Joseph R. Ficalora - Chief Executive Officer, President, Director, Chief Executive Officer of New York Commercial Bank, Chief Executive Officer of New York Community Bank, President of New York Community Bank, President of New York Commercial Bank, Director of New York Community Bank and Director of New York Commercial Bank Thomas Robert Cangemi - Chief Financial Officer, Senior Executive Vice President, Chief Financial Officer of New York Community Bank, Chief Financial Officer of New York Commercial Bank, Senior Executive Vice President of the New York Community Bank and Senior Executive Vice President of the Commercial Bank

Ken A. Zerbe - Morgan Stanley, Research Division Bob Ramsey - FBR Capital Markets & Co., Research Division David Rochester - Deutsche Bank AG, Research Division Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division Moshe Orenbuch - Crédit Suisse AG, Research Division Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division David Darst - Guggenheim Securities, LLC, Research Division Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division David S. Hochstim - The Buckingham Research Group Incorporated

Good morning, and thank you all for joining the management team of New York Community Bancorp for its quarterly post-earnings release conference call. Today's discussion of the company's third quarter 2014 performance will be led by President and Chief Executive Officer, Joseph Ficalora, together with Chief Financial Officer, Thomas Cangemi. Also joining in on the call are Chief Operating Officer, Robert Wann; and Chief Accounting Officer, John Pinto. Certain of the comments made by the company's management today will contain forward-looking statements, which are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those the company currently anticipates due to a number of factors, many of which are beyond its control. Among those factors are: general economic conditions and trends, both nationally and in the company's local markets; changes in interest rates, which may affect the company's net income, prepayment penalty income, mortgage banking income and other future cash flows or the market value of its assets, including its investment securities; changes in the demand for deposit, loan, and investment products and other financial services; and changes in legislation, regulation, and policies. You will find more about the risk factors associated with the company's forward-looking statements on Page 7 of this morning's earnings release and in its SEC filings, including its 2013 Annual Report on Form 10-K, and it's first and second quarter 2014 reports on Form 10-Q. The release also includes reconciliations of certain GAAP and non-GAAP earnings and capital measures, which will be discussed during this conference call. If you would like a copy of the earnings release, please call the company's Investor Relations department at (516) 683-4420 or visit ir.mynycb.com. [Operator Instructions] To start the discussion, I will now turn this call over to Mr. Ficalora, who will provide a brief overview of the company's third quarter performance before opening the line for Q&A. Mr. Ficalora?

Thank you, Leo, and thank you, all, for joining us this morning as we discuss our third quarter performance, which was highlighted by continued loan and deposit growth, the exceptional quality of our assets, as well as our above average efficiency. I'd like to begin by speaking to our earnings, which rose not only sequentially, but also year-over-year. In the third quarter of 2014, we generated GAAP earnings of $120.3 million as compared to $118.7 million and $114.2 million in the trailing and year earlier 3 months. Furthermore, at $0.27 per diluted share, our current third quarter earnings were $0.01 higher than the year earlier level and consistent with the level recorded at the second quarter of this year. We also reported cash earnings of $129.6 million for the quarter, which is equivalent to $0.29 per diluted share. In view of the strength of our earnings and our solid capital position, the Board of Directors last night declared our 82nd consecutive quarterly cash dividend in general and our 43rd consecutive quarterly cash dividend at $0.25 per share. The dividend will be paid on the 20th of November to shareholders of record as of November 7, 2014. For the purposes of this morning's discussion, I'd like to focus the remainder of my comments on the third quarter performance as compared to our performance in the trailing 3-month period. One of the factors contributing to the strength of our third quarter earnings was a sequential increase in the net interest income, which albeit modest was no small achievement in the current rate environment. The increase was largely attributable to a rise in prepayment penalty income, which was $25.4 million in the current third quarter as compared to $19.3 million in the second quarter of this year. In addition, prepayment penalties contributed 24…

[Operator Instructions] Our first question is coming from Ken Zerbe of Morgan Stanley.

I guess, Joe, my first question is for you. In your prepared comments, you seem pretty confident that you won't cross the $50 billion without a deal, but as we all know you guys are running out of time. So -- or should we view this as a statement that you're more confident that you can get a deal done very soon? Or that you're more confident that you can run at $49 billion for the next x number of quarters?

I think the important thing to note is that our balance sheet does lend itself to flexibility in managing our size and there is a 4 sequential quarter lead time into the relevance of a $50 billion trigger. So when you take the 2 together, we have quite a bit of time ahead of us. We are actively working with our regulators and doing the things that are appropriate for consideration of transactions. It has been our consistent business model to grow by acquisition and it continues to be our expectation that we will structure a well-designed transaction that will be highly accretive to earnings and to capital, and that when that is all put together, it should have a very reasonable market expectation that it will get regulatory consideration. So I think your question is extremely important. Everybody must have the same question, how long can we do this? Well, we can conceivably do this for the next couple of years. The reality is that as long as we're able to build earnings and maintain the overall size of the company within this range, I think we have a great deal of opportunity to make the decisions and do the necessary work so as to not have this unique trigger of change in the position of the company without change in the risk inherent in the company.

Okay. And then question for Tom. At what point do you start thinking about locking in long-term funding? I mean you're very -- I'm sorry, you're very liability sensitive, and given where rates are, it seems like now is probably decent time to start extending the duration of your liabilities. Are you making any progress on that? Or is it, you really are kind of waiting for a deal to happen and then restructuring liabilities at that point?

Good morning, Ken. So what I would say is that the company has made a concerted effort starting in January to push on into the retail platform on deposits. If you notice, we're up 13.8% for this 9 month annualized. That's a pretty strong deposit growth story for our history. Historically, we've been always below our rate there. So we've obviously moved the retail platform into bringing in some deposit funds, and this is obviously the CD market, as well as operating account. That's the first initial step to try to re-diversify the balance sheet in respect to funding. Going forward, we're going to evaluate all options as the markets move around here and we're clearly cognizant of our liability sensitivity. But if you look at what we've done in the past 9 months, we've definitely changed the mix of our deposit base and funding base.

I definitely noticed that in the press release. And then final question, just on mortgage banking. I think, Joe, you mentioned that you're -- seemed confident that you can kind of maintain this level sort of $16-ish million of mortgage banking revenue going forward? Is that right just coming where rates are?

It's Tom. What I would say with that is obviously there's been a significant movement in interest rates. When a swing note [ph] rate drops below 4%, I think it hit as low as 3.67% 3.70-ish. Our volumes spiked 3x, 3x multipliers, which is a significant rush to refi. So what we saw in October was there is still refi demand within our portfolio. We have a significant $20 billion MSR portfolio that we're servicing, which has a coupon that's close to 4%. So if you see a change in interest rates well below 4%, you'll see some more refinancing activity. We noticed that when we had that anomaly of treasury rally. What does that mean for the rest of the quarter as Mr. Ficalora indicated, it's only 1 quarter -- 1 month into the quarter, but October looks pretty strong, given that rates are much lower. Now if that continues throughout the fourth quarter, it's conceivable that you can have an up for mortgage banking quarter. I like to be conservative. I'd say it would be close around the same level as Q3, assuming rates go back up to the 2.50-ish level. But where we are today, it's about 2.20% on a 10 year, you're still seeing some decent flows of lock volume.

Our next question comes from Bob Ramsey of FBR. Bob Ramsey - FBR Capital Markets & Co., Research Division: I guess I was hoping maybe first you could talk a little bit about your margin outlook given you came in toward the better end of your guided range. We have seen rates move over the course of the quarters. Sort of how you're thinking about it? And then also maybe how slower growth impacts your margin. I mean, I don't know if you at the margin cut out some of maybe what would have been lower-yielding loans and that gives you a little bit more defense around margin if you're not having to grow as fast?

Yes, so Bob, again, I'm not going out on a limb past 1 quarter. I'm going to guide for the Q4 around the same level as Q3, down 3 to 5 basis points, and hopefully that will come in conservative given the environment. We've had once again a significantly substantial change in the treasury curve which really brought rates lower. So we have a low for longer again. So the scenario, it's almost like a Groundhog Day. It's a big quarter. It keeps rates to not go up here, but the reality is that we're holding margin at a very nice level and given a very challenging rate environment. With that being said, we have moved on some assets. These are not high-yielding assets. So for example, the loans sold out of the at the investment loans held for investment were all conforming ARMs that are below 3%. So I think opportunistically when rates are this low, we have the opportunity to move on some balance sheet items that, although are good asset and high-quality assets, they're not the highest yielding assets. So it's not going to impact the margin negatively. The good news for the portfolio we're putting on our mortgage business is holding very strong in the multifamily side. We're getting higher spread given this most recent rally in the treasury curve. What does that mean for us? We're still holding north of 3% for the 5-year money and between 7 and 10, it's more like 3.5%. So that -- so we're going to hold our overall yields. And as far as the bleed on the yields that we had quarter-over-quarter, we saw less of a decline as far as what we're putting on and what we're originating. But it's coming off. That's a favorable move and that's what's kind of keeping our margin within a reasonable range of 3 to 5 basis points.

So Bob, the reality is that the indications from the quarter just ended are not aberrations. They are consistent with what we reasonably can expect for the quarters ahead. And therefore, it does look rather good given the external environment and the impact that has on our margins in our balance sheet. We have a unique degree of flexibility here to continue to perform at levels that you see in front of you without growth. The idea of the balance sheet has to be bigger for us to have a better margin -- or the balance sheet has to be bigger for us to have strong earnings is not the case.

And Bob, I just wanted to add. If you look at the whole year going to the 9 months, we had a significant front-loaded growth. We were well ahead of budget starting in the first quarter of 2014. So if you look at the third quarter, we had good multi-family growth. We're still running at an annualized rate of 13%-plus. And as you know, historically, you followed the company for many years, third quarters are typically the slower closing quarters of the company. So Q4 should be robust in the multi-family side. Bob Ramsey - FBR Capital Markets & Co., Research Division: Okay, that's all helpful color. And I know you said you don't want to go out in guidance beyond the quarter, which is fair because of the volatility on rates.

Right. Bob Ramsey - FBR Capital Markets & Co., Research Division: But how are you thinking about us relative to where -- with the curve where it is today and where, I guess, the competitive landscape where it is today, how close are we to the bottom do you think today?

I've been saying that for a few quarters now. I assume the bottom was 2, 3 quarters behind us. It's just low for too long, it's a difficult environment. The good news as far as on the business side, the multi-family business when spreads start to tighten, rates are higher. When spread starts to widen, rates are lower. So right now we're in a lower rate environment, the spreads are widening. So we're not really changing the dynamic of getting reasonable returns for an asset on average life of 2 to 3 years. So I think that strategy is continuing. So we're not seeing irrational pricing, although there's 1 or 2 players that may be pricing below the marketplace. It's reasonable. If you look at the traditional savings bank portfolio, we charge prepayment penalties. The market in general is a yield maintenance market. So by being -- offering that to the customer, they have the opportunity to put a reasonable rate in front of us, and they know what their exit strategy will be 3 to 4 years out. I think that's still working here. We're not seeing a significant impact to the actual rates that we're offering. So despite the fact that rates below 2% on the 10-year, we still have our mortgage business. So for example our pipeline that we announced this morning is about 3.40% yield. It's slightly lower than last quarter which was 3.41% on origination, but it's not below 3%. So we're still seeing reasonable returns given the asset class. And obviously, the credit clause of that class is very strong. Bob Ramsey - FBR Capital Markets & Co., Research Division: Okay. And then maybe last question around loan yields. I know one of your smaller multi-family competitors recently announced that they're not going to go below 3 1/4 on rate as sort of an absolute floor on what they're willing to put on their balance sheet. Have you all thought about something like that?

It's very possible. Depends on how many other things are happening in the market simultaneously and who the players are.

I think that's reasonable. I mean, obviously, we're not going to be specific, but I think that makes sense.

Our next question comes from Dave Rochester of Deutsche Bank.

So how are you guys thinking about expenses x amortization in 4Q? Are you thinking you can hold these levels here? Or will we see a little bit of an uptick for reg and compliance, which you guys are doing?

I can't tell you, but we feel very comfortable on the expense side. We had a nice slight reduction quarter-over-quarter. Like we talked about last quarter, we put a lot of money into the platform of building ourselves to get -- to be at that $50 billion level. And I wouldn't be surprised going to Q4 at times it will be slightly down. So once again, we're tightening our belt, we're focusing on the environment. We've made significant adds in previous years. And we're benefiting from -- just for example, deposit change at the bank. Funding deposits versus funding through home loan bank line is significant cost reductions in respect to regulatory costs. Now you're assessments go down materially. So if you look at where we are for Q4 versus Q3, we're probably going to be down $1 million, $1.5 million, maybe total G&A of $1.41 million x CDI.

Okay. But now I know you guys are still doing some work on the LCR front. How's your progress there? And then second question, given the new rules, how much liquidity do you guys think that you're going to need when you eventually cross through 50?

Right. Right. We are doing a lot of work on the LCR. I will tell you that. As you indicated, it has been -- final rules that were published in September. And with that being said, the positive is that it's not a daily quote, it's a monthly quote. In addition, the timeframe as far as the [indiscernible] is going to be 16 down to 16 [indiscernible]. But for us, it's still below $50 billion. We are now in a phase of project planning. So by fourth quarter, our project plan will be in place. Then we go into the -- we'll call it, the hiring stage and the system stage will be in 2015. And until we cross the $50 billion, then we have to do the implementation of actual assets. So depending on the makeup of our assets, Level 1 versus Level 2, we have some strategies that we're working on. But, clearly, we're going to be well-prepared for that. We articulate that internally and working very hard to complete the project plan. But we expect that the actual project plan itself will be put in place in Q4 of this year, and implementation from now until we take up to the crossing of $50 billion should be not an issue for us.

I know you talked about being very active in the multi-family side and you grew that portfolio very decently this quarter. You've got a stronger pipeline going into 4Q. At what point do you feel like you need to constrain growth even in the multi-family side in order to prepare for the LCR before you cross through that $50 billion threshold? Or do you need to do that?

I think, just bear in mind, we have a substantial amount of cash flow that comes in that multi-family portfolio. And origination stream is very strong. We have the ability to see prepayments come in at a very nice clip. Last quarter was the highest level of prepays for the year. That's typically a fourth quarter event. So you'd assume fourth quarter is relatively active depending on how much payouts come. If there's a significant spike, you will probably have a mad rush to refi, which will benefit probably some more balance sheet focus and having the ability to put on higher coupon loans. This is a strategy that will go from time-to-time, quarter-to-quarter as Mr. Ficalora indicated. It's a four-quarter look back. We're not $55 billion today or $57 billion today, which will trigger the 50 expectation. We're still below $50 billion. We have some room here to evaluate. But more importantly, rates are very, very low right now. So we're not looking at 4% multi-family coupons to grow into a much higher rate environment. And we're dealing with a relatively short asset class. So we feel pretty good that we can manage through this process over the next few quarters ahead and be very comfortable on continuing to be the #1 player for the portfolio [indiscernible] multi-family.

Our next question comes from Collyn Gilbert of KBW. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Tom, just a question. On this quarter's multi-family production, what was the split between 5-year and then more of that 7 to 10-year paper?

I would say probably 65% is more towards the 5 -- traditional 5 one and the remaining is between 7 and 10. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. Is that -- I'm just curious, how that ratio would have compared a few quarters ago?

I'd probably say -- it's probably -- this quarter was a little bit more weighed to 7 ones, between 7-year type structure. But I will tell you in the previous quarter, it was mostly 5-year structure, traditional stuff. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. Okay, that's helpful. And then just on the deposit side, I mean, you guys have said it all along that when it's time for you...

No, I just wanted to point in there, I want to go backwards. If you look at the portfolio going into the current quarter, that's more 5-year driven because the coupon's a little bit lower because obviously we're getting less for the shorter duration. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Got it, right. And then just on the deposit side. What specifically are you doing to really bring in those deposits? What are some of the initiatives you have out there?

I would say what we've been doing, which has been very effective, our retail line managers are in the marketplace bringing in CDs at the market, where historically -- and, Collyn, you know us for a long time, we've always been below the market. So we have a very unique, unique deposit franchise throughout -- unique markets that have the ability to bring in significant funds and we're competing with our marketplace on the CD side. And savings...

And savings are up materially, Collyn. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Yes, that was a big shift this quarter.

And when you look at the numbers, savings is the largest growth in our deposits.

Promotion with the liquid CDs, liquid CDs.

Yes, liquid CDs. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, that's helpful. And I think, Tom, you kind of -- you sort of I think gave the color I was looking for on this, but -- so the volatility on the long end, how do you see that affecting your multi-family business in general?

Obviously -- if we go back to history, there's spikes, you're going to have a spurt to refi. If it starts to go low, you'll have an acceleration of refi. If you're running flat for a long period of time, things kind of slow down. So we've had volatility. I think volatility is good for our business model. I mean, we want higher rates in the long run, but having volatility creates people to come to the table.

I think, Collyn, it's really important to recognize that for our particular business model, for our particular niche, the people who have built substantial value in the properties which they financed with us, have a great deal of flexibility in the timing of their refinancing. So it could very well be that because the market is so rich, the values are so high, that people will in fact choose to sell at great gain. For us that's an automatic refi. That's an automatic prepayment. So when you look at the multitude of factors affecting the moment in time, there's a great likelihood that our portfolio will have a great deal of churning or movement. And then that's always good for us. So as we sit today, new rates approximate old rates. So rate isn't going to be a major contributor to change, but the opportunity to gain on prepay and the opportunity to have substantial liquidity from this refinancing is going to be very, very attractive. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, okay. Just one last quick question. The prepay income you saw this quarter, was that fairly broad based? Or was there one credit or a couple of large credits in particular that drove that?

It was broad-based. There was no large specific items.

Our next question comes from Moshe Orenbuch of Credit Suisse. Moshe Orenbuch - Crédit Suisse AG, Research Division: Most of my questions have been asked and answered, but could you talk a little bit more about the loan sales and how you kind of anticipate using that as you go forward?

Sure. Well, for the quarter we exited one line of business. The medallion business, we decided to exit. That was a small C&I book of business sub-3% type yield at $160 million and the other actual sale that took place was the -- that we moved over to held-for-sale was $236 million the 5 1 [ph] hybrid ARMs. These are jumbo prime ARMs that we have on balance sheet. Again, we looked at that historically as a placeholder versus securities in the years past. The market was very opportunistic as far as pricing. Obviously, this is low yielding paper so it's sub-3%. So it's not going to impact the margin negatively as it exits since we put on higher-yielding multi-family credits. Those 2 transactions will close in the fourth quarter. So that'll be part of our balance sheet initiative. And we sold conforming paper, which is traditional for the mortgage banking business for us that we had on balance sheet that was ARM conforming residential loans with Fannie and Freddie... Moshe Orenbuch - Crédit Suisse AG, Research Division: Right. So you weren't selling -- you weren't really selling kind of your traditional business. It was...

Oh, absolutely not. This is, again -- just bear in mind, it took us many years to put on residential loans on portfolio. If you know the history of the company, we've been a multi-family CRE lender. We put on some, we'll call it residential loans, hybrid ARMs of high-quality hybrid ARMs over time and built the portfolio and a portfolio that was pristine, but we did opportunistically for balance sheet purposes. Now that -- those assets are now being moved off the balance sheet, not at losses, but we're getting them off the balance sheet, economically feasible to the company and these are sub-3% yields. Moshe Orenbuch - Crédit Suisse AG, Research Division: And going back to the discussion of deposits. I mean, it sounds like it's a little bit of a shift in terms of your pricing in terms of your kind of pricing parameters in terms of trying to not be a below-market rate payer. Could you just kind of talk through that a little more? What kind of led you to that?

There's no question. They are different environment. We're still growing. We had significant front-loaded growth this year. So we have to fund and we opted -- if you look at this funding mechanism in this day and age versus pre Great Recession is the cost for borrowing versus deposits. So when you're taking the all in cost between the FAC insurance premiums on a liability from the deposit base versus the liability from, let's say, the home loan bank of the repo market, you need to effectuate those costs and you'll see the savings are on our expense side. So we priced it accordingly.

Our next question comes from Matthew Kelley of Sterne Agee. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Just kind of staying on that topic of deposit growth. I mean, what is the promotional kind of liquid CD rate? And is that classified in the CD bucket or the savings? Because the CDs have actually been down. So it's a more...

Delinquent CDs, I think, it's a savings account. I think it's a $1 million, $1 million that came in with 50-basis point promotional rate. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay. And that's where a bulk of the growth has come from?

Yes. So If you take that into account, thinking about the FDIC costs versus going out to borrow money from the home loan bank, net-net, it's cheaper going to the retail platform in that specific offering. And it's a little bit stickier when rates start to rise. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay, got it. With rates down just in the last couple of weeks here, could the fourth quarter decline in the securities portfolio actually be larger than what we saw in Q3?

No. Again, what Q3 -- I mean, Q4 very well expected. We had some debentures that were slated to be called and they were called. And we'll probably see at least $145 million if we don't sell any securities depending on market conditions further declines in Q4. So I'm not envisioning substantial declines in the fourth quarter in securities. But on a conservative note, $145 million could be the drop for the -- excluding any repayments on CMOs. And potentially if the marketplace has a significant treasury rally, we look at opportunistically to sell securities depending on market conditions. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay. And is that $145 million on a stable rate environment what we should expect into early next year as well on a quarterly basis?

No. No, it all depends on interest rates. If we have a substantial rally it could be significantly higher. If there's a selloff in the treasury market, there will be very little cash flow. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay.

So the yield on that portfolio is around 3.14%. The effective duration on the mortgage side is about 6.5 years. And we're very comfortable given that we have a very strong dust portfolio, which is multi-family loans wrapped by Fannie Mae. And that particular structure is very strong in this environment and it's been performing very well as far as value and the potential for additional income over time. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay. And then can you help us just understand and dig in a little deeper on how you've been able to manage expenses. You guys have done a pretty good job keeping those numbers low. Help put some numbers around that in terms of headcount reduction or facilities...

Yes, so the 2 big items -- the 2 large items, there's obviously the NPA book is significantly lower than it was 2, 3 years ago. So the foreclosure expenses in large commercial real estate properties and multi-family are significant. That is substantially removed from the P&L. In addition, as we shift away from advances and we look towards the deposit retail side, that is a substantial savings on assessments. Now -- so you have a reduction of NPAs, not only is that a reduction of foreclosure expense, but it's also a reduction of the overall assessment that's favorable portfolio. In addition to that, going into the retail market versus the advance market, that's a real FDIC savings there. So you're seeing significant drops and those are the 2 large line items where you will see drops. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay. And then just in the last 2 or 3 years, you've suggested that -- you talked about -- you've had quite a bit of the costs related to regulatory and compliance that you've already incurred and you've been able to offset that elsewhere. What would that dollar amount be that you have had to incur on those new expenses for compliance and regulatory and...

Over time, Matt, over the past 3.5 years, I'll call it, there's been tens of millions of dollars. So I would probably, for a fair estimate, well north of $30 million, easily north of $30 million over the past 3.5 years. We started fairly early. We were very early on focusing to grow past $50 billion when the Dodd-Frank Act was put in place and all these new spiffy rules came into place. So we learn as we go. We work with our partners. We have external partners and a lot of consulting fees, but a lot of that has been borne by the company and the infrastructure is -- we're not done, but the infrastructure is in place. They continue to grow. When we choose to go over 50, there's going to be expense there. But they will not be material bases on our current assessment. As I indicated last quarter, the LCR costs, although the project plan is in place, should not be material with the exception of changing the asset mix of the company. That will allow us to add value as far as earnings because you're going to have to put on more assets. But we're not in a position to be over 50 today. So that does not have to take place. So the expense build there is not going to be significant. And dealing with living will, it's not going to be a huge undertaking for the company because we're pretty simplistic. We'll have some consulting fees. We'll have -- our legal department will work together with the outsiders who have come up with a living will and -- but it's not going to be a substantial undertaking get passed to a Citibank per se. And as far as dealing with monthly reporting to Washington, dealing with the CCAR change from below 50 BFAs [ph to above 50. Now you're looking at monthly reporting, some system changes and some personnel adds, not material costs. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay. Do you have an ability to quantify what those are being aggregated -- all the items you just rattled off?

No. Again, I'll say it's immaterial. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Immaterial?

Yes. On the long run. Over the next 2, 3 years. I don't -- again, I don't envision this happening next quarter. If we do a transaction, we will have it in place. So we announced the transaction, and we doubled the company's size, you'd assume we have it in place.

Our next question comes from David Darst of Guggenheim.

So Tom, could you maybe talk about the covered loan portfolio, I recognize it's got a very attractive yield. But is there any flexibility to move some of those assets off the balance sheet or reduce the FDIC?

As you know, the good news it's covered, right, it's a covered portfolio. The bad news is that it's now you have to work with the FDIC in order to make any specific changes there. So we manage it well. We have a very strong relationship with the FDIC there. We're very happy the way things are working. And from time to time, we do have discussions about moving on assets. But clearly, it would have to be under the approval of the FDIC.

So...

And they're very sensitive to that because we're -- we took a very large sales bank and managed the FDIC loss share process very well. So they're pleased with the management. Our team has done a fine job out in Cleveland throughout the bank, and that's good and bad because if you want to look at potential exit opportunities, you're going to have think about the implication to the person who's putting the guarantee on that specific pool of loan. So we definitely are looking at the portfolio, but we'd have to work with the FDIC.

What do you think the remaining average life is will be for the portfolio?

It really depends on interest rate. We have a significant amount of ARMs that are subject to payment shock down the road and depending on interest rates. If interest rates stay low for longer, the portfolios performing well better than expected and that's been the history since we bought the company. When we entered into the transaction we assumed rates were going up. Few years thereafter, they haven't gone up. So customers have been able to have a very low payments in this environment and they're paying their bills. Until they stop paying their bills, then we'll have -- we'd be more concerned on the operation side, not on the credit side.

Okay, got it. Okay, and then is anything changing now with the C&I business that you're doing in Boston? Are you backing...

They're doing phenomenal work. I've got to tell you, we're very pleased with the results there. The growth has been significant. Slightly ahead of budget, so we'll definitely -- probably exceed our budget expectations there. The credit quality has been pristine. The yield returns are pristine. We're running well north of 3.5% type overall yield and a portfolio that is highly leveraged now that the expense base has put upfront from day 1. We have a nice group of people. I've been doing this for many, many, many years and now we're well through the profitability phase. Now every loan they put on, we now reap the profits combined, which is a good thing. So we will -- my guess is that we should probably hit $1 billion number by the end of 2015 for sure.

Okay. And then one more question, if they do raise the SIFI limit from $50 billion to $100 billion...

It'll be $250 billion.

Or $250 billion, wherever it goes above, would you consider restructuring your balance sheet and raising capital independently so you could reaccelerate organic growth?

Well, it gives us a great deal of flexibility as to what we would immediately do. We could do, for example, if they would do raise the limit, we might choose to do a $10 billion deal or $5 billion deal. And in any deal, we would do restructuring. So the factors that exists at the moment in time if this were to occur, would dictate the opportunity that we would take.

The good news has been significant dialogue throughout the country about making some changes there. You can't rely on that, but there has been some positive movement that would -- we would definitely be a beneficiary there.

I think the important reality here is that the lead regulators are in the forefront of the people discussing the appropriateness of making this change.

Our next question comes from Steven Alexopoulos of JPMorgan. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: Joe, I wanted to follow up on your earlier comments that you could potentially delay reaching $50 billion on an average four-quarter basis for several years. If we look the commentary on looking for large deal, it goes back well over 2 years now. Is there a Plan B if a deal does not materialize over the next 2 years? Or do you just remain patient and stay below $50 billion for as long as it takes?

I think that the environment is going to be fluid. The idea that anyone would be able to guess on the various factors that would be relevant to the changes that would impact both our decision process and also the likelihood that the marketplace presents opportunities could be very hard to go out 2 years and say that anyone knows exactly what's going to happen. I think the good news for us is that we have a great deal of flexibility and the tools with which to make choices. Those choices would include the assets we've put in to the portfolio, the assets we take out of the portfolio, as well as the timing of a particular type transaction that we might execute. So we're very optimistic that the future choices we have will in fact ultimately materialize in a positive way. There are no reasons why we have concern about the immediate 4-quarter, 5-quarter, 6-quarter period. We have a great deal of flexibility as to how we deal with those opportunities and the balance sheet gives us a great deal of flexibility. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: Okay. Maybe to follow-up on that, as part of the strategy to slow balance sheet growth, are you adjusting pricing on multi-family to slow that organic growth into the bank?

Let me say this. We obviously have the opportunity to do that and when we assess quarter-by-quarter, where we are and what we want to do with regard to the marketplace, as well as with regard to the balance sheet, we'll make choices. We're not locked in to any choice over an elongated period. We can make choices month-over-month. We can make choices quarter-over-quarter. The good news is, we have a great deal of flexibility in the marketplace. We are gaining market share. We have the ability to make judgments that would in fact fit into our overall business model quarter-by-quarter.

I will just say one other point, Steve. If you think about the history in the past 5 years, we had a situation where the balance sheet wasn't growing at all. We were making substantial returns to the mortgage banking operation and the like, and the prepayment activity record levels 3 years in a row, given the fact the rates were still low, the cash flow to the portfolio was substantial. Running in place was difficult. So, yes, we have a little uptick in rates and you saw some good, we'll call it front-loaded growth this year. We were well ahead of budget mid-year 2014 as far as where I expected the balance sheet to be as of September 30. So I look at this year as somewhat front-loaded. It's relatively flat going into September quarter, and in the fourth quarter, we'll have some asset sales. So we'll get some breathing room there. But the good news of rates stay where they are right now, we'll have reasonable growth, but we'll reallocate the asset mix and we'll continue dominating our multi-family space. As you know, the fourth quarter is traditionally the strongest quarter of the year. The pipeline is strong. Third quarter was a very strong origination quarter, but very typical for seasonality. We do less business in Q3s for the past decade.

I think the important thing is right in front of you. We in fact, slowed our growth and increased our earnings. That's not magic. That's just the opportunity that this balance sheet represents in the environment that we're in. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: And, Tom, maybe just one final one. Can you talk about the linked quarter decline in other assets which seemed to take some pressure off-balance sheet growth and how much more flexibility you have down there to work down those balances?

Other assets, Steve.

Are you talking about ORE, I guess? Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: No, actually Other assets.

Okay.

Can I get back to you on that particular question? I don't have it in front -- at my fingertips. My guess is that it shouldn't be a material change quarter-over-quarter. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: It went from $1.7 billion down to $1.57 billion. We could follow up if you like.

Yes, we'll follow up.

Yes, that'll be good.

Our last question comes from David Hochstim of Buckingham Research.

Could you just clarify, are you expecting a gain on the asset sales in the fourth quarter?

We are not expecting a loss. But we have loans held-for-sale. Net-net, we had some that were -- loans that were sold above par. I'd say we have fees attached to some of them. So obviously -- I would say it's a wash, but it's not going to be a loss.

Maybe another way to ask it. When you mark them to held-for-sale, was there some change in value?

Correct. Correct. It's pretty much a wash.

Okay. And then could you just give us a breakdown on mortgage servicing and the hedging gain and -- or losses on...

Yes. For the quarter we had $12.3 million of service and fee income. The change in the MSR value was a negative 1.2. And the hedge -- MSR hedge was a negative net $1.1 million. So the total mortgage servicing income for the quarter was $10 million, consistent with the previous quarter.

And spreads in October versus the third quarter, where are they on?

It's relatively consistent. We ran around -- I'd say upper 60 basis -- 63 to 65 basis points.

That's about the same now?

Yes, yes. Now again, the market has changed somewhat. So we're reevaluating our pricing. We had significant uptick in October, but, no, it's early. It's only 1 month into the quarter. And it has been a -- it's a much lower swing note rate in this environment than it was going into the summer months. But we're hopeful.

Okay, good. And is there anything more you could say on competition and multi-family in terms of other lenders being...

There's no question that there are many people that are vocal about their participation in the multi-family market. That is not necessarily relevant with regards to the magnitude of participation in the multi-family market. So we've had a consistent, over the course of the last 2, 3, 4 quarters, a consistent participation by new players. And in varying degrees, those that have been in the market have either taken a little more share or a little less share. In all cases, we've had the opportunity to gain share. So I think most important isn't how many names we compete with, but how readily we can, in fact, gain share and hold rate. And that's working out pretty well.

Is the competition having any impact on underwriting or LTVs or...

No. Well, as is always the case, the competition in this marketplace is often filled with people that have a priced benefit in either size or in rate because that's how they're compensated. And as a result, they may be a little more aggressive, but that's not new news. That's the way it's always been. So there is no over-change in the quarter that has just ended or in the quarter that we are in that would suggest to us that there's going to be any material difference in how we position ourselves in this market.

And there are no further questions at this time.

Thank you. On behalf of our board and management team, I thank you for your interest in the company, our strategies and our performance, and wish you and your families all the best as the holiday season draws near. We look forward to chatting with you again in January when we report our earnings for the full year and the fourth quarter of 2014. Thank you.

Thank you. This does conclude today's third quarter 2014 earnings conference call with the management team of New York Community Bancorp. Please disconnect your lines at this time, and have a wonderful day.