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income segment) have not changed despite the headlines surrounding a softening in the multifamily space. * Hiring bankers, even as team hiring on pause: On the hiring front, management noted that although it does not expect to hire teams heading into year-end, it is continuing to hire individual bankers (recently hired 4 to 5 lenders). Hiring will be focused on C&l and specialty finance lenders. Management does not expect to hire additional CRE lenders. = Easing in regulatory environment could provide some relief on expense growth: With regard to the potential for some easing of regulatory burden on the banks (important here as SBNY approaches the $50bn asset threshold) under the incoming Trump administration management noted that it could see some abatement in expense growth associated with compliance costs. However, management is running the business based on the current regulatory framework and will look for more tangible signs before it makes any changes to investment decision, especially as it relates to the compliance infrastructure. = Lending rates reflecting the steepening in the yield curve: SBNY noted that it had raised rates on its 5-year fixed by 0.125% to 3.5%- 3.625% and 7-year fixed up by 0.25% to 4.0%-4.125% following the steepening in the yield curve over the last week. We note that this was echoed by SBNY’s NY rival NYCB which also noted increasing rates on lending products in the aftermath of the move higher in interest rates. We believe higher rates associated with new loans and better reinvestment opportunities in the securities portfolio should serve as a tailwind to the margin even as funding costs will likely trend higher, especially as the Fed raises interest rates by 25bp in December. = Regulatory scrutiny on multifamily lending manageable: With regard to the heightened regulatory concerns surrounding CRE multifamily lending (multifamily is 50% of SBNY’s loan book), management noted that it has implemented a new loan system likely coming on line in 3Q17 which should allow the bank to analyze the loan portfolio at a more granular level. Management is also underwriting fewer interest only multifamily loans in response to the regulatory concerns. Although, it noted that it was not losing any significant business due to this as competitors had also pulled back and borrower ability (in most instances) to service a non-interest only loan. BankofAmerica <2” 26 2016 Future of Financials Conference | 17 November 2016 Merrill Lynch HOUSE_OVERSIGHT_014340