Question-and-Answer Session
Operator
(Operator Instructions) We go first to Mark Fitzgibbon with Sandler O’Neill.
Mark Fitzgibbon - Sandler O’Neill
Good morning. Joe, I wonder if you could share with us your thoughts on participating in the TARP program?
Joseph Ficalora
I think the TARP program represents a unique opportunity to generate capital. However, all of the ramifications of participating are not necessarily clearly established and therefore we are not prepared to commit ourselves to that program yet. Obviously opportunities to do deals would make the use of those funds significantly more likely to find a home in our institution. But, having said all of that, the time will come later for us to actually make that decision.
Mark Fitzgibbon - Sandler O’Neill
Okay. Secondly, could share with us your outlook for the net interest margin, maybe some of the key dynamics driving it in coming quarters?
Joseph Ficalora
Well, the fact is that we do not normally talk extensively about our margins. However, what we have said is that, we do believe that the cost of our funding continues to go down and our assets should earn more. Tom has some comments.
Thomas Cangemi
Mark hey, this is Tom. What we are seeing right now is good opportunities on the multi-family side, we are looking at around 380 or over equivalent spreads in respect to the five-year CMT. That is a significant differential from prior years. So, you will probably see in the ongoing quarters continued margin expansion, cost of funds are continuing to decline, and our overall funding costs have dropped dramatically and continues to drop. We are excited about the benefits of much higher spread. So, that should result in higher margins in the fourth quarter and beyond.
Mark Fitzgibbon - Sandler O’Neill
Okay. Then since the conduits have really gotten out of the multi-family market, I am wondering if the average loan size that you-all are doing, rising relative to the average for the portfolio of about 3.8 million.
Joseph Ficalora
No.
Mark Fitzgibbon - Sandler O’Neill
Okay.
Joseph Ficalora
The conduits were the excess lenders. In many cases, they were lending far too many dollars. For those loans that actually are put into our portfolio they would be in our portfolio, with the dollars rational, whether we did it this year or we did it last year. Last year a property owner may have been able to get way more money than they should have, this year they are not going to get that. So we are not seeing an increase in size, because we are always limited by the availability of cash flow. Whereas, the conduits were not?
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