BankUnited, Inc. (BKU) Q3 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the BankUnited 2012 Third Quarter Earnings Call. My name is Carissa, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Ms. Mary Harris, Senior Vice President, Marketing and Public Relations. Please proceed.

Thank you. Good morning and welcome, everyone. Before we start, I'd like to remind everyone that this call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the company's current views with respect to among other things future events and financial performance. The company generally identifies forward-looking statements by terminologies such as outlook, believes, expects, potential, continues, may, will, could, should, seeks, approximately, predicts, intends, plans, estimates, anticipates or the negative version of those words or other comparable words. Any forward-looking statements contained in this call are based on the historical performance of the company and its subsidiaries or on the company's current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the company that the statements are subject to various risks and uncertainties and assumptions relating to the company's operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these, or other risks or uncertainties materialize, or if the company's underlying assumptions prove to be incorrect, the company's actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive. The company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2011, available at the SEC's website. It's now my pleasure to turn the call over and introduce BankUnited's Chairman, President and CEO, John Kanas. John?

Good morning, everybody. I assume we all had a chance to take a look at our numbers first thing this morning. We continue to enjoy the recovery that the surprise [indiscernible] in South Florida, particularly centered around Miami and Dade, the economy continues to show very significant improvement starting with the real estate sector and now spreading out to the contiguous industries surrounding real estate. Net income was strong. Just under $50 million, $48 million last year, and by the way for those of you who are doing the math, that's a core of $45 million as I think consensus was $44 million, so a little better than consensus, $0.03. In here are security gains that represents the sale of, Doug will tell more information later, but over $100 million worth of securities that during the quarter the regulators determined we are about [indiscernible] at the bank level. It's unfortunate for us and actually resulted in a little bit of margin compression you saw this quarter. Those securities were yielding taxable equivalent basis over $7 million, but we did still even so our margin compression was a little bit less than we had guided for, so for the 9 months net income about $149 million, $0.44 a share. Returns, very respectable. Return on equity of 11.96%, 1.63% on assets. Balance sheet grew to about $12.7 billion mostly as a result of the fact that we continue to see more loan growth and we have run-off. New loans for the quarter $361 million, so to total about $3.3 billion, a little bit less than last quarter recoveries in new residential portfolios. Obviously owing to rate environment seeing a higher amount of run-off and we actually had fewer residential purchases during the quarter, but the annualized growth rate for the 9 months is still 121%. We also had some large deals on the commercial side that will slip over into the fourth quarter, so we are seeing a continuation of the loan growth that we saw earlier in the year, reflecting 2 things: One, the aforementioned strength in the economy and also our ability to continue to gain market share in this market, so commercial loans alone grew by about $257 million, totaling $2.4 billion. For the quarter and for the 9 months, growth in new loans, obviously, outpaced the resolution of covered loans which resulted in the net growth of the portfolio. Loan portfolio. The total portfolio at the end of September at about $5.3 billion, and covered loans are now just about 39% of the total loan portfolio. Asset quality obviously remains very strong. Non-performers, the total loans of [indiscernible] compared to $0.57 in June and $0.92 a year ago. While we continue to put our shareholder behind the wheel in Florida, we are at the same time preparing for the expansion of our franchise in New York. Those locations are on track for the opening sometime after the first of the year, actually specifically after the 1st of February, and we are in the process of –- we are pretty well done in building out the credit structure behind Herald. We also allowed for run-off some loans in the Herald portfolio that we deemed were loans that we want to go forward with, so that's also part of this bridge during the quarter with regard to loan growth. All in all, [indiscernible], a little better than we thought. Florida continues to surprise us on the positive side and a lot of very anxious people here to get going building our New York franchise, we spent a lot of time, John both and I, particularly spent a lot time here recruiting new people that will join our team. Obviously, non-Capital One people who will join our team later next year and continue to be impressed by the interest on the part of not only customers, but on the part of employees who would like to be part of our story, so we look forward to that with a great deal of enthusiasm as we've reported to you before. Raj, why don't you talk a little bit about the specific [ph]?

The story on deposit side [indiscernible] we saw continuation of the trends over the last few quarters, deposits are growing, costs started coming down and the mix of deposits is getting better. Total deposits grew to $8.5 million. Transaction deposit, which is a DDA and interest [indiscernible] checking totaled $1.7 billion, which is a little over 20% of our total deposit book. This number will improve again when we enter the New York market. Cost of funds continues to drop. It was 84-basis point last quarter. It's dropped to 78 basis points. And as we look into the fourth quarter, we expect this trend to continue. In fact, looking beyond into 2013, we expect the trend to continue. Mention a little bit about mortgage portfolio, we purchased less this quarter, and as the portfolio run-off was larger than you [indiscernible] given the refi market that we are in. The negative [ph] portfolio continues to perform as it has over the last several quarters with delinquencies improving and severity are steady to slightly better. The speed of the covered transaction portfolio keep getting slower and slower every quarter. The commercial loan portfolio is a little more sporadic given [indiscernible]. I'll turn it over to Doug and Leslie will talk a little bit more about P&L.

Sure. Thanks, Raj. And as Raj mentioned, Leslie Lunak is with us, and when we get to the question and answers, any questions I don't like, I am going to turn directly to her. In terms of talking about the margin for the quarter, it was 539, and for the 9 months, 572. Both of those were higher than our projections at the beginning of the year. I think, we had guided people for the year. We expected to be at 555 or so. I think last call, we upped that to 565 or so. We are now looking like for the year of 2012, we expect to be in the low 570s for the year, so we expect the margin for the fourth quarter to be in the high 560s as we sit here today and as we talked before, there is an impact from the loan sale that we have planned in the fourth quarter that impacts the margin, so that's why we see a little bit of a spike in the fourth quarter. So, we are very happy with the way our margin is holding up, better than we had been projecting for folks. Net interest income was $139 million, almost on par with the second quarter and up from a year ago, a year ago was $129 million. Non-interest income continues to be impacted by lower accretion on the FDIC indemnification asset, which certainly is no surprise to those of you who have followed us, and also the net gain loss on indemnification asset. We are just getting better gains, if you will, on the resolution of some of these assets, which then impacts on the other side on the indemnification asset. Our non-interest expense continues to benefit from lower OREO and foreclosure costs. Capital obviously remains very, very strong. I would just mention that, again under the MPRs that are out there, if we were to fully implement those MPRs today, the Tier-1 common equity ratio would be in excess of 25%, so we obviously remain in a very, very positive capital position, an advantageous capital position. A couple of things I just want to mention that in terms of stuff that's been in the news. We were very happy that the bank was rated investment grade by Moody's during the quarter, and also there has been a lot of –- some noise out there about the impact of Chapter 7 bankruptcies on the 1 to 4 family portfolios of some banks. That's really not at all an issue for us. In fact our review of the portfolio indicated the impact was less than $250,000. So, for us that really is a non-issue. John, you want to talk a little bit about going forward strategies or anything?

Yes. As it's probably been well established by now, this industry continues to suffer for margin compression and for expenses that relate to regulatory compliance cost. It is causing everyone to think about their future. Doug and I and Raj talk about this all the time. I think there’s about 6,000 banks out there today that are all talking to each other, trying to decide what kind of amalgamations make sense. We believe that, and I know that we said this before. We believe that there will be a movement toward consolidation in this industry. We continue to have multiple conversations going on, in both Florida and in the Northeast. Impossible, of course, to predict when any of these things may turn into transactions, but it does appear that more and more people are feeling the pinch and getting more and more motivated toward some forms of non-organic growth, and we think we'll start seeing transactions sometime soon. Doug mentioned one of the things that's been in the news that's not in our release and that is the impact of the Chapter 7 bankruptcy issue promulgated by the OCC and fortunately not had a great impact on us. The other thing that's not in our numbers is non-interest income as a result of mortgage origination, which as you know has been a big part of the earnings statements that have come out in the last few days and also in the prior quarter. We've talked about that endlessly here and we thought about whether we should be in that business. And, if we should be in that business, how it is that we should enter that business, and we have several conversations going on there that will lead to a decision on that very soon. To be frank, I worry about how long this story is going to go on and how much lower rates will go, and we are sensitive to not building up a whole family of expenses that are non-variable that relate to this business. I mean, I am personally worried about 2 things. I am worried about the refi business drying up. I also worry about government getting involved in this business and suddenly noticing how many billions of dollars banks have made in this business in the last 2 quarters, and starting to think like they thought about the student loans. So, we are very aware that that's been a very important part of some banks, profiled in the last couple of quarters and are still thinking about where that belongs here. On the other hand, our core business obviously is doing very well. While our FDIC loss share agreement was very valuable when we inked it 3 years ago. It's a lot more valuable today given the fact that interest rates are where they are and that others are suffering [ph] tremendous margin compression and having a severe negative impact on earnings quickly, so we are very much insulated from that even as our loss share agreement proceeds and Raj said it proceeds slower now than it ever did, so we are very fortunate to be in this position. So, solid quarter, good credit quality, decent reports all the way around, market continuing to improve in South Florida, and we are feeling pretty good. And, I think at that, I'll end my comments and open the floor to the questions you might have.

[Operator Instructions] Your first question comes from the line of Robert Placet of Deutsche Bank.

First question. Just as we think about the drivers of expenses from here. I guess, how much should we expect expenses to migrate higher just given you continue to invest in branches down in Florida and given your ramping in New York, so I guess what's in the run rate currently and how much will be incremental from here?

I am going to let Doug and Leslie answer that, but just let me give you sort of an overarching comment. The new branch build out in Florida is reaching its conclusion. We are slowing down a lot this year and don't look out toward very much more expansion in physical branches down in Florida. We are nearing 100 branches. We are in the towns we want to be in. We have moved a good deal of the branches from shopping centers into the towns we want to be, we've built branches that are more in line with our commercial lending needs, and so that is winding down. We've been building in New York obviously as we go forward, and so the expenses in some areas of the bank will go out [indiscernible]. Doug, can you get more specific about that?

Well, look, we would expect comp expenses to go up a bit and we would expect occupancy as we do some stuff in New York. We think we are going to continue to benefit from a decrease in OREO and foreclosure expenses going forward. So, in general, looking at next year, you may be 6%, something like that, in aggregate as we sit here today, I mean, we're still going through the budgeting process for next year, but that's pretty much what we are looking at.

Okay. And, any color you can add on how much the New York franchise will add to expenses, I guess, with the backdrop that -- with thought that you will only be operating with a handful branches, so maybe expenses there won't be as much as some expect or?

I think we'd rather focus on revenue that New York will generate, frankly. As you say, Rob, we don't have to open bunch of branches. We think we can cover Manhattan with a small number and we expect to do tremendous growth, so I mean we can certainly talk offline a little more specifically about expenses if you want, but for us it's more a function focusing on the business we can drive there.

Right. Got it. Then secondly as it relates to your NIM outlook for 4Q, you mentioned you have some uplift related to the expected loan sales in the quarter, but I guess x the loan sales, I guess still be uplift to mid or the high 560s range. How much is from the loan sales versus how much is kind of x that or in the core NIM?

I think the loan sale has a rather large impact in terms of the spike in the fourth quarter. We've been pretty clear about that over the last couple of years in terms of the impact of that especially last year. So, I think what you are really probably asking is, where do you see the NIM going from here? And our guidance for next year would be similar to what we've been saying all along, in the aggregate for 2013, we would expect to be roughly 75 basis points lower.

Your next question comes from the line of Brady Gailey.

Just a follow-up on the comment about the 4Q bulk sale, I know it has a positive effect on the margin. I think it has a negative in fees. But when you look at the bulk sale and all the moving parts, should we expect to see just through the accounting somewhat of a decline in the EPS number just driven by that kind of one-time bulk sale event?

Yes, Brady. I think, it's a little hard to sit here today and say exactly what that's going to be. I think what we've been telling people is kind of look in terms of that same overall magnitude as happened last year in the fourth quarter. We are still working our way through exactly what we are going to sell and we don't obviously know what the pricing is going to be, but yes, we would expect net income and EPS to be lower in the fourth quarter because of the impact of the loan sale. The one thing that I would mention, and John and Raj and Leslie and I are still debating this going forward, but we are considering in 2013, possibly selling loans throughout the year as opposed to just in the fourth quarter, so that we try and start to build a more consistent trend of earnings. It gets a little tough for you guys obviously and anyone who follows us to sort through what the fourth quarter can be with this big sale, so that's one of the things we are thinking about.

Okay, and then a follow-up. If you look at non-covered, non-purchased loan growth, it was about $270 million this quarter, down about $100 million from last quarter, that $270 million, was any of that out of New York and could you just comment on the trajectory of the growth potential out of New York over the next couple of quarters as you continue to gain steam in that market?

None of that is New York. Nothing in New York at all to speak of. That’s all Florida. Actually I forgot about that, we drove a bunch of loans out of New York off the Herald balance sheet that we didn't feel comfortable with living [ph], how much Doug? $20 million, $30 million?

Yes. Roughly $20 million.

About $20 million, $25 million, so the net effect on that has been to shrink it a little [indiscernible] out of New York. With regard to how much we expect to do in New York. It's, look, we've given a little bit of guidance on that in the past, I mean I don't want everybody to be –- to think that on February 1, this thing is going to balloon into a few billion dollars’ worth of loan growth. We are -- started hiring people in our branches on February 1. That's going to take the better part of February to get under control. We’re going to really get rolling in a serious way in the early part of spring next year, and we have said before that we would be very disappointed if we don't get at least the kind of quarterly loan growth out of New York [ph] that we are getting out of Florida in going into the first full week of operation, second half of next year we would continue to stand by that I would think that from where I sit that is conservative right now, but we wouldn't put a number on it. I would be very disappointed if we don't at least what we've done [ph].

Your next question comes from the line of Ken Zerbe.

Great. Just on the preferred stock that you had to sell, I just want to make sure you still are holding some at the bank, but also kind of want to make sure or just get a better sense for why you guys feel this is a good asset class to hold, because it seems that you are probably one of the only banks that have made any kind of material investment in preferred stock in the midcap bank space.

Ken, just to get a little bit technical, we do still hold preferred stock, but none at the bank. It's held at the holding company. We like the asset class. We are comfortable with it. We feel that we can analyze these banks and feel comfortable about the asset class and we love the yield. When we did our initial analysis, we felt that these things had a lot more characteristics of debt than equity, and we felt that we could hold them at the bank level. The OCC disagrees with us and we made a decision that we didn't want to take our entire portfolio that we held at the bank and move it to the holding company. We just didn't want that much concentration at the holding company, so we moved some to the holding company and we sold, as Raj or John indicated earlier, about 100 million of preferred stock, which resulted in a gain of roughly $6 million pre-tax. I can't speak for everyone. I would prefer to be holding the securities and grabbing the interest going forward. I think our overall strategic choice would have been to hold them rather than sell them, but we were concerned about concentration at the holding company. As I said, I think we like the asset class, because we think we can understand it a bit. Raj, do you have any other insight on that?

And we have the capital at the holding company to do it.

Okay. Listen, we liked the piece that you wrote. We agree with you, obviously.

No. It just surprises me that more banks aren't doing more of this, because within that 10% bank holding company capital, it seems that this is a very valid asset class that can generate more yield. But, again, I am just surprised that more banks aren't doing more of this the way you guys are, so.

Ken, this is John. Everybody is gun shy of the regulators here. I mean, even though you hold at the holding company level, everybody is very sensitive to their attitude toward these things. I frankly, we would never have sold these things if it weren't for their attitude toward this investment.

Your next question comes from the line of Erika Penala of Bank of America.

I just had one follow-up question. John, I appreciate all the color that you gave us in terms of the conversations that you have been having with potential targets. My question is, your commentary in Florida seems positive. On the other hand, clearly the revenue environment for the banks feel like it's just getting worse. Is it fair to assume that perhaps the opportunities where credit is getting better, i.e. the Southeast, the bid ask continues to be wide and maybe got wider as credit is getting better for the standalone banks. And, perhaps really more of the acquisition opportunities could lie in the Northeast in terms of where your conversations are going today?

Well, the bid ask is not getting wider in Southeast, Erika. In fact it's already getting narrower. As more and more people suffer under the burden of collapsing margins and regulatory pressure, particularly in the smaller institutions and I think you can see that as you pour through the releases this quarter and the releases that are yet to come. And, frankly our experience is, people are paying more attention to this and getting in my view more realistic. I think that's true in the Northeast as well, but this is an industry that's under a great amount of pressure, and to deny it would be silly. The overarching [Audio Gap] the Fed threatens to pour more liquidity into this system and drive rates down even further, which will have a further negative impact on banks and on some banks’ balance sheets a lot more than others, and I think that there is a very distinct attitude among banks our size toward thinking about consolidation in one form or another. I think we are going to look through the whole panoply of consolidation forms. We are going see MOEs [ph], and we are going to see acquisitions and we are going to see people throwing their hands up, and we got as we get reminded every time we turn the TV on the big event coming up here in early November, and lots of people are paying attention to that with regard to where the economy is likely to go and where the country is likely to go in the next couple of years and I think all of that's going to have impact on this industry. It's amazing that we haven't see a lot more consolidation already, and I talked about that before and I think that's because it's tough for people get their heads around new valuations in this business, it will happen and it will happen whether the incumbent gets in or the White House changes, and so I think the opportunities are every bit as many as they were 6 months ago probably more, but we are being -- as most buyers are, being very, very cautious about this right now.

So, this is first time that you've observed the bid ask spreads narrowing in your time at BankUnited?

No. I think if you went back 2 years ago, people were starting at 2x book and willing to have a meal over that. And a year ago it was 1.5x book, and it's been substantially reduced in some institutions down from there, and so I think this has been a gradual process as people are getting used to the new valuations in this industry. So, no, we’ve seen this continue, and as we predicted would happen, these things seem to be getting cheaper. So, picking the right entry point here is an art and not a science, and we are going to continue to contemplate that move.

Your next question comes from the line of Gerard Cassidy of RBC.

Sticking with the M&A theme for a moment, what are you guys seeing on the loan marks. I know you have been very conservative over the years in what you think the loans are worth. Are those loan marks improving at all when you guys get to look at other banks?

I don't know. It kept us from doing deals up until now. I don't know, Raj, it is getting better? Are people more in touch with reality? [indiscernible] things are looking.

I think loan marks per say have clearly [indiscernible] that much as the pricing expectation or recent [ph] expectation of orders of the bank. That has actually moved, but again Gerard, it's a very wide field. There are clean banks and there are net [ph] banks and there is everything in between, so it's a generalization. Clearly when the banks are clean, the bid ask on the credit mark is much, much lower. It's when thing are iffy that some of the thing are worth 100%, then we think they worth 50%, so I can't generalize that.

I think while realism on valuation has crept in here over time on the part of potential sellers. That's the good news. The bad news is, there is another issue that enters the M&A thinking and that is the regulatory risk, and we are not really sure where regulators stand with regard to their attitude toward consolidation. If you take a look at some of the deals that have occurred here over the last year, the regulatory process is pretty drawn out. It's not a fait accompli that regulators are going to routinely bless the types of consolidation that we've seen before, particularly among larger institutions, so while loan marks might be a little bit more realistic and sellers where we might be a little bit more realistic, there is –- the elephant in the room is regulatory attitude toward this process going forward. I am frankly a little confused because we seem to be getting mixed signals in that regard from time-to-time.

No doubt. I agree with you on the regulatory process. Definitely mixed signals. Raj, talking about the investment portfolio for a moment, I know we can all talk about different outlooks for the economy and who wins the election in November. If for some reason the economy gains more steam next year, because of a stronger housing market across the United States, and if rates were to start to rise at the long end of the curve by the end of next year going into '14. What kind of extension would you see in your duration in the securities portfolio if rates go up 50 or 100 basis points at the long end of the curve?

I want to start by reminding everyone that our duration on our securities portfolio is fairly low. It's about a little over 1.5 years.

1.8 years.

1.8. Sorry. So, versus a lot of our peers who have taken a lot more risk on securities portfolio, if rates do go up, which I hope they do for many reasons, I don't think we have same level of risk in our securities portfolio that you would expect at a typical bank our size. Doug, if you want to quantify that, I can’t do the math in my head.

I think in general terms, you are absolutely right, Raj. Gerard, most regional banks in stuff that we read are already over 3 in terms of the duration. We are at 1.8, we have a ton of floating rate stuff, so yes. We would see some expansion, obviously, but we think nothing that we are not comfortable with. We have been pretty clear that we've made the decision to run this pretty conservatively from that aspect. We do recognize, we probably left some money on the table, which just positions us better going forward, which is what we are comfortable with. So, I can pull out some stuff and give you some more specifics offline if you would like, but to Raj's point, we are not going to extend the way most bank portfolios are. And, frankly, the other thing to think about too is going forward, assuming that the economy improves in the way that you indicated, we expect to do a lot of lending and very little additional buying for the investment portfolio, so.

Got you. No, you are right about your duration is much lower. Yours is more like the money-center banks than it is a regional bank. I am just curious, what are you guys buying today in your securities portfolio? What type of security in terms of duration and yield? What are you guys getting these days?

Last quarter, I think the asset class we focus on every asset CLOs, buying AAA CLOs, and we are getting, Doug, correct me if I’m wrong, swaps plus 150 to 175 in that range. Roughly.

Nothing to write home about, Gerard.

I know. You guys obviously are doing quite well in the southern Florida on the loan growth side. Are you seeing any, obviously, you have been down there for a handful of years now. Are you seeing any increased competition from banks that have kind of gotten up on their feet and they were wobbly before, now they are stronger. Or is it now [ph] people are still digging out of the mess that they are in?

It is a little bit of both, but there is undeniably more competition, particularly in the C&I space. By the way, by both banks that are up on their feet and not quite so wobbly and also by the banks that are wobbly as they chase yield, and the whole industry is being driven by the government into riskier assets as this interest rate environment continues to unfold, and we are very mindful of the fact that we need to be vigilant about this because we are working our way back toward a time when although nobody seems to be concerned about credit issues now. I mean, frankly starting with the regulators, the regulators are paying much more attention to other things right now, so it's probably time to start. It's early I guess, but it's time to start worrying about credit issues as people get more and more aggressive. Two years ago nobody was competing with us in Florida, a year ago, we were getting rate competition. Now we are getting rate competition and structure competition, as John would probably tell you, and we have backed away from some deals during this quarter and last quarter that we just wouldn't do at the price or the terms that other people would do them at. So, I think it's fair that, that's a category that should be watched.

Your next question comes from the line of Herman Chan.

In terms of potential acquisitions, can you talk about your interest in terms of asset size, especially in Florida? Would it be safe to assume that the ideal acquisition would be larger than the Herald deal?

Yes. I mean, we came here thinking we’d buy bunch of $300 million and $400 million banks, but to be frank between the regulatory environment and the legal environment and all the regulations surrounding these deals and the expenses associated with them, nobody makes any money on those things, but the lawyers, so it's tough to justify doing those small deals anywhere either in a Southeast or the Northeast, so I think as most people are, we are focusing more on larger transactions that the –- whose cost would justify the transaction itself. There is no particular asset [indiscernible]. It's hard to think about doing a deal under a couple billion dollars. It's a lot easier to think about doing deals that are substantially larger even the size that we are or higher. Remember that our market cap is substantially greater than a lot of institutions that are greater in asset size than we are so, our opportunities are wide spread.

[Operator Instructions] Your next question comes from the line of David Peppard of Janney.

Looking at your deposit market shares down in Florida in a lot of the MSAs that you guys operate in, you don't have a top-5 market share in any of those MSAs. And, as we look forward to next year and the opportunities in New York, do you see an ability to have deeper penetration in Florida, while also balancing growth in New York, or is a lot of the focus going to shift up into the Northeast, and the franchise that we haven't thought of, both on the commercial lending side and the deposit side is going to kind of stay stable where it is now?

You were cut off a little bit, David, but I think you are asking, what we can expect in terms of growth of market share both in the Southeast and the Northeast. Our theory on deposit market share has always been the same, and that is we would like a little piece of a big thing for a long time, so we are not consumed with the idea that we have a large market share in a particular market. We would rather be in a very large market, which Miami is and Manhattan is, and have a small market share that continues to be able to grow, so I am going to remind you that North Fork, when we were $50 billion or $60 billion, we probably had a 4% market share in New York, but that was a very, very profitable market share, so we really concentrate on profitable deposit market share rather than on market share in general. We are not chasing deposit growth with rate down in Florida. Although, we had a special in some of the new branches we've opened this year and that's actually kept our deposit cost up higher than they normally would be in Florida, which is why I think Raj said safely you can see that continue to come down, but sadly the deposit generating business is not very profitable any more. Given what you can borrow money at, and you can see that on some banks are using borrowings substantially more than they are using deposits to fund loan growth because the margins are much greater, so we are trying to balance that, but we don't really think about our overall market share as compared to others in a given market.

Our prior view of getting lending market share, but not deposit market share.

I don't know if you guys went over this already, but did you guys disclose the average yield on new loans for the quarter?

Doug, you got that?

I do. It's all-in around 365.

There are no further questions at this time. I would like to turn the call back over to Mr. Kanas for closing remarks.

So, in summary, forgive us for continuing to be a boring story, but we are, as we said, we would be 2 or 3 years ago predictable, solid, a balance sheet that's not likely to blow up whatever happens in the economy. We continue to be cautious. You might argue that we are overly cautious, but I think I am getting old, but I think these are times when caution is the byword. There are a lot of uncertainties out here with regard to the industry and with regard to the macroeconomic environment surrounding the industry, not the least of which is the political uncertainty, so as I think most reasonable thinkers are in this business, we are sitting back on the sidelines watching with everyone else to see what's going to happen. And, when something makes sense on the M&A line, you will see an announcement by us, but you won't see an announcement just for the sake of making an announcement. And, frankly, I think those, particularly in the Southeast, who moved aggressively earlier are paying the price for it, even for the FDIC deals that looked attractive a year or 2 ago turned out to be not so, and so we've been careful. We look forward to going to New York. To answer your question of how much we are going to do in New York, the answer is I don't know, but the reception that we seem to be getting in talking to people is very, very encouraging, both from employees and customers who we've known very well over the years, and I think we will get more than our share of the market when we get to New York, but let's be realistic. That's not going to be high margin business either. But, the old fallback in New York used to be multi-family lending, which was a lot more attractive business 2 or 3 years ago than it is today, where we are seeing rates in the low 3s and we would expect to be frank with you if banks keep being as aggressive as they are to break this [ph], so we are not going to be able to make it doing just multi-family lending in New York for sure. That's going to have to be a mixture of commercial lending and commercial real estate lending and C&I, all of which we are prepared to develop in that market, but I think we are being very realistic about our expectations and we are trying to get that point across to you and make everybody feel comfortable with our thinking as you know, those of you who know Raj and Doug and I for years, we don’t hide much. We -- our thinking is an open book and we are going to try to do what make sense here. Having said all of that, appreciate your call, appreciate your interest in the company and look forward to talking to you again in 90 days. Bye.

Thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.