Good morning and thank you all for joining the management team of New York Community Bancorp for its first quarter 2018 conference call. Today’s discussion of the company’s first quarter 2018 performance will be led by President and Chief Executive Officer, Joseph Ficalora together with Chief Operating Officer, Robert Wann; Chief Financial Officer, Thomas Cangemi; and company’s Chief Accounting Officer, John Pinto. Certain comments made on this call will contain forward-looking statements that 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 that 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 these 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 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 in this morning’s earnings release and in its SEC filings, including the 2017 annual report on Form 10-K and Form 10-Q for the quarterly period ended September 30, 2017. The release also includes reconciliations of certain GAAP and non-GAAP financial measures that maybe discussed during this conference call. If you would like a copy of this morning’s release, please call the company’s Investor Relations department at 516-683-4420 or visit ir.mynycb.com. As a reminder, today’s call is being recorded. At this time, all participants are in a listen-only mode. You will have a chance to ask questions during the Q&A following management’s prepared remarks. Instructions will be given at that time. To start the discussion, I will now turn the call over to Mr. Ficalora who will provide a brief overview of the company’s performance before opening the line for Q&A. Mr. Ficalora, please go ahead.

Thank you, operator and thank you all for joining us this morning as we discuss our first quarter 2018 performance. Earlier this morning, we have reported diluted earnings per common share of $0.20 for the three months ended March 31, 2018. This translates into a return on average assets of 0.87% compared to 0.85% in the first quarter of 2017 and a return on average common stockholders equity of 6.26% compared to 6.76% in the year ago quarter. On a tangible basis, the return on average tangible assets for the current first quarter was 0.92% compared to 0.90% in the year ago first quarter, while our return on average tangible common stockholders equity was 10.21% compared to 11.20% in the first quarter of 2017. We also announced as the Board of Directors declared a $0.17 cash dividend per common share for the quarter. The dividend is payable on May 22 to common shareholders of record as of May 8. Based on yesterday’s closing price, our annualized dividend yield is 5.2%. Now, I will take you through some of the highlights of the quarter. Since the middle of 2017, we have discussed only the resumption of the company’s organic balance sheet growth strategy. This growth began in the second half of last year and has carried over into 2018. Our first quarter performance picked up where our fourth quarter 2017 performance left off marking the third consecutive quarter of balance sheet growth. During the quarter, we continue to grow our loan portfolio. Our asset quality remained stellar. The net interest margin held up relatively well despite a sharp increase in retail deposit rates and operating expenses declined further. Turning first to our loan portfolio our loan growth continued into the first quarter of the year with total loans held for investment…

Thank you. [Operator Instructions] Our first question comes from the line of Mark Fitzgibbon with Sandler O'Neill. Please proceed with your question.

Good morning.

Good morning, Mark.

First question I had for you is on G&A expenses they were down about $11 million from the linked quarter, what were the major items that sort of drove that decline?

Good morning, Mark. It’s Tom Cangemi. I would say – how are you doing? The execution of the mortgage banking exit was very successful. Obviously, we had our expectation is to have it completely finished by the first quarter 2018 that was done with precision and we continue to grind further into the insurance related department that had overlapped regarding mortgage banking, so big picture, I’d say mortgage banking was better than expected. Typically, the first quarter is the high quarter on expenses. I would probably guide to next quarter down a couple of million from here, so probably around 137 type number and from there it’s flat for the year, so that would probably give us a run-rate between 5.50 to 5.60, but our original guidance is around 5.60 with $100 million of expense reduction coming off the 6.50 from last year at the high run rate. So I think the good news is that we continue to grind down our expenses as we manage the bank and we see some opportunity. We are trying to be conservative here, but clearly, the first quarter should be the high quarter like I said in the previous conference call, so $139 being the high quarter in Q1. If I were looking out another couple of million dollars down in Q2 and hopefully they are continuing to extract more cost reductions as we get the benefit from what we call less consulting expenses and other related expenses as we went through the Astoria transaction in the previous years that was embedded in our previous year’s run-rates.

Okay. And then while we stay on sort of the margin outlook, how you are thinking about the margin based on couple of more rate hikes?

I would like to say it’s flat, but my guide right now will be down another 10 and that’s driven solely with an expectation of another rate hike in June. We also have another anticipated rate hike at the end of the year. And we are just modeling with consensus with a 3% Fed Fund rate going into the first quarter of 2020. So, clearly, the dive down is down 10 driven predominantly due to the borrowing costs that are coming due and increase in the retail deposits that we are seeing throughout the U.S.

Thank you. Our next question comes from the line of Peter Winter with Wedbush Securities. Please proceed with your question.

Good morning, Peter.

Good morning.

Just follow up on the core margin what’s happening on the asset side of the balance sheet and from a unit perspective?

So I would say the good news obviously was we missed out our previous quarter guide by about 3 basis points, which is the final by very late closings in the quarter. Most of our loan closings closed towards the back end of the quarter and we did invest in the securities market. We had opportunities. We opted to keep the balance sheet smaller as we continue to wait for this SIFI transition. We are optimistic there, but as we collect in previous conference calls that when the $250 billion number becomes the number we will grow more aggressively here. We have a 6%, 6.9% securities to assets, which would be more than double that amount right now and those yields are about 100 basis points higher than they were about a year ago. So, that’s a positive where we haven’t really put those funds to us. So, we are sitting in excess cash which also held back the margin a little bit and we anticipate to put that money to use hopefully in the foreseeable quarters ahead. In the event that there is some real movement here and the House does approve the bill along with the Senate, we will be more active on growing the balance sheet. We have to be mindful that we do not want to do a CRE crossover in the wrong quarter. So, obviously if we were to grow the balance sheet, let’s say, $500 million to $700 million per quarter for the next couple of quarters that will put us into the fourth quarter and that will be transition in the event of some reason, we don’t change the people. So, we have flexibility there. But clearly, we are allocating our projects towards multifamily CRE loan growth, very good pipeline, very strong growth quarter, our net multifamily loans were up 8%. As I discussed in the previous quarter, 5% net loan growth is reasonable as expected and obviously when they do anticipate to see the cap get raised as far as the 250 we will be more active on growing the balance sheet, in particular on the security side.

The important thing to recognize is the way the bill has been written, there could be a different consequence of being bigger than $50 billion before the bill was written versus going to $250 billion after the bill was written. So that becomes a little restraint on the speed with which we wanted to grow. Absent the way that was being prepared or the possibility that there could be language that will be detrimental based on timing of they are being a little more restraint in that regard.

Hopefully that will be clear, for the next few quarters you will see us grow every quarter, that’s the plan.

Thank you. Our next question comes from the line of Ken Zerbe with Morgan Stanley. Please proceed with your question.

Hi, great. Thanks. Two questions, I guess I will start with the first one, Tom just going back to what you are saying about the securities growth rate, SIFI let’s say – again SIFI threshold it’s raised growth through securities, how are you funding that, I mean what changed, because I found the release, you said that you are putting a lot of CDs at this point, is that the funding strategy for your securities growth after the SIFI threshold gets raised?

Well, there is two strategies, right. And the current strategy was sitting on I mean the abundance of cash and liquidity, right. So we have treasury bills, we have short-term notes. We have well over $2.6 billion of cash earning a very lower return as we await and we put money to work. We have been allocating most of those resources towards loan growth. This is the replacement of the loans that we sold from the previous year and we exited loss share with the FDIC. Big picture is that as we grow the balance sheet, we will look at the wholesale markets and put the retail the target market. Right now for the NYCB strategy retail products are more, more viable alternative given the cost of money in the wholesale market. So for example, these were actually growing actively our CD book right now which is significantly lower than the cost of funds borrowing from the wholesale market, so that’s the current strategy. Until the company is in a position to announce a depository transaction, we will be in the market raising retail deposits.

Thank you. Our next question comes from the line of Christopher Marinac with FIG Partners. Please proceed with your question.

Thanks. Good morning.

Good morning.

So Tom just leveraging off your last question, there were additional sort of customer deposits not being able to pay that could be therefore be a relative low cost option for you on funding or just keep it in the wholesale market?

I would say all options on the table to bringing good deposit sources. We have been focused bank on the asset generation side. We are going to be very focused on the deposit generations right in 2018 and beyond. The company has a growth need. And the growth has to be funded and the funding expectations are more – less expensive in the retail market than the wholesale market. So, we will be very active in the in-market deposits. Remember, we are in many markets. We are in Arizona, Ohio, Florida, New York and New Jersey, so we have the ability to regionally price our deposit mix to ensure that we have adequate funding. The good news is that we had a nice pickup in our CD book and we continue to as we are in mid quarter right now, we are seeing nice growth in CDs and they continued. So we hope to continue showing some more profound growth throughout the year. And as we do that we also have significant amount of borrowings coming those were very successful. I am not going to give guidance on what the expectations could be, but as we were through be able to pay-down some of those borrowings. It’s at a significant cost savings plus the reinvestment on the borrowing side is probably about 80 basis points to 90 basis points above the CD market.

Got it. And then just a quick follow-up on the prepayments this quarter and was there anything unusual about from a seasonal perspective on the level that you had in Q1?

I will say seasonally slow. Obviously, we don’t control prepayment activity, but if you look at the loan prepay it was about $11.8 million, total prepaid is at $14.7 million, some of that was security related. But for us that’s not a significant number. So the good news is that we hope to see better prepayments in the future, but very optimistic about the fact that we have a little bit of a higher rate environment right now. We saw a slight jump up in January which was very favorable for apps coming in and then until back in February. So where we are today we raised our current loan offering rates twice in the past couple of weeks, 4.25% for the 5-year typical multifamily. Commercial real estate now is hovering close to 5%, so that’s a significant change from the past eight weeks let’s say and we believe that that could be a tipping point for customers to react to higher rate. There is no question when you look at the 2-year and the 5-year where the current treasuries are trading, it’s dramatically higher than the previous year. And as every loan becomes 1 year more mature, the option to prepay will be more viable towards our customer base. So we are bullish about elevated prepayment. We can’t guarantee what happens with the customer base, but no question Q1 is typically the slowest quarter of the year when it comes to prepayment activity.

That’s helpful.

Sure.

Thank you. Our next question comes from the line of Dave Rochester with Deutsche Bank. Please proceed with your question.

Good morning, Dave.

Good morning. Just a real quick one on the NIM, just wondering at what rate you guys are rolling borrowings at this point and then what’s the roll-off rate there? You mentioned the pricing was 80 to 90 bps above CDs. So, just curious where that actual rate was in the borrowings and the CDs at this point that you are seeing?

Yes. So, we have about for the next year – for the remainder of the year about $2.6 billion coming off about 1.66% for this second quarter is about $1 billion and it goes to $200 million for Q3 in the fourth quarter – in the back end of the quarter is $1.4 billion. So that was coming due this year and next year we have approximately another $4.6 billion coming in 2019. So, it’s an ongoing expectation of dealing with these bonds as they come due. We have been pushing money out. So, for example, since the expectation of a story was not going to close, we moved $5.95 billion loans at a rate of 2.14, so lot of this money has been moved long already since the restructurings added 2.14 rate what when you look at market rate that’s reasonable compared to the current market. So we have been very actively managing our interest rate risk by pushing our liabilities out longer. But for the bank in the profitability and what for the franchise, we rather see some of these deposits being offset by retail customers. So, there has been a push at the retail level to bring in core deposit accounts.

Yes. So, are you seeing – so where is CD pricing now?

From 1.55 to 2.10 depending on the duration.

Got it.

Following 13 months and occasionally we look at the 18 month as well. But I think in general, I don’t think customers are ready to go 2, 3, 4 years yet. So, it’s still not shorter term type maturities, which is pretty much the industry standard throughout the U.S.

So, would the $2.10 be more like 13 month or is that 2-year type stuff?

I’d say more like 13 to 15 depending on markets. We are in various markets. If they are in line, 1 year treasury is trading at $2.25 and the 2 years at $2.50, you can go to treasury direct and get 2.5% tax-free state if we choose to. So, it’s going to be a competitive deposit Mark and this is what typically happens when short-term rates rise.

Yes, typically, you don’t raise rates where you have the biggest bulk of deposits that are maturing, you raise rates into new offerings and then you basically keep rates as low as possible in losing the rollover rate as you know?

Right. And then on the borrowings that you are rolling into what’s the general duration in rate on those at this point?

So like I mentioned previously over the past year and a half, we moved about 6 billion at 2.14, the average life has been approximately 2.4 years depending on the tranche that we moved over. I would say, we were very fortuitous going into the beginning of this quarter, we look at the portable market, there was some attractive optionality there. So, we are able to get very low cost funding for the 3-year type portable transaction. The most of our stock has been straightforward and bolus expensive right now. So depending on what’s out there available to the bank we have opted for the first tranche of – with some type of optionality in the form of convertible bonds in the second tranche going into – in the previous tranche that we first wanted to close, so, 2-year, 3-year type bullet structures.

Okay. And those would be like mid to high 2s I guess at this point?

Like I said, the first $6 billion was at 2.14, the vast majority of that probably closed, so you had from – much low in long term money 3 years below 2% a year ago.

Got it. And then the cash balances seem to be pretty elevated this quarter, what’s your interest in using a chunk of that to just fund some of these borrowings maturities or just deploying some of that into securities to help defend the NIM at this point?

That’s going to be the plan. Obviously, we are very, very cautiously evaluating the securities market. We believe that there is going to be an opportunity and we are being very cautious that we have 6% securities to assets on the balance sheet, which is the loans you have had as a public company. So, we are positioned to put on growth. We will look at the loan pipeline, which is significant. Q1 is typically a slow quarter, where we grew 8% net multifamily growth. So, as the company moves into its loan product and evaluate the securities market, we are going to deploy cash at the same time in rising interest rates on short-term funding we are getting a much higher tick on the investable yield. So, for example, 3-month treasuries or 3-month term loans that we are getting in, that are cash and cash equivalents are dramatically high than they were a year ago. So we have been very cautious here, because we don’t want to get stuck in the duration trap and we will put the money once we feel comfortable, but it’s not going to be one ongoing quarter, we are going to gradually build the portfolio in the event that for some reason we get regular relief and we expect the SIFI threshold, but we will accelerate that, but the good news here is that a year ago this time last year, you picked up 100 basis points on the securities market. So, it’s been a favorable movement as you are probably more favorable than loan spreads, right, but the good news on the loans side, we are seeing a – I would say an industry re-pricing upward as far as the coupons. Rates are higher, we are going to be at the market and the market needs to have some reasonable spread up to 5 years, so anywhere from 120 to 140 that should be our spread and that gets to north of 4% on the loan side. If you look at where the coupons are, our coupons are at the bottom. So the good news every month and every quarter we will see elevated current coupons in the portfolio, so we believe that is the portfolio yield, so the coupon has bottomed in 2017 and we look forward to seeing that you have U-shape recovery or a V-shape recovery in the actual coupon, that’s going to be the exciting dynamic to offset some of this margin pressure. In the event the customer with a 3% mortgage realized its 4.5% and is the current market, they maybe off to accelerate their prepayment activity in order to lock it now before it’s too late. We are occasionally awaiting that opportunity. We believe that’s a real viable option for us.

I know your NIM guide includes the – obviously the March hike that we have just had, given that you are also assuming a June hike, are you thinking about similar pressure in 3Q that you are expecting for 2Q?

No, I don’t be able to go past one quarter guidance on the NIM, it was a good try.

I know, I just tried.

Again, as you think they are going to raise it over the summer I don’t see it, I see maybe the possibility in September, but the reality is we are kind of following work in the senses and that’s a 3% Fed Fund rate going into the first quarter 2020, that’s up – it was June this quarter and then we have another one at the end of the year and the same pattern next year. And then one more in the first quarter of ‘20 if you get to the 3% on Fed Funds, now that could change tomorrow depending on the economic landscape, but we don’t have crystal ball and obviously we are liability sensitive. We are working real hard to look at the best dynamic on the funding side and it’s clearly an opportunity for us to be competitive on the retail deposits which should offset some of the funding costs. The borrowing costs are expensive when they model and in our model we have a lot of this funding going out to a more expensive type of financing in the wholesale market. We are successful that could change the NIM on our own guidance more favorably.

Okay, great. Thanks guys.

Thank you. Our next question comes from the line of Matthew Breese with Piper Jaffray. Please proceed with your question.

Good morning guys.

Good morning Matt.

Just going on the NIM guide, I wanted to make sure I had the core guidance correct for next quarter, is it down 10 basis points, is that accurate?

Can you repeat it again, I would say that 10, yes…

Got it and is that because...

And that is prepayment activity, that’s just a NIM excluding any prepayment activity.

Right. So, that’s a higher ramp than prior quarters, it used to be 5 basis points, I just want to get a sense is that because you have…?

My response to that is we had the March and into June, so the collective nature of those two increases plus the fact that we have $1 billion coming due on the wholesale market and we are assuming reasonable cost of funds on the reinvestment side they have, we are guiding down to 10, that’s the change depending on how successful we are on the deposit side. And we are also depending on what happens in June. Right, so we will have the impact of the March and the previous December rate hike into the quarter for sure 100% of that. We didn’t have a very, very conservative view on cash deployment. We decided to put the cash deployment to work tomorrow and securities won’t get that rate lower. That’s going to be a business decision as we evaluate the securities market, so you are right sitting in abundance of cash.

Right. So, I just want to just better understand the components and isolate the variables a little bit, so the increase from used to be 5 to 10, how much of that $1 billion of borrowings being re-priced contributes to greater margin compression?

Yes. I wouldn’t get into that much specificity. It’s about $1 billion per quarter. We have a little bit of reprieve in Q3, it’s $200 million I gave you like quarter and the fourth quarter is a $1.4 billion, so that’s the breakdown for 2018 by quarter of which the average for the entire year is 166 that’s coming. We have some higher costs coming due in this quarter, so as much I believe and I would say the lower costs coming due towards the middle of the year which is again but a smaller amount. So, we are going to be very focused on the retail deposits as that should be an opportunity for the bank, but obviously, we feel forward to bringing this given that we have a lot of rollover of the wholesale bank, the wholesale deposit market and a repo market that’s going to be at a higher cost, we can offset some of that, that could offset some of the margin pressure.

I mean all of that’s equal [ph] do you think you used the flat yield curve having an impact on your ability to maintain margin or manage margin compression, is that the takeaway?

I think that was the lack of accelerated prepayment activity, but the good news that the pipeline is strong, we have a – we will call it a pipeline close to 4% coming on to the balance sheet was more exciting at the current rate offering. There is the timing difference is between 60 to 90 days before you see the realization of these higher loans coming into the balance sheet. So, I mean, we can easily put the securities tomorrow at the current closing rate that’s in our pipeline. Markets have close to 4% now. And the loan book is coming right around 3.87ish for the quarter, but the current offering is north of 4%. So as I have resonated to the customer base, there will be an acceleration of activity and hopefully we will see more prepayment activity. So, we are encouraged by what we are hearing from our lending people that there is a lot of chatter about when is the right time to refinance. And every file that gets such we get paid a few and that should drive in the bottom line.

Right, okay. And then just curious on the funding side, the funding strategy, obviously the loan to deposit ratio is at 133%, as you think about the attractiveness of the deposit market versus the wholesale market, should we be thinking about a lower loan to deposit ratio going forward or a maintenance of that or just give us some color as to the incremental billion dollars of loans, what that will be?

Again, the mathematics is pretty simple. We are doing commercial real estate multifamily. We are very proud of the asset quality, that’s our focused business model, especially finance business is going to grow with the seasonal adjustment in Q1 we should grow that business between 20% to 25% this year – asset higher yields. The reality is we have a very unique opportunity here to be very active on looking at the prepayment mix, which may – we have I have just said in the previous quarter 5% net loan growth is a reasonable run-rate. At the same time, we are not growing our balance sheet 10%. So, obviously, we have some cash here we would like to deploy. We are being very cautious, but I am not going to get into specifics in respect to how the margin components will move, but there is a drag in the back end of the curve, because rates have an artificially lower compared to the short end of the curve. It’s there for us to widen. That’s a very favorable event for the company and occasionally we are awaiting that opportunity to deploy our future closing into that – into the hiring by now. If it does, if the curve stays where it is right now, I think many customers are going to have to make real business decisions given where their comp plans are. As I said in the previous quarter, we bottomed out on multifamily increase on the coupon 17th. So, there is upside potential. The question is it a U-shape recovery on the asset yields or a V-shape. Right now, we are seeing a U-shape. Each month, our rate has gone up every month. That’s a favorable dynamic, but it’s not – it’s obviously not keeping up pace with the cost of funds. Eventually, cost of funds should stabilize over time and we should be thinking we are going to get the 10-year downtick on multifamily CRE coupons. There will be hopefully a very long opportunity on the upside from U-shape and V-shape.

Understood. That’s all I had. Thank you very much.

Thank you. Our next question comes from the line of Brock Vandervliet with UBS. Please proceed with your question.

Good morning, Brock.

Good morning. Could you – I may have missed this in your prepared remarks, but the $9.6 million provision, was that for taxi medallions or some other factor?

So we had – the good news about this, the total portfolio asset quality is pristine and we will define it as being stellar. We had two specific loans, one an ABC loan and one a pure CRE loan that we had to charge down, one is off the books, that’s about $2.2 million, that was the ABC loan, the other was $3.2 million and we expect to a CRE loan. As far as taxi medallion, it was insignificant about $1.5 million of related charges to taxi medallions. Our taxi medallion portfolio obviously is relevant. So, our balance sheet is dramatically smaller than our competitors. It’s about $95 million all-in total exposure to the industry, which we have a valuation in the like around 2.65ish is our current valuation for the portfolio. So, we are seeing positive trends in the medallion. We have actually for the first time, we actually sold one and that we closed in April 2.25 was the actual purchase price and we have two pending sales. So, that’s encouraging. We haven’t really done much in years as far as getting rid of some of these repossessed assets, but it’s encouraging to see some stabilization. I am not going to define any expectation on value, but the good news that we have actually transacted on one close and we have two that are pending exit from the repossessed portfolio.

Got it. And within the – so you said there is CRE and what was the other one?

As an ABC loan construction.

Got it, okay. Any other color on the CRE loan?

Just this is a typical unique situation I will call it an anomaly for our asset quality metrics. The great news for the portfolio is that as you called out a rollout of our non-performing multifamily – non-performing medallion loans are right at percentage of $30 million on a $50 billion balance sheet, so we are very proud of the fact that we have such a de minimis amount of non-performing assets. We don’t expect to see any uptick currently. It’s a big question mark on the medallion side, but as far as the CRE and the multifamily it’s performing stellar.

Okay. Thank you.

So, the possibility that your provision will probably in such a case to be well depending on the medallion business going into these new quarters ahead.

Got it.

Thank you. [Operator Instructions] Our next question comes from the line of Collyn Gilbert with KBW. Please proceed with your question.

Thanks. Good morning gentlemen.

Good morning Collyn.

Tom, just curious talking about kind of loan pricing and the borrowers wanting to come in and refinance before rates moves higher to materially higher, whatever the case might be, what do you think that level is like when you said made the comment before it’s too late like what do you think that the rate level is that’s going to cause the slowdown in refinancing activity?

I am going to give you specificity around what happens around the quarter, in the beginning of January, we are probably in the mid-3s, towards the end of January we took 4, that creates a lot of activity and we went back down to 3.78s plus market volatility in February where at rates were lower and that the rates could come down were back north of 4, rates are higher. We are getting a lot of chat, a lot of discussion. Our lenders are very active right now. We are always taking activity as people try to realized is it the time to do something with a portfolio now, are they waiting, or will they wait for a higher rate. The average coupon is lower average coupon that market rates moving 100 basis points is meaningful for the next round of financing, typically to another 5 years that have a lock in. So, we are very pleased on this flurry of activity that happened in January, it slowed down in February and the flurry is backed up again. We raised rates I believe in the past 10 days twice. So right now, our current – often, for I would share it 5-year multifamily papers [indiscernible] in the quarter. If you look at the commercial market we are close to 5%, 4.75% to 5%. Those are meaningfully higher than the current portfolio of coupons. So the good news that we are very bullish about the fact that has been a flurry of activity in January. We saw a new flurry of activity recently and if that continues at higher rates, we believe that will be an ongoing positive benefit for the company.

Collyn, we have been a public company for 25 years and consistently over that time we have told everyone that we do not try to anticipate prepayment. Prepayment is very erratic and there are many, many different factors that impact the dollar volumes in any given quarter, so it’s not as though it’s directional as interest rates might be on CDs and the balance of decisions that are made are very determinable. Prepay is very erratic and therefore we have never tried to anticipate prepay.

Okay. And I am just tying that into just broader market activity, right, I mean it’s impossible to gauge, but there seems to be so much commentary and discussion that demand – loan demand is slowing, real estate demand is slowing, so just trying to sort of gauge what’s that, what’s the rate trigger that really starts to see that activities start to follow that?

Collyn, bear in mind the government is typically playing at the back end of the curve. The fact that we have a 10-year that now is north of 3% of [indiscernible] that does impact – that does market impacts the agency market and it tends to bring customers back to the portfolio of lenders. So the fact that we have a higher rate environment is very favorable for portfolio of lenders. We look forward to continuing seeing that because there is an option what was the government longer term funding and locked in existing type of structure or go back to your portfolio of lenders. So we are pleased to see this slight movement in the back end of curve is typically a favorable event for our portfolio of lenders. And we are portfolio of lenders.

And again another thing that is maybe a little atypical here. There is clearly a change in market participants, some people that are ordinarily in our market aggressively are not in our market at all. And there is no question that there are people in our market that do not belong in our market. The government is the government and the government is an active player in our market and demonstrated that consistently, but the other players in our markets are rather erratic. So, the people we compete with will change over the period ahead and therefore the way in which we compete will be consistent from our perspective, but not consistent from what is available in the marketplace.

And Collyn, I would just add to Joe’s commentary that it’s clearly going to be a growth story in our core business model. We talked about the 5% net loan growth, multi-family is of 8%, now we feel very confident on our expectations given the current pipeline that will continue. As I mentioned we will start growing the balance sheet a little bit more, that we will call it accelerated depending on what’s happened down in Washington, but at a minimum, we will continue to go along, but which in the previous 3 years we were not growing the loan book. We were selling assets. We are not in the market of selling assets currently.

Okay, that’s helpful. And then just on the security side, your securities book is yielding blended yield $3.95 really healthy yield, what are you seeing in terms of new securities purchases and I hear your messaging that you are going to hold off perhaps for as long as you can on purchasing securities in a bit of LCR, but just trying to kind of get a sense of – it seems like there is still going to be some mixed dilution occurring when you have to start building for building that securities book?

On our portfolio, obviously, our portfolio is dramatically smaller than historical norms. Right, we are at 6% of total assets, of which we have a very substantial amount of borrowings that are held at the home loan bank, which we have – home bank spas and they pay a very sizable dividend, which we enjoy that sizable dividends when you look at our portfolio yield that does impact some of the benefits of being a member of the home loan bank. At the same time, if you look at the current portfolio that we have, we will call it the mortgage-related portfolio that’s a kind of 3.25 yields and markets there are higher. So, if we were to try to increase the portfolio, absent the home loan bank, that’s a dividend that gets paid. We have an opportunity to increase the yields in the securities portfolio as well. So, for example, in this environment, you are close to 4% anywhere from $3.60 to we will call it $3.90 is kind of the range depending on your duration and how much risk you want to take on duration. We think that this is a positive change from the previous year. It’s about a 100 basis points change. And that’s a very positive impact when we decide to double the securities portfolio. We can do that tomorrow what the cash or at least the portion of it was the cash that we have in our balance sheet. In the meantime, we will continue just to keep a lot of the cash in short-term instruments, predominantly and money with the fed. And as we see this rate environment continue to revise, we should be able to deploy this at a much higher rate than our current portfolio ex the home loan bank investment.

Okay, that’s helpful. I will leave it there. Thank you.

Sure.

Thank you. Our next question comes from the line of William Wallace with Raymond James. Please proceed with your question.

Thanks. Good morning, guys.

Good morning, Will.

Good morning. I just have two quick follow-ups. One on the taxi, the sale that you did in April on the pending sales, are those going off your balance sheet or are you financing this for the buyers?

Finance. We would like to say they were off the balance sheet, but – and these actually was new potential – new customers. So, the good news is that people are looking for opportunities and we financed it with 100% financing. It is what it is and we are pleased to be able to at least put a transaction then. And we have two more pending as I discussed.

Okay. And then I apologize Tom, I think I heard two different things when you are talking about the non-interest expense guidance, you said down a couple of million to about 137 in the second quarter and then I heard, I thought I heard flat from there, but then I thought I heard maybe there was opportunity to take more out in the back half?

I typically don’t give long-term guidance Wallace. So, big picture, typically the first quarter is the high quarter of the year given liabilities and the like and payroll taxes. So, we got $1.39 in Q1, we think we could be around $1.37 in Q2, I don’t give long-term guidance, but $1.37, if you run that out for the rest of the year, you come out to $5.50, so the range between $5.50 and $5.60 I think is very reasonable, we call it $5.60 last year. We think we are going to achieve that, maybe able to achieve around that $5.50 or maybe even better, but I don’t want to give long-term guidance on the expense side. We are laser focused. We continue to improve the operations of the institution. We want to leverage the monies spent on being ready to be a large institution. A lot of money was spent during the expectation of closing Astoria. We hope to benefit from that. You will see a dramatic reduction of consulting fees that were put in place. We try to get us to the finish line of closing the deal. Obviously, the deal didn’t happen, but we have the cost of debt. We think you will see some efficiencies going forward. In the event, CCARs change and $2.50 happens, there will be some savings, but it’s not going to be material, but remember, we found that the company’s mortgage operation was a fairly large platform. It was in every state. It was a major operations in Cleveland. We have exited that. We had $21 billion of new PBM servicing. We are out of the servicing business. There is a lot of cost that we run out of that to the tune between $60 million to $65 million on that alone. So, we feel very bullish that we can get back – our goal is to get somewhere between 45% to 46% efficiency ratio by year end and then set us for up was 19 was a much lower efficiency ratio because we are growing the balance sheet and we have operating leverage. So, we are getting back to what is the core historical norm how we operate. We are not saying we are going to be in the 30s, but it’s a new landscape we acknowledged that, but we should definitely be somewhere in the mid 40s, not in the low 50s to run this franchise given our product mix.

Thank you very much, Tom.

Sure.

Thank you. There are no further questions. At this time, I would like to turn the call back over to Mr. Ficalora for any closing remarks.

Thank you again for taking the time to join us this morning. We think that our results show that 2018 is off to a good start and look forward to chatting with you again to the end of July when we will discuss our performance for the 3 and 6 months ended June 30, 2018. Thank you.

Thank you. This concludes today’s conference. Thank you for your participation. You may disconnect your lines and have a wonderful day.