New York Community Bancorp Q3 2007 Earnings Call Transcript

| About: New York (NYCB)
This article is now exclusive for PRO subscribers.

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

Operator

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

For opening remarks and introductions, I would like to turnthe 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 joiningthe management team of New York Community Bancorp for today's discussion of ourthird quarter 2007 performance.

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

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

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

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

Joseph Ficalora

Thank you, Ilene, and good morning, everyone. We welcomethis opportunity to discuss our third quarter performance and the many factorsthat contributed to our solid results.

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

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

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

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

The proceeds from the sale were invested in agency bankobligations featuring higher yields than the securities we sold. The net effectwas a $0.12 per diluted share increase in our GAAP and cash earnings. Excludingthis amount, our operating earnings were $0.23 per diluted share in the quarterconsistent with the level reported in the trailing quarter and $0.02 higherthan the third quarter 2006 amount.

The sale of our Atlantic Bank building, by the way, was agreat example of our ability to execute accretive merger transactions and togenerate long-term shareholder value through the sale of acquired assets thatare either inconsistent with or our business model or simply do not suit ourneeds.

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

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

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

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

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

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

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

The growth in our tangible capital is partially due to thegrowth of our cash earnings, which contributed $273 million to tangible capitalat quarter end. The strength of our capital levels, together with our capacityto generate earnings, has enabled us to maintain our dividend at the currentlevel of $0.25 per share. The dividend continues to be a key component of ourtotal return on investment and I am therefore pleased to report that our nextdividend 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 makeon the performance of the company before I take questions. And I would like tostart with our loan production over the past three months.

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

Although some of the irrationality has since been removedfrom 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, anincrease from last quarter's number, with multi-family loans representingapproximately $617 million or 66% the current amount.

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

During this time, we also realized a 12 basis point rise inour net interest margin, which was 2.39% in the current nine month period. Theincrease is partially a function of the average yield on our assets, which rose42 basis points, year-over-year to 6.06%. The average yield on loans accountedfor much of the increase, rising 45 basis points year-over-year to 6.32%. Weare pleased with the year-over-year improvement in each of these nine monthmeasures and are eager to see continued progress in the last three months ofthis year.

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

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

Question-and-Answer Session

Operator

Thankyou, 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 aboutsome of these pre-payment fees. As I recall you were selectively beginning toimplement commitment fees as well. Given the recent environment I just wonderedif that trend has continued here in the last quarter.

Joseph Ficalora

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

The significant change that we saw at, for example at theend of the last cycle took years to get to. So I think that directionalmovement is very good, but the immediate affect of this is not going to bedramatic.

Tony Davis - StifelNicolaus

Could you talk a little bit about how much businesswhichever you have picked up from both in conduit agreements here in the lastquarter or so?

Joseph Ficalora

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

We are going to be getting product as we evolve down theroad that more meets our expectation. This is not something that's going tohappen overnight. Its not as though, loan that otherwise were very wellstructured 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 thatoccurs.

Thomas Cangemi

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

Joseph Ficalora

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

Tony Davis - Stifel Nicolaus

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

Thomas Cangemi

Tony the full is obviously $22 million versus $17 million onprepaid 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 areseeing better spread and we are looking at a better spread opportunities, thanwe saw in the previous quarters.

Tony Davis - Stifel Nicolaus

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

Thomas Cangemi

Well we are still evaluating and obviously we are looking atthe lines of businesses and actually what coming, it's a small company. It'snot a material company to the total balance, but we will do some asset sale aswe go through the quarter. My guess is that, all of our asset activity will becompleted 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 BearStearns.

Sal DiMartino - BearStearns

Hey good morning, guys.

Joseph Ficalora

Good morning, Sal.

Sal DiMartino - BearStearns

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

Joseph Ficalora

Yeah. Given the nature of our assets, we really don't wereally don't, typically track the trends of most of the lenders. As you wellmay be imagine we have a very disproportionate small amount of properties thatare 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 Bankand those loans are 10 or so years old.

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

Thomas Cangemi

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

Sal DiMartino - BearStearns

I am sorry, Tom, but you said

Thomas Cangemi

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

Joseph Ficalora

Yes.

Thomas Cangemi

No negative reaction despite the conditions in themarketplace.

Joseph Ficalora

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

Sal DiMartino - BearStearns

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

Joseph Ficalora

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

Sal Dimartino - BearStearns

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

Joseph Ficalora

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

So, I know that what he is telling you is absolutely truewith regards to what he is seeing, and in fact he is opting not to do certainkinds of lending. And what I'd say to you is the obvious, rates have changedgenerally in the marketplace that we are in and as I think you well know, wewere getting and 6 and 38 and 6 and 58 not very long ago. We are getting loweryields today accepting for the overall term yield. One of the things that isvery distinguishable about our asset is the fact that we get term yields thatin some cases are as short as one year and as long as four years. That's a veryshort asset. We don't have an interest rate, change we have an actual couponplus points change in the overall yield that we have experienced, in lets justsay a three period.

Bob Hughes – KBW

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

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 overallcouple 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 hasbeen in north of that. Obviously, in the summer it was significantly higherfrom the dislocation in the credit market, where we saw deals substantiallyhigher than that.

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

Bob Hughes – KBW

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

Thomas Cangemi

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

Bob Hughes – KBW

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

Joseph Ficalora

I think there is no question about that, that we are beingvery conservative here with regard to how we are pricing deposits. Yousometimes have to adjust your deposit base, to feature the core, and not to tryand 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 wehave a foundation that we want to build upon with regard to core relationships.Therefore, we have had taking advantage of during this quarter, the opportunityto let go some of the hottest money that's in the market and to build on relationshipbanking.

Thomas Cangemi

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

So, we are clearly very liquid right now and the hot moneywill role out, we are very comfortable with that, and we will right price ourfunding 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 decentpipeline with very expensive deposit rolling off, and going to else where. Weare getting margin benefit from that.

Joseph Ficalora

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

Bob Hughes – KBW

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

Joseph Ficalora

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

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

Thomas Cangemi

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

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

Mark Fitzgibbon -Sandler O'neill

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

Thomas Cangemi

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

We are not forecasting dramatic growth. If we see thepipeline build dramatically, you can have significant margin expansion here. Noquestion, where we are today is that we are in a very good environment, wherewe were six to nine-month ago when we expect the margin. We are not seeing thepressure on the margin like we had in previous quarters.

Joseph Ficalora

In broad brush, there is no question that we've hadsignificant growth in the cost to funds over the preceding couple of years. Weare not looking at that all now. If anything we are looking at our retaildepositor actually coming down in cost. We are looking broad brush increaseyields 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 believethat our deposit cost are going to be going up, nor do we have any reason tobelieve that our assets yields are going to be coming down. Even though youwill see fluctuations from one quarter to a next, based on the actual amountsof pre-payments, and I guess that's why for many, many years we alwayscautioned against over expectation or trying to put into a particular box thepre-payment penalties.

They will fluctuate from period to period. Sometimes, theywill 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-yieldon our assets given the ability for us to do less risk lending and that's veryimportant.

I will tell you with certainty that we are a getting a loweryield 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 ofthis marketplace, chose not to, because we wanted to take less risk. I thinkthe charges that you are seeing in most banks today, reflect the fact that theyhave 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 agreater risk.

Mark Fitzgibbon - SandlerO'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'sone 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 amworried 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 notparticularly aware whatever that loan is. So, I would say if they were an issuesurrounding something that we were involved in, we'd know about it. But no oneat 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 couldwith us your view of the acquisition marketplace, may be the areas in yourfranchise that you would like to strengthen over time if or if you need sort ofholes in your...

Joseph Ficalora

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

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

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

We will have many more opportunities, and we may have,opportunities that go outside of our geography. But that has already previouslybeen the case. And I emphasize a circumstance such as South Jersey, not a big departure from our franchise, but veryeconomically 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 PennFedand Doral, the system has been integrated into our platform. So, we have thesynergy transaction that will be done earlier in '08, sometime in '08 as far asthe integration. And then we have the ability to continue to take the platformto 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 waslooking to find out, what type of borrowers, are they historical borrowers thatwere 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 somecases. We have still had properties in our portfolio. Let me step back asecond, I cannot give you a number today. However, we are putting this numbertogether. Many of the properties that come out of our portfolio sell into themarket at 2, 3, 4 times the value that we carried in our portfolio. So when youthink about what is happening out there, an awful lot of properties arechanging hands at are very high prices. As I mentioned earlier, we are notfinancing those, because they don't meet our standards with regard to how wewill decide appropriate dollars for particular property.

Properties that sell at market are typically way to highrest to put in to our portfolio. So when you think about it there is a mix oftrades that are occurring today. In some cases, properties are actuallychanging hands. For us that's very good, although it is not evident in theimmediate financials, it is very good for us over time, because when a propertyowner or smart property owner that's in our portfolio, sells at a huge gain, hedoes a 1031 exchange and comes back with far more dollars, to buy far morerational properties for us to put it into the portfolio three, six, 12 monthsdown the road.

So a lot of the activity that looks like, we are losingshare or losing market, is really preparing us for a future benefit down theroad. From the standpoint of refinancing, we've said many times that there isan awful lot of bill with regard to loans that are in our portfolio, that areseasoning to the point where they are going to refinance just because thecalendar 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 lotof property. Despite all of the discussion, that is surrounding depreciatedvalues in the U.S., theactual reality is that the rentals in the New York market are very, very strong.

Thomas McGovern - LehmanBrothers

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

Joseph Ficalora

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

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

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

Thomas McGovern - LehmanBrothers

Got it. Great. Thanks a lot.

Joseph Ficalora

You are welcome.

Operator

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

James Abbott - FBRCapital Markets

Hi, good morning.

Joseph Ficalora

Good morning, Jim.

James Abbott - FBRCapital Markets

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

Joseph Ficalora

Amount of repayments? No.

James Abbott - FBRCapital Markets

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

Joseph Ficalora

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

James Abbott - FBRCapital Markets

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

Joseph Ficalora

I think.

James Abbott - FBRCapital Markets

Better but.

Joseph Ficalora

Yeah, we -- Jim, I think it's important to recognize thatgiven the fact that prepayments for a given property could be extraordinarilyhigh. 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 getfour points, we can even gotten to five points on some properties that are soldthat as we did the deal, it was pretty evident to us based on our relationshipwith the owner that this was not at the beginning of their ownership. This wasat the end of their ownership. They were going to be selling it.

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

James Abbott - FBRCapital Markets

Yeah, that's what I am trying to isolate. Can you give us asense then may be a different way to ask the question is, can you give us a senseof the $17 million of prepayment penalties? How much were large dollartransaction, 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 getback to a point where it’s a much more granular number?

Thomas Cangemi

Yeah, Jim, it's Tom. I would say that it was granularthroughout 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 andthe third quarter was consistent. We saw a nice level of continued prepaymentmonth-after-month.

James Abbott - FBRCapital Markets

Okay.

Joseph Ficalora

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

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

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

James Abbott - FBRCapital Markets

Okay.

Thomas Cangemi

Jim, I will talk to that.

James Abbott - FBRCapital Markets

Okay. So let me just move on.

Thomas Cangemi

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

James Abbott - FBRCapital Markets

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

Thomas Cangemi

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

James Abbott - FBRCapital Markets

Yeah.

Thomas Cangemi

So we are enjoying that opportunity right now. As you knowin the past few quarters we haven't grown our loan book, but we've experiencedstabilization on earnings and margins held up, because of our ability to getlower coupon paper off the book and enjoy the ability of generating substantialprepayment opportunities.

James Abbott - FBRCapital Markets

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

Thomas Cangemi

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

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

James Abbott - FBRCapital Markets

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

Thomas Cangemi

Yeah.

James Abbott - FBRCapital Markets

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

Thomas Cangemi

Yeah. Okay.

James Abbott - FBRCapital Markets

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

Joseph Ficalora

We just bought a company. We closed on October 1, so theexpenses will be up from here. You will see an up tick, because of Synergy and weget the full impact of Doral for the fourth quarter. So you are probablylooking at somewhere I would say in the mid to upper 70s, and you have an up tickbecause of the acquisition. That will also be right size for Synergy when weactually integrate the system in the beginning of '08 when we decide to finallyput 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 seethe opportunity across the boards that have rein in cost control in this toughenvironment.

James Abbott - FBRCapital Markets

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

Thomas Cangemi

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

James Abbott - FBRCapital Markets

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

Thomas Cangemi

Not that I am aware of.

James Abbott - FBRCapital Markets

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

Joseph Ficalora

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

That kind of stuffs results in some very large flows ofdollars in and out of the bank, in those account relationships. So, there willbe 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 something that is typical to the commercial bank by example.

James Abbott - FBRCapital Markets

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

Joseph Ficalora

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

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

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

James Abbott - FBRCapital Markets

Yeah.

Joseph Ficalora

See a drop in wholesale, because we are right now at, we arelooking for the loan book to build and when it builds we have very goodopportunities to fund. Funding right now is extremely inexpensive, so thecurrent liability that we have right now is going up slightly, but nomaterially compared to the reduction of our retail fund.

James Abbott - FBRCapital Markets

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

Joseph Ficalora

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

James Abbott - FBRCapital 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 JanneyMontgomery Scott.

Rick Weiss - JanneyMontgomery Scott

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

Thomas Cangemi

As we go down the road I think we will be doing more andmore of that. As you have seen in the last couple of quarters, we have actuallybeen 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 aresult, 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 aretalking 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 thepercentages as well.

Rick Weiss - JanneyMontgomery Scott

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

Joseph Ficalora

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

Thomas Cangemi

Rick, it will on the level of repayments. Obviously, if therepayment activity is significantly high as well as continuing to stay where itis right now you can generate a lot of multi-family credit at higher couponshowever, not close the book. So clearly that's pretty much what Joe wasindicating here. You can have a substantial amount of origination in thequarter, 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 forthis particular quarter on the third quarter that we saw growth of the secondquarter for the first time in the number of quarters in the multi-familycategory.

Rick Weiss - JanneyMontgomery Scott

Okay. And could you just like specify a little bit more onthe prepayment this quarter. How much of it was, people just pre-paying andtaking 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, butit was obviously a mix. One of the things over the last several quarters,including the immediate quarter has been a sale of properties. Whenever thereis a sale we are very unlikely to do the financing. And there have been moresales in the recent quarters, including the last quarter. So how long will thatcontinue to be the case it depends on the marketplace.

Rick Weiss - JanneyMontgomery Scott

Okay. Thank you.

Thomas Cangemi

Thank you, Rick.

Operator

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

Matt Kelley - SterneAgee & Leach Inc.

Yeah, hi guys.

Thomas Cangemi

Hi, Matt.

Matt Kelley - SterneAgee & Leach Inc.

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

Joseph Ficalora

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

Matt Kelley - SterneAgee & Leach Inc.

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

Joseph Ficalora

10 year structure.

Matt Kelley - SterneAgee & Leach Inc.

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

Joseph Ficalora

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

Matt Kelley - SterneAgee & Leach Inc.

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

Joseph Ficalora

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

Matt Kelley - SterneAgee & Leach Inc.

Lower than 4?

Joseph Ficalora

Oh, yes, in this environment, yes.

Matt Kelley - SterneAgee & Leach Inc.

Like on what type of a wholesale structure?

Joseph Ficalora

I mean, just to give you an example, the typical -- ifyou'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 somewherein mid three. As I was giving structure I am just giving you an example.

Matt Kelley - SterneAgee & 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 amountallocated to commercial real estate in construction. I know you provide that inthe 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 wasin prior year, nothing has changed. As I said before looking back on thecategory between 30 to 89 we haven’t seen any deterioration, we are verycomfortable with the company's credit quality portfolio. You had a few loansthat come in and out. But starting at $20 million odd on averages is extremelylow for the size of the bank.

Matt Kelley - SterneAgee & Leach Inc.

Great.

Joseph Ficalora

We are very comfortable.

Matt Kelley - SterneAgee & Leach Inc.

And then, I guess, the bottom line everybody trying to dancearound the margin issue and how much sensitivity there is here. I mean, if youdo look at just one metric that we do have in terms of sensitivity looking atthe NII change data that you provided in the 10-Q, rates down a 100 basispoints, and net interest income up 3%. That’s about $0.04 a share on a paralleltype of shift. I mean, how do we think about magnitude beyond that in terms ofhow 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 tohope to see is the improvement in the slope of the curve, continuing prepaymentopportunities within the portfolio. And again, I want to reiterate the abilityto take that roll coupon paper and sitting on our books which is billion ofdollars that has to be financed. If it stays with us or if it goes away, webenefit from that in this environment.

We are very pleased that there is a risk premium adjustmentfor the marketplace, and not so much in our particular space yet, but that willcome. We see some improvements in overall offering to our products. Overall, inreality over time we should see to more normalization of getting a much betterspread 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 beingvery cautious on forecasting that, running models internally, but when thatoccurs, you will get substantial benefits for our model, because it is a shortasset model.

Matt Kelley - SterneAgee & 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, Iassume that’s where most of the low coupon stuff is kind of coming down thepipeline?

Joseph Ficalora

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

Matt Kelley - SterneAgee & Leach Inc.

What is the average kind of coupon be of that?

Joseph Ficalora

Low fives.

Matt Kelley - SterneAgee & 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 thecommercial franchise, and I guess first, just a point of fact, mentioned $494million in assets from the Doral acquisition, and I thought I remembered fromthe second quarter call hearing $386 million, did I miss something?

Joseph Ficalora

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

Thomas Cangemi

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

Dustin Brumbaugh -Ragen MacKenzie

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

Joseph Ficalora

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

Dustin Brumbaugh -Ragen MacKenzie

Okay. I looked back through the transcript, and it saidassets and deposit, so anyway I'll -- that's fine. And now, I was just going tohave you refresh my memory too, I know a big pieces of loans they were the taximedallion 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 othertaxable loans are consistent with our current underwriting standard. Itsmulti-family credit, some small multi-family credits and one to four familycredit that ultimately, may be we securitize so back to them.

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

Dustin Brumbaugh -Ragen MacKenzie

Okay. And in total loans of the $494 million how much ofthose 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 38commercial branches now and just maybe you want to Joe to talk a little bitabout how aggressive you are in trying to generate assets out of those branchesand…

Joseph Ficalora

We are not we are not being very aggressive at all. As we'vesaid many times we are building a commercial bank foundation that we want tohave in place as the cycle evolves. The best time to be doing loans is in theworst market and the market is in fact, as everyone is quiet aware now, evolvingfrom being a very, very rich positive market into being a more troubled creditcycle turn and we are not being aggressive in our lending here and that's veryconscious on our part. We are being very cautious in how we prepare our systemsand our people and we are building relationships that we believe to be goodsustainable relationships, but we are not being aggressive.

Dustin Brumbaugh -Ragen MacKenzie

And is that just kind of a -- you continue to monitor thesituation 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 forexample; we may pull on some very good larger relationships that are very soundrelationships that have a capacity, to survive the cycle. We may let a largenumber of relationships to go away. In another words, where we have seen lesscomfort with regard to the nature of the relationship, the lender, the personthat had worked for the bank or the relationship itself we let that go away. Sowe are not anxious to get everything that's in the marketplace, we are beingvery selective as to how we prepare our people and who will use to actuallybuild the portfolio. That means the numbers will move more slowly and itdoesn't mean that we are not interested in servicing good relationships. Itmeans that we are being more selective than many of the people that are in themarket today.

Thomas Cangemi

I would add, the opportunity is the Community Bankportfolio. We have a sizeable book to loan that have relationships with verygood borrowers that have other types of commercial facilities out with thelargest commercial banks in the world, that could bank with us and that's theopportunity.

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 toturn the call back over to Mr. Ficalora.

Joseph Ficalora

Thank you again for participating in this morning'sdiscussion. We appreciate the opportunity to discuss our third quarterperformance, which reflected the continuing stability of our net interestmargin. The consistent quality of our assets and our ability to maintain aposition of capital strength. We look forward to reporting our fourth quarter results,which will reflect the addition of the Synergy Financial Group to our bankingfamily.

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

Operator

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

Copyright policy: All transcripts on this site are the copyright of 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.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!