New York Community Bancorp Q3 2007 Earnings Call Transcript

New York Community Bancorp Inc. (NYB)

Q3 2007 Earnings Call

October 19, 2007 9:30 am ET

Executives

Ilene Angarola - Director of IR

Joseph Ficalora - President and CEO

Thomas Cangemi - Senior EVP and CFO

Robert Wann - Senior EVP and COO

John Pinto - EVP and CAO

Analysts

Bob Hughes - KBW

Mark Fitzgibbon - Sandler O'neill

Thomas McGovern - Lehman Brothers

James Abbott - FBR Capital Markets

Rick Weiss - Janney Montgomery Scott

Matt Kelley - Sterne Agee & Leach Inc.

Dustin Brumbaugh - Ragen MacKenzie

Presentation

Operator

Good day, and welcome to the New York Community Bancorp Third Quarter 2007 Earnings Conference Call. Today's call is being recorded.

For opening remarks and introductions, I would like to turn the call over to the Senior Vice President and Director of Investor Relations, Ms. Ilene Angarola. Please go ahead, ma'am.

Ilene Angarola

Thank you. Good morning, everyone, and thank you for joining the management team of New York Community Bancorp for today's discussion of our third quarter 2007 performance.

Today's conference call will be led by our Chairman, President and Chief Executive Officer, Joseph Ficalora and Thomas Cangemi, our Senior Executive Vice President and Chief Financial Officer. Also with us on the call are Robert Wann, our Senior Executive Vice President and Chief Operating Officer and John Pinto, our Executive Vice President and Chief Accounting Officer.

Our comments today will feature certain forward-looking statements, which are intended to be covered by the Safe Harbor Provisions of the Private Securities Litigation and Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those we currently anticipate, due to a number of factors, many of which are beyond our control. Among those factors are, changes in interest rates, which may affect our net income, pre-payment penalties, and other future cash flows or the market value of our assets, changes in deposit flows and the demand for deposits, loan and investment products and other financial services in our local market and changes in competitive pressures among financial institutions or from non-financial institutions.

You will find a more detailed list of risk factors associated with our forward-looking statements in our recent SEC filings and on page eight of this morning's earnings release. The release also includes the reconciliation of our GAAP and non-GAAP earnings and capital measures, which will also be discussed on this morning's call. If you'd like to copy of the earnings release, please call our investor relations department at 516-683-4420 or visit either of our websites, myNYCB.com or NewYorkCommercialBank.com.

I would now like to turn the call over to Mr. Ficalora, who will make a brief presentation before opening the line for Q&A. Mr. Ficalora?

Joseph Ficalora

Thank you, Ilene, and good morning, everyone. We welcome this opportunity to discuss our third quarter performance and the many factors that contributed to our solid results.

In addition to the consistency of our earnings on an operating basis, we are pleased to report a meaningful level of GAAP and cash earnings, a strong net interest margin and the maintenance of our record of solid asset quality, in addition to continued capital strength.

During the quarter we completed the sale of our Atlantic Bank headquarters and our acquisition of Doral Bank's branch network in New York City and prepared for the completion of our Synergy Financial Group transaction, which took effect on October 1. These were the key performance components I'll be talking about before we start our Q&A.

As we reported this morning, our third quarter earnings amounted to $0.38 per diluted share on a cash earnings basis and on a GAAP basis amounted to $0.35 per diluted share. Included into our third quarter GAAP and cash earnings, was an after-tax gain of $44.8 million or $0.14 per diluted share that stem from the sale of our Atlantic Bank headquarters.

As previously announced, we sold the building in mid July for $105 million, generating a pre-tax gain of $64.9 million. We also recorded a $7.3 million pre-tax loss on the sale of our low yielding securities during the quarter, which translated in to an after tax loss of $5 million or $0.02 per diluted share.

The proceeds from the sale were invested in agency bank obligations featuring higher yields than the securities we sold. The net effect was a $0.12 per diluted share increase in our GAAP and cash earnings. Excluding this amount, our operating earnings were $0.23 per diluted share in the quarter consistent with the level reported in the trailing quarter and $0.02 higher than the third quarter 2006 amount.

The sale of our Atlantic Bank building, by the way, was a great example of our ability to execute accretive merger transactions and to generate long-term shareholder value through the sale of acquired assets that are either inconsistent with or our business model or simply do not suit our needs.

With the acquisition of Doral's branch network in the New York City, we obtained an alternative mid-town location to serve as the headquarters for Atlantic Bank division of New York Commercial bank.

Another third quarter highlight was the stability of our net interest margin, largely reflecting the level of prepayment penalties received. While the prepayment penalty income declined $5.2 million on linked-quarter basis to $17.1 million, the latter amount was dramatically higher than the $5.3 million we recorded in the third quarter of 2006. Year-to-date, prepayment penalty income has exceeded $53 million, that's 156% higher than the year earlier nine month amount.

As I mentioned in this morning's press release, the level of prepayment penalties we recorded in the second quarter of 2007, represented the highest amount we have recorded in our public life. As a result, our margin equaled 2.41% in the third quarter of 2007, a three basis point reduction from the trailing quarter level, but a 17 basis point increase year-over-year. While the margin clearly will fluctuate from quarter-to-quarter depending on the level of prepayment penalty income, its consistency over the past seven quarters, has validated the strategies we have been actively pursuing in the past few years.

With the liquidity afforded by a post merger repositioning of our balance sheet, our record of asset quality, and the strength of our tangible capital measures, we believe that, we can capitalize on the opportunities that are likely to be presented as the downturn in the credit cycle picks up speed as the quarters -- in the quarters ahead.

Given the news we have been hearing for months about declining real estates values and deteriorating credits, we were pleased to extend our strong record of asset quality. Although the ratio of nonperforming assets to total assets was up from a very low 0.05% in the second quarter, the fact is, the ratio was still a low 0.0% at the end of September. And our year-to-date charge offs, amounted to $286,000, a modest amount.

While we do not expect to remain immune to loss in the coming quarters, we do expect that the nature of our multi-family lending niche and certainly the fact, that we have no subprime or all day exposure, will enable us to preserve our record of assets quality relative to our peers.

In view of the current environment, we also are pleased with our solid capital position, not only have our tangible equity ratios remained in the 5.5% to 5.8% range, a level that gives us much comfort, it also -- our regulatory capital levels also have continued to be strong. The Community Bank had a leverage capital ratio of 8.05% at the close of the quarter and the Commercial Bank had a leverage capital ratio of 11.35%.

The growth in our tangible capital is partially due to the growth of our cash earnings, which contributed $273 million to tangible capital at quarter end. The strength of our capital levels, together with our capacity to generate earnings, has enabled us to maintain our dividend at the current level of $0.25 per share. The dividend continues to be a key component of our total return on investment and I am therefore pleased to report that our next dividend will be paid on November 15 to shareholders of record on November 6.

These are just a few of the points that I would like to make on the performance of the company before I take questions. And I would like to start with our loan production over the past three months.

Loans totaled $19 billion at the end of the quarter and were up albeit modestly from the balance recorded at the end of June. The increase was due to loans we acquired in the Doral branch transaction, as well as the $175 million increase in the volume of loans that we ourselves produced. Originations totaled $1.2 billion in the third quarter of 2007 and included $681 million in multi-family loans.

Although some of the irrationality has since been removed from the market, its still remained a factor in the third quarter of this year. I am pleased to report that our current pipeline amounts to $937 million, an increase from last quarter's number, with multi-family loans representing approximately $617 million or 66% the current amount.

Another achievement I would like to point out is the strength of the year's nine month performance as compared to our performance in the nine months ending September 30, 2006. In addition to a nearly 10% rise in net interest income to $462 million, we reported a better than 10% rise in core non-interest income, which we would define as fee income, BOLI income and other income combined.

During this time, we also realized a 12 basis point rise in our net interest margin, which was 2.39% in the current nine month period. The increase is partially a function of the average yield on our assets, which rose 42 basis points, year-over-year to 6.06%. The average yield on loans accounted for much of the increase, rising 45 basis points year-over-year to 6.32%. We are pleased with the year-over-year improvement in each of these nine month measures and are eager to see continued progress in the last three months of this year.

Finally, I would like to welcome those of you, who have joined us through the Synergy transaction. We look forward to serving all of our customers through our expanded franchise, which now consists of 218 locations, including 53 in New Jersey and to enhancing the value of our shareholders investments in our company.

At this time, I would be happy to take your questions. As always, we will do our best to get everybody in the time allotted. But, if we should miss you, please feel free to call us individually this afternoon or next week. Thank you.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions). We'll go first to Tony Davis with Stifel Nicolaus.

Tony Davis - StifelNicolaus

Good morning, Joe, Tom. How are you?

Joseph Ficalora

Good morning. How are you, Tony?

Tony Davis - StifelNicolaus

Just wanted to ask you a little bit about some of these pre-payment fees. As I recall you were selectively beginning to implement commitment fees as well. Given the recent environment I just wondered if that trend has continued here in the last quarter.

Joseph Ficalora

Yeah. Tony, the change that was evidenced, as we were discussing it, is obviously a continuing trend, but it is not a dramatic change. The very big changes were the very large players that left the market and some of the players that were most extreme. But the market generally has had a significant amount of continuance of the existing product meaning, what was in the pipe. Lots of our competitors had loans that they were already committed to and there was an awful lot of product that was on the table that needed to be refinanced. So that the big change is in how these loans will be priced will come in the months and quarters ahead.

The significant change that we saw at, for example at the end of the last cycle took years to get to. So I think that directional movement is very good, but the immediate affect of this is not going to be dramatic.

Tony Davis - Stifel Nicolaus

Could you talk a little bit about how much business whichever you have picked up from both in conduit agreements here in the last quarter or so?

Joseph Ficalora

Yeah. I think one of the things that that needs to be recognized is that, although the conduits have pulled away in some cases from some very attractive big deals, those deals are at pricing levels or at size that we would not find acceptable. I don't mean that the loan is too big for us to do the loan has too many dollars based on the income stream of the property. And awful lot of that property was done based on, market values that were extraordinarily high. We would not due those loans. So even though, there has been change and there are new lenders, that have to accommodate those loans, we are not going to be that lender.

We are going to be getting product as we evolve down the road that more meets our expectation. This is not something that's going to happen overnight. Its not as though, loan that otherwise were very well structured are going to come to us in a structure that is acceptable to us. There is going to have to be some readjustments in the markets before that occurs.

Thomas Cangemi

Tony, its Tom. I would also add the risk premium adjustment is going to occur in that typical part of the business. This seven to 10 year window is clearly pricing much higher than it was six months ago, dramatically higher.

Joseph Ficalora

But Tony, you might remember we don't do seven and 10 year loans.

Tony Davis - Stifel Nicolaus

I did notice though that your embedded mortgage yield failed in the quarter and so I was wondering, kind of what's your spreads were versus say the product were?

Thomas Cangemi

Tony the full is obviously $22 million versus $17 million on prepaid that goes through our margin as you know it.

Tony Davis - Stifel Nicolaus

Right, so that’s most of it?

Thomas Cangemi

That's a big

Joseph Ficalora

That’s the effect

Thomas Cangemi

The big effect, but no question this environment we are seeing better spread and we are looking at a better spread opportunities, than we saw in the previous quarters.

Tony Davis - Stifel Nicolaus

Final question, just Tom if you can give us some thoughts about balance sheet moves you have made Synergy close or what you are thinking about?

Thomas Cangemi

Well we are still evaluating and obviously we are looking at the lines of businesses and actually what coming, it's a small company. It's not a material company to the total balance, but we will do some asset sale as we go through the quarter. My guess is that, all of our asset activity will be completed by the fourth quarter this year.

Tony Davis - Stifel Nicolaus

Thank you much.

Thomas Cangemi

If we have any, we should have some.

Tony Davis - Stifel Nicolaus

Thanks.

Operator

We will take our next question from Sal DiMartino from Bear Stearns.

Sal DiMartino - Bear Stearns

Hey good morning, guys.

Joseph Ficalora

Good morning, Sal.

Sal DiMartino - Bear Stearns

Actually Tony, beating to the punch with my questions on pricings, but may be can you talk a little bit, just since that needs to be that the topic of the quarter on credit quality trends. What you are seeing in your portfolio and kind of what you are seeing in the market?

Joseph Ficalora

Yeah. Given the nature of our assets, we really don't we really don't, typically track the trends of most of the lenders. As you well may be imagine we have a very disproportionate small amount of properties that are making the headlines. One to four family loans are typically season loans. Most of that portfolio by the way goes all the way back to Roslyn Savings Bank and those loans are 10 or so years old.

So the trends that we see are not dramatic. Because, the numbers are so small, the change of one house or one property going into a non-performance status moves the numbers, but it doesn't have an impact on our actual losses or reserves of course.

Thomas Cangemi

Sal, I would also add that on a linked quarter basis there has been no change between the 30 to 89 category.

Sal DiMartino - Bear Stearns

I am sorry, Tom, but you said

Thomas Cangemi

It has a no change between the 30 to 89 category in delinquency, so we are very comfortable with the quality of portfolio.

Joseph Ficalora

Yes.

Thomas Cangemi

No negative reaction despite the conditions in the marketplace.

Joseph Ficalora

Our portfolio is very atypical Sal. It is not at all the same as the portfolios that are catching headlines these days.

Sal DiMartino - Bear Stearns

Okay. I guess I'm just looking at your non-performers. I guess you ended the year at about $22 million, a decline to $15 million last quarter and now it's back up to $22 million. I was just kind of see what was going on there.

Joseph Ficalora

I think that's not a volume issue, I think it's a more matter of a size of a particular loan that comes in and goes out of a particular category. As you well know none of our bigger loans resulted in our taking losses, but they change that number fairly dramatically. So if for one reason or the another properties isn’t being sold or property goes into a one month or two month or three month non-performance it could change that number fairly dramatically, because the number itself is small. So, I don't think there is any trend or any concern that we have at all about the non-performance. By next quarter, you can see dramatic drop just because a couple of loans are moved.

Sal Dimartino - Bear Stearns

Okay thanks, Joe.

Joseph Ficalora

Thank you, Sal.

Operator

We'll go next to Bob Hughes of KBW.

Bob Hughes – KBW

Hi, good morning guys.

Joseph Ficalora

Good morning, Bob.

Bob Hughes – KBW

I guess a couple of questions on pricing in the market today, obviously even so in the bank there is some degree, particularly in the volume of the conduits timing. Going away I am wondering, a story they told us on the call yesterday that pricing in the multi-family is somewhere around 5 and 7, 8 today, whereas I think in the last quarter you told you are around 6 in the quarter. Can you give us sense for where the absolute level of pricing was in the third quarter?

Joseph Ficalora

Yeah. I think Bob, an important thing to recognize is that in your opening comments you have mentioned very dramatically different kind of properties. A story is typically dealing with much smaller properties and certainly in the niche that is not carnages. As you well know, they have a very low volume in our particular area of lending and even though they are there for the last couple of years, they are primarily a one to four family lender. Their experience is not our experience.

So, I know that what he is telling you is absolutely true with regards to what he is seeing, and in fact he is opting not to do certain kinds of lending. And what I'd say to you is the obvious, rates have changed generally in the marketplace that we are in and as I think you well know, we were getting and 6 and 38 and 6 and 58 not very long ago. We are getting lower yields today accepting for the overall term yield. One of the things that is very distinguishable about our asset is the fact that we get term yields that in some cases are as short as one year and as long as four years. That's a very short asset. We don't have an interest rate, change we have an actual coupon plus points change in the overall yield that we have experienced, in lets just say a three period.

Bob Hughes – KBW

Okay. I understand, I am curious, may be you can give us the sense for what the initial coupon was on loans you originated in the third quarter?

Joseph Ficalora

I think they were running at about 165 over typically.

Thomas Cangemi

Bob, I would answer that, that if you look at our overall couple of quarters, we have actually lowest throughout the line in the sand, where we're at 150 or better. And our overall performance for the quarter has been in north of that. Obviously, in the summer it was significantly higher from the dislocation in the credit market, where we saw deals substantially higher than that.

But we are still seeing some benefit on that, although it weighed a little bit. We're still seeing better spread to the historical 150. We believe that the premium reward will now be factored in to the marketplace for all the assets including multi-family going forward. It will take sometime we are seeing some better economics as they stand today.

Bob Hughes – KBW

Okay. The five year CMT has come in pretty considerably though, so on an absolute basis.

Thomas Cangemi

We are putting our loans 4% to 6%. So estimate a huge spread compared to the kind of five year CMT.

Bob Hughes – KBW

Okay. So that's just kind of where I want to get to. On the deposit side, backing out sort of acquired deposits in the quarter, can you give us a sense of what kind of growth or decline you had in core deposits? And then secondly, what kind of flexibility are you seeing in the market today to actually ratchet back administered deposit pricing given some of the rates being hung out there in the market by larger competitors?

Joseph Ficalora

I think there is no question about that, that we are being very conservative here with regard to how we are pricing deposits. You sometimes have to adjust your deposit base, to feature the core, and not to try and grow with the hottest money in the market.

We have a huge amount of liquidity coming in to this period. We have a significant opportunity with regard to new funding sources and we have a foundation that we want to build upon with regard to core relationships. Therefore, we have had taking advantage of during this quarter, the opportunity to let go some of the hottest money that's in the market and to build on relationship banking.

Thomas Cangemi

Bob, I would also add to that, that obviously in this environment we have probably the lowest price in the marketplace with deposit liabilities on retail. And we will probably forecast for the quarter lower retail cost of fund, continued lower retail cost of fund.

So, we are clearly very liquid right now and the hot money will role out, we are very comfortable with that, and we will right price our funding needs as the loan book is out there. As the loan book demand goes higher, we will find our sources of fund, but right now, we have a reasonably decent pipeline with very expensive deposit rolling off, and going to else where. We are getting margin benefit from that.

Joseph Ficalora

I think, you are pretty well aware Bob that, it's very easy to move in to this market, with a product array, and gain deposits very quickly. So, many of the people that have, literally showing a change in their deposit base, are more often than not, showing a dramatic change in, how they choose in to price.

Bob Hughes – KBW

Okay. And one final question as I may, Joe I don't think anybody will require perfect strength of your asset quality. That said you have originated $820 million C&I credits this year with no provision, got a reasonably sizeable construction portfolio. I am curious to what extent you scrubbed that portfolio?

Joseph Ficalora

Yeah I think the important thing is we do an analysis every single month. We have plenty of reserves against all of those assets that are there. When you say, we've originated $820 million, when you look at the numbers we've actually been able to keep ourselves in a very, very attractive place with regard to reserves.

Remember, reserves are for losses and we have amongst the lowest losses in the industry. So there is always a concern when a bank starts setting aside reserves without their being a comparable expectation if there are going to be losses. The good news for us is that we've been able to enhance our reserves, as a result of every deal that we've done. And I think that we believe that we have more than adequate reserves for the kinds of things that we are seeing in our portfolio.

Thomas Cangemi

Bob, I would add. Obviously, if we look at the comparisons from the beginning of the year to where we are today we have a lot of renewals within the portfolio and cross-selling within our Community Bank customer base who happen to be our long-term customers on the lending side that we are trying to cross-sell commercial products that we haven’t in the past.

With that being said, if you look at the overall categories we are not seeing overall net loan growth with the exception of -- this is the first quarter, I believe in three or four that we actually grew our net multi-family loan book. Approximately just south of a $100 million, but this trend is moving in the right direction. We've been very focused on credit quality, even clearly originating the taper that we are comfortable with originating for our current customer base. We are not over reaching for additional new credits in the commercial side.

Bob Hughes – KBW

That's fair. Thank you guys.

Joseph Ficalora

Thank you, Bob.

Operator

We'll take our next question from Mark Fitzgibbon of Sandler O'Neill.

Mark Fitzgibbon - Sandler O'neill

Good morning. Joe or and Tom, I wondered if you could kind of -- you have a lot of moving parts right now with the balance sheet with the restructuring and the acquisitions. I wondered if you could help us sort of think about how the margin is going to look going forward, what are the kind of key variables we should be focused on?

Thomas Cangemi

Mark, obviously, this is an interesting environment. What I will say is that, depending on the pre-payment level activity, depending on where the Fed is going right now, we are assuming that with a niche environment and pre-paid hold up reasonably well, we will see probably slide up margins, five to up margins in the fourth quarter without any real balance sheet growth.

We are not forecasting dramatic growth. If we see the pipeline build dramatically, you can have significant margin expansion here. No question, where we are today is that we are in a very good environment, where we were six to nine-month ago when we expect the margin. We are not seeing the pressure on the margin like we had in previous quarters.

Joseph Ficalora

In broad brush, there is no question that we've had significant growth in the cost to funds over the preceding couple of years. We are not looking at that all now. If anything we are looking at our retail depositor actually coming down in cost. We are looking broad brush increase yields on the assets that we have.

So both of those things indicate that margins will in fact, be strong and widening in the period ahead. We don't have any reason to believe that our deposit cost are going to be going up, nor do we have any reason to believe that our assets yields are going to be coming down. Even though you will see fluctuations from one quarter to a next, based on the actual amounts of pre-payments, and I guess that's why for many, many years we always cautioned against over expectation or trying to put into a particular box the pre-payment penalties.

They will fluctuate from period to period. Sometimes, they will be extraordinarily strong, other times they will be a little less strong. The reality is over time, they in fact provide us with a very strong yield, term-yield on our assets given the ability for us to do less risk lending and that's very important.

I will tell you with certainty that we are a getting a lower yield on our assets than many of our competitors. This month, last quarter, over the course of last year, we could have taken much bigger yields out of this marketplace, chose not to, because we wanted to take less risk. I think the charges that you are seeing in most banks today, reflect the fact that they have been taking greater yields and are now paying back with greater losses. And that is inevitable. You don't get paid more interest unless you take a greater risk.

Mark Fitzgibbon - Sandler O'neill

Okay. And then secondly, I am sorry Tom, did you say some? Oh the second question, I had we had heard from another area bank that there's one large multi-family credit on something like 18 or 19 buildings in Manhattan, where there is a fraud situation and it doesn't look particularly good. I am worried if you are a, aware of that loan and do you have any exposure to of it, to it.

Joseph Ficalora

I don't think we have any exposure to it. I am not particularly aware whatever that loan is. So, I would say if they were an issue surrounding something that we were involved in, we'd know about it. But no one at this table has any awareness of what you are talking about.

Mark Fitzgibbon - Sandler O'neill

Okay. Last question I had Joe is on, wondered if you could with us your view of the acquisition marketplace, may be the areas in your franchise that you would like to strengthen over time if or if you need sort of holes in your...

Joseph Ficalora

No, I think the important thing here Mark is that, we have consistently since we are public company been prepared to consider the opportunities to do deal that makes sense for our shareholders.

I think that as you have noticed we have often chosen deals that are good stock deals, not good franchise deals. In other words, the driver is not filling a hole in our franchise. The driver is doing what is momentarily, whatever the circumstance may be momentarily the numbers align themselves in a way that make good sense.

Ultimately, the franchise builds and the franchise is more valuable and as you could see going from 12 branches to 218 branches, we have actually built a very large metropolitan area franchise that has real value, as a franchise. But the driver has never been sized, nor has it been in the proximity of the particular branches. The driver has always been, can this transaction in the very narrow window, between announcement and dispositions of assets, and the ultimate preparation of the financials going forward, can this transaction enhance the value of our stock. And I think that will be continue to be the case.

We will have many more opportunities, and we may have, opportunities that go outside of our geography. But that has already previously been the case. And I emphasize a circumstance such as South Jersey, not a big departure from our franchise, but very economically beneficial to the company.

Mark Fitzgibbon - Sandler O'neill

Thank you.

Thomas Cangemi

Well, I would just add one of the point there, as you know PennFed and Doral, the system has been integrated into our platform. So, we have the synergy transaction that will be done earlier in '08, sometime in '08 as far as the integration. And then we have the ability to continue to take the platform to a much higher level.

Operator

We will go next to Thomas McGovern of Lehman Brothers

Thomas McGovern - Lehman Brothers

Hey, good morning.

Joseph Ficalora

Good morning, Tom.

Thomas McGovern - Lehman Brothers

Given the record levels of repays in the quarter, I was looking to find out, what type of borrowers, are they historical borrowers that were kind of waiting for the environment to change in order to repay?

Joseph Ficalora

I think there is always a mix Tom, and certainly in some cases. We have still had properties in our portfolio. Let me step back a second, I cannot give you a number today. However, we are putting this number together. Many of the properties that come out of our portfolio sell into the market at 2, 3, 4 times the value that we carried in our portfolio. So when you think about what is happening out there, an awful lot of properties are changing hands at are very high prices. As I mentioned earlier, we are not financing those, because they don't meet our standards with regard to how we will decide appropriate dollars for particular property.

Properties that sell at market are typically way to high rest to put in to our portfolio. So when you think about it there is a mix of trades that are occurring today. In some cases, properties are actually changing hands. For us that's very good, although it is not evident in the immediate financials, it is very good for us over time, because when a property owner or smart property owner that's in our portfolio, sells at a huge gain, he does a 1031 exchange and comes back with far more dollars, to buy far more rational properties for us to put it into the portfolio three, six, 12 months down the road.

So a lot of the activity that looks like, we are losing share or losing market, is really preparing us for a future benefit down the road. From the standpoint of refinancing, we've said many times that there is an awful lot of bill with regard to loans that are in our portfolio, that are seasoning to the point where they are going to refinance just because the calendar has moved them along.

So when you take the two things together, over the course of '08 as an example, we should see a significant opportunity to move an awful lot of property. Despite all of the discussion, that is surrounding depreciated values in the U.S., the actual reality is that the rentals in the New York market are very, very strong.

Thomas McGovern - Lehman Brothers

All right. That's going to be hard to predict the trend going forward then.

Joseph Ficalora

That's right, because there is quite an interesting mix. I think in broad brush again, the good news for us, is we should have a higher percentage of our portfolio, literally repricing over the course of 12 and 18 month period in front of us. We should have significant opportunity to provide good loans to very stable and astute property owners, who are going to be in a very good position to acquire properties under reasonable terms and to build those values over time.

Remembering, that even though we build value over time and some of our property owners may only give in property for decades, we refinance that property every three to four years.

So, we are very different than most of the market. We are not doing trump tower, we are not doing the bulk of the marketplace. A lot of what you hear about the marketplace is not our experience. So by example, in the last cycle, which was devastating, multi-family loans lost enough money to take probably American Great out of business. We lost nothing during that cycle, because the actual experience with regards to our niche was very different. And even today, even though there is a very strong market, our niche is still very different and that's driven by the quality of the owner, the business model of the owner, the person who is going to be working with us as this cycle evolves and gets worse down the road, our guys are typically not the ones who are losing money, our guys are typically the ones that are buying more properties.

Thomas McGovern - Lehman Brothers

Got it. Great. Thanks a lot.

Joseph Ficalora

You are welcome.

Operator

We'll take the next question from James Abbott from FBR Capital Markets.

James Abbott - FBR Capital Markets

Hi, good morning.

Joseph Ficalora

Good morning, Jim.

James Abbott - FBR Capital Markets

First question is on, I was curious as to, if you could give us the amount of re-payments that you experienced during the quarter. Do you have that number?

Joseph Ficalora

Amount of repayments? No.

James Abbott - FBR Capital Markets

The amount of cash flow coming off the loan portfolio for the quarter? Thanks Tom.

Joseph Ficalora

We can get back to you, but we don't have it, I think it's in the….

James Abbott - FBR Capital Markets

Okay. And I guess what I was trying to get out is what's your sense on in terms of prepayment penalties going forward? In the fourth quarter and in the first quarter do you see it is relatively stable at this level? I know you have talked a lot about this.

Joseph Ficalora

I think.

James Abbott - FBR Capital Markets

Better but.

Joseph Ficalora

Yeah, we -- Jim, I think it's important to recognize that given the fact that prepayments for a given property could be extraordinarily high. We can get four points on one property that is virtually changing hands, because it was packaged with the intent of being sold, lets say. We can get four points, we can even gotten to five points on some properties that are sold that as we did the deal, it was pretty evident to us based on our relationship with the owner that this was not at the beginning of their ownership. This was at the end of their ownership. They were going to be selling it.

And at the same time, we got lots of properties that are very early in the process, properties that are going to be refinanced every two, four years over the course of the next two decades that are going to just keep rolling. It is very hard to put a number on exactly how much we'll get in prepayment, because any given quarter we'll have a change in the extra ordinaries, meaning the large ones that actually go to market to sell.

James Abbott - FBR Capital Markets

Yeah, that's what I am trying to isolate. Can you give us a sense then may be a different way to ask the question is, can you give us a sense of the $17 million of prepayment penalties? How much were large dollar transaction, large buildings, may be over $3 million. A couple of quarters ago, you had a some building sales were huge and but I think eventually you'll get back to a point where it’s a much more granular number?

Thomas Cangemi

Yeah, Jim, it's Tom. I would say that it was granular throughout the quarter. Nothing of magnitude, it was a nice flow of three phase. Yes, we had some larger ones in the second quarter, but the first quarter and the third quarter was consistent. We saw a nice level of continued prepayment month-after-month.

James Abbott - FBR Capital Markets

Okay.

Joseph Ficalora

I think, the release does have, in the nine month period, $6 billion in prepayments and in the three months period 1.3. So obviously, the prepayments were much higher, in one of or both of the earlier quarters. This number is never going to be a consistent number, otherwise it's very hard to try and model this and that's why we always caution about this.

It is not something that we manage, it's certainly something that occurs and has an impact on our overall performance. But it is something that is going to be driven by the unique circumstances each particular property owner may be in, and how they are looking at the markets that they are literally looking to buy into and sell out of.

So for example, a group of properties that make good sense to a particular property owner may in fact be sold, because he finds an opportunity to buy something else that makes more sense to that property owner.

James Abbott - FBR Capital Markets

Okay.

Thomas Cangemi

Jim, I will talk to that.

James Abbott - FBR Capital Markets

Okay. So let me just move on.

Thomas Cangemi

Jim, one of the points, on Joe's point there, you should look out as the future out here. We saw a very local buyer on the multi-family book that needs to be refinancing. Clearly that, if it stays with us or it goes away it's not negatively impacting our margin in this environment. We are very excited about the low coupon paper running off. We have very good opportunities in '08 and '09 and in the future to see a lot of the continue cash flow at low coupon.

James Abbott - FBR Capital Markets

Did you give this, you in the past you give us a dollar amount of contraction maturities over the course of say next eight to six months do you have that number?

Thomas Cangemi

It's very consistent as previous amount, but the huge amount of prepaid. I mean '08 or '09 the numbers are dramatic and they are low coupons.

James Abbott - FBR Capital Markets

Yeah.

Thomas Cangemi

So we are enjoying that opportunity right now. As you know in the past few quarters we haven't grown our loan book, but we've experienced stabilization on earnings and margins held up, because of our ability to get lower coupon paper off the book and enjoy the ability of generating substantial prepayment opportunities.

James Abbott - FBR Capital Markets

And you've said in the past that you would consider putting a table of what's coming due and coupons

Thomas Cangemi

No, I think the reason we don't do that is for the things that we've been saying. When you think about this, if a guy has a loan for 18 months and he prepays it and let's say it's a very large loan, that's going to change those numbers very dramatically. In other words, it won't be in the future period of loans that are potentially going to prepay. And in many cases we are dealing with the same owner who may have a variety of properties.

So if he prepays early on let's just say $15 million worth of his properties, he may choose to hold a little bit longer; six months 12 months 18 months, something else that he has in his portfolio. I think one of the thing that we are we are comfortable in saying is that there is a large amount of properties out there that are approaching their fourth year or certainly to a lesser degree their fifth year. Those properties must refinanced based on the calendar and they will. And we've not seen any change in that, but because of the unusual numbers meaning the guys that refinance in year two or the guys that refinance at the beginning of year three versus the beginning of year four or five that number is always going to be different than what a table would tell you.

James Abbott - FBR Capital Markets

Oh, sure. I understand. I just think that some data is better than no data and…

Thomas Cangemi

Yeah.

James Abbott - FBR Capital Markets

And that's just for what it's worth it.

Thomas Cangemi

Yeah. Okay.

James Abbott - FBR Capital Markets

If you would disclosed that I would applaud that. Let me just shift gears to the non-interest expense item. Can you tell us -- are there any contra expense items in that number? Is that a good run rate going forward or is there some reversals?

Joseph Ficalora

We just bought a company. We closed on October 1, so the expenses will be up from here. You will see an up tick, because of Synergy and we get the full impact of Doral for the fourth quarter. So you are probably looking at somewhere I would say in the mid to upper 70s, and you have an up tick because of the acquisition. That will also be right size for Synergy when we actually integrate the system in the beginning of '08 when we decide to finally put the systems together. But keep in mind PennFed now is under our platform, so we've receive all our cost base somewhat acquisition. In addition, we see the opportunity across the boards that have rein in cost control in this tough environment.

James Abbott - FBR Capital Markets

Were there any, specifically though any contra expenses in that number as in like reversals of bonus accruals or incentive plans or anything like that?

Thomas Cangemi

I think we've been very, very conservative throughout the year as profitability was fairly strong to the very record, focused on putting incentive across there. Obviously, we charge that every quarter. So we do have accruals in respect to bonuses, but that moves around depending on profitability. Right now, is a tough environment, but we are very comfortable to rein in costs control. Clearly the margins holding out very nicely for us. Profitability is relatively strong as compared to previous quarters and our expense control is a focus with the company. We are putting our synergy as of October 1 that will increase our expense base. And we'll have an increase from the branches acquired from Doral. With that being said, you will see an up tick in the fourth quarter, but we are going to work very hard to keep control on expenses, especially in this tough environment.

James Abbott - FBR Capital Markets

Okay. I understand but, just to reiterate, was there any thing that was a negative expense in that.

Thomas Cangemi

Not that I am aware of.

James Abbott - FBR Capital Markets

Not that you are aware of. Okay. Thank you. And then, can you also give us some sense on the non-interest-bearing deposit growth. It's been very strong. How much of title and escrow or 1031 exchange money.

Joseph Ficalora

Yeah, we don't have a 1031 exchange program, although that has been offered to us. And certainly, if we had a 1031 exchange program that could throw an awful lot of money on a temporary basis in to the bank. So when it comes right down to it, there are no large programs like that right now. We will have large deviation in our deposit mix, based on some of the very large relationships that we have. So, for example, we do some very, very good business with the Pentagon on behalf of the National Bank of Greece.

That kind of stuffs results in some very large flows of dollars in and out of the bank, in those account relationships. So, there will be times when we have money flowing in and out, as a result of procurement. That is not something that was typical to the Community Bank, but that is some thing that is typical to the commercial bank by example.

James Abbott - FBR Capital Markets

Okay. Thank you, that's helpful. And last question, and I hope and I just apologies for doing so many, but I noticed that the cost of borrowings was up, it sort of accelerated. It's been running up at about two to five basis points per quarter, it was up nine basis points this quarter. I assume that's due to callable advances. Can you give a sense going in to the fourth quarter, if there is a lot of structures that are eligible to be called in the fourth quarter and what your projection might be there?

Joseph Ficalora

As we recall back in 2004 we had a substantial restructuring that a lot of that money can do so had to replace that, that's it a stuff that was called as you mentioned the '04 restructuring was substantial restructuring for the company.

We will see an up tick in the fourth quarter, I don't think of materiality. I think the benefit of the reduction in the retail side, the up size on the asset side, we are looking at, a bump up in our margin in the event that we have, the current rate environment and continued prepayment activity.

So, I think you are correct, you will probably see a little up tick not so much due to the callable side, this is to the environment. We are not growing the balance sheet. If we were to grow the balance sheet and look at the whole sale market you see it drop.

James Abbott - FBR Capital Markets

Yeah.

Joseph Ficalora

See a drop in wholesale, because we are right now at, we are looking for the loan book to build and when it builds we have very good opportunities to fund. Funding right now is extremely inexpensive, so the current liability that we have right now is going up slightly, but no materially compared to the reduction of our retail fund.

James Abbott - FBR Capital Markets

So, we get back to the normal run rate may be 3 to 5 basis points a quarter rather than 9 on the borrowing?

Joseph Ficalora

Probably about 4, 5 dips for the wholesale, somewhere in that range depending on the market condition.

James Abbott - FBR Capital Markets

All right, thank you very much Tom and thanks Joe.

Joseph Ficalora

Thanks, Jim.

Operator

We will take our next question from Rick Weiss from Janney Montgomery Scott.

Rick Weiss - Janney Montgomery Scott

Hi guys. Actually most of my questions have been answered just wanted to know is multi-family is about 70% of loan portfolio. It seems like it's been there forever actually. Do you expect that percentage to continue?

Thomas Cangemi

As we go down the road I think we will be doing more and more of that. As you have seen in the last couple of quarters, we have actually been doing less than 70% with regard to our originations. And that is mainly, because we have been very, very disciplined in how we choose to lend and as a result, we are doing less of the product, which is out there. That will change, as the quarter evolved down the road. So I am on a guess that, if we are talking 6, 12 months down the road our percentage will be going up.

But in the near term a lot of things need to be realigned. We are getting some very good alternative product, which winds up changing the percentages as well.

Rick Weiss - Janney Montgomery Scott

I am sorry. I am confused. So is that like a kind of a ramped that number or little bit less, Joe.

Joseph Ficalora

I would say that we are probably going to stay in the range of that 70% in total, probably for the next couple of quarters. We will go up down the road, exactly when that will start to be the case will depend on how the market actually evolves. So for now something in the range of about 70% in total is where we will be.

Thomas Cangemi

Rick, it will on the level of repayments. Obviously, if the repayment activity is significantly high as well as continuing to stay where it is right now you can generate a lot of multi-family credit at higher coupons however, not close the book. So clearly that's pretty much what Joe was indicating here. You can have a substantial amount of origination in the quarter, taking that low 5% coupon off the books putting on six and having, lets say a slight growth instead of a substantial growth. The good news for this particular quarter on the third quarter that we saw growth of the second quarter for the first time in the number of quarters in the multi-family category.

Rick Weiss - Janney Montgomery Scott

Okay. And could you just like specify a little bit more on the prepayment this quarter. How much of it was, people just pre-paying and taking their loans elsewhere or just reifying and staying with NYB?

Thomas Cangemi

I don't know. We don't have a breakdown of that number, but it was obviously a mix. One of the things over the last several quarters, including the immediate quarter has been a sale of properties. Whenever there is a sale we are very unlikely to do the financing. And there have been more sales in the recent quarters, including the last quarter. So how long will that continue to be the case it depends on the marketplace.

Rick Weiss - Janney Montgomery Scott

Okay. Thank you.

Thomas Cangemi

Thank you, Rick.

Operator

We'll take our next question from Matt Kelley with Sterne Agee.

Matt Kelley - Sterne Agee & Leach Inc.

Yeah, hi guys.

Thomas Cangemi

Hi, Matt.

Matt Kelley - Sterne Agee & Leach Inc.

Just to follow-up on earlier question. What was the actual structure of the new borrowings that you took on during the quarter?

Joseph Ficalora

We put some loan liabilities out there. We tried to balance it depending on our needs. I'd say on average 18 months its typical for us. We would like try and we typically miss match our multi-family book by about year and half, so if it was a three and half average life, we typically put on average 18 month time structure and then typically call those structures. As you can see, we hadn't moved on growth perspective of materiality. We just refinance our existing call that were callable at that point in time.

Matt Kelley - Sterne Agee & Leach Inc.

Okay. I mean what was the final maturity of those payments versus the callable period.

Joseph Ficalora

10 year structure.

Matt Kelley - Sterne Agee & Leach Inc.

Okay. 10 year. So 10 year non-call one.

Joseph Ficalora

Yeah. Non-call ones, two's, 90 days are varied, but all average I would say the 18 months.

Matt Kelley - Sterne Agee & Leach Inc.

And kind of a blended average there, just looking at there web search around 4% as of today, right, a little under maybe?

Joseph Ficalora

Yeah, little, depending when you put the money on, obviously in June it was higher today its lower. So as what I previously stated in the event we were to fund wholesale right now, which gives very attractive, the numbers are substantially lower than that.

Matt Kelley - Sterne Agee & Leach Inc.

Lower than 4?

Joseph Ficalora

Oh, yes, in this environment, yes.

Matt Kelley - Sterne Agee & Leach Inc.

Like on what type of a wholesale structure?

Joseph Ficalora

I mean, just to give you an example, the typical -- if you're going to fund it short as in 10 year and of course three months, probably 90 days up to 10 year, that I always do the math is probably somewhere in mid three. As I was giving structure I am just giving you an example.

Matt Kelley - Sterne Agee & Leach Inc.

Right. Of the -- just kind of turning real quick to credit, of the $88 million with the reserves that you have, what’s the dollar amount allocated to commercial real estate in construction. I know you provide that in the case. But wondered if you make any update there?

Joseph Ficalora

I don’t think there has been any dramatic change.

Thomas Cangemi

Yeah, I will go with the consistency is the same as it was in prior year, nothing has changed. As I said before looking back on the category between 30 to 89 we haven’t seen any deterioration, we are very comfortable with the company's credit quality portfolio. You had a few loans that come in and out. But starting at $20 million odd on averages is extremely low for the size of the bank.

Matt Kelley - Sterne Agee & Leach Inc.

Great.

Joseph Ficalora

We are very comfortable.

Matt Kelley - Sterne Agee & Leach Inc.

And then, I guess, the bottom line everybody trying to dance around the margin issue and how much sensitivity there is here. I mean, if you do look at just one metric that we do have in terms of sensitivity looking at the NII change data that you provided in the 10-Q, rates down a 100 basis points, and net interest income up 3%. That’s about $0.04 a share on a parallel type of shift. I mean, how do we think about magnitude beyond that in terms of how much the margin and earnings could improve particularly as we look at '08, '09 numbers?

Joseph Ficalora

I think, if you look at the out years what we are going to hope to see is the improvement in the slope of the curve, continuing prepayment opportunities within the portfolio. And again, I want to reiterate the ability to take that roll coupon paper and sitting on our books which is billion of dollars that has to be financed. If it stays with us or if it goes away, we benefit from that in this environment.

We are very pleased that there is a risk premium adjustment for the marketplace, and not so much in our particular space yet, but that will come. We see some improvements in overall offering to our products. Overall, in reality over time we should see to more normalization of getting a much better spread as you look at the space right now. Every category in the U.S. has seen a risk premium adjustment even a government security.

So, we have the ability to benefit from that. We are being very cautious on forecasting that, running models internally, but when that occurs, you will get substantial benefits for our model, because it is a short asset model.

Matt Kelley - Sterne Agee & Leach Inc.

Right. I mean, just looking at your GAAP table, it's about $11 billion worth of loans and the one to five year kind of bucket maturing, I assume that’s where most of the low coupon stuff is kind of coming down the pipeline?

Joseph Ficalora

Into the back half of '08 and going into '09, those coupons are extremely low, and if they prepay, it's a tremendous benefit. And typically, they prepay on an accelerated basis. They don’t typically prepay when they have to prepay, they're usually a year or two in advance.

Matt Kelley - Sterne Agee & Leach Inc.

What is the average kind of coupon be of that?

Joseph Ficalora

Low fives.

Matt Kelley - Sterne Agee & Leach Inc.

Low fives. Okay. All right, thanks a lot.

Joseph Ficalora

Thank you.

Thomas Cangemi

All right.

Operator

We will go next Dustin Brumbaugh with Ragen MacKenzie.

Dustin Brumbaugh - Ragen MacKenzie

Good morning.

Joseph Ficalora

Good morning.

Dustin Brumbaugh - Ragen MacKenzie

I just wanted to ask a couple of questions about the commercial franchise, and I guess first, just a point of fact, mentioned $494 million in assets from the Doral acquisition, and I thought I remembered from the second quarter call hearing $386 million, did I miss something?

Joseph Ficalora

We have some actives that were literally closed on our books, which were subsequently repositioned back to their parent company. So overall, I think the net numbers is going to be smaller than that when we clean up the rest of the assets that we have in the book. There are some assets that we will not be holding on for long duration. So, most likely by the end of the year any assets that were supposed to be put back to Doral, will be put back to Doral, as well as Synergy. Synergy as well, significant amount of assets that we are evaluating, we make keep or we may sell, it depends on the credit quality and our plans as a company.

Thomas Cangemi

The difference between the Doral and all the other deals, in all others deals we sold into the market assets. In the case of Doral, we had a unique relationship where assets were actually returned to the parent, since there is an on going surviving entity.

Dustin Brumbaugh - Ragen MacKenzie

Okay. So, am I understanding right, that the $108 million or whatever the difference between $386 million and $494 million, those are assets that are expected to be put back to Doral over the next?

Joseph Ficalora

Yeah, I think. 495, I believe was assets. The other bigger number your recording maybe in the deposit number.

Dustin Brumbaugh - Ragen MacKenzie

Okay. I looked back through the transcript, and it said assets and deposit, so anyway I'll -- that's fine. And now, I was just going to have you refresh my memory too, I know a big pieces of loans they were the taxi medallion loans. Would you remind me how big that portfolio is? And then also, how much and what types of other loans you may have brought on?

Thomas Cangemi

About 80 million, the taxi medallion business and the other taxable loans are consistent with our current underwriting standard. Its multi-family credit, some small multi-family credits and one to four family credit that ultimately, may be we securitize so back to them.

We have a few commercial real estate loans that are relationship loans that we're consistently managing because they have bought up our portfolio. That the relationship of one borrower is in that portfolio and was very comfortable with that particular borrower, so those are loans that we selected to acquire. While as Joe indicated this is a unique situation, loans that we've selected to acquire with our -- that was kind of our opportunity. We did not take their bridge loans and did not take their land loans and as well as other loans that we were uncomfortable in accepting.

Dustin Brumbaugh - Ragen MacKenzie

Okay. And in total loans of the $494 million how much of those assets were loans?

Thomas Cangemi

That's $200 million. Small amount.

Dustin Brumbaugh - Ragen MacKenzie

Okay. And then, finally, just I wanted to you have 38 commercial branches now and just maybe you want to Joe to talk a little bit about how aggressive you are in trying to generate assets out of those branches and…

Joseph Ficalora

We are not we are not being very aggressive at all. As we've said many times we are building a commercial bank foundation that we want to have in place as the cycle evolves. The best time to be doing loans is in the worst market and the market is in fact, as everyone is quiet aware now, evolving from being a very, very rich positive market into being a more troubled credit cycle turn and we are not being aggressive in our lending here and that's very conscious on our part. We are being very cautious in how we prepare our systems and our people and we are building relationships that we believe to be good sustainable relationships, but we are not being aggressive.

Dustin Brumbaugh - Ragen MacKenzie

And is that just kind of a -- you continue to monitor the situation or do you have a sense of when things might get to a point.

Joseph Ficalora

I would say it depends on a case by case basis. So for example; we may pull on some very good larger relationships that are very sound relationships that have a capacity, to survive the cycle. We may let a large number of relationships to go away. In another words, where we have seen less comfort with regard to the nature of the relationship, the lender, the person that had worked for the bank or the relationship itself we let that go away. So we are not anxious to get everything that's in the marketplace, we are being very selective as to how we prepare our people and who will use to actually build the portfolio. That means the numbers will move more slowly and it doesn't mean that we are not interested in servicing good relationships. It means that we are being more selective than many of the people that are in the market today.

Thomas Cangemi

I would add, the opportunity is the Community Bank portfolio. We have a sizeable book to loan that have relationships with very good borrowers that have other types of commercial facilities out with the largest commercial banks in the world, that could bank with us and that's the opportunity.

Dustin Brumbaugh - Ragen MacKenzie

Okay. Great. Thank you, guys.

Joseph Ficalora

You are welcome.

Operator

We had no additional questions at this time. I would like to turn the call back over to Mr. Ficalora.

Joseph Ficalora

Thank you again for participating in this morning's discussion. We appreciate the opportunity to discuss our third quarter performance, which reflected the continuing stability of our net interest margin. The consistent quality of our assets and our ability to maintain a position of capital strength. We look forward to reporting our fourth quarter results, which will reflect the addition of the Synergy Financial Group to our banking family.

Again, if you have any further questions, please feel free to call us, either this afternoon, or during the week ahead. Thank you.

Operator

This concludes today's conference. We thank everyone for your participation. And you may now disconnect your lines.

Copyright policy: All transcripts on this site are copyright Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.