CHARGE-OFF
DERIVATIVE
GOODWILL
YIELD
•LIST OF ABBREVIATIONS AND ACRONYMSconditions in the securities markets and real estate markets or the banking industry;
| Business |
| ||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
| |||||
PART I
ITEM 1. BUSINESS
General
(ii) New York Community Bank
Established in 1859, was merged with and into Flagstar Bank N.A., with Flagstar Bank N.A. continuing as the Bank is a surviving entity.
We are a leading producer of multi-family loans inthe New York City market area, where it specializes in rent-regulated, non-luxury apartment buildings. Flagstar Mortgage is the 7th largest bank originator of residential mortgages for the 12-months ended December 31, 2023, while we are the industry’s 5th largest sub-servicer of mortgage loans nationwide, servicing 1.4 million accounts with an emphasis$382.2 billion in unpaid principal balances as of December 31, 2023. Additionally, the Company is the 2nd largest mortgage warehouse lender nationally based on non-luxury residential apartment buildings with rent-regulated units that feature rents that are below non-regulated units. In addition to multi-family loans, which are our principal asset, we originate CRE loans (primarily in New York City), specialty finance loans and leases, and, to a much lesser extent, ADC loans, and C&I loans (typically made to small and mid-size business in Metro New York).total commitments.
Our current market for deposits consists of the 26 counties
9
The combined population of the 26 counties where our branches are located is approximately 31.7 million, and the number of banks and thrifts we compete with currently exceeds 350. With total deposits of $35.1 billion at December 31, 2021, we ranked in the top 20 among all bank and thrift depositories serving these 26 counties. We also ranked third among all banks and thrifts in Richmond County in New York, fifth among all banks and thrifts in Queens County in New York, and second among all banks and thrifts in Nassau County in New York (market share information was provided by S&P Global Market Intelligence).
One of our competitive advantages is our strong community presence and commitment to providing a high level of customer service in each of our markets. In 2021, the Bank was named the number one bank in the country for best overall customer experience based on a survey conducted by American Banker and creative experience firm Monigle.
10
finance loans that we originate are sourced from larger financial institutions who have many customers for these loans. Some of these customers are larger and have more capital and liquidity than the Company.
While
11
The 11Parent Company also has four direct subsidiaries of the(including Flagstar Bank, are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The eight subsidiaries of Bank-owned entities are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N.A). NYB Realty Holding Company, LLC, a subsidiary of the Bank, owns interests in ten10 additional active entities organized as indirect wholly-owned subsidiaries to own interests in various real estate properties.
12
The health and safety of our employees is also of critical importance. In response to the ongoing COVID-19 pandemic, we have implemented a flexible response plan that includes the transitioning of certain back office employees to a remote work model, as conditions warrant while implementing additional safety protocols for employees who, due to the nature of their positions, continue to work on-site. We maintain strict compliance with federal, state and local requirements that enhance workplace safety, such as masking and social distancing, and we provide employees who either contract or are exposed to COVID-19 with appropriate leave.
Federal Reserve. The Bank is requiredalso subject to file reports with the NYSDFS,supervision of the CFPB, which regulates the offering and provision of consumer financial products or services under federal consumer financial laws. The OCC, FDIC and the CFPB concerning itsmay take regulatory enforcement actions if we do not operate in accordance with applicable regulations, policies and directives. Proceedings may be instituted against us, or any "institution-affiliated party", such as a director, officer, employee, agent or controlling person, who engages in unsafe and unsound practices, including violations of applicable laws and regulations. The FDIC has additional authority to terminate insurance of accounts, if after notice and hearing, we are found to have engaged in unsafe and unsound practices, including violations of applicable laws and regulations. The federal system of regulation and supervision establishes a comprehensive framework of activities and financial condition,in which to operate and is periodically examined byprimarily intended for the NYSDFS, the FDIC,protection of depositors and the CFPB to assess compliance with various regulatory requirements, including with respect to safety and soundness and consumer financial protection regulations. The regulatory structure gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classificationFDIC's DIF rather than our shareholders.
of assets and the establishment of an adequate allowance for credit losses on loans and leases for regulatory purposes. Changes in such regulations or in banking legislation could have
The Company is subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of 1956, as amended (the “BHCA”) by the FRB. Furthermore, the Company would be required to obtain the prior approval of the FRB to acquire all, or substantially all, of the assets of any bank or bank holding company.
In addition, the Company is periodically examined by the FRB-NY, and iscompany, we are required to file certain reports under, and otherwise comply with the rules and regulations of the SEC underFederal Reserve. We are required to file certain reports, and we are subject to examination by, and the enforcement authority of, the Federal Reserve. Under the federal securities laws. Certainlaws, we are also subject to the rules and regulations of the regulatory requirements applicableSEC.
On June 14,
14
15
the Capital section of the MD&A and Note 17 - Capital. As of December 31, 2021,2023, each of the Bank’s capital ratios exceeded those required for an institution to be considered “well capitalized” under these regulations.
the preceding two calendar years, less any required transfer to paid-in capital. The FDIC has authorityterm “net profits” is defined as net income for a given period less any dividends paid during that period. As a result of our acquisition of Flagstar, we are also required to use its enforcement powers to prohibit a savings bank or commercial bankseek regulatory approval from paying dividends if, in its opinion,the OCC for the payment of any dividend to the Parent Company through at least the period ending November 1, 2024. In 2023, dividends would constitute an unsafe or unsound practice. Federal law prohibitsof $580 million were paid by the paymentBank to the Parent Company.
Investment Activities
Since the enactment of the FDICIA, all state-chartered financial institutions, including savings banks, commercial banks,OCC's regulations in conducting such investment activities. A bank must consider, as appropriate, the interest rate, credit, liquidity, price, foreign exchange, transaction, compliance, strategic, and their subsidiaries, have generally been limitedreputation risks presented by a proposed activity, and the particular activities undertaken by the bank must be appropriate for that bank. If the OCC determines for safety and soundness reasons that a bank should calculate its investment limits more frequently than required by the OCC's Investment Securities regulations, the OCC may provide written notice to such activities as principalthe bank
17
In 1993,
Enforcement
The FDIC has extensive enforcement authority over insured banks, includingof the Bank. ThisFederal Reserve. The enforcement authority of these regulatory agencies includes, among other things, the ability to assess civil money penalties, to issue cease and desist orders, and to remove directors and officers. In general, these enforcement actions may be initiated in response to violations of laws and regulations and unsafe or unsound practices.
We expect an increase in special assessment expense, which is not expected to be material, on or around June 2024 based on the FDIC’s modified loss estimate.
The Company is currently subject to examination, regulation, and periodic reporting under the BHCA, as administered by the FRB.
FRB regulations generally prohibitacquiring us if that company is engaged directly or indirectly in activities that are not permissible for a bank holding company from engagingor financial holding company.
18
The FRB has issued a policy statement regardingOCC for the payment of dividends by bank holding companies. In general, the FRB’s policies provide that dividends should be paid only out of current earnings, and only if the prospective rate of earnings retention by the bank holding company appears consistent with the organization’s capital needs, asset quality, and overall financial condition. The FRB’s policies also require that a bank holding company serve as a source of financial strength to its subsidiary bank by standing ready to use available resources to provide adequate capital fundsany dividend to the bank during periods of financial stress or adversity, and by maintainingParent Company through at least the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary bank where necessary.
Under FRB regulations, banks must adopt and maintain written policies that establish appropriate limits and standards for extension of credit secured by liens or interests in real estate or are made for the purpose of financing permanent improvements to real estate. These policies must establish loan portfolio diversification standards; prudent underwriting standards, including loan-to-value limits that are clear and measurable; loan administration procedures; and documentation, approval, and reporting requirements. A bank's real estate lending policy must reflect consideration of the Interagency Guidelines for Real Estate Lending Policies (the "Interagency Guidelines") adopted by the federal bank regulators. The Interagency Guidelines, among other things, call for internal loan-to-value limits for real estate loans that are not in excess of the limits specified in the guidelines. The Interagency Guidelines state, however, that it may be appropriate in individual cases to originate or purchase loans with loan-to-value ratios in excess of the supervisory loan-to-value limits.
Interchange fees, or "swipe" fees, are fees that merchants pay to credit card companies and debit card-issuing banks such as the Bank for processing electronic payment transactions on their behalf. The maximum permissible interchange fee that a non-exempt issuer may receive for an electronic debit transaction is the sum of 21 cents per transaction and five bps multiplied by the value of the transaction, subject to an upward adjustment of one cent if an issuer certifies that it has implemented policies and procedures reasonably designed to achieve the fraud-prevention standards set forth by the FRB. In addition, card issuers and networks are prohibited from entering into agreements requiring that debit card transactions be processed on a single network or only two affiliated networks, and allows merchants to determine transaction routing.
The DFA codified the source of financial strength policy and required regulations to facilitate its application. Under the prompt corrective action laws, theperiod ending November 1, 2024, which could restrict our ability of a bank holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. These regulatory policies could affect the ability of the Company to pay dividends or otherwise engage in capital distributions.common stock dividend.
19
New York State Regulation
The Bank is also subject to provisions of the New York State Banking Law that impose continuing and affirmative obligations upon a banking institution organized in New York State to servemeeting the credit needs of the community and to take such record into account in its local community. Such obligations are substantially similar to those imposedevaluation of certain applications by the CRA.institution, including applications for charters, branches and other deposit facilities, relocations, mergers, consolidations, acquisitions of assets or assumptions of liabilities, and bank holding company and savings and loan holding company acquisitions. The latest New York State CRA rating receivedalso requires that all institutions make public disclosure of their CRA ratings.
Federal
activities. The Financial Crimes Enforcement Network ("Fin CEN"), a bureau of the U.S. Treasury, has the authority to implement, administer, and enforce compliance with the USA PATRIOTPatriot Act requires banks and other BSA legislation. Fin CEN has adopted regulations that require financialdepository institutions, brokers, dealers and certain other businesses involved in the transfer of money to among other things, obtain beneficial ownership information with respect to legal entities with which such institutions conduct business, subject to certain exemptions and exclusions.
The Anti-Money Laundering Act of 2020 ("AMLA"), which amends the BSA, was enacted in January 2021. The AMLA is intended to comprehensively reform and modernize U.S. bank secrecy andestablish anti-money laundering laws. Among other things, it codifiesprograms, including employee training and independent audit requirements meeting minimum standards specified by the Patriot Act, to follow standards for customer identification and maintenance of customer identification records, and to compare customer lists against lists of suspected terrorists, terrorist organizations and money launderers. The Patriot Act also requires federal bank regulators to evaluate the effectiveness of an applicant in combating money laundering in determining whether to approve a risk-based approach toproposed bank acquisition.
20
by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences.
New York State Law
The Bank derives its lending, investment,stock and other authority primarily from the applicable provisions$329 million of New York State Banking Law and the regulations of the NYSDFS, as limited by FDIC regulations. Under these laws and regulations, banks, including the Bank, may invest in real estate mortgages, consumer and commercial loans, certain types of debt securities (including certain corporate debt securities, and obligations of federal, state, and local governments and agencies), certain types of corporate equity securities, and certain other assets.FHLB-Indianapolis shares.
New York State Banking Law gives the Superintendent authority to issue an order to a New York State-chartered banking institution to appear and explain an apparent violation of law, to discontinue unauthorized or unsafe practices, and to keep prescribed books and accounts. Upon a finding by the NYSDFS that any director, trustee, or officer of any banking organization has violated any law, or has continued unauthorized or unsafe practices in conducting the business of the banking organization after having been notified by the Superintendent to discontinue such practices, such director, trustee, or officer may be removed from office after notice and an opportunity to be heard. The
21
Superintendent also has authority to appoint a conservator or a receiver for a savings or commercial bank under certain circumstances.
Interstate Branching
Federal law allows the FDIC, and New York State Banking Law allows the Superintendent, to approve an application by a state banking institution to acquire interstate branches by merger, unless, in the case of the FDIC, the state of the target institution has opted out of interstate branching. New York State Banking Law authorizes savings banks and commercial banks to open and occupy de novo branches outside the state of New York. Pursuant to the DFA, the FDIC is authorized to approve a state bank’s establishment of a de novo interstate branch if the intended host state allows de novo branching by banks chartered by that state. The Bank currently maintains 40 branches in New Jersey, 26 branches in Florida, 28 branches in Ohio, and 14 branches in Arizona, in addition to its 129 branches in New York State.
Acquisition of the Holding Company
Federal Restrictions
Under the Federal Change in Bank Control Act (“CIBCA”), a notice must be submitted to the FRB if any person (including a company), or group acting in concert, seeks to acquire 10% or more of the Company’s shares of outstanding common stock, unless the FRB has found that the acquisition will not result in a change in control of the Company. Under the CIBCA, the FRB generally has 60 days within which to act on such notices, taking into consideration certain factors, including the financial and managerial resources of the acquirer; the convenience and needs of the communities served by the Company, the Bank; and the anti-trust effects of the acquisition. Under the BHCA, any company would be required to obtain approval from the FRB before it may obtain “control” of the Company within the meaning of the BHCA. Control generally is defined to mean the ownership or power to vote 25% or more of any class of voting securities of the Company, the ability to control in any manner the election of a majority of the Company’s directors, or the power to exercise a controlling influence over the management or policies of the Company. Under the BHCA, an existing bank holding company would be required to obtain the FRB’s approval before acquiring more than 5% of the Company’s voting stock. See “Holding Company Regulation” earlier in this report.
New York State Change in Control Restrictions
New York State Banking Law generally requires prior approval of the New York State Banking Board before any action is taken that causes any company to acquire direct or indirect control of a banking institution which is organized in New York.
22
Information (Regulation P), Margin Stock Loans (Regulation U), Right To Financial Privacy Act, Flood Disaster Protection Act, Homeowners Protection Act, Servicemembers Civil Relief Act, Real Estate Settlement Procedures Act (Regulation X), Telephone Consumer Protection Act, CAN-SPAM Act, Children’s Online Privacy Protection Act, the Military Lending Act, and the Homeownership Counseling Act. Additionally, we are subject to Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive, or abusive acts or practices (“UDAAP”) in connection with any consumer financial product or service.
President Biden's Executive Order on Promoting Competition in CFPB Interpretive Rule regarding Section 1042 of the American EconomyConsumer Financial Protection Act of 2010 (87 FR 31940, May 26, 2022).
Current Operating Environment
COVID-19 Pandemic
The Company's business, financial condition, and results of operation have been and may continue to be affected by the outbreak of COVID-19. Both globally and within the United States, the pandemic continues to have various effects on economic and commercial activity and financial markets, both nationally and locally. Due to its high rate of contagion and mortality, state and local governments enacted numerous safeguards to contain the spread of the virus. These included, the shut-down of all businesses considered to be “non-essential,” restrictions on gatherings, social distancing requirements were put in place. Businesses continue to observe and modify their activities and behaviors to remain in compliance with the jurisdictional directives while concurrently providing consumers with goods and services. Certain actions taken by U.S. or other governmental authorities, including the Federal Reserve, that are intended to ameliorate the macroeconomic effects of COVID-19 may adversely impact our business.
The concentration and severity of COVID-19 infection in the New York City metro region, during the early stages of the pandemic, led it to be considered the epicenter of the pandemic in the country. This region is also the Company’s largest service area, having over 100 branches and 72% of the loan portfolio.
The Company has been very proactive throughout all stages of the pandemic, supporting employees, customers, and its communities. As an essential business, the Company implemented business continuity plans and continued to provide our financial services to customers, while taking health and safety measures into account.
In response to the pandemic and to ensure that the Company’s operations, during the term of the pandemic runs smoothly, senior management formed two committees: the COVID-19 Resiliency Committee and the COVID-19 Lending Committee. The COVID-19 Resiliency Committee meets as needed and is primarily focused on operational issues including employee safety and well-being, branch closings, PPE procurement, IT sustainability, and continuous monitoring of the COVID-19 pandemic. The COVID-19 Lending Committee meets weekly and focuses on our credit quality trends and our deferral program. Management continually monitors developments, evaluates strategic and tactical initiatives and solutions and allocates the necessary resources to mitigate the negative impact of this significant market disruption caused by the pandemic. For a description of the potential impacts of COVID-19 on the Company, see "Item 1A. Risk Factors".
Pending Acquisition of Flagstar Bancorp, Inc.
On April 26, 2021,2024, the Company announced it hadthat future quarterly cash dividends on shares of the Company’s common stock would be further reduced to $0.01 per share.
24
Community Pledge Agreement with the National Community Reinvestment Coalition
On January 24, 2022, the Company and the National Community Reinvestment Coalition ("NCRC") announced the Company's commitment to provide $28 billion in loans, investments, and other financial support to communities and people of color, low- and moderate-income ("LMI") families and communities, and small businesses. The Company's Community Pledge Agreement was developed with NCRC and its members in conjunction with the Company's pending merger with Flagstar Bancorp, Inc. The agreement includes $22 billion in community lending and affordable housing commitments and $6 billion of residential mortgage originations to underserved and LMI borrowers, and in LMI and majority-minority neighborhoods over a five-year period. NYCB will also provide $542 million in loans to small businesses with less than $1 million in revenues and in LMI and majority-minority communities; $16.5 million in philanthropic support to nonprofit organizations that meet the needs of LMI and majority-minority communities and individuals; greater access to banking products and services; and the continuation of NYCB's responsible multi-family lending practices. The agreement is subject to the closing of the Flagstar merger. Absent the closing of the merger, the Company will continue to work with its community groups to provide financial and other support within its markets.
USDF Stablecoin Program Initiative
Part
The Company has also engaged its regulators, including the NYSDFS and the FDIC, throughout this process and intends to request non-objection from the Superintendentapproval of the NYSDFS to engage in USDF Stablecoin Program activities, and any additional non-objection required by the FDIC. Assuming that timely non-objection is received, the Company expects to launch the USDF Stablecoin Program in late first-quarter 2022. At which point, the Bank's customers would be able to conduct USDF transactions upon demand, including (i) minting USDF stablecoin; (ii) transmitting and receiving USDF stablecoin; (iii) redeeming USDF stablecoin; and (iv) conducting any and all activities necessary or incidental to the USDF Stablecoin Program.reverse stock split).
ITEM
COVID-19 Related Risk
COVID-19 has caused a significant global economic downturn which has adversely affectedChanges in interest rates could reduce our net interest income and is expected to continue to adversely affect many business.
25
Our business is dependent uponnegatively impact the ability and willingnessvalue of our customers to conduct bankingloans, securities, and other assets and have a material adverse effect on our cash flows, financial transactions, including the paymentcondition, results of their loan obligations. Specifically,operations, and capital.
The COVID-19 pandemic has also ledcould result in, additional expenses, exposure to an increase in the numbercivil litigation, increased regulatory scrutiny, losses, and a loss of deferred loans the Company entered intocustomers.
26
reduction in our earnings. Our net interest income and earnings would be similarly impacted were the interest rates on our interest-earning assets to decline more quickly than the interest rates on our interest-bearing liabilities.
In addition, such changes in interest rates could affect our ability to originate loans and attract and retain deposits; the fair values of our securities and other financial assets; the fair values of our liabilities; and the average lives of our loan and securities portfolios. Changes in interest rates also could have an effect on loan refinancing activity, which, in turn, would impact the amount of prepayment income we receive on our multi-family and CRE loans. Because prepayment income is recorded as interest income, the extent to which it increases or decreases during any given period could have a significant impact on the level of net interest income and net income we generate during that time.
Also, changes in interest rates could have an effect on the slope of the yield curve. If the yield curve were to invert or become flat, our net interest income and net interest margin could contract, adversely affecting our net income and cash flows, and the value of our assets. Moreover, higher inflation could lead to fluctuations in the value of our assets and liabilities and off-balance sheet exposures, and could result in lower equity market valuations of financial services companies.
Changes to and replacement of the LIBOR Benchmark Interest Rate may adversely affect our business, financial condition, and results of operations.
The Company has certain loans, interest rate swap agreements, investment securities, and debt obligations whose interest rate is indexed to LIBOR. In 2017, the FCA, which is responsible for regulating LIBOR, announced that the publication of LIBOR is not guaranteed beyond 2021. In December 2020, the administrator of LIBOR announced its intention to (i) cease the publication of the one-week and two-month U.S. dollar LIBOR after December 31, 2021, and (ii) cease the publication of all other tenors of U.S. dollar LIBOR (one, three, six, and 12-month LIBOR) after June 30, 2023, and on March 15, 2021, announced that it will permanently cease to publish most LIBOR settings beginning on January 1, 2022 and cease to publish the overnight, one-month, three-month, six-month, and 12-month U.S. dollar LIBOR settings on July 1, 2023. Accordingly, the FCA has stated that it does not intend to persuade or compel banks to submit to LIBOR after such respective dates. Until such time, however, FCA panel banks have agreed to continue to support LIBOR. In October 2021, the Federal bank regulatory agencies issued a Joint Statement on Managing the LIBOR Transition that offered their regulatory expectations and outlined potential supervisory and enforcement consequences for banks that fail to adequately plan for and implement the transition away from LIBOR. The failure to properly transition away from LIBOR may result in increased supervisory scrutiny. The implementation of a substitute index for the calculation of interest rates under the Company's loan agreements may result in disputes or litigation with counterparties over the appropriateness or comparability to LIBOR of the substitute index, which would have an adverse effect on the Company's results of operations. Even when robust fallback language is included, there can be no assurances that the replacement rate plus any spread adjustment will be economically equivalent to LIBOR, which could result in a lower interest rate being paid to the Company on such assets.
The Bank established a sub-committee of ALCO to address issues related to the phase out and transition from LIBOR. This sub-committee is led by our Chief Financial Officer and consists of personnel from various departments through the Bank including lending, loan administration, credit risk management, finance/treasury, including interest rate risk and liquidity management, information technology, and operations. The Company has LIBOR-based contracts that extend beyond June 20, 2023 included in loans and leases, securities, wholesale borrowings, derivative financial instruments, and long-term debt. The sub-committee has reviewed contract fallback language and noted that certain contracts will need updated provisions for the transition and is coordinating with impacted business lines. In complying with industry requirements, the Bank will not offer new LIBOR-based products after December 31, 2021.
The Alternative Reference Rates Committee (a group of private-market participants convened by the FRB and the FRB-NY) has identified SOFR as the recommended alternative to LIBOR. The use of SOFR as a substitute for LIBOR is voluntary and may not be suitable for all market participants. SOFR is calculated and observed differently than LIBOR. Given the manner in which SOFR is calculated, it is likely to be lower than LIBOR and is less likely to correlate with the funding costs of financial institutions. Market practices related to SOFR calculation conventions continue to develop and may vary. Inconsistent calculation conventions among financial products may expose is to increased basic rate and resultant costs.
27
Other alternatives to LIBOR also exist, but, because of the difference in how those alternatives are constructed, they may diverge significantly from LIBOR in a range of situations and market conditions.
A decline in the quality of our assets could result in higher losses and the need to set aside higher loan loss provisions, thus reducing our earnings and our stockholders’ equity.
The inability of our borrowers to repay their loans in accordance with their terms would likely necessitate an increase in our provision for credit losses, and therefore reduce our earnings.
The loans we originate for investment are primarily multi-family loans, CRE loans, and specialty finance loans and leases. Such loans are generally larger, and have higher risk-adjusted returns and shorter maturities, than the other loans we produce for investment. Our credit risk would ordinarily be expected to increase with the growth of our multi-family and CRE loan portfolios.
Payments on multi-family and CRE loans generally depend on the income generated by the underlying properties which, in turn, depends on their successful operation and management. The ability of our borrowers to repay these loans may be impacted by adverse conditions in the local real estate market and the local economy. While we seek to minimize these risks through our underwriting policies, which generally require that such loans be qualified on the basis of the collateral property’s cash flows, appraised value, and debt service coverage ratio, among other factors, there can be no assurance that our underwriting policies will protect us from credit-related losses or delinquencies.
To minimize the risks involved in our specialty finance lending and leasing, we participate in syndicated loans that are brought to us, and equipment loans and leases that are assigned to us, by a select group of nationally recognized sources, and generally are made to large corporate obligors, many of which are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide. Each of our credits is secured with a perfected first security interest in the underlying collateral and structured as senior debt or as a non-cancelable lease.
We seek to minimize the risks involved in our other C&I lending by underwriting such loans on the basis of the cash flows produced by the business; by requiring that such loans be collateralized by various business assets, including inventory, equipment, and accounts receivable, among others; and by requiring personal guarantees. However, the capacity of a borrower to repay such a C&I loan is substantially dependent on the degree to which his or her business is successful. In addition, the collateral underlying other C&I loans may depreciate over time, may not be conducive to appraisal, or may fluctuate in value, based upon the results of operations of the business.
We also originate ADC loans, although to a far lesser degree than we originate multi-family and CRE loans. ADC financing typically involves a greater degree of credit risk than longer-term financing on multi-family and CRE properties. Risk of loss on an ADC loan largely depends upon the accuracy of the initial estimate of the property’s value at completion of construction or development, compared to the estimated costs (including interest) of construction. If the estimate of value proves to be inaccurate, the loan may be under-secured. While we seek to minimize these risks by maintaining consistent lending policies and procedures, and rigorous underwriting standards, an error in such estimates, among other factors, could have a material adverse effect on the quality of our ADC loan portfolio, thereby resulting in losses or delinquencies.
The ability of our borrowers to repay their loans could be adversely impacted by a decline in real estate values and/or an increase in unemployment, which not only could result in our experiencing losses, but also could necessitate our recording a provision for credit losses. Either of these events would have an adverse impact on our net income. Although losses on the loans we produce have been comparatively limited, even during periods of economic weakness in our markets, we cannot guarantee that this will be our experience in future periods.
In addition to loan losses due to borrowers’ inability to repay their loans, downgrades in our internal loan classifications may result in a higher provision for credit losses and the ACL, a higher level of net charge-offs, and/or higher non-interest expenses.
28
If the judgments and assumptions we make with regard to the allowance are incorrect, our allowance for losses on such loans might not be sufficient, and an additional provision for credit losses might need to be made. Depending on the amount of such loan loss provisions, the adverse impact on our earnings could be material.
In addition,
Our current business strategy is to continue to originate multi-family loans and to a lesser extent CRE loans.
29
Accordingly, the ability of our borrowers to repay their loans, and the value of the collateral securing such loans, may be significantly affected by economic conditions in this region, including changes in the local real estate market. A significant decline in general economic conditions caused by inflation, recession, unemployment, acts of terrorism, extreme weather, or other factors beyond our control, could therefore have an adverse effect on our financial condition and results of operations. In addition, because multi-family and CRE loans represent the majority of the loans in our portfolio, a decline in tenant occupancy or rents, due to such factors, or for other reasons, such as new legislation, could adversely impact the ability of our borrowers to repay their loans on a timely basis, which could have a negative impact on our net income.
Furthermore, economic or market turmoil could occur in the near or long term. This could negatively affect our business, our financial condition, and our results of operations, as well as our ability to maintain or increase the level of cash dividends we currently pay to our stockholders.
Changes in accounting standards or interpretation of new or existing standards may affect how we report our financial condition and results of operations.
From time to time the FASB and the SEC change accounting regulations and reporting standards that govern the preparation of our financial statements. In addition, the FASB, SEC, and bank regulators, may revise their previous interpretations regarding existing accounting regulations and the application of these accounting standards. These changes can be difficult to predict and can materially impact how to record and report our financial condition and results of operations. In some cases, there could be a requirement to apply a new or revised accounting standard retroactively, resulting in the restatement of prior period financial statements.
Deposit flows, calls of investment securities and wholesale borrowings, and the prepayment of loans and mortgage-related securities are strongly influenced by such external factors as the direction of interest rates, whether actual or perceived; local and national economic conditions; and competition for deposits and loans in the markets we serve. Deposit outflows can occur for a number of reasons, including clients seeking higher yields, clients with uninsured deposits may seek greater financial security or clients may simply prefer to do business with our competitors, or for other reasons. The withdrawal of more deposits than we anticipate could have an adverse impact on our profitability as this source of funding, if not replaced by similar deposit funding, would need to be
A downgrade Downgrades of the credit ratings of the Company and the Bank, such as those announced by certain credit rating agencies in both February and March 2024, could alsoresult in an acceleration in deposit outflows and additional collateral needs, which this far have been modest. They could adversely affect our access to liquidity and capital, and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us or to purchase our securities. This could affect our growth, profitability, and financial condition, including our liquidity.
31
If the non-payment of dividends on Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock for any dividend period would cause the Company to fail to comply with any applicable law or regulation, or any agreement we may enter into with our regulators from time to time, then we would not be able to declare or pay a dividend for such dividend period. In such a case,
Furthermore, it is possible that future regulatory changes could result in more stringent capital or liquidity requirements, including increases in the levels of regulatory capital we are required to maintain and changes in the way capital or liquidity is measured for regulatory purposes, either of which could adversely affect our business and our ability to expand. For example, federal banking regulations adopted under Basel III standards require bank holding companies and banks to undertake significant activities to demonstrate compliance with higher capital requirements. Any additional requirements to increase our capital ratios or liquidity could necessitate our liquidating certain assets, perhaps on terms that are unfavorable to us or that are contrary to our business plans. In addition, such requirements could also compel us to issue additional securities, thus diluting the value of our common stock.
In addition, failure to meet established capital requirements could result in the FRB and/or OCC placing limitations or
Such regulation and supervision govern the activities in which a bank holding company and its banking subsidiaries may engage, and are intended primarily for the protection of the DIF, the banking system in general, and
32
bank customers, rather than for the benefit of a company’s stockholders. These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including with respect to the imposition of restrictions on the operation of a bank or a bank holding company, the imposition of significant fines, the ability to delay or deny merger or other regulatory applications, the payment of dividends, the classification of assets by a bank, and the adequacy of a bank’s allowance for loan losses, among other matters. Failure to comply (or to ensure that our agents and third-party service providers comply) with laws, regulations, or policies, including our failure to obtain any necessary state or local licenses, could result in enforcement actions or sanctions by regulatory agencies, civil money penalties, and/or reputational damage, which could have a material adverse effect on our business, financial condition, or results of operations. Penalties for such violations may also include: revocation of licenses; fines and other monetary penalties; civil and criminal liability; substantially reduced payments by borrowers; modification of the original terms of loans, permanent forgiveness of debt, or inability to, directly or indirectly, collect all or a part of the principal of or interest on loans provided by the Bank. Changes in such regulation and supervision, or changes in regulation or enforcement by such authorities, whether in the form of policy, regulations, legislation, rules, orders, enforcement actions, ratings, or decisions, could have a material impact on the Company, our subsidiary bank and other affiliates, and our operations. In addition, failure of the Company or the Bank to comply with such regulations could have a material adverse effect on our earnings and capital.
See “Regulation and Supervision” in Part I, Item 1, “Business” earlier in this filing for a detailed description of the federal, state, and local regulations to which the Company and the Bank are subject.
For example, economic and market conditions, heightened legislative and regulatory scrutiny of the financial services industry, and increases in the overall complexity of our operations, among other developments, have resulted in the creation of a variety of risks that were previously unknown and unanticipated, highlighting the intrinsic limitations of our risk monitoring and mitigation techniques. As a result, the further development of previously unknown or unanticipated risks may result in our incurring losses in the future that could adversely impact our financial condition and results of operations. Furthermore, an ineffective ERM framework, as well as other risk factors, could result in a material increase in our FDIC insurance premiums.
33
audit, and application of financial accounting standards. We may take tax return filing positions for which the final determination of tax is uncertain, and our net income and earnings per share could be reduced if a federal, state, or local authority were to assess additional taxes that have not been provided for in our consolidated financial statements. In addition, there can be no assurance that we will achieve our anticipated effective tax rate. Unanticipated changes in tax laws or related regulatory or judicial guidance, or an audit assessment that denies previously recognized tax benefits, could result in our recording tax expenses that materially reduce our net income.
Furthermore, declines in the value of our investment securities could result in our having to record losses based on the other-than-temporary impairment of securities, which would reduce our earnings and also could reduce our capital. In addition, continued economic weakness could reduce the demand for our products and services, which would adversely impact our liquidity and the revenues we produce.
Higher inflationDecember 31, 2023, and averaged 2.96 percent during 2023, 101 basis points higher than average rates experienced during 2022. The sustained higher rates experienced throughout 2023 negatively impacted the mortgage market including our loan origination volume and refinancing activity. In addition to being affected by interest rates, the secondary mortgage markets are also subject to investor demand for residential mortgage loans and investor yield requirements for these loans. These conditions may fluctuate or worsen in the future. Adverse market conditions, including increased volatility, changes in interest rates and mortgage spreads and reduced market demand, could result in greater risk in retaining mortgage loans pending their sale to investors. A prolonged period of secondary market illiquidity may result in a reduction of our loan mortgage production volume and could have a materially adverse effect on our financial condition and results of operations.
Inflation can negativelyrisk management strategies, which rely on assumptions or projections, may not adequately mitigate the impact the Company by increasing our labor costs, through higher wages and higherof changes in interest rates, which may negatively affectinterest rate volatility, convexity, credit spreads, or prepayment speeds, and, as a result, the marketchange in the fair value of securities on our balance sheet, higher interest expenses on our deposits, especially CDs, and a higher cost of our borrowings. Additionally, higher inflation levels could lead to higher oil and gas prices, whichMSRs may negatively impact the net operating incomeearnings.
Recent supply chain constraints have led to higher inflation, which if sustained couldmay have a negativematerially adverse effect on our results of operations or could cause us to take other actions that would be materially detrimental. Fannie Mae and Freddie Mac remain in conservatorship and a path forward for them to emerge from conservatorship is unclear. Their roles could be reduced, modified or eliminated as a result of regulatory actions and the nature of their guarantees could be limited or eliminated relative to historical measurements. The elimination or modification of the traditional roles of Fannie Mae or Freddie Mac could create additional competition in the market and significantly and adversely affect our business, financial condition and results of operations.
Longer-lasting supply chain constraintsother servicing practices, the servicing and ancillary fees that we may charge, modification standards and procedures, and the amount of non-reimbursable advances. We cannot negotiate these terms, which are subject to change at any time, with the Agencies. A significant change in various productsthese guidelines, which decreases the fees we charge or requires us to expend additional resources in providing mortgage services, could decrease our revenues or increase our costs, adversely affecting our business, financial condition, and labor marketsresults of operations. In addition, changes in the nature or extent of the guarantees provided by Fannie Mae and Freddie Mac or the insurance provided by the FHA could potentially exacerbate inflationalso have broad adverse market implications. The fees that we are required to pay to the Agencies for these guarantees have changed significantly over time and sustain it at elevated levels, even as growth slows. The riskany future increases in these fees would adversely affect our business, financial condition and results of sustained high inflation would likely be accompanied by monetary policy tightening with potential negative effects on various elevated asset classes.operations.
The market price and liquidity
Thethe exercise of warrants issued by us may dilute existing holders of our common stock and other securities, decrease the value of our common stock and other securities and adversely affect the market price of our common stock could beand other securities.
34
Economic or market turmoil could occur in the near or long term, which could negatively affect our business, governmental activities, and on our financial condition and our results of operations, as well as volatilityperformance.
Although we also originate C&I and ADC loans, and invest in securities, our
If we are unable to engage in or complete a desired acquisition or merger transaction, our financial condition and results of operations could be adversely impacted. As acquisitions have been a significant source of deposits, the inability to complete a business combination could require that we increase the interest rates we pay on deposits in order to attract such funding through our current branch network, or that we increase our use of wholesale funds. Increasing our cost of funds could adversely impact our net interest income and our net income. Furthermore, the absence of acquisitions could impact our ability to fulfill our loan demand.
In addition, mergers and acquisitions can lead to uncertainties about the future on the part of customers and employees. Such uncertainties could cause customers and others to consider changing their existing business relationships with the company to be acquired, and could cause its employees to accept positions with other companies before the merger occurs. As a result, the ability of a company to attract and retain customers, and to attract, retain, and motivate key personnel, prior to a merger’s completion could be impaired.
Furthermore, no assurance can be given that acquired operations would not adversely affect our existing profitability; that we would be able to achieve results in the future similar to those achieved by our existing banking business; that we would be able to compete effectively in the market areas served by acquired branches; or that we would be able to manage any growth resulting from a transaction effectively. In particular, our ability to compete effectively in new markets would be dependent on our ability to understand those markets and their competitive
35
dynamics, and our ability to retain certain key employees from the acquired institution who know those markets better than we do.
The failure to receive the necessary regulatory approvals for the Company's acquisition of Flagstar Bancorp, Inc. in a timely manner, would have a material negative impact on our financial results, operations, and reputation.
On April 26, 2021, the Company entered into a definitive merger agreement under which it will acquire Flagstar Bancorp, Inc. in a 100% stock transaction. On August 4, 2021, both sets of shareholders approved the merger. Completion of the proposed merger remains subject to the receipt of required approvals from NYSDFS, the FDIC, and the FRB.
While both companies remain committed to continuing to seek all such approvals, the aforementioned regulatory approvals could be delayed or not obtained at all, including due to: an adverse development in either company's regulatory standing or in any other factors considered by regulators when granting such approvals, including factors not known at the present time.
If the merger is not completed for any reason, there
Additionally, NYCB has incurred and will continue to incur substantial expenses in connection with the negotiation and completion of the transaction completed by the merger agreement, as well as the costs and expenses incurred in connection with the merger. If the merger is not completed, NYCB would have incurred these expenses without realizingachieving the expected benefits from our merger and acquisition activities.
The inabilityacquisitions. We may also lose key personnel from the acquired entity as a result of an acquisition. We may not discover all known and unknown factors when examining a company for acquisition or merger during the due diligence period. These factors could produce unintended and unexpected consequences for us including, but not limited to, receive dividendsincreased compliance and legal risks, including increased litigation or regulatory actions such as fines or restrictions related to the business practices or operations of the combined business. Undiscovered factors as a result of an acquisition or merger could bring civil, criminal, and financial liabilities against us, our management, and the management of those entities we acquire or merge with. In addition, if difficulties arise with respect to the integration process, we may incur higher integration expenses than anticipated and the economic benefits expected to result from the acquisition, including revenue growth and cost savings, might not occur or might not occur to the extent we expected. Failure to successfully integrate businesses that we acquire or merge with could have an adverse effect on our subsidiary bankprofitability, return on equity, return on assets, or our ability to implement our strategy, any of which in turn could have a material adverse effect on our business, financial condition orand results of operations.
The Parent Company (i.e., the company on an unconsolidated basis) is a separate and distinct legal entity from the Bank, and a substantial portionexpedited nature of the revenuesFDIC-assisted transaction did not allow bidders the Parent Company receives consiststime and access to information customarily associated with preparing for and evaluating a negotiated transaction. As a result, fair value estimates we have made in connection with the Signature transaction may be inaccurate and subject to change, which could adversely impact our financial condition, results of dividendsoperations and future prospects. In addition, we may obtain additional information and evidence during the period of one year from March 20, 2023, the Bank. These dividends aredate we completed the primary funding source forSignature transaction, that may result in changes to the dividends we pay on our common stock and the interest and principal payments on our debt. Various federal and state laws and regulations limitestimated amounts recorded as of December 31, 2023, which could change the amount of dividends that a bank may paythe bargain purchase gain we have recorded. Adjustments to its parent company. In addition, our right to participate in a distribution of assets upon the liquidation or reorganization of a subsidiarythis gain may be subject torecorded based on additional information received after the prior claimsacquisition date that affect the measurement of the subsidiary’s creditors. Ifassets acquired and liabilities assumed and any decrease in the Bank is unable to pay dividends to the Parent Company, we might not be able to service our debt, pay our obligations, or pay dividends on our common stock.
Reduction or eliminationamount of our quarterly cash dividend could have an adverse impact on the market price of our common stock.
Holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds available for such payments under applicable law and regulatory guidance, and althoughbargain purchase gain we have historically declared cash dividends onrecorded could also adversely impact our common stock, we are not required to do so. Furthermore, the paymentfinancial condition, results of dividends falls under federal regulations that have grown more stringent in recent years. While we pay our quarterly cash dividend in compliance with current regulations, such regulations could change in the future. Any reduction or elimination of our common stock dividend in theoperations and future could adversely affect the market price of our common stock.prospects.
36
be inadequate or inaccurate, we could incur increased or unexpected losses which, in turn, could adversely affect our earnings and capital. Additionally, failure by the Company to maintain compliance with strict capital, liquidity, and other stress test requirements under banking regulations could subject us to regulatory sanctions, including limitations on our ability to pay dividends.
In addition, breaches of security have in the past and may in the future occur through intentional or unintentional acts by those having authorized or unauthorized access to our confidential or other information, or that of our customers, clients, or counterparties. If one or more ofCertain previously identified cyber incidents have resulted, and future such events were to occur,could result, in the breach of confidential and other information processed and stored in and transmitted through, our computer systems and networksnetworks. These events could potentially be jeopardized, or could otherwise cause interruptions or malfunctions in our operations or the operations of our customers, clients, or counterparties. Further, we may not know that an attack occurred until well after the event. Even after discovering an attempt or breach occurred, we may not know the extent of the impact of the attack for some period of time. This could cause us significant reputational damage or result in our experiencing significant losses.
Furthermore, we We may also be required to expend significant additional resources to modify our protective measures or investigate and remediate vulnerabilities or other exposures arising from operational and security risks. Additional expenditures may be requiredrisks, including expenses for third-party expert consultants or outside counsel. We are currently subject to litigation regarding cyber incidents, and we also may be subject to future litigation and financial losses that either are not insured against or not fully covered through any insurance we maintain.maintain or any third-party indemnification or insurance. We believe that the impact of any previously identified cyber incidents, including those subject to ongoing investigation and remediation, will not have a material financial impact.
While we have established information security policies, procedures and procedures,controls, including an Incident Response Plan, to prevent or limit the impact of systems failures and interruptions, we may not be able to anticipate all possible security breaches that could affect our systems or information and there can be no assurance that such events will not occur or will be adequately prevented or mitigated by our policies, procedures and controls if they do.
37
Our third-party providers may be vulnerable to unauthorized access, computer viruses, phishing schemes, and other security breaches. Threats to information security also exist in the processing of customer information through various other third-party providers and their personnel. We may be required to expend significant additional resources to protect against the threat of such security breaches and computer viruses, or to alleviate problems caused by such security breaches or viruses. To the extent that the activities of our third-party providers or the activities of our customers involve the storage and transmission of confidential information, security breaches and viruses could expose us to claims, regulatory scrutiny, litigation, and other possible liabilities.
These types of third-party relationships are subject to increasingly demanding regulatory requirements and oversight by federal bank regulators (such as the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation) and the CFPB. As a result, if our regulators conclude that we have not exercised adequate oversight and control over vendors and subcontractors or other ongoing third-party business relationships or that such third-parties have not performed appropriately, we could be subject to enforcement actions, including civil money penalties or other administrative or judicial penalties or fines, as well as requirements for consumer remediation. In addition, the Company may not be adequately insured against all types of losses resulting from third-party failures, and our insurance coverage may be inadequate to cover all losses resulting from systems failures or other disruptions to our banking services.
10 owners of MSRs, excluding ourselves, for which we act as subservicer for the mortgage loans they own. Due to the limited number of relationships, discontinuation of existing agreements with those third parties or adverse changes in contractual terms could have a significant negative impact to our mortgage servicing revenue. The terms and conditions in which a master servicer may terminate subservicing contracts are broad and could be exercised at the discretion of the master servicer without requiring cause. Additionally, the master servicer directs the oversight of custodial deposits associated with serviced loans and, to the extent allowable, could choose to transfer the oversight of the Bank's custodial deposits to another depository institution. Further, as servicer or subservicer of loans, we have certain contractual obligations, including foreclosing on defaulted mortgage loans or, to the extent applicable, considering alternatives to foreclosure. If we commit a material breach of our obligations as servicer, we may be subject to termination if the breach is not cured within a specified period of time following notice, causing us to lose servicing income.
in turn, on our financial condition and results of operations. Claims asserted against us can be highly complicated and slow to develop, making the outcome of such proceedings difficult to predict or estimate early in the process. As a public company,participant in the financial services industry, it is likely that we arewill be exposed to a high level of litigation and regulatory scrutiny relating to our business and operations. Although we establish accruals for legal or regulatory proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated, we do not have accruals for all legal or regulatory proceedings where we face a risk of loss. Due to the inherent subjectivity of the assessments and unpredictability of the outcome of legal and regulatory proceedings, amounts accrued may not represent the ultimate loss to us from the legal and regulatory proceedings in question. As a result, our ultimate losses may be significantly higher than the amounts accrued for legal loss contingencies. For further information, see Note 19 - Commitments and Contingencies and Item 3 - Legal Proceedings.
38
cannot assure you that our internal control over financial reporting will be effective in the future may enact, statutes requiring the payment of interest on escrow balances or if we would be required to retroactively credit interest on escrow funds, the Company’s earnings could be adversely affected.
If we are not able to maintaindetect or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting. Matters impacting our internal control over financial reporting may cause us to be unable to report our financial information onmitigate fraud risks in a timely basis, or may cause usmanner. We are committed to restate previously issued financial information,ongoing investments and thereby subject usattention to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules.
There could also be a negative reaction in the financial markets duecombat fraud and enhance our security measures to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements is also likely to suffer if we or our independent registered public accounting firm reports a material weakness in the effectiveness of our internal control over financial reporting. This could materially adversely affect us by, for example, leading to a decline in our stock price and impairing our ability to raise capital.protect against these risks.
Our actual or perceived failure to identify and address various issues also could give rise to reputational risk that could significantly harm us and our business prospects, including failure to properly address operational risks. These issues include legal and regulatory requirements; consumer protection, fair lending, and privacy issues; properly maintaining customer and associated personal information; record keeping; protecting against money laundering; sales and trading practices; and ethical issues.
Additionally, concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts around the world to mitigate those impacts. Investors, consumers, and businesses also may change their behavior on their own as a result of these concerns. The Company and its customers will need to respond to new laws and regulations as well as investor, consumer and business preferences resulting from climate change concerns. The Company and its customers may face cost increases, asset value reductions, and operating process changes, among other impacts. The impact on the Company’s customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. In addition, the Company would face reductions in credit worthiness on the part of some customers or in the value of assets securing loans. Investors could determine
39
not to invest in the Company’s securities due to various climate change related considerations. The Company’s efforts to take these risks into account in making lending and other decisions may not be effective in protecting the Company from the negative impact of new laws and regulations or changes in investor, consumer or business behavior.
| Item 1B. | Unresolved Staff Comments | ||||
| Item 1C. | Cybersecurity | ||||
| Item 2. | Properties | ||||
| Item 3. | Legal Proceedings | ||||
ITEM 3. LEGAL PROCEEDINGS
Following
| Item 4. | Mine Safety Disclosures | ||||
40
| Item 5. | Market For the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases | ||||
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Comparison of 5-Year Cumulative Total Return
Among New York Community Bancorp, Inc.,
S&P Mid-Cap 400 Index, and S&P U.S. BMI Banks Index*
ASSUMES $100 INVESTED ON
| 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | 12/31/2023 | |||||||||||||||
| New York Community Bancorp, Inc. | $ | 100.00 | $ | 135.38 | $ | 127.51 | $ | 156.41 | $ | 118.03 | $ | 149.75 | ||||||||
| S&P Mid-Cap 400 Index | $ | 100.00 | $ | 126.20 | $ | 143.44 | $ | 178.95 | $ | 155.58 | $ | 181.15 | ||||||||
| S&P U.S. BMI Banks Index | $ | 100.00 | $ | 137.36 | $ | 119.83 | $ | 162.92 | $ | 135.13 | $ | 147.41 | ||||||||
|
| 12/31/2016 |
| 12/31/2017 |
| 12/31/2018 |
| 12/31/2019 |
| 12/31/2020 |
| 12/31/2021 |
| ||||||
New York Community Bancorp, Inc. |
| $ | 100.00 |
| $ | 86.12 |
| $ | 66.11 |
| $ | 89.50 |
| $ | 84.30 |
| $ | 103.41 |
|
S&P Mid-Cap 400 Index |
| $ | 100.00 |
| $ | 116.24 |
| $ | 103.36 |
| $ | 130.44 |
| $ | 148.26 |
| $ | 184.97 |
|
S&P U.S. BMI Banks Index |
| $ | 100.00 |
| $ | 118.21 |
| $ | 98.75 |
| $ | 135.64 |
| $ | 118.33 |
| $ | 160.89 |
|
*The SNL U.S. Bank & Thrift Index was renamed to the S&P U.S. BMI Banks Index.
| (dollars in millions, except share data) | ||||||||||||||||||||||||||
| Period | Total Shares of Common Stock Repurchased | Average Price Paid per Common Share | Total Allocation | Total Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs | ||||||||||||||||||||||
| First Quarter 2023 | 976,454 | $ | 9.33 | $ | 9 | 0 | ||||||||||||||||||||
| Second Quarter 2023 | 190,177 | 10.36 | 2 | 0 | ||||||||||||||||||||||
| Third Quarter 2023 | 33,956 | 12.50 | 0 | 0 | ||||||||||||||||||||||
| Fourth Quarter 2023 | ||||||||||||||||||||||||||
| October 1 - 31, 2023 | 1,525 | 10.29 | 0 | — | ||||||||||||||||||||||
| November 1 - 30, 2023 | 4,897 | 9.34 | — | — | ||||||||||||||||||||||
| December 1 - 31, 2023 | 50,526 | 9.92 | 1 | — | ||||||||||||||||||||||
| Total Fourth Quarter 2023 | 56,948 | $ | 16.57 | 1 | — | |||||||||||||||||||||
| 2023 Total | 1,257,535 | $ | 9.59 | $ | 12 | — | ||||||||||||||||||||
| Item 6. | Reserved | ||||
| Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | ||||
|
|
|
|
|
|
|
|
|
| |||
(dollars in millions, except per share data) |
| Total Shares |
|
| Average Price |
|
| Total |
| |||
First Quarter 2021 |
|
| 1,343,366 |
| $ |
| 11.55 |
| $ |
| 16 |
|
Second Quarter 2021 |
|
| 17,422 |
|
|
| 11.99 |
|
|
| - |
|
Third Quarter 2021 |
|
| 36,163 |
|
|
| 11.58 |
|
|
| - |
|
Fourth Quarter 2021 |
|
|
|
|
|
|
|
|
| |||
October |
|
| 579 |
|
|
| 13.85 |
|
|
| - |
|
November |
|
| 2,246 |
|
|
| 12.51 |
|
|
| - |
|
December |
|
| 2,331 |
|
|
| 11.96 |
|
|
| - |
|
Total Fourth Quarter 2021 |
|
| 5,156 |
|
|
| 12.41 |
|
|
| - |
|
2021 Total |
|
| 1,402,107 |
|
|
| 11.56 |
| $ |
| 16 |
|
ITEM 6. RESERVED
43
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the purpose of this discussion and analysis, the words “we,” “us,” “our,” and the “Company” are used to refer to New York Community Bancorp, Inc. and our consolidated subsidiaries, including New York Community Bank (the “Bank”).
Executive Summary
New York Community Bancorp, Inc. is the holding company for New York Community Bank, with 237 branches in Metro New York, New Jersey, Ohio, Florida, and Arizona.
Chartered in the Statebusiness of New York, theSignature Bridge Bank, is subject to regulation byfrom the FDIC the CFPB, and the NYSDFS. In addition, the holding company is subject to regulation by the FRB, the SEC, andas receiver for Signature Bridge Bank (the “Signature Transaction”). See Note 3 - Business Combinations to the requirements ofConsolidated Financial Statements for further information regarding the NYSE, where shares of our common stock are traded under the symbol “NYCB” and shares of our preferred stock trade under the symbol “NYCB PA.” As a publicly traded company, our mission is to provide our stockholders with a solid return on their investment by producing a strong financial performance, maintaining a solid capital position, and engaging in corporate strategies that enhance the value of their shares.Signature Transaction.
Strong Year-Over-Year Growth In Our Loan Portfolio
| For the Years Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||
| (dollars in millions) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | ||||||||||||||||||||||||||
| ASSETS: | |||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||
Mortgage and other loans and leases , net (1) | $ | 81,855 | $ | 4,509 | 5.51 | % | $ | 49,376 | $ | 1,848 | 3.74 | % | $ | 43,200 | $ | 1,525 | 3.53 | % | |||||||||||||||||
Securities (2) (3) | 10,611 | 444 | 4.18 | % | 7,448 | 200 | 2.69 | % | 6,625 | 156 | 2.35 | % | |||||||||||||||||||||||
| Reverse repurchase agreements | 388 | 22 | 5.77 | % | 460 | 15 | 3.24 | % | 430 | 4 | 1.05 | % | |||||||||||||||||||||||
| Interest-earning cash and cash equivalents | 10,025 | 516 | 5.14 | % | 1,988 | 29 | 1.47 | % | 2,016 | 4 | 0.17 | % | |||||||||||||||||||||||
| Total interest-earning assets | $ | 102,879 | $ | 5,491 | 5.34 | % | $ | 59,272 | $ | 2,092 | 3.53 | % | $ | 52,271 | $ | 1,689 | 3.23 | % | |||||||||||||||||
| Non-interest-earning assets | 7,616 | 5,130 | 5,275 | ||||||||||||||||||||||||||||||||
| Total assets | $ | 110,495 | $ | 64,402 | $ | 57,546 | |||||||||||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | |||||||||||||||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||||||||||||||
| Interest-bearing checking and money market accounts | $ | 29,286 | $ | 943 | 3.22 | % | $ | 17,910 | $ | 226 | 1.26 | % | $ | 12,829 | $ | 31 | 0.24 | % | |||||||||||||||||
| Savings accounts | 9,941 | 169 | 1.70 | % | 9,336 | 60 | 0.64 | % | 7,612 | 28 | 0.36 | % | |||||||||||||||||||||||
| Certificates of deposit | 17,097 | 646 | 3.78 | % | 8,772 | 97 | 1.11 | % | 9,094 | 55 | 0.60 | % | |||||||||||||||||||||||
| Total interest-bearing deposits | $ | 56,324 | $ | 1,758 | 3.12 | % | $ | 36,018 | $ | 383 | 1.06 | % | $ | 29,535 | $ | 114 | 0.38 | % | |||||||||||||||||
| Short term borrowed funds | 7,263 | 305 | 4.20 | % | 2,408 | 56 | 2.32 | % | 2,343 | 8 | 0.34 | % | |||||||||||||||||||||||
| Other borrowed funds | 10,671 | 351 | 3.29 | % | 12,982 | 257 | 1.99 | % | 13,366 | 278 | 2.08 | % | |||||||||||||||||||||||
| Total borrowed funds | $ | 17,934 | $ | 656 | 3.66 | % | $ | 15,390 | $ | 313 | 2.04 | % | $ | 15,709 | $ | 286 | 1.82 | % | |||||||||||||||||
| Total interest-bearing liabilities | $ | 74,258 | $ | 2,414 | 3.25 | % | $ | 51,408 | $ | 696 | 1.35 | % | $ | 45,244 | $ | 400 | 0.88 | % | |||||||||||||||||
| Non-interest-bearing deposits | 21,583 | 5,124 | 4,578 | ||||||||||||||||||||||||||||||||
| Other liabilities | 4,073 | 787 | 790 | ||||||||||||||||||||||||||||||||
| Total liabilities | $ | 99,914 | $ | 57,319 | $ | 50,612 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 10,581 | 7,083 | 6,934 | ||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 110,495 | $ | 64,402 | $ | 57,546 | |||||||||||||||||||||||||||||
| Net interest income/interest rate spread | $ | 3,077 | 2.09 | % | $ | 1,396 | 2.17 | % | $ | 1,289 | 2.35 | % | |||||||||||||||||||||||
| Net interest margin | 2.99 | % | 2.35 | % | 2.47 | % | |||||||||||||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.39 | x | 1.15 | x | 1.16 | x | |||||||||||||||||||||||||||||
| For the Years Ended December 31, | ||||||||||||||||||||||||||
| 2023 compared to Year Ended 2022 Increase/(Decrease) Due to: | 2022 compared to Year Ended 2021 Increase/(Decrease) Due to: | |||||||||||||||||||||||||
| (in millions) | Volume | Rate | Net | Volume | Rate | Net | ||||||||||||||||||||
| INTEREST-EARNING ASSETS: | ||||||||||||||||||||||||||
| Mortgage and other loans and leases, net | $ | 1789 | $ | 872 | $ | 2661 | $ | 231 | $ | 92 | $ | 323 | ||||||||||||||
| Securities | 132 | 112 | 244 | 22 | 22 | 44 | ||||||||||||||||||||
| Reverse repurchase agreements | (4) | 11 | 7 | 1 | 10 | 11 | ||||||||||||||||||||
| Interest Earning cash and cash equivalents | 413 | 74 | 487 | — | 25 | 25 | ||||||||||||||||||||
| Total interest-earnings assets | 2,327 | 1,072 | 3,399 | 247 | 156 | 403 | ||||||||||||||||||||
| INTEREST-BEARING LIABILITIES: | ||||||||||||||||||||||||||
| Interest-bearing checking and money market accounts | 366 | 351 | 717 | 64 | 131 | 195 | ||||||||||||||||||||
| Savings accounts | 10 | 99 | 109 | 11 | 21 | 32 | ||||||||||||||||||||
| Certificates of deposit | 315 | 234 | 549 | (4) | 46 | 42 | ||||||||||||||||||||
| Short term borrowed funds | 204 | 45 | 249 | 2 | 46 | 48 | ||||||||||||||||||||
| Other borrowed funds | (76) | 170 | 94 | (8) | (13) | (21) | ||||||||||||||||||||
| Total interest-bearing liabilities | 743 | 975 | 1,718 | 83 | 213 | 296 | ||||||||||||||||||||
| Change in net interest income | $ | 1,584 | $ | 97 | $ | 1,681 | $ | 164 | $ | (57) | $ | 107 | ||||||||||||||
| For the Years Ended December 31, | |||||||||||||||||
| (in millions) | 2023 | 2022 | 2021 | ||||||||||||||
| Bargain purchase gain | $ | 2,131 | $ | 159 | $ | — | |||||||||||
| Fee income | 172 | 27 | 23 | ||||||||||||||
| Net return on mortgage servicing rights | 103 | 6 | — | ||||||||||||||
| Net gain on loan sales and securitizations | 89 | 5 | — | ||||||||||||||
| Other | 68 | 17 | 9 | ||||||||||||||
| Bank-owned life insurance | 43 | 32 | 29 | ||||||||||||||
| Net loan administration income | 82 | 3 | — | ||||||||||||||
| Net loss on securities | (1) | (2) | — | ||||||||||||||
| Total non-interest income | $ | 2,687 | $ | 247 | $ | 61 | |||||||||||
| At December 31, | |||||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| (in millions) | Amount | Percent of Loans Held for Investment | Amount | Percent of Loans Held for Investment | |||||||||||||
| Mortgage Loans: | |||||||||||||||||
| Multi-family | $ | 37,265 | 44.0 | % | $ | 38,130 | 55.3 | % | |||||||||
| Commercial real estate | 10,470 | 12.4 | % | 8,526 | 12.4 | % | |||||||||||
| One-to-four family first mortgage | 6,061 | 7.2 | % | 5,821 | 8.4 | % | |||||||||||
| Acquisition, development, and construction | 2,912 | 3.4 | % | 1,996 | 2.8 | % | |||||||||||
| Total mortgage loans | $ | 56,708 | 67.0 | % | $ | 54,473 | 78.9 | % | |||||||||
| Other Loans: | |||||||||||||||||
| Commercial and industrial | $ | 25,254 | 29.9 | % | $ | 12,276 | 17.8 | % | |||||||||
| Other loans | 2,657 | 3.1 | % | 2,252 | 3.3 | % | |||||||||||
| Total other loans held for investment | $ | 27,911 | 33.0 | % | $ | 14,528 | 21.1 | % | |||||||||
| Total loans and leases held for investment | $ | 84,619 | 100.0 | % | $ | 69,001 | 100.0 | % | |||||||||
| Allowance for credit losses on loans and leases | (992) | (393) | |||||||||||||||
| Total loans and leases held for investment, net | $ | 83,627 | $ | 68,608 | |||||||||||||
| Loans held for sale | 1,182 | 1,115 | |||||||||||||||
| Total loans and leases, net | $ | 84,809 | $ | 69,723 | |||||||||||||
At year-end 2021, multi-family loans increased $2.4 billion or 7% compared to year-end 2020 with most of this growth occurring in the fourth quarter. Multi-family loans grew $1.8 billion during the fourth quarter of 2021 compared to the third quarter of 2021. The growth in the multi-family portfolio was driven by increased activity on the part of both existing and new borrowers prompted by the expectation of higher interest rates in 2022, a strong rebound in property transactions, and the Company's ability to service and meet our borrowers' needs.
The specialty finance portfolio totaled $3.5 billion at December 31, 2021, up $451 million or 15% compared2023. Loans that have adjustable rates are shown as being due in the period during which their interest rates are next subject to change.
| (in millions) | Multi- Family | Commercial Real Estate | One-to- Four Family | Acquisition, Development, and Construction | Other | Total Loans | |||||||||||||||||||||||||||||
| Amount due: | |||||||||||||||||||||||||||||||||||
| Within one year | $ | 3,530 | $ | 1,233 | $ | 14 | $ | 1,049 | $ | 8,323 | $ | 14,149 | |||||||||||||||||||||||
| After one year: | |||||||||||||||||||||||||||||||||||
| One to five years | 28,419 | 7,946 | 54 | 1,775 | 14,973 | 53,167 | |||||||||||||||||||||||||||||
| Over five years to fifteen years | 5,314 | 1,263 | 297 | 25 | 3,280 | 10,179 | |||||||||||||||||||||||||||||
| Over fifteen years | 2 | 28 | 5,696 | 63 | 1,335 | 7,124 | |||||||||||||||||||||||||||||
| Total due or repricing after one year | 33,735 | 9,237 | 6,047 | 1,863 | 19,588 | 70,470 | |||||||||||||||||||||||||||||
| Total amounts due or repricing, gross | $ | 37,265 | $ | 10,470 | $ | 6,061 | $ | 2,912 | $ | 27,911 | $ | 84,619 | |||||||||||||||||||||||
Our Deposit Base Continued to Show Solid Growth
Total deposits at December 31, 2021 were $35.1 billion, up $2.6 billion or 8% compared to December 31, 2020 and increased $438 million compared to September 30, 2021. Core deposits (total deposits excluding CDs) increased to $26.6 billion at year-end 2021, up $4.5 billion or 20% compared to year-end 2020 and $738 million compared to the third quarter of 2021.
44
The year-over-year growth was driven by higher levels of non-interest bearing accounts and savings accounts. Non-interest bearing accounts at December 31, 2021 totaled $4.5 billion, up $1.5 billion or 47% compared to December 31, 2020. Savings accounts totaled $8.9 billion at December 31, 2021, increasing $2.5 billion or 39% compared to the balance at December 31, 2020. This was offset by a $1.9 billion or 18% decrease in CDs, which totaled $8.4 billion at December 31, 2021. CDs at year-end 2021 represented 24% of total deposits compared to 32% at year-end 2020.
Total deposits at year-end 2021 also reflect the impact of various initiatives we undertook during the year: the launch of our Banking as a Service business and an increase in loan-related deposits. Loan-related deposits increased $475 million or 14% to $4 billion at year-end 2021 compared to year-end 2020. Loan-related deposits include business operating accounts, which increased 37% or $318 million to $1.2 billion, representing 30% of overall loan-related deposits. Banking as a Service-related deposits totaled $1 billion in its first year.
Continued Expense Discipline
For the twelve months ended December 31, 2021, total non-interest expenses were $541 million, up $30 million or 6% compared to the twelve months ended December 31, 2020. Included in the 2021 full-year results were $23 million of merger expenses related to our pending acquisition of Flagstar Bancorp, Inc. compared to no such expenses during full-year 2020. Excluding such merger-related expenses, total operating expenses during full-year 2021 were $518 million, up $7 million or 1% compared to full-year 2020. As a result of the modest increase in operating expenses and higher net income, the efficiency ratio in 2021 declined to 38.36% compared to 44.02% in 2020.
Continued Growth in our Net Interest Income and NIM Expansion
During the twelve months ended December 31, 2021, both our net interest income and the NIM continued to improve. Net interest income for full-year 2021 increased $189 million or 17% to $1.3 billion compared to full-year 2020. The year-over-year increase was primarily due to lower interest expense. Interest expense fell $208 million or 34% to $400 million for the twelve months ended December 31, 2021. Included in net interest income for the twelve months ended December 31, 2021 was $79 million of prepayment income, up $25 million or 46% compared to the twelve months ended December 31, 2020.
Our NIM also improved during full-year 2021. For the twelve months ended December 31, 2021, the NIM expanded 23 bp to 2.47% compared to the twelve months ended December 31, 2020. The improvement was driven by a decline in our cost of funding, which declined 51 bps to 0.88% in full-year 2021. Prepayment income added 15 bps to this year's NIM compared to 11 bps last year.
Our Asset Quality Metrics Remain Strong
NPAs at December 31, 2021 were $41 million or seven bps of total assets, down $5 million or 11% compared to $46 million or eight bps of total assets at December 31, 2020. Total NPLs also decreased $5 million or 13% to $33 million or seven bps of total loans compared to $38 million or nine bps of total loans at December 31, 2020.
Our CARES Act-related deferrals also improved. At December 31, 2021, deferred loans paying interest-only and escrow totaled $479 million, down $2.1 billion or 81% compared to year-end 2020. As of year-end 2021, the Company had zero full-payment deferrals.
Critical Accounting Policies
The preparation of these financial statements requires management to make estimates that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. Actual results may differ from these estimates under varying conditions. On a quarterly basis, management evaluates its estimates, particularly those that involve the most difficult, subjective or complex judgments and are often about matters that are inherently uncertain. The most significant judgments and estimates relate to the accounting policy for the Allowance for Credit Losses that is discussed in more detail below.
45
The judgments used by management in applying these critical accounting policies may be influenced by adverse changes in the economic environment, which may result in changes to future financial results.
Allowance for Credit Losses
The Company’s January 1, 2020, adoption of ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments,” resulted in a significant change to our methodology for estimating the allowance since December 31, 2019. ASU No. 2016-13 replaced the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loan receivables. It also applies to off-balance sheet exposures not accounted for as insurance and net investments in leases accounted for under ASC Topic 842. At December 31, 2019, the allowance for credit losses on loans and leases totaled $148 million. On January 1, 2020, the Company adopted the CECL methodology under ASU Topic 326 and recognized an increase in the allowance for credit losses on loans and leases of $2 million as a “Day 1” transition adjustment from changes in methodology, with a corresponding decrease in retained earnings. Separately, at December 31, 2019, the Company had an allowance for unfunded commitments of $1 million. Upon adoption, the Company recognized an increase in the allowance for unfunded commitments of $13 million as a “Day 1” transition adjustment with a corresponding decrease in retained earnings.
The allowance for credit losses on loans and leases is deducted from the amortized cost basis of a financial asset or a group of financial assets so that the balance sheet reflects the net amount the Company expects to collect. Amortized cost is the unpaid loan balance, net of deferred fees and expenses, and includes negative escrow. Subsequent changes (favorable and unfavorable) in expected credit losses are recognized immediately in net income as a credit loss expense or a reversal of credit loss expense. Management estimates the allowance by projecting and multiplying together the probability-of-default, loss-given-default and exposure-at-default depending on economic parameters for each month of the remaining contractual term. Economic parameters are developed using available information relating to past events, current conditions, and economic forecasts. The Company’s economic forecast period is 24 months, and afterwards reverts to a historical average loss rate on a straight line basis over a 12 month period. Historical credit experience provides the basis for the estimation of expected credit losses, with qualitative adjustments made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency levels and terms, as well as for changes in environmental conditions, such as changes in legislation, regulation, policies, administrative practices or other relevant factors. Expected credit losses are estimated over the contractual term of the loans, adjusted for forecasted prepayments when appropriate. The contractual term excludes potential extensions or renewals. The methodology used in the estimation of the allowance for loan and lease losses, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions. Each quarter the Company reassesses the appropriateness of the economic forecasting period, the reversion period and historical mean at the portfolio segment level, considering any required adjustments for differences in underwriting standards, portfolio mix, and other relevant data shifts over time.
The allowance for credit losses on loans and leases is measured on a collective (pool) basis when similar risk characteristics exist. The portfolio segment represents the level at which a systematic methodology is applied to estimate credit losses. Management believes the products within each of the entity’s portfolio segments exhibit similar risk characteristics. Smaller pools of homogenous financing receivables with homogeneous risk characteristics were modeled using the methodology selected for the portfolio segment. The macroeconomic data used in the quantitative models are based on a reasonable and supportable forecast period of 24 months. The Company leverages economic projections including property market and prepayment forecasts from established independent third parties to inform its loss drivers in the forecast. Beyond this forecast period, the Company reverts to a historical average loss rate. This reversion to the historical average loss rate is performed on a straight-line basis over 12 months.
Loans that do not share risk characteristics are evaluated on an individual basis. These include loans that are in nonaccrual status with balances above management determined materiality thresholds depending on loan class and also loans that are designated as TDR or “reasonably expected TDR” (criticized, classified, or maturing loans that will have a modification processed within the next three months). In addition, all taxi medallion loans are individually evaluated. If a loan is determined to be collateral dependent, or meets the criteria to apply the collateral dependent practical expedient, expected credit losses are determined based on the fair value of the collateral at the reporting date, less costs to sell as appropriate.
46
The Company maintains an allowance for credit losses on off-balance sheet credit exposures. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as a provision for credit losses expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated life. The Company examined historical credit conversion factor (“CCF”) trends to estimate utilization rates, and chose an appropriate mean CCF based on both management judgment and quantitative analysis. Quantitative analysis involved examination of CCFs over a range of fund-up windows (between 12 and 36 months) and comparison of the mean CCF for each fund-up window with management judgment determining whether the highest mean CCF across fund-up windows made business sense. The Company applies the same standards and estimated loss rates to the credit exposures as to the related class of loans.
When applying this critical accounting policy we incorporate several inputs and judgments that may be influenced by changes period to period. These include, but are not limited to changes in the economic environment and forecasts, changes in the credit profile and characteristics of the loan portfolio, and changes in prepayment assumptions which will result in provisions to or recoveries from the balance of the allowance for credit losses.
While changes to the economic environment forecasts, and portfolio characteristics will change from period to period, portfolio prepayments are an integral assumption in estimating the allowance for credit losses on our mortgage loan portfolio, are subject to estimation uncertainty and changes in this assumption could have a material impact to our estimation process. Prepayment assumptions are sensitive to interest rates and existing loan terms and determine the weighted average life of the mortgage loan portfolio. Excluding other factors, as the weighted average life of the portfolio increases or decreases, so will the requireddollar amount of the allowance for credit losses on mortgage loans. A 20% decrease in prepayment assumptions would lead to an increase in the required allowance for credit losses on mortgageall loans of approximately 6%.
FINANCIAL CONDITION
Balance Sheet Summary
At December 31, 2021, total assets were $59.5 billion, up $3.2 billion or 6% compared to December 31, 2020 and up $1.6 billion compared to the third quarter of 2021. The growth compared to both periods was driven by high-single digit loan growth funded primarily through deposits and a fourth-quarter increase in the level of whole sale borrowings.
Total loans and leases held for investment of $45.7 billion increased $2.9 billion or 7% compared tothat are due after December 31, 20202024, and rose $2.1 billion compared to September 30, 2021. Both the year-over-year and linked-quarter was due to growth in both the multi-family and specialty finance portfolios, offset by modest declines in the CRE portfolio.
Total deposits for the full year were $35.1 billion, up $2.6 billionindicates whether such loans have fixed or 8% compared to last year and increased $438 million compared to the previous quarter. Core deposits (total deposits excluding CDs) increased to $26.6 billionadjustable rates of year-end 2021, up $4.5 billion or 20% compared to year-end 2020 and $738 million compared to the third quarter of 2021.interest:
| (in millions) | Fixed | Adjustable | Total | ||||||||||||||
| Mortgage Loans: | |||||||||||||||||
| Multi-family | $ | 8,758 | $ | 24,977 | $ | 33,735 | |||||||||||
| Commercial real estate | 3,381 | 5,856 | 9,237 | ||||||||||||||
| One-to-four family first mortgage | 2,201 | 3,846 | 6,047 | ||||||||||||||
| Acquisition, development, and construction | 121 | 1,742 | 1,863 | ||||||||||||||
| Total mortgage loans | 14,461 | 36,421 | 50,882 | ||||||||||||||
| Other loans | 9,836 | 9,752 | 19,588 | ||||||||||||||
| Total loans | $ | 24,297 | $ | 46,173 | $ | 70,470 | |||||||||||
Loans Held for Investment
47
In addition to multi-family loans and CRE loans, our specialty finance loans and leases have become an increasingly larger portion of our overall loan portfolio. The remainder of our portfolio includes smaller balances of C&I loan, one-to-four family loans, ADC loans, and other loans held for investment. The majority of our C&I loans consist of loans to small- and mid-size businesses.investment:
| For the Years Ended December 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| (in millions) | Amount | Percent of Total | Amount | Percent of Total | |||||||||||||||||||
| Mortgage Loan Originated for Investment: | |||||||||||||||||||||||
| Multi-family | $ | 839 | 4.0 | % | $ | 8,387 | 49.2 | % | |||||||||||||||
| Commercial real estate | 1,092 | 5.3 | % | 1,086 | 6.4 | % | |||||||||||||||||
| One-to-four family first mortgage | 3,739 | 18.1 | % | 328 | 1.9 | % | |||||||||||||||||
| Acquisition, development, and construction | 1,571 | 7.6 | % | 149 | 0.9 | % | |||||||||||||||||
| Total mortgage loans originated for investment | $ | 7,241 | 35.0 | % | $ | 9,950 | 58.4 | % | |||||||||||||||
| Other Loans Originated for Investment: | |||||||||||||||||||||||
| Specialty finance | $ | 7,326 | 35.4 | % | $ | 6,001 | 35.2 | % | |||||||||||||||
| Commercial and industrial | 4,942 | 23.9 | % | 1,016 | 6.0 | % | |||||||||||||||||
| Other | 1,178 | 5.7 | % | 83 | 0.4 | % | |||||||||||||||||
| Total other loans originated for investment | $ | 13,446 | 65.0 | % | $ | 7,100 | 41.6 | % | |||||||||||||||
| Total loans originated for investment | $ | 20,687 | 100.0 | % | $ | 17,050 | 100.0 | % | |||||||||||||||
Multi-family loans are our principal asset.
Atat December 31, 2021, multi-family loans represented $34.62023, down slightly compared to $38.1 billion or 76%,at December 31, 2022 due to a combination of total loans held for investment, reflecting a year-over-year increase of $2.4 billion, or 7%.higher interest rates and our loan diversification strategy.
December 31, 2022.
48
Our emphasis on multi-family loans is driven by several factors, including their structure, which reduces our exposure to interest rate volatility to some degree. Another factor driving our focus on multi-family lending has been the comparative quality of the loans we produce. Reflecting the nature of the buildings securing our loans, our underwriting standards, and the generally conservative LTV ratios our multi-family loans feature at origination, a relatively small percentage of the multi-family loans that have transitioned to non-performing status have actually resulted in losses, even when the credit cycle has taken a downward turn.
duration.
Accordingly, while
| At December 31, 2023 | ||||||||
| Multi-Family Loans | ||||||||
| (in millions) | Amount | Percent of Total | ||||||
| New York City: | ||||||||
| Manhattan | $ | 6,893 | 18 | % | ||||
| Brooklyn | 5,840 | 16 | % | |||||
| Bronx | 3,619 | 10 | % | |||||
| Queens | 2,831 | 8 | % | |||||
| Staten Island | 133 | — | % | |||||
| Total New York City | $ | 19,316 | 52 | % | ||||
| New Jersey | 5,064 | 14 | % | |||||
| Long Island | 509 | 1 | % | |||||
| Total Metro New York | $ | 24,889 | 67 | % | ||||
| Other New York State | 1,233 | 3 | % | |||||
| Pennsylvania | 3,682 | 10 | % | |||||
| Florida | 1,681 | 5 | % | |||||
| Ohio | 1,085 | 3 | % | |||||
| Arizona | 434 | 1 | % | |||||
| All other states | 4,261 | 11 | % | |||||
| Total | $ | 37,265 | 100 | % | ||||
49
The termsmore than half of our CRE loans are similar to the terms of our multi-family credits. While a small percentage of our CRE loans feature ten-year fixed-rate terms, they primarily feature a fixed rate of interest for the first five or seven years of the loan that is generally based on intermediate-term interest rates plus a spread. During years six through tenIn addition to customary fixed rate terms, we now also offer floating rates advances indexed to CME Term SOFR. These products are generally offered in combination with interest rate cap or eight through twelve,swaps that provide borrowers with additional optionality to manage their interest rate risk. Following the initial fixed rate period, the loan resets to an annually adjustable interest rate that is tiedindexed to the prime rate of interest,CME Term SOFR or Prime, plus a spread.spread. Alternately, the borrower may opt for a fixed rate that is tied to the five-year fixed advance rate of the FHLB-NY plus a spread. The fixed-rate option also requires the payment of an amount equal to one percentage point of the then-outstanding loan balance. In either case, the minimum rate at repricing is equivalent to the rate in the initial five- or seven-year term.
The repayment of loans secured by commercial real estate is often dependent on the successful operation and management of the underlying properties. To minimize our credit risk, we
| At December 31, 2023 | ||||||||
| Commercial Real Estate Loans | ||||||||
| (in millions) | Amount | Percent of Total | ||||||
| New York | $ | 5,319 | 51 | % | ||||
| Michigan | 1,000 | 10 | % | |||||
| New Jersey | 580 | 5 | % | |||||
| Florida | 457 | 4 | % | |||||
| Texas | 105 | 1 | % | |||||
| Pennsylvania | 374 | 4 | % | |||||
| Ohio | 132 | 1 | % | |||||
| All other states | 2,503 | 24 | % | |||||
| Total | $ | 10,470 | 100 | % | ||||
C&I Loans
In the twelve months ended December 31, 2021, C&I loans increased $132 million or 34% to $526 million, or 1% of total loans, and represented $536 million or 4% of the held for investment loans we originated.
In contrast to the loans produced by our specialty finance subsidiary, the C&I loans we produce are primarily made to small and mid-size businesses in the five boroughs of New York City and on Long Island. Such loans are tailored to meet the specific needs of our borrowers, and include term loans, demand loans, revolving lines of credit, and, to a much lesser extent, loans that are partly guaranteed by the Small Business Administration.
A broad range of C&I loans, both collateralized and unsecured, are made available to businesses for working capital (including inventory and accounts receivable), business expansion, the purchase of machinery and equipment, and other general corporate needs. In determining the term and structure of C&I loans, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. C&I loans are typically secured by business assets and personal guarantees of the borrower, and include financial covenants to monitor the borrower’s financial stability.
The interest rates on our C&I loans can be fixed or floating, with floating-rate loans being tied to prime or some other market index, plus an applicable spread. Our floating-rate loans may or may not feature a floor rate of interest. The decision to require a floor on C&I loans depends on the level of competition we face for such loans from other institutions, the direction of market interest rates, and the profitability of our relationship with the borrower.
Acquisition, Development, and Construction Loans
Because ADC loans are generally considered to have a higher degree of credit risk, especially during a downturn in the credit cycle, borrowersng 80 percent are required to provide a guaranteeobtain mortgage insurance. As of repayment and completion. In the twelve months ended December 31, 20212023, non-government guaranteed loans in this portfolio had an average current FICO score of 741 and 2020, we did not recover any losses against guarantees. The riskan average LTV of loss on an ADC53.
When applicable, as a condition to closing an ADC loan, it is our practice to require that properties meet pre-sale or pre-lease requirements prior to funding.
One-to-Four Family Loans
At December 31, 2021, one-to-four familyguarantor. These loans represented $160 million, or 0.3%, of totalare recorded in loans held for investment and the liability to repurchase the loans is recorded in other liabilities on the Consolidated Statements of Condition. Certain loans within our portfolio may be subject to indemnifications and insurance limits which expose us to limited credit risk. We have reserved for these risks within other assets and as compared to $236 million, or 0.6%, at the prior year-end. These loan balances include certain mixed-use CRE loans with less than fivea component of our ACL on residential units classified as one-to-four family loans. Other than these types of loans, we do not currently originate traditional one-to-four family loans.first mortgages.
Lending Authority
The Board of Directors updated certain aspects of the Company's lending authority as detailed below. These changes were effective as of July 21, 2021.
51
Multi-family, CRE, ADC, and specialty finance loans less than or equal to $10 million and C&I loans less than or equal to $5 million are approved by the joint authority of lending officers. C&IDecember 31, 2023, loans in excessthis portfolio had an average current FICO score of $5 million and all multi-family, CRE, ADC, and specialty finance loans in excess751.
In addition, all loans of $50 million or more originated by the Bank continue to be reported to the Board of Directors.
In 2021, 251 loans greater than $10 million were originated by the Bank, with an aggregate loan balance of $7.0 billion at origination. In 2020, by comparison, 252 loans greater than $10 million were originated, with an aggregate loan balance at origination of $7.5 billion.
At December 31, 2021 and 2020, the largest mortgage loan in our portfolio was a $329 million multi-family loan, which is collateralized by six properties located in Brooklyn, New York. As of the date of this report, the loan has been current since origination.
Geographical Analysis of the Portfolio of Loans Held for Investment
The following table presents a geographical analysis of the multi-family and CRE2023, loans in our held-for-investment loanindirect portfolio at December 31, 2021:had an average current FICO score of 743. Point of sale loans consist of unsecured consumer installment loans originated primarily for home improvement purposes throug
| At December 31, 2021 |
|
| ||||||||||||||
|
| Multi-Family Loans |
|
|
| Commercial Real Estate Loans |
|
| |||||||||
(dollars in millions) |
| Amount |
| Percent |
|
|
| Amount |
| Percent |
|
| |||||
New York City: |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Manhattan | $ |
| 7,731 |
|
| 22.34 |
| % |
| $ |
| 2,867 |
|
| 42.80 |
| % |
Brooklyn |
|
| 6,144 |
|
| 17.76 |
|
|
|
|
| 363 |
|
| 5.42 |
|
|
Bronx |
|
| 3,577 |
|
| 10.34 |
|
|
|
|
| 143 |
|
| 2.14 |
|
|
Queens |
|
| 2,900 |
|
| 8.38 |
|
|
|
|
| 595 |
|
| 8.88 |
|
|
Staten Island |
|
| 124 |
|
| 0.36 |
|
|
|
|
| 53 |
|
| 0.79 |
|
|
Total New York City | $ |
| 20,476 |
|
| 59.18 |
| % |
| $ |
| 4,021 |
|
| 60.03 |
| % |
New Jersey |
|
| 4,704 |
|
| 13.59 |
|
|
|
|
| 545 |
|
| 8.14 |
|
|
Long Island |
|
| 563 |
|
| 1.63 |
|
|
|
|
| 1,026 |
|
| 15.32 |
|
|
Total Metro New York | $ |
| 25,743 |
|
| 74.40 |
| % |
| $ |
| 5,592 |
|
| 83.49 |
| % |
Other New York State |
|
| 1,093 |
|
| 3.16 |
|
|
|
|
| 157 |
|
| 2.34 |
|
|
Pennsylvania |
|
| 3,266 |
|
| 9.44 |
|
|
|
|
| 323 |
|
| 4.82 |
|
|
Florida |
|
| 1,390 |
|
| 4.02 |
|
|
|
|
| 219 |
|
| 3.27 |
|
|
Ohio |
|
| 696 |
|
| 2.01 |
|
|
|
|
| 22 |
|
| 0.33 |
|
|
Arizona |
|
| 412 |
|
| 1.19 |
|
|
|
|
| 10 |
|
| 0.15 |
|
|
All other states |
|
| 2,003 |
|
| 5.80 |
|
|
|
|
| 375 |
|
| 5.60 |
|
|
Total | $ |
| 34,603 |
|
| 100.00 |
| % |
| $ |
| 6,698 |
|
| 100.00 |
| % |
At December 31, 2021, the majorityh a third-party financial technology company who also provides us a level of our other loans held for investment, excluding specialty finance loans and leases, were secured by properties and/or businesses located in Metro New York.credit loss protection.
52
Loan Maturity and Repricing Analysis: Loans Held for Investment
The following table sets forth the maturity or period to repricing of our portfolio of loans held for investment at December 31, 2021. Loans that have adjustable rates are shown as being due in the period during which their interest rates are next subject to change.
(in millions) |
| Multi- |
|
| Commercial |
|
| One-to- |
|
| Acquisition, |
|
| Other |
|
| Total |
| ||||||||||||
Amount due: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Within one year |
| $ |
| 8,752 |
|
| $ |
| 2,352 |
|
| $ |
| 123 |
|
| $ |
| 177 |
|
| $ |
| 2,750 |
|
| $ |
| 14,154 |
|
After one year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
One to five years |
|
|
| 22,381 |
|
|
|
| 3,748 |
|
|
|
| 36 |
|
|
|
| 29 |
|
|
|
| 1,123 |
|
|
|
| 27,317 |
|
Over five years to fifteen years |
|
|
| 3,445 |
|
|
|
| 598 |
|
|
|
| 1 |
|
|
|
| 3 |
|
|
|
| 101 |
|
|
|
| 4,148 |
|
Over fifteen years |
|
|
| 25 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 37 |
|
|
|
| 62 |
|
Total due or repricing after one year |
|
|
| 25,851 |
|
|
|
| 4,346 |
|
|
|
| 37 |
|
|
|
| 32 |
|
|
|
| 1,261 |
|
|
|
| 31,527 |
|
Total amounts due or repricing, gross |
| $ |
| 34,603 |
|
| $ |
| 6,698 |
|
| $ |
| 160 |
|
| $ |
| 209 |
|
| $ |
| 4,011 |
|
| $ |
| 45,681 |
|
The following table sets forth, as of December 31, 2021, the dollar amount of all loans held for investment that are due after December 31, 2022, and indicates whether such loans have fixed or adjustable rates of interest:
|
|
| Due after December 31, 2022 |
| |||||||||||
(in millions) |
|
| Fixed |
|
| Adjustable |
|
| Total |
| |||||
Mortgage Loans: |
|
|
|
|
|
|
|
|
|
|
|
| |||
Multi-family |
| $ |
| 4,809 |
|
| $ |
| 21,042 |
|
| $ |
| 25,851 |
|
Commercial real estate |
|
|
| 455 |
|
|
|
| 3,891 |
|
|
|
| 4,346 |
|
One-to-four family |
|
|
| 37 |
|
|
|
| - |
|
|
|
| 37 |
|
Acquisition, development, and construction |
|
|
| 32 |
|
|
|
| - |
|
|
|
| 32 |
|
Total mortgage loans |
|
|
| 5,333 |
|
|
|
| 24,933 |
|
|
|
| 30,266 |
|
Other loans |
|
|
| 1,192 |
|
|
|
| 69 |
|
|
|
| 1,261 |
|
Total loans |
| $ |
| 6,525 |
|
| $ |
| 25,002 |
|
| $ |
| 31,527 |
|
AtLoans held-for-sale at December 31, 2021,2023 totaled $1.2 billion, up from $1.1 billion at December 31, 2022. The Signature Transaction contributed $360 million of Small Business Administration ("SBA") loans to this increase. We classify loans as held for sale were zero comparedwhen we originate or purchase loans that we intend to $117 million at December 31, 2020. The balance at year-end 2020 consisted entirelysell. We have elected the fair value option for nearly all of Paycheck Protection Programthis portfolio, except the SBA loans. During 2020 andWe estimate the first halffair value of 2021, the Company was a participant in the Small Business Administration Paycheck Protection Program, a loan program established to help consumers and small businesses during the COVID-19 pandemic. During the second quarter of 2021, the Company transferred the $94 million of PPPmortgage loans remainingbased on the balance sheet that were heldquoted market prices for sale to the held for investment C&I portfolio.
53
Loan Origination Analysis
The following table summarizes our productionsecurities backed by similar types of loans, heldwhere available, or by discounting estimated cash flows using observable inputs inclusive of interest rates, prepayment speeds and loss assumptions for investment in the years ended December 31, 2021 and 2020:similar collateral.
|
|
| For the Years Ended December 31, |
|
| ||||||||||||||
|
|
| 2021 |
|
|
| 2020 |
|
| ||||||||||
(dollars in millions) |
|
| Amount |
|
| Percent |
|
|
| Amount |
|
| Percent |
|
| ||||
Mortgage Loan Originated for Investment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Multi-family |
| $ |
| 8,256 |
|
|
| 62.87 |
| % |
| $ | 8,712 |
|
|
| 67.78 |
| % |
Commercial real estate |
|
|
| 893 |
|
|
| 6.80 |
|
|
|
| 958 |
|
|
| 7.45 |
|
|
One-to-four family residential |
|
|
| 168 |
|
|
| 1.28 |
|
|
|
| 58 |
|
|
| 0.45 |
|
|
Acquisition, development, and construction |
|
|
| 119 |
|
|
| 0.91 |
|
|
|
| 35 |
|
|
| 0.27 |
|
|
Total mortgage loans originated for investment |
|
|
| 9,436 |
|
|
| 71.86 |
|
|
|
| 9,763 |
|
|
| 75.95 |
|
|
Other Loans Originated for Investment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Specialty finance |
|
|
| 3,153 |
|
|
| 24.01 |
|
|
|
| 2,695 |
|
|
| 20.96 |
|
|
Other commercial and industrial |
|
|
| 536 |
|
|
| 4.08 |
|
|
|
| 393 |
|
|
| 3.06 |
|
|
Other |
|
|
| 6 |
|
|
| 0.05 |
|
|
|
| 4 |
|
|
| 0.03 |
|
|
Total other loans originated for investment |
|
|
| 3,695 |
|
|
| 28.14 |
|
|
|
| 3,092 |
|
|
| 24.05 |
|
|
Total loans originated for investment |
| $ |
| 13,131 |
|
|
| 100.00 |
| % |
| $ | 12,855 |
|
|
| 100.00 |
| % |
Loan Portfolio Analysis
The following table summarizes the composition of our loan portfolio at each year-end for the three years ended December 31, 2021:
| At December 31, |
| ||||||||||||||||
| 2021 |
| 2020 |
| 2019 |
| ||||||||||||
(dollars in millions) | Amount |
| Percent |
| Amount |
| Percent |
| Amount |
| Percent |
| ||||||
Mortgage Loans: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Multi-family | $ | 34,603 |
|
| 75.75 | % | $ | 32,236 |
|
| 75.07 | % | $ | 31,159 |
|
| 74.46 | % |
Commercial real estate |
| 6,698 |
|
| 14.66 |
|
| 6,836 |
|
| 15.92 |
|
| 7,082 |
|
| 16.93 |
|
One-to-four family |
| 160 |
|
| 0.35 |
|
| 236 |
|
| 0.55 |
|
| 380 |
|
| 0.91 |
|
Acquisition, development, and |
| 209 |
|
| 0.46 |
|
| 90 |
|
| 0.21 |
|
| 201 |
|
| 0.48 |
|
Total mortgage loans |
| 41,670 |
|
| 91.22 |
|
| 39,398 |
|
| 91.75 |
|
| 38,822 |
|
| 92.78 |
|
Other Loans: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Specialty finance |
| 3,479 |
|
| 7.62 |
|
| 3,024 |
|
| 7.04 |
|
| 2,594 |
|
| 6.20 |
|
Other commercial and industrial |
| 527 |
|
| 1.16 |
|
| 393 |
|
| 0.92 |
|
| 420 |
|
| 1.00 |
|
Other loans |
| 5 |
|
| 0.01 |
|
| 7 |
|
| 0.02 |
|
| 8 |
|
| 0.02 |
|
Total other loans |
| 4,011 |
|
| 8.78 |
|
| 3,424 |
|
| 7.98 |
|
| 3,022 |
|
| 7.22 |
|
Total loans held for investment | $ | 45,681 |
|
| 100.00 |
| $ | 42,822 |
|
| 99.73 |
| $ | 41,844 |
|
| 100.00 |
|
Loans held for sale |
| — |
|
| - |
|
| 117 |
|
| 0.27 |
|
| — |
|
| — |
|
Total loans | $ | 45,681 |
|
| 100.00 | % | $ | 42,939 |
|
| 100.00 | % | $ | 41,844 |
|
| 100.00 | % |
Net deferred loan origination costs |
| 57 |
|
|
|
| 62 |
|
|
|
| 50 |
|
|
| |||
Allowance for credit losses on loans and leases |
| (199 | ) |
|
|
| (194 | ) |
|
|
| (148 | ) |
|
| |||
Total loans and leases, net | $ | 45,539 |
|
|
| $ | 42,807 |
|
|
| $ | 41,746 |
|
|
| |||
54
Asset Quality
Loans Held for Investment and Repossessed Assets
Total NPAs were $41 million or 0.07% of total assets at December 31, 2021, down 11% or $5 million compared to $46 million or 0.08% of total assets at December 31, 2020. Total non-accrual mortgage loans increased $9 million to $27 million, while other non-accrual loans, consisting mainly of taxi medallion-related loans, declined $14 million to $6 million compared to $20 million at December 31, 2020. Included in these amounts were non-accrual taxi medallion-related loans of $6 million and $19 million, respectively.
Repossessed assets totaled $8 million, unchanged compared to the balance at December 31, 2020. As is the case with other non-accrual loans, the majority of the Company’s repossessed assets consist of taxi medallions. Taxi medallions represented $5 million of total repossessed assets at December 31, 2021 compared to $7 million at December 31, 2020.
The following table presents our non-performing loans by loan type and the changes in the respective balances from December 31, 2020 to December 31, 2021:
|
|
|
|
|
|
|
|
| Change from |
|
| |||||||
(dollars in millions) |
| December 31, |
|
| December 31, |
|
|
| Amount |
|
| Percent |
|
| ||||
Non-Performing Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-accrual mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Multi-family | $ |
| 10 |
|
| $ | 4 |
|
| $ |
| 6 |
|
|
| 150 |
| % |
Commercial real estate |
|
| 16 |
|
|
| 12 |
|
|
|
| 4 |
|
|
| 33 |
|
|
One-to-four family |
|
| 1 |
|
|
| 2 |
|
|
|
| (1 | ) |
|
| (50 | ) |
|
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
Total non-accrual mortgage loans |
|
| 27 |
|
|
| 18 |
|
|
|
| 9 |
|
|
| 50 |
|
|
Non-accrual other loans (1) |
|
| 6 |
|
|
| 20 |
|
|
|
| (14 | ) |
|
| (70 | ) |
|
Total non-performing loans | $ |
| 33 |
|
| $ | 38 |
|
| $ |
| (5 | ) |
|
| (13 | ) |
|
| |||||
|
|
| |||
|
| ||||
|
|
| |||
|
| ||||
|
|
| |||
|
|
| |||
|
|
| |||
55
Reflecting the strength of the underlying collateral for these loans and the collateral structure, a relatively small percentage of our non-performing multi-family loans have resulted in losses over time.
56
the average LTVs of such credits at origination were below those amounts at December 31, 2021. Exceptions to these DSCR and LTV limitations are minimal and are reviewed on a case-by-case basis.
The repaymentapproved by the joint authority of loans secured by commercial real estate is often dependent oncredit and lending officers and when necessary, the successful operation and managementBoard Credit Committee of the underlying properties. To minimize our credit risk, we originate CRE loans in adherence with conservative underwriting standards, and require that such loans qualify on the basis of the property’s current income stream and DSCR. The approval of a CRE loan also depends on the borrower’s credit history, profitability, and expertise in property management. Given that our CRE loans are underwritten in accordance with underwriting standards that are similar to those applicable to our multi-family credits, the percentage of our non-performing CRE loans that have resulted in losses has been comparatively small over time.Board.
Multi-family and CRE loans are generally originated at conservative LTVs and DSCRs, as previously stated. Low LTVs provide a greater likelihood of full recovery and reduce the possibility of incurring a severe loss on a credit; in many cases, they reduce the likelihood of the borrower “walking away” from the property. Although borrowers may default on loan payments, they have a greater incentive to protect their equity in the collateral property and to return their loans to performing status. Furthermore, in the case of multi-family loans, the cash flows generated by the properties are generally below-market and have significant value.
57
The following table presents our loans 30 to 89 days past due by loan type and the changes in the respective balances from December 31, 2021 to December 31, 2020:
|
|
|
|
|
|
|
| Change from |
|
| |||||||
(dollars in millions) |
| December 31, |
|
| December 31, |
|
| Amount |
|
| Percent |
|
| ||||
Loans 30-89 Days Past Due: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Multi-family |
| $ | 57 |
|
| $ | 4 |
|
| $ | 53 |
|
|
| 1325 | % |
|
Commercial real estate |
|
| 2 |
|
|
| 10 |
|
|
| (8 | ) |
|
| -80 |
|
|
One-to-four family |
|
| 8 |
|
|
| 2 |
|
|
| 6 |
|
|
| 300 |
|
|
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
|
| - |
|
| NM |
|
| |
Other loans |
|
| — |
|
|
| — |
|
|
| - |
|
| NM |
|
| |
Total loans 30-89 days past due |
| $ | 67 |
|
| $ | 16 |
|
| $ | 51 |
|
|
| 319 | % |
|
Based upon all relevant and available information at the end of this December, management believes that the allowance for losses on loans was appropriate at that date.
| December 31, 2023 | December 31, 2022 | ||||||||||
| Non-performing loans to total loans held for investment | 0.51 | % | 0.20 | % | |||||||
| Non-performing assets to total assets | 0.39 | 0.17 | |||||||||
| Allowance for credit losses on loans and leases to non-performing loans | 231.51 | 278.87 | |||||||||
| Allowance for credit losses on loans and leases to total loans held for investment | 1.17 | 0.57 | |||||||||
(dollars in millions) |
| Loan No. 1 |
|
| Loan No. 2 (2) |
|
| Loan No. 3 |
|
| Loan No. 4 |
|
| Loan No. 5 |
| |||||
Type of Loan |
| CRE |
|
| Multi-Family |
|
| CRE |
|
| Multi-Family |
|
| CRE |
| |||||
Origination date |
| 06/20/14 |
|
| 07/28/2015 |
|
| 09/20/2016 |
|
| 07/24/2020 |
|
| 06/16/2003 |
| |||||
Origination balance |
| $ | 10 |
|
| $ | 8 |
|
| $ | 10 |
|
| $ | 2 |
|
| $ | 2 |
|
Full commitment balance (1) |
| $ | 10 |
|
| $ | 8 |
|
| $ | 10 |
|
| $ | 2 |
|
| $ | 2 |
|
Balance at December 31, 2021 |
| $ | 8 |
|
| $ | 7 |
|
| $ | 6 |
|
| $ | 2 |
|
| $ | 1 |
|
Associated allowance |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Non-accrual date |
| October 2019 |
|
| January 2021 |
|
| November 2021 |
|
| November 2021 |
|
| October 2015 |
| |||||
Origination LTV |
| 65% |
|
| 59% |
|
| 72% |
|
| 25% |
|
| 68% |
| |||||
Current LTV |
| 86% |
|
| 84% |
|
| 95% |
|
| 26% |
|
| 23% |
| |||||
Last appraisal |
| November 2021 |
|
| August 2021 |
|
| May 2021 |
|
| December 2021 |
|
| August 2021 |
| |||||
| Change from | |||||||||||||||||
| December 31, 2022 | |||||||||||||||||
| to | |||||||||||||||||
| December 31, 2023 | |||||||||||||||||
| (in millions) | December 31, 2023 | December 31, 2022 | Amount | ||||||||||||||
Non-Performing Loans(1)(2): | |||||||||||||||||
| Non-accrual mortgage loans: | |||||||||||||||||
| Multi-family | $ | 138 | $ | 13 | $ | 125 | |||||||||||
| Commercial real estate | 128 | 20 | 108 | ||||||||||||||
| One-to-four family first mortgage | 95 | 92 | 3 | ||||||||||||||
| Acquisition, development, and construction | $ | 2 | $ | — | 2 | ||||||||||||
| Total non-accrual mortgage loans | $ | 363 | $ | 125 | 238 | ||||||||||||
| Commercial and industrial | 43 | 3 | 40 | ||||||||||||||
Other non-accrual loans(3) | 22 | 13 | 9 | ||||||||||||||
| Total non-performing loans | $ | 428 | $ | 141 | 287 | ||||||||||||
| Repossessed assets | 14 | 12 | 2 | ||||||||||||||
| Total non-performing assets | $ | 442 | $ | 153 | 289 | ||||||||||||
58
The following is a description of the five loans identified in the preceding table.(3)
No. 1 - The borrower is an owner of real estateIncludes home equity, consumer and is based in New York. The loan is collateralized by an 8,566 square foot, retail condo unit located in New York, New York.other loans.
No. 3 - The borrower is an owner of real estate and is based in New Florida. The loan is collateralized by retail property containing 8,490 square feet of gross leasable area, located in Miami, Fl.
No. 4 - The borrower is an owner of real estate and is based in New York. This loan is collateralized by one three (3) story walk-up building containing 6 residential units, 1 four (4) story walk-up building containing 8 residential units and 1 four (4) story mixed use building containing 6 residential units and 1 commercial unit located in Brooklyn, New York.
No. 5 - The borrower is an owner of real estate and is based in New York. This loan is collateralized by a 19,508 square foot commercial building in Woodhaven, New York.
Troubled Debt Restructurings
In an effort to proactively manage delinquent loans, we have selectively extended such concessions as rate reductions and extensions of maturity dates, as well as forbearance agreements, to certain borrowers who have experienced financial difficulty. In accordance with GAAP, we are required to account for such loan modifications or restructurings as TDRs.
The eligibility of a borrower for work-out concessions of any nature depends upon the facts and circumstances of each transaction, which may change from period to period, and involve management’s judgment regarding the likelihood that the concession will result in the maximum recovery for the Company.
Loans modified as TDRs are placed on non-accrual status until we determine that future collection of principal and interest is reasonably assured. This generally requires that the borrower demonstrate performance according to the restructured terms for at least six consecutive months.
At December 31, 2021, loans modified as TDRs totaled $29 million, including accruing loans of $16 million and non-accrual loans of $13 million. At the prior year-end, loans modified as TDRs totaled $34 million, including accruing loans of $15 million and non-accrual loans of $19 million.
Analysis of Troubled Debt Restructurings
| (in millions) | |||||
| Balance at December 31, 2022 | $ | 141 | |||
| New non-accrual, including acquired from acquisition | 466 | ||||
| Charge-offs | (97) | ||||
| Transferred to repossessed assets | (3) | ||||
| Loan payoffs, including dispositions and principal pay-downs | (36) | ||||
| Restored to performing status | (43) | ||||
| Balance at December 31, 2023 | $ | 428 | |||
(in millions) |
| Accruing |
|
|
| Non- |
|
|
| Total |
| |||
Balance at December 31, 2020 | $ |
| 15 |
|
| $ |
| 19 |
|
| $ |
| 34 |
|
New TDRs |
|
| 1 |
|
|
|
| 10 |
|
|
|
| 11 |
|
Charge-offs |
|
| — |
|
|
|
| (4 | ) |
|
|
| (4 | ) |
Transferred from performing |
|
| — |
|
|
|
| — |
|
|
|
| — |
|
Loan payoffs, including dispositions and |
|
| — |
|
|
|
| (12 | ) |
|
|
| (12 | ) |
Balance at December 31, 2021 | $ |
| 16 |
|
| $ |
| 13 |
|
| $ |
| 29 |
|
Loans on which concessions were made with respect
59
Based on the number of loans performing in accordance with their revised terms, our success rate for restructured CRE loans was 100%; for one-to-four loans it was 0% at the end of this December; our success rate for other loans was 15%, at that date.
On a limited basis, we may provide additional credit to a borrower after the loan has been placed on non-accrual status or modified as a TDR if, in management’s judgment, the value of the property after the additional loan funding is greater than the initial value of the property plus the additional loan funding amount. In 2021, no such additional credit was provided. Furthermore, the terms of our restructured loans typically would not restrict us from cancelling outstanding commitments for other credit facilities to a borrower in the event of non-payment of a restructured loan.
For additional information about our TDRs0.20 percent at December 31, 2021 and 2020, see the discussion of “Asset Quality”2022. The increase in Note 5, “Loans and Leases”NPLs was primarily driven by a $125 million increase in Item 8, “Financial Statements and Supplementary Data.”
Except for the non-accrualmulti-family loans and TDRs discloseda $108 million in this filing, we did not have any potential problemcommercial real estate loans, at December 31, 2021 that would have caused managementprimarily office. Repossessed assets of $14 million were slightly higher compared to have serious doubts as to the ability of a borrower to comply with present loan repayment terms and that would have resulted in such disclosure if that were the case.
Loan Deferrals
Under U.S. GAAP, banks are required to assess modifications to a loan’s terms for potential classification as a TDR. A loan to a borrower experiencing financial difficulty is classified as a TDR when a lender grants a concession that it would otherwise not consider, such as a payment deferral or interest concession. In order to encourage banks to work with impacted borrowers, the CARES Act and bank regulators have provided relief from TDR accounting. The main benefits of TDR relief include a capital benefit$12 million in the form of reduced risk-weighted assets, as TDRs are more heavily risk-weighted for capital purposes; aging of the loans is frozen, i.e., they will continue to be reported in the same delinquency bucket they were in at the time of modification; and the loans are generally not reported as non-accrual during the modification period.prior year.
In addition to the full-payment deferrals, the Company entered into certain modifications whereby the borrowers are paying interest and escrow only. At December 31, 2021, principal deferrals totaled $479 million, down $2.1 billion or 81% compared to $2.5 billion at December 31, 2020 and down $435 million or 48% compared to $914 million at September 30, 2021.
60
The following table reflects as of December 31, 2021, the aggregate amount of principal deferrals by various categories:
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
| Deferred as |
|
|
|
| ||||
|
|
|
|
|
|
| a % of |
|
| Weighted |
| ||||
| Amount in |
|
| Outstanding |
|
| Total |
|
| Average |
| ||||
| Deferral |
|
| Balance |
|
| Portfolio |
|
| LTV |
| ||||
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
| ||||
Multi-Family | $ | 351 |
|
| $ | 34,571 |
|
|
| 1.0 | % |
|
| 56.8 | % |
CRE: |
|
|
|
|
|
|
|
|
|
|
| ||||
Office |
| 113 |
|
|
| 3,112 |
|
|
| 3.6 | % |
|
| 74.3 | % |
Retail |
| 6 |
|
|
| 1,759 |
|
|
| 0.3 | % |
|
| 115.6 | % |
Mixed Use |
| 3 |
|
|
| 543 |
|
|
| 0.6 | % |
|
| 55.3 | % |
Other |
| — |
|
|
| 1,284 |
|
|
| 0.0 | % |
| N/A |
| |
Sub-total CRE | $ | 122 |
|
| $ | 6,698 |
|
|
| 1.8 | % |
|
| 75.7 | % |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total multi-family and CRE | $ | 473 |
|
| $ | 41,269 |
|
|
| 1.1 | % |
|
| 61.7 | % |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other | $ | 6 |
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total | $ | 479 |
|
|
|
|
|
|
|
|
|
| |||
Additionally, the allowance for credit losses on accrued interest receivable on loans, including loans in the deferral program, was $1.0 million, as of December 31, 2021.
Asset Quality Analysis
| Change from | |||||||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| to | |||||||||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||
| (in millions) | December 31, 2023 | December 31, 2022 | Amount | Percent | |||||||||||||||||||
Loans 30 to 89 Days Past Due(1): | |||||||||||||||||||||||
| Multi-family | $ | 121 | $ | 34 | $ | 87 | 256 | % | |||||||||||||||
| Commercial real estate | 28 | 2 | 26 | 1300 | % | ||||||||||||||||||
| One-to-four family first mortgage | 40 | 21 | 19 | 90 | % | ||||||||||||||||||
| Acquisition, development, and construction | 2 | — | 2 | NM | |||||||||||||||||||
| Commercial and industrial | 37 | 2 | 35 | 1750 | % | ||||||||||||||||||
| Other loans | 22 | 11 | 11 | 100 | % | ||||||||||||||||||
| Total loans 30-89 days past due | $ | 250 | $ | 70 | 180 | 257 | % | ||||||||||||||||
|
| At or for the Years Ended December 31, |
| ||||||||||
|
| 2021 |
|
|
| 2020 |
|
| 2019 |
| |||
Non-performing loans to total loans |
|
| 0.07 | % |
|
|
| 0.09 | % |
|
| 0.15 | % |
Non-performing assets to total assets |
|
| 0.07 | % |
|
|
| 0.08 |
|
|
| 0.14 |
|
Allowance for losses on loans to non-performing loans |
|
| 611.79 |
|
|
|
| 513.55 |
|
|
| 241.07 |
|
Allowance for losses on loans to total loans |
|
| 0.44 |
|
|
|
| 0.45 |
|
|
| 0.35 |
|
61
The following table presents information on the Company's net charge-offs as compared to average loans outstanding
| For the Year Ended |
| |||||||
| December 31, |
| |||||||
(dollars in millions) | 2021 |
| 2020 |
| 2019 |
| |||
Multi-family |
|
|
|
|
|
| |||
Net charge-offs (recoveries) during the period | $ | 1 |
| $ | (1 | ) | $ | 1 |
|
Average amount outstanding | $ | 32,424 |
| $ | 31,322 |
| $ | 29,993 |
|
Net charge-offs (recoveries) as a percentage of average loans |
| 0.00 | % |
| 0.00 | % |
| 0.00 | % |
|
|
|
|
|
|
| |||
Commercial real estate |
|
|
|
|
|
| |||
Net charge-offs (recoveries) during the period | $ | 2 |
| $ | 2 |
| $ | - |
|
Average amount outstanding | $ | 5,489 |
| $ | 6,009 |
| $ | 6,220 |
|
Net charge-offs (recoveries) as a percentage of average loans |
| 0.04 | % |
| 0.03 | % |
| 0.00 | % |
|
|
|
|
|
|
| |||
One-to-Four Family |
|
|
|
|
|
| |||
Net charge-offs (recoveries) during the period | $ | 1 |
| $ | - |
| $ | 1 |
|
Average amount outstanding | $ | 191 |
| $ | 314 |
| $ | 415 |
|
Net charge-offs (recoveries) as a percentage of average loans |
| 0.52 | % |
| 0.00 | % |
| 0.24 | % |
|
|
|
|
|
|
| |||
Acquisition, Development and Construction |
|
|
|
|
|
| |||
Net charge-offs (recoveries) during the period | $ | - |
| $ | - |
| $ | - |
|
Average amount outstanding | $ | 152 |
| $ | 116 |
| $ | 311 |
|
Net charge-offs (recoveries) as a percentage of average loans |
| 0.00 | % |
| 0.00 | % |
| 0.00 | % |
|
|
|
|
|
|
| |||
Other Loans |
|
|
|
|
|
| |||
Net charge-offs (recoveries) during the period | $ | (6 | ) | $ | 18 |
| $ | 17 |
|
Average amount outstanding | $ | 4,944 |
| $ | 4,267 |
| $ | 3,446 |
|
Net charge-offs (recoveries) as a percentage of average loans |
| -0.12 | % |
| 0.42 | % |
| 0.49 | % |
|
|
|
|
|
|
| |||
Total loans |
|
|
|
|
|
| |||
Net charge-offs (recoveries) during the period | $ | (2 | ) | $ | 19 |
| $ | 19 |
|
Average amount outstanding | $ | 43,200 |
| $ | 42,028 |
| $ | 40,385 |
|
Net charge-offs (recoveries) as a percentage of average loans |
| 0.00 | % |
| 0.04 | % |
| 0.05 | % |
| At December 31, | |||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||
| (dollars in millions) | Amount | Percent of Total Loans and Leases | Amount | Percent of Total Loans and Leases | Amount | Percent of Total Loans and Leases | |||||||||||||||||||||||||||||
| Multi-family loans | $ | 307 | 44 | % | $ | 178 | 55 | % | $ | 159 | 76 | % | |||||||||||||||||||||||
| Commercial real estate loans | 366 | 12 | 46 | 12 | 17 | 15 | |||||||||||||||||||||||||||||
| One-to-four family first mortgage loans | 48 | 7 | 46 | 8 | 1 | — | |||||||||||||||||||||||||||||
| Acquisition, development, and construction loans | 36 | 3 | 20 | 3 | 2 | — | |||||||||||||||||||||||||||||
| Commercial and industrial | 132 | 30 | — | — | |||||||||||||||||||||||||||||||
| Other loans | 103 | 3 | 103 | 21 | 20 | 9 | |||||||||||||||||||||||||||||
| Total loans | $ | 992 | 100 | % | $ | 393 | 100 | % | $ | 199 | 100 | % | |||||||||||||||||||||||
| 2021 |
|
| 2020 |
|
| 2019 |
| |||||||||||||||
(dollars in millions) | Amount |
|
| Percent of |
|
| Amount |
|
| Percent of |
|
| Amount |
|
| Percent of |
| ||||||
Multi-family loans | $ | 159 |
|
|
| 75.75 | % |
| $ | 150 |
|
|
| 75.28 | % |
| $ | 97 |
|
|
| 74.46 | % |
Commercial real estate loans |
| 17 |
|
|
| 14.66 |
|
|
| 24 |
|
|
| 15.96 |
|
|
| 21 |
|
|
| 16.93 |
|
One-to-four family residential loans |
| 1 |
|
|
| 0.35 |
|
|
| 1 |
|
|
| 0.55 |
|
|
| 1 |
|
|
| 0.91 |
|
Acquisition, development, and construction loans |
| 2 |
|
|
| 0.46 |
|
|
| 1 |
|
|
| 0.21 |
|
|
| 4 |
|
|
| 0.48 |
|
Other loans |
| 20 |
|
|
| 8.78 |
|
|
| 18 |
|
|
| 8.00 |
|
|
| 25 |
|
|
| 7.22 |
|
Total loans | $ | 199 |
|
|
| 100.00 | % |
| $ | 194 |
|
|
| 100.00 | % |
| $ | 148 |
|
|
| 100.00 | % |
Each of the preceding allocations was based upon an estimate of various factors, as discussed in “Critical Accounting Policies” earlier in this report, and a different allocation methodology may be deemed to be more appropriate in the future. In addition, it should be noted that the portion of the allowance forcredit losses on loans allocatedand leases increased $599 million from December 31, 2022 to each loan category does not representDecember 31, 2023. The day 1 impact of the total amount availableSignature Transaction that closed on March 20, 2023 added $127 million to absorbthe reserve. The remaining net increase of approximately $472 million primarily reflects our actions to build reserves during the fourth quarter to address weakness in the office sector, potential repricing risk in the multi-family portfolio and conditions leading to increases in classified assets, which better aligns the Company with its relevant bank peers, including Category IV banks. The allowance for credit losses that may occur within that category, since the total loan loss allowance is available for the entire loan portfolio.
62
The following table presents a geographical analysison loans and leases represented 232 percent of our non-performing loans at December 31, 2021:2023, as compared to 279 percent at the prior year-end.
| |||||
|
|
| |||
|
| ||||
|
| ||||
|
|
| |||
SecuritiesFor the year ended December 31, 2023, our gross charge-offs were $223 million and net charge-offs were $208 million, compared to gross charge-offs of $7 million and net recoveries of $4 million over the same period in 2022.
| For the Years Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| (in millions) | |||||||||||
| Charge-offs: | |||||||||||
| Multi-family | $ | 119 | $ | 1 | |||||||
| Commercial real estate | 56 | 4 | |||||||||
| One-to-four family residential | 4 | — | |||||||||
| Commercial and industrial | 30 | — | |||||||||
| Other | 14 | 2 | |||||||||
| Total charge-offs | $ | 223 | $ | 7 | |||||||
| Recoveries: | |||||||||||
| Commercial real estate | — | (4) | |||||||||
| One-to-four family residential | — | — | |||||||||
| Commercial and industrial | (11) | (7) | |||||||||
| Other | (4) | — | |||||||||
| Total recoveries | $ | (15) | $ | (11) | |||||||
| Net charge-offs (recoveries) | $ | 208 | $ | (4) | |||||||
| For the Years Ended December 31, | |||||||||||||||||
| (in millions) | 2023 | 2022 | 2021 | ||||||||||||||
| Multi-family | |||||||||||||||||
| Net charge-offs during the period | $ | 119 | $ | 1 | $ | 1 | |||||||||||
| Average amount outstanding | $ | 37,839 | $ | 36,292 | $ | 32,424 | |||||||||||
| Net charge-offs as a percentage of average loans | 0.31 | % | 0.00 | % | 0.00 | % | |||||||||||
| Commercial real estate | |||||||||||||||||
| Net charge-offs during the period | $ | 56 | $ | — | $ | 2 | |||||||||||
| Average amount outstanding | $ | 9,905 | $ | 6,964 | $ | 5,489 | |||||||||||
| Net charge-offs as a percentage of average loans | 0.57 | % | 0.00 | % | 0.04 | % | |||||||||||
| One-to-Four Family first mortgage | |||||||||||||||||
| Net charge-offs during the period | $ | 4 | $ | — | $ | 1 | |||||||||||
| Average amount outstanding | $ | 5,907 | $ | 516 | $ | 191 | |||||||||||
| Net charge-offs as a percentage of average loans | 0.06 | % | 0.00 | % | 0.52 | % | |||||||||||
| Acquisition, Development and Construction | |||||||||||||||||
| Net charge-offs during the period | $ | — | $ | — | $ | — | |||||||||||
| Average amount outstanding | $ | 2,530 | $ | 203 | $ | 152 | |||||||||||
| Net charge-offs as a percentage of average loans | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||
| Commercial and Industrial Loans | |||||||||||||||||
| Net charge-offs during the period | $ | 19 | $ | (7) | $ | — | |||||||||||
| Average amount outstanding | $ | 21,460 | $ | — | $ | — | |||||||||||
| Net charge-offs as a percentage of average loans | 0.09 | % | 0.00 | % | 0.00 | % | |||||||||||
| Other Loans | |||||||||||||||||
| Net charge-offs (recoveries) during the period | $ | 10 | $ | (5) | $ | (6) | |||||||||||
| Average amount outstanding | $ | 2,552 | $ | 5,401 | $ | 4,944 | |||||||||||
| Net charge-offs (recoveries) as a percentage of average loans | 0.38 | % | (0.09) | % | (0.12) | % | |||||||||||
| Total loans | |||||||||||||||||
| Net charge-offs (recoveries) during the period | $ | 208 | $ | (4) | $ | (2) | |||||||||||
| Average amount outstanding | $ | 80,193 | $ | 49,376 | $ | 43,200 | |||||||||||
| Net charge-offs (recoveries) as a percentage of average loans | 0.26 | % | (0.01) | % | 0.00 | % | |||||||||||
The investment policies of the Company and the Bank are established by the Board of Directors and implemented by the ALCO. ALCO meets monthly or on an as-needed basis to review the portfolios and specific capital market transactions. In addition, the securities portfolios and investment activities are reviewed monthly by the Board of Directors. Furthermore, the policy governing the investment portfolio activities is reviewed at least annually by the ALCO and ratified by the Board of Directors.
Our general investment strategy is to purchase liquid investments with various maturities to ensure that our overall interest rate risk position stays within the required limits of our investment policies. We generally limit our investments to GSE obligations and U.S. Treasury obligations. At December 31, 2021 and 2020, GSE obligations and U.S. Treasury obligations together represented 83% and 82% of total securities, respectively. The remainder of the portfolio at those dates was comprised of corporate bonds, foreign notes, capital trust notes, and municipal obligations.
| Mortgage- |
|
| U.S. |
|
| State, |
|
| Other |
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Available-for-Sale Debt |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Due within one year |
| 2.72 |
| % |
| 0.06 |
| % |
| — |
| % |
| 1.01 |
| % |
Due from one to five years |
| 3.23 |
|
|
| 3.52 |
|
|
| — |
|
|
| 1.83 |
|
|
Due from five to ten years |
| 2.48 |
|
|
| 1.62 |
|
|
| 3.52 |
|
|
| 2.24 |
|
|
Due after ten years |
| 1.84 |
|
|
| 1.60 |
|
|
| 3.33 |
|
|
| 1.09 |
|
|
Total debt securities available for sale |
| 1.98 |
|
|
| 1.59 |
|
|
| 3.48 |
|
|
| 1.72 |
|
|
2023:
| Mortgage- Related Securities | U.S. Government and GSE Obligations | State, County, and Municipal | Other Debt Securities (2) | ||||||||||||||||||||
Available-for-Sale Debt Securities: (1) | |||||||||||||||||||||||
| Due within one year | — | % | 4.65 | % | — | % | — | % | |||||||||||||||
| Due from one to five years | 3.33 | 5.42 | — | 5.53 | |||||||||||||||||||
| Due from five to ten years | 2.73 | 1.61 | 3.16 | 5.05 | |||||||||||||||||||
| Due after ten years | 4.18 | — | — | 5.74 | |||||||||||||||||||
| Total debt securities available for sale | 4.09 | 2.27 | 3.16 | 5.56 | |||||||||||||||||||
63
In 2023, dividends of $580 million were paid by the Bank to the Parent Company. December 31, (in millions) 2021 Portion of U.S. time deposits in excess of insurance limit $ 2,747 Time deposits otherwise uninsured with a maturity of: 3 months or less $ 787 Over 3 months through 6 months 467 Over 6 months through 12 months 519 Over 12 months 974 Total time deposits otherwise uninsured $ 2,747 including, among others, the convenience of our branches and our other banking channels; our customers’ satisfaction with the service they receive; the rates of interest we offer; the types of products we feature; and the attractiveness of their terms. at December 31, 2022. credit act as a means of ensuring payment to a seller upon shipment of goods to a buyer. At December 31, 2021 Actual Minimum (dollars in millions) Amount Ratio Required Common equity tier 1 capital $ 4,226 9.68 % 4.50 % Tier 1 risk-based capital 4,729 10.83 6.00 Total risk-based capital 5,558 12.73 8.00 Leverage capital 4,729 8.46 4.00 At December 31, 2020 Actual Minimum (dollars in millions) Amount Ratio Required Common equity tier 1 capital $ 3,962 9.72 % 4.50 % Tier 1 risk-based capital 4,465 10.95 6.00 Total risk-based capital 5,290 12.97 8.00 Leverage capital 4,465 8.52 4.00 For the Twelve (dollars in millions) December 31, December 31, Change (%) Total Interest Income $ 1,689 $ 1,708 -1 % Prepayment Income: Loans $ 70 $ 52 35 % Securities 9 2 350 % Total prepayment income $ 79 $ 54 46 % GAAP Net Interest Margin 2.47 % 2.24 % 23 bp Less: Prepayment income from loans -14 bp -11 bp -3 bp Prepayment income from securities -1 — -1 bp Total prepayment income contribution to net interest margin -15 bp -11 bp -4 bp Adjusted Net Interest Margin 2.32 % 2.13 % 19 bp For the Years Ended December 31, 2021 2020 2019 Average Average Average Average Yield/ Average Yield/ Average Yield/ (dollars in millions) Balance Interest Cost Balance Interest Cost Balance Interest Cost ASSETS: Interest-earning assets: Mortgage and other loans and leases, net (1) $ 43,200 $ 1,525 3.53 % $ 42,028 $ 1,542 3.67 % $ 40,385 $ 1,553 3.85 % Securities (2)(3) 6,625 156 2.35 5,965 163 2.73 6,330 235 3.72 Reverse repurchase agreements 430 4 1.05 20 — 0.32 — — — Interest-earning cash and cash equivalents 2,016 4 0.17 1,088 3 0.27 744 17 2.23 Total interest-earning assets 52,271 1,689 3.23 49,101 1,708 3.48 47,459 1,805 3.80 Non-interest-earning assets 5,275 5,008 4,650 Total assets $ 57,546 $ 54,109 $ 52,109 LIABILITIES AND STOCKHOLDERS’ EQUITY: Interest-bearing deposits: Interest-bearing checking and money market $ 12,829 $ 31 0.24 % $ 10,965 $ 57 0.52 % $ 10,597 $ 174 1.65 % Savings accounts 7,612 28 0.36 5,520 32 0.57 4,738 36 0.75 Certificates of deposit 9,094 55 0.60 12,412 217 1.75 13,532 320 2.37 Total interest-bearing deposits 29,535 114 0.38 28,897 306 1.06 28,867 530 1.84 Short term borrowed funds 2,343 8 0.34 2,319 16 0.70 62 1 1.93 Other borrowed funds 13,366 278 2.08 12,514 286 2.28 13,332 317 2.37 Total Borrowed funds 15,709 286 1.82 14,833 302 2.03 13,394 318 2.37 Total interest-bearing liabilities 45,244 400 0.88 43,730 608 1.39 42,261 848 2.01 Non-interest-bearing deposits 4,578 2,957 2,588 Other liabilities 790 714 596 Total liabilities 50,612 47,401 45,445 Stockholders’ equity 6,934 6,708 6,664 Total liabilities and stockholders’ equity $ 57,546 $ 54,109 $ 52,109 Net interest income/interest rate spread $ 1,289 2.35 % $ 1,100 2.09 % $ 957 1.79 % Net interest margin 2.47 % 2.24 % 2.02 % Ratio of interest-earning assets to interest-bearing 1.16x 1.12x 1.12x Year Ended Year Ended December 31, 2021 December 31, 2020 Compared to Year Ended Compared to Year Ended December 31, 2020 December 31, 2019 Increase/(Decrease) Increase/(Decrease) Due to Due to (in millions) Volume Rate Net Volume Rate Net INTEREST-EARNING ASSETS: Mortgage and other loans and leases, net $ 48 $ (65 ) $ (17 ) $ 86 $ (97 ) $ (11 ) Securities 28 (35 ) (7 ) (13 ) (60 ) (73 ) Reverse repurchase agreements 4 — 4 — — — Interest Earning Cash & Cash Equivalent 1 — 1 15 (28 ) (13 ) Total 81 (100 ) (19 ) 88 (185 ) (97 ) INTEREST-BEARING LIABILITIES: Interest-bearing checking and money $ 12 $ (38 ) $ (26 ) $ 6 $ (124 ) $ (118 ) Savings accounts (148 ) 144 (4 ) 9 (13 ) (4 ) Certificates of deposit (47 ) (115 ) (162 ) (24 ) (78 ) (102 ) Short Term Borrowed Funds — (8 ) (8 ) 15 — 15 Other Borrowed Funds 25 (33 ) (8 ) (19 ) (12 ) (31 ) Totals (158 ) (50 ) (208 ) (13 ) (227 ) (240 ) Change in net interest income $ 239 $ (50 ) $ 189 $ 101 $ 42 $ 143 For the Years Ended December 31, (in millions) 2021 2020 2019 Fee income $ 23 $ 22 $ 29 BOLI income 29 32 28 Net gain (loss) on securities — 1 8 Other income: Third-party investment product sales 5 4 7 Other 4 2 12 Total other income 9 6 19 Total non-interest income $ 61 $ 61 $ 84 At or for the (dollars in millions) 2021 2020 Stockholders’ Equity $ 7,044 $ 6,842 Less: Goodwill (2,426 ) (2,426 ) Preferred stock (503 ) (503 ) Tangible common stockholders’ equity $ 4,115 $ 3,913 Total Assets $ 59,527 $ 56,306 Less: Goodwill (2,426 ) (2,426 ) Tangible assets $ 57,101 $ 53,880 Common stockholders’ equity to total assets 10.99 % 11.26 % Tangible common stockholders’ equity to 7.21 7.26 Book value per common share $ 14.07 $ 13.66 Tangible book value per common share 8.85 8.43 At December 31, 2021 (dollars in millions) Three Four to More Than More Than More Than More Than Total INTEREST-EARNING ASSETS: Mortgage and other loans (1) $ 6,057 $ 8,098 $ 16,044 $ 11,273 $ 4,233 $ — $ 45,705 Mortgage-related securities (2)(3) 241 384 775 514 598 278 2,790 Other securities (2) 1,887 215 59 77 1,386 100 3,724 Interest-earning cash and cash equivalents 2,062 — — — — — 2,062 Total interest-earning assets 10,247 8,697 16,878 11,864 6,217 378 54,281 INTEREST-BEARING LIABILITIES: Interest-bearing checking and money 7,210 357 1,611 614 3,417 — 13,209 Savings accounts 2,712 2,422 635 284 2,839 — 8,892 Certificates of deposit 3,441 4,013 905 65 — — 8,424 Borrowed funds 1,039 2,175 4,675 250 8,280 143 16,562 Total interest-bearing liabilities 14,402 8,967 7,826 1,213 14,536 143 47,087 Interest rate sensitivity gap per period (4) $ (4,155 ) $ (270 ) $ 9,052 $ 10,651 $ (8,319 ) $ 235 $ 7,194 Cumulative interest rate sensitivity gap $ (4,155 ) $ (4,425 ) $ 4,627 $ 15,278 $ 6,959 $ 7,194 Cumulative interest rate sensitivity gap (6.98 ) % (7.43 ) % 7.77 % 25.67 % 11.69 % 12.09 % Cumulative net interest-earning assets as a 71.15 % 81.06 % 114.83 % 147.14 % 114.82 % 115.28 % Interest rate sensitivity is of expected cash flows from assets, liabilities, and off-balance sheet contracts. The EVE ratio, under any interest rate scenario, is defined as the EVE in that scenario divided by the market value of assets in the same scenario. The model assumes estimated loan and MBS prepayment rates, (dollars in millions) Change in Market Value Market Value Economic Net Change Estimated + 200 $ 55,740 $ 49,932 $ 5,808 $ (934 ) (13.85 ) % + 100 57,255 50,743 6,512 (230 ) (3.41 ) — 58,736 51,994 6,742 — — The net changes in EVE presented in the preceding table are within the parameters approved by the Boards of Directors of the Company and the Bank.As a member of the FHLB-NY, the Bank is required to acquire and hold shares of its capital stock. 2021,2023 the Bank heldCompany had $861 million and $329 million of FHLB-NY stock, in the amount of $734 million.at cost, and FHLB-Indianapolis stock, at cost, respectively. At December 31, 2020,2022, the Bank heldCompany had $762 million and $329 million of FHLB-NY stock, at cost and FHLB-Indianapolis stock, at cost, respectively. The Company maintains an investment in FHLB-NY stock and, as a result of the Flagstar acquisition, FHLB-Indianapolis stock, partly in conjunction with its membership in the amount of $714 million. Dividends from the FHLB-NYFHLB and partly related to its access to the FHLB funding it utilizes. In addition, the Company had Federal Reserve Bank totaled $32stock, at cost, of $203 million and $36$176 million respectively, in 2021at December 31, 2023 and 2020.December 31, 2022, respectively.rose $20 million year-over-year to $1.2 billion at December 31, 2021.2023 rose $19 million to$1.6 billion compared to December 31, 2022.For more information about As of December 31, 2023, the Company identified a triggering event and applied a market approach using the end of day stock price. We evaluated those conditions known and knowable by the Company and how a market participant would view the control premium as confirmed by the subsequent confirming market evidence. This adjusted market capitalization was then compared to the carrying value to determine the extent of the shortfall which was calculated to be in excess of the goodwill balance. The Company’s assessment concluded that goodwill seefrom historical transactions (2007 and prior) was fully impaired as of December 31, 2023. As a result, the discussionCompany recorded an impairment charge of “Summarythe entire goodwill balance of Significant Accounting Policies”$2.4 billion.Footnote 2 of these consolidated statements.fiscal year in which the dividend is declared and/or the preceding fiscal year.Sources of Fundsfourthree primary funding sources for the payment of dividends, share repurchases, and other corporate uses: dividends paid to the Parent Company by the Bank; capital raised through the issuance of securities;equity; and funding raised through the issuance of debt instruments;instruments.repaymentsits non-bank subsidiaries. The Bank would require the approval of the OCC if the dividends it declares in any calendar year were to exceed the total of its respective net profits for that year combined with its respective retained net profits for the preceding two calendar years, less any required transfer to paid-in capital. The term “net profits” is defined as net income for a given period less any dividends paid during that period. As a result of our acquisition of Flagstar, we are also required to seek regulatory approval from the OCC for the payment of any dividend to the Parent Company through at least the period ending November 1, 2024. In connection with receiving regulatory approval from the OCC for the Signature Transaction, the Bank has committed that (i) for a period of two years from the date of the Signature Transaction, it will not declare or pay any dividend without receiving a prior written determination of no supervisory objection from the OCC and income from, investment securities.(ii) it will not declare or pay dividends on the amount of retained earnings that represents any net bargain purchase gain that is subject to a conditional period that may be imposed by the OCC.(Dollars in millions) Cash and cash equivalents $ 11,475 Unencumbered investment securities 6,300 FHLB borrowing availability 8,400 Federal Reserve Bank borrowing availability through the discount window 1,700 Total Ready Liquidity $ 27,875 In 2021, loan repayments and sales generated cash flows of $10.4 billion, as compared to $11.9 billion in 2020. Cash flows from repayments accounted for $10.4 billion and $11.9 billion of the respective totals, and cash flows from sales accounted for $37 million and $3 million in 2021 and 2020, respectively.In 2021, cash flows from the repayment securities totaled $1.7 billion, while the purchase of securities amounted to $1.8 billion for the year. By comparison, cash flows from the repayment and sale of securities totaled $2.1 billion and $484 million, respectively, in 2020, and were offset by the purchase of securities totaling $2.5 billion.In 2021, the cash flows from loans and securities were primarily deployed into the production of multi-family loans held for investment, as well as held-for-investment CRE loans and specialty finance loans and leases.DepositsTotal deposits increased $2.6 billion or 8% on a year-over-year basis to $35.1 billion. Deposit growth was driven by growth in savings accounts and non-interest bearing accounts and offset by a decline in CDs. Compared to the fourth quarter of last year, CDs declined $1.9 billion or 18% to $8.4 billion, while savings accounts increased $2.5 billion or 39% to $8.9 billion and interest bearing checking and money market accounts increased over the same timeframe by $599 million or 5% to $13.2 billion. Non-interest-bearing accounts rose $1.5 billion or 47% to $4.5 billion at December 31, 2021.64While the vast majority of our deposits are retail in nature (i.e., they are deposits we have gathered through our branches or through business combinations), institutional deposits and municipal deposits are also part of our deposit mix. Retail deposits rose $2.4 billion year-over-year to $27.2 billion, while institutional deposits rose $161 million to $1.4 billion at year-end. Municipal deposits represented $751 million of total deposits at the end of this December, a $259 million decrease from the balance at December 31, 2020.Included in total deposits at year-end 2021 were $4 billion in loan-related deposits compared to $3.5 billion at year-end 2020. Total deposits at December 31, 2021 also included $1 billion of deposits related to our Banking as a Service initiative, which was launched earlier in 2021.Depending on their availability and pricing relative to other funding sources, we also include brokered deposits in our deposit mix. Brokered deposits accounted for $5.7 billion of our deposits at the end of this December, compared to $5.3 billion at December 31, 2020. Brokered money market accounts represented $2.9 billion of total brokered deposits at December 31, 2021 and $3.0 billion at December 31, 2020; brokered interest-bearing checking accounts represented $1.6 billion and $1.3 billion, respectively, at the corresponding dates. At December 31, 2021, we had $1.2 billion of brokered CDs, compared to $1.0 billion at December 31, 2020.The following table indicates the amount of time deposits, by account, that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity as of December 31, 2021.Our uninsured deposits, on an unconsolidated basis, are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $10.1 billion and $11.3 billion at December 31, 2021 and 2020, respectively. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.Borrowed FundsThe majority of our borrowed funds are wholesale borrowings and consist of FHLB-NY advances, repurchase agreements, and federal funds purchased, and, to a lesser extent, junior subordinated debentures and subordinated notes. At December 31, 2021, total borrowed funds increased $478 million or 3% to $16.6 billion compared to the balance at December 31, 2020. The bulk of the year-over-year increase was driven by an increase in the balance of wholesale borrowings.Wholesale BorrowingsWholesale borrowings totaled $15.9 billion and $15.4 billion, respectively, at December 31, 2021 and 2020, representing 27% of total assets at both dates. FHLB-NY advances accounted for $15.1 billion of the year-end 2021 balance, as compared to $14.6 billion at the prior year-end. Pursuant to blanket collateral agreements with the Bank, our FHLB-NY advances and overnight advances are secured by pledges of certain eligible collateral in the form of loans and securities. (For more information regarding our FHLB-NY advances, see the discussion that appears earlier in this report regarding our membership and our ownership of stock in the FHLB-NY.) At December 31, 2021 and 2020, $8.3 billion of our wholesale borrowings had callable features.65Also included in wholesale borrowings were repurchase agreements of $800.0 million at December 31, 2021 and 2020. Repurchase agreements are contracts for the sale of securities owned or borrowed by the Bank with an agreement to repurchase those securities at agreed-upon prices and dates.Our repurchase agreements are primarily collateralized by GSE obligations, and may be entered into with the FHLB-NY or certain brokerage firms. The brokerage firms we utilize are subject to an ongoing internal financial review to ensure that we borrow funds only from those dealers whose financial strength will minimize the risk of loss due to default. In addition, a master repurchase agreement must be executed and on file for each of the brokerage firms we use.We had no federal funds purchased at both December 31, 2021 and 2020.Junior Subordinated DebenturesJunior subordinated debentures totaled $361 million at December 31, 2021, slightly higher than the balance at the prior year-end reflecting discount accretion.Subordinated NotesAt December 31, 2021, the balance of subordinated notes was $296 million, relatively unchanged from December 31, 2020.See Note 9, “Borrowed Funds,” in Item 8, “Financial Statements and Supplementary Data” for a further discussion of our wholesale borrowings, our junior subordinated debentures and subordinated debt.Liquidity, Contractual Obligations and Off-Balance Sheet Commitments, and Capital PositionLiquidityWe manage our liquidity to ensure that our cash flows are sufficient to support our operations, and to compensate for any temporary mismatches between sources and uses of funds caused by variable loan and deposit demand.We monitor our liquidity daily to ensure that sufficient funds are available to meet our financial obligations. Our most liquid assets are cash and cash equivalents, which totaled $2.2 billion and $1.9 billion, respectively, at December 31, 2021 and 2020. As in the past, our loan and securities portfolios provided meaningful liquidity in 2021, with cash flows from the repayment and sale of loans totaling $10.4 billion and cash flows from the repayment and sale of securities totaling $1.7 billion.Additional liquidity stems from deposits and from our use of wholesale funding sources, including brokered deposits and wholesale borrowings. In addition, we have access to the Bank’s approved lines of credit with various counterparties, including the FHLB-NY. The availability of these wholesale funding sources is generally based on the amount of mortgage loan collateral available under a blanket lien we have pledged to the respective institutions and, to a lesser extent, the amount of available securities that may be pledged to collateralize our borrowings. At December 31, 2021, our available borrowing capacity with the FHLB-NY was $8.4 billion. In addition, the Bank had available-for-sale securities of $5.8 billion, of which, $4.6 billion is unpledged.Furthermore, the Bank has agreements with the FRB-NY that enable it to access the discount window as a further means of enhancing their liquidity. In connection with these agreements, the Bank has pledged certain loans and securities to collateralize any funds they may borrow. At December 31, 2021, the maximum amount the Bank could borrow from the FRB-NY was $1.0 billion. There were no borrowings against these lines of credit at December 31, 2021.Our primary investing activity is loan production, and the volume of loans we originated for investment totaled $13.1 billion in 2021. During this time, the net cash used in investing activities totaled $2.8 billion; the net cash provided by our operating activities totaled $290 million. Our financing activities provided net cash of $2.7 billion.20212023 totaled $7.5$17.3 billion, representing 88%80 percent of total CDs at that date. Our ability to attract and retain retail deposits, including CDs, depends on numerous factors,66The Parent Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to operating expenses and any share repurchases, the Parent Company is responsible for paying any dividends declared to our stockholders. As a Delaware corporation, the Parent Company is able to pay dividends either from surplus or, in case there is no surplus, from net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.The Parent Company’sdividends may also depend, in part, upon dividends it receives from the Bank. The abilitytypes of the Bank to pay dividends and other capital distributions to the Parent Company is generally limited by New York State Banking Law and regulations, and by certain regulations of the FDIC. In addition, the Superintendent of the New York State Department of Financial Services (the “Superintendent”), the FDIC,products we offer, and the FRB,attractiveness of their terms. The vast majority of our deposits are retail in nature (i.e., they are deposits we have gathered through our branches or through business combinations).reasons$9.5 billion of safety and soundness, may prohibit the payment of dividends that are otherwise permissible by regulations.Under New York State Banking Law, a New York State-chartered stock-form savings bank or commercial bank may declare and pay dividends out of its net profits, unless there is an impairment of capital. However, the approval of the Superintendent is required if the total of all dividends declared in a calendar year would exceed the total of a bank’s net profits for that year, combined with its retained net profits for the preceding two years. In 2021, the Bank paid dividends totaling $380 million to the Parent Company, leaving $469 million that it could dividend to the Parent Company without regulatory approval at year-end. Additional sources of liquidity available to the Parent Companyour deposits at December 31, 2021 included $139 million in cash2023, compared to $5.1 billionat December 31, 2022. Brokered money market accounts represented $1.3 billion of total brokered deposits at December 31, 2023 and cash equivalents. If$2.8 billion at December 31, 2022; brokered interest-bearing checking accounts represented $1.6 billion and $1.0 billion, respectively. At December 31, 2023, we had $6.6 billion of brokered CDs, compared to $1.3 billion at December 31, 2022.Bank wasportion of deposit accounts that exceed the FDIC insurance limit (currently $250,000). These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes and excludes internal accounts. At December 31, 2023 our deposit base includes $29.3 billion of uninsured deposits, a net increase of $12.9 billion as compared to applyDecember 31, 2022 due to the Superintendent for approval to make a dividend or capital distributionSignature Transaction. This represents 36 percent of our total deposits.dividend amounts permitted underFDIC insurance limit (currently $250,000) by time remaining until maturity:(in millions) December 31, 2023 December 31, 2022 Portion of U.S. time deposits in excess of insurance limit $ 7,893 $ 3,749 Time deposits otherwise uninsured with a maturity of: 3 months or less 1,675 969 Over 3 months through 6 months 1,623 604 Over 6 months through 12 months 2,325 1,269 Over 12 months 2,271 907 Total time deposits otherwise uninsured $ 7,894 $ 3,749 regulations, there can beFRB of New York and, to a lesser extent, junior subordinated debentures and subordinated notes. At December 31, 2023, total borrowed funds decreased $65 million to $21.3 billion compared to the balance at December 31, 2022.assurance that such application would be approved.federal funds outstanding at December 31, 2023 and December 31, 2022. and Off-Balance Sheet CommitmentsFor example, we offer CDs with contractual terms to our customers, and borrow funds under contract from the FHLB-NY and various brokerage firms. These contractual obligations are reflected in the Consolidated Statements of Condition under “Deposits” and “Borrowed funds,” respectively. At December 31, 2021, we had CDs of $8.4 billion and long-term debt (defined as borrowed funds with an original maturity one year or more) of $13.4 billion.We also are obligated under certain non-cancelable operating leases on the buildings and land we use in operating our branch network and in performing our back-office responsibilities. These obligations are included in the Consolidated Statements of Condition and totaled $249 million at December 31, 2021.At December 31, 2021, we also hadinclude commitments to extend credit in the form of mortgage and other loan originations, as well as commercial, performance stand-by, and financial stand-by letters of credit, totaling $3.1 billion. credit. off-balance sheet commitments consist of agreements to extend credit, as long as there is no violation of any condition established in the contract under which the loan is made. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee.67 Although commercialare used to effect payment for domestic transactions, the majority are used to settle payments in international trade. Typically, such letters of credittypically require the presentation of documents that describe the commercial transaction, and provide evidence of shipment and the transfer of title. The fees we collectFees collected in connection with the issuance of letters of credit are included in “Fee income” in the Consolidated Statements of Income and Comprehensive Income.Based upon our current liquidity position, we expect that our funding will be sufficient to fulfill these cash obligations and commitments when they are due both in the short term and long term.2021,2023, we did not engage in any off-balance sheet transactions reasonably likelythat we expect to have a material effect on our financial condition, results of operations or cash flows.2021,2023, we had no commitments to purchase securities.Positionamounts and classifications are also subject to the Regulators’ qualitative judgments about the components of capital and risk weightings, among other factors.As reflectedfollowing table,regulations). At December 31, 2023, our capital measures continued to exceed the minimum federal requirements for a bank holding company and for a bank. The following table sets forth our common equity tier 1, tier 1 risk-based, total risk-based, and leverage capital amounts and ratios on a consolidated basis and for the Bank on a stand-alone basis, as well as the respective minimum regulatory capital requirements, at December 31, 2021that date:2020:ratios for the Company:Risk-Based Capital December 31, 2023 Common Equity Tier 1 Tier 1 Total Leverage Capital (in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 8,009 9.05 % $ 8,512 9.62 % $ 10,415 11.77 % $ 8,512 7.75 % Minimum for capital adequacy purposes 3,983 4.50 5,310 6.00 7,081 8.00 4,392 4.00 Excess $ 4,026 4.55 % $ 3,202 3.62 % $ 3,334 3.77 % $ 4,120 3.75 % December 31, 2022 Total capital $ 6,335 9.06 % $ 6,838 9.78 % $ 8,154 11.66 % $ 6,838 9.70 % Minimum for capital adequacy purposes 3,146 4.50 4,195 6.00 5,593 8.00 2,819 4.00 Excess $ 3,189 4.56 % $ 2,643 3.78 % $ 2,561 3.66 % $ 4,019 5.70 %
Ratio
RatioRisk-Based Capital December 31, 2023 Common Equity Tier 1 Tier 1 Total Leverage Capital (dollars in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 9,305 10.52 % $ 9,305 10.52 % $ 10,271 11.61 % $ 9,305 8.48 % Minimum for capital adequacy purposes 3,980 4.50 5,307 6.00 7,076 8.00 4,389 4.00 Excess $ 5,325 6.02 % $ 3,998 4.52 % $ 3,195 3.61 % $ 4,916 4.48 % December 31, 2022 Total capital $ 7,653 10.96 % $ 7,653 10.96 % $ 7,982 11.43 % $ 7,653 10.87 % Minimum for capital adequacy purposes 3,142 4.50 4,189 6.00 5,585 8.00 2,817 4.00 Excess $ 4,511 6.46 % $ 3,464 4.96 % $ 2,397 3.43 % $ 4,836 6.87 % 2021,2023, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by 377 basis points and the fully phased-in capital conservation buffer by 127 basis points.continuedif adopted as proposed.exceedeither or both in future reporting periods.classification as “well capitalized” institutions, as defined undercredit losses on commercial real estate.Federal Deposit Insurance Corporation Improvement Actsecondary market and often retain the right to service the loan at the time of 1991,sale upon which, a mortgage servicing right (MSR) is created. We have elected to report our MSR assets at fair value which is determined using an internal valuation model that utilizes an option-adjusted spread, constant prepayment rates, costs to service, and asother assumptions. The assumptions used in the MSR valuation are unobservable in nature, involve a higher degree of judgment and are estimated based on our judgment regarding the value that market participants would assign to the asset. To corroborate this estimate, we obtain third-party valuations of the MSR portfolio on a quarterly basis from independent valuation services to assess the reasonableness of the fair value calculated by the internal valuation model.discussed in Note 19, “Capital,information and sensitivity analysis regarding the valuation of the MSR asset, see "Note 9 - Mortgage Servicing Rights,” in Item 8. “Financial Statements and Supplementary Data.”"RESULTS OF OPERATIONS: 2021 AS COMPARED TO 2020Net Interest IncomeNet interest income is our primary sourceincome. Its level isAccountingfunctionbusiness combination be recorded at their fair values as of the average balanceacquisition date. This method often involves estimates, all of which are inherently subjective. We have elected to hold the measurement period open to allow for potential adjustments for up to one year after the acquisition date, for new information that existed at the acquisition date but may not have been known or available at that time. For further information, refer to Note 3 - Business Combinations in Item 8, "Financial Statements and Supplementary Data".interest-earning assets,single reporting unit, which considers how a market participant would view a control premium, complemented by an income approach if deemed necessary. The resulting value is then compared to our book value and any shortfalls would be recorded as an impairment.average balanceCompany identified a triggering event and applied a market approach using the end of our interest-bearing liabilities,day stock price, control premium for completed bank acquisitions, and the spread between the yield on such assets and the cost of such liabilities. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by various external factors, including the local economy, competitionan adjustment for loans and deposits, the monetary policy of the FOMC, and market interest rates.The cost of our deposits and borrowed funds is largelyCompany-specific risk considerations based on short-term rates of interest, the level of which is partially impacted by the actions of the FOMC. The FOMC reduces, maintains, or increases the target federal funds rate (the rate at which banks borrow funds overnight from one another) as it deems necessary.68While the target federal funds rate generally impacts the cost of our short-term borrowings and deposits, the yields on our held-for-investment loans and other interest-earning assets are typically impacted by intermediate-termsubsequent confirming market interest rates.Another factor that impacts the yields on our interest-earning assets—and our net interest income—is the income generated by our multi-family and CRE loans and securities when they prepay. Since prepayment income is recorded as interest income, an increase or decrease in its level will also be reflected in the average yields (as applicable) on our loans, securities, and interest-earning assets, and therefore in our net interest income, our net interest rate spread, and our net interest margin.It should be noted that the level of prepayment income on loans recorded in any given period depends on the volume of loans that refinance or prepay during that time. Such activity is largely dependent on such external factors as currentevidence. This adjusted market conditions, including real estate values, and the perceived or actual direction of market interest rates. In addition, while a decline in market interest rates may trigger an increase in refinancing and, therefore, prepayment income, so too may an increase in market interest rates. It is not unusual for borrowers to lock in lower interest rates when they expect, or see, that market interest rates are rising rather than risk refinancing later at a still higher interest rate.For the twelve months ended December 31, 2021, net interest income totaled $1.3 billion, up $189 million or 17%capitalization was then compared to the twelve months endedcarrying value to determine the extent of any shortfall which was calculated to be in excess of the goodwill balance. The Company’s assessment concluded that goodwill from historical transactions (2007 and prior) was fully impaired as of December 31, 2020. The year-over-year improvement was driven2023, as confirmed by a significant decline in interest expense due to lower funding costs, modestly offset by a yield-driven decline of $19 million in interest income.Year-Over-Year ComparisonThe following factors contributed to the year-over-year increase in net interest income:•Interest income on mortgage and other loans, net totaled $1.5 billion, down $17 million compared to full-year 2020, while interest income on securities declined $7 million to $156 million compared to last year. This was partially offset by a $5 million increase on interest income related to cash and cash equivalents.•Interest income on mortgages and other loans, net was driven by a $1.2 billion or 3% increase in average loan balances to $43.2 billion, offset by a 14 bps decrease in the average loan yield to 3.53% from 3.67% in 2020.•Interest income on securities was negatively impacted by a 38 bps decline in the average yield to 2.35% from 2.73%, offset by a $660 million or 11% increase in the average securities balance to $6.6 billion.•Average interest-earning cash and cash equivalent balances more than doubled during full-year 2021 to $2.4 billion compared to $1.1 billion during full-year 2020, while the average yield rose four bps to 0.32%.•Interest expense on average interest-bearing deposits declined $192 million or 63% to $114 million during full-year 2021, driven by a 68 bps decrease in the average cost of interest-bearing deposits, while the average balance of interest-bearing deposits rose $638 million or 2% to $29.5 billion.•Interest expense on borrowed funds declined $16 million or 5% to $286 million, despite an $876 million or 6% increase in the average balance to $15.7 billion.•The average cost of borrowed funds declined 21 bps to 1.82% during full-year 2021.69Net Interest MarginThe direction of the Company’s net interest margin was consistent with that of its net interest income, and generally was driven by the same factors as those described above. Adjusted net interest margin is a non-GAAP financial measure, as more fully discussed below.
Months Ended
2021
2020
(non-GAAP)RECONCILIATION OF NET INTEREST MARGIN AND ADJUSTED NET INTEREST MARGINWhile our net interest margin, including the contribution of prepayment income and the impact from our recent subordinated notes offering, is recorded in accordance with GAAP, adjusted net interest margin, which excludes the contribution of prepayment income, is not. Nevertheless, management uses this non-GAAP measure in its analysis of our performance, and believes that this non-GAAP measure should be disclosed in this report and other investor communications for the following reasons:1.Adjusted net interest margin gives investors a better understanding of the effect of prepayment income on our net interest margin. Prepayment income in any given period depends on the volume of loans that refinance or prepay, or securities that prepay, during that period. Such activity is largely dependent on external factors such as current market conditions, including real estate values, and the perceived or actual direction of market interest rates.2.Adjusted net interest margin is among the measures considered by current and prospective investors, both independent of, and in comparison with, our peers.Adjusted net interest margin should not be considered in isolation or as a substitute for net interest margin, which is calculated in accordance with GAAP. Moreover, the manner in which we calculate this non-GAAP measure may differ from that of other companies reporting a non-GAAP measure with a similar name.The following table sets forth certain information regarding our average balance sheet for the years indicated, including the average yields on our interest-earning assets and the average costs of our interest-bearing liabilities. Average yields are calculated by dividing the interest income produced by the average balance of interest-earning assets. Average costs are calculated by dividing the interest expense produced by the average balance of interest-bearing liabilities. The average balances for the year are derived from average balances that are calculated daily. The average yields and costs include fees, as well as premiums and discounts (including mark-to-market adjustments from acquisitions), that are considered adjustments to such average yields and costs.70Net Interest Income Analysis
accounts
liabilities(1)Amounts are net of net deferred loan origination costs/(fees) and the allowances for loan losses and include loans held for sale non-performing loans.(2)Amounts are at amortized cost.(3)Includes FHLB stock.The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities affected our interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) the changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) the changes attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.71Rate/Volume Analysis
market accountsProvision for Credit LossesDuring 2021, the provision for credit losses totaled $3 million, down $59 million compared to the $62 million we reported during 2020. For additional information about our methodologies for recording recoveries of, and provisions for, loan losses, see the discussion of the loan loss allowance under “Critical Accounting Policies” and the discussion of “Asset Quality” that appear earlier in this report.Non-Interest IncomeWe generate non-interest income through a variety of sources, including—among others—fee income (in the form of retail deposit fees and charges on loans); income from our investment in BOLI; gains on sales of securities; and “other” sources, including the revenues produced through the sale of third-party investment products.For the twelve months ended December 31, 2021, non-interest income totaled $61 million, unchanged compared to the twelve months ended December 31, 2020.72Non-Interest Income AnalysisThe following table summarizes our sources of non-interest income for the years ended December 31, 2021, 2020, and 2019:Non-Interest ExpenseFor the twelve months ended December 31, 2021 total non-interest expense was $541 million up $30 million or 6% compared to the twelve months December 31, 2020. Included in the 2021 amount are $23 million of merger-related expenses. Excluding this item, operating expenses for the twelve months ended December 31, 2021 were $518 million, up $7 million or 1% compared to the previous year.Income Tax ExpenseIncome tax expense includes federal, New York State, and New York City income taxes, as well as non-material income taxes from other jurisdictions where we operate our branches and/or conduct our mortgage banking business.For the twelve months ended December 31, 2021, income tax expense totaled $210 million and the Company's effective tax rate was 26.09% compared to $77 million and an effective tax rate of 13.05% for the twelve months ended December 31, 2020. The year-over-year increase was due to higher pre-tax income and the non-deductibility of certain merger-related expenses, and an increase in the New York State corporate tax rate. Our full-year 2020 income tax expense included a $68 million income tax benefit related to certain tax provisions related to corporations under the CARES Act versus no such benefit during full-year 2021.RESULTS OF OPERATIONS: 2020 AS COMPARED TO 2019The results of operations comparison of 2020 compared to 2019 can be found in the Company’s previously filed Annual Report on Form 10-K for the year-ended December 31, 2020 under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”- Results of Operations: 2020 As Compared to 2019.”IMPACT OF INFLATIONThe consolidated financial statements and notes thereto presented in this report have been prepared in accordance with GAAP, which requires that we measure our financial condition and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, nearly all of a bank’s assets and liabilities are monetary in nature.capitalization. As a result, the impactCompany recorded an impairment charge of interest rates on our performance is greater than the impactentire goodwill balance of general levels$2.4 billion. Refer to "Note 2 - Summary of inflation. Interest rates do not necessarily moveSignificant Accounting Policies" and "Note 16 - Intangible Assets" in Item 8, "Financial Statements and Supplementary Data" for the methodologies and assumptions used in the same direction, or to the same extent, as the prices of goods and services.IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTSRecently Issued Accounting StandardsIn January 2021, the FASB issued ASU No. 2021-01, an update to ASU 2020-04, which clarifies the scope of the optional relief for reference rate reform provided by ASC Topic 848. The ASU permits entities to apply certain of the optional practical expedients and exceptions in ASC 848 to the accounting for derivative contracts and hedging activities that may be affected by changes in interest rates used for discounting cash flows, computing variation margin73settlements and calculating price alignment interest (the “discounting transition”). These optional practical expedients and exceptions may be applied to derivative instruments impacted by the discounting transition even if such instruments do not reference a rate that is expected to be discontinued. The ASU was effective upon issuance and can generally be applied through December 31, 2022. The adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Statements of Condition, results of operations, or cash flows.RECONCILIATIONS OF SHAREHOLDERS’ EQUITY, COMMON STOCKHOLDERS’ EQUITY, AND TANGIBLE COMMON SHAREHOLDERS’ EQUITY; TOTAL ASSETS AND TANGIBLE ASSETS; AND THE RELATED MEASURESWhile stockholders’ equity, common stockholders’ equity, total assets, and book value per common share are financial measures that are recorded in accordance with U.S. GAAP, tangible common stockholders’ equity, tangible assets, and tangible book value per common share are not. It is management’s belief that these non-GAAP measures should be disclosed in this report and others we issue for the following reasons:1.Tangible common stockholders’ equity is an important indication of the Company’s ability to grow organically and through business combinations, as well as its ability to pay dividends and to engage in various capital management strategies.2.Tangible book value per common share and the ratio of tangible common stockholders’ equity to tangible assets are among the capital measures considered by current and prospective investors, both independent of, and in comparison with, the Company’s peers.Item7A. Quantitative and Qualitative Disclosures about Market Risk Tangible common stockholders’ equity, tangible assets, and the related non-GAAP measures should not be considered in isolation or as a substitute for stockholders’ equity, common stockholders’ equity, total assets, or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate these non-GAAP measures may differ from that of other companies reporting non-GAAP measures with similar names.Reconciliations of our stockholders’ equity, common stockholders’ equity, and tangible common stockholders’ equity; our total assets and tangible assets; and the related financial measures for the respective periods follow:
Twelve Months Ended
December 31,
tangible assets74ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKIn 2021, weWe have continuedContinue to emphasizeincrease the origination and retentioninvestments portfolio with an overall shorter duration profile; (2) The use of intermediate-term assets, primarily in the form of multi-family and CRE loans; (2) We have continued the origination of certain C&I loans that feature floatingderivatives to manage our interest rates;rate position; (3) Increased the focus on retaining low costs deposits; and (4) Obtained new low costincreasing our branch deposits as part of the banking-as-a-service initiative.base.LIBOR Transition Process and Phase OutIn 2017, the FCA, which is responsible for regulating LIBOR, announced that the publication of LIBOR is not guaranteed beyond 2021. In December 2020, the administrator of LIBOR announced its intention to : (i) cease the publication of one-week and two-month U.S. dollar LIBOR after December 31, 2021, and (ii) cease the publication of all other tenors of U.S. dollar LIBOR (one, three, six, and 12-month LIBOR) after June 30, 2023. The administrator for LIBOR announced on March 5, 2021, that it will permanently cease to publish most LIBOR settings beginning on January 1, 2022 and cease to publish the overnight, one-month, three-month, six-month, and 12-month U.S. dollar LIBOR settings on July 1, 2023. Accordingly, the FCA has stated that it does not intend to persuade or compel banks to submit to LIBOR after such respective dates. Until such time, however, FCA panel banks have agreed to continue to support LIBOR. In October 2021, the federal bank regulatory agencies issued a Joint Statement on Managing the LIBOR Transition. In that guidance, the agencies offered their regulatory expectations and outlined potential supervisory and enforcement consequences for banks that fail to adequately plan for and implement the transition away from LIBOR. The FRB established the Alternative Reference Rate Committee ("ARRC"), comprised of a group of private market participants and other members, representing banks and financial sector regulators, to identify a set of alternative reference rates for potential use as benchmarks. The FRB-NY established SOFR as its recommended alternative to LIBOR. In addition to SOFR, the Company is evaluating alternatives other than SOFR as a potential alternative to LIBOR.The Bank established a sub-committee of ALCO to address issues related to the phase out and transition away from LIBOR. This sub-committee is led by our Chief Financial Officer and consists of personnel from various departments throughout the Bank including lending, loan administration, credit risk management, finance/treasury, including interest rate risk and liquidity management, information technology, and operations. The Company has LIBOR-based contracts that extend beyond June 30, 2023 included in loans and leases, securities, wholesale borrowings, derivative financial instruments, and long-term debt. The sub-committee has reviewed contract fallback language and noted that certain contracts will need updated provisions for the transition and is coordinating with impacted business lines. In complying with industry requirements, the Bank will not offer new LIBOR-based products after December 31, 2021.75The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive” and by monitoring a bank’s interest rate sensitivity “gap.” An asset or liability is said to be interest rate sensitive within a specific time frame if it will mature or reprice within that period of time. The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time frame and the amount of interest-bearing liabilities maturing or repricing within that same period of time.At December 31, 2021, our one-year gap was a negative 7.43%, as compared to a negative 4.94% at December 31, 2020. The change in our one-year gap from December 31, 2020, primarily reflects a decrease in loans repricing or maturing coupled with an increase in short term borrowings which was partially offset by an increase in cash and cash equivalents and decrease in maturing CD deposits.In a rising interest rate environment, an institution with a negative gap would generally be expected, absent the effects of other factors, to experience a greater increase in the cost of its interest-bearing liabilities than it would in the yield on its interest-earning assets, thus producing a decline in its net interest income. Conversely, in a declining rate environment, an institution with a negative gap would generally be expected to experience a lesser reduction in the yield on its interest-earning assets than it would in the cost of its interest-bearing liabilities, thus producing an increase in its net interest income.In a rising interest rate environment, an institution with a positive gap would generally be expected to experience a greater increase in the yield on its interest-earning assets than it would in the cost of its interest-bearing liabilities, thus producing an increase in its net interest income. Conversely, in a declining rate environment, an institution with a positive gap would generally be expected to experience a lesser reduction in the cost of its interest-bearing liabilities than it would in the yield on its interest-earning assets, thus producing a decline in its net interest income.The table on the following page sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at December 31, 2021 which, based on certain assumptions stemming from our historical experience, are expected to reprice or mature in each of the future time periods shown. Except as stated below, the amounts of assets and liabilities shown as repricing or maturing during a particular time period were determined in accordance with the earlier of (1) the term to repricing, or (2) the contractual terms of the asset or liability.The table provides an approximation of the projected repricing of assets and liabilities at December 31, 2021 on the basis of contractual maturities, anticipated prepayments, and scheduled rate adjustments within a three-month period and subsequent selected time intervals. For residential mortgage-related securities, prepayment rates are forecasted at a weighted average CPR of 14.24% per annum; for multi-family and CRE loans, prepayment rates are forecasted at weighted average CPRs of 14.76% and 12.57% per annum, respectively. Borrowed funds were not assumed to prepay.Savings, interest bearing checking and money market accounts were assumed to decay based on a comprehensive statistical analysis that incorporated our historical deposit experience. Based on the results of this analysis, savings accounts were assumed to decay at a rate of 68% for the first five years and 32% for years six through ten. Interest-bearing checking accounts were assumed to decay at a rate of 69% for the first five years and 31% for years six through ten. The decay assumptions reflect the prolonged low interest rate environment and the uncertainty regarding future depositor behavior. Including those accounts having specified repricing dates, money market accounts were assumed to decay at a rate of 80% for the first five years and 20% for years six through ten.76Interest Rate Sensitivity Analysis
Months
or Less
Twelve
Months
One Year
to Three
Years
Three
Years to
Five Years
Five Years
to 10 Years
10 Years
market accounts
as a percentage of total assets
percentage of net interest-bearing liabilities(1)For the purpose of the gap analysis, loans held for sale, non-performing loans and the allowance for loan losses have been excluded.(2)Mortgage-related and other securities, including FHLB stock, are shown at their respective carrying amounts.(3)Expected amount based, in part, on historical experience.(4)The interest rate sensitivity gap per period represents the difference between interest-earning assets and interest-bearing liabilities.Prepayment and deposit decay rates can have a significant impact on our estimated gap. While we believe our assumptions to be reasonable, there can be no assurance that the assumed prepayment and decay rates noted above will approximate actual future loan and securities prepayments and deposit withdrawal activity.To validate our prepayment assumptions for our multi-family and CRE loan portfolios, we perform a monthly analysis, during which we review our historical prepayment rates and compare them to our projected prepayment rates. We continually review the actual prepayment rates to ensure that our projections are as accurate as possible, since prepayments on these types of loans are not as closely correlated to changes in interest rates as prepayments on one-to-four family loans tend to be. In addition, we review the call provisions in our borrowings and investment portfolios and, on a monthly basis, compare the actual calls to our projected calls to ensure that our projections are reasonable.As of December 31, 2021, the impact of a 100 bp decline in market interest rates for our loans would have had very little impact on prepayment speeds due to the current low interest rates and current coupons being floored at base rates. The impact of a 100 bp increase in market interest rates would have decreased our projected prepayment rates for multi-family and CRE loans by a constant prepayment rate of 3.23% per annumCertain shortcomings are inherent in the method of analysis presented in the preceding Interest Rate Sensitivity Analysis. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of the market, while interest rates on other types may lag behind changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset. Furthermore, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate from those assumed in calculating the table. Also, the ability of some borrowers to repay their adjustable-rate loans may be adversely impacted by an increase in market interest rates. also monitored through the use of a model that generates estimates of the change in our Economic Value of Equity (“EVE”)(EVE) over a range of interest rate scenarios. EVE is defined as the net present value77reinvestment rates,current market value spreads, and deposit decay rates similar to those utilized in formulating the preceding Interest Rate Sensitivity Analysis.and betas.2021,2023, the following table sets forth our EVE, assuming the changes in interest rates noted:Change in Interest Rates (in basis points) Estimated Percentage Change in Economic Value of Equity -200 shock (2.39)% -100 shock (1.31)% +100 shock (0.28)% +200 shock (1.44)%
Interest
Rates (in basis
points) (1)
of Assets
of Liabilities
Value
of Equity
Percentage
Change in
Economic
Value of Equity(1)The impact of a 100-bp and a 200-bp reduction in interest rates is not presented in view of the current level of the federal funds rate and other short-term interest rates.
As with
We also utilize an internal net interest income simulation to manage our sensitivity to interest rate risk. The simulation incorporates various market-based assumptions regarding the impact of changing interest rates on future levels of our financial assets and liabilities. The assumptions used in the net interest income simulation are inherently uncertain. Actual results may differ significantly from those presented in the following table, due to the frequency, timing, and magnitude of changes in interest rates; changes in spreads between maturity and repricing categories; and prepayments, among other factors, coupled with any actions taken to counter the effects of any such changes.
Change in Interest Rates (in | Estimated Percentage Change in | |||||||||||
-200 shock | (5.81)% | |||||||||||
| -100 shock | (3.17)% | |||||||||||
| +100 | 3.24% |
|
|
| ||||||||
+200 | 6.40% |
|
| |||||||||
78
December 31, (in millions, except share data) 2021 2020 ASSETS: Cash and cash equivalents $ 2,211 $ 1,948 Securities: Debt securities available-for-sale ($1,168 and $1,278 pledged at 5,780 5,813 Equity investments with readily determinable fair values, at fair value 16 32 Total securities 5,796 5,845 Loans held for sale — 117 Loans and leases held for investment, net of deferred loan fees and costs 45,738 42,884 Less: Allowance for credit losses on loans and leases (199 ) (194 ) Total loans and leases, net 45,539 42,807 Federal Home Loan Bank stock, at cost 734 714 Premises and equipment, net 270 287 Operating lease right-of-use assets 249 267 Goodwill 2,426 2,426 Bank-owned life insurance 1,184 1,164 Other real estate owned and other repossessed assets 8 8 Other assets 1,110 840 Total assets $ 59,527 $ 56,306 LIABILITIES AND STOCKHOLDERS’ EQUITY: Deposits: Interest-bearing checking and money market accounts $ 13,209 $ 12,610 Savings accounts 8,892 6,416 Certificates of deposit 8,424 10,331 Non-interest-bearing accounts 4,534 3,080 Total deposits 35,059 32,437 Borrowed funds: Wholesale borrowings: Federal Home Loan Bank advances 15,105 14,628 Repurchase agreements 800 800 Total wholesale borrowings 15,905 15,428 Junior subordinated debentures 361 360 Subordinated notes 296 296 Total borrowed funds 16,562 16,084 Operating lease liabilities 249 267 Other liabilities 613 676 Total liabilities 52,483 49,464 Stockholders’ equity: Preferred stock at par $0.01 (5,000,000 shares authorized): Series A (515,000 shares 503 503 Common stock at par $0.01 (900,000,000 shares authorized; 490,439,070 and 490,439,070 5 5 Paid-in capital in excess of par 6,126 6,123 Retained earnings 741 494 Treasury stock, at cost (25,423,427 and 26,537,262 shares, respectively) (246 ) (258 ) Accumulated other comprehensive loss, net of tax: Net unrealized (loss) gain on securities available for sale, net of tax of $17 and (45 ) 67 Net unrealized loss on pension and post-retirement obligations, net of tax of $12 (31 ) (59 ) Net unrealized loss on cash flow hedges, net of tax of $3 and $13, respectively (9 ) (33 ) Total accumulated other comprehensive loss, net of tax (85 ) (25 ) Total stockholders’ equity 7,044 6,842 Total liabilities and stockholders’ equity $ 59,527 $ 56,306 Years Ended December 31, (in millions, except per share data) 2021 2020 2019 INTEREST INCOME: Loans and leases $ 1,525 $ 1,542 $ 1,553 Securities and money market investments 164 166 252 Total interest income 1,689 1,708 1,805 INTEREST EXPENSE: Interest-bearing checking and money market accounts 31 57 174 Savings accounts 28 32 36 Certificates of deposit 55 217 320 Borrowed funds 286 302 318 Total interest expense 400 608 848 Net interest income 1,289 1,100 957 Provision for credit losses 3 62 7 Net interest income after provision for credit loan losses 1,286 1,038 950 NON-INTEREST INCOME: Fee income 23 22 29 Bank-owned life insurance 29 32 28 Net gain on securities — 1 8 Other 9 6 19 Total non-interest income 61 61 84 NON-INTEREST EXPENSE: Operating expenses: Compensation and benefits 303 301 302 Occupancy and equipment 88 86 89 General and administrative 127 124 120 Total operating expense 518 511 511 Merger-related expenses 23 — — Total non-interest expense 541 511 511 Income before income taxes 806 588 523 Income tax expense 210 77 128 Net income $ 596 $ 511 $ 395 Preferred stock dividends 33 33 33 Net income available to common stockholders $ 563 $ 478 $ 362 Basic earnings per common share $ 1.20 $ 1.02 $ 0.77 Diluted earnings per common share $ 1.20 $ 1.02 $ 0.77 Net income $ 596 $ 511 $ 395 Other comprehensive income (loss), net of tax: Change in net unrealized gain (loss) on securities available for sale, (112 ) 42 46 Change in pension and post-retirement obligations, net of tax of 6 (5 ) 5 Change in net unrealized (loss) gain on cash flow hedges, net of tax 23 (42 ) 1 Less: Reclassification adjustment for sales of available-for-sale — (1 ) (4 ) Reclassification adjustment for defined benefit pension plan, 5 5 7 Reclassification adjustment for net gain on cash flow hedges 18 8 — Total other comprehensive income (loss), net of tax (60 ) 7 55 Total comprehensive income, net of tax $ 536 $ 518 $ 450 (in millions, except share data) Shares Preferred Common Paid-in Retained Treasury Accumulated Total Twelve Months Ended December 31, 2021 Balance at December 31, 2020 463,901,808 $ 503 $ 5 $ 6,123 $ 494 $ (258 ) $ (25 ) $ 6,842 Shares issued for restricted stock, net of forfeitures 2,515,942 — — (28 ) — 28 — — Compensation expense related to restricted stock awards — — — 31 — — — 31 Net income — — — — 596 — — 596 Dividends paid on common stock ($0.68) — — — — (316 ) — — (316 ) Dividends paid on preferred stock ($63.76) — — — — (33 ) — — (33 ) Purchase of common stock (1,402,107 ) — — — — (16 ) — (16 ) Other comprehensive income, net of tax — — — — — — (60 ) (60 ) Balance at December 31, 2021 465,015,643 $ 503 $ 5 $ 6,126 $ 741 $ (246 ) $ (85 ) $ 7,044 Twelve Months Ended December 31, 2020 Balance at December 31, 2019 467,346,781 $ 503 $ 5 $ 6,115 $ 342 $ (220 ) $ (33 ) $ 6,712 Opening retained earnings adjustment (1) — — — — (10 ) — — (10 ) Adjusted balance, beginning of period 332 6,702 Shares issued for restricted stock, net of forfeitures 2,321,105 — — (22 ) — 22 — — Compensation expense related to restricted stock awards — — — 30 — — — 30 Net income — — — — 511 — — 511 Dividends paid on common stock ($0.68) — — — — (316 ) — — (316 ) Dividends paid on preferred stock ($63.76) — — — — (33 ) — — (33 ) Purchase of common stock (5,766,078 ) — — — — (60 ) — (60 ) Other comprehensive loss, net of tax — — — — — — 8 8 Balance at December 31, 2020 463,901,808 $ 503 $ 5 $ 6,123 $ 494 $ (258 ) $ (25 ) $ 6,842 Twelve Months Ended December 31, 2019 Balance at December 31, 2018 473,536,604 $ 503 $ 5 $ 6,100 $ 297 $ (162 ) $ (88 ) $ 6,655 Shares issued for restricted stock, net of forfeitures 1,665,028 — — (17 ) — 17 — — Compensation expense related to restricted stock awards — — — 32 — — — 32 Net income — — — — 395 — — 395 Dividends paid on common stock ($0.68) — — — — (317 ) — — (317 ) Dividends paid on preferred stock ($63.76) — — — — (33 ) — — (33 ) Purchase of common stock (7,854,851 ) — — — 0 (75 ) — (75 ) Other comprehensive loss, net of tax — — — — — — 55 55 Balance at December 31, 2019 467,346,781 $ 503 $ 5 $ 6,115 $ 342 $ (220 ) $ (33 ) $ 6,712 Years Ended December 31, (in millions) 2021 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 596 $ 511 $ 395 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 3 62 7 Depreciation 21 24 27 Amortization of discounts and premiums, net (5 ) 11 8 Net (gain) loss on securities — (2 ) (8 ) Net loss (gain) on sales of loans (1 ) — — Net gain on sales of fixed assets — — (8 ) Stock-based compensation 31 29 32 Deferred tax expense (13 ) 219 101 Changes in operating assets and liabilities: (Increase) decrease in other assets(1) (284 ) (411 ) (56 ) Increase (decrease) in other liabilities(2) (6 ) 9 11 Purchases of securities held for trading (110 ) (15 ) (43 ) Proceeds from sales of securities held for trading 110 15 43 Origination of loans held for sale (52 ) (119 ) — Proceeds from sales of loans originated for sale — — — Net cash provided by operating activities 290 334 510 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from repayment of securities available for sale 1,728 2,062 1,962 Proceeds from sales of securities available for sale — 484 361 Purchase of securities available for sale (1,796 ) (2,514 ) (2,503 ) Redemption of Federal Home Loan Bank stock 92 173 136 Purchases of Federal Home Loan Bank stock (112 ) (239 ) (139 ) Proceeds from (purchases of) bank-owned life insurance, net 12 12 (138 ) Proceeds from sales of loans 37 3 115 Purchases of loans (161 ) (95 ) (864 ) Other changes in loans, net (2,558 ) (912 ) (998 ) Dispositions (purchases) of premises and equipment, net (4 ) 1 9 Net cash used in investing activities (2,762 ) (1,025 ) (2,059 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 2,622 780 893 Net increase in short-term borrowed funds 950 1,150 1,100 Proceeds from long-term borrowed funds 2,072 6,925 4,786 Repayments of long-term borrowed funds (2,544 ) (6,550 ) (5,538 ) Cash dividends paid on common stock (316 ) (316 ) (317 ) Cash dividends paid on preferred stock (33 ) (33 ) (33 ) Treasury stock repurchased — (50 ) (67 ) Payments relating to treasury shares received for restricted stock award tax payments (16 ) (9 ) (8 ) Net cash provided by financing activities 2,735 1,897 816 Net increase (decrease) in cash, cash equivalents, and restricted cash 263 1,206 (733 ) Cash, cash equivalents, and restricted cash at beginning of year 1,948 742 1,475 Cash, cash equivalents, and restricted cash at end of year $ 2,211 $ 1,948 $ 742 Supplemental information: Cash paid for interest $ 402 $ 633 $ 813 Cash paid for income taxes 471 118 76 Non-cash investing and financing activities: Transfers to repossessed assets from loans $ 1 $ 1 $ 5 Operating lease liabilities arising from obtaining right-of-use assets as — — 324 Securitization of residential mortgage loans to mortgage-backed securities 161 53 94 Transfer of loans from held for investment to held for sale 52 — 115 Transfer of loans from held for sale to held for investment 94 — — Disposition of premises and equipment — — 1 Shares issued for restricted stock awards 28 22 17 New York Community Bancorp, Inc. (on a stand-alone basis, the “Parent Company” or, collectively with its subsidiaries, the “Company” or "we") was organized under Delaware law on July 20, 1993 and is the holding company for The Company has grown organically and through a series of accretive mergers and acquisitions, culminating in its acquisition of Flagstar Bancorp, Inc., which closed on December 1, 2022 and the Signature Transaction which closed on March 20, 2023. Basis of Presentation Cash and Cash Equivalents and Restricted Cash Debt Securities and Equity Investments with Readily Determinable Fair Values Allowance for Credit Losses on Loans and Leases over the contractual term of the loans, adjusted for forecasted prepayments when appropriate. The contractual term excludes potential extensions or renewals. The methodology used in the estimation of the allowance for credit losses on Repossessed Assets and OREO Retirement Plans and expenses requires that certain assumptions be made regarding several factors, most notably including the discount rate and the expected rate of return on plan assets. The Company evaluates these assumptions on an annual basis. Other factors considered by the Company in its evaluation include retirement patterns and mortality rates. The following table presents the Company’s computation of basic and diluted earnings per common share: Years Ended December 31, (in millions, except share and per share amounts) 2021 2020 2019 Net income available to common stockholders $ 563 $ 478 $ 362 Less: Dividends paid on and earnings allocated (7 ) (6 ) (4 ) Earnings applicable to common stock $ 556 $ 472 $ 358 Weighted average common shares outstanding 463,865,661 462,605,341 465,380,010 Basic earnings per common share $ 1.20 $ 1.02 $ 0.77 Earnings applicable to common stock $ 556 $ 472 $ 358 Weighted average common shares outstanding 463,865,661 462,605,341 465,380,010 Potential dilutive common shares 767,058 676,061 283,322 Total shares for diluted earnings per common 464,632,719 463,281,402 465,663,332 Diluted earnings per common share and $ 1.20 $ 1.02 $ 0.77 (in millions) Details about Affected Line Item in the Unrealized gains on available-for-sale $ — Net gain on securities Income tax expense $ — Net gain on securities, net of tax Unrealized gains on cash flow hedges: $ 65 Interest expense Income tax benefit $ 48 Net gain on cash flow hedges, net of tax Amortization of defined benefit pension Past service liability $ — Actuarial losses (7) Total before tax Income tax benefit $ (6) Amortization of defined benefit pension plan items, net of tax Total reclassifications for the period $ 42 The following tables summarize the Company’s portfolio of debt securities available for sale and equity investments with readily determinable fair December 31, 2021 (in millions) Amortized Gross Gross Fair Debt securities available-for-sale Mortgage-Related Debt Securities: GSE certificates $ 1,102 $ 20 $ 15 $ 1,107 GSE CMOs 1,717 11 45 1,683 Total mortgage-related debt securities $ 2,819 $ 31 $ 60 $ 2,790 Other Debt Securities: U. S. Treasury obligations $ 45 $ — $ — $ 45 GSE debentures 1,524 1 45 1,480 Asset-backed securities (1) 479 3 3 479 Municipal bonds 25 — — 25 Corporate bonds 821 18 1 838 Foreign notes 25 1 — 26 Capital trust notes 96 8 7 97 Total other debt securities $ 3,015 $ 31 $ 56 $ 2,990 Total debt securities available for sale $ 5,834 $ 62 $ 116 $ 5,780 Equity securities: Preferred stock — — — — Mutual funds 16 — — 16 Total equity securities $ 16 $ — $ — $ 16 Total securities (2) $ 5,850 $ 62 $ 116 $ 5,796 values: December 31, 2020 (in millions) Amortized Gross Gross Fair Debt securities available-for-sale Mortgage-Related Debt Securities: GSE certificates $ 1,155 $ 54 $ — $ 1,209 GSE CMOs 1,787 45 3 1,829 Total mortgage-related debt securities $ 2,942 $ 99 $ 3 $ 3,038 Other Debt Securities: U. S. Treasury obligations $ 65 $ — $ — $ 65 GSE debentures 1,158 4 4 1,158 Asset-backed securities (1) 530 2 6 526 Municipal bonds 26 1 — 27 Corporate bonds 871 18 6 883 Foreign Notes 25 1 — 26 'Capital trust notes 96 6 11 91 Total other debt securities $ 2,771 $ 32 $ 27 $ 2,776 Total other securities available for sale $ 5,713 $ 131 $ 30 $ 5,814 Equity securities: Preferred stock 15 — — $ 15 Mutual funds 16 — — 16 Total equity securities $ 31 $ — $ — $ 31 Total securities (2) $ 5,744 $ 131 $ 30 $ 5,845 The following table summarizes the gross proceeds, gross realized gains, and gross realized losses from the sale of available-for-sale securities during the December 31, (in millions) 2021 2020 2019 Gross proceeds $ — $ 484 $ 361 Gross realized gains — 2 5 Gross realized losses — 1 — Mortgage- U.S. State, Other Fair (dollars in millions) Available-for-Sale Debt Due within one year $ 27 $ 45 $ — $ 5 $ 77 Due from one to five years 142 22 — 408 594 Due from five to ten years 271 423 19 512 1,226 Due after ten years 2,379 1,079 6 496 3,883 Total debt securities available $ 2,819 $ 1,569 $ 25 $ 1,421 $ 5,780 Less than Twelve Months Twelve Months or Longer Total (in millions) Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized Temporarily Impaired Securities: U. S. Treasury obligations $ 45 $ — $ — $ — $ 45 $ — U.S. Government agency and GSE obligations 317 7 185 8 502 15 GSE certificates 846 28 293 17 1,139 45 GSE CMOs 491 8 926 37 1,417 45 Asset-backed securities 130 1 135 2 265 3 Municipal bonds — — 8 — 8 — Corporate bonds — — 99 1 99 1 Foreign notes 5 — — — 5 — Capital trust notes — — 37 7 37 7 Equity securities 12 — — — 12 — Total temporarily impaired $ 1,846 $ 44 $ 1,683 $ 72 $ 3,529 $ 116 Less than Twelve Months Twelve Months or Longer Total (in millions) Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized Temporarily Impaired Securities: U. S. Treasury obligations $ — $ — $ — $ — $ — $ — U.S. Government agency and GSE obligations 59 — — — 59 — GSE certificates 442 3 74 — 516 3 GSE CMOs 522 4 — — 522 4 Asset-backed securities — — 364 6 364 6 Municipal bonds — — 9 — 9 — Corporate bonds 72 3 246 3 318 6 Foreign notes — — — — — — Capital trust notes — — 33 11 33 11 Equity securities — — — — — — Total temporarily impaired $ 1,095 $ 10 $ 726 $ 20 $ 1,821 $ 30 We December 31, 2021 December 31, 2020 (dollars in millions) Amount Percent of Amount Percent of Loans and Leases Held for Investment: Mortgage Loans: Multi-family $ 34,603 75.75 % $ 32,236 75.28 % Commercial real estate 6,698 14.66 6,836 15.96 One-to-four family 160 0.35 236 0.55 Acquisition, development, and construction 209 0.46 90 0.21 Total mortgage loans held for investment (1) 41,670 91.22 39,398 92.00 Other Loans: Commercial and industrial 2,236 4.89 1,682 3.93 Lease financing, net of unearned income 1,770 3.88 1,735 4.05 Total commercial and industrial loans (2) 4,006 8.77 3,417 7.98 Other 5 0.01 7 0.02 Total other loans held for investment 4,011 8.78 3,424 8.00 Total loans and leases held for investment (1) $ 45,681 100.00 % $ 42,822 100.00 % Net deferred loan origination costs 57 62 Allowance for loan and lease losses (199 ) (194 ) Total loans and leases held for investment, net $ 45,539 $ 42,690 Loans held for sale (3) — 117 Total loans and leases, net $ 45,539 $ 42,807 The following table presents information regarding the quality of the Company’s loans held for investment at December 31, (in millions) Loans Non- Loans 90 Total Current Total Multi-family $ 57 $ 10 $ — $ 67 $ 34,536 $ 34,603 Commercial real estate 2 16 — 18 6,680 6,698 One-to-four family 8 1 — 9 151 160 Acquisition, development, and — — — — 209 209 Commercial and industrial(1) (2) — 6 — 6 4,000 4,006 Other — — — — 5 5 Total $ 67 $ 33 $ — $ 100 $ 45,581 $ 45,681 2023: (in millions) Loans Non- Loans 90 Total Current Total Multi-family $ 4 $ 4 $ — $ 8 $ 32,228 $ 32,236 Commercial real estate 10 12 — 22 6,814 6,836 One-to-four family 2 2 — 4 232 236 Acquisition, development, and — — — — 90 90 Commercial and industrial(1) (2) — 20 — 20 3,397 3,417 Other — — — — 7 7 Total $ 16 $ 38 $ — $ 54 $ 42,768 $ 42,822 The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at December 31, Mortgage Loans Other Loans (in millions) Multi- Commercial One-to- Acquisition, Total Commercial Other Total Credit Quality Indicator: Pass $ 33,011 $ 5,874 $ 137 $ 204 $ 39,226 $ 3,959 $ 5 $ 3,964 Special mention 981 643 14 5 1,643 2 — 2 Substandard 611 181 9 — 801 45 — �� 45 Doubtful — — — — — — — — Total $ 34,603 $ 6,698 $ 160 $ 209 $ 41,670 $ 4,006 $ 5 $ 4,011 2023: Mortgage Loans Other Loans (in millions) Multi- Commercial One-to- Acquisition, Total Commercial Other Total Credit Quality Indicator: Pass $ 31,220 $ 5,884 $ 222 $ 68 $ 37,394 $ 3,388 $ 7 $ 3,395 Special mention 567 637 12 22 1,238 3 — 3 Substandard 449 315 2 — 766 26 — 26 Doubtful — — — — — — — — Total $ 32,236 $ 6,836 $ 236 $ 90 $ 39,398 $ 3,417 $ 7 $ 3,424 2022: Vintage Year (in millions) 2021 2020 2019 2018 2017 Prior To Revolving Total Pass $ 9,363 $ 9,223 $ 5,623 $ 4,700 $ 3,320 $ 7,006 $ 17 $ 39,252 Special Mention — 128 221 346 123 825 1 1,644 Substandard — 23 108 145 93 432 — 801 Total mortgage loans $ 9,363 $ 9,374 $ 5,952 $ 5,191 $ 3,536 $ 8,263 $ 18 $ 41,697 Pass 916 670 533 87 152 167 1,469 3,994 Special Mention — — — — — — 2 2 Substandard — 2 2 1 1 13 26 45 Total other loans 916 672 535 88 153 180 1,497 4,041 Total $ 10,279 $ 10,046 $ 6,487 $ 5,279 $ 3,689 $ 8,443 $ 1,515 $ 45,738 Collateral Type (in millions) Real Other Multi-family $ 9 $ — Commercial real estate 30 — One-to-four family — — Acquisition, development, and construction — — Commercial and industrial — 6 Other — — Total collateral-dependent loans held for investment 39 6 Modifications to Borrowers Experiencing Financial Difficulty December 31, (in millions) 2021 2020 2019 Interest income that would have been recorded $ 3 $ 5 $ 5 Interest income actually recorded (1 ) (1 ) (3 ) Interest income foregone $ 2 $ 4 $ 2 The following table presents information regarding the December 31, 2021 December 31, 2020 (in millions) Accruing Non- Total Accruing Non- Total Loan Category: Multi-family $ — $ 7 $ 7 $ — $ — $ — Commercial real estate 16 — 16 15 — 15 One-to-four family — — — — — — Acquisition, development, and — — — — — — Commercial and industrial (1) — 6 6 — 19 19 Total $ 16 $ 13 $ 29 $ 15 $ 19 $ 34 2022: The financial effects of the Company’s TDRs for the twelve months ended December 31, For the Twelve Months Ended December 31, 2021 Weighted Average (dollars in millions) Number Pre- Post- Pre- Post- Charge- Capitalized Loan Category: Commercial real estate 2 $ 4 $ 4 6.00 % 3.55 % $ — $ — Multi-family 1 8 8 3.13 3.25 — — Total 3 $ 12 $ 12 $ — $ — For the Twelve Months Ended December 31, 2020 Weighted Average (dollars in millions) Number Pre- Post- Pre- Post- Charge- Capitalized Loan Category: Commercial real estate 1 $ 15 $ 15 8.00 % 3.50 % $ — $ — Commercial and industrial 42 9 8 2.36 2.23 1 — Total 43 $ 24 $ 23 $ 1 $ — For the Twelve Months Ended December 31, 2019 Weighted Average (dollars in millions) Number Pre- Post- Pre- Post- Charge- Capitalized Loan Category: One-to-four family 1 $ — $ — 5.50 % 5.50 % $ — $ — Commercial and industrial 72 35 31 4.31 4.37 4 — Total 73 $ 35 $ 31 $ 4 $ — Note 7 - Allowance for Credit Losses on Loans and Leases Allowance for Credit Losses on Loans and Leases Twelve Months Ended December 31, 2021 2020 (in millions) Mortgage Other Total Mortgage Other Total Balance, beginning of period $ 176 $ 18 $ 194 $ 123 $ 25 $ 148 Impact of CECL adoption — — — — 2 2 Adjusted balance, beginning of period 176 18 194 123 27 150 Charge-offs (6 ) (7 ) (13 ) (2 ) (20 ) (22 ) Recoveries 2 13 15 1 2 3 Provision for (recovery of) credit 6 (3 ) 3 54 9 63 Balance, end of period $ 178 $ 21 $ 199 $ 176 $ 18 $ 194 $23 million, respectively. The following table presents additional information about the Company’s nonaccrual loans at December 31, (in millions) Recorded Related Interest Nonaccrual loans with no related allowance: Multi-family $ 9 $ — $ 1 Commercial real estate 14 — — One-to-four family — — — Acquisition, development, and construction — — — Other 6 — — Total nonaccrual loans with no related allowance $ 29 $ — $ 1 Nonaccrual loans with an allowance recorded: Multi-family $ 1 $ — $ — Commercial real estate 2 — — One-to-four family 1 — — Acquisition, development, and construction — — — Other — — — Total nonaccrual loans with an allowance recorded $ 4 $ — $ — Total nonaccrual loans: Multi-family $ 10 $ — $ 1 Commercial real estate 16 — — One-to-four family 1 — — Acquisition, development, and construction — — — Other 6 — — Total nonaccrual loans $ 33 $ — $ 1 (in millions) Recorded Related Interest Nonaccrual loans with no related allowance: Multi-family $ — $ — $ — Commercial real estate 2 — — One-to-four family 1 — — Acquisition, development, and construction — — — Other 20 — 1 Total nonaccrual loans with no related allowance $ 23 $ — $ 1 Nonaccrual loans with an allowance recorded: Multi-family $ 4 $ 1 $ — Commercial real estate 10 — — One-to-four family 1 — — Acquisition, development, and construction — — — Other — — — Total nonaccrual loans with an allowance recorded $ 15 $ 1 $ — Total nonaccrual loans: Multi-family $ 4 $ 1 $ — Commercial real estate 12 — — One-to-four family 2 — — Acquisition, development, and construction — — — Other 20 — 1 Total nonaccrual loans $ 38 $ 1 $ 1 Lessor Arrangements another party. Impairment of residual values arises if the expected fair value is less than the carrying amount. The Company assesses its net investment in lease financing receivables (including residual values) for impairment on an annual basis with any impairment losses recognized in accordance with the impairment guidance for financial instruments. As such, net investment in lease financing receivables may be reduced by an allowance for credit losses with changes recognized as provision expense. On certain lease financings, the Company obtains residual value insurance from third parties to manage and reduce the risk associated with the residual value of the leased assets. At December 31, (in millions) For the For the Interest income on lease financing (1) $ 53 $ 52 111 (in millions) December 31, December 31, Net investment in the lease - lease payments receivable $1,790 $1,771 Net investment in the lease - unguaranteed residual assets 75 80 Total lease payments $1,865 $1,851 The following table presents the remaining maturity analysis of the undiscounted lease receivables, (in millions) December 31, 2022 $ 22 2023 225 2024 275 2025 370 2026 399 Thereafter 574 Total lease payments 1,865 Plus: deferred origination costs 25 Less: unearned income (95 ) Total lease finance receivables, net $ 1,795 (in millions) For the Twelve For the Twelve Operating lease cost $ 27 $ 23 Sublease income — — Total lease cost $ 27 $ 23 Supplemental cash flow information related to the leases for the following periods: (in millions) For the Twelve For the Twelve Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 27 $ 23 Supplemental balance sheet information related to the leases for the following periods: (in millions, except lease term and discount rate) December 31, December 31, Operating Leases: Operating lease right-of-use assets $ 249 $ 267 Operating lease liabilities $ 249 267 Weighted average remaining lease term 16 years 16 years Weighted average discount rate% 3.05 % 3.12 % (2) (in millions) December 31, 2022 $ 26 2023 26 2024 25 2025 24 2026 23 Thereafter 197 Total lease payments 321 Less: imputed interest (72 ) Total present value of lease liabilities $ 249 The following table summarizes the hypothetical effect on the fair value of servicing rights using adverse changes of 10 percent and 20 percent to the weighted average of certain significant assumptions used in valuing these assets: December 31, 2021 2020 (dollars in millions) Amount Percent Weighted Amount Percent Weighted Interest-bearing checking and money $ 13,209 37.68 % 0.20 % $ 12,610 38.87 % 0.28 % Savings accounts 8,892 25.36 0.35 6,416 19.78 0.41 Certificates of deposit 8,424 24.03 0.52 10,331 31.85 0.83 Non-interest-bearing accounts 4,534 12.93 — 3,080 9.50 — Total deposits $ 35,059 100.00 % 0.29 % $ 32,437 100.00 % 0.45 % The scheduled maturities of certificates of deposit (in millions) 1 year or less $ 17,321 More than 1 year through 2 years 3,879 More than 2 years through 3 years 229 More than 3 years through 4 years 142 More than 4 years through 5 years 7 Over 5 years 3 $ 21,581 The following table summarizes the Company’s borrowed December 31, (in millions) 2021 2020 Wholesale borrowings: FHLB advances $ 15,105 $ 14,628 Repurchase agreements 800 800 Total wholesale borrowings $ 15,905 $ 15,428 Junior subordinated debentures 361 360 Subordinated notes 296 296 Total borrowed funds $ 16,562 $ 16,084 The contractual maturities and the next call dates of FHLB advances outstanding at December 31, Contractual Maturity Earlier of Contractual (dollars in millions) Amount Weighted Amount Weighted 2022 $ 3,750 0.50 % $ 11,030 1.53 % 2023 2,525 0.85 2,725 0.91 2024 1,350 0.85 1,350 0.85 2025 — — — — 2026 — — — — 2027 — — — — 2028 4,350 2.40 — — 2029 3,130 1.55 — — Total FHLB advances $ 15,105 1.36 $ 15,105 1.36 The Contractual Maturity Earlier of Contractual (dollars in millions) Amount Weighted Amount Weighted 2022 $ — — % $ 800 2.24 % 2023 — — — — 2028 300 2.37 — — 2029 500 2.16 — — $ 800 2.24 $ 800 2.24 Mortgage-Related GSE Debentures and (dollars in millions) Amount Weighted Amortized Fair Amortized Fair Greater than 90 days $ 800 2.24 % $ 345 $ 343 $ 549 $ 570 Issuer Interest Rate Junior Capital Date of Stated First Optional (dollars in millions) New York Community Capital 6.00 % $ 147 $ 140 Nov. 4, 2002 Nov. 1, 2051 Nov. 4, 2007 (1) New York Community Capital 1.80 124 120 Dec. 14, 2006 Dec. 15, 2036 Dec. 15, 2011 (2) PennFed Capital Trust III 3.45 31 30 June 2, 2003 June 15, 2033 June 15, 2008 (2) New York Community Capital 1.87 59 58 April 16, 2007 June 30, 2037 June 30, 2012 (2) Total junior subordinated debentures $ 361 $ 348 2023: At December 31, Date of Original Issue Stated Maturity Interest Rate(1) Original Issue (dollars in millions) Nov. 6, 2018 Nov. 6, 2028 5.90 % $ 300 The following table summarizes the components of the Company’s net deferred tax asset (liability) at December 31, : December 31, (in millions) 2021 2020 Deferred Tax Assets: Allowance for credit losses on loans and leases $ 55 $ 53 Acquisition accounting and fair value adjustments on securities (including OTTI) 21 — Compensation and related benefit obligations 17 21 Net operating loss carryforwards 1 6 Other 15 18 Gross deferred tax assets 109 98 Valuation allowance — — Deferred tax asset after valuation allowance $ 109 $ 98 Deferred Tax Liabilities: Amortizable intangibles $ (3 ) $ (3 ) Acquisition accounting and fair value adjustments on securities — (13 ) Premises and equipment (5 ) (6 ) Prepaid pension cost (35 ) (25 ) Fair value adjustments on loans (81 ) (92 ) Leases (360 ) (370 ) Other (9 ) (9 ) Gross deferred tax liabilities $ (493 ) $ (518 ) Net deferred tax liability $ (384 ) $ (420 ) The following table summarizes the Company’s income tax expense for the years ended December 31, December 31, (in millions) 2021 2020 2019 Federal – current $ 188 $ (148 ) $ 4 State and local – current 35 5 23 Total current 223 (143 ) 27 Federal – deferred (28 ) 190 101 State and local – deferred 15 29 — Total deferred (13 ) 219 101 Income tax expense reported in net income 210 77 128 Income tax expense reported in stockholders’ equity related to: Securities available-for-sale (42 ) 16 16 Pension liability adjustments 10 — 5 Cash flow hedge 9 (13 ) — Adoption of ASU 2016-13 — (4 ) — Total income taxes $ 187 $ 76 $ 149 The following table presents a reconciliation of statutory federal income tax expense (benefit) to combined actual income tax expense (benefit) reported in net income for the years ended December 31, December 31, (in millions) 2021 2020 2019 Statutory federal income tax at 21%, 21% and 21%, respectively $ 169 $ 123 $ 110 State and local income taxes, net of federal income tax effect 40 27 18 Effect of tax law changes — (73 ) — Non-deductible FDIC deposit insurance premiums 9 8 7 Effect of tax deductibility of ESOP (3 ) (3 ) (3 ) Non-taxable income and expense of BOLI (6 ) (7 ) (6 ) Non-deductible merger expenses 3 — — Federal tax credits — (1 ) (1 ) Adjustments relating to prior tax years (1 ) 1 — Other, net (1 ) 2 3 Total income tax expense $ 210 $ 77 $ 128 Consolidated Statements of Condition, were The following table summarizes changes in the liability for unrecognized gross tax benefits for the years ended December 31, : December 31, (in millions) 2021 2020 2019 Uncertain tax positions at beginning of year $ 38 $ 36 $ 33 Additions for tax positions relating to current-year operations 2 1 1 Additions for tax positions relating to prior tax years 1 1 2 Subtractions for tax positions relating to prior tax years (2 ) — — Reductions in balance due to settlements — — — Uncertain tax positions at end of year $ 39 $ 38 $ 36 reserve will become taxable in the foreseeable future. Events that would result in taxation of this reserve include redemptions of the Bank’s stock or certain excess distributions by the Bank to the Company. shares available for grants as restricted stock, options, or other forms of related rights under the 2020 Incentive Plan, which includes the remaining shares available, converted at the merger conversion factor from the legacy Flagstar Bancorp, Inc. 2016 Stock Plan. The Company granted 9,995,495 shares of restricted stock, with an average fair value of $10.24 per share on the date of grant, during the year ended December 31, 2023. (in millions) December 31, 2021 December 31, 2020 Line Item in the Consolidated Statements of Carrying Cumulative Carrying Cumulative Total loans and leases, net (1) $ 2,025 $ 25 $ 2,073 $ 73 The following December 31, 2021 Fair Value (in millions) Notional Other Other Derivatives designated as fair value hedging instruments: Interest rate swap $ 2,000 $ — $ — Total derivatives designated as fair value hedging instruments $ 2,000 $ — $ — (in millions) For the Twelve For the Twelve Derivative – interest rate swap: Interest income $ 48 $ (20 ) Hedged item – loans: Interest income $ (48 ) $ 20 (dollars in millions) December 31, December 31, Notional amounts $ 2,250 $ 2,250 Cash collateral posted 12 46 Weighted average pay rates 1.27 % 1.27 % Weighted average receive rates 0.18 % 0.23 % Weighted average maturity 0.9 years 1.9 years The following table presents the effect of the Company’s cash flow derivative instruments on (in millions) For the Twelve For the Twelve Amount of (loss) gain recognized in AOCL $ 8 $ (58 ) Amount of reclassified from AOCL to interest expense 25 12 The following table (in millions) Expires Within Expires After Total Maximum Financial stand-by letters of credit $ 77 $ 60 $ 137 $ 271 Performance stand-by letters of credit 3 — 3 3 Commercial letters of credit 7 1 8 17 Total letters of credit $ 87 $ 61 $ 148 $ 291 December 31, (in millions) 2021 2020 Change in Benefit Obligation: Benefit obligation at beginning of year $ 172 $ 160 Interest cost 4 5 Actuarial loss (gain) (9 ) 15 Annuity payments (6 ) (7 ) Settlements (3 ) (1 ) Benefit obligation at end of year $ 158 $ 172 Change in Plan Assets: Fair value of assets at beginning of year $ 261 $ 243 Actual return (loss) on plan assets 31 26 Contributions — — Annuity payments (6 ) (7 ) Settlements (3 ) (1 ) Fair value of assets at end of year $ 283 $ 261 Funded status (included in “Other assets”) $ 125 $ 89 Changes recognized in other comprehensive income for the year ended Amortization of prior service cost $ — $ — Amortization of actuarial loss (7 ) (7 ) Net actuarial (gain) loss arising during the year (23 ) 4 Total recognized in other comprehensive income for the year (pre-tax) $ (30 ) $ (3 ) Accumulated other comprehensive loss (pre-tax) not yet recognized Prior service cost $ — $ — Actuarial loss, net 43 73 Total accumulated other comprehensive loss (pre-tax) $ 43 $ 73 Years Ended December 31, (in millions) 2021 2020 2019 Components of net periodic pension expense (credit): Interest cost $ 4 $ 5 $ 6 Expected return on plan assets (16 ) (15 ) (14 ) Amortization of net actuarial loss 7 7 10 Net periodic pension (credit) expense $ (5 ) $ (3 ) $ 2 Years Ended December 31, 2021 2020 2019 Discount rate 2.2 % 3.0 % 4.1 % Expected rate of return on plan assets 6.3 6.5 6.8 As of December 31, The following table presents (in millions) Total Quoted Prices Significant Other Significant Equity: Large-cap value (1) $ 24 $ — $ 24 $ — Large-cap growth (2) 27 — 27 — Large-cap core (3) 17 — 17 — Mid-cap value (4) 7 — 7 — Mid-cap growth (5) 6 — 6 — Mid-cap core (6) 6 — 6 — Small-cap value (7) 3 — 3 — Small-cap growth (8) 7 — 7 — Small-cap core (9) 5 — 5 — International equity (10) 37 — 37 — Fixed Income Funds: Fixed Income – U.S. Core (11) 77 — 77 — Intermediate duration (12) 26 — 26 — Equity Securities: Company common stock 36 36 — — Cash Equivalents: Money market * 5 1 4 — $ 283 $ 37 $ 246 $ — At December 31, 2021 2020 Equity securities 62 % 60 % Debt securities 36 38 Cash equivalents 2 2 Total 100 % 100 % $286 million. The Company (in millions) 2022 $ 8 2023 8 2024 8 2025 9 2026 8 2027 and thereafter 44 Total $ 85 December 31, (in millions) 2021 2020 Change in benefit obligation: Benefit obligation at beginning of year $ 12 $ 12 Interest cost — — Actuarial gain (2 ) — Premiums and claims paid — — Benefit obligation at end of year $ 10 12 Change in plan assets: Fair value of assets at beginning of year $ — $ — Employer contribution — 1 Premiums and claims paid — (1 ) Fair value of assets at end of year $ — $ — Funded status (included in “Other liabilities”) $ (10 ) (12 ) Changes recognized in other comprehensive income for Amortization of prior service cost $ — $ — Amortization of actuarial gain — — Net actuarial (gain) loss arising during the year (2 ) — Total recognized in other comprehensive income for the year (pre-tax) $ (2 ) $ — Accumulated other comprehensive loss (pre-tax) not yet recognized Prior service cost $ — $ — Actuarial loss, net — 1 Total accumulated other comprehensive income (pre-tax) $ — $ 1 Years Ended December 31, (in millions) 2021 2020 2019 Components of Net Periodic Benefit Cost: Service cost $ 0 $ 0 $ 0 Interest cost 0 0 0 Amortization of past-service liability 0 0 0 Amortization of net actuarial loss 0 0 0 Net periodic benefit cost $ 0 $ 0 $ 0 Years Ended December 31, 2021 2020 2019 Discount rate 2.0 % 2.9 % 3.9 % Current medical trend rate 6.5 6.5 6.5 Ultimate trend rate 5.0 5.0 5.0 Year when ultimate trend rate will be reached 2027 2026 2025 (in millions) 2022 $ 1 2023 1 2024 1 2025 1 2026 1 2027 and thereafter 2 Total $ 7 For the Year Ended Number of Shares Weighted Unvested at beginning of year 6,228,048 $ 12.43 Granted 3,131,949 11.20 Vested (2,107,282 ) 13.15 Canceled (302,380 ) 11.71 Unvested at end of year 6,950,335 11.68 GAAP sets forth a definition of fair value, establishes a consistent framework for measuring fair value, and requires disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. GAAP also clarifies that fair value is an “exit” price, representing the amount that would be received when selling an asset, or paid when transferring a liability, in an orderly transaction between market participants. Fair value is thus a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: The following tables present assets and liabilities that were measured at fair value on a recurring basis as of December 31, Fair Value Measurements at December 31, 2021 (in millions) Quoted Significant Significant Netting Total Assets: Mortgage-related Debt Securities GSE certificates $ — $ 1,107 $ — $ — $ 1,107 GSE CMOs — 1,683 — — 1,683 Total mortgage-related debt securities $ — $ 2,790 $ — $ — $ 2,790 Other Debt Securities Available for Sale: U. S. Treasury obligations $ 45 $ — $ — $ — $ 45 GSE debentures — 1,480 — — 1,480 Asset-backed securities — 479 — — 479 Municipal bonds — 25 — — 25 Corporate bonds — 838 — — 838 Foreign notes — 26 — — 26 Capital trust notes — 97 — — 97 Total other debt securities $ 45 $ 2,945 $ — $ — $ 2,990 Total debt securities available for sale $ 45 $ 5,735 $ — $ — $ 5,780 Equity securities: Preferred stock $ — $ — $ — $ — $ — Mutual funds and common stock — 16 — — 16 Total equity securities $ — $ 16 $ — $ — $ 16 Total securities $ 45 $ 5,751 $ — $ — $ 5,796 Fair Value Measurements at December 31, 2020 (in millions) Quoted Significant Significant Netting Total Assets: Mortgage-Related Debt Securities GSE certificates $ — $ 1,209 $ — �� $ — $ 1,209 GSE CMOs — 1,829 — — 1,829 Total mortgage-related debt securities $ — $ 3,038 $ — $ — $ 3,038 Other Debt Securities Available U.S. Treasury obligations $ 65 $ — $ — $ — $ 65 GSE debentures — 1,158 — — 1,158 Asset-backed securities — 527 — — 527 Municipal bonds — 26 — — 26 Corporate bonds — 882 — — 882 Foreign notes — 26 — — 26 Capital trust notes — 91 — — 91 Total other debt securities $ 65 $ 2,710 $ — $ — $ 2,775 Total debt securities available for sale $ 65 $ 5,748 $ — $ — $ 5,813 Equity securities: — — Preferred stock $ 15 $ — $ — $ — $ 15 Mutual funds and common stock — 16 — — 16 Total equity securities $ 15 $ 16 $ — $ — $ 31 Total securities $ 80 $ 5,764 $ — $ — $ 5,844 Fair Value Measurements at December 31, 2021 Using (in millions) Quoted Prices Significant Significant Total Fair Certain loans (1) $ — $ — $ 32 $ 32 Other assets(2) — — 32 32 Total $ — $ — $ 64 $ 64 Fair Value Measurements at December 31, 2020 Using (in millions) Quoted Prices Significant Significant Total Fair Certain impaired loans (1) $ — $ — $ 41 $ 41 Other assets (2) — — 6 6 Total $ — $ — $ 47 $ 47 The following tables summarize the carrying values, estimated fair values, and fair value measurement levels of financial instruments that were not carried at fair value on the Company’s Consolidated Statements of Condition at December 31, December 31, 2021 Fair Value Measurement Using (in millions) Carrying Estimated Quoted Prices Significant Significant Financial Assets: Cash and cash equivalents $ 2,211 $ 2,211 $ 2,211 $ — $ — FHLB stock (1) 734 734 — 734 — Loans and leases, net 45,539 44,748 — — 44,748 Financial Liabilities: Deposits $ 35,059 $ 35,051 $ 26,635 (2) $ 8,416 (3) $ — Borrowed funds 16,562 17,169 — 17,169 — December 31, 2020 Fair Value Measurement Using (in millions) Carrying Estimated Quoted Prices Significant Significant Financial Assets: Cash and cash equivalents $ 1,948 $ 1,948 $ 1,947,931 $ — $ — FHLB stock (1) 714 714 — 714 — Loans and leases, net 42,807 42,376 — — 42,376 Financial Liabilities: Deposits $ 32,437 $ 32,466 $ 22,106 (2) $ 10,360 (3) $ — Borrowed funds 16,084 16,794 — 16,794 — The following tables present the condensed financial statements for New York Community Bancorp, Inc. (Parent Company only): December 31, (in millions) 2021 2020 ASSETS: Cash and cash equivalents $ 139 151 Investments in subsidiaries 7,525 7,334 Receivables from subsidiaries 3 — Other assets 45 23 Total assets $ 7,712 7,508 LIABILITIES AND STOCKHOLDERS’ EQUITY: Junior subordinated debentures $ 361 360 Subordinated notes 296 296 Other liabilities 11 10 Total liabilities 668 666 Stockholders’ equity 7,044 6,842 Total liabilities and stockholders’ equity $ 7,712 7,508 Condensed Statements of Income Years Ended December 31, (in millions) 2021 2020 2019 Interest income $ — $ — $ — Dividends received from subsidiaries 380 380 380 Other income 1 1 1 Gross income 381 381 381 Operating expenses 50 52 50 Income before income tax benefit and equity in underdistributed 331 329 331 Income tax benefit 14 14 14 Income before equity in underdistributed earnings of subsidiaries 345 343 345 Equity in underdistributed earnings of subsidiaries 251 168 50 Net income $ 596 $ 511 $ 395 Condensed Statements of Cash Flows Years Ended December 31, (in millions) 2021 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 596 $ 511 $ 395 Change in other assets (22 ) — — Change in other liabilities 1 — (2 ) Other, net 32 30 33 Equity in undistributed earnings of subsidiaries (251 ) (168 ) (50 ) Net cash provided by operating activities 356 373 376 CASH FLOWS FROM INVESTING ACTIVITIES: �� Change in receivable from subsidiaries, net (3 ) 2 4 Net cash (used in) provided by investing activities (3 ) 2 4 CASH FLOWS FROM FINANCING ACTIVITIES: Treasury stock repurchased (16 ) (59 ) (75 ) Cash dividends paid on common and preferred stock (349 ) (348 ) (350 ) Net cash used in financing activities (365 ) (407 ) (425 ) Net decrease in cash and cash equivalents (12 ) (32 ) (45 ) Cash and cash equivalents at beginning of year 151 183 228 Cash and cash equivalents at end of year $ 139 $ 151 $ 183 On March 7, 2024, we entered into separate investment agreements with affiliates of funds managed by Liberty and certain other investors. The Investors invested an aggregate of approximately $1.05 billion in the Company Risk-Based Capital At December 31, 2021 Common Equity Tier 1 Total Leverage Capital (dollars in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 4,226 9.68 % $ 4,729 10.83 % $ 5,558 12.73 % $ 4,729 8.46 % Minimum for capital 1,966 4.50 2,621 6.00 3,494 8.00 2,237 4.00 Excess $ 2,260 5.18 % $ 2,108 4.83 % $ 2,064 4.73 % $ 2,492 4.46 % Risk-Based Capital At December 31, 2020 Common Equity Tier 1 Total Leverage Capital (dollars in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 3,962 9.72 % $ 4,465 10.95 % $ 5,290 12.97 % $ 4,465 8.52 % Minimum for capital 1,834 4.50 2,446 6.00 3,262 8.00 2,096 4.00 Excess $ 2,128 5.22 % $ 2,019 4.95 % $ 2,028 4.97 % $ 2,369 4.52 % Risk-Based Capital At December 31, 2021 Common Tier 1 Total Leverage (dollars in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 5,217 11.95 % $ 5,217 11.95 % $ 5,402 12.38 % $ 5,217 9.33 % Minimum for capital adequacy 1,964 4.50 2,619 6.00 3,491 8.00 2,236 4.00 Excess $ 3,253 7.45 % $ 2,598 5.95 % $ 1,911 4.38 % $ 2,981 5.33 % Risk-Based Capital At December 31, 2020 Common Tier 1 Total Leverage (dollars in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 4,964 12.18 % $ 4,964 12.18 % $ 5,145 12.62 % $ 4,964 9.48 % Minimum for capital adequacy 1,834 4.50 2,445 6.00 3,260 8.00 2,095 4.00 Excess $ 3,130 7.68 % $ 2,519 6.18 % $ 1,885 4.62 % $ 2,869 5.48 % New York, New York Plan Category Number of Equity compensation plans Equity compensation plans not Total — 4.4 Form of depositary receipt representing the Depositary Shares 4.5 4.5 Description of securities registered pursuant to Section 12 of the Securities and Exchange Act of 1934 4.6 Registrant will furnish, upon request, copies of all instruments defining the rights of holders of long-term debt instruments of the registrant and its consolidated subsidiaries. 10.1 Form of Employment Agreement between New York Community Bancorp, Inc. 10.2(P) 10.3(P) 10.4(P) 10.5(P) 10.6(P) 10.7 New York Community Bancorp, Inc. Management Incentive Compensation Plan 10.8 New York Community Bancorp, Inc. 2012 Stock Incentive Plan 10.9 10.12 Flagstar Bancorp, Inc. 2016 Stock Award and Incentive Plan (as assumed by New York Community Bancorp, Inc. 10.19 10.21 23 Consent of KPMG LLP, dated 31.1 31.2 32 97 101.SCH 101.CAL Cover Page Interactive Date File (formatted in Inline XBRL and contained in Exhibit 101) registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request. April 27, 2021 (File No. 1-31565) March 14, 2024 /s/ /s/ John J. Pinto John J. Pinto Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) Alessandro P. DiNello Director /s/ Lawrence J. Savarese Marshall Lux 3/14/24 Peter Schoels /s/ Jennifer R. Whip 3/14/24 Jennifer R. Whip Directorgap, NPV,EVE, and/or net interest income simulation.NII simulations.•Our ALCO Committee would inform the Board of Directors of the variance, and present recommendations to the Board regarding proposed courses of action to restore conditions to within-policy tolerances.synthetic hedging techniquesother balance sheet management activities including the potential use of derivatives to more immediately reduce the risk exposure. Where variance from policy tolerances is triggered by more fundamental imbalances in the risk profiles of core loan and deposit products, a remedial strategy may involve restoring balance through natural hedges to the extent possible before employing synthetic hedging techniques. Other strategies might include:2021,2023, our analysis indicated that an immediatea further inversion of the yield curve would be expected to result in an 8.14% decreasea 2.1 increase in net interest income; conversely, an immediate steepening of the yield curve would be expected to result in a 1.58% increase2.4 percent decrease in net interest income. It should be noted that the yield curveincome. Both scenarios are derived from immediate changes in these scenarios were updated, given the changing market rate environment, which resulted in an increase in the income sensitivity.to short-term rates.79ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAOurITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA and Notes thereto and other supplementary data begin on the following page.80NEW YORK COMMUNITY BANCORP, INC.CONSOLIDATED STATEMENTS OF CONDITION
December 31, 2021 and 2020, respectively)
issued and outstanding)
shares issued; and 465,015,643 and 463,901,808 shares outstanding, respectively)
$(25), respectively
and $22 respectivelyDecember 31, 2023 December 31, 2022 (in millions, except per share data) ASSETS: Cash and cash equivalents $ 11,475 $ 2,032 Securities: Debt Securities available-for-sale ($2,822 and $434 pledged at December 31, 2023 and December 31, 2022, respectively) 9,145 9,060 Equity investments with readily determinable fair values, at fair value 14 14 Total securities 9,159 9,074 Loans held for sale ($902 and $1,115 measured at fair value, respectively) 1,182 1,115 Loans and leases held for investment, net of deferred loan fees and costs 84,619 69,001 Less: Allowance for credit losses on loans and leases (992) (393) Total loans and leases held for investment, net 83,627 68,608 Federal Home Loan Bank stock and Federal Reserve Bank stock, at cost 1,392 1,267 Premises and equipment, net 652 491 Core deposit and other intangibles 625 287 Goodwill — 2,426 Mortgage servicing rights 1,111 1,033 Bank-owned life insurance 1,580 1,561 Other assets 3,254 2,250 Total assets $ 114,057 $ 90,144 LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Interest-bearing checking and money market accounts $ 30,700 $ 22,511 Savings accounts 8,773 11,645 Certificates of deposit 21,554 12,510 Non-interest-bearing accounts 20,499 12,055 Total deposits 81,526 58,721 Borrowed funds: Federal Home Loan Bank and Federal Reserve Bank advances 20,250 20,325 Junior subordinated debentures 579 575 Subordinated notes 438 432 Total borrowed funds 21,267 21,332 Other liabilities 2,897 1,267 Total liabilities 105,690 81,320 Stockholders' equity: Preferred stock at par $0.01 (5,000,000 shares authorized): Series A (515,000 shares issued and outstanding) 503 503 7 7 Paid-in capital in excess of par 8,231 8,130 Retained earnings 443 1,041 Treasury stock, at cost ($22,089,421 and 24,212,052 shares, respectively) (218) (237) Accumulated other comprehensive loss, net of tax: Net unrealized loss on securities available for sale, net of tax of $225 and $240, respectively (581) (626) Net unrealized loss on pension and post-retirement obligations, net of tax of $12 and $18, respectively (28) (46) Net unrealized gain on cash flow hedges, net of tax of $(6) and $(20), respectively 10 52 Total accumulated other comprehensive loss, net of tax (599) (620) Total stockholders’ equity 8,367 8,824 Total liabilities and stockholders’ equity $ 114,057 $ 90,144 For the Years Ended December 31, (in millions, except per share data) 2023 2022 2021 INTEREST INCOME: Loans and leases $ 4,509 $ 1,848 $ 1,525 Securities and money market investments 982 244 164 Total interest income 5,491 2,092 1,689 INTEREST EXPENSE: Interest-bearing checking and money market accounts 943 226 31 Savings accounts 169 60 28 Certificates of deposit 646 97 55 Borrowed funds 656 313 286 Total interest expense 2,414 696 400 Net interest income 3,077 1,396 1,289 Provision for credit losses 833 133 3 Net interest income after provision for credit loan losses 2,244 1,263 1,286 NON-INTEREST INCOME: Fee income 172 27 23 Bank-owned life insurance 43 32 29 Net loss on securities (1) (2) — Net return on mortgage servicing rights 103 6 — Net gain on loan sales and securitizations 89 5 — Net loan administration income 82 3 — Bargain purchase gain 2,131 159 — Other 68 17 9 Total non-interest income 2,687 247 61 NON-INTEREST EXPENSE: Operating expenses: Compensation and benefits 1,149 354 303 Occupancy and equipment 200 92 88 General and administrative 750 158 127 Total operating expense 2,099 604 518 Intangible asset amortization 126 5 — Merger-related and restructuring expenses 330 75 23 Goodwill impairment 2,426 — — Total non-interest expense 4,981 684 541 (Loss) Income before income taxes (50) 826 806 Income tax expense 29 176 210 Net (loss) income $ (79) $ 650 $ 596 Preferred stock dividends 33 33 33 Net (loss) income available to common stockholders $ (112) $ 617 $ 563 Basic (loss) earnings per common share $ (0.16) $ 1.26 $ 1.20 Diluted (loss) earnings per common share $ (0.16) $ 1.26 $ 1.20 Net (loss) income $ (79) $ 650 $ 596 Other comprehensive gain (loss), net of tax: Change in net unrealized loss on securities available for sale, net of tax of $(15); $223 and $42, respectively 45 (581) (112) Change in pension and post-retirement obligations, net of tax of $(5); $6 and $(8), respectively 12 (17) 23 Change in net unrealized gain on cash flow hedges, net of tax of $(3); $(24) and $(2), respectively 6 64 6 Reclassification adjustment for defined benefit pension plan, net of tax of $(1); $— and $(2), respectively 6 2 5 Reclassification adjustment for net (loss) gain on cash flow hedges included in net income, net of tax $17; $1 and $(7), respectively (48) (3) 18 Total other comprehensive gain (loss), net of tax 21 (535) (60) Total comprehensive (loss) income, net of tax $ (58) $ 115 $ 536 81NEW YORK COMMUNITY BANCORP, INC.CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
net of tax of $42; $(16); and $(18), respectively
$(8); $2 and $(2)
of $(2); $16 and $-, respectively
securities, net of tax of $-; $-; and $2, respectively
net of tax of $(2); $(2) and $(2), respectively
included in net income, net of tax $(7); $(3) and $-, respectively82NEW YORK COMMUNITY BANCORP, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Outstanding
Stock (Par
Value:
$0.01)
Stock (Par
Value:
$0.01)
Capital in
excess
of Par
Earnings
Stock, at
Cost
Other
Comprehensive
Loss, Net
of Tax
Stockholders’
Equity(1)Amount represents a $10 million cumulative adjustment, net of tax, to retained earnings as of January 1, 2020, as a result of the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which became effective January 1, 2020.(in millions, except share data) Shares Outstanding Preferred Stock (Par Value: $0.01) Common Stock (Par Value: 0.01) Paid-in Capital in excess of Par Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Loss, Net of Tax Total Stockholders’ Equity Year Ended December 31, 2023 Balance at December 31, 2022 681,217,334 $ 503 $ 7 $ 8,130 $ 1,041 $ (237) $ (620) $ 8,824 Issuance and exercise of FDIC Equity appreciation instrument 39,032,006 — — 85 — — — 85 Shares issued for restricted stock, net of forfeitures 3,074,565 — — (31) — 31 — — Compensation expense related to restricted stock awards — — — 47 — — — 47 Net income — — — — (79) — — (79) Dividends paid on common stock ($0.56) — — — — (486) — — (486) Dividends paid on preferred stock ($63.76) — — — — (33) — — (33) Purchase of common stock (1,257,535) — — — — (12) — (12) Other comprehensive income, net of tax — — — — — — 21 21 Balance at December 31, 2023 722,066,370 $ 503 $ 7 $ 8,231 $ 443 $ (218) $ (599) $ 8,367 Year Ended December 31, 2022 Balance at December 31, 2021 465,015,643 $ 503 $ 5 $ 6,126 $ 741 $ (246) $ (85) $ 7,044 Issuance and exercise of FDIC Equity appreciation instrument 214,990,316 — 2 2,008 — — — 2,010 Shares issued for restricted stock, net of forfeitures 3,548,310 — — (33) — 33 — — Compensation expense related to restricted stock awards — — — 29 — — — 29 Net income — — — — 650 — — 650 Dividends paid on common stock ($0.68) — — — — (317) — — (317) Dividends paid on preferred stock ($63.76) — — — — (33) — — (33) Purchase of common stock (2,336,935) — — — — (24) — (24) Other comprehensive loss, net of tax — — — — — — (535) (535) Balance at December 31, 2022 681,217,334 $ 503 $ 7 $ 8,130 $ 1,041 $ (237) $ (620) $ 8,824 Year Ended December 31, 2021 Balance at December 31, 2020 463,901,808 $ 503 $ 5 $ 6,123 $ 494 $ (258) $ (25) $ 6,842 Shares issued for restricted stock, net of forfeitures 2,515,942 — — (28) — 28 — — Compensation expense related to restricted stock awards — — — 31 — — — 31 Net income — — — — 596 — — 596 Dividends paid on common stock ($0.68) — — — — (316) — — (316) Dividends paid on preferred stock ($63.76) — — — — (33) — — (33) Purchase of common stock (1,402,107) — — — — (16) — (16) Other comprehensive loss, net of tax — — — — — — (60) (60) Balance at December 31, 2021 465,015,643 $ 503 $ 5 $ 6,126 $ 741 $ (246) $ (85) $ 7,044 83NEW YORK COMMUNITY BANCORP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
of January 1, 2019
available for sale(1)Includes $18 million, $20 million, and $38 million of net amortization of operating lease right-of-use assets for the twelve months ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively.(2)New York Community Bancorp, Inc.For the Years Ended December 31, (in millions) 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (79) $ 650 $ 596 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 833 133 3 Amortization of intangibles 126 5 — Depreciation 39 18 21 Amortization of discounts and premiums, net 221 (37) (5) Net loss on securities 1 2 — Net gain on sales of loans (89) (5) (1) Net gain on sales of fixed assets — (2) — Gain on business acquisition (2,131) (159) — Goodwill Impairment 2,426 — — Stock-based compensation 47 29 31 Deferred tax expense (187) (3) (13) Changes in operating assets and liabilities: (Increase) decrease in other assets (721) 348 (284) Decrease in other liabilities (255) (100) (6) Purchases of securities held for trading (10) (75) (110) Proceeds from sales of securities held for trading 10 75 110 Change in loans held for sale, net 32 147 (52) Net cash provided by operating activities 263 1,026 290 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from repayment of securities available for sale 1,402 732 1,728 Proceeds from sales of securities available for sale including loans that have been securitized 1,858 228 — Purchase of securities available for sale (3,046) (2,242) (1,796) Redemption of Federal Home Loan Bank stock 1,501 635 92 Purchases of Federal Home Loan Bank and Federal Reserve Bank stock (1,626) (839) (112) Proceeds from bank-owned life insurance, net 30 16 12 Proceeds from sales of loans — — 37 Purchases of loans — (162) (161) Net proceeds from sales of MSR's 50 — — Other changes in loans, net (4,331) (5,019) (2,558) Purchases of premises and equipment, net (66) (3) (4) Cash acquired in business acquisition 24,901 331 — Net cash provided by (used in) investing activities 20,673 (6,323) (2,762) CASH FLOWS FROM FINANCING ACTIVITIES: Net (decrease) increase in deposits (10,738) 7,662 2,622 Net (decrease) increase in short-term borrowed funds (550) 2,550 950 Proceeds from long-term borrowed funds 19,850 9,479 2,072 Repayments of long-term borrowed funds (19,374) (13,960) (2,544) Net disbursement of payments of loans serviced for others (66) (189) — Cash dividends paid on common stock (486) (317) (316) Cash dividends paid on preferred stock (33) (33) (33) Treasury stock repurchased — (7) — Payments relating to treasury shares received for restricted stock award tax payments (12) (17) (16) Net cash (used in) provided by financing activities (11,409) 5,168 2,735 9,527 (129) 263 2,082 2,211 1,948 $ 11,609 $ 2,082 $ 2,211 Includes $18 million, $20 million, and $38 million of net amortization of operating lease liability for the twelve months ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively.Supplemental information: Cash paid for interest $ 2,290 $ 657 $ 402 Cash paid for income taxes 54 17 471 Non-cash investing and financing activities: Transfers to repossessed assets from loans $ 9 $ — $ 1 Securitization of loans to mortgage-backed securities available for sale 222 162 161 Transfer of loans from held for investment to held for sale 163 — 52 Transfer of loans from held for sale to held for investment — — 94 MSRs resulting from sale or securitization of loans — 19 — Shares issued for restricted stock awards 31 33 28 Business Combinations: Fair value of tangible assets acquired 37,384 24,449 — Intangible assets 464 292 — Mortgage servicing rights — 1,012 — Liabilities assumed 35,632 23,584 — Common Stock issued in business combination — 2,010 — Issuance of FDIC Equity appreciation instrument 85 — — 84NEW YORK COMMUNITY BANCORP, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 1: ORGANIZATION AND BASIS OF PRESENTATIONOrganizationNew York CommunityFlagstar Bank N.A. (hereinafter referred to as the “Bank”). The Company is headquartered in Hicksville, New York with regional headquarters in Troy, Michigan.Founded on April 14, 1859formerly known as Queens County Savingssupervision by the Federal Reserve. The Bank is a National Association, subject to federal regulation and oversight by the Bank converted from a state-chartered mutual savings bank to the capital stock form of ownership onOCC. at which date the Company issued its initial offering of common stock (par value: $0.01$0.01 per share) at a price of $25.00$25.00 per share ($($0.93 per share on a split-adjusted basis, reflecting the impact of nine stock splits between 1994 and 2004)2004).237420 branches across twelve states, including strong footholds in the Northeast and Midwest and exposure to markets in the Southeast and West Coast. Flagstar Mortgage operates nationally through eighta wholesale network of approximately 3,600 third-party mortgage originators. Flagstar Bank N.A. also operates through nine local divisions, each with a history of service and strength: New York Community Bank, Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, Roosevelt Savings Bank, and Atlantic Bank in New York; Garden State Community Bank in New Jersey; Ohio Savings Bank in Ohio; and AmTrust Bank in Arizona and Florida. (“GAAP”) and to general practices within the banking industry. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates that are used in connection with the determination of the allowance for loancredit losses, mortgage servicing rights, the Flagstar acquisition and lease losses.the Signature Transaction.9, “Borrowed12 - Borrowed Funds” for additional information regarding these trusts.Dollar amounts are presentedmillions,the form of an interest rate reduction, an other-than-insignificant payment delay, a term extension, principal forgiveness or a combination thereof (collectively referred to as comparedTroubled Debt Modifications or TDMs).prior year filings which were presented in thousandsthe adoption of dollars.NOTE 2: SUMMARY OF SIGNIFStandard Description Effective Date ASU 2022-02- Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures Issued March 2022 ASU 2022-02 eliminates prior accounting guidance for TDRs, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The standard also requires that an entity disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases. The Company adopted ASU 2022-02 effective January 1, 2023 using a modified retrospective transition approach for the amendments related to the recognition and measurement of TDRs. The impact of the adoption resulted in an immaterial change to the allowance for credit losses ("ACL"), thus no adjustment to retained earnings was recorded. Disclosures have been updated to reflect information on loan modifications given to borrowers experiencing financial difficulty as presented in Note 6. TDR disclosures are presented for comparative periods only and are not required to be updated in current periods. Additionally, the current year vintage disclosure included in Note 6 has been updated to reflect gross charge-offs by year of origination for the three months ended September 30, 2023. ASU 2023-02 Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method Issued: March 2023 ASU 2023-02 permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The Company adopted ASU 2023-02 effective January 1, 2023 and it did not have a significant impact on the Company's consolidated financial statements. ICANT ACCOUNTING POLICIESagreements.agreements, if any. At December 31, 20212023 and 2020,2022, the Company’s cash and cash equivalents totaled $2.2$11.5 billion and $1.9$2.0 billion, respectively. Included in cash and cash equivalents at those dates were $1.7$10.7 billion and $$837 million1.6, billion, respectively, of interest-bearing deposits in other financial institutions, primarily consisting of balances due from the FRB-NY. There were 0no reverse repurchase agreements outstanding as of December 31, 2023 and $793 million of reverse repurchase agreements were outstanding at December 31, 2022. There were no federal funds sold outstanding at December 31, 20212023 or December 31, 2020. There was $4062022. Restricted cash totaled $134 million of reverse repurchase agreements outstandingand $50 million at December 31, 2021. There was $193 million reverse repurchase agreements outstanding at2023 and December 31, 2020.2022, respectively and includes cash that the Bank pledges as maintenance margin on centrally cleared derivatives and is included in other assets on the Consolidated Statements of Condition.85assessassesses whether (i) it intends to sell, or (ii) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of these criteria is met, any previously recognized allowances are charged off and the security’s amortized cost basis is written down to fair value through income. If neither of the aforementioned criteria are met, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. a method that approximates the interest method, and are adjusted for anticipated prepayments. Dividend and interest income are recognized when earned. The cost of securities sold is based on the specific identification method.FHLB-NY.FHLB-NY and FHLB-Indianapolis.86LoansNote 18 - Fair Value Measures.loans.loans and leases.The Company’s January 1, 2020, adoption of ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments,” resulted in a significant change to our methodology for estimating the allowance since December 31, 2019. ASU No. 2016-13 replaces the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loan receivables. It also applies to off-balance sheet exposures not accounted for as insurance and net investments in leases accounted for under ASC Topic 842. At December 31, 2020, the allowance for loan and lease losses totaled $194 million. On January 1, 2020, the Company adopted the CECL methodology under ASU Topic 326 and recognized an increase in the ACL on loans and leases of $2 million as a “Day 1” transition adjustment from changes in methodology, with a corresponding decrease in retained earnings. Separately, at December 31, 2019, the Company had an allowance for unfunded commitments of $1 million. Upon adoption, the Company recognized an increase in the allowance for unfunded commitments of $13 million as a “Day 1” transition adjustment with a corresponding decrease in retained earnings.loss-given-defaultloss- given-default and exposure-at-default depending on economic parameters for each month of the remaining contractual term. Economicterm, as well as credit ratings for certain loans within the commercial and industrial portfolio. The Company loss drivers for certain loans in the commercial and industrial portfolio are derived using leverages economic projections including property market and prepayment forecasts from established independent third parties, as well as credit ratings for certain loans within the commercial and industrial portfolio, to inform its loss drivers in the forecast. The Company estimates the exposure-at-default using prepayment models which forecasts prepayments over the life of the loans and leases. The economic forecast and the related economic parameters are developed using available information relating to past events, current conditions, multiple economic forecasts scenarios, including related weightings, over the reasonable and supportable forecast period and macroeconomic assumptions. The Company’seconomic forecast scenarios and related economic parameters are sourced from independent third parties. The economic forecast over a reasonable and supportable period ofis 24 months, and afterwards the Company reverts to a historical average loss rate on a straight linestraight-line basis over a 12 month12-month period. Historical credit loss experience over the historical loss observation period provides the basis for the estimation of expected credit losses, with qualitative factor adjustments made87loansloan and leases, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions. Each quarter the Company reassesses the appropriateness of the reasonable and supportableeconomic forecasting period, the reversion period and historical mean at the portfolio segment level, considering any required adjustments for differences in underwriting standards, portfolio mix, and other relevant data shifts over time.Smaller pools of homogenous financing receivables with homogeneous risk characteristics were modeled using the methodology selected for the portfolio segment. The macroeconomic data used in the quantitative models are based on a reasonable and supportable forecast period of 24 months. The Company leverages economic projections including property market and prepayment forecasts from established independent third parties, as well as credit ratings for certain loans within the commercial and industrial portfolio, to inform its loss drivers in the forecast. Beyond this forecast period, the Company reverts to a historical average loss rate. This reversion to the historical average loss rate is performed on a straight-line basis over 12 months.In addition, all taxi medallion loans are individually evaluated. If a loan is determined to be collateral dependent, or meets the criteria to apply the collateral dependent practical expedient, expected credit losses are determined based on the fair value of the collateral at the reporting date, less costs to sell as appropriate.credit conversion factor (“CCF”)CCF trends to estimate utilization rates, and chose an appropriate mean CCF based on both management judgment and quantitative analysis. Quantitative analysis involved examination of CCFs over a range of fund-up windows (between 12 and 36 months) and comparison of the mean CCF for each fund-up window with management judgment determining whether the highest mean CCF across fund-up windows made business sense. The Company applies the same standards and estimated loss rates to the credit exposures as to the related class of loans.Allowance for LoanLease Losses - 2019At December 31, 2019,judgments that may be influenced by changes period to period. These include, but are not limited to changes in the methodology used foreconomic environment and forecasts, changes in the computationcredit profile and characteristics of the loan portfolio, and changes in prepayment assumptions which will result in provisions to or recoveries from the balance of the allowance for loancredit losses.lease losses the Bank segregated their loss factors (used for both criticized and non-criticized loans) into a component that was primarily based on historical loss rates and a component that was primarily based on other qualitative factors thatportfolio characteristics will change from period to period, portfolio prepayments are probable to affect loan collectability. In determiningan integral assumption in estimating the allowance for loancredit losses on our commercial real estate (multi-family, CRE and lease losses, management considers the Bank’s current business strategies and credit processes, including compliance with applicable regulatory guidelines and with guidelines approved by the Boards of Directors with regard to credit limitations, loan approvals, underwriting criteria, and loan workout procedures.The allowance for loan and lease losses is established based on management’s evaluation of incurred losses in theADC) portfolio in accordance with GAAP, and is comprised of both specific valuation allowances and a general valuation allowance.Specific valuation allowances are established based on management’s analyses of individual loans that are considered impaired. If a loan is deemed to be impaired, management measures the extent of the impairment and establishes a specific valuation allowance for that amount. A loan is classified as impaired when, based on current information and/or events, it is probable that the Company will be unable to collect all amounts due under the88contractual termswhich comprises 60 percent of the loan agreement. The Company appliesportfolio at December 31, 2023. Portfolio prepayments are subject to estimation uncertainty and changes in this classification as necessaryassumption could have a material impact to loans individually evaluated for impairment in our portfolios. Smaller-balance homogenous loansestimation process. Prepayment assumptions are sensitive to interest rates and loans carried at the lower of cost or fair value are evaluated for impairment on a collective, rather than individual, basis. Loans to certain borrowers who have experienced financial difficulty and for which theexisting loan terms have been modified, resulting in a concession, are considered TDRs and are classified as impaired.The Company primarily measures impairment on an individual loan and determine the extentweighted average life of the commercial mortgage loan portfolio. Excluding other factors, as the weighted average life of the portfolio increases or decreases, so will the required amount of the allowance for credit losses on commercial real estate.which a specific valuation allowance is necessary by comparing the loan’s outstanding balance to eitherdetermine the fair value of our single reporting unit, which considers how a market participant would view a control premium, complemented by an income approach if deemed necessary. The resulting value is then compared to our book value and any shortfalls would be recorded as an impairment.collateral, lessCompany identified a triggering event and applied a market approach using the estimated costend of day stock price, control premium for completed bank acquisitions, and an adjustment for Company-specific risk considerations based on subsequent confirming market evidence. This adjusted market capitalization was then compared to the carrying value to determine the extent of any shortfall which was calculated to be in excess of the goodwill balance. The Company’s assessment concluded that goodwill from historical transactions (2007 and prior) was fully impaired as of December 31, 2023, as confirmed by the Company’s current market capitalization. As a result, the Company recorded an impairment charge of the entire goodwill balance of $2.4 billion. Additional information on the methodologies and assumptions used in the goodwill impairment analysis can be found in Note 16 - Intangible Assets.present value of expected cash flows, discountedCompany retains the right to service the loan, an MSR is created at the loan’s effective interest rate. Generally, whentime of sale which is recorded at fair value. The Company uses an internal valuation model that utilizes an option-adjusted spread, constant prepayment speeds, costs to service and other assumptions to determine the fair value of the collateral, netMSRs.estimated costMSR portfolio on a quarterly basis from independent valuation services to sell, orassess the presentreasonableness of the fair value calculated by our internal valuation model. Changes in the fair value of the expected cash flows is less than the recorded investment in the loan, any shortfall is promptly charged off.An allowance for unfunded commitments is maintained separate from the allowance for loan and lease losses and is included in Other liabilities inour MSRs are reported on the Consolidated Statements of Condition.GoodwillIncome and Comprehensive Income in net return on mortgage servicing. For further information, see The Company adopted, on a prospective basis, ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment on January 1, 2020. The Company has significant intangible assets related to goodwill and as of December 31, 2021, the Company had goodwill of $2.4Note 9 - Mortgage Servicing Rights billion. In connection with its acquisitions, the assets acquired and liabilities assumed are recorded at their estimated fair values. Goodwill represents the excess of the purchase price of its acquisitions over the fair value of identifiable net assets acquired, including other identified intangible assets. The Company tests goodwill for impairment at the reporting unit level. The Company has identified 1Note 18 - Fair Value Measures reporting unit which is the same as its operating segment and reportable segment. If the Company changes its strategy or if market conditions shift, its judgments may change, which may result in adjustments to the recorded goodwill balance..The Company performs its goodwill impairment test in the fourth quarter of each year, or more often if events or circumstances warrant. For annual goodwill impairment testing, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill and other intangible assets. If the Company concludes that this is the case, it would compare the fair value the reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized, however, would not exceed the total amount of goodwill allocated to that reporting unit. Additionally, the Company would consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. As of December 31, 2021, the Company’s goodwill was 0t impaired.$21$39 million, $24$18 million, and $27$21 million, respectively, in the years ended December 31, 2021, 2020,2023, 2022, and 2019.2021. Accumulated depreciation as of December 31, 2023 and December 31, 2022 was $526 million and $434 million. The estimated useful lives for the principal classes of assets are as follows:Premises and Equipment Useful Lives Buildings 30 Furniture, fixtures and equipment, and building improvements 13.5 Leasehold improvements 10 ATMs 7 20212023 and 2020,2022, the Company’s investment in BOLI was $1.2$1.6 billion. The Company’s investment in BOLI generated income of $29$43 million, $32$32 million, and $28$29 million, respectively, during the years ended December 31, 2021, 2020,2023, 2022, and 2019.2021.892021,2023, the Company had $3$5 million of OREO, $4 million of taxi medallions and $5 million of repossessed specialty equipment. At December 31, 2022, the Company had $8 million of OREO and $5$4 million of taxi medallions. At December 31, 2020,had $2 millionowns the MSR are included in net return on mortgage servicing rights on the Consolidated Statements of OREOIncome and $7 millionComprehensive Income. The fees are based on the outstanding principal and are recorded as income when earned. Subservicing fees, which are included in loan administration income on the Consolidated Statements of taxi medallions.Income and Comprehensive Income, are based on a contractual monthly amount per loan including late fees and other ancillary income.2021,2023, the Company had 8,548,78316,143,893 shares available for grant under the 2020 Incentive Plan. Compensation cost related to restricted stock grants is recognized on a straight-line basis over the vesting period. For a more detailed discussion of the Company’s stock-based compensation, see Note 15, “Stock-Related Benefit14 - Stock-Related Benefits Plans.”9091For the Years Ended December 31, (in millions, except share and per share amounts) 2023 2022 2021 Net (loss) income available to common stockholders $ (112) $ 617 $ 563 Less: Dividends paid on and earnings allocated to participating securities (5) (8) (7) (Loss) earnings applicable to common stock $ (117) $ 609 $ 556 Weighted average common shares outstanding 713,643,550 483,603,395 463,865,661 (Loss) basic earnings per common share $ (0.16) $ 1.26 $ 1.20 (Loss) earnings applicable to common stock $ (117) $ 609 $ 556 Weighted average common shares outstanding 713,643,550 483,603,395 463,865,661 Potential dilutive common shares — 1,530,950 767,058 Total shares for diluted (loss) earnings per common share computation 713,643,550 485,134,345 464,632,719 Diluted (loss) earnings per common share and common share equivalents $ (0.16) $ 1.26 $ 1.20 (in millions) March 20, 2023 (preliminary) Net assets acquired before fair value adjustments $ 2,973 Fair value adjustments: Loans (727) Core deposit and other intangibles 464 Certificates of deposit 27 Other net assets and liabilities 39 FDIC Equity Appreciation Instrument (85) Deferred tax liability (690) Bargain purchase gain on Signature Transaction, as initially reported 2,001 Measurement period adjustments, excluding taxes 28 Change in deferred tax liability 102 Bargain purchase gain on Signature Transaction, as adjusted $ 2,131 (in millions) Preliminary as Initially Reported Measurement Period Adjustments Preliminary as Adjusted Purchase Price consideration $ 85 $ 85 Fair value of assets acquired: Cash & cash equivalents 25,043 (142) 24,901 Loans held for sale 232 232 Loans held for investment: Commercial and industrial 10,102 (214) 9,888 Commercial real estate 1,942 (262) 1,680 Consumer and other 174 (1) 173 Total loans held for investment 12,218 (477) 11,741 CDI and other intangible assets 464 — 464 Other assets 679 (169) 510 Total assets acquired 38,636 (788) 37,848 Fair value of liabilities assumed: Deposits 33,568 (61) 33,507 Other liabilities 2,982 (857) 2,125 Total liabilities assumed 36,550 (918) 35,632 Fair value of net identifiable assets 2,086 130 2,216 Bargain purchase gain $ 2,001 $ 130 $ 2,131 (in millions) Total Par value (UPB) $ 583 ACL at acquisition (13) Non-credit (discount) (76) Fair value $ 494 (in millions) December 1, 2022 Purchase Price consideration $ 2,010 Fair value of assets acquired: Cash & cash equivalents 331 Securities 2,695 Loans held for sale 1,257 Loans held for investment: One-to-four family first mortgage 5,438 Commercial and industrial 3,891 Commercial real estate 6,523 Consumer and other 2,156 Total loans held for investment 18,008 CDI and other intangible assets 292 Mortgage servicing rights 1,012 Other assets 2,158 Total assets acquired 25,753 Fair value of liabilities assumed: Deposits 15,995 Borrowings 6,700 Other liabilities 889 Total liabilities assumed 23,584 Fair value of net identifiable assets 2,169 Bargain purchase gain $ 159 (in millions) Total Par value (UPB) $ 1,950 ACL at acquisition (51) Non-credit (discount) (33) Fair value $ 1,866 2020,do not reflect the anticipated cost savings that have not yet been realized. Acquisition costs incurred by the Company during the years ended December 31, 2022 and 2019:
to participating securities
share computation
common share equivalentsImpact of Recent Accounting PronouncementsRecently Adopted Accounting StandardsThe Company adopted ASU No. 2020-042021 are reflected in the first quarter of 2020 upon issuance.pro forma amounts. The amendments provide optional expedients and exceptions for certain contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of rate reform. The guidance is effective frompro forma information does not necessarily reflect the date of issuance until December 31, 2022. If certain criteria are met, the amendments allow exceptions to the designation criteria of the hedging relationship and the assessment of hedge effectiveness during the transition period. To date, the guidance has not had a material impact on the Company’s Consolidated Statements of Condition, results of operations or cash flows. that would have occurred had the Flagstar Transaction occurred at the beginning of 2021.For the Years Ended December 31, (unaudited) (in millions) 2022 2021 Net interest income $ 2,278 $ 2,208 Non-interest income 650 1,105 Net income 804 1,207 Net income available to common stockholders $ 771 $ 1,174 Company will continue to assessfollowing table sets forth the impact as the reference rate transition occurs. components in accumulated other comprehensive income:92NOTE 3: RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSSFor the Twelve MonthsYear Ended December 31, 20210— 00(25)(17) 7(18)0(7)(7) (7)1 2(5)(23)14, “Employee20 - Employee Benefits” for additional information.93NOTE 4: SECURITIESvalues at December 31, 2021 and 2020:
Cost
Unrealized
Gain
Unrealized
Loss
ValueDecember 31, 2023 (in millions) Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Debt securities available-for-sale Mortgage-Related Debt Securities: GSE certificates $ 1,366 $ 1 $ 146 $ 1,221 GSE CMOs 5,495 48 381 5,162 Private Label CMOs 174 7 1 180 Total mortgage-related debt securities $ 7,035 $ 56 $ 528 $ 6,563 Other Debt Securities: U. S. Treasury obligations $ 198 $ — $ — $ 198 GSE debentures 1,899 1 291 1,609 307 — 5 302 Municipal bonds 6 — — 6 Corporate bonds 365 — 22 343 Foreign notes 35 — 1 34 Capital trust notes 97 5 12 90 Total other debt securities $ 2,907 $ 6 $ 331 $ 2,582 Total debt securities available for sale $ 9,942 $ 62 $ 859 $ 9,145 Equity securities: Mutual funds $ 16 $ — $ 2 $ 14 Total equity securities $ 16 $ — $ 2 $ 14 $ 9,958 $ 62 $ 861 $ 9,159 The underlying assets of the asset-backed securities are substantially guaranteed by the U.S. Government..(2)Excludes accrued interest receivable of $15 million included in other assets in the Consolidated Statements of Condition.94
Cost
Unrealized
Gain
Unrealized
Loss
Value(1)$$38 million included in other assets in the Consolidated Statements of Condition.December 31, 2022 (in millions) Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Debt securities available-for-sale Mortgage-Related Debt Securities: GSE certificates $ 1,457 $ — $ 160 $ 1,297 GSE CMOs 3,600 1 300 3,301 Private Label CMOs 185 6 — 191 Total mortgage-related debt securities $ 5,242 $ 7 $ 460 $ 4,789 Other Debt Securities: U. S. Treasury obligations $ 1,491 $ — $ 4 $ 1,487 GSE debentures 1,749 — 351 1,398 375 — 14 361 Municipal bonds 30 — — 30 Corporate bonds 913 2 30 885 Foreign Notes 20 — — 20 Capital trust notes 97 5 12 90 Total other debt securities $ 4,675 $ 7 $ 411 $ 4,271 Total other securities available for sale $ 9,917 $ 14 $ 871 $ 9,060 Equity securities: Mutual funds $ 16 $ — $ 2 $ 14 Total equity securities $ 16 $ — $ 2 $ 14 $ 9,933 $ 14 $ 873 $ 9,074 15The underlying assets of the asset-backed securities are substantially guaranteed by the U.S. Government.20212023, the Company had $861 million and 2020, respectively,$329 million of FHLB-NY stock, at cost and FHLB-Indianapolis stock, at cost, respectively. At December 31, 2022, the Company had $734$762 million and $714$329 million of FHLB-NY stock, at cost.cost and FHLB-Indianapolis stock, at cost, respectively. The Company maintains an investment in FHLB-NY stock partly in conjunction with its membership in the FHLB and partly related to its access to the FHLB funding it utilizes. In addition, at December 31, 2023 and December 31, 2022, the Company had $203 million and $176 million of Federal Reserve Bank stock, respectively.years ended December 31, 2021, 2020, and 2019:years-ended:December 31, ( in millions) 2023 2022 2021 Gross proceeds $ 1,637 $ 228 $ — Gross realized gains 2 — — Gross realized losses (3) — — Netgainslosses on equity securities recognized in earnings for the years ended December 31, 2023. For the years ended December 31, 2022 and 2021 2020, and 2019there were $0 million, $1unrealized losses on equity securities of $2 million and $zero recognized in earnings, respectively.2 million, respectively.2021:2023:95
Related
Securities
Government
and GSE
Obligations
County,
and
Municipal
Debt
Securities (1)
Value
Securities:
for saleMortgage- Related Securities U.S. Government and GSE Obligations State, County, and Municipal Fair Value ( in millions) Available-for-Sale Debt Securities: Due within one year $ — $ 448 $ — $ — $ 446 Due from one to five years 178 50 — 353 560 Due from five to ten years 316 1,502 6 105 1,597 Due after ten years 6,541 96 — 345 6,542 Total debt securities available for sale $ 7,035 $ 2,096 $ 6 $ 803 $ 9,145 2021:2023:Less than Twelve Months Twelve Months or Longer Total (in millions) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Temporarily Impaired Securities: U. S. Treasury obligations $ — $ — $ — $ — $ — $ — U.S. Government agency and GSE obligations 181 1 1,362 290 1,543 291 GSE certificates 312 5 843 141 1,155 146 Private Label CMOs 29 1 — — 29 1 GSE CMOs 1,835 77 1,312 304 3,147 381 Asset-backed securities — — 228 5 228 5 Municipal bonds — — 6 — 6 — Corporate bonds — — 343 22 343 22 Foreign notes — — 9 1 9 1 Capital trust notes — — 81 12 81 12 Equity securities — — 14 2 14 2 Total temporarily impaired securities $ 2,357 $ 84 $ 4,198 $ 777 $ 6,555 $ 861
Loss
Loss
Loss
securities2020:2022:Less than Twelve Months Twelve Months or Longer Total (in millions) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Temporarily Impaired Securities: U. S. Treasury obligations $ 1,487 $ 4 $ — $ — $ 1,487 $ 4 U.S. Government agency and GSE obligations 243 5 1,156 346 1,399 351 GSE certificates 871 46 420 114 1,291 160 GSE CMOs 2,219 36 925 264 3,144 300 Asset-backed securities 61 2 262 12 323 14 Municipal bonds 9 — 7 — 16 — Corporate bonds 698 27 97 3 795 30 Foreign notes 20 — — — 20 — Capital trust notes 46 2 34 10 80 12 Equity securities 4 — 10 2 14 2 Total temporarily impaired securities $ 5,658 $ 122 $ 2,911 $ 751 $ 8,569 $ 873
Loss
Loss
Loss
securities9620212023 consisted of 4eighty-four agency collateralized mortgage obligations, 5six capital trusts notes, 4note, eight asset-backed securities, 2twelve corporate bonds, 20thirty-seven US government agency bonds, 21three hundred two mortgage-backed securities, one mutual fund, one foreign debt, and 1one municipal bond.bond . The investment securities designated as having a continuous loss position for twelve months or more at December 31, 20202022 consisted of 4twenty three agency collateralized mortgage obligations, 5five capital trusts notes, 7seven asset-backed securities, 3two corporate bonds, thirty three US government agency bonds, one hundred thirty three mortgage-backed securities, one mutual fund, and 1one municipal bond.Based on an evaluation of available information about past events, current conditions, and reasonable and supportable forecasts that are relevant to collectability, the Company has concluded that it expects to receive all contractual cash flows from each security held in its available-for-sale securities portfolio.firstalso assess whether (i) we intend to sell, or (ii) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria is met, any previously recognized allowances are charged off and the security’s amortized cost basis is written down to fair value through income. If neither of the aforementioned criteria are met, we evaluate whether the decline in fair value has resulted from credit losses or other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.20212023 or December 31, 20202022 relates to the marketability of the securities or the issuers’ ability to honor redemption obligations. Rather, the unrealized losses relate to changes in interest rates relative to when the investment securities were purchased, and do not indicate credit-related impairment. Management based this conclusion on an analysis of each issuer including a detailed credit assessment of each issuer. The Company does not intend to sell, and it is not more likely than not that the Company will be required to sell the positions before the recovery of their amortized cost basis, which may be at maturity. As such, no allowance for credit losses was recordedremains with respect to debt securities as of or during the twelve months ended December 31, 2021.2023.Management has madeaccounting policy electionintent and ability to exclude accrued interest receivable on available-for-sale securities fromhold for the estimate of credit losses. Available-for-sale debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due,foreseeable future or until maturity as LHFI. We report LHFI loans at their amortized cost, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status.97NOTE 5: LOANS AND LEASESThe following table sets forthincludes the composition of the loanoutstanding principal balance adjusted for any unamortized premiums, discounts, deferred fees and lease portfolio at the dates indicated:unamortized fair value adjustments for acquired loans:
Loans
Held for
Investment
Loans
Held for
Investment
of $95 and $116 respectivelyDecember 31, 2023 December 31, 2022 (dollars in millions) Amount Percent of
Loans
Held for
InvestmentAmount Percent of
Loans
Held for
InvestmentLoans and Leases Held for Investment: Mortgage Loans: Multi-family $ 37,265 44.0 % $ 38,130 55.3 % Commercial real estate 10,470 12.4 % 8,526 12.4 % One-to-four family first mortgage 6,061 7.2 % 5,821 8.4 % Acquisition, development, and construction 2,912 3.4 % 1,996 2.8 % $ 56,708 67.0 % $ 54,473 78.9 % Other Loans: Commercial and industrial 22,065 26.1 % 10,597 15.4 % Lease financing, net of unearned income of $258 and $85, respectively 3,189 3.8 % 1,679 2.4 % 25,254 29.9 % 12,276 17.8 % Other 2,657 3.1 % 2,252 3.3 % Total other loans held for investment 27,911 33.0 % 14,528 21.1 % $ 84,619 100.0 % $ 69,001 100.0 % Allowance for credit losses on loans and leases (992) (393) Total loans and leases held for investment, net 83,627 68,608 Loans held for sale 1,182 1,115 Total loans and leases, net $ 84,809 $ 69,723 $199$423 million and $219$292 million at December 31, 20212023 and December 31, 2020,2022, respectively, which is included in other assets in the Consolidated Statements of Condition.$3.5$5.2 billion and $3.0$4.4 billion respectively, at December 31, 20212023 and December 31, 2020, and other C&I loans of $527 million and $393 million, respectively, at December 31, 2021 and December 31, 2020.(3)Includes deferred loan origination fees of $2 million.2022, respectively.and Leaseswith Government GuaranteesLoans and Leases Held for InvestmentThe majority of the loans the Company originates for investmentmulti-family loans, most of which are collateralized by non-luxury apartment buildings in New York City with rent-regulated units and below-market rents. In addition, the Company originates CRE loans, most of which are collateralized by income-producing properties such as office buildings, retail centers, mixed-use buildings, and multi-tenanted light industrial properties that are located in New York City and on Long Island.To a lesser extent, the Company also originates ADC loans for investment. One-to-four family loans held for investment were originated through the Company’s former mortgage banking operation and primarily consisted of jumbo prime adjustable rate mortgages made to borrowers with a solid credit history.ADC loans are primarily originated for multi-family and residential tract projects in New York City and on Long Island. C&I loans consist of asset-based loans, equipment loans and leases, and dealer floor-plan loans (together, specialty finance loans and leases) that generally are made to large corporate obligors, many of which are publicly traded, carry investment gradeinsured or near-investment grade ratings, and participate in stable industries nationwide; and other C&I loans that primarily are made to small and mid-size businesses in Metro New York. Other C&I loans are typically made for working capital, business expansion, and the purchase of machinery and equipment.98The repayment of multi-family and CRE loans generally depends on the income producedguaranteed by the underlying properties which, in turn, depends on their successful operation and management. To mitigateFHA or the potential for credit losses, the Company underwrites itsU.S. Department of Veterans Affairs. Nonperforming repurchased loans in accordance with credit standards it considers to be prudent, looking firstthis portfolio earn interest at the consistency of the cash flows being produced by the underlying property. In addition, multi-family buildings, CRE properties, and ADC projects are inspected as a prerequisite to approval, and independent appraisers, whose appraisals are carefully reviewed by the Company’s in-house appraisers, perform appraisals on the collateral properties. In many cases, a second independent appraisal review is performed.To further manage its credit risk, the Company’s lending policies limit the amount of credit granted to any one borrower and typically require conservative debt service coverage ratios and loan-to-value ratios. Nonetheless, the ability of the Company’s borrowers to repay these loans may be impacted by adverse conditions in the local real estate market, the local economy and changes in applicable laws and regulations. Accordingly, there can be no assurance that its underwriting policies will protect the Company from credit-related losses or delinquencies.ADC loans typically involve a higher degree of credit risk than loans secured by improved or owner-occupied real estate. Accordingly, borrowers are required to provide a guarantee of repayment and completion, and loan proceeds are disbursed as construction progresses, as certified by in-house inspectors or third-party engineers. The Company seeks to minimize the credit risk on ADC loans by maintaining conservative lending policies and rigorous underwriting standards. However, if the estimate of value proves to be inaccurate, the cost of completion is greater than expected, or the length of time to complete and/or sell or lease the collateral property is greater than anticipated, the property could have a value upon completion that is insufficient to assure full repayment of the loan. This could have a material adverse effect on the quality of the ADC loan portfolio, and could result in losses or delinquencies. In addition, the Company utilizes the same stringent appraisal process for ADC loans as it does for its multi-family and CRE loans.To minimize the risk involved in specialty finance lending and leasing, the Company participates in syndicated loans that are brought to it, and equipment loans and leases that are assigned to it, by a select group of nationally recognized sources who have had long-term relationships with its experienced lending officers. Each of these credits is secured with a perfected first security interest or outright ownership in the underlying collateral, and structured as senior debt or as a non-cancelable lease. To further minimize the risk involved in specialty finance lending and leasing, each transaction is re-underwritten. In addition, outside counsel is retained to conduct a further review of the underlying documentation.To minimize the risks involved in other C&I lending, the Company underwrites such loans on the basis of the cash flows produced by the business; requires that such loans be collateralized by various business assets, including inventory, equipment, and accounts receivable, among others; and typically requires personal guarantees. However, the capacity of a borrower to repay such a C&I loan is substantially dependent on the degree to which the business is successful. In addition, the collateral underlying such loans may depreciate over time, may not be conducive to appraisal, or may fluctuate in value,rate based upon the results of operations of10-year U.S. Treasury note rate from the business.Includedtime the underlying loan becomes 60 days delinquent until the loan is conveyed to HUD (if foreclosure timelines are met), which is not paid by the FHA until claimed. The Bank has a unilateral option to repurchase loans sold to GNMA if the loan is due, but unpaid, for three consecutive months (typically referred to as 90 days past due) and can recover losses through a claims process from the guarantor. These loans are recorded in loans held for investment and the liability to repurchase the loans is recorded in other liabilities on the Consolidated Statements of Condition. Certain loans within our portfolio may be subject to indemnifications and insurance limits which expose us to limited credit risk. As of December 31, 2023, LGG loans totaled $541 million and the repurchase liability was $456 million.2021 and2023.2020, were loans of $62023 totaled $1.2 billion, up from $1.1 billion at December 31, 2022. The Signature Transaction contributed $360 million and $38 million, respectively, to officers, directors, and their related interests and parties. There were noin Small Business Administration ("SBA") loans to principal shareholders atthis increase. We classify loans as held for sale when we originate or purchase loans that date.we intend to sell. We have elected the fair value option for nearly all of this portfolio, except the SBA loans. We estimate the fair value of mortgage loans based on quoted market prices for securities backed by similar types of loans, where available, or by discounting estimated cash flows using observable inputs inclusive of interest rates, prepayment speeds and loss assumptions for similar collateral.20212023 and December 31, 2020, all of our non-performing2022 we had no loans that were non-accrual loans.nonperforming and still accruing.992021:
30-89
Days
Past Due
Accrual
Loans
Days or
More
Delinquent
and Still
Accruing
Interest
Past Due
Loans
Loans
Loans
Receivable
construction(in millions) Loans 30-89 Days Past Due Non- Accrual Loans Total Past Due Loans Total Loans Receivable Multi-family $ 121 $ 138 $ 259 $ 37,006 $ 37,265 Commercial real estate 28 128 156 10,314 10,470 One-to-four family first mortgage 40 95 135 5,926 6,061 Acquisition, development, and construction 2 2 4 2,908 2,912 37 43 80 25,174 25,254 Other 22 22 44 2,613 2,657 Total $ 250 $ 428 $ 678 $ 83,941 $ 84,619 Includes $6 million of taxi medallion-related loans that were 90 days or more past due. There were 0 taxi medallion-related loans that were 30 to 89 days past due.(2)receivables, allreceivables.which were current.collection as of December 31, 2023 and subsequently settled on January 2, 2024.2020:2022:
30-89
Days
Past Due
Accrual
Loans
Days or
More
Delinquent
and Still
Accruing
Interest
Past Due
Loans
Loans
Loans
Receivable
construction(in millions) Loans 30-89 Days Past Due Non- Accrual Loans Total Past Due Loans Current Loans Total Loans Receivable Multi-family $ 34 $ 13 $ 47 $ 38,083 $ 38,130 Commercial real estate 2 20 22 8,504 8,526 One-to-four family first mortgage 21 92 113 5,708 5,821 Acquisition, development, and construction — — — 1,996 1,996 2 3 5 12,271 12,276 Other 11 13 24 2,228 2,252 Total $ 70 $ 141 $ 211 $ 68,790 $ 69,001 Includes $19 million of taxi medallion-related loans that were 90 days or more past due. There were 0 taxi medallion-related loans that were 30 to 89 days past due.(2)1002021:
Family
Real Estate
Four
Family
Development,
and
Construction
Mortgage
Loans
and
Industrial(1)
Other
Loans(1)Mortgage Loans Other Loans (in millions) Multi- Family Commercial Real Estate One-to- Four Family Acquisition, Development, and Construction Total Mortgage Loans Commercial and Industrial Other Total Other Loans Credit Quality Indicator: Pass $ 34,170 $ 8,734 $ 5,328 $ 2,825 $ 51,057 $ 24,683 $ 2,634 $ 27,317 Special mention 768 367 — 57 1,192 335 — 335 Substandard 2,327 1,369 733 30 4,459 236 23 259 Doubtful — — — — — — — — Total $ 37,265 $ 10,470 $ 6,061 $ 2,912 $ 56,708 $ 25,254 $ 2,657 $ 27,911 Includes lease financing receivables, all of which were classified as Pass.2020:
Family
Real Estate
Four
Family
Development,
and
Construction
Mortgage
Loans
and
Industrial(1)
Other
Loans(1)Mortgage Loans Other Loans (in millions) Multi- Family Commercial Real Estate One-to- Four Family Acquisition, Development, and Construction Total Mortgage Loans Commercial and Industrial Other Total Other Loans Credit Quality Indicator: Pass $ 36,622 $ 7,871 $ 5,710 $ 1,992 $ 52,195 $ 12,208 $ 2,238 $ 14,446 Special mention 864 230 8 4 1,106 18 — 18 Substandard 644 425 103 — 1,172 50 14 64 Total $ 38,130 $ 8,526 $ 5,821 $ 1,996 $ 54,473 $ 12,276 $ 2,252 $ 14,528 Includes lease financing receivables, all of which were classified as Pass.1012021.2023:Vintage Year (in millions) 2023 2022 2021 2020 2019 Prior To 2019 Revolving Loans Revolving Loans Converted to Term Loans Total Pass $ 2,532 $ 13,295 $ 10,308 $ 8,438 $ 4,725 $ 9,670 $ 1,981 $ 108 $ 51,057 Special Mention — 217 69 407 144 341 14 — 1,192 Substandard 45 98 258 336 809 2,910 — 3 4,459 Doubtful — — — — — — — — — Total mortgage loans $ 2,577 $ 13,610 $ 10,635 $ 9,181 $ 5,678 $ 12,921 $ 1,995 $ 111 $ 56,708 Current-period gross write-offs — (112) — — (2) (64) — — (178) $ 9,709 $ 3,598 $ 1,936 $ 1,141 $ 911 $ 941 $ 8,757 $ 324 $ 27,317 Special Mention 1 182 17 9 6 18 102 — 335 Substandard 10 39 45 28 40 40 46 11 259 Doubtful — — — — — — — — — Total other loans $ 9,720 $ 3,819 $ 1,998 $ 1,178 $ 957 $ 999 $ 8,905 $ 335 $ 27,911 Current-period gross write-offs $ (2) $ (10) $ (5) $ (8) $ (2) $ (18) $ — $ — $ (45) Total $ 12,297 $ 17,429 $ — $ 12,633 $ 10,359 $ 6,635 $ 13,920 $ 10,900 $ 446 $ 84,619
Risk Rating Group
2017
Loans2021:2023:Collateral Type (in millions) Real Property Other Multi-family $ 253 $ — Commercial real estate 256 — One-to-four family first mortgage 105 — Commercial and industrial — 120 Total collateral-dependent loans held for investment $ 614 $ 120
Propertytwelve monthsyear ended December 31, 2021.2023.20212023 and December 31, 2020,2022, the Company had0 $81 million and $121 million of residential mortgage loans in the process of foreclosure.foreclosure, respectively.interest incomefollowing table summarizes the amortized cost basis of loans modified during the reporting period to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of modification:Amortized Cost (dollars in millions) Interest Rate Reduction Term Extension Combination - Interest Rate Reduction & Term Extension Total Percent of Total Loan class Year Ended December 31, 2023 Multi-family $ 122 $ — $ — $ 122 1.17 % Commercial real estate 102 1 — 103 0.98 % One-to-four family first mortgage 3 5 6 14 0.23 % Commercial and Industrial — 19 2 21 0.08 % Other Consumer $ — $ — $ 2 2 0.08 % Total $ 227 $ 25 $ 10 $ 262 Interest Rate Reduction Term Extension Weighted-average contractual interest rate From To Weighted-average Term (in years) Year Ended December 31, 2023 Multi-family 7.45 % 6.02 % Commercial real estate 8.83 % 4.56 % One-to-four family first mortgage 6.08 % 4.79 % Commercial and industrial 8.44 % 8.08 % 0.58 Other Consumer 9.09 % 4.82 % wouldwere modified for borrowers experiencing financial difficulty that received term extension and subsequently defaulted during the period and $4 million one-to-four family first mortgages that were combination modifications and subsequently defaulted during the period.recorded undermodified during the original terms of non-accrual loans at the respective year-ends, and the interest income actually recorded on these loans in the respective years, is summarized below:reporting period:December 31, 2023 (dollars in millions) Current 30 - 89 Past Due 90+ Past Due Total Commercial real estate 1 — — 1 One-to-four family first mortgage 3 — 8 11 Commercial and industrial 3 9 1 13 Other Consumer 1 1 — 2 Total $ 8 $ 10 $ 9 $ 27 102Theis required to accountaccounted for certain loan modifications and restructurings as TDRs. In general, a modification or restructuring of a loan constitutesconstituted a TDR if the Company grantsgranted a concession to a borrower experiencing financial difficulty. A loan modified as a TDR was generally is placed on non-accrual status until the Company determinesdetermined that future collection of principal and interest is reasonably assured, which requires, among other things, that the borrower demonstrate performance according to the restructured terms for a period of at least six consecutive months. In determining the Company’s allowance for credit losses on loans and leases, reasonably expected TDRs were individually evaluated and consist of criticized, classified, or maturing loans that will have a modification processed within the next three months.2021,2022, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $$44 million.29 million.The CARES Act was enacted on March 27, 2020. Under the CARES Act, the Company made the election to deem that loan modifications do not result in TDRs if they are (1) related to the novel coronavirus disease (“COVID-19”); (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the National Emergency or (B) December 31, 2020. This includes short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented.Company’sCompany's TDRs as of December 31, 2021 and 2020:
Accrual
Accrual
construction(1)December 31, 2022 (dollars in millions) Accruing Non- Accrual Total Loan Category: Multi-family $ — $ 6 $ 6 Commercial real estate 16 19 35 Includes $6 million and $18 million of taxi medallion-related loans at December 31, 2021 and 2020, respectively.Commercial and industrial — 3 3 Total $ 16 $ 28 $ 44 The eligibility of a borrower for work-out concessions of any nature depends upon the facts and circumstances of each loan, which may change from period to period, and involves judgment by Company personnel regarding the likelihood that the concession will result in the maximum recovery for the Company.1032021, 2020 and 20192022 are summarized as follows:Weighted Average Interest Rate (dollars in millions) Number of Loans Pre- Modification Recorded Investment Post- Modification Recorded Investment Pre- Modification Post- Modification Charge- off Amount Capitalized Interest Loan Category: Commercial real estate 2 $ 22 $ 19 6.00 % 4.02 % $ 3 $ —
Interest Rate
of Loans
Modification
Recorded
Investment
Modification
Recorded
Investment
Modification
Modification
off
Amount
Interest
Interest Rate
of Loans
Modification
Recorded
Investment
Modification
Recorded
Investment
Modification
Modification
off
Amount
Interest
Interest Rate
of Loans
Modification
Recorded
Investment
Modification
Recorded
Investment
Modification
Modification
off
Amount
InterestAt December 31, 2021, 0 loans have been modified as TDR's that were in payment default during the twelve months ended at that date. December 31, 2020, C&I loans totaling $3 million that had been modified as a TDR during the twelve months ended at that date were in payment default. At December 31, 2019, C&I loans in the amount of $1 million that had been modified as a TDR during the twelve months ended at that date was in prepayment default.The Company does not consider a payment to be in default when the loan is in forbearance, or otherwise granted a delay of payment, when the agreement to forebear or allow a delay of payment is part of a modification.Subsequent to the modification, the loan is not considered to be in default until payment is contractually past due in accordance with the modified terms. However, the Company does consider a loan with multiple modifications or forbearance periods to be in default, and would also consider a loan to be in default if the borrower were in bankruptcy or if the loan were partially charged off subsequent to modification.104NOTE 6: ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASESloan and leasecredit losses for the periods indicated:For the Years Ended December 31, 2023 2022 (in millions) Mortgage Other Total Mortgage Other Total Balance, beginning of period $ 290 $ 103 $ 393 $ 178 $ 21 $ 199 Adjustment for Purchased PCD Loans 13 13 21 30 51 Charge-offs (178) (45) (223) (5) (2) (7) Recoveries 15 15 4 7 11 Provision for (recovery of) credit losses on loans and leases 644 150 794 92 47 139 Balance, end of period $ 756 $ 236 $ 992 $ 290 $ 103 $ 393
losses on loans and leasesAt2021,2023, the allowance for credit losses on loans and leases totaled $199$992 million, up $5$599 million compared to December 31, 2020, driven by a provision for credit losses of $3 million coupled with net recoveries of $2 million during the year 2021.At December 31, 2021 and 2020, the allowance for unfunded commitments totaled $12 million.For the year ended December 31, 20212022. The increase in the allowance for credit losses on loans and leases remained relatively flatwas primarily duedriven by an increase in reserves to address weakness in the office sector, potential repricing risk in the multifamily portfolio and an increase in classified assets. Also contributing to the combination of macroeconomic factors and increased loan activity on the balance sheet. The key contributing forecasted macroeconomic and market level factors included relatively unchanged unemployment rates, slight increase in Gross Domestic Product (“GDP”) and improving Multi Family and Commercial Real Estate Property Prices reflecting the improving economic landscape as the COVID-19 pandemic begins to subside. In addition to these quantitative inputs, several qualitative factors were considered, including the risk that the economic decline proves to be more severe and/or prolonged than our baseline forecast which also increased our allowance for loancredit losses on loans and lease losses. Theleases was the day 1 impact of the unprecedented fiscal stimulusSignature Transaction that closed on March 20, 2023, which added $141 million to the reserve.changes to federalDecember 31, 2022, the allowance for unfunded commitments totaled $52 million and local laws and regulations, including changes to various government sponsored loan programs, was also considered.1052021:2023:(in millions) Recorded Investment Related Allowance Interest Income Recognized Nonaccrual loans with no related allowance: Multi-family $ 134 $ — $ 5 Commercial real estate 53 — 2 One-to-four family first mortgage 85 — — Acquisition, development, and construction — — — Other (includes C&I) 22 — — Total nonaccrual loans with no related allowance $ 294 $ — $ 7 Nonaccrual loans with an allowance recorded: Multi-family $ 4 $ — $ — Commercial real estate 75 17 3 One-to-four family first mortgage 11 2 — Acquisition, development, and construction — — — Other (includes C&I) 44 28 — Total nonaccrual loans with an allowance recorded $ 134 $ 47 $ 3 Total nonaccrual loans: Multi-family $ 138 $ — $ 5 Commercial real estate 128 17 5 One-to-four family first mortgage 96 2 — Acquisition, development, and construction — — — Other (includes C&I) 66 28 — Total nonaccrual loans $ 428 $ 47 $ 10
Investment
Allowance
Income
Recognized10620202022:(in millions) Recorded Investment Related Allowance Interest Income Recognized Nonaccrual loans with no related allowance: Multi-family $ 13 $ — $ — Commercial real estate 19 — 1 One-to-four family first mortgage 90 — — Other (includes C&I) 3 — — Total nonaccrual loans with no related allowance $ 125 $ — $ 1 Nonaccrual loans with an allowance recorded: Commercial real estate $ 1 $ — $ — One-to-four family first mortgage 2 — — Other (includes C&I) 13 14 — Total nonaccrual loans with an allowance recorded $ 16 $ 14 $ — Total nonaccrual loans: Multi-family $ 13 $ — $ — Commercial real estate 20 — 1 One-to-four family first mortgage 92 — — Other (includes C&I) 16 14 — Total nonaccrual loans $ 141 $ 14 $ 1
Investment
Allowance
Income
RecognizedNOTE 7. LEASES10720212023 and December 31, 2020,2022, the carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $61$280 million and $71$32 million, respectively.
Twelve
Months
Ended
December 31,
2021
Twelve
Months
Ended
December 31,
2020For the Years Ended December 31, (in millions) 2023 2022 2021 $ 119 $ 53 $ 53 20212023 and December 31, 2020,2022, the carrying value of net investment in leases, excluding purchase accounting adjustments was $1.9 billion. $3.5 billion and $1.7 billion, respectively. The components of net investment in direct financing leases, including the carrying amount of the lease receivables, as well as the unguaranteed residual asset were as follows:(in millions) December 31, 2023 December 31, 2022 Net investment in the lease - lease payments receivable $ 3,187 $ 1,685 Net investment in the lease - unguaranteed residual assets 321 60 Total lease payments $ 3,508 $ 1,745
2021
2020 as of December 31, 2021, as well as the reconciliation to the total amount of receivables recognized in the Consolidated Statements of Condition:(in millions) December 31, 2023 2024 549 2025 602 2026 874 2027 521 2028 293 Thereafter 669 Total lease payments $ 3,508 Plus: deferred origination costs 15 Less: unearned income (258) Less: purchase accounting adjustment $ (76) Total lease finance receivables, net $ 3,189
2021108operating lease right-of-useother assets and operating leaseother liabilities in the Consolidated Statements of Condition.mostthe vast majority of the leases do not provide an implicit rate, the incremental borrowing rate (FHLB borrowing rate) is used based on the information available at adoptioncommencement date in determining the present value of lease payments. The implicit rate is used when readily determinable. The operating lease ROU asset is measured at cost, which includes the initial measurement of the lease liability, prepaid rent and initial direct costs incurred by the Company, less incentives received. The lease terms include options to extend the lease when it is reasonably certain that we will exercise that option. For the vast majority of the Company’s leases, we are reasonably certain we will exercise our options to renew to the end of all renewal option periods. As such, substantially all of our future options to extend the leases have been included in the lease liability and ROU assets. Amortization of the ROU assets was $18million and $20 million for the twelve months ended December 31, 2021 and 2020, respectively.The Company has operating leases for corporate offices, branch locations, and certain equipment. The Company’s leases have remaining lease terms of one year to approximately 25 years, the vast majority of which include one or more options to extend the leases for up to five years resulting in lease terms up to 40 years.For the Years Ended December 31, (in millions) 2023 2022 2021 Operating lease cost $ 86 $ 28 $ 27 Total lease cost $ 86 $ 28 $ 27
Months Ended
December 31,
2021
Months Ended
December 31,
2020(in millions) For the Years Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 64 $ 28
Months Ended
December 31,
2021
Months Ended
December 31,
2020109(in millions, except lease term and discount rate) December 31, 2023 December 31, 2022 Operating Leases: $ 426 $ 119 $ 446 $ 122 Weighted average remaining lease term 11.2 years 6 years Weighted average discount rate percent 4.71 % 3.85 %
2021
2020
Maturities of lease liabilities:
2021
(in millions)December 31, 2023 Maturities of lease liabilities: 2024 71 2025 65 2026 58 2027 52 2028 45 Thereafter 296 Total lease payments $ 587 Less: imputed interest $ (141) Total present value of lease liabilities $ 446 (in millions) Year Ended December 31, 2023 Balance at beginning of period $ 1,033 Additions from loans sold with servicing retained 208 Reductions from sales (51) (80) 1 Fair value of MSRs at end of period $ 1,111 NOTE 8: DEPOSITSDecember 31, 2023 Fair Value (dollars in millions) Actual 10% adverse change 20% adverse change Option adjusted spread 5.4 % $ 1,091 $ 1,072 Constant prepayment rate 7.9 % 1,073 1,040 Weighted average cost to service per loan $ 69 $ 1,100 $ 1,090 December 31, 2022 Fair Value (dollars in millions) Actual 10% adverse change 20% adverse change Option adjusted spread 5.9 % $ 1,012 $ 992 Constant prepayment rate 7.9 % 1,000 970 Weighted average cost to service per loan $ 68 $ 1,023 $ 1,013 (in millions) Year Ended December 31, 2023 Month Ended December 31, 2022 Net return on mortgage servicing rights $ 227 $ 20 Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes and other (80) (8) Changes in fair value due to interest rate risk 1 10 (47) (16) Net transaction costs 2 — Total return included in net return on mortgage servicing rights $ 103 $ 6 (in millions) Year Ended December 31, 2023 Year Ended December 31, 2022 Loan administration income on mortgage loans subserviced $ 154 $ 11 (168) (8) Other servicing charges (3) — Total (loss) income on mortgage loans subserviced, included in loan administration income $ (17) $ 3 20212023 and 2020:2022:December 31, 2023 2022 (dollars in millions) Amount Percent of Total Weighted Average Interest Rate Amount Percent of Total Weighted Average Interest Rate Interest-bearing checking and money market accounts $ 30,700 37.66 % 3.51 % $ 22,511 38.34 % 2.66 % Savings accounts 8,773 10.76 % 2.67 % 11,645 19.83 % 1.30 % Certificates of deposit 21,554 26.44 % 4.42 % 12,510 21.30 % 2.04 % Non-interest-bearing accounts 20,499 25.14 % — % 12,055 20.53 % — % Total deposits $ 81,526 100.00 % 2.79 % $ 58,721 100.00 % 1.71 %
of Total
Average
Interest
Rate
of Total
Average
Interest
Rate
market accounts20212023 and 2020,2022, the aggregate amount of time deposit accounts (including certificates of deposit) that meet or exceed the insured limit was $7.9 billion and $3.7 billion, respectively.$1.9$121 million and $2.3$4 million, respectively.(“CDs”) at December 31, 20212023 were as follows:7,4544104952639-8,42411020212023 and 20202022 were brokered deposits of $5.7$9.5 billion and $5.3$5.1 billion with weighted average interest rates of .07%3.72 percent and .08%.49 percent at the respective year-ends. Brokered money market accounts represented $3.0$1.3 billion and $2.8 billion of the December 31, 20212023 and 20202022 totals, and brokered interest-bearing checking accounts represented $1.5$1.6 billion and $1.3$1.0 billion, respectively. Brokered CDs represented $1.2$6.6 billion and $1.0$1.3 billion of brokered deposits at December 31, 20212023 and 2020,2022, respectively.NOTE 9: BORROWED FUNDSfunds at December 31, 2021 and 2020:funds:(in millions) December 31, 2023 December 31, 2022 Wholesale borrowings: FHLB advances $ 19,250 $ 20,325 FRB term funding 1,000 — Total wholesale borrowings $ 20,250 $ 20,325 Junior subordinated debentures 579 575 Subordinated notes 438 432 Total borrowed funds $ 21,267 $ 21,332 $18 $50 million and $19$37 million, respectively, at December 31, 2021 and 2020.2023, December 31, 2022.20212023 were as follows:
Maturity or Next Call Date
Year
Average
Interest
Rate (1)
Average
Interest
Rate (1)Contractual Maturity Earlier of Contractual Maturity or Next Call Date (dollars in millions) Year Amount Weighted Average Interest Rate (1) Amount Weighted Average Interest Rate (1) 2024 7,350 4.57 9,100 4.37 2025 1,500 5.38 1,750 5.11 2026 2,500 5.37 2,500 5.37 2027 4,000 4.62 3,500 4.75 2028 2,400 5.17 2,400 5.17 2032 1,500 3.43 — — Total FHLB advances $ 19,250 $ 19,250 20212023 and 2020,2022, respectively, the Bank had unused lines of available credit with the FHLBFHLB-NY of up to $8.4$8.4 billion and $7.3$11.3 billion. The Company had 0did not have any overnight advances at December 31, 2021, or2023 and $2.8 billion at December 31, 2020.2022. During the twelve monthsyear ended December 31, 2021,2023, the average balance of overnight advances amounted to $6$624 million, with a weighted average interest rate of .36%.5.08 percent. During the twelve monthsyear ended December 31, 2020,2022, the average balancesbalance of overnight advances amounted to $2$318 million, with a weighted average interest ratesrate of 3.48 percent.1.2%.111$233$564 million, $246$251 million and $259$233 million, in the years ended December 31, 2023, 2022, and 2021, 2020, and 2019, respectively.following table presents an analysis of the contractual maturities and next call dates of the Company’sCompany had no outstanding repurchase agreements accounted for as secured borrowings atof December 31, 2021:
Maturity or Next
Call Date
Year
Average
Interest
Rate
Average
Interest
RateThe following table provides the contractual maturity2023 and weighted average interest rate of repurchase agreements, and the amortized cost and fair value of the securities collateralizing the repurchase agreements, at December 31, 2021:2022.
and Other Securities
U.S. Treasury
Obligations
Period of Maturity
Average
Interest
Rate
Cost
Value
Cost
Value0no short-term repurchase agreements outstanding at December 31, 2021 or 2020.At December 31, 20212023 and 2020, the2022.to $2 million.at December 31, 2023. The interest expense on repurchase agreements was $18$14 million and $18 million for each of the years ended December 31, 2022 and 2021, 2020, and 2019, respectively.0no federal funds purchased outstanding at December 31, 2021 or 2020.2023 and December 31, 2022.20212023 and 2020,2022, respectively, the average balances of federal funds purchased were $81$196 million and $180$466 million, with weighted average interest rates of 0.09%5.01 percent and 0.49%.1.65 percent. The interest expense produced by federal funds purchased was $0$10 million, $1$8 million and $0$0 million for the years ended December 31, 2023, 2022 and 2021, 2020 and 2019, respectively.20212023 and 2020,December 31, 2022, the Company had $361$609 million and $360$608 million, respectively, of outstanding junior subordinated deferrable interest debentures (“junior subordinated debentures”) held by statutory business trusts (the “Trusts”) that issued guaranteed capital securities.securities, excluding purchase accounting adjustments.112Trusts are accounted for as unconsolidated subsidiaries, in accordance with GAAP. The proceedsfollowing table presents contractual terms of each issuance were invested in a series ofthe junior subordinated debentures of the Company and the underlying assets of each statutory business trust are the relevant debentures. The Company has fully and unconditionally guaranteed the obligations under each trust’s capital securities to the extent set forth in a guarantee by the Company to each trust. The Trusts’ capital securities are each subject to mandatory redemption, in whole or in part, upon repayment of the debentures at their stated maturity or earlier redemption.The following junior subordinated debentures were outstanding at December 31, 2021:
of Capital
Securities
and
Debentures
Subordinated
Debentures
Amount
Outstanding
Securities
Amount
Outstanding
Original Issue
Maturity
Redemption
Date
Trust V (BONUSESSM Units)
Trust X
Trust XIIssuer Interest Rate of Capital Securities and Debentures Capital Securities Amount Outstanding Date of Original Issue Stated Maturity (dollars in millions) New York Community Capital Trust V (BONUSES Units) (1) 6.00 $ 147 $ 141 Nov. 4, 2002 Nov. 1, 2051 New York Community Capital Trust X (2) 7.25 124 120 Dec. 14, 2006 Dec. 15, 2036 PennFed Capital Trust III (2) 8.90 31 30 June 2, 2003 June 15, 2033 New York Community Capital Trust XI (2) 7.24 59 58 April 16, 2007 June 30, 2037 Flagstar Statutory Trust II (2) 8.87 26 25 Dec. 26, 2002 Dec. 26, 2032 Flagstar Statutory Trust III (2) 8.91 26 25 Feb. 19, 2003 April 7, 2033 Flagstar Statutory Trust IV (2) 8.84 26 25 Mar. 19, 2003 Mar 19, 2033 Flagstar Statutory Trust V (2) 7.66 26 25 Dec 29, 2004 Jan. 7, 2035 Flagstar Statutory Trust VI (2) 7.66 26 25 Mar. 30, 2005 April 7, 2035 Flagstar Statutory Trust VII (2) 7.40 51 50 Mar. 29, 2005 June 15, 2035 Flagstar Statutory Trust VIII (2) 7.16 26 25 Sept. 22, 2005 Oct. 7, 2035 Flagstar Statutory Trust IX (2) 7.10 26 25 June 28, 2007 Sept. 15, 2037 Flagstar Statutory Trust X (2) 8.15 15 15 Aug. 31, 2007 Sept 15, 2037 $ 609 $ 589 from this date forward.at any time.$50.00$50.00 per share. Each of the 5,500,000 BONUSES units offered consisted of a capital security issued by New York Community Capital Trust V, a trust formed by the Company, and a warrant to purchase 2.4953 shares of the common stock of the Company (for a total of approximately 13.714 million common shares) at an effective exercise price of $20.04$20.04 per share. Each capital security has a maturity of 49 years,, with a coupon, or distribution rate, of 6.00% percent on the $50.00$50.00 per share liquidation amount. The warrants and capital securities were non-callable for five years from the date of issuance and were not called by the Company when the five-year period passed on November 4, 2007.$275.0$275 million and were allocated between the capital security and the warrant comprising such units in proportion to their relative values at the time of issuance. The value assigned to the warrants, $92.4$92.4 million, was recorded as a component of additional “paid-in capital” in the Company’s Consolidated Statements of Condition. The value assigned to the capital security component was $182.6$182.6 million. The $92.4$92.4 million difference between the assigned value and the stated liquidation amount of the capital securities was treated as an original issue discount, and is being amortized to interest expense over the 49-year life of the capital securities on a level-yield basis. At December 31, 2021,2023, this discount totaled $65$64 million.threeremaining trust preferred securities noted in the preceding table were formed for the purpose of issuing Company Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trusts Holding Solely Junior Subordinated Debentures (collectively, the “Capital Securities”). Dividends on the Capital Securities are payable either quarterly or semi-annually and are deferrable, at the Company’s option, for up to five years. As of December 31, 2021,2023, all dividends were current.$18$48 million, $19$22 million, and $22$18 million, respectively, for the years ended December 31, 2021, 2020,2023, 2022, and 2019.2021.11320212023 and 2020,December 31, 2022, the Company had $296a total of $438 million and $432 million subordinated notes outstanding; respectively, of fixed-to-floating rate subordinated notes outstanding:
AmountDate of Original Issue Stated Maturity Interest Rate Original Issue Amount November 6, 2018 November 6, 2028 (1) 5.900% $ 300 October 28, 2020 November 1, 2030 (2) 4.125% $ 150 % percent per annum payable semi-annually. Unless redeemed, from and including November 6, 2023 to but excluding the maturity date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBORSOFR rate plus 304.16 b278 basis pointasis points payable quarterly.expense on subordinated notes amounted to $payment date.18 million for the years ended December 31, 2021 , 2020,2019.Local TaxesNOTE 10: FEDERAL, STATE, AND LOCAL TAXES20212023 and 2020:2022
(including OTTI)December 31, (in millions) 2023 2022 Deferred Tax Assets: Allowance for credit losses on loans and leases $ 253 $ 102 Acquisition accounting and fair value adjustments on securities (including OTTI) 188 227 Acquisition accounting and fair value adjustments on loans — 36 Capitalized loan costs 46 Right of Use Liability 32 — Compensation and related benefit obligations 30 23 Capitalized research and development costs — 10 Accrued Expenses 19 — Net operating loss carryforwards 8 15 Other 22 18 Gross deferred tax assets 552 477 Valuation allowance (5) (5) Net deferred tax asset after valuation allowance $ 547 $ 472 Deferred Tax Liabilities: Leases $ (492) $ (328) Mortgage servicing rights (79) (105) Premises and equipment (44) (18) Prepaid pension cost (35) (29) Fair value adjustments on loans (210) — Amortizable intangibles (127) (71) Acquisition accounting and fair value adjustments on deposits (2) (9) Right of Use Asset (32) — Deferred Loan fees (13) — Acquisition accounting and fair value adjustments on debt (9) (10) Other (21) (9) Gross deferred tax liabilities $ (1,064) $ (579) Net deferred tax liability $ (517) $ (107) 20212023 and 2020.2022.114At December 31, 2021, the Company had a New York City net operating loss (“NOL”) carry forward of $21 million, which is available to offset future federal taxable income. The NOL may be carried forward for 20 years to any future calendar tax year after 2021.has determined that all deductible temporary differences and net operating loss carryforwards areevaluates the need for a deferred tax asset valuation allowances based on a more likely than not to provide a benefit in reducing future federal, state, and local tax liabilities, as applicable.standard. The Company has reached this determinationCompany’s evaluation is based on its history of reporting positive taxable income in all relevant tax jurisdictions, the length of time available to utilize the net operating loss carryforwards, and the recognition of taxable income in future periods from taxable temporary differences.2021, 2020,2023, 2022, and 2019:2021:December 31, (in millions) 2023 2022 2021 Federal – current $ 156 $ 147 $ 188 State and local – current 59 32 35 Total current 215 179 223 Federal – deferred (137) (10) (28) State and local – deferred (49) 7 15 Total deferred (186) (3) (13) Income tax expense reported in net income 29 176 210 Income tax expense reported in stockholders’ equity related to: Securities available-for-sale 15 (223) (42) Pension liability adjustments 6 (6) 10 Cash flow hedge (14) 23 9 Total income taxes $ 36 $ (30) $ 187 2021, 2020,2023, 2022, and 2019:GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. The CARES Act was enacted on March 27, 2020 to provide relief related to the COVID-19 pandemic. The CARES Act includes many measures to assist companies including the allowance of net operating losses originating in 2018, 2019 or 2020 to be carried back 2021:December 31, (in millions) 2023 2022 2021 Statutory federal income tax at 21% $ (10) $ 174 $ 169 State and local income taxes, net of federal income tax effect 8 31 40 Tax Exempt income $ (6) $ — $ — Non-taxable bargain gain (447) (33) — Non-deductible goodwill impairment $ 509 $ — $ — Non-deductible FDIC deposit insurance premiums 16 10 9 Effect of tax deductibility of deferred compensation $ (3) $ (3) $ (3) Non-taxable income and expense of BOLI (9) (7) (6) Non-deductible merger expenses $ — $ 3 $ 3 Non-deductible compensation expense 1 4 — Federal tax credits $ (31) $ (1) $ — Adjustments relating to prior tax years 2 (1) (1) Other, net (1) (1) (1) Total income tax expense $ 29 $ 176 $ 210 five years. The Company recorded $68.4 million in tax benefits for the year ended December 31, 2020 relating to the enactment of the CARES Act.115$76$372 million million and $85$304 million, respectively, at December 31, 20212023 and 2020,2022, and included commitments of $34$210 million and $54$183 million that are expected to be funded over the next three5 years. The Company elected to apply the proportional amortization method to these investments. Recognized in the determination of income tax (benefit) expense from operations for the years ended December 31, 2023, 2022, and 2021 2020, and 2019 were $9$34 million million, $8, $11 million, and $6$9 million, respectively,$9$30 million, $6$10 million, and $5$9 million, respectively, for the amortization of the related investments. NaNNo impairment losses were recognized in relation to these investments for the years ended December 31, 2021, 2020,2023, 2022, and 20192021.2021,2023 and 2022, the Company had $39$42 million and $40 million of unrecognized gross tax benefits.benefits, respectively. Gross tax benefits do not reflect the federal tax effect associated with state tax amounts. The total amount of net unrecognized tax benefits at December 31, 20212023 and 2022 that would have affected the effective tax rate, if recognized, was $30$34 million a million.nd $32 million, respectively.2021, 2020,2023, 2022, and 2019,2021, the Company recognized income tax expense attributed to interest and penalties of $4$8 million million, $3, $4 million, and $3$4 million, respectively. Accrued interest and penalties on tax liabilities were $22$34 million and $18$26 million, respectively, at December 31, 20212023 and 2020.2022.2021, 2020,2023, 2022, and 2019:2021December 31, (in millions) 2023 2022 2021 Uncertain tax positions at beginning of year $ 40 $ 39 $ 38 Additions for tax positions relating to current-year operations 1 1 2 Additions for tax positions relating to prior tax years 2 — 1 Subtractions for tax positions relating to prior tax years (1) — (2) Uncertain tax positions at end of year $ 42 $ 40 $ 39 20182019 through the present;20152018 through the present.$$21 million million due to completion of tax authorities’ exams and the expiration of statutes of limitations.As a savings institution, theThe Bank is subject to a special federal tax provision regarding its frozen tax bad debt reserve. At December 31, 2021,2023, the Bank’s federal tax bad debt base-year reserve was $$62 million million,, with a related federal deferred tax liability of $13 $13 million, which has not been recognized since the Bank does not expect that this116NOTE 11. DERIVATIVE AND HEDGING ACTIVITIESCompany’s derivative financial instruments consistshares of interest rate swaps. restricted stock that were granted during the year ended December 31, 2023 and 2022, vest over a one to five years period. Compensation and benefits expense related to the RSAs grants is recognized on a straight-line basis over the vesting period and totaled $44 million, $25 million and $27 million for the years ended December 31, 2023, 2022 and 2021.Year Ended December 31, 2023 Number of Shares Weighted Average Grant Date Fair Value Unvested at beginning of year 9,576,602 $ 10.92 Granted 9,995,495 10.24 Vested (3,105,582) 10.99 Forfeited (1,292,574) 10.62 Unvested at end of period 15,173,941 $ 10.49 Number of
SharesWeighted
Average
Grant Date
Fair ValuePerformance
PeriodExpected
Vesting
DateOutstanding at beginning of year 794,984 $ 10.73 Granted 566,656 8.95 Released (143,352) 10.34 Forfeited — — Outstanding at end of period 1,218,288 9.95 January 1, 2022 - December 31, 2025 March 31, 2023 - 2026 from time to time, the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates.Title VIIDodd-Frank Wall Street Reform and Consumer Protection Actderivative agreements. 2010 (the “Dodd-Frank Act”) requires all standardized derivatives, including most interest rate swaps, foreign currency swaps, futures, swaptions and forward commitments used to be submitted for clearingmanage exposure to central counterpartieschanges in interest rates and MSR asset values and to reduce counterparty risk. Twomeet the needs of customers. The Company also enters into interest rate lock commitments, which are commitments to originate mortgage loans whereby the central counterparties areinterest rate on the Chicago Mercantile Exchange (“CME”)loan is determined prior to funding and the London Clearing House (“LCH”). As of December 31, 2021, all of the Company’s $4.3 billion notional derivative contracts were clearedcustomers have locked into that interest rate. Market risk on the LCH. Daily variation margin payments on derivatives cleared through the LCH are accounted for as legal settlement. For derivatives cleared through LCH, the net gain (loss) position includes the variation margin amounts as settlement of the derivativeinterest rate lock commitments and not collateral againstmortgage LHFS is managed using corresponding forward sale commitments and US Treasury futures. Changes in the fair value of derivatives not designated as hedging instruments are recognized on the derivative, which includes accrued interest; therefore, thoseConsolidated Statements of Income and Comprehensive Income.and derivative contractsswaps as cash flow hedges on overnight SOFR-based variable interest payments on federal home loan bank advances. Changes in the Company clears through the LCH are reported at a fair value of approximately zeroderivatives designated as cash flow hedges are recorded in other comprehensive income on the Consolidated Statements of Condition and reclassified into interest expense in the same period in which the hedged transaction is recognized in earnings. At December 31, 2023, the Company had $10 million (net-of-tax) of unrealized gains on derivatives classified as cash flow hedges recorded in accumulated other comprehensive loss. The Company had $52 million (net-of-tax) of unrealized gains on derivatives classified as cash flow hedges recorded in accumulated other comprehensive loss at December 31, 2021.2022.The Company’s exposurelimited to the value of the derivative contracts in a gain position less any collateral helddeemed necessary. All designated hedge relationships were, and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterpartyare expected to be, zero. Athighly effective as of December 31, 2021, the Company had a net negative exposure.2023.entered into an interest rate swapswaps with a notional amountamounts of $2.0$2.0 billion to hedge certain real estate loans.multi-family loans using the portfolio layer method. For the twelve monthsyear ended December 31, 2021,2023, the floating rate received related to the net settlement of thisthese interest rate swapswaps was lessgreater than the fixed rate payments. As such, interest income from Loansloans and leases in the accompanying Consolidated Statements of Income and Comprehensive Income was decreasedincreased by $49$24 million for the twelve monthsyear ended December 31, 2021. For2023 and decreased by $6 million for the twelve monthsyear ended December 31, 2020, the floating rate received related to the net settlement of this interest rate swap was less than the fixed rate payments. As such, interest income from Loans2022, respectively.in the accompanyingheld for investment on our Consolidated Statements of Income and Comprehensive IncomeCondition. The carrying amount of our hedged loans was decreased by $$6.1 billion at 35 million for the twelve months ended December 31, 2020.2023117As, of which unrealized gains of $9 million were due to the fair value hedge relationship. We have designated $2.0 billion of this portfolio of loans in a hedging relationship as of December 31, 2021, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges.2023.
Condition in which the Hedge Item is Included
Amount of
the Hedged
Assets
Amount of
Fair Value
Hedging
Adjustments
Included in
the Carrying
Amount of
the Hedged
Assets
Amount of
the Hedged
Assets
Amount of
Fair Value
Hedging
Adjustments
Included in
the Carrying
Amount of
the Hedged
Assets(1)These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. At December 31, 2021, the amortized cost basis of the closed portfolios used in these hedging relationships was $2.9 billion; the cumulative basis adjustments associated with these hedging relationships was $25 million; and the amount of the designated hedged items was $2.0 billion.table setstables set forth information regarding the Company’s derivative financial instruments at December 31, 2021.instruments:December 31, 2023 Fair Value (in millions) Notional Amount Other Assets Other Liabilities Expiration Dates Derivatives designated as cash flow hedging instruments: Interest rate swaps on FHLB advances $ 5,500 $ — $ 2 2025-2028 Total 5,500 — 2 Derivatives designated as fair value hedging instruments: Interest rate swaps on multi-family loans held for investment $ 2,000 $ — $ 1 2025-2027 Derivatives not designated as hedging instruments: Assets Mortgage-backed securities forwards $ 1,012 $ 11 $ — 2024 Rate lock commitments 1,490 12 — 2024 Interest rate swaps and swaptions 5,431 115 — 2024-2041 Total $ 7,933 $ 138 $ — Liabilities Futures $ 2,235 $ — $ 1 2024 Mortgage-backed securities forwards 1,048 $ — 32 2024 Rate lock commitments 77 — 3 2024 Interest rate swaps and swaptions 2,720 — 59 2024-2054 Total derivatives not designated as hedging instruments $ 6,080 $ — $ 95 December 31, 2022 Fair Value (in millions) Notional Amount Other Assets Other Liabilities Expiration Date Derivatives designated as cash flow hedging instruments: Interest rate swaps $ 3,750 $ 5 $ — 2023-2027 Total 3,750 5 — Derivatives not designated as hedging instruments: Assets Futures $ 1,205 $ 2 $ — 2023 Mortgage-backed securities forwards 1,065 36 — 2023 Rate lock commitments 1,539 9 — 2023 Interest rate swaps and swaptions 7,594 182 — 2023-2032 Total $ 11,403 $ 229 $ — Liabilities Mortgage-backed securities forwards $ 739 $ — $ 61 2023 Rate lock commitments 527 — 10 2023 Interest rate swaps and swaptions 2,445 — 65 2023-2053 Total derivatives not designated as hedging instruments $ 3,711 $ — $ 136
Amount
Assets
Liabilitiessets forthpresents the effectderivatives subject to a master netting agreement, including the cash pledged as collateral:December 31, 2023 Gross Amounts Not Offset in the Statements of Condition (in millions) Gross Amount Gross Amounts Netted in the Statements of Condition Net Amount Presented in the Statements of Condition Financial Instruments Cash Collateral Pledged (Received) Derivatives designated hedging instruments: Interest rate swaps on FHLB advances $ 2 $ — $ 2 $ — $ 75 $ 1 $ — $ 1 $ — $ 27 Derivatives not designated as hedging instruments: Assets Mortgage-backed securities forwards $ 11 $ — $ 11 $ — $ (1) Interest rate swaptions 115 — 115 — (34) Total derivative assets $ 126 $ — $ 126 $ — $ (35) Liabilities Futures $ 1 $ — $ 1 $ — $ 3 Mortgage-backed securities forwards 32 — 32 — 57 59 — 59 — 42 Total derivative liabilities $ 92 $ — $ 92 $ — $ 102 instruments onposition for accounting purposes.Consolidated Statementsderivatives subject to a master netting agreement, including the cash pledged as collateral:December 31, 2022 Gross Amounts Not Offset in the Statements of Condition (in millions) Gross Amount Gross Amounts Netted in the Statements of Condition Net Amount Presented in the Statements of Condition Financial Instruments Cash Collateral Pledged (Received) Derivatives designated hedging instruments: Interest rate swaps on FHLB advances $ 5 $ — $ 5 $ 4 $ 27 Derivatives not designated as hedging instruments: Assets Mortgage-backed securities forwards $ 36 $ — $ 36 $ — $ (9) Interest rate swaptions 182 — 182 — (36) Futures 2 2 1 Total derivative assets $ 220 $ — $ 220 $ — $ (44) Liabilities Mortgage-backed securities forwards $ 61 $ — $ 61 $ — $ 54 65 — 65 — 29 Total derivative liabilities $ 126 $ — $ 126 $ — $ 83 Income and Comprehensive Incomeopen positions is considered settlement of the derivative position for the periods indicated.accounting purposes.
Months Ended
December 31, 2021
Months Ended
December 31, 2020affects.affects earnings.$2.3$5.5 billion and $3.8 billion as of December 31, 20212023 and December 31, 2020,2022, were designated as cash flow hedges of certain FHLB borrowings.118The following table summarizes information about the interest rate swaps designated as cash flow hedges at December 31, 2021 and December 31, 2020:
2021
2020AOCL for the year ending December 31, 2021:AOCL:For the Years Ended December 31, (in millions) 2023 2022 2021 Amount of gain (loss) recognized in AOCL $ 9 $ 88 $ 8 Amount of reclassified from AOCL to interest expense $ (65) $ (4) $ 25
Months Ended
December 31, 2021
Months Ended
December 31, 2020Gains (losses) included in the Consolidated Statements of Income related to interest rate derivatives designated as cash flow hedges during the twelve months ended December 31, 2021 was $25 million. the Company estimates that an additional $25interest expense reduction of $98 million willis expected to be reclassified to interest expense.out of AOCL.NOTE 12: COMMITMENTS AND CONTINGENCIESPledged AssetsThe Company pledges securities to servecollateral for its repurchase agreements, among other purposes. At December 31, 2021, the Company had pledged available for sale mortgage-related securities and other debt securities with carrying values of $Hedging Instruments704 million and $464 million, respectively. At December 31, 2020, the Company had pledged available for sale mortgage-related securities and other debt securities with carrying values of $898 million and $380 million, respectively. In addition, the Company had $33.9 billion and $33.5 billion of loans pledged to the FHLB-NY to serve as collateral for its wholesale borrowings at the respective year-ends.Loan Commitments and Letters of CreditAt December 31, 2021 and 2020, the Company had commitments to originate loans, including unused lines of credit, of $2.8 billion and $2.5 billion, respectively. The majority of the outstanding loan commitments at those dates were expected to close within 90 days. In addition, the Company had commitments to originate letters of credit totaling $291 million and $376 million at December 31, 2021 and 2020.summarizespresents the Company’s off-balance sheet commitmentsnet gain (loss) recognized in income on derivatives not designated as hedging instruments, net of the impact of offsetting positions:For the Years Ended December 31, (dollars in millions) 2023 2022 Derivatives not designated as hedging instruments Location of Gain (Loss) Futures Net return on mortgage servicing rights $ 1 $ (1) Interest rate swaps and swaptions Net return on mortgage servicing rights (34) (11) Mortgage-backed securities forwards Net return on mortgage servicing rights (15) (4) Rate lock commitments and US Treasury futures Net gain on loan sales 2 28 Forward commitments Other noninterest income — (1) Other non-interest income (1) — Total derivative (loss) gain $ (47) $ 11 originate loansthe difference between the purchase price and letters of credit at December 31, 2021:(in millions)Mortgage Loan Commitments:Multi-family and commercial real estate$352One-to-four family—Acquisition, development, and construction168Total mortgage loan commitments$520Other loan commitments2,301Total loan commitments$2,821Commercial, performance stand-by, and financial stand-by letters of credit291Total commitments$3,112119Financial GuaranteesThe Company provides guarantees and indemnifications to its customers to enable them to complete a variety of business transactions and to enhance their credit standings. These guarantees are recorded at their respective fair values in “Other liabilities” in the Consolidated Statements of Condition. The Company deems the fair value of an acquired company’s assets, net of the guarantees to equal the consideration received.The following table summarizes the Company’s guarantees and indemnifications atliabilities assumed. As of December 31, 2021:
One Year
One Year
Outstanding
Amount
Potential
Amount of
Future PaymentsThe maximum potential amount2023, the Company identified a triggering event and applied a market approach using the end of future payments represents the notional amounts that could be funded under the guaranteesday stock price. We evaluated those conditions known and indemnifications if there were a total defaultknowable by the guaranteed parties or if indemnification provisions were triggered,company and how a market participant would view the control premium as applicable, without consideration of possible recoveries under recourse provisions or from collateral held or pledged.The Company collects fees upon the issuance of commercial and stand-by letters of credit. Fees for stand-by letters of credit fees are initially recordedconfirmed by the Companysubsequent confirming market evidence. This adjusted market capitalization was then compared to the carrying value to determine the extent of the shortfall which was calculated to be in excess of the goodwill balance. The Company’s assessment concluded that goodwill from historical transactions (2007 and prior) was fully impaired as of December 31, 2023. As a liability, and are recognized as income periodically through the respective expiration dates. Fees for commercial letters of credit are collected and recognized as income at the time that they are issued and upon payment of each set of documents presented. In addition,result, the Company requires adequate collateral, typicallyrecorded an impairment charge of the entire goodwill balance of $2.4 billion.form of cash, real property, and/or personal guarantees upon its issuance of irrevocable stand-by letters of credit. Commercial letters of credit are primarily secured by the goods being purchased in the underlying transaction and are also personally guaranteed by the owner(s) of the applicant company.At December 31, 2021, the Company had 0 commitments to purchase securities.Legal ProceedingsFollowing the announcement of the Merger Agreement, the first of four lawsuits was filed on June 23, 2021 in United States Federal District Courts by alleged stockholders of NYCB against NYCB and the members of its board of directors challenging the accuracy or completeness of the disclosures contained in the Form S-4 filed on June 25, 2021 by NYCB with the SEC relating to the proposed Merger. Four additional lawsuits were filed by alleged Flagstar stockholders in state and federal courts against Flagstar and its board of directors (and, in one instance, NYCB and 615 Corp.) challenging the proposed Merger or Flagstar’s disclosures relating to the Merger, and those four lawsuits have since been resolved and dismissed. The complaints in the actions against NYCB allege, among other things, that the defendants caused a materially incomplete and misleading Form S-4 relating to the proposed Merger to be filed with the SEC in violation of Section 14(a) and Section 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 14a-9 promulgated thereunder. None of NYCB defendants has been served with the complaint in any of these actions, and NYCB believes that these claims are without merit.120NOTE 13: INTANGIBLE ASSETSGoodwillGoodwill is presumed to have an indefinite useful life and is tested for impairment, rather than amortized, at the reporting unit level, at least once a year. There was 0 change in goodwillcarrying amount during the year ended December 31, 2021.NOTE 14: EMPLOYEE BENEFITS(in millions) Gross Carrying Amount Balance at December 31, 2022 $ 2,426 Impairment (2,426) Balance at December 31, 2023 $ — Retirement PlanThe New York Community Bancorp, Inc. Retirement Plan (the “Retirement Plan”) covers substantially all employees who had attained minimum age, service, and employment status requirements prior to the date when the individual plans were frozen by the banks of origin. Once frozen, the individual plans ceased to accrue additional benefits, service, and compensation factors, and became closed to employees who would otherwise have met eligibility requirements after the “freeze” date.The following table sets forth certain information regarding the Retirement Plan asAs a result of the dates indicated:Signature Transaction, the Company recorded
December 31:
in net periodic benefit cost at December 31:In 2022, an estimated $2 $464 million of unrecognized net actuarial loss for the Retirement Plan will be amortized from AOCL into net periodic benefit cost. The comparable amount recognized as net periodic benefit cost in 2021 was $7 million. NaN prior service cost will be amortized in 2022core deposit intangible and other intangible assets that are amortizable.NaN was amortized in 2021. The discount rates used to determine the benefit obligation atAt December 31, 2021 and 2020 were 20232.6% and 2.2%, respectively.The discount rate reflects rates at which the benefit obligation could be effectively settled. To determine this rate, the Company considers rates of return on high-quality fixed-income investments that are currently available and are expected to be available during the period until the pension benefits are paid. The expected future payments are121discounted based on a portfolio of high-quality rated bonds (AA or better) for which the Company relies on the Financial Times Stock Exchange (“FTSE”) Pension Liability Index that is published asintangible assets consisted of the measurement date.following:December 31, 2023 December 31, 2022 (in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Core deposit intangible $ 700 $ (113) $ 587 $ 250 $ (4) $ 246 Other intangible assets 56 (18) 38 42 (1) 41 Total other intangible assets $ 756 $ (131) $ 625 $ 292 $ (5) $ 287 The components of net periodic pension (credit) expense were as follows for the years indicated:The following table indicates the weighted average assumptions used in determining the net periodic benefit cost for the years indicated:2021, Retirement Plan2023 the weighted average amortization period for core deposit intangible and other intangible assets were invested in two diversified investment portfoliosis 10 years and 5.1 years, respectively.the Pentegra Retirement Trust (the “Trust”), a private placement investment fund.The Company (in this context, the “Plan Sponsor”) chooses the specific asset allocationCDI and other intangible assets for the Retirement Plan withinnext five years is as follows:(in millions) Amortization Expense 2024 $ 132 2025 107 2026 94 2027 81 2028 68 Total $ 482 parameters set forthOCC and the Federal Reserve (the “Regulators”). The Bank is also governed by numerous federal and state laws and regulations, including the FDIC Improvement Act of 1991, which established five categories of capital adequacy ranging from “well capitalized” to “critically undercapitalized.” Such classifications are used by the FDIC to determine various matters, including prompt corrective action and each institution’s FDIC deposit insurance premium assessments. Capital amounts and classifications are also subject to the Regulators’ qualitative judgments about the components of capital and risk weightings, among other factors.Trust’s Investment Policy Statement. The long-term investment objectives areregulations). At December 31, 2023, our capital measures continued to maintain the Retirement Plan’s assets at a level that will sufficiently cover the Plan Sponsor’s long-term obligations, and to generate a return on those assets that will meet or exceed the rateminimum federal requirements for a bank holding company and for a bank. The following tables sets forth our common equity tier 1, tier 1 risk-based, total risk-based, and leverage capital amounts and ratios on a consolidated basis and for the Bank on a stand-alone basis, as well as the respective minimum regulatory capital requirements, at which the Plan Sponsor’s long-term obligations will grow.The Retirement Plan allocates its assets in accordance with the following targets:•To hold 55% of its assets in equity securities via investment in the Trust’s Long-Term Growth—Equity (“LTGE”) Portfolio, a diversified portfolio that invests in a number of actively and passively managed equity mutual funds and collective trusts in order to gain exposure to both U.S. and non-U.S. equity markets;•To hold 44% of its assets in intermediate-term investment-grade bonds via investment in the Long-Term Growth—Fixed Income (“LTGFI”) Portfolio, a diversified portfolio that invests in a number of fixed-income mutual funds and collective investment trusts, primarily including intermediate-term bond funds with a focus on U.S. investment grade securities and opportunistic allocations to below-investment grade and non-U.S. investments; and•To hold 1% in a cash equivalents portfolio for liquidity purposes.In addition, the Retirement Plan holds Company shares, the value of which is approximately equal to 13% of the assets that are held by the Trust.The LTGE and LTGFI portfolios are designed to provide long-term growth of equity and fixed-income assets with the objective of achieving an investment return in excess of the cost of funding the active life, deferred vesting, and all 30-year term and longer obligations of retired lives in the Trust. Risk and volatility are further managed in accordance with the distinct investment objectives of the Trust’s respective portfolios.122information about the fair value measurementsactual capital amounts and ratios for the Company:Risk-Based Capital December 31, 2023 Common Equity Tier 1 Tier 1 Total Leverage Capital (dollars in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 8,009 9.05 % $ 8,512 9.62 % $ 10,415 11.77 % $ 8,512 7.75 % Minimum for capital adequacy purposes 3,983 4.50 5,310 6.00 7,081 8.00 4,392 4.00 Excess $ 4,026 4.55 % $ 3,202 3.62 % $ 3,334 3.77 % $ 4,120 3.75 % December 31, 2022 Total capital $ 6,335 9.06 % $ 6,838 9.78 % $ 8,154 11.66 % $ 6,838 9.70 % Minimum for capital adequacy purposes 3,146 4.50 4,195 6.00 5,593 8.00 2,819 4.00 Excess $ 3,189 4.56 % $ 2,643 3.78 % $ 2,561 3.66 % $ 4,019 5.70 % Risk-Based Capital December 31, 2023 Common Equity Tier 1 Tier 1 Total Leverage Capital (dollars in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 9,305 10.52 % $ 9,305 10.52 % $ 10,271 11.61 % $ 9,305 8.48 % Minimum for capital adequacy purposes 3,980 4.50 5,307 6.00 7,076 8.00 4,389 4.00 Excess $ 5,325 6.02 % $ 3,998 4.52 % $ 3,195 3.61 % $ 4,916 4.48 % December 31, 2022 Total capital $ 7,653 10.96 % $ 7,653 10.96 % $ 7,982 11.43 % $ 7,653 10.87 % Minimum for capital adequacy purposes 3,142 4.50 4,189 6.00 5,585 8.00 2,817 4.00 Excess $ 4,511 6.46 % $ 3,464 4.96 % $ 2,397 3.43 % $ 4,836 6.87 % investments held byCompany’s Fixed-to-Floating Rate Series A Noncumulative Perpetual Preferred Stock, par value $0.01 per share, with a liquidation preference of $1.00 per share (equivalent to $25 per depositary share). Dividends will accrue on the Retirement Plan asdepositary shares at a fixed rate equal to 6.375 percent per annum until March 17, 2027, and a floating rate equal to Three-month LIBOR plus 382.1 basis points per annum beginning on March 17, 2027. Dividends will be payable in arrears on March 17, June 17, September 17, and December 17 of each year, which commenced on June 17, 2017.2021:
in Active
Markets for
Identical
Assets
(Level 1)
Observable Inputs
(Level 2)
Unobservable
Inputs
(Level 3)* Includes cash equivalent investments in equity and fixed income strategies.(1)This category contains large-cap stocks with above-average yield. The portfolio typically holds between 60 and 70 stocks.(2)This category seeks long-term capital appreciation by investing primarily in large growth companies based in2023, the U.S.(3)This fund tracks the performanceCompany has repurchased a total of the S&P 500 Index by purchasing the securities represented in the Index in approximately the same weightings as the Index.(4)This category employs30 million shares at an indexing investment approach designed to track the performanceaverage price of the CRSP US Mid-Cap Value Index.(5)This category employs$9.61 or an indexing investment approach designed to track the performanceaggregate purchase of the CRSP US Mid-Cap Growth Index.(6)This category seeks to track the performance of the S&P Midcap 400 Index.(7)This category consists of a selection of investments based on the Russell 2000 Value Index.(8)This category consists of a mutual fund invested in small cap growth companies along with a fund invested in a selection of investments based on the Russell 2000 Growth Index.(9)This category consists of a mutual fund investing in readily marketable securities of U.S. companies with market capitalizations within the smallest 10% of the market universe, or smaller than the 1000th largest US company.(10)This category invests primarily in medium to large non-US companies in developed and emerging markets. Under normal circumstances, at least 80% of total assets will be invested in equity securities, including common stocks, preferred stocks, and convertible securities.(11)This category currently includes equal investments in 3 mutual funds, two of which usually hold at least 80% of fund assets in investment grade fixed income securities, seeking to outperform the Barclays US Aggregate Bond Index while maintaining123a similar duration to that index. The third fund targets investments of 50% or more in mortgage-backed securities guaranteed by the US government and its agencies.(12)This category consists of a mutual fund which invest in a diversified portfolio of high-quality bonds and other fixed income securities, including U.S. Government obligations, mortgage-related and asset backed securities, corporate and municipal bonds, CMOs, and other securities mostly rated A or better.Current Asset AllocationThe asset allocations for the Retirement Plan as of December 31, 2021 and 2020 were as follows:Determination of Long-Term Rate of ReturnThe long-term rate of return on Retirement Plan assets assumption was based on historical returns earned by equities and fixed income securities, and adjusted to reflect expectations of future returns as applied to the Retirement Plan’s target allocation of asset classes. Equities and fixed income securities were assumed to earn long-term rates of return in the ranges of 6% to 8% and 3% to 5%, respectively, with an assumed long-term inflation rate of 2.5% reflected within these ranges. When these overall return expectations are applied to the Retirement Plan’s target allocations, the result is an expected rate of return of 5% to 7%.Expected Contributionsdoes not expect to contribute to the Retirement Plan in 2022.Expected Future Annuity PaymentsThe following annuity payments, which reflect expected future service, as appropriate, are expected to be paid by the Retirement Planhad no repurchases during the years indicated:Qualified Savings Plan (401(k) Plan)The Company maintains a defined contribution qualified savings plan in the form of a 401(k) plan in which all salaried employees are able to participate after one month of service and having attained age 21. The Company instituted a safe harbor matching contribution program during2023. During the year ended December 31, 2020, and accordingly,2022, the Company matchesrepurchased 871,710 shares, at a portion of employee 401(k) plan contributions. Such expense totaled $6 million for the twelve months ended December 31, 2021 and 2020.Post-Retirement Health and Welfare BenefitsThe Company offers certain post-retirement benefits, including medical, dental, and life insurance (the “Health & Welfare Plan”) to retired employees, depending on age and years of service at the time of retirement. The costs of such benefits are accrued during the years that an employee renders the necessary service.124The Health & Welfare Plan is an unfunded plan and is not expected to hold assets for investment at any time. Any contributions made to the Health & Welfare Plan are used to immediately pay plan premiums and claims as they come due.The following table sets forth certain information regarding the Health & Welfare Plan as of the dates indicated:
the year ended December 31:
in net periodic benefit cost at December 31:The discount rates used in the preceding table were 2.3% at December 31, 2021 and 2.0% at December 31, 2020.The estimated net actuarial loss and the prior service liability that will be amortized from AOCL into net periodic benefit cost in 2022 are $0 and $0, respectively.The following table presents the components of net periodic benefit cost for the years indicated:(1) All numbers round to zero.125The following table presents the weighted average assumptions used in determining the net periodic benefit cost for the years indicated:Expected ContributionsThe Company expects to contribute $1 million to the Health & Welfare Plan to pay premiums and claims in the fiscal year ending December 31, 2022.Expected Future Payments for Premiums and ClaimsThe following amounts are currently expected to be paid for premiums and claims during the years indicated under the Health & Welfare Plan:NOTE 15: STOCK-RELATED BENEFIT PLANSNew York Community Bank Employee Stock Ownership PlanOn December 6, 2021, the ESOP was terminated with the assets in the ESOP merged into the employee’s 401(k) plan. After the merger of the ESOP into the 401(k) plan, the Company allocated $4 million into eligible participant’s accounts.In 2020 and 2019, the Company allocated 405,167 and 349,356 shares, respectively, to participants in the ESOP. For each of the years ended December 31, 2021, 2020, and 2019, the Company recorded expense of $4 million.Supplemental Executive Retirement PlanThe Bank has established a Supplemental Executive Retirement Plan (“SERP”), which provided additional unfunded, non-qualified benefits to certain participants in the ESOP in the form of Company common stock. The SERP was frozen in 1999. Trust-held assets, consisting entirely of Company common stock, amounted to 1,006,186 and 2,191,915 shares, respectively, at December 31, 2021 and 2020, including shares purchased through dividend reinvestment. The cost of these shares is reflected as a reduction of paid-in capital in excess of par in the Consolidated Statements of Condition.$8 million.Stock Based CompensationAt December 31, 2021, the Company had a total of 8,548,783 shares available for grants as restricted stock, options, or other forms of related rights under the 2020 Incentive Plan, which was approved by the Company’s shareholders at its Annual Meeting on June 3, 2020. The Company granted 3,131,949 shares of restricted stock, with an average fair value of $11.20 per share on the date of grant, during the twelve months ended December 31, 2021.126During 2020 and 2019, the Company granted 2,421,345 shares and 2,031,198 shares, respectively, of restricted stock, which had average fair values of $11.61 and $10.45 per share on the respective grant dates. The shares of restricted stock that were granted during the years ended December 31, 2021, 2020, and 2019 vest over a period of five years. Compensation and benefits expense related to the restricted stock grants is recognized on a straight-line basis over the vesting period and totaled $27 million, $28 million, and $31 million, respectively, for the years ended December 31, 2021, 2020, and 2019.The following table provides a summary of activity with regard to restricted stock awards in the year ended December 31, 2021:
December 31, 2021
Average
Grant Date
Fair ValueAs of December 31, 2021, unrecognized compensation cost relating to unvested restricted stock totaled $55 million. This amount will be recognized over a remaining weighted average period of 2.9 years.The following table provides a summary of activity with regard to Performance-Based Restricted Stock Units ("PSUs") in the twelve months ended December 31, 2021:Number of
SharesPerformance
PeriodExpected
Vesting
DateOutstanding at beginning of year477,872Granted356,740January 1, 2021 - December 31, 2023March 31, 2024Outstanding at end of period834,612PSUs are subject to adjustment or forfeiture, based upon the achievement by the Company of certain performance standards. Compensation and benefits expense related to PSUs is recognized using the fair value as of the date the units were approved, on a straight-line basis over the vesting period and totaled $5 million and $1 million for the twelve months ended December 31, 2021 and December 31, 2020. As of December 31, 2021, unrecognized compensation cost relating to unvested restricted stock totaled $5 million. This amount will be recognized over a remaining weighted average period of 1.4 years. As of December 31, 2021, the Company believes it is probable that the performance conditions will be met.127NOTE 16: FAIR VALUE MEASUREMENTS20212023 and 2020,December 31, 2022, and that were included in the Company’s Consolidated Statements of Condition at those dates:December 31, 2023 (in millions) Quoted Prices in Active Markets for Identical Assets
(Level 1)Significant Other Observable Inputs
(Level 2)Significant Unobservable Inputs
(Level 3)Netting Adjustments Total Fair Value Assets: Mortgage-related Debt Securities Available for Sale: GSE certificates $ — $ 1,221 $ — $ — $ 1,221 GSE CMOs — 5,162 — — 5,162 Private Label CMOs — 148 32 — 180 Total mortgage-related debt securities $ — $ 6,531 $ 32 $ — $ 6,563 Other Debt Securities Available for Sale: U. S. Treasury obligations $ 198 $ — $ — $ — $ 198 GSE debentures — 1,609 — — 1,609 Asset-backed securities — 302 — — 302 Municipal bonds — 6 — — 6 Corporate bonds — 343 — — 343 Foreign notes — 34 — — 34 Capital trust notes — 90 — — 90 Total other debt securities $ 198 $ 2,384 $ — $ — $ 2,582 Total debt securities available for sale $ 198 $ 8,915 $ 32 $ — $ 9,145 Equity securities: Mutual funds and common stock — 14 — — 14 Total equity securities — 14 — — 14 Total securities $ 198 $ 8,929 $ 32 $ — $ 9,159 Loans held-for-sale Residential first mortgage loans $ — $ 770 $ — $ — $ 770 Acquisition, development, and construction — 123 — — 123 Commercial and industrial loans — — 9 — — 9 Derivative assets Interest rate swaps and swaptions — 115 — — 115 Futures — — — — — Rate lock commitments (fallout-adjusted) — — 12 — 12 Mortgage-backed securities forwards — 11 — — 11 Mortgage servicing rights — — 1,111 — 1,111 Total assets at fair value $ 198 $ 9,957 $ 1,155 $ — $ 11,310 Derivative liabilities Mortgage-backed securities forwards — 32 — — 32 Futures — 1 — — 1 Interest rate swaps and swaptions — 59 — — 59 Rate lock commitments (fallout-adjusted) — — 3 — 3 Total liabilities at fair value $ — $ 92 $ 3 $ — $ 95
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Adjustments
Fair
Value
Available for Sale:128
Prices
in Active
Markets for
Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Adjustments
Fair Value
Available for Sale:
for Sale:December 31, 2022 (in millions) Quoted Prices in Active Markets for Identical Assets
(Level 1)Significant Other Observable Inputs
(Level 2)Significant Unobservable Inputs
(Level 3)Netting Adjustments Total Fair Value Assets: Mortgage-related Debt Securities Available for Sale: GSE certificates $ — $ 1,297 $ — $ — $ 1,297 GSE CMOs — 3,301 — — 3,301 Private Label CMOs — 191 — — 191 Total mortgage-related debt securities $ — $ 4,789 $ — $ — $ 4,789 Other Debt Securities Available for Sale: U. S. Treasury obligations $ 1,487 $ — $ — $ — $ 1,487 GSE debentures — 1,398 — — 1,398 Asset-backed securities — 361 — — 361 Municipal bonds — 30 — — 30 Corporate bonds — 885 — — 885 Foreign notes — 20 — — 20 Capital trust notes — 90 — — 90 Total other debt securities $ 1,487 $ 2,784 $ — $ — $ 4,271 Total debt securities available for sale $ 1,487 $ 7,573 $ — $ — $ 9,060 Equity securities: Mutual funds and common stock — 14 — — 14 Total equity securities — 14 — — 14 Total securities $ 1,487 $ 7,587 $ — $ — $ 9,074 Loans held-for-sale Residential first mortgage loans $ — $ 1,115 $ — $ — $ 1,115 Derivative assets Interest rate swaps and swaptions — 182 — — 182 Futures — 2 — — 2 Rate lock commitments (fallout-adjusted) — — 9 — 9 Mortgage-backed securities forwards — 36 — — 36 Mortgage servicing rights — — 1,033 — 1,033 Total assets at fair value $ 1,487 $ 8,922 $ 1,042 $ — $ 11,451 Derivative liabilities Mortgage-backed securities forwards — 61 — — 61 Interest rate swaps and swaptions — 65 — — 65 Rate lock commitments (fallout-adjusted) — — 10 — 10 Total liabilities at fair value $ — $ 126 $ 10 $ — $ 136 129(dollars in millions) Balance at Beginning of Year Total Gains / (Losses) Recorded in Earnings (1) Purchases / Originations Sales Settlement Transfers In (Out) Balance at End of Year Year Ended December 31, 2023 Assets $ 1,033 $ (79) $ 208 $ (51) — — $ 1,111 Private Label CMOs — — — — — 32 32 (1) (49) 104 — — (45) 9 Totals $ 1,032 $ (128) $ 312 $ (51) $ — $ (13) $ 1,152 Fair Value Valuation Technique Range
(Weighted Average)(dollars in millions) Assets Mortgage servicing rights $1,111 Discounted cash flows Option adjusted spread 5.0% - 21.7% 5.4% Constant prepayment rate —% - 10.0% 7.9% Weighted average cost to service per loan $65.0 - $90.0 $69.0 Private Label CMOs $32 Discounted cash flows Constant default rates 0.10% - 0.30% Weighted average life 8.2 - 11.8 Rate lock commitments (net) $9 Consensus pricing Origination pull-through rate 64.30% 20212023 and 2020,December 31, 2022, and that were included in the Company’s Consolidated Statements of Condition at those dates:
in Active
Markets for
Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
ValueFair Value Measurements at December 31, 2023 Using (in millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value $ — $ — $ 197 $ 197 — — 50 50 Total $ — $ — $ 247 $ 247 certainimpaired loans, individually assessed for impairment, based on the value of the collateral.Fair Value Measurements at December 31, 2022 Using (in millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value $ — $ — $ 28 $ 28 — — 41 41 Total $ — $ — $ 69 $ 69
in Active
Markets for
Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
ValueRepresentsRepresents the fair value of impaired loans, based on the value of the collateral.RepresentsRepresents the fair value of repossessed assets, based on the appraised value of the collateral subsequent to its initial classification as repossessed assets.assets and equity securities without readily determinable fair values. These equity securities are classified as Level 3 due to the infrequency of the observable prices and/or the restrictions on the shares.13020212023 and 2020:December 31, 2022:
Value
Fair Value
in Active
Markets
for Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)December 31, 2023 Fair Value Measurement Using (in millions) Carrying Value Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Financial Assets: Cash and cash equivalents $ 11,475 $ 11,475 $ 11,475 $ — $ — $ 1,392 $ 1,392 $ — $ 1,392 $ — Loans and leases held for investment, net $ 83,627 $ 79,333 $ — $ — $ 79,333 Financial Liabilities: Deposits $ 81,526 $ 81,247 $ 59,972 (2) $ 21,275 (3) $ — Borrowed funds $ 21,267 $ 21,082 $ — $ 21,082 $ —
Value
Fair Value
in Active
Markets
for Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)December 31, 2022 Fair Value Measurement Using (in millions) Carrying Value Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Financial Assets: Cash and cash equivalents $ 2,032 $ 2,032 $ 2,032 $ — $ — $ 1,267 $ 1,267 $ — $ 1,267 $ — Loans and leases held for investment, net $ 68,608 $ 65,673 $ — $ — $ 65,673 Financial Liabilities: Deposits $ 58,721 $ 58,479 $ 46,211 (2) $ 12,268 (3) $ — Borrowed funds $ 21,332 $ 21,231 $ — $ 21,231 — CarryingCarrying value and estimated fair value are at cost.Securities131LoansThe estimated fair values of non-performing mortgage and other loans are based on recent collateral appraisals. For those loans where a discounted cash flow technique was not considered reliable, the Company used a quoted market price for each individual loan.20212023 and 2020.December 31, 2022.NOTE 17: DIVIDEND RESTRICTIONSParentfollowing table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected:For the Years Ended December 31, (dollars in millions) 2023 2022 Assets Loans held-for-sale Net gain on loan sales $ 43 $ 8 December 31, 2023 (dollars in millions) Unpaid Principal Balance Fair Value Fair Value Over / (Under) UPB Assets: Nonaccrual loans: Loans held-for-sale $ 2 $ 2 $ — Total non-accrual loans $ 2 $ 2 $ — Other performing loans: Loans held-for-sale $ 869 $ 894 $ 25 Total other performing loans $ 869 $ 894 $ 25 Total loans: Loans held-for-sale $ 871 $ 896 $ 25 Total loans $ 871 $ 896 $ 25 December 31, 2022 (dollars in millions) Unpaid Principal Balance Fair Value Fair Value Over / (Under) UPB Assets: Other performing loans: Loans held-for-sale $ 1,095 $ 1,115 $ 20 Total other performing loans $ 1,095 $ 1,115 $ 20 Total loans: Loans held-for-sale $ 1,095 $ 1,115 $ 20 Total loans $ 1,095 $ 1,115 $ 20 December 31, (in millions) 2023 2022 Multi-family and commercial real estate $ 52 $ 216 One-to-four family including interest rate locks 1,694 2,066 Acquisition, development, and construction 3,926 3,539 Warehouse loan commitments 7,074 8,042 Other loan commitments 11,315 7,964 Total loan commitments $ 24,061 $ 21,827 Commercial, performance stand-by, and financial stand-by letters of credit 915 541 Total commitments $ 24,976 $ 22,368 (in millions) Expires Within One Year Expires After One Year Total Outstanding Amount Maximum Potential Amount of Future Payments Financial stand-by letters of credit $ 254 $ 288 $ 542 $ 639 Performance stand-by letters of credit 100 2 102 102 Commercial letters of credit 3 — 3 174 Total letters of credit $ 357 $ 290 $ 647 $ 915 a separateinvolved in various legal entity fromactions arising in the Bankordinary course of its business, including stockholder class and must provide for its own liquidity. In additionderivative actions. All such actions in the aggregate involve amounts that are believed by management to operating expenses and any share repurchases, the Parent Company is responsible for paying any dividends declaredbe immaterial to the Company’s shareholders. Asfinancial condition and results of operations of the Company. The outcome of any pending litigation is uncertain. There can be no assurance (i) that we will not incur material losses due to damages, penalties, costs and/or expenses as a Delaware corporation,result of such litigation, (ii) that the Parentreserves we have established will be sufficient to cover such losses, or (iii) that such losses will not materially exceed such reserves and have a material impact on our financial condition or results of operations. The Company may incur significant legal expenses in defending the litigation described above during the pendency of these matters, and in connection with any other potential cases, including expenses for the potential reimbursement of legal fees of officers and directors under indemnification obligations.December 31, (in millions) 2023 2022 Change in Benefit Obligation: Benefit obligation at beginning of year $ 116 $ 158 Interest cost 5 4 Actuarial gain 2 (38) Annuity payments (7) (7) Settlements (1) (1) Benefit obligation at end of year $ 115 $ 116 Change in Plan Assets: Fair value of assets at beginning of year $ 228 $ 283 Actual return (loss) on plan assets 33 (47) Annuity payments (7) (7) Settlements (1) (1) Fair value of assets at end of year $ 253 $ 228 Funded status (included in “Other assets”) $ 138 $ 112 Changes recognized in other comprehensive income for the year ended December 31: Amortization of actuarial loss $ (7) $ (2) Net actuarial (gain) loss arising during the year (18) 26 Total recognized in other comprehensive income for the year (pre-tax) $ (25) $ 24 Accumulated other comprehensive loss (pre-tax) not yet recognized in net periodic benefit cost at December 31: Actuarial loss, net $ 41 $ 66 Total accumulated other comprehensive loss (pre-tax) $ 41 $ 66 Years Ended December 31, (in millions) 2023 2022 2021 Components of net periodic pension expense (credit): Interest cost $ 5 $ 4 $ 4 Expected return on plan assets (14) (16) (16) Amortization of net actuarial loss 7 2 7 Net periodic pension credit $ (2) $ (10) $ (5) Years Ended December 31, 2023 2022 2021 Discount rate 4.9 % 2.6 % 2.2 % Expected rate of return on plan assets 6.3 6.0 6.3 Asset Allocation Parameters by Asset Class Equity Minimum Target Maximum U.S. Large-Cap 27% U.S. Mid-Cap 7% U.S. Small-Cap 7% Non-U.S. 14% Total - Equity 45% 55% 65% Total - Fixed Income/Cash Equivalents 35% 45% 55% (in millions) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Equity: $ 12 $ 12 $ — $ — 22 22 — — 17 17 — — 15 15 — — 16 16 — — 18 18 — — 10 10 — — Fixed Income Funds: 98 98 — — Equity Securities: Company common stock 31 31 — — Common/Collective Trusts-Equity: 13 — 13 — Cash Equivalents: 1 1 — $ 253 $ 240 $ 13 $ — December 31, 2023 2022 Equity securities 61 % 60 % Debt securities 39 % 38 % Cash equivalents — % 2 % Total 100 % 100 % (in millions) 2024 $ 8 2025 8 2026 8 2027 8 2028 8 2029 and thereafter 43 Total $ 83 dividends eitherplan premiums and claims as they come due.December 31, (in millions) 2023 2022 Change in benefit obligation: Benefit obligation at beginning of year $ 7 $ 10 Interest cost 1 — Actuarial gain 1 (2) Premiums and claims paid (1) (1) Benefit obligation at end of year $ 8 $ 7 Change in plan assets: Fair value of assets at beginning of year $ — $ — Employer contribution 1 1 Premiums and claims paid (1) (1) Fair value of assets at end of year $ — $ — Funded status (included in “Other liabilities”) $ (8) $ (7) Changes recognized in other comprehensive income for the year ended December 31: Amortization of prior service cost — Amortization of actuarial gain — Net actuarial (gain) loss arising during the year 1 (2) Total recognized in other comprehensive income for the year (pre-tax) $ 1 $ (2) Accumulated other comprehensive (gain) loss (pre-tax) not yet recognized in net periodic benefit cost at December 31: Prior service cost — Actuarial (gain) loss, net (1) (2) Total accumulated other comprehensive income (pre-tax) $ (1) $ (2) surplus or,AOCL into net periodic benefit cost in case there is no surplus, from2024 are less than $1 million, respectively.profitsperiodic benefit costs and all components thereof for the years-ended December 31, 2023 and 2022 were less than $1 million.Years Ended December 31, 2023 2022 2021 Discount rate 4.8% 2.3% 2.0% Current medical trend rate 6.5 6.5 6.5 Ultimate trend rate 5.0 5.0 5.0 Year when ultimate trend rate will be reached 2029 2028 2027 in which the dividend is declared and/or the preceding fiscal year.ending Various legal restrictions limit the extent to which the Company’s subsidiary bank can supply funds to the Parent Company and its non-bank subsidiaries. The Company’s subsidiary bank would require the approval of the Superintendent of the NYSDFS if the dividends they declared in any calendar year were to exceed the total of their respective net profits for that year combined with their respective retained net profits for the preceding two calendar years, less any required transfer to paid-in capital. The term “net profits” is defined as the remainder of all earnings from current operations plus actual recoveries on loans, investments, and other assets, after deducting from the total thereof all current operating expenses, actual losses if any, and all federal, state, and local taxes. In 2021, dividends of $380.0 million were paid by the Bank to the Parent Company. At December 31, 2021,2023.Bank could have paid additional dividends of $469 million toyears indicated under the Health & Welfare Plan:(in millions) 2024 $ 1 2025 1 2026 1 2027 1 2028 1 2029 and thereafter 2 Total $ 7 Company without regulatory approval.Company-Only Financial Information132NOTE 18: PARENT COMPANY-ONLY FINANCIAL INFORMATIONDecember 31, (in millions) 2023 2022 ASSETS: Cash and cash equivalents $ 158 $ 121 Investments in subsidiaries 9,160 9,633 Other assets 80 85 Total assets $ 9,398 $ 9,839 LIABILITIES AND STOCKHOLDERS’ EQUITY: Junior subordinated debentures $ 579 $ 575 Subordinated notes 438 432 Other liabilities 14 8 Total liabilities $ 1,031 $ 1,015 Stockholders’ equity $ 8,367 $ 8,824 Total liabilities and stockholders’ equity $ 9,398 $ 9,839 Years Ended December 31, (in millions) 2023 2022 2021 Dividends received from subsidiaries $ 580 $ 335 $ 380 Other income 2 160 1 Gross income 582 495 381 Operating expenses 108 55 50 Income before income tax benefit and equity in undistributed
(loss) earnings of subsidiaries474 440 331 Income tax benefit 25 14 14 Income before equity in undistributed (loss) earnings of subsidiaries 499 454 345 Equity in undistributed (loss) earnings of subsidiaries (578) 196 251 Net (loss) income $ (79) $ 650 $ 596
earnings of subsidiaries133Years Ended December 31, (in millions) 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (79) $ 650 $ 596 Change in other assets 30 (3) (22) Change in other liabilities 6 (4) 1 Other, net 65 (130) 32 Equity in undistributed (loss) earnings of subsidiaries 578 (196) (251) Net cash provided by operating activities $ 600 $ 317 $ 356 CASH FLOWS FROM INVESTING ACTIVITIES: Cash acquired in business acquisition — 34 — Change in receivable from subsidiaries, net (32) 5 (3) Net cash (used in) provided by investing activities $ (32) $ 39 $ (3) CASH FLOWS FROM FINANCING ACTIVITIES: Treasury stock repurchased (12) (24) (16) Cash dividends paid on common and preferred stock (519) (350) (349) Net cash used in financing activities (531) (374) (365) Net increase (decrease) in cash and cash equivalents 37 (18) (12) Cash and cash equivalents at beginning of year 121 139 151 Cash and cash equivalents at end of year $ 158 $ 121 $ 139 134NOTE 19: CAPITALis subject to examination, regulation,in exchange for the sale and periodic reporting underissuance by the Bank Holding Company Act of 1956,(a) 76,630,965 shares of our common stock, at a purchase price per share of $2.00, (b) 192,062 shares of a new series of our preferred stock, par value $0.01 per share, designated as amended,Series B Preferred Stock, at a price per share of $2,000, each share of which is administered byconvertible into 1,000 shares of common stock (or, in certain limited circumstances, one share of Series C Preferred Stock), (c) 256,307 shares of a new series of our preferred stock, par value $0.01 per share, designated as Series C Preferred Stock, at a price per share of $2,000, each share of which is convertible into 1,000 shares of common stock, and (d) warrants affording the FRB. The FRB has adopted capital adequacy guidelines for bank holding companies (on a consolidated basis) that are substantially similar to thoseholder thereof the right, until the seven-year anniversary of the FDICissuance of such warrant, to purchase for the Bank.The following tables present the regulatory capital ratios for the Company at December 31, 2021 and 2020, in comparison with the minimum amounts and ratios required by the FRB for capital adequacy purposes:
Tier 1
adequacy purposes
Tier 1
adequacy purposesAt December 31, 2021, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by 473 basis points and the fully phased-in capital conservation buffer by 223 basis points.The Bank$2,500 per share, shares of Series D NVCE Stock, each share of Series D NVCE Stock is subject to regulation, examination, and supervision by the NYSDFS and the FDIC (the “Regulators”). The Bank is also governed by numerous federal and state laws and regulations, including the FDIC Improvement Act of 1991, which established five categories of capital adequacy ranging from “well capitalized” to “critically undercapitalized.” Such classifications are used by the FDIC to determine various matters, including prompt corrective action and each institution’s FDIC deposit insurance premium assessments. Capital amounts and classifications are also subject to the Regulators’ qualitative judgments about the components of capital and risk weightings, among other factors.The quantitative measures established to ensure capital adequacy require that banks maintain minimum amounts and ratios of leverage capital to average assets andconvertible into 1,000 shares of common equity tier 1 capital, tier 1 capital, and total capital to risk-weighted assets (as such measures are definedstock (or, in the regulations). At December 31, 2021, the Bank exceeded all the capital adequacy requirements to which they were subject.As of December 31, 2021, the Company and the Bank are categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, a bank must maintain a minimum common equity tier 1 risk-based capital ratio of 6.50%; a minimum tier 1 risk-based capital ratio of 8.00%; a minimum total risk-based capital ratio of 10.00%; and a minimum leverage capital ratio of 5.00%. In the opinion of management, no conditions or events have transpired since December 31, 2021 to change these capital adequacy classifications.135The following tables present the actual capital amounts and ratios for the Bank at December 31, 2021 and 2020 in comparison to the minimum amounts and ratios required for capital adequacy purposes.
Equity
Tier 1
Capital
purposes
Equity
Tier 1
Capital
purposesPreferred StockOn March 17, 2017, the Company issued 20,600,000 depositary shares, each representing a 1/40th interest in acertain limited circumstances, one share of Series C Preferred Stock), and all of which shares of Series D NVCE Stock, upon issuance, will represent the Company’s Fixed-to-Floating Rate Series A Noncumulative Perpetual Preferred Stock, par value $0.01 per share, with a liquidation preferenceright (on an as converted basis) to receive 315,000,000 shares of $1.000 per share (equivalent to $25 per depositary share). Dividends will accrue on the depositary shares at a fixed rate equal to 6.375% per annum until March 17, 2027, and a floating rate equal to Three-month LIBOR plus 382.1 basis points per annum beginningcommon stock. The transaction closed on March 17, 2027. 11, 2024.Dividends will be payable in arrears on March 17, June 17, September 17, and December 17 of each year, which commenced on June 17, 2017.Treasury Stock RepurchasesOn October 23, 2018, the Board of Directors approved the repurchase of up to $300 million of the Company’s outstanding common stock. As of December 31, 2021, the Company has repurchased a total of 29 million shares at an average price of $9.63 or an aggregate purchase of $278 million. The Company had 0 repurchases during 2021. During the year ended December 31, 2020, the Company repurchased 5 million shares, at a cost of $50 million.136NOTE 20: PENDING ACQUISITIONAcquisition of Flagstar Bancorp, Inc.On April 26, 2021, the Company announced it had entered into a definitive merger agreement (the "Merger Agreement") under which we would acquire Flagstar Bancorp, Inc. ("Flagstar") in a 100% stock transaction valued at the time, at $2.6 billion. Under terms of the Merger Agreement, which was unanimously approved by the Boards of Directors of both companies, Flagstar shareholders will receive 4.0151 shares of New York Community Bancorp, Inc. common stock for each Flagstar share they own. Following completion of the merger, New York Community shareholders are expected to own 68% of the combined company, while Flagstar shareholders are expected to own 32% of the combined company. The new company will have $85 billion in total assets, operate nearly 400 traditional branches in nine states, and 83 retail home lending offices across a 28-state footprint. It will be headquartered on Long Island, N.Y. with regional headquarters in Troy, Michigan, including Flagstar's mortgage operations.Both sets of shareholders approved the merger on August 4, 2021. The transaction is subject to the satisfaction of certain other customary closing conditions, including approvals from the NYSDFS, the FDIC, and the FRB.137Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of DirectorsReport of Independent Registered Public Accounting Firm 20212023 and 2020,2022, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021,2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20212023 and 2020,2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021,2023, in conformity with U.S. generally accepted accounting principles.2021,2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 25, 2022March 14, 2024 expressed an unqualifiedadverse opinion on the effectiveness of the Company’s internal control over financial reporting.Change in Accounting PrincipleAs discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for the recognition and measurement of credit losses as of January 1, 2020 due to the adoption of ASC Topic 326, Financial Instruments - Credit Losses.MatterMattersmattermatters communicated below is a matterare matters arising from the current period audit of the consolidated financial statements that waswere communicated or required to be communicated to the audit committee and that: (1) relatesrelate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit mattermatters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit mattermatters below, providing a separate opinionopinions on the critical audit mattermatters or on the accounts or disclosures to which it relates.they relate.related to the multi-family and commercial real estate portfolio segments that are evaluated on a collective basis67 to the consolidated financial statements, the Company’s total allowance for credit losses (ACL) on loans and leases as of December 31, 20212023 was $199$992 million, a substantial portion of which is related to the one-to-four family first mortgage, multi-family, commercial and industrial, specialty finance, and commercial real estate portfolio segments. The allowance for credit losses on loans and138leases issegments measured on a collective basis when similar risk characteristics exist (collective ACL). Management estimates the collective ACL by projecting and multiplying together the probability-of-default (PD), loss-given-default (LGD) and exposure-at-default depending on economic parameters for each month of the remaining contractual term. ForThe loss drivers for certain loans within the multi-familycommercial and commercial real estate portfolios, theindustrial portfolio are derived using credit ratings. The Company estimates the exposure-at-default using a prepayment modelmodels which projectsforecasts prepayments over the life of the loans. Economicloans and leases. The economic forecast and the related economic parameters are developed using available information relating to past events, current conditions,multiple economic forecasts, and macroeconomic assumptions. Economic parameters are forecast scenarios, including related weightings, over athe reasonable and supportable forecast period. After the reasonable and supportable forecast period, the Company reverts to a historical average loss rate on a straight line basis.straight-line basis over 12 months. Historical credit loss experience over the historical loss observation period provides the basis for the estimation of expected credit losses, with qualitative factor adjustments made for differences in current loan-specific risk characteristics as well as for changes in environmental conditions. on loans and leases related to the multi-family and commercial real estate portfolio segments as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment due to significant measurement uncertainty. Specifically, the assessment encompassed the evaluation of the collective ACL methodology, including the methods and models used to estimate the PD, LGD, and prepayments and their significant assumptions. Such significant assumptions included portfolio segmentation, the selection of the multiple economic forecasts and macroeconomic assumptions,forecast scenarios including related weightings, economic parameters, credit ratings, the reasonable and supportable forecast period, the reversion period and the historical loss observation period. The assessment also included the evaluation of the qualitative factor adjustments and their significant assumptions for differences in loan-specific risk characteristics and changes in environmental factors.conditions. The assessment also included an evaluation of the conceptual soundness and performance of the PD, LGD, and prepaymentsprepayment models. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained.on loans and leases related to multi-family and commercial real estate portfolio segments,estimate, including controls over the:on loans and leases related to the multi-family and commercial real estate portfolio segments methodologychanges made tothe PD, LGD, and prepayment modelsperformance monitoring of the PD, LGD, and prepayment models•on loans and leases related to the multi-family and commercial real estate portfolio segments results, trends, and ratiosratios. on loans and leases related to the multi-family and commercial real estate portfolio segments estimate by testing certain sources of data, factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors, and assumptions. In addition, we involved credit risk and valuation professionals with specialized skills and knowledge, who assisted in:139forecastsforecast scenarios including the related weightings, and underlying macroeconomic assumptionseconomic parameters by comparing itthem to the Company’s business environment and relevant industry practicesperiodperiods by comparing them to specific portfolio risk characteristics and trendspracticespracticefactorsfactor adjustments and their significant assumptions and the effect of those factorsadjustments on the allowance for credit losses on loans and leasescollective ACL compared with relevant credit risk factors, current collateral valuations, and consistency with credit trends and identified limitations of the underlying quantitative models.on loans and leases related to the multi-family and commercial real estate portfolio segments estimate by evaluating the:
have served asevaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s fair value measurements of acquired loans and the CDI asset at the acquisition date. This included controls related to the (1) determination of certain significant assumptions used in the discounted cash flow methodologies for acquired loans and the CDI asset, and (2) assessment of the overall fair value measurement for acquired loans and the CDI asset. We evaluated the Company’s process to determine the estimated fair value of the CDI asset at the acquisition date by testing certain sources of data and subjective assumptions that the Company used and considered the relevance and reliability of such data and subjective assumptions. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:since 1993.judgment was involved in the assessment of the internal valuation model and significant unobservable assumptions, which included option-adjusted spread and constant prepayment rate. There was also a high degree of subjectivity and potential for management bias related to the timing and magnitude of adjustments made to the significant assumptions used in the valuation./s/ KPMG LLP We have served as the Company’s auditor since 1993. New York, New York February 25, 2022March 14, 2024140Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm2021,2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained in all material respects, effective internal control over financial reporting as of December 31, 2021,2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.20212023 and 2020,2022, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021,2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 25, 2022March 14, 2024 expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP February 25, 2022March 14, 2024141Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosures ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREItem 9A. Controls and Procedures None.ITEM 9A. CONTROLS AND PROCEDURESreport.report because of the material weaknesses in internal control over financial reporting described below. Notwithstanding the material weaknesses, based on additional analyses and other procedures performed, management concluded that the financial statements included in this report fairly present in all material respects our financial position, results of operations, capital position, and cash flows for the periods presented in conformity with GAAP.Disclosurereporting.reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our system of internal control is designed under the supervision of management, including our Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles (“GAAP”).assets;assets of the Company; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are made only in accordance with the authorization of management and the Boards of Directors of the Company and the Bank; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on our financial statements.ProjectionsAlso, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions or that the degree of compliance with policies and procedures may deteriorate.2021,2023, management assessed the effectiveness of the Company’s internal control over financial reporting based upon the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected on a timely basis.upon itson this assessment, because of the following material weaknesses, management concluded that the Company’sCompany did not maintain effective internal control over financial reporting as of December 31, 2020 was2023.using this criteria.risk assessment and monitoring activities.The effectivenessCompany’sallowance for credit losses on loans and leases.2021 has been audited by KPMG LLP, an2023.thatKPMG LLP, which audited the Company’s2023 consolidated financial statements as of and for the year ended December 31, 2020, as stated in their report, included in Item 8 on the preceding page, which expressesthis Form 10-K, has expressed an unqualifiedadverse opinion on the effectiveness of the Company’s internal control over financial reporting. KPMG LLP’s report appears on page 144 of this Annual Report on Form 10-K.December 31, 2021.Directors with extensive experience as financial experts in our industry and backgrounds in risk management. Additionally, several members of the Board of Directors resigned.142ThereItem 9B. Other Information Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ITEM 9B. OTHER INFORMATIONNone.ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONSNot applicable143Item 10. Directors, Executive Officers of the Registrant and Corporate Governance IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCEon June 1, 2022for fiscal year 2024 (hereafter referred to as our “2022“2024 Proxy Statement”) under the captions “Information with Respect to Nominees, Continuing Directors, and Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Meetings and Committees of the Board of Directors,” and “Corporate Governance,” and is incorporated herein by this reference.Item 11. Executive Compensation ITEM 11. EXECUTIVE COMPENSATION20222024 Proxy Statement under the captions “Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation,” “Compensation Discussion and Analysis,” “Executive Compensation and Related Information,” and “Director Compensation,” and is incorporated herein by this reference.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS2021:2023:
Securities to Be
Issued Upon
ExerciseWeighted Average
Exercise Price (1)Number of securities to beSecuritiesissued upon exercise of
outstanding options,
warrants, and rightsWeighted-average
exercise price of
outstanding options,
warrants, and rightsNumber of securitiesRemaining Available
remaining available
for future issuanceFuture Issuanceunder equityUnder Equitycompensation plansCompensation Plans
(excluding securities
reflected
in column (a))Plan category(a)(b)(c)$ —16,143,893 —8,548,783— ———$ — 16,143,893 —8,548,78320222024 Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners” and “Information with Respect to Nominees, Continuing Directors, and Executive Officers.”Item 13. Certain Relationship and Related Transactions, and Director Independence 14420222024 Proxy Statement under the captions “Transactions with Certain Related Persons” and “Corporate Governance,” respectively, and is incorporated herein by this reference.Item 14. Principal Accounting Fees and Services ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES, New York, New York,, Auditor Firm ID: 185.185.20222024 Proxy Statement under the caption “Audit and Non-Audit Fees,” and is incorporated herein by this reference.145Item 15. Exhibits, Financial Statement Schedules PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESAsas Part of Thisthis Report20202023 and 2021;2021;2021;2021;2023; and 4.4(8)(11)146 (9)(12) 4.6Robert Wann, Thomas R. Cangemi, James J. Carpenter, and John J. Pinto** Pinto(10) (13)Officers**Officers (11)(14)Plan**Plan (11)(14)Bank**Bank (12)(15)Bank**Bank (11)(14)Plan**Plan (11)(14)** (13)(16)** (14)(17)10.910.1110.10ConsultingEmployment Agreement between New York Community Bancorp, Inc. and James J. Carpenter** John T. Adams(16)(19)10.1110.13, 2020 Omnibus Incentive Plan** effective December 1, 2022)(17)(21)10.1210.1410.15 10.16 10.17 10.18 21.010.20Subsidiaries information incorporated hereinInvestment Agreement, dated as of March 7, 2024 (as amended on March 11, 2024), by reference to Part I, “Subsidiaries”and between New York Community Bancorp, Inc. and affiliates of funds managed by Reverence Capital Partners LLC(9)22.02122 23.0February 25, 2022March 14, 2024 (attached hereto)32.0101101.INSThe following materials fromXBRL Instance Document – the Company’s Annual Report on Form 10-K forinstance document does not appear in the year ended December 31, 2021, formatted inInteractive Data File because XBRL tags are embedded within the Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Income and Comprehensive Income, (iii) the Consolidated Statements of Changes in Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.Inline XBRL Taxonomy Extension Schema Document. Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 0-22278)(3)(6)147(4)(7)(5)(8)(6)(9)Company’s Form 10-K for the year ended December 31, 2016 (File No. 1-31565)(7)(10)(8)(11)(9)(12)(10)(13)(11)(14)(12)(15)(13)(16)(14)(17)(15)(18)Incorporated by reference to Exhibits filed with the Company’s Registration Statement filed on Form S-8 filed, Registration No. 333-241023November 6, 2018December 1, 2022 (File No. 1-31565)(16)(21)Incorporated by reference to Exhibit 10.1 to Flagstar Bancorp, Inc.’s Form 10-Q filed with the Securities and Exchange Commission on November 6, 2015 (File No. 1-16577)10-K/A10-K for the year ended December 31, 20192022 (File No. 1-31565)(17)(23)Incorporated by reference to Exhibits to the Company’s Current Report on Form 8-K (File No. 1-31565), as filed with the Securities and Exchange Commission on March 8, 2024Registration Statement filed on Form S-8 filed on August 5, 2020. Registration10-K for the year ended December 31, 2021 (File No. 333-2410231-31565)Item 16. Form 10-K Summary ITEM 16. FORM 10-K SUMMARYNone.148SIGNATURESFebruary 25, 2022DATE:New York Community Bancorp, Inc. (Registrant) /s/ Alessandro P. DiNello /s/ Thomas R. CangemiAlessandro P. DiNello Thomas R. CangemiChairman, President and Chief Executive Officer(Principal Executive Officer) Thomas R. CangemiAlessandro P. DiNello2/25/222/25/22Thomas R. CangemiAlessandro P. DiNelloChairman, President and Chief Executive Officer(Principal Executive Officer)/s/ Alessandro P. DiNello 3/14/24 /s/ Bryan L Marx 3/14/24 Bryan L Marx Principal Accounting Officer /s/ Dominick CiampaMarshall Lux2/25/22/s/ Hanif W. Dahya2/25/22Dominick CiampaHanif W. DahyaDirectorDirector/s/ Leslie D. Dunn2/25/22/s/ James J. O’Donovan2/25/22Leslie D. DunnJames J. O’DonovanDirectorDirector/s/ Lawrence Rosano, Jr.2/25/22/s/ Ronald A. Rosenfeld2/25/22Lawrence Rosano, Jr.Ronald A. RosenfeldDirectorDirector2/25/22/s/ Robert Wann2/25/22Lawrence J. Savarese Presiding Director Director Robert Wann/s/ Peter Schoels/s/ David L. Treadwell 3/14/24 David L. Treadwell Director Director Senior Executive Vice President,Chief Operating Officer, and Director149