many years, and the business model results in our actually taking less losses than most banks do on their principal assets, and we refinance our assets every 3 to 4 years. So we earn well over time through the cycle and we, in fact, get the opportunity to refinance the assets every 3 to 4 years based on the prepayment schedule that gives us roughly 1 to 2 points if they go to the 4-year period.

The multi-family loans represented about 68.4% of total noncovered loans. And net charge-offs for the first quarter represented 0.02% of average loans. The residential mortgage banking, which is the origination of loans, last year, we did about $10.9 billion in such loans. Since acquiring our residential mortgage banking operation at the end of December, we didn't really start adding to that business until the second quarter of '10. We've originated about $32 billion of one-to-four family loans, and then we sell those loans principally. And as a result, we have about $481 million in income that we've gotten from that business.

Our efficiency ratio has consistently ranked us in the top 3% of all banks and thrifts and was 43.21 -- 43.25% in the first quarter of 2013.

Our growth through acquisitions. We did our first deal announced at June 27 2000. We were about $1.9 billion when that deal was closed. And today, we're about $44.5 billion.

Our multi-family is lending -- is principally on regulated buildings that's rent control, rent stabilization and that's principally in the city of New York, and we distinguish ourselves in that particular business model by actually having a significant consistency with which we approach the product and the market. And we've had very consistent results through both good times and bad times. In the 40-odd years that we're doing this, we've had very, very, very little losses and we've had a very consistent performance metrics. For every 3 to 4 years, on average, for the 4-plus decades, we've actually had those loans in existence for 3 to 4 years. And we've been paid between 1 and 4 points. Very rarely do we get 5, but 1 and 4 points has those loans choose to refinance or otherwise, the property is sold.

Our focus on multi-family has been very consistent over the last many decades, and we find these loans to be less costly to produce, less costly to service and have extraordinarily superior performance metrics when, in fact, the markets turn. And obviously, the markets in New York have turned several times in the 4-plus decades that we've been doing this.

The reality is that the banks that were multi-family lenders of New York such as Bowery, American, Greater, Dollar. They all went out of business on multi-family loans. So in the face of the very same stress, the very same difficult turn in the real estate values in New York City, we continue to lose very, very little money, and other banks that have been multi-family lenders for many, many decades actually went out of business on the losses that they took. So there are discernible differences in how we choose to do multi-family lending.

We are perceived to be one of the leading producers of multi-family loans. In the years that we're public, we've generated something in the range of $94 billion in such loans, and most -- a lot of loans in less than 20 years. But the reality is that we get to refinance those loans every 3 to 4 years which, of course, adds to the dollar volumes.

As you could see here, the multi-family loan portfolio is about $19.2 billion, and has a percentage of noncovered loans that represents about 68.4% at March 31.

The average principal balance is about $4.2 million. The expected weighted average life today, and this analysis is done every quarter, today, is at about 2.9 years. And the first quarter originations were about $1.5 billion. The percentage of multi-family loans located in the Metro New York City area is about 91.5%.

Commercial real estate loans, and in some cases, those loans are multi-family in the second to tenth floor and retail in the first floor. So the contribution to earnings is high enough. We classify that loan as a commercial product. But our commercial loan portfolio is at $7.5 billion. It represents about 26.8% of our total portfolio.

The average principal balance is very close, it's $4.7 million. The expected weighted average life, remembering that the multi-family was just shy of 3, this is over 3, 3.4 years, with the first quarter originations at about $386 million.

The percentage of CRE located in the Metro New York City area is 95.3% of our entire loan book. Our CRE loans are typically collateralized by office buildings, retail centers, mixed-use buildings and multi-tenant light industrial properties.

The asset quality. This here, slide, shows that the assets have improved dramatically since the peak of nonperformance at 3/31/10. So we track here comparing nonperforming loans and nonperforming assets, and we go from 3/31/10 to 3/31/13, and it runs from 3.14% to 0.64%. So obviously, the improvement continues, and we expect this to be the case on a go-forward basis as well.

Year-over-year, the nonperforming loans were down 46 basis points, while the non-performing assets were down 29.

We have been distinguished by our low level of net charge-offs in the downward credit cycles, and the reality is that for 52 consecutive quarters, we had no losses at all on any assets that we have generated ourselves. But as you could see here, the yellow lines represent the other banks that had losses in those particular years. And as you could see, we had substantially fewer losses. Even when the numbers are as attractive as the other banks are down to 0.23%, that's 10x the loss reflected by us in the same quarter.

This here is another slide that deals with nonperforming loans, and it's the comparison of the current credit cycle to the credit cycle that existed in 1989 through '93. And as you could see, we compared very well in each of those perspective years.

Historically and currently, a few of our nonperforming loans have resulted in charge-offs, and that's typically the result of the way we do the loan in the first place. We do significantly better appraisals than our peers. How do I know this? I know this because in many cases, peer banks wind up lending way more dollars than we could ever lend on a particular property. So they're assessing it. They're literally doing an appraisal that, in some cases, can come up to $125 million, $150 million more in value for the same property. So if they lend more dollars, they take more risks. If they take more risks, they have more loss at the end of the day. The consistency with which we disposed of assets at de minimis losses is ample evidence that we're appraising those properties incredibly well. And when push comes to shelf, even when a property gets troubled on the interim appraisal before disposition, we're appraising those properties extremely well because at disposition, you're still de minimis loss. So the good news about the processes is that you can't argue with results.

If the company actually has these results, decade after decade after decade, it must be doing something right because we do not lend in a vacuum. We lend in a market that, as I mentioned earlier, has actually taken out banks that had been around 100-plus years. Greater New York was a bank that had been around a long, long time. Bowery Savings Bank was a very large bank that had been around a very long time. And they, in fact, appraise all the properties they have in their portfolio. And in fact, in disposition, they lost substantial amounts of money, enough to put them out of business.

So the proof of the process is in the comparison and the reality that other banks loose substantial amounts of money by lending on the very assets that we lend on, except they lend differently. So a very, very good asset can become a very, very bad loan if, in fact, the motivation of the lender is to lend the maximum number of dollars. And most other banks pay their lenders on a basis of dollar value, on a basis of contribution to earnings. So you can contribute more to earnings by taking more risks. You can certainly have a larger payment as a lender if you lend more dollars. Those facts result in greater losses because if you lend more dollars, you have greater exposure on the same cash flow. The rent roll is the cash flow. So you could see here these numbers further demonstrate that we compare very favorably to the industry as a whole.

These are, in fact, the real numbers. If you look here in the last credit cycle, where other banks lost substantial amount of money and some of the banks I had mentioned when out of business, we lost in that entire cycle. It looks like, here, about 17 basis points, and that's in 5 years. 5 years of serious loss in the marketplace. We lost 17 basis points. So I'm very pleased with the reality that this business model has very consistently demonstrated that it can outperform the industry as a whole.

So how do we get there? While the quality of our assets reflects many different things, but among them is the conservative underwriting. We do lend less dollars. We do appraise properly. We do have a extensive review of each loan before we close that loan. And as a result, we have very consistent expectations and the people in the marketplace, the people that we lend to, know what they reasonably can expect from us. Do we ever lose a loan to another lender because the other lender gives him more money? Yes, we do. And do those lenders that give them more money ever lose money on that loan? Yes, they do. So there are definitely occasions where that happens.

Our board involvement far exceeds the involvement of other boards. We know this as a fact. Our board members actually do go to properties and inspect the properties, meet with the owner. If we do not know the owner, we meet with the owner, we inspect the property with the owner, we make an assessment of whether or not we judge that, that person has the capacity to truly run that building well and succeed in creating value in the building because that's what they're intending on doing. They're not intending on the building being worth the same amount 3 years down the road. They refinance typically because they have more equity in the building. They've increased their rent roll. And they are, therefore, in a position to actually get more dollars.

So the involvement of our board is incredibly important to the results. We do multiple appraisals. All properties are appraised by independent, external MAI appraisers. They're reviewed by in-house appraisals and a second independent appraisal is performed when the loans exceed $5 million. So do we really think a value needs to be well established and determined? Absolutely. Do we spend money and time doing that? Absolutely. Are we consistent in our demand? Absolutely. The process and the results confirm what we're doing. Sometimes people wonder, "How is it that we have better numbers than everybody else?" Because we work at it. Because we do things that make it possible for those better numbers to actually show up 2 years, 3 years, even 5 years down the road.

So our risk-averse mix of noncovered loans, noncovered loans that -- speaking of the loans that we have in our portfolio that came from the AmTrust deal are covered by the FDIC, noncovered loans and all the rest of the loans. So multi-family is 68.4%; CRE is 26.8%; ADC loans are 1.4%; one-to-four family loans are 1.1%; and commercial and industrial loans are 2.1%. I bet you could see we are very, very intent on having the bulk of our loan book be in multi-family, which has had these incredible results over a long period of time. And not surprisingly, our CRE loans actually had better performance metrics than our multi-family loans. And I'm talking here about -- with regard to nonperformance.

So the loans in the OREO acquired in our FDIC-assisted transactions are covered by loss-sharing agreements, thus mitigating credit risks. As you could see here, at 12/31, that's -- we closed the deal during December of '09. Our one-to-four family loans were $4,347,000,000 and commercial loans were $309 million.

We did an acquisition of the Desert Hills Bank in Arizona at the end of the first quarter of '10, and that's why the numbers changed there. We didn't increase the lending. That was additional covered asset that came in the second transaction. But as you could see, by 3/31/13, that number is at $3.2 billion and represents 7.2% of our assets.

Our residential mortgage banking operation is the leading aggregator of agency-conforming one-to-four family loans. We do this, again, with an intent to be risk averse. They're acquired through AmTrust transaction in December of 2009 and established us as a subsidiary in New York Community Bank in April of 2010. That's when we decided that we're actually going to keep this business. We rank among the top 15 aggregators of one-to-four family loans for sale in the U.S. Since January of 2010, we've aggregated 118,430 one-to-four family loans for sale, totaling $31.3 billion.

The credit quality, as of March 31, 2013, 99.8% of all funded loans were current. That doesn't mean that we had 0.2% in losses. I mean, the company's loan repurchase exposure is comparatively low, as we benefit from the industry's more stringent credit and documentation standards, which have been in effect since we entered the residential mortgage banking business in January 2010.

Since the inception of the mortgage banking business, we have generated mortgage banking income of $481.4 million, including $26.1 million in the first quarter of 2013.

Our proprietary mortgage banking platform uses the capacity to expand our revenues, market share and product line. This platform had been used to service well over $30 billion in loans earlier. Our mortgage banking income has supported the stability of our return on average tangible assets even as market interest rates have declined.

The declining interest rate environment, mortgage banking income and prepayment penalty income have contributed to the stability of our return on tangible assets. As you could see here, that line is pretty consistent, and it runs across going from 1.34% to 1.19%.

As I'm sure you're all aware, interest rates today are lower than they were several quarters ago, even a couple of years ago. And as a result, we are in fact, earning less on the new assets that are replacing the existing assets in the portfolio.

Our prepayment income has been extraordinarily strong during this period. And as you could see, mortgage banking income also reflects significant contributions to the bottom line.

The average 10-year treasury rate is here just to give you some perspective as to what's been going on with rates as these numbers have been changing.

Our mortgage banking operation generated 34.6% of noninterest income and 7.4% of total revenues in the first quarter of '13.

You could see that for the 3 months ended 3/31, one-to-four family loans funded in the first quarter were $2.4 billion. The percentages sold to GSEs was 99%. We did keep some select loans in our portfolio. The average FICO is 7.71%, and the average loan-to-value was about 70%. Our first quarter 2013 mortgage banking income from originations was almost $26 million.

The features, loans can be originated or purchased in all 50 states. Loan production is driven by our proprietary, real-time, web accessible mortgage banking technology platform, would help us decide if we're keeping this or the fact that there were many major players that came to look for lease suggestions so we could consider selling it, and they all liked what they saw.

Our proprietary platform securely controls the lending process while mitigating business and regulatory risks. As a result, our client cost-effectively compete with the nation's largest mortgage lenders. 900-plus approved clients include community banks, credit unions, mortgage companies and mortgage brokers.

The vast majority of loans funded are agency-eligible one-to-four family loans, and 100% of the loans funded are full documentation prime credit loans.

Our efficiency ratio continues to be extremely strong, very positive compared to our industry. As you could see, our first quarter '13 numbers are higher. That's not a good thing.

But it talks about it on this right side here. As franchise expansion has largely stemmed from mergers and acquisitions, we generally do not engage in de novo branch development. Our multi-family -- and by the way, this number represents the top 2% or 3%, with regard to efficiency ratio, plus the country. So we are amongst, and there've been many years that we actually were the most efficient operating bank, but we are amongst the most efficient operating banks in the country.

Products and services are typically developed by third-party providers, and the sale of these products generate additional revenues for us. 39 of our branches are located in store. In-store banking is very effective and very efficient, where rental spaces, obviously, that's costly enabling us to supplement the service provided by our additional branches more efficiently. And we acquire our deposits primarily through earnings, accretive acquisitions, rather than by paying above-market interest rates.

So growth through acquisition. This reflects the 11 transactions that we entered into. As you could see, the first 3 were transactions where we actually doubled the bank in each of those transactions.

And then we had smaller banks to the whole along the way, and then the big transaction, more recently, was the December transaction with the FDIC, where we acquired AmTrust. Actually, they paid us $425 million to do that transaction.

Our deposit growth has been largely acquisition driven. So as noted here, the changes in our deposit base reflects, in many cases, the closing on the transaction that occurred in that financial period. So as you might well imagine, the largest transaction we did was the AmTrust transaction and that had the most significant effect on the bank's overall deposits.

This is loans outstanding. And in many ways, the loans outstanding track the transactions that we do, not so much because we get and hold the assets that we acquire. In many cases, we dispose of the bulk of those assets, although there is always some residue. And clearly, some of the losses that we took in the year '12 was a result of some of the transactions that we had earlier done.

So total return on investment. Our quarterly cash dividends are a significant component of our commitment to building value for our investors. We've actually demonstrated that over the course of the near 20 years that we're public. And as you could see here, the compounded annual growth rate has been 28.4%. That's the annual total return to shareholders, and that return is at 3,436% at March 31. And as I had mentioned earlier, if you had purchased our stock before 1994, which was the first full year that we were a -- actually, if you purchased the stock between 1994 and 2004, you got 2,700 shares as a result of the 9 stock splits that occurred in that time frame in that 10-year window for the 100 shares that you originally purchased.

If you have any questions, I'll be glad to try and answer them.

Question-and-Answer Session

Joseph R. Ficalora

Yes? We will wait for the microphone so that the people who are listening elsewhere can hear the question.

Unknown Analyst

The first question is, do you view the initial objection in the problems closing the Hudson City deal as an opportunity? Are you guys going to kind of remain on the sidelines as that unfolds?

Joseph R. Ficalora

No, I think the viability of that deal wasn't a question at all. M&T is a very respectable bank that has the capacity to do many deals. They have done several successful deals, and this deal will close very effectively and be integrated very effectively. There's been a lot of activity, which mean people on both sides of that transaction. It's very unfortunate that the deal was not losing as scheduled. BFA is important, but BFA will be taking care of whether the deal closes or it doesn't close. So nothing about this delay is, in anyway, jeopardizing the viability of the deal. It is just a determination that first you need to fix the BFA problem, and then you get to close the deal.

Unknown Analyst

Okay, got it. And then a follow-up on that. I mean, as you look towards your own plans that you've stated is trying to do a sizable deal here, could you update us on kind of what you're seeing as far as opportunities? And does the delay with this kind of speak to the fact that it's just -- it's going to take longer than normal to get any kind of deal approved?

Joseph R. Ficalora

I'd say that in the recent past, in particular, the larger deals have taken longer. I mean, with the cap one, other deals have also taken longer than expected. It is the environment in which deals are being done. So we would expect that an announced deal would still take a long time to do, even though there would be preliminary work done before the deal. So obviously, in the case of M&T, they had to discuss that deal with their regulators in advance of announcing that deal. And they had that BFA issue in advance of announcement of deal. So the complexity of the larger deals and the time that it takes to go through that process would suggest that it'll take longer to get them announced, and it'll take longer to get them done. But inevitably, deals will be done.

Unknown Analyst

Okay, got it. Just one more quick one, then I'll hand over. Can you just give us an update on the pricing you're seeing in the multi-family space?

Joseph R. Ficalora

Multi-family loans, the nearest market is extremely attractive right now. Multi-family loans are being done by many different players. The good news is that we do not have the structured debt lenders who are extremely excessive during the prior cycle. They were lending very aggressively way too many dollars in many cases. That did not cause the property to be a bad property or the owner to be a bad owner. It caused the dollar values to make it near impossible to pay off that loan with the cash flow that was there. So the expectations were irrational. In the case of the current market, we don't have structured debt lenders, so there are a variety of lenders in the marketplace. Some of them are overly aggressive in how many dollars they will lend. We see it often, where someone comes to us for a loan and we wind up not doing that loan because somebody else will lend them far more money than we will. I think that's attached to the consistency of our appraisal process that we are disciplined in how we lend, and the fact that, that loan won't go away from us because of other banks who are regulated by the same people who have the same requirements with regards to appraisal who should be assessed for lending more dollars than they should be lending. The burden that they face is that they lose money, and they lose money sometimes rather rapidly. Synovus and Talent were the biggest example of excessive lending. The speculation on what that value might be, could it be in the dollars beyond what the fact it's true appraised value should have been, but the fact it passed all of the review that was available at the time. So I'd say that the marketplace does have a variety of players. Some of them know the market well, some of them do not. Some of them overlend in the market. Many of them are being aggressive either in dollars or in terms. And sometimes, they give up things they shouldn't give up and sometimes, they basically underprice the market. Otherwise, they take a rate that is too low. We're very comfortable that the market is very strong, that we are gaining share of the market. So when you look at our originations over the last couple of years, we are consistently gaining share of the market, plus a lot of the loans that are coming to market today had other lenders that are no longer in the market that were actively lending on those assets. So we're gaining share from that available product.

Unknown Analyst

And if -- maybe I'll ask a question on the single-family origination. And I think it's coming down a little bit, if I'm -- correct me. So currently, you're selling 99%. Is that going to go down? Or how do you see that going forward?

Joseph R. Ficalora

I'd say that it's probably going to stay about the same. There is no question that the one-to-four family lending that we do is greatly tied to interest rate. Unfortunately, in prior markets, interest rates were always a components of activity, but less of a component of activity because people needed homes. And certainly, if you look at the environment 10 years ago or even 5 years ago, people who are buying homes did not have to put any money down. So there were a large number of people that were available who could buy a house because they, in fact, were able to qualify despite their income and despite the value of the house being, basically, as much as the loan was going to be. In this environment, people have to put down a substantial amount of money. Not everybody has that kind of money to put down. So there are fewer people eligible to buy. And as a result, it's far more sensitive to interest rate change because when you look at the people that are actually buying, they're not buying because they have to put their kids to school and they want to be in that house. Perhaps, they're not that broader spectrum of buyers. There are some very large buyers of foreclosed properties around the country who are buying those properties and, in many cases, renting them. They can qualify. The big players can qualify to buy cheaply discounted housing. So they're buying a lot of the housing, and they're putting it into the rental market. And that, of course, helps to stabilize. But that's very, very different than individuals buying a house, they get a job, they have a child, they want a house, and they buy what they could afford. A lot of those houses are being rented today. But even though the person can't qualify to buy the house, they can qualify to rent the house. Yes, sir?

Unknown Analyst

Can I get a question that's kind of a bit of a history lesson and then kind of linking it to the present? So just the history part, so we've come through a credit cycle. You guys did a fantastic job. But now we've kind of -- credit cycles come down again. So can you kind of talk about the prior credit cycle? When we're going to this phase? How did NYB kind of do in that situation? And then link that to now and kind of say what kind of [indiscernible]? What are you going to use to drive your earnings? What kind of lever are you going to pull to kind of...?

Joseph R. Ficalora

Yes. I think the reality is the credit cycle in the past or the credit cycle today is not a dominant factor with regards to contribution to capital or actual creation of earnings. It is -- I mean, in this last cycle, there were significantly more charges or a significantly bigger bank. We had residue, if you will, of other acquisitions in our portfolio that we took losses on, as well as the losses generated by our own mistakes. But in the prior cycle, we didn't have residue. And in the prior cycle, we virtually had a different environment following the end of that cycle. Interest rates were significantly higher back then, and the economy was in a very different place. I think, as you know, during the '90s, the economy rapidly grew. And things were significantly more certain as to how things might be occurring in the future. Today is a great deal of uncertainty as to what might actually happen in the future period. So it's a different environment today than it was during the '90s. So I'd say that we've been very consistent in the risk profile of what we do, and we've been able to earn our spreads. Today are actually are wider than they were a number of years ago. And certainly, if Fannie and Freddie were to do less share on the market, it would turn out that we and other banks would do more, and that we would wind up with higher yields. In 2008, when Fannie and Freddie were somewhat disarray, these spreads that were earned by banks, not just by us but by banks, were significantly wider. So there is some degree of uncertainty as to what they will actually be doing in the pro forma period. There's a wide spectrum of speculation as to what would be right and wrong. And depending on where they fall in that spectrum, we're going to have an effect on what we will be lending and how we will be earning. Our principal earning asset is driven by the ability to lend in this market, unlike the last market. And the last market was principally multi-family. In this market, it's still principally multi-family, but there is also the one-to-four family component. We haven't been doing one-to-four family lending for many decades. So even though we're not portfolioing any large amount of this, that activity is going to be driven by the ability of individuals to buy houses. A great share of who we lend to are people that are refinancing their house and people who are actually buying houses as investments. Think about that. You have money in the bank, and you're earning a very, very low interest rate, and you can buy a house and a pay low interest rate, but it's higher than the interest rate you're paying or getting on your investment in the bank. But you also can get rent. So when you add the rent to it, it can become a good investment. And when you take the alternative process a lot of people are choosing to have, rental housing has a means of not only getting income, but also has the means of dealing with appreciation opportunities in the future. And this is not just a decision being made by an individual. These are decisions being made by very, very large players that go out and buy large amounts of properties in many markets around the country. Yes, sir?

Unknown Analyst

Joseph, I'm sorry, I think we're going to have to [indiscernible].

Joseph R. Ficalora

Okay, thank you.

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