Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “seek,” “strive,” “try,” or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. Although we believe that our plans, intentions, and expectations as reflected in these forward-looking statements are reasonable, we can give no assurance that they will be achieved or realized.
Our ability to predict results or the actual effects of our plans and strategies is inherently uncertain. Accordingly, actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements contained in this report.
There are a number of factors, many of which are beyond our control, that could cause actual conditions, events, or results to differ significantly from those described in our forward-looking statements. These factors include, but are not limited to:
others;
1
| Term | Definition | Term | Definition | |||||||||||||||||
| ACL | Allowance for Credit Losses | FHLB-NY | Federal Home Loan Bank of New York | |||||||||||||||||
| ADC | Acquisition, development, and construction loan | FOMC | Federal Open Market Committee | |||||||||||||||||
| ALCO | Asset and Liability Management Committee | FRB | Federal Reserve Board | |||||||||||||||||
| AOCL | Accumulated other comprehensive loss | FRB-NY | Federal Reserve Bank of New York | |||||||||||||||||
| ASC | Accounting Standards Codification | FTEs | Full-time equivalent employees | |||||||||||||||||
| ASU | Accounting Standards Update | GAAP | U.S. generally accepted accounting principles | |||||||||||||||||
| BaaS | Banking as a Service | GLBA | The Gramm Leach Bliley Act | |||||||||||||||||
| BOLI | Bank-owned life insurance | GNMA | Government National Mortgage Association | |||||||||||||||||
| BP | Basis point(s) | GSE | Government-sponsored enterprises | |||||||||||||||||
| BTFP | Bank Term Funding Program | HELOC | Home Equity Line of Credit | |||||||||||||||||
| C&I | Commercial and industrial loan | HELOAN | Home Equity Loan | |||||||||||||||||
| CDs | Certificates of deposit | HPI | Housing Price Index | |||||||||||||||||
| CECL | Current Expected Credit Loss | LGG | Loans with government guarantees | |||||||||||||||||
| CFPB | Consumer Financial Protection Bureau | LHFS | Loans Held-for-Sale | |||||||||||||||||
| CMOs | Collateralized mortgage obligations | LIBOR | London Interbank Offered Rate | |||||||||||||||||
| CMT | Constant maturity treasury rate | LTV | Loan-to-value ratio | |||||||||||||||||
| CPI | Consumer Price Index | MBS | Mortgage-backed securities | |||||||||||||||||
| CPR | Constant prepayment rate | MSRs | Mortgage servicing rights | |||||||||||||||||
| CRA | Community Reinvestment Act | NIM | Net interest margin | |||||||||||||||||
| CRE | Commercial real estate loan | NOL | Net operating loss | |||||||||||||||||
| DIF | Deposit Insurance Fund | NPAs | Non-performing assets | |||||||||||||||||
| DFA | Dodd-Frank Wall Street Reform and Consumer Protection Act | NPLs | Non-performing loans | |||||||||||||||||
| DSCR | Debt service coverage ratio | NPV | Net Portfolio Value | |||||||||||||||||
| EPS | Earnings per common share | NYSE | New York Stock Exchange | |||||||||||||||||
| ERM | Enterprise Risk Management | OCC | Office of the Comptroller of the Currency | |||||||||||||||||
| ESOP | Employee Stock Ownership Plan | OREO | Other real estate owned | |||||||||||||||||
| EVE | Economic Value of Equity at Risk | PAA | Purchase accounting adjustments | |||||||||||||||||
| Fannie Mae | Federal National Mortgage Association | PSAs | Performance-Based Restricted Stock Units | |||||||||||||||||
| FASB | Financial Accounting Standards Board | ROU | Right of use asset | |||||||||||||||||
| FDI Act | Federal Deposit Insurance Act | RSAs | Restricted Stock Awards | |||||||||||||||||
| FDIC | Federal Deposit Insurance Corporation | SBA | Small Business Administration | |||||||||||||||||
| FHA | Federal Housing Administration | Signature | Signature Bridge Bank, N.A. | |||||||||||||||||
| FHFA | Federal Housing Finance Agency | SEC | U.S. Securities and Exchange Commission | |||||||||||||||||
| FHLB | Federal Home Loan Bank | SOFR | Secured Overnight Financing Rate | |||||||||||||||||
| Freddie Mac | Federal Home Loan Mortgage Corporation | TDR | Troubled debt restructurings | |||||||||||||||||
2
In addition, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control.
Furthermore, on an ongoing basis, we evaluate opportunities to expand through mergers and acquisitions and opportunities for strategic combinations with other banking organizations. Our evaluation of such opportunities involves discussions with other parties, due diligence, and negotiations. As a result, we may decide to enter into definitive arrangements regarding such opportunities at any time.
In addition to the risks and challenges described above, these types of transactions involve a number of other risks and challenges, including:
3
See Part I, Item 1A, “Risk Factors” in this annual report and in our other SEC filings for a further discussion of important risk factors that could cause actual results to differ materially from our forward-looking statements.
Readers should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this report. We do not assume any obligation to revise or update these forward-looking statements except as may be required by law.
4
GLOSSARY
BARGAIN PURCHASE GAIN
CHARGE-OFF
DERIVATIVE
5
6
YIELD
•LIST OF ABBREVIATIONS AND ACRONYMSconditions in the securities markets and real estate markets or the banking industry;
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PART I
ITEM 1. BUSINESS
General
9
While we continue to originate ADC and C&I loans for investment, such loans represent a small portion of our loan portfolio as compared to multi-family, CRE loans, and specialty finance loans.
10
The 21Parent Company also has four direct subsidiaries of the(including Flagstar Bank, are:
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The 12 subsidiaries of Bank-owned entities are:
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N.A). NYB Realty Holding Company, LLC, a subsidiary of the Bank, owns interests in 10 additional active entities organized as indirect wholly-owned subsidiaries to own interests in various real estate properties.
12
See Note 12 “Borrowed- Borrowed Funds,” in Item 8, “Financial Statements and Supplementary Data,” for a further discussion of the Company’s special business trusts. The Parent Company also has one non-banking subsidiary that was established in connection with the acquisition of Atlantic Bank of New York and two non-banking insurance subsidiaries that were acquired in connection with the Flagstar acquisition.
13
14
15
16
17
elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of CRE lending.
18
Enforcement
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.
20
evaluate the institution’s record of making loans in its assessment areas; (2) investment, to evaluate the institution’s record of investing in community development projects, affordable housing, and programs benefiting low- or moderate-income individuals and businesses; and (3) service, to evaluate the institution’s delivery of services through its branches, ATMs and other offices. The CRA requires each federal banking agency, in connection with its examination of a financial institution, to assess and assign one of four ratings to the institution’s record of meeting the credit needs of the community and to take such record into account in its evaluation of certain applications by the 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 CRA also requires that all institutions make public disclosure of their CRA ratings.
The final rule (i) encourages banks to expand access to credit, investment and banking services in low- and moderate-income communities, (ii) adapts to changes in the banking industry, including mobile and online banking, (iii) provides greater clarity and consistency in the application of CRA regulations and (iv) tailors CRA evaluations and data collection to bank size and type.Under the final rule, the agencies will evaluate bank performance across the varied activities they conduct and communities in which they operate so that the CRA continues to be an effective tool to address inequities in access to credit and financial services.The final rule also updates existing CRA regulations to evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, branchless banking, and hybrid models. In addition, the final rule implements a new metrics-based approach to evaluating bank retail lending and community development financing, using benchmarks based on peer and demographic data.Most of the final rule’s requirements will become effective beginning on January 1, 2026 and the remaining requirements, including the final rule’s data reporting requirements, will become effective on January 1, 2027.
21
Cybersecurity
22
under the Sarbanes-Oxley Act have several requirements, including having those Officers certify that they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal controls over financial reporting; that they have made certain disclosures to our auditors and the Audit Committee of the Board of Directors about our internal control over financial reporting; and they have included information in our quarterly and annual reports about their evaluation and whether there have been changes in our internal control over financial reporting or in other factors that could materially affect internal control over financial reporting.
23
to supervision and examination by applicable state regulatory authorities in the jurisdictions in which we may offer consumer financial products or services.
24
own financial requirements. We are also subject to examination by Fannie Mae, FHA and VA to assure compliance with the applicable regulations, policies and procedures. Mortgage origination activities are subject to, among others, the Equal Credit Opportunity Act, the Federal Truth-in-Lending Act, the Fair Housing Act, the Fair Credit Report Act, the National Flood Insurance Act and the Real Estate Settlement Procedures Act and related regulations that prohibit discrimination and require the disclosure of certain basic information to mortgagors concerning credit terms and settlement costs. Our mortgage banking operations are also affected by various state and local laws and regulations and the requirements of various private mortgage investors.
Mortgage Restructuring”), (b) affiliates of funds managed by Hudson Bay Capital Management, LP (“
Legacy Flagstar proactively rightsized its mortgage operation throughout 2022Hudson Bay”), (c) affiliates of funds managed by Reverence Capital Partners L.P. (“Reverence”), and (d) certain other investors (the “Other Investors” and, collectively with Liberty, Reverence and Hudson Bay, the “Investors”, and the investments agreements entered into with each of the Investors on March 7, 2024, collectively, the “Original Investment Agreements”). On March 11, 2024, NYCB entered into separate amendments to adjust for market conditions. The mortgage business is cyclical by naturethe Original Investment Agreements with Liberty (such agreement, as amended, the “Liberty Investment Agreement”), Hudson Bay (such agreements, as amended, the “Hudson Bay Investment Agreements”) and challenging conditions are expectedReverence (such agreement, as amended, the “Reverence Agreement” and, collectively with the Liberty Agreement, the Hudson Bay Agreements and the Original Investment Agreements of the Other Investors, the “Investment Agreements”).
We expect that these actions will optimize our mortgage business and improve profitability duringInvestment Agreements, on March 11, 2024, the current mortgage down cycle, while still allowing us to participateInvestors invested an aggregate of approximately $1.05 billion in the upside onceCompany in exchange for the interest rate cycle becomes favorable. This allows us to maintainsale and issuance by the Company of (a) 76,630,965 shares of our common stock, at a retail presence withinpurchase price per share of $2.00, (b) 192,062 shares of a new series of our nine-state footprint, leveragespreferred stock, par value $0.01 per share, designated as Series B Noncumulative Convertible Preferred Stock (the “Series B Preferred Stock”), at a price per share of $2,000, each share of which is convertible into 1,000 shares of common stock (or, in certain limited circumstances, one share of Series C Preferred Stock (as defined below)), (c) 256,307 shares of a new series of our marketingpreferred stock, par value $0.01 per share, designated as Series C Noncumulative Convertible Preferred Stock (the “Series C Preferred Stock”, together with the Series B Preferred Stock, the “Preferred Stock”), at a price per share of $2,000, each share of which is convertible into 1,000 shares of common stock, and branding spend, and reduces risk. More importantly, it leaves our position within(d) warrants (the “Issued Warrants”), which may not be exercised until 180 days after issuance thereof, affording the mortgage industry intact. We remain oneholder thereof the right, until the seven-year anniversary of the largest bank originators,issuance of such Issued Warrant, to purchase for $2,500 per share, shares of a new class of non-voting, common-equivalent preferred stock of the 6th largest sub-servicerCompany (the “Series D NVCE Stock”), each share of Series D NVCE Stock is convertible into 1,000 shares of common stock (or, in certain limited circumstances, one share of Series C Preferred Stock), and all of which shares of Series D NVCE Stock, upon issuance, will represent the right (on an as converted basis) to receive 315,000,000 million shares of common stock.
ITEM
26
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 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. 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.
27
repayment of the loans often depends on the successful operation of the properties and the sale of such properties securing the loans. Such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one-to-four family residential loans. Also, many of our borrowers have more than one of these types of loans outstanding. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development with respect to a one-to-four family residential real estate loan. In addition, if loans that are collateralized by real estate become troubled and the value of the real estate has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for loan losses and adversely affect our operating results and financial condition.
28
29
30
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.
31
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.
Higher inflation could have a negative impact on our financial results and operations.
Inflation can negatively impact the Company by increasing our labor costs, through higher wages and higher interest rates, which may negatively affect the market 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, which may negatively impact the net operating income on the properties which we lend on and could impair a borrower's ability to repay their mortgage.
32
sales for the Bank and for other financial institutions have risen and fallen in response to these and other factors. An increase in interest rates and/or a decrease in our mortgage production volume could have a materially adverse effect on our operating results. The 10-year U.S. Treasury rate was 3.883.97 percent at December 31, 2022,2023, and averaged 2.952.96 percent during 2022, 1512023, 101 basis points higher than average rates experienced during 2021.2022. The sustained higher rates experienced throughout 20222023 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.
33
provided by Fannie Mae and Freddie Mac or the insurance provided by the FHA could also 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 any future increases in these fees would adversely affect our business, financial condition and results of operations.
34
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. As a resultassets acquired and liabilities assumed and any decrease in the amount of our acquisition of Flagstar, we are required to seek regulatory approval from the OCC for the payment of any dividend to the Bancorp through at least the period ending November 1, 2024. If 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 elimination 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. As a result of our acquisition of Flagstar, we are 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, which could restrict our ability to pay the common stock dividend. Any reduction or elimination of our common stock dividend in theoperations and future could adversely affect the market price of our common stock.prospects.
35
performance, the models they are based on may prove to be inadequate or inaccurate because of other flaws in their design or implementation. If the models we use in the process of managing our interest rate and other risks prove to 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.
Any failure, breach, or interruption in service involving our systems or those
36
our customers, to adequately process and account for our customers’ transactions, or otherwise conduct our business could be adversely impacted by any disruption in the services provided by these third parties; their failure to handle current or higher volumes of usage; or any difficulties we may encounter in communicating with them. Replacing these third-party providers also could entail significant delay and expense. 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.
37
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.
38
burden and the system requirements associated with complying with these rules or potential changes to these rules could impact our mortgage volume and increase costs. These arrangements with third-party mortgage originators and the fees payable by us to such third parties could also be subject to future regulatory scrutiny and restrictions.
39
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.
| Item 1B. | Unresolved Staff Comments | ||||
| Item 1C. | Cybersecurity | ||||
| Item 2. | Properties | ||||
| Item 3. | Legal Proceedings | ||||
40
ITEM 3. LEGAL PROCEEDINGS
Not applicable.Lemm, Jr. v. New York Community Bancorp, Inc., et al., Case No. 1:24-cv-00903, filed on February 6, 2024 in the United States District Court for the Eastern District of New York. This action, which seeks unspecified compensatory damages to be proven at trial, alleges violations of the federal securities laws, including Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5, with respect to disclosures concerning the Company’s business, operations and prospects, particularly regarding the impact of the Flagstar and Signature transactions and the Bank’s commercial real estate loan portfolio and related matters, that were made in the Company’s public SEC filings and press releases during the period beginning on March 1, 2023 and ending on January 30, 2024. The Company intends to vigorously defend this action and any related actions.
| Item 4. | Mine Safety Disclosures | ||||
| 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*
r
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 | ||||||||
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| 12/31/2017 |
| 12/31/2018 |
| 12/31/2019 |
| 12/31/2020 |
| 12/31/2021 |
| 12/31/2022 |
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New York Community Bancorp, Inc. |
| $ | 100.00 |
| $ | 76.76 |
| $ | 103.92 |
| $ | 97.88 |
| $ | 120.07 |
| $ | 90.61 |
|
S&P Mid-Cap 400 Index |
| $ | 100.00 |
| $ | 88.92 |
| $ | 112.21 |
| $ | 127.54 |
| $ | 159.12 |
| $ | 138.34 |
|
S&P U.S. BMI Banks Index |
| $ | 100.00 |
| $ | 83.54 |
| $ | 114.74 |
| $ | 100.10 |
| $ | 136.10 |
| $ | 112.89 |
|
| (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 |
|
| Total Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs |
| ||||
First Quarter 2022 |
|
| 901,934 |
| $ |
| 12.93 |
| $ |
| 11 |
|
|
| — |
|
Second Quarter 2022 |
|
| 809,996 |
|
|
| 8.88 |
|
|
| 7 |
|
|
| 791,101 |
|
Third Quarter 2022 |
|
| 107,022 |
|
|
| 9.16 |
|
|
| 1 |
|
|
| 80,609 |
|
Fourth Quarter 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
October 1-31, 2022 |
|
| 236 |
|
|
| 8.54 |
|
|
| — |
|
|
| — |
|
November 1-30, 2022 |
|
| 2,173 |
|
|
| 9.90 |
|
|
| — |
|
|
| — |
|
December 1-31, 2022 |
|
| 515,574 |
|
|
| 8.72 |
|
|
| 5 |
|
|
| — |
|
Total Fourth Quarter 2022 |
|
| 517,983 |
|
|
| 8.72 |
|
|
| 5 |
|
|
| — |
|
2022 Total |
|
| 2,336,935 |
|
|
| 10.42 |
| $ |
| 24 |
|
|
| 871,710 |
|
44
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXECUTIVE SUMMARY
For the twelve monthsyear ended December 31, 2022,2023, net loss was $79 million as compared to net income wasof $650 million an increase of $54 million or 9 percent compared to the $596 million the Company reported for the twelve monthsyear ended December 31, 2021.2022. Net incomeloss available to common stockholders for the twelve monthsyear ended December 31, 20222023 was $112 million, compared to net income $617 million also up $54 million and 10 percent compared tofor the twelve monthsyear ended December 31, 2021. On a per share basis, this translates into diluted2022. Diluted (loss) earnings per share of $1.26 in full-year 2022, up 5 percenttotaled $(0.16) for the year ended December 31, 2023 compared to the $1.20 we reported in full-year 2021. In terms of profitability, our full-year 2022 results reflect a return on average assets of 1.01 percent compared to 1.04 percent in full-year 2021 and a return on average common stockholders' equity of 9.38 percent$1.26 for the full-year 2022 versus 8.75 percentyear ended December 31, 2022.
Our specialty finance portfolio increased $912 million or 26 percent to $4.4 billion at December 31, 2022. Total commitments for the specialty finance portfolio stood at $7.4$12.3 billion at December 31, 2022. The remainingmajority of the increase is attributable to the $9.9 billion of C&I loans acquired in the Signature Transaction along with continued growth through new originations.
Loans held for sale were $1.1 billion at December 31, 2022, resulting from the Flagstar acquisition. These loans consisted of one-to-four family residential mortgage loans pending sale for which we have elected the fair value option.
At December 31, 2022, multi-family loans represented 55 percent of total loans, compared to 76 percent at December 31, 2021, commercial loans (including specialty financeSignature transaction, and CRE loans) represented 33 percent compared to less than 25 percent at December 31, 2021, while residential loans represented 8 percent.
Deposit Base
Total deposits at December 31, 2022 were $58.7 billion, up $23.7 billion or 67 percent compared to $35.1 billion at December 31, 2021. Deposit growth was driven by the addition of $16.0 billion of deposits from the Flagstar acquisition and $7.6 billion growth in loan-related deposits and BaaS deposits. Non-interest-bearing deposits were $12.1 billion at December 31, 2022 and represented 21 percent of total deposits, compared to $4.5 billion, or 13 percent as of December 31, 2021. Excluding the impact of the Flagstar acquisition, deposits increased $7.6 billion or 22 percent during 2022. Loan-related deposits totaled $4.4 billion at December 31, 2022 up $389 million or 10 percent as compared to $4.0 billion at December 31, 2021.
45
In addition, our BaaS deposits totaled $11.5 billion at December 31, 2022, up $10.5 billion compared to $1.0 billion at December 31, 2021. Our BaaS deposits fall into three verticals: traditional BaaS, banking as a service for government agencies and states, which includes the U.S. Treasury's prepaid debit card program, and mortgage as a service, which caters to mortgage companies and consists primarily of escrow deposit accounts for principal, interest, and tax payments. The majority of the year-over-year growth was in the government banking as a service vertical and related to certain prepaid debit card programs.
Net Interest Income
During the twelve months ended December 31, 2022, our net interest income grew driven by our higher asset base. Net interest income for full-year 2022 was $1.4 billion, up $107 million or 8 percent compared to $1.3 billion for the twelve months ended December 31, 2021. Average interest-earning assets increased $7.0 billion or 13 percent over the course of the year to $59.3 billion primarily due to organic loan growth, and the Flagstar acquisition. The average yield increased 30 basis points to 3.53 percent. Average interest-bearing liabilities totaled $51.4 billion, up $6.2 billion or 14 percent, while the average cost of funds rose 47 basis points to 1.35 percent.
For the twelve months ended December 31, 2022, the NIM declined 12 basis points to 2.35 percent compared to 2.47 percent for the twelve months ended December 31, 2021 primarily driven byalong with the impact of higher interest rates on the liability sensitive balance sheet through November 30, 2022. With the Flagstar acquisition we remain slightly liability sensitive. See Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,”. Prepayment income contributed eight basis pointsrates.
Asset Quality
Asset quality remained strong during 2022 as increases in NPAs were substantially due to changes in asset mix related to the Flagstar acquisition and centered on non-performing one-to-four family residential and home equity loans. Total NPAs0.17 percent at December 31, 2022 were $153 millionwhile NPL to total loans equaled 0.51 percent compared to $41 million0.20 percent at December 31, 2021,2022. The increase in NPLs was primarily driven by NPLsa $125 million increase in multi-family loans and a $108 million in commercial real estate loans. Repossessed assets acquiredof $14 million were slightly higher compared to $12 million in the Flagstar acquisition. At December 31, 2022, NPAsprior year.
In this capacity, Mr. DiNello serves as the most senior executive officer of the Company.
46
Year-Over-Year Comparison
The following factors contributed to the year-over-year increase in net interest income:
For the Years Ended December 31, 2022 2021 2020 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) $ 49,376 $ 1,848 3.74 % $ 43,200 $ 1,525 3.53 % $ 42,028 $ 1,542 3.67 % Securities (2)(3) 7,448 200 2.69 6,625 156 2.35 5,965 163 2.73 Reverse repurchase agreements 460 15 3.24 430 4 1.05 20 — 0.32 Interest-earning cash and cash equivalents 1,988 29 1.47 2,016 4 0.17 1,088 3 0.27 Total interest-earning assets 59,272 2,092 3.53 52,271 1,689 3.23 49,101 1,708 3.48 Non-interest-earning assets 5,130 5,275 5,008 Total assets $ 64,402 $ 57,546 $ 54,109 LIABILITIES AND STOCKHOLDERS’ EQUITY: Interest-bearing deposits: Interest-bearing checking and money market $ 17,910 $ 226 1.26 % $ 12,829 $ 31 0.24 % $ 10,965 $ 57 0.52 % Savings accounts 9,336 60 0.64 7,612 28 0.36 5,520 32 0.57 Certificates of deposit 8,772 97 1.11 9,094 55 0.60 12,412 217 1.75 Total interest-bearing deposits 36,018 383 1.06 29,535 114 0.38 28,897 306 1.06 Short term borrowed funds 2,408 56 2.32 2,343 8 0.34 2,319 16 0.70 Other borrowed funds 12,982 257 1.99 13,366 278 2.08 12,514 286 2.28 Total Borrowed funds 15,390 313 2.04 15,709 286 1.82 14,833 302 2.03 Total interest-bearing liabilities 51,408 696 1.35 45,244 400 0.88 43,730 608 1.39 Non-interest-bearing deposits 5,124 4,578 2,957 Other liabilities 787 790 714 Total liabilities 57,319 50,612 47,401 Stockholders’ equity 7,083 6,934 6,708 Total liabilities and stockholders’ equity $ 64,402 $ 57,546 $ 54,109 Net interest income/interest rate spread $ 1,396 2.17 % $ 1,289 2.35 % $ 1,100 2.09 % Net interest margin 2.35 % 2.47 % 2.24 % Ratio of interest-earning assets to interest-bearing 1.15x 1.16x 1.12x Year Ended Year Ended December 31, 2022 December 31, 2021 Compared to Year Ended Compared to Year Ended December 31, 2021 December 31, 2020 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 $ 227 $ 96 $ 323 $ 48 $ (65 ) $ (17 ) Securities 21 23 44 28 (35 ) (7 ) Reverse repurchase agreements — 11 11 4 — 4 Interest Earning Cash & Cash Equivalent — 25 25 1 — 1 Total 248 155 403 81 (100 ) (19 ) INTEREST-BEARING LIABILITIES: Interest-bearing checking and money $ 17 $ 178 $ 195 $ 12 $ (38 ) $ (26 ) Savings accounts 7 25 32 (148 ) 144 (4 ) Certificates of deposit (2 ) 44 42 (47 ) (115 ) (162 ) Short Term Borrowed Funds — 48 48 — (8 ) (8 ) Other Borrowed Funds (8 ) (13 ) (21 ) 25 (33 ) (8 ) Totals 14 282 296 (158 ) (50 ) (208 ) Change in net interest income $ 234 $ (127 ) $ 107 $ 239 $ (50 ) $ 189 (dollars in millions) Remaining fair value adjustment at December 31, 2022 Estimated effective duration Amortization method One-to-four family first mortgage $ (295 ) 4 years Interest method Commercial real estate (5 ) 2 years Interest method Commercial and industrial (25 ) 2 years Interest method Consumer and other (136 ) 3 years Interest method Core deposit and other intangibles 287 9 years Sum of years digits and straight-line Deposits 36 2 years Interest method Other borrowings 40 7 years Interest method For the Years Ended December 31, (in millions) 2022 2021 2020 Fee income $ 27 $ 23 $ 22 BOLI income 32 29 32 Net (loss) gain on securities (2 ) — 1 Net return on mortgage servicing rights 6 — — Net gain on loan sales 5 — — Loan administration income 3 — — Bargain purchase gain 159 — — Other income: Third-party investment product sales 6 5 4 Other 11 4 2 Total other income 17 9 6 Total non-interest income $ 247 $ 61 $ 61 2022. For the At December 31, 2022 2021 (dollars in millions) Amount Percent of Amount Percent of Mortgage Loans: Multi-family $ 38,130 55.3 % $ 34,628 75.7 % Commercial real estate 8,526 12.4 6,701 14.7 One-to-four family first mortgage 5,821 8.4 160 0.3 Acquisition, development, and 1,996 2.8 209 0.5 Total mortgage loans 54,473 78.9 41,698 91.2 Other Loans: Commercial and industrial 12,276 17.8 4,034 8.8 Other loans 2,252 3.3 6 0.0 Total other loans held for investment 14,528 21.1 4,040 8.8 Total loans and leases held for investment $ 69,001 100.0 $ 45,738 100.0 Allowance for credit losses on loans and leases (393 ) (199 ) Total loans and leases held for investment, net $ 68,608 $ 45,539 Loans held for sale, at fair value 1,115 — Total loans and leases, net $ 69,723 $ 45,539 For the Years Ended December 31, 2022 2021 (dollars in millions) Amount Percent Amount Percent Mortgage Loan Originated for Investment: Multi-family $ 8,387 49.2 % $ 8,256 62.9 % Commercial real estate 1,086 6.4 893 6.8 One-to-four family first mortgage 328 1.9 168 1.3 Acquisition, development, and construction 149 0.9 119 0.9 Total mortgage loans originated for investment 9,950 58.4 9,436 71.9 Other Loans Originated for Investment: Specialty finance 6,001 35.2 3,153 24.0 Commercial and industrial 1,016 6.0 536 4.1 Other 83 0.4 6 0.0 Total other loans originated for investment 7,100 41.6 3,695 28.1 Total loans originated for investment $ 17,050 100.0 % $ 13,131 100.0 % December 31, 2022. to a range of five points to one point over years six through ten or eight through twelve. For example, a ten-year multi-family loan that prepays in year three would generally be expected to pay a prepayment penalty equal to three percentage points of the remaining principal balance. A twelve-year multi-family loan that prepays in year one or two would generally be expected to pay a penalty equal to five percentage points. duration. At December 31, 2022 Multi-Family Loans (dollars in millions) Amount Percent New York City: Manhattan $ 7,330 19.23 % Brooklyn 6,385 16.75 Bronx 3,715 9.74 Queens 2,889 7.58 Staten Island 126 0.33 Total New York City $ 20,445 53.63 % New Jersey 5,107 13.39 Long Island 574 1.51 Total Metro New York $ 26,126 68.53 % Other New York State 1,157 3.02 Pennsylvania 3,760 9.86 Florida 1,690 4.43 Ohio 1,006 2.64 Arizona 442 1.16 All other states 3,949 10.36 Total $ 38,130 100.00 % At December 31, 2022 Commercial Real Estate Loans (dollars in millions) Amount Percent New York $ 5,081 59.59 % Michigan 1,039 12.19 New Jersey 560 6.57 Pennsylvania 328 3.85 Florida 255 2.99 Ohio 149 1.75 Arizona 73 0.86 All other states 1,041 12.20 Total $ 8,526 100.00 % 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. (in millions) Multi- Commercial One-to- Acquisition, Other Total Amount due: Within one year $ 4,399 $ 1,878 $ 122 $ 1,363 $ 8,960 $ 16,722 After one year: One to five years 22,746 5,394 523 620 3,563 32,846 Over five years to fifteen years 10,961 1,254 1,639 13 1,386 15,253 Over fifteen years 24 — 3,537 — 619 4,180 Total due or repricing after one year 33,731 6,648 5,699 633 5,568 52,279 Total amounts due or repricing, gross $ 38,130 $ 8,526 $ 5,821 $ 1,996 $ 14,528 $ 69,001 Due after December 31, 2023 (in millions) Fixed Adjustable Total Mortgage Loans: Multi-family $ 8,564 $ 25,167 $ 33,731 Commercial real estate 2,040 4,608 6,648 One-to-four family first mortgage 2,402 3,297 5,699 Acquisition, development, and construction 21 612 633 Total mortgage loans 13,027 33,684 46,711 Other loans 2,534 3,034 5,568 Total loans $ 15,561 $ 36,718 $ 52,279 Change from (dollars in millions) December 31, December 31, Amount Percent Loans 30-89 Days Past Due: Multi-family $ 34 $ 57 $ (23 ) -40 % Commercial real estate 2 2 — 0 One-to-four family first mortgage 21 8 13 163 Acquisition, development, and construction — — — NM Other loans 13 — 13 NM Total loans 30-89 days past due $ 70 $ 67 $ 3 4 % Change from (dollars in millions) December 31, December 31, Amount Percent Non-Performing Loans: Non-accrual mortgage loans: Multi-family $ 13 $ 10 $ 3 30 % Commercial real estate 20 16 4 25 One-to-four family first mortgage 92 1 91 9,100 Acquisition, development, and construction — — — — Total non-accrual mortgage loans 125 27 98 363 Non-accrual other loans (1) 16 6 10 167 Total non-performing loans $ 141 $ 33 $ 108 327 Total (in millions) Accruing Non- Total Balance at December 31, 2021 $ 16 $ 13 $ 29 New TDRs — 19 19 Charge-offs — — — Transferred from performing — — — Loan payoffs, including dispositions and — (4 ) (4 ) Balance at December 31, 2022 $ 16 $ 28 $ 44 At or for the Years Ended December 31, 2022 2021 2020 Non-performing loans to total loans 0.20 % 0.07 % 0.09 Non-performing assets to total assets 0.17 0.07 0.08 Allowance for losses on loans to non-performing loans 278.87 611.79 513.55 Allowance for losses on loans to total loans 0.57 0.44 0.45 For the Year Ended December 31, (dollars in millions) 2022 2021 2020 Multi-family Net charge-offs (recoveries) during the period $ 1 $ 1 $ (1 ) Average amount outstanding $ 36,292 $ 32,424 $ 31,322 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 $ 6,964 $ 5,489 $ 6,009 Net charge-offs (recoveries) as a percentage of average loans 0.00 % 0.04 % 0.03 % One-to-Four Family first mortgage Net charge-offs (recoveries) during the period $ - $ 1 $ - Average amount outstanding $ 516 $ 191 $ 314 Net charge-offs (recoveries) as a percentage of average loans 0.00 % 0.52 % 0.00 % Acquisition, Development and Construction Net charge-offs (recoveries) during the period $ - $ - $ - Average amount outstanding $ 203 $ 152 $ 116 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 $ (5 ) $ (6 ) $ 18 Average amount outstanding $ 5,401 $ 4,944 $ 4,267 Net charge-offs (recoveries) as a percentage of average loans -0.09 % -0.12 % 0.42 % Total loans Net charge-offs (recoveries) during the period $ (4 ) $ (2 ) $ 19 Average amount outstanding $ 49,376 $ 43,200 $ 42,028 Net charge-offs (recoveries) as a percentage of average loans -0.01 % 0.00 % 0.04 % 2022 2021 2020 (dollars in millions) Amount Percent of Amount Percent of Amount Percent of Multi-family loans $ 178 55.26 % $ 159 75.71 % $ 150 75 % Commercial real estate loans 46 12.36 17 14.65 24 15.96 One-to-four family first mortgage loans 46 8.44 1 0.35 1 0.55 Acquisition, development, and construction loans 20 2.79 2 0.46 1 0.21 Other loans 103 21.05 20 8.83 18 8.00 Total loans $ 393 100.00 % $ 199 100.00 % $ 194 100.00 % Mortgage- U.S. State, Other Available-for-Sale Debt Due within one year 4.46 % 3.12 % 4.89 % 4.29 % Due from one to five years 3.27 3.14 — 5.58 Due from five to ten years 3.05 1.53 3.72 5.09 Due after ten years 3.61 1.88 4.07 5.35 Total debt securities available for sale 3.58 2.42 3.91 5.32 2023: December 31, (in millions) 2022 Portion of U.S. time deposits in excess of insurance limit $ 3,749 Time deposits otherwise uninsured with a maturity of: 3 months or less $ 969 Over 3 months through 6 months 604 Over 6 months through 12 months 1,269 Over 12 months 907 Total time deposits otherwise uninsured $ 3,749 At December 31, 2022 Actual Minimum (dollars in millions) Amount Ratio Required Common equity tier 1 capital $ 6,335 9.06 % 4.50 % Tier 1 risk-based capital 6,838 9.78 6.00 Total risk-based capital 8,154 11.66 8.00 Leverage capital 6,838 9.70 4.00 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 or for the (dollars in millions) 2022 2021 Stockholders’ Equity $ 8,824 $ 7,044 Less: Goodwill and other intangible assets (2,713 ) (2,426 ) Preferred stock (503 ) (503 ) Tangible common stockholders’ equity $ 5,608 $ 4,115 Total Assets $ 90,144 $ 59,527 Less: Goodwill and other intangible assets (2,713 ) (2,426 ) Tangible assets $ 87,431 $ 57,101 Common stockholders’ equity to total assets 9.23 % 10.99 % Tangible common stockholders’ equity to 6.41 7.21 Book value per common share $ 12.21 $ 14.07 Tangible book value per common share 8.23 8.85 (dollars in millions) Change in Market Value Market Value Economic Net Change Estimated -200 $ 90,388 $ 79,644 $ 10,744 $ 95 0.89 % -100 88,570 77,719 10,851 202 1.90 % - 86,770 76,121 10,649 — — +100 85,050 74,725 10,325 (324 ) (3.04 ) % +200 83,398 73,466 9,932 (717 ) (6.73 ) % 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. December 31, (in millions, except share data) 2022 2021 ASSETS: Cash and cash equivalents $ 2,032 $ 2,211 Securities: Debt securities available-for-sale ($434 and $1,168 pledged at 9,060 5,780 Equity investments with readily determinable fair values, at fair value 14 16 Total securities 9,074 5,796 Loans held for sale, at fair value 1,115 — Loans and leases held for investment, net of deferred loan fees and costs 69,001 45,738 Less: Allowance for credit losses on loans and leases (393 ) (199 ) Total loans and leases held for investment, net 68,608 45,539 Federal Home Loan Bank and Federal Reserve Bank stock, at cost 1,267 734 Premises and equipment, net 491 270 Core deposit and other intangibles 287 — Goodwill 2,426 2,426 Mortgage servicing rights 1,033 — Bank-owned life insurance 1,561 1,184 Other assets 2,250 1,367 Total assets $ 90,144 $ 59,527 LIABILITIES AND STOCKHOLDERS’ EQUITY: Deposits: Interest-bearing checking and money market accounts $ 22,511 $ 13,209 Savings accounts 11,645 8,892 Certificates of deposit 12,510 8,424 Non-interest-bearing accounts 12,055 4,534 Total deposits 58,721 35,059 Borrowed funds: Wholesale borrowings: Federal Home Loan Bank advances 20,325 15,105 Repurchase agreements — 800 Total wholesale borrowings 20,325 15,905 Junior subordinated debentures 575 361 Subordinated notes 432 296 Total borrowed funds 21,332 16,562 Other liabilities 1,267 862 Total liabilities 81,320 52,483 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; 705,429,386 and 490,439,070 7 5 Paid-in capital in excess of par 8,130 6,126 Retained earnings 1,041 741 Treasury stock, at cost (24,212,052 and 25,423,427 shares, respectively) (237 ) (246 ) Accumulated other comprehensive loss, net of tax: Net unrealized (loss) gain on securities available for sale, net of tax of $240 and (626 ) (45 ) Net unrealized loss on pension and post-retirement obligations, net of tax of $18 (46 ) (31 ) Net unrealized gain (loss) on cash flow hedges, net of tax of $(20) and $3, respectively 52 (9 ) Total accumulated other comprehensive loss, net of tax (620 ) (85 ) Total stockholders’ equity 8,824 7,044 Total liabilities and stockholders’ equity $ 90,144 $ 59,527 Years Ended December 31, (in millions, except per share data) 2022 2021 2020 INTEREST INCOME: Loans and leases $ 1,848 $ 1,525 $ 1,542 Securities and money market investments 244 164 166 Total interest income 2,092 1,689 1,708 INTEREST EXPENSE: Interest-bearing checking and money market accounts 226 31 57 Savings accounts 60 28 32 Certificates of deposit 97 55 217 Borrowed funds 313 286 302 Total interest expense 696 400 608 Net interest income 1,396 1,289 1,100 Provision for credit losses 133 3 62 Net interest income after provision for credit loan losses 1,263 1,286 1,038 NON-INTEREST INCOME: Fee income 27 23 22 Bank-owned life insurance 32 29 32 Net (loss) gain on securities (2 ) — 1 Net return on mortgage servicing rights 6 — — Net gain on loan sales 5 — — Loan administration income 3 — — Bargain purchase gain 159 — — Other 17 9 6 Total non-interest income 247 61 61 NON-INTEREST EXPENSE: Operating expenses: Compensation and benefits 354 303 301 Occupancy and equipment 92 88 86 General and administrative 158 127 124 Total operating expense 604 518 511 Intangible asset amortization 5 — — Merger-related expenses 75 23 — Total non-interest expense 684 541 511 Income before income taxes 826 806 588 Income tax expense 176 210 77 Net income $ 650 $ 596 $ 511 Preferred stock dividends 33 33 33 Net income available to common stockholders $ 617 $ 563 $ 478 Basic earnings per common share $ 1.26 $ 1.20 $ 1.02 Diluted earnings per common share $ 1.26 $ 1.20 $ 1.02 Net income $ 650 $ 596 $ 511 Other comprehensive (loss) income, net of tax: Change in net unrealized (loss) gain on securities available for sale, (581 ) (112 ) 42 Change in pension and post-retirement obligations, net of tax of (17 ) 23 (5 ) Change in net unrealized gain (loss) on cash flow hedges, net of tax 64 6 (42 ) Less: Reclassification adjustment for sales of available-for-sale — — (1 ) Reclassification adjustment for defined benefit pension plan, 2 5 5 Reclassification adjustment for net gain on cash flow hedges (3 ) 18 8 Total other comprehensive (loss) income, net of tax (535 ) (60 ) 7 Total comprehensive income, net of tax $ 115 $ 536 $ 518 (in millions, except share data) Shares Preferred Common Paid-in Retained Treasury Accumulated Total Twelve Months Ended December 31, 2022 Balance at December 31, 2021 465,015,643 $ 503 $ 5 $ 6,126 $ 741 $ (246 ) $ (85 ) $ 7,044 Issuance of common stock for business combination 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 income, net of tax — — — — — — (535 ) (535 ) Balance at December 31, 2022 681,217,334 $ 503 $ 7 $ 8,130 $ 1,041 $ (237 ) $ (620 ) $ 8,824 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 loss, 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 ) — — — 0 (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 Years Ended December 31, (in millions) 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 650 $ 596 $ 511 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 133 3 62 Amortization of core deposit intangible 5 — — Depreciation 18 21 24 Amortization of discounts and premiums, net (37 ) (5 ) 11 Net (gain) loss on securities 2 — (2 ) Net (gain) loss on sales of loans (5 ) (1 ) — Net gain on sales of fixed assets (2 ) — — Gain on business acquisition (159 ) — — Stock-based compensation 29 31 29 Deferred tax expense (3 ) (13 ) 219 Changes in operating assets and liabilities: Decrease (increase) in other assets 348 (284 ) (411 ) (Decrease) increase in other liabilities (100 ) (6 ) 9 Purchases of securities held for trading (75 ) (110 ) (15 ) Proceeds from sales of securities held for trading 75 110 15 Change in loans held for sale, net 147 (52 ) (119 ) Net cash provided by operating activities 1,026 290 334 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from repayment of securities available for sale 732 1,728 2,062 Proceeds from sales of securities available for sale 228 — 484 Purchase of securities available for sale (2,242 ) (1,796 ) (2,514 ) Redemption of Federal Home Loan Bank stock 635 92 173 Purchases of Federal Home Loan Bank and Federal Reserve Bank stock (839 ) (112 ) (239 ) Proceeds from bank-owned life insurance, net 16 12 12 Proceeds from sales of loans — 37 3 Purchases of loans (162 ) (161 ) (95 ) Other changes in loans, net (5,019 ) (2,558 ) (912 ) (Purchases) dispositions of premises and equipment, net (3 ) (4 ) 1 Cash acquired in business acquisition 331 — — Net cash used in investing activities (6,323 ) (2,762 ) (1,025 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 7,662 2,622 780 Net increase in short-term borrowed funds 2,550 950 1,150 Proceeds from long-term borrowed funds 9,479 2,072 6,925 Repayments of long-term borrowed funds (13,960 ) (2,544 ) (6,550 ) Net receipt of payments of loans serviced for others (189 ) — — Cash dividends paid on common stock (317 ) (316 ) (316 ) Cash dividends paid on preferred stock (33 ) (33 ) (33 ) Treasury stock repurchased (7 ) — (50 ) Payments relating to treasury shares received for restricted stock award tax payments (17 ) (16 ) (9 ) Net cash provided by financing activities 5,168 2,735 1,897 Net (decrease) increase in cash, cash equivalents, and restricted cash (3) (129 ) 263 1,206 Cash, cash equivalents, and restricted cash at beginning of year (3) 2,211 1,948 742 Cash, cash equivalents, and restricted cash at end of year (3) $ 2,082 $ 2,211 $ 1,948 Supplemental information: Cash paid for interest $ 657 $ 402 $ 633 Cash paid for income taxes 17 471 118 Non-cash investing and financing activities: Transfers to repossessed assets from loans $ — $ 1 $ 1 Securitization of residential mortgage loans to mortgage-backed securities 162 161 53 Transfer of loans from held for investment to held for sale — 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 33 28 22 Business Combination: Fair value of tangible assets acquired 24,449 — — Intangible assets 292 — — Mortgage Servicing Rights 1,012 — — Liabilities assumed 23,584 — — Common Stock issued in business combination 2,010 — — 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 Flagstar Bank N.A. (hereinafter referred to as the “Bank”). The Company is headquartered in Hicksville, New York with regional headquarters in Troy, Michigan. Basis of Presentation Adoption of New Accounting Standards Cash and Cash Equivalents and Restricted Cash Federal Home Loan Bank Stock Loans Held-for-Sale . Loans with Government Guarantees 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 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. Mortgage Servicing Rights and equipment). Leasehold improvements are carried at cost less the accumulated amortization computed on a straight-line basis over the shorter of the related lease term or the estimated useful life of the improvement. Variable Interest Entities Servicing Fee Income Derivative Instruments and Hedging Activities The Company utilizes derivative instruments to manage the fair value changes in our MSRs, interest rate lock commitments and LHFS portfolio which are exposed to price and interest rate risk; facilitate asset/liability management; minimize the variability of future cash flows on long-term debt; and to meet the needs of our customers. All derivatives are recognized on the Consolidated Statements of Condition as other assets and liabilities, as applicable, at their estimated fair value. Retirement Plans 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) 2022 2021 2020 Net income available to common stockholders $ 617 $ 563 $ 478 Less: Dividends paid on and earnings allocated (8 ) (7 ) (6 ) Earnings applicable to common stock $ 609 $ 556 $ 472 Weighted average common shares outstanding 483,603,395 463,865,661 462,605,341 Basic earnings per common share $ 1.26 $ 1.20 $ 1.02 Earnings applicable to common stock $ 609 $ 556 $ 472 Weighted average common shares outstanding 483,603,395 463,865,661 462,605,341 Potential dilutive common shares 1,530,950 767,058 676,061 Total shares for diluted earnings per common 485,134,345 464,632,719 463,281,402 Diluted earnings per common share and $ 1.26 $ 1.20 $ 1.02 Flagstar Bancorp, Inc. The following table provides (in millions) December 1, 2022 Purchase $ 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 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 $ (in millions) Total Par value (UPB) $ ACL at acquisition (51) Non-credit (discount) (33) Fair value $ The following pro forma financial information presents the unaudited consolidated results of operations of the Company and Flagstar as if the Twelve Months 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 Note 4 - Accumulated Other Comprehensive Income (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: $ Interest expense Income tax benefit $ 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 $ Amortization of defined benefit pension plan items, net of tax Total reclassifications for the period $ The following tables summarize the Company’s portfolio of debt securities available for sale and equity investments with readily determinable fair values: December 31, 2022 (in millions) Amortized Gross Gross Fair 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 Asset-backed securities (1) 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 debt securities available for sale $ 9,917 $ 14 $ 871 $ 9,060 Equity securities: Mutual funds 16 — 2 14 Total equity securities $ 16 $ — $ 2 $ 14 Total securities (2) $ 9,933 $ 14 $ 873 $ 9,074 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 other securities available for sale $ 5,834 $ 62 $ 116 $ 5,780 Equity securities: Mutual funds 16 — — 16 Total equity securities $ 16 $ — $ — $ 16 Total securities (2) $ 5,850 $ 62 $ 116 $ 5,796 The following table summarizes the gross proceeds, gross realized gains, and gross realized losses from the sale of available-for-sale securities during the years-ended: December 31, (in millions) 2022 2021 2020 Gross proceeds $ 228 $ — $ 484 Gross realized gains — — 2 Gross realized losses — — 1 The following table summarizes, by contractual maturity, the amortized cost of securities at December 31, Mortgage- U.S. State, Other Fair (dollars in millions) Available-for-Sale Debt Due within one year $ 52 $ 1,588 $ 2 $ 20 $ 1,657 Due from one to five years 195 150 — 472 804 Due from five to ten years 277 1,177 18 509 1,656 Due after ten years 4,718 325 10 404 4,943 Total debt securities available $ 5,242 $ 3,240 $ 30 $ 1,405 $ 9,060 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 $ 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 4 795 30 Foreign notes 20 — — — 20 — Capital trust notes 46 2 34 10 80 12 Equity securities 4 — 10 2 14 2 Total temporarily impaired $ 5,658 $ 122 $ 2,911 $ 752 $ 8,569 $ 873 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 2023 consisted of eighty-four agency collateralized mortgage obligations, six capital trusts note, eight asset-backed securities, twelve corporate bonds, thirty-seven US government agency bonds, three hundred two mortgage-backed securities, one mutual fund, one foreign debt, and one municipal bond . The investment securities designated as having a continuous loss position for twelve months or more at December 31, 2022 consisted of twenty three agency collateralized mortgage obligations, five capital trusts notes, seven asset-backed securities, two corporate bonds, thirty three US government agency bonds, one hundred thirty three mortgage-backed securities, one mutual fund, and one municipal bond. We The December 31, 2022 December 31, 2021 (dollars in millions) Amount Percent of Amount Percent of Loans and Leases Held for Investment: Mortgage Loans: Multi-family $ 38,130 55.3 % $ 34,628 75.7 % Commercial real estate 8,526 12.4 6,701 14.7 One-to-four family first mortgage 5,821 8.4 160 0.3 Acquisition, development, and construction 1,996 2.8 209 0.5 Total mortgage loans held for investment (1) 54,473 78.9 41,698 91.2 Other Loans: Commercial and industrial 10,597 15.4 2,238 3.2 Lease financing, net of unearned income 1,679 2.4 1,796 3.9 Total commercial and industrial loans (2) 12,276 17.8 4,034 7.2 Other 2,252 3.3 6 0.0 Total other loans held for investment 14,528 21.1 4,040 7.2 Total loans and leases held for investment (1) $ 69,001 100.0 % $ 45,738 100.0 % Allowance for credit losses on loans and leases (393 ) (199 ) Total loans and leases held for investment, net $ 68,608 $ 45,539 Loans held for sale, at fair value 1,115 — Total loans and leases, net $ 69,723 $ 45,539 The (2)Includes $207 million multi-family loans from one borrower that had a payment in the process of collection as of December 31, 2023 and subsequently settled on January 2, 2024. (in millions) Loans Non- Loans 90 Total Current Total 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 — — — — 1,996 1,996 Commercial and industrial(1) — 7 — 7 12,269 12,276 Other 13 9 — 22 2,230 2,252 Total $ 70 $ 141 $ — $ 211 $ 68,790 $ 69,001 (in millions) Loans Non- Loans 90 Total Current Total Multi-family $ 57 $ 10 $ — $ 67 $ 34,561 $ 34,628 Commercial real estate 2 16 — 18 6,683 6,701 One-to-four family first mortgage 8 1 — 9 151 160 Acquisition, development, and — — — — 209 209 Commercial and industrial(1) — 6 — 6 4,029 4,035 Other — — — — 5 5 Total $ 67 $ 33 $ — $ 100 $ 45,638 $ 45,738 2023: Mortgage Loans Other Loans (in millions) Multi- Commercial One-to- Acquisition, Total Commercial Other Total 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 Doubtful — — — — — — — — Total $ 38,130 $ 8,526 $ 5,821 $ 1,996 $ 54,473 $ 12,276 $ 2,252 $ 14,528 Mortgage Loans Other Loans (in millions) Multi- Commercial One-to- Acquisition, Total Commercial Other Total Credit Quality Indicator: Pass $ 33,035 $ 5,876 $ 137 $ 204 $ 39,252 $ 3,987 $ 6 $ 3,993 Special mention 982 644 14 5 1,645 2 — 2 Substandard 611 181 9 — 801 45 — 45 Doubtful — — — — — — — — Total $ 34,628 $ 6,701 $ 160 $ 209 $ 41,698 $ 4,034 $ 6 $ 4,040 The preceding classifications are the most current ones available and generally have been updated within the last twelve months. In addition, they follow regulatory guidelines and can generally be described as follows: pass loans are of satisfactory quality; special mention loans have potential weaknesses that deserve management’s close attention; substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness and there is a possibility that the Company will sustain some loss); and doubtful loans, based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable. In addition, one-to-four family loans are classified based on the duration of the delinquency.The Company’s net interest margin declined 12 basis points for the twelve months ended December 31, 2022, to 2.35 percent compared to 2.47 percent for the twelve months ended December 31, 2021. This decline was driven by our liability sensitive balance sheet in the rising rate environment. Prepayment income contributed eight basis points to the full-year net interest margin compared to 15 basis points during full-year 2021.yearsperiods 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 yearperiods 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.47Net Interest Income Analysis
accounts
liabilitiesFor 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: $ 81,855 $ 4,509 5.51 % $ 49,376 $ 1,848 3.74 % $ 43,200 $ 1,525 3.53 % 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 the allowances for loan losses and includeincludes loans held for sale and non-performing loans.rate.rate on each separate line.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 132000000 112000000 244000000 22 22 44 Reverse repurchase agreements -4000000 11000000 7000000 1 10 11 Interest Earning cash and cash equivalents 413000000 74000000 487000000 — 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 48Rate/Volume Analysis
market accountsIn connectionwe have recorded certainand the Signature Transaction along with the impact of higher interest rates. Average interest-earning assets andincreased $43.6 billion, or 74 percent, on a year-over-year basis to $102.9 billion for the year ended December 31, 2023, while the average yield rose 181 basis points to 5.34 percent.at fair value. The following table provides information regardingincreased $22.9 billion, or 44 percent, to $74.3 billion while the discounts and premiums that are estimatedaverage cost increased to accrete3.25 percent from 1.35 percent. Average interest-bearing deposits rose $20.3 billion, or amortize into earnings in future periods using56 percent, while the estimated effective duration and methods shown below.average cost of deposits increased to 3.12 percent compared to 1.06 percent. Average borrowed funds increased $2.5 billion to $17.9 billion while the average cost rose to 3.66 percent from 2.04 percent. Average non-interest-bearing deposits rose $16.5 billion to $21.6 billion.For the twelve months2022, the provision for credit losses totaled $133 million compared to $3 million for the twelve months ended December 31, 2021. The fourth-quarter and full-year2023 provision for credit losses was impacted by$833 million compared to $133 million for the year ended December 31, 2022. The 2023 provision primarily reflects an initial $132 million provision for credit losses for acquired loans and related commitments from the Signature Transaction and a net $483 million increase in ACL and unfunded commitment reserves which 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. Lastly, the Company recorded a net $10 million provision related to net charge-offs on AFS securities.initial ACL measurementfourth quarter. The charged-off co-non-PCD Flagstar acquired loans totaling $117 million.$26 million from its previously written-down fair value estimate. This gain on sale will be recognized in the first quarter of 2024. For additional information about our methodologiesa more detailed discussion and analysis of the total allowance for recording recoveries of, and provisions for, loancredit losses, see the discussion"Credit Quality" section of the loan loss allowance under “Critical Accounting Policies”this MD&A and the discussion of “Asset Quality” that appear earlier in this report."Note 7 - Allowance for Credit Losses on Loans and Leases".income from our investment in BOLI; net return on our MSR asset; gainsnet gain on loan sales of securities;and securitizations, net loan administration income (including loan subservicing income); income from our investment in BOLI; and “other” sources, including the revenues produced through the sale of third-party investment products and loan subservicing.products.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 49Fortwelve monthsyear ended December 31, 2023 compared to the year ended December 31, 2022 non-interest income totaled $247 million, which includes aprimarily due to the bargain purchase gain of $159 million$2.1 billion related to the Flagstar acquisition. Non-interestSignature Transaction. Excluding bargain purchase gains, non-interest income increased an additional $27 million fromfor the year-endedyear ended December 31, 2021,2023 totaled $556 million as compared to $88 million for the year-endedyear ended December 31, 2022, a 44 percent increase due primarily to fee income generated in December from the Flagstar acquisition.Non-Interest Income AnalysisThe following table summarizes our sources of non-interest income:Non-Interest Expensetwelve monthsyear ended December 31, 2023, net gains on loan sales, net return on mortgage servicing rights and net loan administration income totaled $274 million compared to $14 million for the year ended December 31, 2022, total non-interest expenses were $684 million, up $143 million or 26 percentall driven by a full year of the Flagstar acquisition. The two acquisitions also drove higher fee income, loan administration income and other income driven by mortgage and FDIC loan servicing along with a higher volume of customer based fees.twelve months ended December 31, 2021. Excluding the impact of merger-related expenses totaling $75 million and intangible asset amortization of $5 million, total operating expenses were $604 million compared to $518 million last year up $86 million or 17 percent. The increase was primarily due to one month of Flagstar in our results. The efficiency ratio for full-year 2022 was 40.72 percent compared to 38.36 percent for full-year 2021.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, 2022, total income taxdriven by goodwill impairment in the fourth quarter totaling $2.4 billion. Additionally, merger related expenses increased $223 million due to the closing of the Signature transaction and ongoing integration costs. Excluding the goodwill impairment and merger related expenses, non-interest expense was $176 million and the effective tax rate was 21.36 percent compared to income tax expense of $210 million and an effective tax rate of 26.09 percent for the twelve monthsyear ended December 31, 2021. The year-over-year decline2023 totaled $2.2 billion as compared to $0.6 billion for the year ended December 31, 2022.effectiveFDIC special assessment issued to certain banks nationally related to deposit insurance fund shortfalls, including the assessment issued by the FDIC in February 2024..rate primarily reflectsexpense for the non-taxability of certain merger-related items includingcurrent year was impacted by the bargain purchase gain. In addition,gain arising from the effective tax rate in 2021 was negatively impacted by $2 million of income tax expense related to the revaluation of deferred taxes related to a change in the New York State tax rate.Signature transaction.20212022 AS COMPARED TO 2020202120212022 compared to 20202021 can be found in the Company’s previously filed Annual Report on Form 10-K for the year-ended December 31, 20212022 under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”- Results of Operations: 20212022 As Compared to 2020.2021.”50Attotal assets were $90.1 billion, up $30.6 billion or 51 percent compared to December 31, 2021. The growth compared the prior period was primarily due to the Flagstar acquisitionSignature Transaction, which added $25.8closed on March 20, 2023, and organic growth.assets,loans, net of purchase accounting adjustments ("PAA"), $33.5 billion of deposits, net of PAA, whileand $2.1 billion of other liabilities related to the remaining growth was driven by growth in our lending portfolios.Signature Transaction.2022 compared to $45.72022. The increase was driven by the aforementioned loans acquired from the Signature Transaction and organic loan growth.2021. The Flagstar acquisition added $18.02023, compared to $9.1 billion at December 31, 2022. As of loans held for investment, netDecember 31, 2023, the Company has no held-to-maturity securities portfolio and all of PAA. the Company’s securities were designated as “Available-for-Sale”, consistent with December 31, 2022.loans held for sale were $1.3deposits grew $22.8 billion, or 39 percent to $81.5 billion at December 31, 2023 compared to $58.7 billion at December 31, 2022 all of which wereprimarily driven by the result ofdeposits assumed in the Flagstar acquisition.AtSignature Transaction. Included in the December 31, 2022, total2023 balance are $247 million in non-interest-bearing custodial deposits were $58.7 billion comparedrelated to $35.1 billion at December 31, 2021. The acquisition of Flagstar added $16.0 billion in deposits, net of PAA. the Signature Transaction.2022 totaled2023 remained flat at $20.3 billion when compared to $15.9 billion at December 31, 2021. The acquisition of Flagstar added $6.4 billion of wholesale borrowings.2022.Borrowed funds totaled $21.3 billion as of year-end 2022, up $4.8 billion or 29 percent compared to year-end 2021. The acquisition of Flagstar added $6.7 billion of borrowings, net of PAA. The net decline was due to lower cost deposit growth.Held for Investmentheld-for-investmentAt 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
Loans
Held for
Investment
Loans
Held for
Investment
construction(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 51(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 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 %
of Total
of TotalMulti-family loans are our principal asset. rents—a market we refer to as our “primary lending niche.” Consistent with our emphasis on multi-family lending,rents.originations represented $8.4portfolio was $37.3 billion or 49 percent, of the loans we produced for investment in 2022.Atat December 31, 2023, down slightly compared to $38.1 billion at December 31, 2022 multi-family loans represented $38.1 billion, or 55 percent,due to a combination of total loans held for investment, reflecting a year-over-year increase of $3.5 billion, or 10 percent.higher interest rates and our loan diversification strategy.2022, $22.22023, $21.1 billion or 5857 percent of the Company’s total multi-family loan portfolio is secured by properties in New York State, and, therefore,of which $18.3 billion are subject to the new rent regulation laws.Of the $18.3 billion properties subject to rent regulation, approximately 38 percent are currently in an interest only period.The weighted average LTV of the NYSNew York State rent regulated multi-family portfolioportfolio was 57.1558 percent as of December 31, 2022,2023 as compared to a weighted average LTV of 60.4857 percent for the entire multi-family loan portfolio at that date.,or Prime, plus a 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 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. As the rent roll increases, the typical property owner seeks to refinance the mortgage, and generally does so before the loan reprices in year six or eight.52duration and, because the multi-family market is largely broker-driven, the expense incurred in sourcing such loans is substantially reduced.We believe our underwriting quality of multi-family lending is distinctive. This reflects the nature of the buildings securing our loans, our underwriting process and standards, and the generally conservative LTV ratios our multi-family loans feature at origination. Historically, a relatively small percentage of the multi-family loans that have transitioned to non-performing status have resulted in actual losses, even when the credit cycle has taken a downward turn.Accordingly, whilelending niche has not been immune to downturns in the credit cycle, the limited number of losses we have recorded, even in adverse credit cycles, suggests that the multi-family loans we produce involve less credit risk than certain other types of loans.markets. In general, buildings that are subject to rent regulation have historically tended to be stable, with occupancy levels remaining more or less constant over time. Because the rents are typically below market and the buildings securing our loans are generally maintained in good condition, they have been more likely to retain their tenants in adverse economic times. In addition, we generally exclude any short-term property tax exemptions and abatement benefits the property owners receive when we underwrite our multi-family loans.53At 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 %
of Total2022,2023, CRE loans represented $8.5$10.5 billion, or 12 percent, of total loans held for investment, reflecting a year-over-year$2.0 billion increase of $1.8 billionwhen compared to $8.5 billion at December 31, 2021 primarily driven by2022. Approximately $1.9 billion of CRE loans were acquired in the Flagstar acquisition.Signature Transaction.65 percent, of the loans we originated in 2022,for the year ended December 31, 2023 as compared to $893 million,$1.1 billion, or 76 percent infor the prior year.year ended December 31, 2022.2022,2023, the largest concentration of CRE loans were secured by properties in the metro New York City area, referarea. Refer to the Geographical Analysis table included abovebelow for additional details. are similar to the terms of our multi-family credits which primarily feature a fixed rate of interest for the first five years of the loan that is generally based on intermediate-term interest rates plus a spread. In 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 swaps that provide borrowers with additional optionality to manage their interest rate risk. Following the initial fixed rate period, the loan resets to an adjustable interest rate that is indexed to CME Term SOFR or Prime, plus a 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.loans, as they do our multi-family credits.loans. Depending on the remaining term of the loan at the time of prepayment, the penalties normally range from five percentage points to one percentage point of the then-current loan balance.54The 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 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 loan alsoprimarily depends on the borrower’s credit history, profitability, and expertise in property management, and generally requires a minimum DSCR of 130 percent and a maximum LTV of 65 percent. In addition, the origination of CRE loans typically requires a security interest in the fixtures, equipment, and other personal property of the borrower and/or an assignment of the rents and/or leases. In addition, certain of our CRE loans may contain an interest-only period which typically does not exceed three years; however, these loans are underwritten on a fully amortizing basis.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 %
of Total2022,2023, our ADC loans represented $2.0$2.9 billion, or 3 percent, of total loans held for investment, reflecting a year-over-yearan increase of $1.8 billion$916 million compared to December 31, 2021 primarily driven by the Flagstar acquisition.2022. In the twelve months ended December 31, 2022 and 2021, we did not recover any losses against guarantees. The risk of loss on an ADC loan is largely dependent upon the accuracy of the initial appraisal of the property’s value upon completion of construction; the developer’s experience; the estimated cost of construction, including interest; and the estimated time to complete and/or sell or lease such property.20222023 C&I loans totaled $12.3$25.3 billion or 1830 percent of total loans held-for-investment. Included in this portfolio is $3.5$5.1 billion in warehouse loans that allow mortgage lenders to fund the closing of residential mortgage loans.55Agencies'agencies' underwriting standards. The guideline for debt to tangible net worth is 15 to 1. We have $3.5At December 31, 2023, we had $5.1 billion outstanding warehouse loans to other mortgage lenders and have relationships in place to lend up to $11.6 $11.8 billion at our discretion.2022,2023, specialty finance loans and leases totaled $4.4$5.2 billion or 76 percent of total loans held for investment, up $912$769 million or 2617 percent compared to December 31, 2021.2022.leaselease financing. Each of these credits is secured with a perfected first security interest in, or outright ownership of, the underlying collateral, and structured as senior debt or as a non-cancelable lease. As of December 31, 2022, 782023, 84 percent of specialty finance loan commitments outstanding are structured as floating rate obligations which will benefit in a rising rate environment. All floating rate obligations are being transitioned from LIBOR to an appropriate LIBOR replacement index in accordance with the regulatory guidance provided around LIBOR cessation.During 2022,$6.0$7.3 billion of specialty finance loans and leases, representing 35 percent of total originations compared to $3.2$6.0 billion during 2021,for the same period in 2022, representing 2435 percent of total originations.2022,2023, one-to-four family loans represented $5.8$6.1 billion, including $1.1 billion$996 million of LGG, or 87 percent, of total loans held for investment. As of December 31, 2021 total2023, the repurchase liability on LGG loans was $456 million. As of December 31, 2022 one-to-four family loans totaled $160 million, with the increase being driven by the Flagstar acquisition.$5.8 billion. These loans include various types of conforming and non-conforming fixed and adjustable rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties. We typically hold certain mortgage loans in LHFI that do not qualify for sale to the Agencies and that have an acceptable yield and risk profile. The LTV requirements on our residential first mortgage loans vary depending on occupancy, property type, loan amount, and FICO scores. Loans with LTVs exceedingexceeding 80 percent are required to obtain mortgage insurance. As of December 31, 2022,2023, non-government guaranteed loans in this portfolio had an average current FICO scorescore of 743741 and an average LTV of 58 percent.53.56As of December 31, 2022, LGG loans totaled $1.2 billion and the repurchase liability was $0.3 billion.2022,2023, other loans totaled $2.3$2.7 billion and consisted primarily of home equity lines of credit, boat and recreational vehicle indirect lending, point of sale consumer loans and other consumer loans, including overdraft loans.SecondSecond mortgage loans and HELOANs are fixed rate loans and are available with terms up to 20 years. HELOC loans are primarily variable-rate loans that contain a 10-year interest only draw period followed by a 20-year amortizing period. As of December 31, 2022,2023, loans in this portfolio had an average current FICO score of 752.751.2022,2023, loans in our indirect portfolio had an average current FICO score of 750.743. Point of sale loans consist of unsecured consumer installment loans originated primarily for home improvement purposes throughthrough a third-party financial technology company who also provides us a level of credit loss protection.At December 31, 2022, loans held for sale were $1.1 billion compared to zeroLoans held-for-sale at December 31, 2021 with the increase driven by the Flagstar acquisition.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 when we originate or purchase loans that we intend to sell. We have elected the fair value option for nearly all of this portfolio.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.MaturityWorkout Unit actively pursue borrowers who are delinquent in repaying their loans in an effort to collect payment. In addition, outside counsel with experience in foreclosure proceedings are retained to institute such action with regard to such borrowers.Repricing Analysis:other assets that are acquired through foreclosure are classified as repossessed assets, and are recorded at fair value at the date of acquisition, less the estimated cost of selling the property. Subsequent declines in the fair value of the assets are charged to earnings and are included in non-interest expense. It is our policy to require an appraisal and anDecember 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 HeldInvestmentinvestment by loan type and the changes in the respective balances:Change from December 31, 2022 to December 31, 2023 (in millions) December 31, 2023 December 31, 2022 Amount 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 22 13 9 Total non-performing loans $ 428 $ 141 287 Repossessed assets 14 12 2 Total non-performing assets $ 442 $ 153 289 maturity or periodchanges in non-accrual loans for the year ended December 31, 2023:(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 repricing of our portfolio of$363 million, while commercial and industrial loans held for investmentincreased $40 million to $43 million and other non-accrual loans increased $9 million to $22 million compared to December 31, 2022.Loans that have adjustable rates are shown as being dueThe increase in NPLs was primarily driven by a $125 million increase in multi-family loans and a $108 million in commercial real estate loans, primarily office. Repossessed assets of $14 million were slightly higher compared to $12 million in the period during which their interest ratesprior year.Change from December 31, 2023 to December 31, 2022 (in millions) December 31, 2023 December 31, 2022 Amount Percent 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 % next subject to change.insured by U.S government agencies.
Family
Real
Estate
Four
Family
Development,
and
Construction
Loans57At 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 % 2022,2023. In applying this judgement, management also considered the dollar amountseverity of allemerging risks such as feedback from regulators, market information, the impact of potential internal loan review weaknesses on the identification of emerging risks, deterioration in collateral values or borrower financial statements, trends or indications of degradation in asset quality metrics such as problem loans, charge-offs and nonaccruals, and market indications.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) that are due after December 31, 2023, and indicates whether such loans have fixed or adjustable rates of interest:outstanding: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 % strong borrowers on a case by case basis, with the approval of the Board Credit Committee of the Board. Relationships less than the aforementioned limits including those discussed throughout the loans held for investment section of this document, are approved by the joint authority of credit officers and lending officers. The Board Credit Committee has authority to direct changes in lending practices as they deem necessary or appropriate in order to address individual or aggregate risks, including regulatory considerations, and credit exposures in accordance with the Bank’s strategic objectives and risk appetites.20222023 and 2021,December 31, 2022, the largest mortgage loan in our portfolio waswas 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.At December 31, 2022 and 2021, 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.Asset QualityAll asset quality information excludes LGG that are insured by U.S government agencies.58Delinquent and non-performing loans held for investment and Repossessed AssetsThe following table presents our loans, 30 to 89 days past due by loan type and the changes in the respective balances:
December 31, 2021
to
December 31, 2022
2022
2021A loan generally is classified as a “non-accrual” loan when it is 90 days or more past due or when it is deemed to be impaired because we no longer expect to collect all amounts due according to the contractual terms of the loan agreement. When a loan is placed on non-accrual status, we cease the accrual of interest owed, and previously accrued interest is reversed and charged against interest income. At December 31, 2022 and 2021, all of our non-performing loans were non-accrual loans. A loan is generally returned to accrual status when the loan is current and we have reasonable assurance that the loan will be fully collectible.We monitor non-accrual loans both within and beyond our primary lending area in the same manner. Monitoring loans generally involves inspecting and re-appraising the collateral properties; holding discussions with the principals and managing agents of the borrowing entities and retain legal counsel, as applicable; requesting financial, operating, and rent roll information; confirming that hazard insurance is in place or force-placing such insurance; monitoring tax payment status. advancing funds as needed; and seeking approval from the courts to appoint a receiver, when necessary to protect the Bank’s interests, including to collect rents, manage property operations, and ensure maintenance of the collateral properties.It is our policy to order updated appraisals for all non-performing loans 90 days or more past due, irrespective of loan type, that are collateralized by multi-family buildings, CRE properties, or land, if the most recent appraisal on file for the property is more than one year old. Appraisals are ordered annually until such time as the loan becomes performing and is returned to accrual status. It is not our policy to obtain updated appraisals for performing loans. However, appraisals may be ordered for performing loans when a borrower requests an increase in the loan amount, a modification in loan terms, or an extension of a maturing loan.59The following table presents our non-performing loans by loan type and the changes in the respective balances:
December 31, 2021
to
December 31, 2022
2022
2021(1)Includes Commercial and Industrial, Home Equity, Consumer and other loans.The following table sets forth the changes in non-performing loans over the twelve months ended December 31, 2022:(in millions)Balance at December 31, 2021$33New non-accrual39Non-accrual acquired from acquisition104Charge-offs(1)Transferred to repossessed assets—Loan payoffs, including dispositions and principal
pay-downs(32)Restored to performing status(2)Balance at December 31, 2022$141non-accrual mortgage loans increased $98 million to $125 million, while other non-accrual loans increased $10 million to $16 million compared to $6 million at December 31, 2021. Included the December 31, 2022 amountsecurities were non-accrual home equity loans of $9 million acquired in the Flagstar acquisition.Total NPAs were $153 million$9.2 billion, or 0.178 percent, of total assets at December 31, 2022, up 273 percent or $112 million 2023, compared to $41 million or 0.07 percent of total assets at December 31, 2021, primarily driven by the Flagstar acquisition. Repossessed assets totaled $12 million, up $4 million compared to the balance at December 31, 2021. The Company’s repossessed assets includes repossessed taxi medallions of $4 million at December 31, 2022 compared to $5 million at December 31, 2021.Non-performing loans are reviewed regularly by management and discussed on a monthly basis with the Board Credit Committee, and the Board of Directors of the Bank, as applicable. In accordance with our charge-off policy, collateral-dependent non-performing loans are written down to their current appraised values, less certain transaction costs. Workout specialists from our Loan Workout Unit actively pursue borrowers who are delinquent in repaying their loans in an effort to collect payment. In addition, outside counsel with experience in foreclosure proceedings are retained to institute such action with regard to such borrowers.Properties and other assets that are acquired through foreclosure are classified as repossessed assets, and are recorded at fair value at the date of acquisition, less the estimated cost of selling the property. Subsequent declines in60the fair value of the assets are charged to earnings and are included in non-interest expense. It is our policy to require an appraisal and an environmental assessment of properties classified as OREO before foreclosure, and to re-appraise the properties on an as-needed basis, and not less than annually, until they are sold. We dispose of such properties as quickly and prudently as possible, given current market conditions and the property’s condition.To mitigate the potential for credit losses, we underwrite our loans in accordance with credit standards that we consider to be prudent. In the case of multi-family and CRE loans, we look first at the consistency of the cash flows being generated by the property to determine its economic value using the “income approach,” and then at the market value of the property that collateralizes the loan. The amount of the loan is then based on the lower of the two values, with the economic value more typically used.The condition of the collateral property is another critical factor. Multi-family buildings and CRE properties are inspected from rooftop to basement as a prerequisite to approval. Furthermore, independent appraisers, whose appraisals are carefully reviewed by our experienced in-house appraisal officers and staff, perform appraisals on collateral properties.In addition, we work with a select group of mortgage brokers who are familiar with our credit standards and whose track record with our lending officers is typically greater than ten years. Furthermore, in New York City, where the majority of the buildings securing our multi-family loans are located, the rents that tenants may be charged on certain apartments are typically restricted under certain rent-control or rent-stabilization laws. As a result, the rents that tenants pay for such apartments are generally lower than current market rents. Buildings with a preponderance of such rent-regulated apartments are less likely to experience vacancies in times of economic adversity.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.To further manage our credit risk, our lending policies limit the amount of credit granted to any one borrower, and typically require minimum DSCRs of 120 percent for multi-family loans and 130 percent for CRE loans. Although we typically lend up to 75 percent of the appraised value on multi-family buildings and up to 65 percent on commercial properties, the average LTVs of such credits at origination were below those amounts at December 31, 2022. Exceptions to these LTV limitations are minimal and are reviewed on a case-by-case basis.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 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.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.With regard to ADC loans, we typically lend up to 75 percent of the estimated as-completed market value of multi-family and residential tract projects; however, in the case of home construction loans to individuals, the limit is 80 percent. With respect to commercial construction loans, we typically lend up to 65 percent of the estimated as-completed market value of the property. Credit risk is also managed through the loan disbursement process. Loan proceeds are disbursed periodically in increments as construction progresses, and as warranted by inspection reports provided to us by our own lending officers and/or consulting engineers.61To minimize the risk involved in specialty finance lending and leasing, each of our 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-cancellable lease. To further minimize the risk involved in specialty finance lending and leasing, we re-underwrite each transaction. In addition, we retain outside counsel to conduct a further review of the underlying documentation.Other C&I loans generally represent loans to commercial businesses which meet certain desired client characteristics and credit standards. The credit standards for commercial borrowers are based on numerous criteria, including historical and projected financial information, strength of management, acceptable collateral, and market conditions and trends in the borrower’s industry. These loans are generally variable rate loans in which the interest rate fluctuates with a specified index rate.The procedures we follow with respect to delinquent loans are generally consistent across all categories, with late charges assessed, and notices mailed to the borrower, at specified dates. We attempt to reach the borrower by telephone to ascertain the reasons for delinquency and the prospects for repayment. When contact is made with a borrower at any time prior to foreclosure or recovery against collateral property, we attempt to obtain full payment, and will consider a repayment schedule to avoid taking such action. Delinquencies are addressed by our Loan Workout Unit and every effort is made to collect rather than initiate foreclosure proceedings.Fair values for all multi-family buildings, CRE properties, and land are determined based on the appraised value. If an appraisal is more than one year old and the loan is classified as either non-performing or as an accruing TDR, then an updated appraisal is required to determine fair value. Estimated disposition costs are deducted from the fair value of the property to determine estimated net realizable value. In the instance of an outdated appraisal on an impaired loan, we adjust the original appraisal by using a third-party index value to determine the extent of impairment until an updated appraisal is received.While we strive to originate loans that will perform fully, adverse economic and market conditions, among other factors, can negatively impact a borrower’s ability to repay. Historically, our level of charge-offs has been relatively low in downward credit cycles, even when the volume of non-performing loans has increased. In 2022, we recorded a net recovery of $4 million, as compared to net recovery of $2 million in the previous year.Partially reflecting the net recoveries noted above, and the provision of $133 million for the allowance for loan losses, the allowance for credit losses increased $194 million, equaling $393 million at December 31, 2022 from $199 million at December 31, 2021. The majority of the increase is related to the initial provision for credit losses of $117 million and the adjustment for PCD loans acquired in the Flagstar acquisition. The allowance for credit losses on loans and leases represented 278.87 percent of non-performing loans at December 31, 2022, as compared to 611.79 percent at the prior year-end.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.Troubled Debt RestructuringsIn 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.62At December 31, 2022, loans modified as TDRs totaled $44 million, including accruing loans of $16 million and non-accrual loans of $28 million. At the prior year-end, loans modified as TDRs totaled $29 million, including accruing loans of $16 million and non-accrual loans of $13 million.Analysis of Troubled Debt RestructuringsThe following table sets forth the changes in our TDRs over the twelve months ended December 31, 2022:
Accrual
principal pay-downsLoans on which concessions were made with respect to rate reductions and/or extensions of maturity dates totaled $38 million and $29 million, respectively, at December 31, 2022 and 2021; loans in connection with which forbearance agreements were reached amounted to $6 million and $0 million at the respective dates.Based on the number of loans performing in accordance with their revised terms, at December 31, 2022, our success rate for restructured CRE loans was 100 percent, our success rate for one-to-four loans was 100 percent and our success rate for other loans was 35 percent.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 2022, 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 TDRs at December 31, 2022 and 2021, see the discussion of “Asset Quality” in Note 6, “Loans and Leases” in Item 8, “Financial Statements and Supplementary Data.”Except for the non-accrual loans and TDRs disclosed in this filing, we did not have any potential problem loans at December 31, 2022 that would have caused management 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.Asset Quality AnalysisThe following table presents information regarding our asset quality measures:63The following table presents information on the Company's net charge-offs as compared to average loans outstanding:The following table sets forth the allocation of the consolidated allowance for losses on loans, at each year-end:
Loans in
Each
Category
to Total
Loans
Held
for
Investment
Loans in
Each
Category
to Total
Loans
Held
for
Investment
Loans in
Each
Category
to Total
Loans
Held
for
InvestmentEach of the preceding allocations was based upon an estimate of various factors, as discussed in “Critical Accounting Estimates”, 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 for losses on loans allocated to each loan category does not represent the total amount available to absorb losses that may occur within that category, since the total loan loss allowance is available for the entire loan portfolio.64SecuritiesTotal securities were $9.1 billion, or 10 percent of total assets at December 31, 2022 compared to $5.8 billion, or 10 percent of total assets at December 31, 2021.. At December 31, 20222023 and December 31, 2021,2022, all of our securities were designated as “Available-for-Sale”. At December 31, 2022, 152023, 12 percent of our portfolio are floating rate securities.2022,2023, available-for-sale securities had an estimated weighted average life of 6six years. Included in the year-endquarter-end amount were mortgage-related securities of $4.8$6.6 billion and other debt securities of $4.3$2.6 billion.$5.8$9.1 billion, and had an estimated weighted average life of 6.9six years. Mortgage-related securities accounted for $2.8$4.8 billion of the year-end balance, with other debt securities accounting for the remaining $3.0$4.3 billion.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, 2022 and 2021, GSE obligations and U.S. Treasury obligations together represented 86 percent and 83 percent of total securities, respectively. The remainder of the portfolio at those dates was comprised of asset-backed securities, corporate bonds, foreign notes, capital trust notes, and municipal obligations.2022:
Related
Securities
Government
and GSE
Obligations
County,
and
Municipal
Debt
Securities (2)
Securities: (1)Mortgage-
Related
SecuritiesU.S.
Government
and GSE
ObligationsState,
County,
and
MunicipalDue 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 At December 31, 2021, the Company had $734 million of FHLB-NY stock, at cost. 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 FHLB and partly related to its access to the FHLB funding it utilizes. In addition, at December 31, 2022, the Company had $176 million of Federal Reserve Bank stock, at cost. The Company had no Federal Reserve Bank stock,cost, of $203 million and $176 million at December 31, 2021.2023 and December 31, 2022, respectively.65and $373 million acquired in the Flagstar acquisition our investment in BOLI at December 31, 2023 rose $377$19 million year-over-yearto$1.6 billion compared to $1.6 billion at December 31, 2022.For more information about the Company’s goodwill, see the discussion As of “Summary of Significant Accounting Policies” in the Footnote 2 of these consolidated statements.Sources of FundsThe Parent Company has four 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; funding raised through the issuance of debt instruments; and repayments of, and income from, investment securities.On a consolidated basis, our funding primarily stems from a combination of the following sources: retail, institutional, and brokered deposits; borrowed funds, primarily in the form of wholesale borrowings; cash flows generated through the repayment and sale of loans; and cash flows generated through the repayment and sale of securities.In 2022, loan repayments and sales generated cash flows of $10.7 billion, as compared to $10.4 billion in 2021.In 2022, cash flows from the repayment of securities totaled $732 million, while the purchase of securities amounted to $2.2 billion for the year. By comparison, cash flows from the repayment of securities totaled $1.7 billion, in 2021, and were offset by the purchase of securities totaling $1.7 billion.In 2022, 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.DepositsOur ability to retain and attract deposits depends on numerous factors, including customer satisfaction, the rates of interest we pay, the types of products we offer, and the attractiveness of their terms. From time to time, we have chosen not to compete actively for deposits, depending on our access to deposits through acquisitions, the availability of lower-cost funding sources, the impact of competition on pricing, and the need to fund our loan demand. 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).Total deposits increased $23.7 billion or 67 percent on a year-over-year basis to $58.7 billion. Deposit growth was driven by the addition of $16.0 billion of deposits from the Flagstar acquisition and $7.6 billion growth in loan-related deposits and BaaS deposits. Loan-related deposits totaled $4.4 billion at December 31, 2022 up $389 million or 10 percent relative to $4.0 billion at December 31, 2021. Our BaaS deposits totaled $11.5 billion at December 31, 2022, as compared to $1.0 billion at December 31, 2021. In addition,2023, the Company has institutional depositsidentified a triggering event and municipal deposits. Institutional deposits remained unchanged from the prior year end at $1.4 billion. Municipal deposits represented $488 million of total deposits atapplied a market approach using the end of this December,day stock price. We evaluated those conditions known and knowable by the Company and how a $263 million decrease frommarket participant would view the balance at December 31, 2021.66Depending on their availability and pricing relative to other funding sources, we also include brokered deposits in our deposit mix. Brokered deposits accounted for $5.1 billion of our deposits atcontrol premium as confirmed by the end of this December,subsequent confirming market evidence. This adjusted market capitalization was then compared to $5.7 billion at December 31, 2021. Brokered money market accounts represented $2.8 billionthe carrying value to determine the extent of total brokered deposits at December 31, 2022 and $2.9 billion at December 31, 2021; brokered interest-bearing checking accounts represented $1.0 billion and $1.6 billion, respectively, at the corresponding dates. At December 31, 2022, we had $1.3 billion of brokered CDs, comparedshortfall which was calculated to $1.2 billion at December 31, 2021.The following table indicates the amount of time deposits, by account, that arebe in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity:Our uninsured deposits, on an unconsolidated basis, are the portiongoodwill balance. The Company’s assessment concluded that goodwill from historical transactions (2007 and prior) was fully impaired as of deposit accounts that exceed the FDIC insurance limit (currently $250,000), and were approximately $19.6 billion and $10.1 billion at December 31, 2022 and 2021, respectively. These amounts were estimated based on2023. As a result, the same methodologies and assumptions used for regulatory reporting purposes.Borrowed FundsThe majority of our borrowed funds are wholesale borrowings (FHLB-NY and FHLB-Indianapolis advances) and, to a lesser extent, junior subordinated debentures and subordinated notes. At December 31, 2022, total borrowed funds increased $4.8 billion or 29 percent to $21.3 billion compared to the balance at December 31, 2021. The year-over-year increase was primarily driven by the amounts assumed in the Flagstar acquisition of $6.7 billionWholesale BorrowingsWholesale borrowings totaled $20.3 billion and $15.9 billion, respectively, at December 31, 2022 and 2021, representing 23 percent of total assets at both dates. FHLB-NY and FHLB-Indianapolis advances accounted for $20.3 billionCompany recorded an impairment charge of the year-end 2022 balance, as compared to $15.1 billion at the prior year-end. Pursuant to blanket collateral agreements with the Bank, our FHLB-NY, FHLB-Indianapolis 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 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, 2022 and 2021, $6.8 billion and $7.5 billion of our wholesale borrowings had callable features, respectively.Included in wholesale borrowings at December 31, 2021, was $800 million of repurchase agreements. There were no repurchase agreements outstanding at December 31, 2022. 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 were 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, 2022 and 2021.67Junior Subordinated DebenturesJunior subordinated debentures totaled $575 million, including $214 million assumed from the Flagstar acquisition, net of purchase accounting adjustments at December 31, 2022.Subordinated NotesAt December 31, 2022, theentire goodwill balance of subordinated notes was $432 million, including $135 million assumed from the Flagstar acquisition, net of purchase accounting adjustments.$2.4 billion.See Note 12, “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 $2.0 billion and $2.2 billion, respectively, at December 31, 2022 and 2021. As in the past, our loan and securities portfolios provided meaningful liquidity in 2022, with cash flows from the repayment and sale of loans totaling $10.7 billion and cash flows from the repayment and sale of securities totaling $960 million.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, 2022, our available borrowing capacity with the FHLB-NY was $11.3 billion. In addition, the Bank had available-for-sale securities of $9.1 billion, of which, $8.6 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. 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, 2022.Our primary investing activity is loan production, and the volume of loans we originated for investment totaled $17.1 billion in 2022. During this time, the net cash used in investing activities totaled $6.3 billion; the net cash provided by our operating activities totaled $1.0 billion. Our financing activities provided net cash of $5.2 billion.CDs due to mature or reprice in one year or less from December 31, 2022 totaled $9.2 billion, representing 74 percent of total CDs at that date. Our ability to attract and retain retail deposits, including CDs, depends on numerous factors, 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.Our decision to compete for deposits also depends on numerous factors, including, among others, our access to deposits through acquisitions, the availability of lower-cost funding sources, the impact of competition on pricing, and the need to fund our loan demand. and any share repurchases, the Parent Company is responsible for paying any dividends declared to our common and preferred 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.68is a separate legal entity fromhas three primary funding sources for the Bankpayment of dividends, share repurchases, and must provide for its own liquidity. In additionother corporate uses: dividends paid to operating expenses and any share repurchases, the Parent Company is responsible for paying any dividends declared toby the Company’s shareholders. As a Delaware corporation,Bank; capital raised through the Parent Company is able to pay dividends either from surplus or, in case there is no surplus, from net profits forissuance of equity; and funding raised through the fiscal year in which the dividend is declared and/or the preceding fiscal year.issuance of debt instruments.2022,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 (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.In 2023, dividends of $335$580 million were paid by the Bank to the Parent Company.(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 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 could have paid additional dividendsour FHLB-NY, FHLB-Indianapolis advances and overnight advances are secured by pledges of $615certain eligible collateral in the form of loans and securities. At December 31, 2023 and December 31, 2022, $2.0 billion and $6.8 billion of our wholesale borrowings had callable features, respectively.Parent Company without regulatory approval.balance of subordinated notes was $438 million compared to $432 million at 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, 2022, we had CDs of $12.5 billion and long-term debt (defined as borrowed funds with an original maturity one year or more) of $13.8 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 $122 million at December 31, 2022.At December 31, 2022, 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 $22.4 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. 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.2022,2023, 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.2022,2023, we had no commitments to purchase securities.69Positionamounts 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: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 that date: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 % 2022,2023, 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.continued to exceedif adopted as proposed.levels required for classification as “well capitalized” institutions, as defined underconsolidated Company level. Following the Federal Deposit Insurance Corporation Improvement Actacquisition of 1991,Flagstar Bank, N.A. and as further discussed in Note 21, “Capital,” in Item 8, “Financial Statements and Supplementary Data.”IMPACT OF INFLATIONThe consolidated financial statements and notes thereto presented in this report have been prepared in accordance with GAAP, which requires thatclosing the Signature Transaction, we measure our financial condition and operating results in terms of historical dollars, without considering changesare currently in the relative purchasing powerprocess of money over time due to inflation. The impact of inflation is reflected inoperationalizing the increased cost of our operations. As a result, the impact of interest rates on our performance is greater than the impact of general levels of inflation. Interest rates do not necessarily move in the same direction, or to the same extent, as the prices of goods and services.IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTSRecently Issued Accounting StandardsIn March 2022, the FASB issued ASU No. 2022-02 - Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The amendments in this ASU eliminate TDR accounting for entities that have adopted ASU No. 2016-13, while enhancing disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty. The ASU also requires disclosure of current period gross write-offs by year of origination for financing receivables and net investment in leases. 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, tangible70assets, 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 currentreporting – both historical and prospective investors, both independent of,– for our reportable segments and in comparison with, the Company’s peers.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 inreporting units, 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 assets71ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe manage our assets and liabilities to reduce our exposure to changes in market interest rates. The asset and liability management process has three primary objectives: to evaluate the interest rate risk inherent in certain balance sheet accounts; to determine the appropriate level of risk, given our business strategy, operating environment, capital and liquidity requirements, and performance objectives; and to manage that risk in a manner consistent with guidelines approved by the Boards of Directors of the Company and the Bank.Market RiskAs a financial institution, we are focused on reducing our exposure to interest rate volatility, which represents our primary market risk. Changes in market interest rates represent the greatest challenge to our financial performance, as such changes can have a significant impact on the level of income and expense recorded on a large portion of our interest-earning assets and interest-bearing liabilities, and on the market value of all interest-earning assets, other than those possessing a short term to maturity. To reduce our exposure to changing rates, the Board of Directors and management monitor interest rate sensitivity on a regular or as needed basis so that adjustments to the asset and liability mix can be made when deemed appropriate.The actual duration of held-for-investment mortgage loans and mortgage-related securities can be significantly impacted by changes in prepayment levels and market interest rates. The level of prepayments may, in turn, be impacted by a variety of factors, including the economy in the region where the underlying mortgages were originated; seasonal factors; demographic variables; and the assumability of the underlying mortgages. However, the factors with the most significant impact on prepayments are market interest rates and the availability of refinancing opportunities.We managed our interest rate risk by taking the following actions: (1) We have continued to emphasize the origination and retention 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 floating interest rates; (3) Increased the focus on retaining low costs deposits; and (4) Obtained new low cost deposits as part of the banking-as-a-service initiative (5) The use of derivatives to manage our interest rate position.LIBOR Transition Process and Phase OutThe 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 implementationa change to either or both in future reporting periods.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 comparabilityour accounting policies, by their nature, are subject 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 assurancesestimation techniques, valuation assumptions and other subjective assessments. Certain accounting policies that, the replacement rate plus any spread adjustment will be economically equivalent to LIBOR, which could result in a lower interest rate being paiddue to the Company on such assets.The Alternative Reference Rates Committee (a groupjudgment, estimates and assumptions are critical to an understanding of private-market participants convened by the FRBour Consolidated Financial Statements and the FRB-NY) has identified SOFR asNotes, are described in Item 1. These policies relate to: (a) 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 conventions72continue to develop and may vary. Inconsistent calculation conventions among financial products may expose is to increased basic rate and resultant costs.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.The Bank established a sub-committee of ALCO to address issues related to the phase out and transition from LIBOR. This sub-committee 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 30, 2023. The sub-committee has monitored the Bank’s LIBOR transition progress and substantially all contracts have been updated. In complying with industry requirements, the Bank has not offered new LIBOR-based products since December 31, 2021.Interest Rate Sensitivity AnalysisInterest rate sensitivity is monitored through the use of a model that generates estimates of the change in our Economic Value of Equity over a range of interest rate scenarios. EVE is defined as the net present value 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 prepayment rates, reinvestment rates, and deposit decay rates.Based on the information and assumptions in effect at December 31, 2022, the following table sets forth our EVE, assuming the changes in interest rates noted:
Interest
Rates (in basis
points)
of Assets
of Liabilities
Value
of Equity
Percentage
Change in
Economic
Value of EquityThe 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.Modeling changes in EVE requires that certain assumptions be made which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the EVE analysis presented above assumes that the compositiondetermination of our interest rate sensitive assetsACL, (b) fair value measurements and liabilities existing at(c) the beginningacquisition method of a period remains constant overaccounting. We believe the period being measured,judgment, estimates and also assumes that a particular change in interest rates is reflected uniformly across the yield curve, regardless of the duration to maturity or repricing of specific assets and liabilities. Furthermore, the model does not take into account the benefit of any strategic actions we may take to further reduce our exposure to interest rate risk. Accordingly, while the EVE analysis provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on our net interest income, and may very well differ from actual results.We also utilize an internal net interest income simulation to manage our sensitivity to interest rate risk. The assumptions used in the
simulation incorporates various market-based assumptions regarding the impact of changing interest rates on future levels of our financial assets and liabilities. Thenet interest income simulation are inherently uncertain. Actual results may differ significantly from those presented in the following table, due to the frequency,73timing, and magnitudepreparation 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 changesBased on the information and assumptions in effect at December 31, 2022, the following table reflects the estimated percentage change in future net interest income for the next twelve months, assuming the changes in interest rates noted:Change in Interest Rates
(in basis points) (1)Estimated Percentage Change in
Future Net Interest Income-200 over one year3.14%-100 over one year1.70%+100 over one year(2.81)%+200 over one year(4.93)%(1)In general, short- and long-term rates are assumed to increase in parallel instantaneously and then remain unchanged.Future changes in our mix of assets and liabilities may result in greater changes to our gap, NPV, and/or net interest income simulation.In the event that our EVE and net interest income sensitivities were to breach our internal policy limits, we would undertake the following actions to ensure that appropriate remedial measures were put in place:•In formulating appropriate strategies, the ALCO Committee would ascertain the primary causes of the variance from policy tolerances, the expected term of such conditions,Consolidated Financial Statements and the projected effect on capital and earnings.•Our ALCO Committee would informNotes are appropriate given the Boardfactual circumstances at the time. However, given the sensitivity of Directors of the variance, and present recommendations to the Board regarding proposed courses of action to restore conditions to within-policy tolerances.Where temporary changes in market conditions or volume levels result in significant increases in risk, strategies may involve reducing open positions or employing other balance sheet management activities including the potential use of derivatives to 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:•Asset restructuring, involving sales of assets having higher risk profiles, or a gradual restructuring of the asset mix over time to affect the maturity or repricing schedule of assets;•Liability restructuring, whereby product offerings and pricing are altered or wholesale borrowings are employed to affect the maturity structure or repricing of liabilities;•Expansion or shrinkage of the balance sheet to correct imbalances in the repricing or maturity periods between assets and liabilities; and/or•Use or alteration of off-balance sheet positions, including interest rate swaps, caps, floors, options, and forward purchase or sales commitments.In connection with our net interest income simulation modeling, we also evaluate the impact of changes in the slope of the yield curve. At December 31, 2022, our analysis indicated that a further inversion of the yield curve would be expected to result in a 4.80% decrease in net interest income; conversely, an immediate steepening of the yield curve would be expected to result in a 1.21% increase in net interest income.Critical Accounting EstimatesThe preparation of these financial statements requires management to make estimates that affect the reported amounts of assets and liabilitiesConsolidated Financial Statements 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 evaluate its74estimates, particularly those that involve the most difficult, subjective or complex judgments and are often about matters that are inherently uncertain.The judgments used by management in applyingNotes to these critical accounting policies, the use of other judgments, estimates may be influenced by adverse changes in the economic environment, which mayand assumptions could result in changes to futurematerial differences in our results of operations and/or financial results.condition.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.is deducted fromrepresents our current estimate of 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 expectedlifetime credit losses are recognized immediately in net income as a credit loss expense or a reversal of credit loss expense.expected from our loan and lease portfolio and our unfunded lending commitments. 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.term, as well as credit ratings for certain loans within the commercial and industrial portfolio. The loss drivers for certain loans in the commercial and industrial portfolio are derived using credit ratings. The economic forecast and the related economic parameters are developed using multiple economic forecast scenarios, including related weightings, over the reasonable and supportable forecast period. The economic forecast scenarios and related economic parameters are sourced from independent third parties. 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 loss experience over the historical loss observation period provides the basis for the estimation of expected credit losses, with qualitative adjustments made for differences in current loan-specific risk characteristics such as differenceslevels of and trends in delinquencies and performance of loans, levels of and trends in write-offs and recoveries collected, trends in volume and terms of loans, effects of any changes in reasonable and supportable economic forecasts, effects of any changes in risk selection and underwriting standards, portfolio mix, delinquency levels and terms, as well as forother changes in environmental conditions, such aslending policies, procedures, and practices, experience, ability, and depth of lending management and other relevant staff, available relevant information sources that support or contradict the registrant’s own forecast, effects of changes in legislation, regulation, policies, administrative practicesprepayment expectations or other relevant factors.factors affecting assessments of loan contractual term, industry conditions; and effects of changes in credit concentrations. 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 loancredit losses on loans and lease losses,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 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.mean.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,as well as credit ratings for certain loans within 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.commercial and industrial portfolio.basis. These include loans that are inbasis, including 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).loans. If a loan is determined to be collateral dependent, or75assumptions which will result in provisions to or recoveries from the balance of the allowance for credit losses.assumptions.70.5%60 percent of the loan portfolio at December 31, 2022.2023. Portfolio prepayments 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 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.Note 19, “Fair Value Measurements,"Note 9 - Mortgage Servicing Rights,” in Item 8. “Financial Statements and Supplementary Data.""Business Combination"- Business Combinations in Item 8, "Financial Statements and Supplementary Data".Item7A. Quantitative and Qualitative Disclosures about Market Risk 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)% ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAModeling changes in NII requires that certain assumptions be made which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the NII analysis presented below assumes that the composition of our interest rate sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured, and also assumes that a particular change in interest rates is reflected uniformly across the yield curve, regardless of the duration to maturity or repricing of specific assets and liabilities.Estimated Percentage Change in Future Net Interest Income -200 shock (5.81)% -100 shock (3.17)% +100 shock 3.24% +200 shock 6.40% ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA and Notes thereto and other supplementary data begin on the following page.77NEW YORK COMMUNITY BANCORP, INC.CONSOLIDATED STATEMENTS OF CONDITION
December 31, 2022 and 2021, respectively)
issued and outstanding)
shares issued; and 681,217,334 and 465,015,643 shares outstanding, respectively)
$17, respectively
and $12 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 78NEW YORK COMMUNITY BANCORP, INC.CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
net of tax of $223; $42; and $(16), respectively
$6; $(8) and $2
of $(24); $(2) and $16, respectively
securities, net of tax of $-; $-; and $-;, respectively
net of tax of $0; $(2) and $(2), respectively
included in net income, net of tax $1; $(7) and $(3), respectively7980NEW 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 81NEW YORK COMMUNITY BANCORP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
available for saleFor 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 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 — — 142 - Derivatives and Hedging Activities.Summary of Significant Accounting Policies82NEW YORK COMMUNITY BANCORP, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 1: ORGANIZATION AND BASIS OF PRESENTATIONOrganization$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). 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, 2022.2022 and the Signature Transaction which closed on March 20, 2023.395420 branches across ninetwelve states, including strong footholds in the Northeast and Midwest and exposure to markets in the Southeast and West Coast. Flagstar Mortgage operates nationally through a wholesale network of approximately 30003,600 third-party mortgage originators. Flagstar Bank N.A. also operates through eightnine 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.that are used in connection with the determination of the allowance for credit losses, mortgage servicing rights, the Flagstar acquisition and the Flagstar acquisition.Signature Transaction.“Borrowed- Borrowed Funds” for additional information regarding these trusts.83NOTE 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, 20222023 and 2021,2022, the Company’s cash and cash equivalents totaled $2.0$11.5 billion and $2.2$2.0 billion, respectively. Included in cash and cash equivalents at those dates were $837 million$10.7 billion and $$837 million1.7 billion, , respectively, of interest-bearing deposits in other financial institutions, primarily consisting of balances due from the FRB-NY. There were no 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, 20222023 or December 31, 2021. There was $793 million of reverse repurchase agreements outstanding at December 31, 2022. There was $406 million reverse repurchase agreements outstanding at December 31, 2021. Restricted cash totaled $50$134 million and $50 million at December 31, 2023 and December 31, 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.841918 - Fair Value Measurements.Measures85The 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.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 economic forecasts.supportable forecast period and macroeconomic assumptions. The Company’s economic forecast scenarios and related economic parameters are sourced from independent third parties. The economic forecast reasonable and supportable period is 24 months, and afterwards the Company reverts to a historical average loss rate on a straight-line basis over a 12-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 madelease losses,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 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.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.20222023 and December 31, 2021,2022, the allowance for credit losses on off-balance sheet exposures was $23$52 million and $12$23 million, respectively. 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 on8670.5%60 percent of the loan portfolio at December 31, 2022.2023. Portfolio prepayments 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 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.adopted,evaluates goodwill for impairment at least annually or when triggering events are identified. We utilize a market approach to determine 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.a prospective basis, ASU No. 2017-04, Intangibles—Goodwillsubsequent 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 Other (Topic 350): Simplifying the Test for Goodwill Impairment on January 1, 2020. The Company has significant intangible assets related to goodwill andprior) was fully impaired as of December 31, 2022,2023, as confirmed by the Company’s current market capitalization. As a result, the Company had goodwill of $2.4 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 one 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 forof the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized, however, would not exceed the total amountentire goodwill balance of goodwill allocated to that reporting unit. Additionally, the Company would consider income tax effects from any tax deductible goodwill$2.4 billion. Additional information on the carrying amount of the reporting unit when measuringmethodologies and assumptions used in the goodwill impairment loss, if applicable. As of December 31, 2022, the Company’s goodwill was analysis can be found in Note 16 - Intangible Assets.not impaired.1918 - Fair Value Measurements.Measures.87$18$39 million, $21$18 million, and $24$21 million, respectively, in the years ended December 31, 2023, 2022, 2021, and 2020.2021. 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 20222023 and 2021,2022, the Company’s investment in BOLI was $1.6 billion and $1.2 billion, respectively. The December 31, 2022 amount includes $373 million acquired in the Flagstar merger.$1.6 billion. The Company’s investment in BOLI generated income of $32$43 million, $29$32 million, and $32$29 million, respectively, during the years ended December 31, 2023, 2022, 2021, and 2020.2021.Entities.Entities.$8$8 million of OREO and $4$4 million of taxi medallions. At December 31, 2021, the Company had $3 million of OREO and $5 million of taxi medallions.881415 - DerivativesDerivative and Hedging Activities and for additional information on recurring fair value disclosures, see Note 1918 - Fair Value Measurements.Measures.$10$12 million and $10 million at December 31, 2023 and December 31, 2022, as compared to $respectively2 million at December 31, 2021..2022,2023, the Company had 5,774,22916,143,893 shares available for grant under the 2020 Incentive Plan. In addition, the Company had 4,025,636 shares available for grant under the Flagstar Bancorp, Inc. 2016 Stock Award and 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 18, “Stock-Related Benefit14 - Stock-Related Benefits Plans.” 8990For 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
to participating securities
share computation
common share equivalentsImpactOn March 20, 2023, the Company’s wholly owned bank subsidiary, Flagstar Bank N.A. (the “Bank”), entered into a Purchase and Assumption Agreement (the “Agreement”) with the Federal Deposit Insurance Corporation (“FDIC”), as receiver (the "FDIC Receiver") of Recent Accounting PronouncementsSignature Bridge Bank, N.A. (“Signature”) to acquire certain assets and assume certain liabilities of Signature (the “Signature Transaction”). Headquartered in New York, New York, Signature Bank was a full-service commercial bank that operated 29 branches in New York, seven branches in California, two branches in North Carolina, one branch in Connecticut, and one branch in Nevada. In connection with the Signature Transaction the Bank assumed all of Signature’s branches. The Bank acquired only certain parts of Signature it believes to be financially and strategically complementary that are intended to enhance the Company’s future growth.Recently Adopted Accounting Standardsadopted ASU No. 2022-01—Derivativeshas determined that the Signature Transaction constitutes a business combination as defined by ASC 805, Business Combinations ("ASC 805"). ASC 805 establishes principles and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Methodrequirements as to how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the first quarteracquiree. Accordingly, the assets acquired and liabilities assumed have been recorded based on their preliminary estimated fair values as of 2022 upon issuance. The amendments expandMarch 20, 2023, which have been adjusted through December 31, 2023 based on changes to those preliminary estimates.current last-of-layer methodAgreement, the Company is expected to provide certain services to the FDIC to assist the FDIC in its administration of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. To reflect that expansion,certain assets and liabilities which were not assumed by the last-of-layer method is renamedCompany and which remain under the portfolio layer method. In addition, the amendments expand the scopecontrol of the portfolio layer methodFDIC (the “Interim Servicing”). The Interim Servicing includes activities related to the servicing of loan portfolios not acquired on behalf of the FDIC for a period of up to one year from the date of the Signature Transaction unless such loans are sold or transferred at an earlier time by the FDIC or until cancelled by the FDIC upon 60-days’ notice. The Interim Servicingnon-prepayable assets; specify eligible hedging instrumentsother ancillary services requested by the FDIC to assist in a single-layer hedge;their administration of the remaining assets and liabilities of Signature Bank. The FDIC will reimburse the Company for costs associated with the Interim Servicing based upon an agreed upon fee which approximates the cost to provide additional guidance onsuch services. As the accounting for and disclosure of hedge basis adjustments; specify how hedge basis adjustments should be considered when determining credit lossesFDIC intends to reimburse the Company for the costs to service the loans, neither a servicing asset nor servicing liability was recognized as part of the Signature Transaction.(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 the closed portfolio. To date, the guidance has not had any impact onnon-interest income in the Company’s Consolidated Statement of Income and Comprehensive Income.(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 Condition,Income and Comprehensive Income.(in millions) Total Par value (UPB) $ 583 ACL at acquisition (13) Non-credit (discount) (76) Fair value $ 494 cash flows.assume all liabilities of Signature and the historical operations are not consistent with the transaction. Therefore, it is impracticable to provide pro forma information on revenues and earnings for the Signature Transaction in accordance with ASC 805-10-50-2.NOTE 3: BUSINESS COMBINATIONFlagstar Bancorp”Flagstar”) in an all-stock transaction.transaction (“Flagstar Transaction”). Flagstar was a savings and loan holding company headquartered in Troy, MI.Bancorp. common stock was converted into 4.0151 shares of the Company’s common shares at the effective time of the merger. In addition, the Company received approval from the Office of the Comptroller of the Currency (the “OCC”“OCC") to convert Flagstar Bank, FSB to a national bank to be known as Flagstar Bank, N.A., and to merge New York Community Bank into Flagstar Bank, N.A. with Flagstar Bank, N.A. being the surviving entity. Flagstar Bank, FSB, provided commercial, small business, and consumer banking services through 158 branches in Michigan, Indiana, California, Wisconsin, and Ohio. It also provided home loans through a wholesale network of brokers and correspondents in all 50 states. The acquisition of Flagstar added significant scale, geographic diversification, improved funding profile, and a broader product mix to the Company.based on initial valuations atof the assets acquired and liabilities assumed December 1, 2022. Due to the timing of the transaction closing date and the Company’s annual report on Form 10-K, these estimated fair values are considered preliminary as of December 31, 2022, andwhich was subject to adjustment for up to one year after December 1, 2022. WhileAs of December 31, 2023, the Company believes thatfinalized its review of the information available on December 1, 2022 provided a reasonable basis for estimating fair value, the Company expects that it may obtain additional information and evidence during the measurement91period that would result in changes to the estimated fair value amounts. Valuations subject to change include, but are not limited to, loans and leases, certain deposits, intangibles, deferred tax assets acquired and liabilities assumed, and certain other assets and other liabilities.The Company’s results of operations for the year-ended December 31, 2022, include the results of operations of Flagstar on and after December 1, 2022. Results for periods prior to December 1, 2022, dodid not include the results of operations of Flagstar.record any material adjustments.a preliminaryan allocation of consideration paid for the fair value of assets acquired and liabilities and equity assumed from Flagstar as of December 1, 2022.pricePrice consideration2,010 2,0103312,6951,2575,4383,891 Commercial real estate 3,891 Commercial and industrial6,5232,15618,0082921,0122,15825,75315,9956,70088923,5842,169159 159$$159 million.159 million.92valuesvalue of cash and cash equivalents approximateapproximates their stated face amounts, as these financial instruments are either due on demand or have short-term maturities.Loansvaluesvalue of deposit liabilities with no stated maturity (i.e., money market accounts, savings accounts, and non-interest-bearing and interest-bearing checking accounts) areis equal to the carrying amounts payable on demand. The fair valuesvalue of certificates of deposit representrepresents contractual cash flows, discounted using interest rates currently offered on deposits with similar characteristics and remaining maturities.93more-than-insignificantmore than insignificant deterioration of credit from origination are considered PCD. For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using the same methodology as other loans and leases held-for-investment. The following table provides a summary of loans and leases purchased as part of the Flagstar acquisition with credit deterioration and the associated credit loss reserve at acquisition:1,950 1,950(51)(33)1,866 1,866CombinedInformationOperationsoperations of Flagstar.MergerFlagstar Transaction occurred as of January 1, 2021 with pro forma adjustments. The pro forma adjustments give effect to any change in interest income due to the accretion of the net discounts from the fair value adjustments of acquired loans, any change in interest expense due to the estimated net premium from the fair value adjustments to acquired time deposits and other debt, and the amortization of intangibles had the deposits been acquired as of January 1, 2021. The pro forma amounts for the twelve monthsyears ended December 31, 2022 and 2021 do not reflect the anticipated cost savings that have not yet been realized. Merger related expensesAcquisition costs incurred by the Company during the twelve monthsyears ended December 31, 2022 and 2021 are reflected in the pro forma amounts. The pro forma information does not necessarily reflect the results of operations that would have occurred had the Company merged with 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 94NOTE 4: RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE LOSSFor the Twelve MonthsYear Ended December 31, 2022— -— -— -65 4(17) (1)48 3— -(2)(7) (2)1 -(6) (2)42 117, “Employee20 - Employee Benefits” for additional information.95NOTE 5: SECURITIES
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 $31$38 million included in other assets in the Consolidated Statements of Condition.96
Cost
Unrealized
Gain
Unrealized
Loss
ValueDecember 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 $15$31 million included in other assets in the Consolidated Statements of Condition.2022,2023, the Company had $762$861 million and $$329 million329 million of FHLB-NY stock, at cost and FHLB-Indianapolis stock, at cost, respectively. At December 31, 2021,2022, the Company had $734$762 million and $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 $176$203 million and $176 million of Federal Reserve Bank stock, at cost. The Company had respectively.no Federal Reserve Bank stock, at December 31, 2021.December 31, ( in millions) 2023 2022 2021 Gross proceeds $ 1,637 $ 228 $ — Gross realized gains 2 — — Gross realized losses (3) — — Net(loss) gainslosses on equity securities recognized in earnings for the years ended December 31, 2023. For the years ended December 31, 2022 and 2021 and 2020there were $(2) million, $0unrealized losses on equity securities of $2 million and $zero recognized in earnings, respectively.1 million, respectively.972022:2023:
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 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 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
securities98following table presentsinvestment securities designated as having a continuous unrealized loss position for less than twelve months and for twelve months or longer as ofmore at December 31, 2021:
Loss
Loss
Loss
securities The investment securities designated as having a continuous loss position for twelve months or more at December 31, 2021 consisted of four agency collateralized mortgage obligations, five capital trusts notes, four asset-backed securities, two corporate bonds, twenty US government agency bonds, twenty one mortgage-backed securities and one 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.20222023 or December 31, 20212022 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, 2022.2023.99NOTE 6: LOANS AND LEASESfollowing table sets forth, atCompany classifies loans that we have the dates indicated,intent and ability to hold for the composition of the loan and lease portfolio held for investment,foreseeable future or until maturity as LHFI. We report LHFI loans at their amortized cost, which includes the outstanding principal balance adjusted for any unamortized premiums, discounts, deferred fees and costs:unamortized fair value adjustments for acquired loans:
Loans
Held for
Investment
Loans
Held for
Investment
of $85 and $95 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 $292$423 million and $199$292 million at December 31, 20222023 and December 31, 2021,2022, respectively, which is included in other assets in the Consolidated Statements of Condition.$4.4$5.2 billion and $3.5$4.4 billion respectively, at December 31, 20222023 and December 31, 2021.Loans and Leases2022, respectively.Loans and Leases Held for InvestmentThe majority of the loans the Company originates for investment are multi-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 grade 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.100The repayment of multi-family and CRE loans generally depends on the income produced by the underlying properties which, in turn, depends on their successful operation and management. To mitigate the potential for credit losses, the Company underwrites its loans in accordance with credit standards it considers to be prudent, looking first 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, based upon the results of operations of the business.At December 31, 2022, one-to-four family loans represented $5.8 billion and as of December 31, 2021 one-to-four family loans totaled $160 million, with the increase being driven by the Flagstar acquisition. These loans include various types of conforming and non-conforming fixed and adjustable rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties.At December 31, 2022, other loans totaled $2.3 billion and consisted primarily of home equity lines of credit, boat and recreational vehicle indirect lending, point of sale consumer loans and other consumer loans, including overdraft loans acquired in the Flagstar acquisition.Included in loans held for investment at December 31, 2022 and December 31, 2021, were loans of $101 million and $6 million, respectively, to officers, directors, and their related interests and parties. There were no loans to principal shareholders at that date.2022,2023, LGG loans totaled $1.2 billion$541 million and the repurchase liability was $$456 million.0.3 billion.10114 millionat December 31, 2023.Loans Held-for-SaleAt December 31, 2022,Signature Transaction contributed $360 million in Small Business Administration ("SBA") loans held for sale were $1.1 billion compared to zero at December 31, 2021, with the increase driven by the Flagstar acquisition. The Company classifiesthis increase. We classify loans as held for sale when we originate or purchase loans that we intend to sell. The Company hasWe have elected the fair value option for nearly all of this portfolio. The Company estimatesportfolio, 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. The majority of our mortgage loans originated as LHFS are ultimately sold into the secondary market on a whole loan basis or by securitizing the loans into agency, government, or private label MBS.20222023 and December 31, 2021, all2022 we had no loans that were nonperforming and still accruing.our non-performingthe Company’s loans were non-accrual loans.held for investment at December 31, 2023:(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
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 102presents information regardingsummarizes the qualityCompany’s portfolio of the Company’s loans held for investment by credit quality indicator at December 31, 2021:
30-89
Days
Past Due
Accrual
Loans
Days or
More
Delinquent
and Still
Accruing
Interest
Past Due
Loans
Loans
Loans
Receivable
construction(1)Includes lease financing receivables, all of which were current.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
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.The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at December 31, 2021:
Family
Real Estate
Four
Family
Development,
and
Construction
Mortgage
Loans
and
Industrial(1)
Other
Loans(1)Includes lease financing receivables, all of which were classified as Pass.103
| 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) | ||||||||||||||||||||||||||||||||||||||||||||
Pass(1) | $ | 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 | |||||||||||||||||||||||||||||||||
|
| Vintage Year |
| |||||||||||||||||||||||||||||||||
(in millions) |
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
|
| Prior To |
|
| Revolving |
|
| Revolving |
|
| Total |
| |||||||||
Pass |
| $ | 12,817 |
|
| $ | 10,925 |
|
| $ | 9,121 |
|
| $ | 5,519 |
|
| $ | 4,301 |
|
| $ | 8,055 |
|
| $ | 1,452 |
|
| $ | 5 |
|
| $ | 52,195 |
|
Special Mention |
|
| — |
|
|
| 15 |
|
|
| 103 |
|
|
| 244 |
|
|
| 293 |
|
|
| 451 |
|
|
| — |
|
|
| — |
|
|
| 1,106 |
|
Substandard |
|
| 1 |
|
|
| 6 |
|
|
| 48 |
|
|
| 224 |
|
|
| 137 |
|
|
| 753 |
|
|
| — |
|
|
| 3 |
|
|
| 1,172 |
|
Total mortgage loans |
| $ | 12,818 |
|
| $ | 10,946 |
|
| $ | 9,272 |
|
| $ | 5,987 |
|
| $ | 4,731 |
|
| $ | 9,259 |
|
| $ | 1,452 |
|
| $ | 8 |
|
| $ | 54,473 |
|
Pass |
|
| 5,415 |
|
|
| 964 |
|
|
| 637 |
|
|
| 727 |
|
|
| 180 |
|
|
| 266 |
|
|
| 6,209 |
|
|
| 46 |
|
|
| 14,444 |
|
Special Mention |
|
| 12 |
|
|
| — |
|
|
| — |
|
|
| 7 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 19 |
|
Substandard |
|
| 1 |
|
|
| 1 |
|
|
| 22 |
|
|
| 2 |
|
|
| 9 |
|
|
| 7 |
|
|
| 19 |
|
|
| 4 |
|
|
| 65 |
|
Total other loans |
|
| 5,428 |
|
|
| 965 |
|
|
| 659 |
|
|
| 736 |
|
|
| 189 |
|
|
| 273 |
|
|
| 6,228 |
|
|
| 50 |
|
|
| 14,528 |
|
Total |
| $ | 18,246 |
|
| $ | 11,911 |
|
| $ | 9,931 |
|
| $ | 6,723 |
|
| $ | 4,920 |
|
| $ | 9,532 |
|
| $ | 7,680 |
|
| $ | 58 |
|
| $ | 69,001 |
|
Collateral Type (in millions) Real Other Multi-family $ 13 $ — Commercial real estate 35 — One-to-four family first mortgage 136 — Acquisition, development, and construction — — Commercial and industrial — 3 Other 14 — Total collateral-dependent loans held for investment 198 3 The December 31, (in millions) 2022 2021 2020 Interest income that would have been recorded $ 3 $ 3 $ 5 Interest income actually recorded (1 ) (1 ) (1 ) Interest income foregone $ 2 $ 2 $ 4 The following table presents information regarding the December 31, 2022 December 31, 2021 (in millions) Accruing Non- Total Accruing Non- Total Loan Category: Multi-family $ — $ 6 $ 6 $ — $ 7 $ 7 Commercial real estate 16 19 35 16 — 16 One-to-four family first mortgage — — — — — — Acquisition, development, and — — — — — — Commercial and industrial — 3 3 — 6 6 Total $ 16 $ 28 $ 44 $ 16 $ 13 $ 29 2022:2023: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, 2022.2023.20222023 and December 31, 2021,2022, the Company had $121$81 million and $121 million of residential mortgage loans in the process of foreclosure, respectively.no residential mortgage loansprocessform of foreclosure, respectively.principal forgiveness, an interest rate reduction, or an other-than-insignificant payment delay or a term extension that have occurred in the current reporting period to a borrower experiencing financial difficulty are disclosed along with the financial impact of the modifications.104interest 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 Theis 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.$$44 million.38 million.Company’s TDRs:
Accrual
Accrual
constructionThe eligibilityCompany's TDRs as 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.December 31, 2022:
| December 31, 2022 | |||||||||||||||||
| (dollars in millions) | Accruing | Non- Accrual | Total | ||||||||||||||
| Loan Category: | |||||||||||||||||
| Multi-family | $ | — | $ | 6 | $ | 6 | |||||||||||
| Commercial real estate | 16 | 19 | 35 | ||||||||||||||
| Commercial and industrial | — | 3 | 3 | ||||||||||||||
| Total | $ | 16 | $ | 28 | $ | 44 | |||||||||||
The financial effects of the Company’s TDRs are summarized as follows:
|
| For the Twelve Months Ended December 31, 2022 |
| |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Weighted Average |
|
|
|
|
|
| |||||||||
(dollars in millions) |
| Number |
|
| Pre- |
|
| Post- |
|
| Pre- |
|
| Post- |
| Charge- |
|
| Capitalized |
| ||||||
Loan Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commercial real estate |
|
| 2 |
|
| $ | 22 |
|
| $ | 19 |
|
|
| 6.00 |
| % | 4.02 | % | $ | 3 |
|
| $ | — |
|
Total |
|
| 2 |
|
| $ | 22 |
|
| $ | 19 |
|
|
|
|
|
|
| $ | 3 |
|
| $ | — |
| |
|
| 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 | % | $ | — |
|
| $ | — |
|
Commercial and industrial |
|
| 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: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
One-to-four family first mortgage |
|
| 1 |
|
| $ | 15 |
|
| $ | 15 |
|
| 8.00 |
| % | 3.50 |
| % | $ | — |
|
| $ | — |
| ||
Commercial and industrial |
|
| 42 |
|
|
| 9 |
|
| $ | 8 |
|
|
| 2.36 |
|
|
| 2.23 |
|
|
| 1 |
|
|
| — |
|
Total |
|
| 43 |
|
| $ | 24 |
|
| $ | 23 |
|
|
|
|
|
|
|
| $ | 1 |
|
| $ | — |
| ||
At December 31, 2022 and December 31, 2021, no loans have been modified as TDR's that were in payment default duringfor the twelve months ended at that date. At December 31, 2020, C&I loans in the amount of $3 million that had been modified2022 are summarized as a TDR during the twelve months ended at that date was in prepayment default.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 | $ | — | ||||||||||||||||||||||||||||
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.
106
NOTE 7: ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES
Allowance for Credit Losses on Loans and Leases
| 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 | |||||||||||||||||||||||
|
| Twelve Months Ended December 31, |
| |||||||||||||||||||||
|
| 2022 |
|
| 2021 |
| ||||||||||||||||||
(in millions) |
| Mortgage |
|
| Other |
|
| Total |
|
| Mortgage |
|
| Other |
|
| Total |
| ||||||
Balance, beginning of period |
| $ | 178 |
|
| $ | 21 |
|
| $ | 199 |
|
| $ | 176 |
|
| $ | 18 |
|
| $ | 194 |
|
Adjustment for Purchased PCD Loans |
|
| 21 |
|
|
| 30 |
|
|
| 51 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Charge-offs |
|
| (5 | ) |
|
| (2 | ) |
|
| (7 | ) |
|
| (6 | ) |
|
| (7 | ) |
|
| (13 | ) |
Recoveries |
|
| 4 |
|
|
| 7 |
|
|
| 11 |
|
|
| 2 |
|
|
| 13 |
|
|
| 15 |
|
Provision for (recovery of) credit |
|
| 92 |
|
|
| 47 |
|
|
| 139 |
|
|
| 6 |
|
|
| (3 | ) |
|
| 3 |
|
Balance, end of period |
| $ | 290 |
|
| $ | 103 |
|
| $ | 393 |
|
| $ | 178 |
|
| $ | 21 |
|
| $ | 199 |
|
allowance for unfunded commitments totaled $52 million and $23 million, respectively. The following table presents additional information about the Company’s nonaccrual loans at December 31, 2022: (in millions) Recorded Related Interest Nonaccrual loans with no related allowance: Multi-family $ 13 $ — $ — Commercial real estate 19 — 1 One-to-four family first mortgage 90 — — Acquisition, development, and construction — — — Other (includes C&I) 3 — — Total nonaccrual loans with no related allowance $ 125 $ — $ 1 Nonaccrual loans with an allowance recorded: Multi-family $ — $ — $ — Commercial real estate 1 — — One-to-four family first mortgage 2 — — Acquisition, development, and construction — — — 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 — — Acquisition, development, and construction — — — Other (includes C&I) 16 14 — Total nonaccrual loans $ 141 $ 14 $ 1 (in millions) Recorded Related Interest Nonaccrual loans with no related allowance: Multi-family $ 9 $ — $ 1 Commercial real estate 14 — — One-to-four family first mortgage — — — 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 first mortgage 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 first mortgage 1 — — Acquisition, development, and construction — — — Other 6 — — Total nonaccrual loans $ 33 $ — $ 1 At2022,2023, the allowance for credit losses on loans and leases totaled $393$992 million, up $194$599 million compared to December 31, 2021, driven primarily by the initial provision for credit losses and the adjustment for PCD loans acquired in the Flagstar acquisition. In addition, the increase was also driven by net recoveries of $4 million during the year 2022.At December 31, 2022 and 2021, the allowance for unfunded commitments totaled $23 million and $12 million, respectively.For the year ended December 31, 2022 the The increase in the allowance for credit losses on loans and leases was primarily driven by a combination of increased loan balances as a result of the Flagstar acquisition and changesan increase in reserves to address weakness in the macroeconomic environment bothoffice sector, potential repricing risk in the multifamily portfolio and an increase in classified assets. Also contributing to the increase in the allowance for credit losses on a spotloans and forecasted basis, specificallyleases was the inflationary pressures leading to sharp increases in interest rates and a slow-down of prepayment activity leading to longer weighted average lives on the balance sheet. In addition, theday 1 impact of the forecasted macroeconomic factors had resultant decreasesSignature Transaction that closed on market level factors in Property Prices onMarch 20, 2023, which added $141 million to the Multi-Family, Commercial Real Estatereserve.1-4 Family loan portfolios reflectingDecember 31, 2022, the changing economic landscape. 107(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 (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
Recognized108The following table presents additional information about the Company’s nonaccrual loans at December 31, 2021
Investment
Allowance
Income
Recognized
NOTE 8. LEASES
Lessor Arrangements
109
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, 20222023 and December 31, 2021,2022, the carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $32$280 million and $61$32 million, respectively.
(in millions) |
| For the |
|
| For the |
| ||
Interest income on lease financing (1) |
| $ | 53 |
|
| $ | 53 |
|
| For the Years Ended December 31, | |||||||||||||||||
| (in millions) | 2023 | 2022 | 2021 | ||||||||||||||
Interest income on lease financing (1) | $ | 119 | $ | 53 | $ | 53 | |||||||||||
112 (in millions) December 31, December 31, Net investment in the lease - lease payments receivable $1,685 $1,790 Net investment in the lease - unguaranteed residual assets 60 75 Total lease payments $1,745 $1,865 The following table presents the remaining maturity analysis of the undiscounted lease receivables, as well as the reconciliation to the total amount of receivables recognized in the Consolidated Statements of Condition: (in millions) December 31, 2022 $ - 2023 52 2024 152 2025 396 2026 342 Thereafter 803 Total lease payments 1,745 Plus: deferred origination costs 19 Less: unearned income (85 ) Total lease finance receivables, net $ 1,679 (in millions) For the Twelve For the Twelve Operating lease cost $ 28 $ 27 Sublease income — — Total lease cost $ 28 $ 27 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 $ 28 $ 27 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 (1) $ 119 $ 249 Operating lease liabilities (2) $ 122 249 Weighted average remaining lease term 6 years 16 years Weighted average discount rate % 3.85 % 3.05 % (in millions) December 31, 2023 $ 28 2024 25 2025 24 2026 19 2027 13 Thereafter 28 Total lease payments 137 Less: imputed interest (15 ) Total present value of lease liabilities $ 122 The Company has investments in MSRs that result from the sale of loans to the secondary market for which we retain the servicing. The Company accounts for MSRs at their fair value. A primary risk associated with MSRs is the potential reduction in fair value as a result of higher than anticipated prepayments due to loan refinancing prompted, in part, by declining interest rates or government intervention. Conversely, these assets generally increase in value in a rising interest rate environment to the extent that prepayments are slower than anticipated. The Company utilizes derivatives as economic hedges to offset changes in the fair value of the MSRs resulting from the actual or anticipated changes in prepayments stemming from changing interest rate environments. There is also a risk of valuation decline due to higher than expected default rates, which we do not believe can be effectively managed using derivatives. For further information regarding the derivative instruments utilized to manage our MSR risks, see Note Changes in the fair value of residential first mortgage MSRs were as follows: (in millions) Balance at beginning of period $ Additions from loans sold with servicing retained 208 Reductions from sales (51) (80) 1 Fair value of MSRs at end of period $ 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, 2022 Fair value Actual 10% adverse change 20% adverse change (dollars in millions) 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 assumption to the change in fair value may not be linear. To isolate the effect of the specified change, the fair value shock analysis is consistent with the identified adverse change, while holding all other assumptions constant. In practice, a change in one assumption generally impacts other assumptions, which may either magnify or counteract the effect of the change. For further information on the fair value of , see Note 18 - Fair Value Measures. The following table summarizes income and fees associated with owned MSRs: 2022. Note 11 - Deposits December 31, 2022 2021 (dollars in millions) Amount Percent Weighted Amount Percent Weighted Interest-bearing checking and money $ 22,511 38.34 % 2.66 % $ 13,209 37.68 % 0.20 % Savings accounts 11,645 19.83 1.30 8,892 25.36 0.35 Certificates of deposit 12,510 21.30 2.04 8,424 24.03 0.52 Non-interest-bearing accounts 12,055 20.53 — 4,534 12.93 — Total deposits $ 58,721 100.00 % 1.71 % $ 35,059 100.00 % 0.29 % The scheduled maturities of certificates of deposit at December 31, (in millions) 1 year or less $ 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 $ The following table summarizes the Company’s borrowed December 31, (in millions) 2022 2021 Wholesale borrowings: FHLB advances $ 20,325 $ 15,105 Repurchase agreements — 800 Total wholesale borrowings $ 20,325 $ 15,905 Junior subordinated debentures 575 361 Subordinated notes 432 296 Total borrowed funds $ 21,332 $ 16,562 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 2023 $ 10,325 3.51 % $ 15,325 3.26 % 2024 1,600 1.36 3,100 2.42 2025 — — 250 3.50 2026 — — — — 2027 2,650 3.77 1,250 3.87 2028 400 4.11 400 4.11 2029 200 1.61 — — 2030 — — — — 2031 — — — — 2032 5,150 2.80 — — Total FHLB advances $ 20,325 3.19 $ 20,325 3.19 The following table presents contractual terms of the junior subordinated debentures outstanding at December 31, Issuer Interest Rate Junior Capital Date of Stated (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) 6.37 124 120 Dec. 14, 2006 Dec. 15, 2036 PennFed Capital Trust III (2) 8.02 31 30 June 2, 2003 June 15, 2033 New York Community Capital Trust XI (2) 6.38 59 58 April 16, 2007 June 30, 2037 Flagstar Statutory Trust II (2) 7.97 26 25 Dec. 26, 2002 Dec. 26, 2032 Flagstar Statutory Trust III (2) 7.33 26 25 Feb. 19, 2003 April 7, 2033 Flagstar Statutory Trust IV (2) 7.98 26 25 Mar. 19, 2003 Mar 19, 2033 Flagstar Statutory Trust V (2) 6.08 26 25 Dec 29, 2004 Jan. 7, 2035 Flagstar Statutory Trust VI (2) 6.08 26 25 Mar. 30, 2005 April 7, 2035 Flagstar Statutory Trust VII (2) 6.52 51 50 Mar. 29, 2005 June 15, 2035 Flagstar Statutory Trust VIII (2) 5.58 25 24 Sept. 22, 2005 Oct. 7, 2035 Flagstar Statutory Trust IX (2) 6.22 25 24 June 28, 2007 Sept. 15, 2037 Flagstar Statutory Trust X (2) 7.27 16 16 Aug. 31, 2007 Sept 15, 2037 Total junior subordinated debentures $ 608 $ 588 2023: At December 31, Date of Original Issue Stated Maturity Interest Rate Original Issue (dollars in millions) November 6, 2018 November 6, 2028 (1) 5.900 % $ 300 October 28, 2020 November 1, 2030 (2) 4.125 % 150 The following table summarizes the components of the Company’s net deferred tax asset (liability) at December 31, : December 31, (in millions) 2022 2021 Deferred Tax Assets: Allowance for credit losses on loans and leases $ 102 $ 55 Acquisition accounting and fair value adjustments on securities (including OTTI) 227 21 Acquisition accounting and fair value adjustments on loans 36 — Capitalized loans costs 46 — Compensation and related benefit obligations 23 17 Capitalized research and development costs 10 — Net operating loss carryforwards 15 1 Other 18 15 Gross deferred tax assets 477 109 Valuation allowance (5 ) — Net deferred tax asset after valuation allowance $ 472 $ 109 Deferred Tax Liabilities: Leases $ (328 ) $ (360 ) Mortgage servicing rights (105 ) $ — Premises and equipment (18 ) (5 ) Prepaid pension cost (29 ) (35 ) Fair value adjustments on loans — (81 ) Amortizable intangibles (71 ) (3 ) Acquisition accounting and fair value adjustments on deposits (9 ) — Acquisition accounting and fair value adjustments on debt (10 ) — Other (9 ) (9 ) Gross deferred tax liabilities $ (579 ) $ (493 ) Net deferred tax liability $ (107 ) $ (384 ) The following table summarizes the Company’s income tax expense for the years ended December 31, 2023, 2022 December 31, (in millions) 2022 2021 2020 Federal – current $ 147 $ 188 $ (148 ) State and local – current 32 35 5 Total current 179 223 (143 ) Federal – deferred (10 ) (28 ) 190 State and local – deferred 7 15 29 Total deferred (3 ) (13 ) 219 Income tax expense reported in net income 176 210 77 Income tax expense reported in stockholders’ equity related to: Securities available-for-sale (223 ) (42 ) 16 Pension liability adjustments (6 ) 10 — Cash flow hedge 23 9 (13 ) Adoption of ASU 2016-13 — — (4 ) Total income taxes $ (30 ) $ 187 $ 76 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, 2023, 2022 December 31, (in millions) 2022 2021 2020 Statutory federal income tax at 21% $ 174 $ 169 $ 123 State and local income taxes, net of federal income tax effect 31 40 27 Effect of tax law changes — — (73 ) Non-taxable bargain gain (33 ) — — Non-deductible FDIC deposit insurance premiums 10 9 8 Effect of tax deductibility of ESOP (3 ) (3 ) (3 ) Non-taxable income and expense of BOLI (7 ) (6 ) (7 ) Non-deductible merger expenses 3 3 — Non-deductible compensation expense 4 — — Federal tax credits (1 ) — (1 ) Adjustments relating to prior tax years (1 ) (1 ) 1 Other, net (1 ) (1 ) 2 Total income tax expense $ 176 $ 210 $ 77 nd $32 million, respectively. The following table summarizes changes in the liability for unrecognized gross tax benefits for the years ended December 31, 2023, 2022 : December 31, (in millions) 2022 2021 2020 Uncertain tax positions at beginning of year $ 39 $ 38 $ 36 Additions for tax positions relating to current-year operations 1 2 1 Additions for tax positions relating to prior tax years — 1 1 Subtractions for tax positions relating to prior tax years — (2 ) — Uncertain tax positions at end of year $ 40 $ 39 $ 38 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, 2022 December 31, 2021 Line Item in the Consolidated Statements of Carrying Cumulative Carrying Cumulative Total loans and leases, net (1) $ - $ - $ 2,025 $ 25 , 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 (in millions) For the Twelve For the Twelve Derivative – interest rate swap: Interest income $ 25 $ 48 Hedged item – loans: Interest income $ (25 ) $ (48 ) December 31, 2023 December 31, 2022 Fair Value (in millions) Notional Other Other Derivatives designated as cash flow hedging instruments: Interest rate swap $ 3,750 $ 5 $ — Total $ 3,750 $ 5 $ — Derivatives not designated as hedging instruments: Assets Futures $ 1,205 $ 2 $ — Mortgage-backed securities forwards 1,065 36 — Rate lock commitments 1,539 9 — Interest rate swaps and swaptions 7,594 182 — Total $ 11,403 $ 229 $ — Liabilities Mortgage-backed securities forwards 739 — 61 Rate lock commitments 527 — 10 Interest rate swaps and swaptions 2,445 — 65 Total derivatives not designated as hedging instruments $ 3,711 $ — $ 136 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 (1) $ 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 Interest rate swaps (2) 65 — 65 — 29 Total derivative liabilities $ 126 $ — $ 126 $ — $ 83 Variation margin pledged to, or received from, a Central Counterparty Clearing House to cover the prior days fair value of open positions is considered settlement of the derivative position for accounting purposes. 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 gain recognized in AOCL $ 88 $ 8 Amount of reclassified from AOCL to interest expense (4 ) 25 The following table presents the net gain (loss) recognized in income on For the Twelve For the Twelve (dollars in millions) Derivatives not designated as hedging instruments Location of Gain (Loss) Futures Net return on mortgage servicing rights $ (1 ) $ — Interest rate swaps and swaptions Net return on mortgage servicing rights (11 ) — Mortgage-backed securities forwards Net return on mortgage servicing rights (4 ) — Rate lock commitments and US Treasury futures Net gain on loan sales 28 — Forward commitments Other noninterest income (1 ) — Interest rate swaps (1) Other noninterest income — — Total derivative (loss) gain $ 11 $ — Finite-lived Intangible Assets The following table summarizes the Company’s off-balance sheet commitments to originate loans and letters of (in millions) Expires Within Expires After Total Maximum Financial stand-by letters of credit $ 79 $ 85 $ 164 $ 398 Performance stand-by letters of credit 108 11 119 118 Commercial letters of credit 10 1 11 25 Total letters of credit $ 197 $ 97 $ 294 $ 541 (in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Value Core deposit intangible $ 250 $ (4 ) $ 246 Other intangible assets 42 (1 ) 41 Total other intangible assets $ 292 $ (5 ) $ 287 (in millions) Amortization Expense 2023 $ 59 2024 54 2025 38 2026 33 2027 29 Total $ 213 Note 20 - Employee Benefits The following table sets forth certain information regarding the Retirement Plan as of the dates indicated: December 31, (in millions) 2022 2021 Change in Benefit Obligation: Benefit obligation at beginning of year $ 158 $ 172 Interest cost 4 4 Actuarial gain (38 ) (9 ) Annuity payments (7 ) (6 ) Settlements (1 ) (3 ) Benefit obligation at end of year $ 116 $ 158 Change in Plan Assets: Fair value of assets at beginning of year $ 283 $ 261 Actual return (loss) on plan assets (47 ) 31 Annuity payments (7 ) (6 ) Settlements (1 ) (3 ) Fair value of assets at end of year $ 228 $ 283 Funded status (included in “Other assets”) $ 112 $ 125 Changes recognized in other comprehensive income for the year ended Amortization of actuarial loss (2 ) (7 ) Net actuarial (gain) loss arising during the year 26 (23 ) Total recognized in other comprehensive income for the year (pre-tax) $ 24 $ (30 ) Accumulated other comprehensive loss (pre-tax) not yet recognized Actuarial loss, net 66 43 Total accumulated other comprehensive loss (pre-tax) $ 66 $ 43 Years Ended December 31, (in millions) 2022 2021 2020 Components of net periodic pension expense (credit): Interest cost $ 4 $ 4 $ 5 Expected return on plan assets (16 ) (16 ) (15 ) Amortization of net actuarial loss 2 7 7 Net periodic pension credit $ (10 ) $ (5 ) $ (3 ) The following table indicates the weighted average assumptions used in determining the net periodic benefit cost for the years indicated: Years Ended December 31, 2022 2021 2020 Discount rate 2.6 % 2.2 % 3.0 % Expected rate of return on plan assets 6.0 6.3 6.5 have full discretion to buy, sell, invest and reinvest in these asset segments based on these guidelines which includes allowing the underlying investments to fluctuate within the stated policy ranges. The The following table presents information about the fair value measurements of the investments held by the Retirement Plan as of December 31, (in millions) Total Quoted Prices Significant Other Significant Equity: Large-cap value (1) $ 23 $ — $ 23 $ — Large-cap growth (2) 17 — 17 — Large-cap core (3) 13 — 13 — Mid-cap value (4) 5 — 5 — Mid-cap growth (5) 4 — 4 — Mid-cap core (6) 5 — 5 — Small-cap value (7) 3 — 3 — Small-cap growth (8) 6 — 6 — Small-cap core (9) 4 — 4 — International equity (10) 30 — 30 — Fixed Income Funds: Fixed Income – U.S. Core (11) 65 — 65 — Intermediate duration (12) 22 — 22 — Equity Securities: Company common stock 26 26 — — Cash Equivalents: Money market * 5 1 4 — $ 228 $ 27 $ 201 $ — At December 31, 2022 2021 Equity securities 60 % 62 % Debt securities 38 36 Cash equivalents 2 2 Total 100 % 100 % Expected Contributions 2023. (in millions) 2023 $ 8 2024 8 2025 8 2026 8 2027 8 2028 and thereafter 42 Total $ 82 The following table sets forth certain information regarding the Health & Welfare Plan as of the dates indicated: December 31, (in millions) 2022 2021 Change in benefit obligation: Benefit obligation at beginning of year $ 10 $ 12 Interest cost — — Actuarial gain (2 ) (2 ) Premiums and claims paid (1 ) — Benefit obligation at end of year $ 7 10 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”) $ (7 ) (10 ) 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 ) (2 ) Total recognized in other comprehensive income for the year (pre-tax) $ (2 ) $ (2 ) Accumulated other comprehensive (gain) loss (pre-tax) not yet recognized Prior service cost $ — $ — Actuarial (gain) loss, net (2 ) — Total accumulated other comprehensive income (pre-tax) $ (2 ) — The following table presents the weighted average assumptions used in determining the net periodic benefit cost for the years indicated: Years Ended December 31, 2022 2021 2020 Discount rate 2.3 % 2.0 % 2.9 % 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 2028 2027 2026 (in millions) 2023 $ 1 2024 1 2025 1 2026 1 2027 1 2028 and thereafter 2 Total $ 7 For the Year Ended Number of Shares Weighted Unvested at beginning of year 6,950,335 $ 11.68 Granted 3,710,689 11.23 Assumed in business acquisition (1) 1,904,025 9.35 Vested (2,374,209 ) 12.21 Forfeited (614,238 ) 11.56 Unvested at end of year 9,576,602 10.92 (1) Weighted-average per share represents the fair value per share on the acquisition date. Number of Weighted Performance Expected Outstanding at beginning of year 834,612 $ 11.44 Granted 473,211 10.09 Released (176,090 ) 11.42 Forfeited (336,749 ) 11.43 Outstanding at end of period 794,984 11.43 January 1, 2022 - December 31, 2024 March 31, 2023 - 2025 Fair Value Measurements at December 31, 2022 (in millions) Quoted Significant Significant Netting Total Assets: Mortgage-related Debt Securities 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 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 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: — — Mutual funds and common stock — 16 — — 16 Total equity securities $ — $ 16 $ — $ — $ 16 Total securities $ 45 $ 5,751 $ — $ — $ 5,796 Balance at Beginning of Year Total Gains / (Losses) Recorded in Earnings (1) Purchases / Originations Sales Settlement Transfers In (Out) Balance at End of Year (dollars in millions) Year-Ended December 31, 2022 Assets Mortgage servicing rights (1) $ 1,012 $ 2 $ 19 — — — $ 1,033 Rate lock commitments (net) (1)(2) 21 (12 ) 5 — — (15 ) (1 ) Totals $ 1,033 $ (10 ) $ 24 $ — $ — $ (15 ) $ 1,032 Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (dollars in millions) Assets Option adjusted spread 5.3% - 21.6% (5.9%) Mortgage servicing rights $ 1,033 Discounted cash flows Constant prepayment rate 0% - 10.0% (7.9%) Weighted average cost to service per loan $65 - $90 ($68) Rate lock commitments (net) $ (1 ) Consensus pricing Origination pull-through rate 76.41% Fair Value Measurements at December 31, 2022 Using (in millions) Quoted Prices Significant Significant Total Fair Certain loans (1) $ — $ — $ 28 $ 28 Other assets(2) — — 41 41 Total $ — $ — $ 69 $ 69 Fair Value Measurements at December 31, 2021 Using (in millions) Quoted Prices Significant Significant Total Fair Certain impaired loans (1) $ — $ — $ 32 $ 32 Other assets (2) — — 32 32 Total $ — $ — $ 64 $ 64 December 31, 2022 Fair Value Measurement Using (in millions) Carrying Estimated Quoted Prices Significant Significant Financial Assets: Cash and cash equivalents $ 2,032 $ 2,032 $ 2,032 $ — $ — FHLB and FRB stock (1) 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 — 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 — Year-ended December 31, 2022 (dollars in millions) Assets Loans held-for-sale Net gain on loan sales $ 8 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 The following tables present the condensed financial statements for New York Community Bancorp, Inc. (Parent Company only): December 31, (in millions) 2022 2021 ASSETS: Cash and cash equivalents $ 121 139 Investments in subsidiaries 9,633 7,525 Other assets 85 48 Total assets $ 9,839 7,712 LIABILITIES AND STOCKHOLDERS’ EQUITY: Junior subordinated debentures $ 575 361 Subordinated notes 432 296 Other liabilities 8 11 Total liabilities 1,015 668 Stockholders’ equity 8,824 7,044 Total liabilities and stockholders’ equity $ 9,839 7,712 Condensed Statements of Income Years Ended December 31, (in millions) 2022 2021 2020 Dividends received from subsidiaries $ 335 $ 4 $ 380 Other income 160 1 1 Gross income 495 381 381 Operating expenses 55 50 52 Income before income tax benefit and equity in undistributed 440 331 329 Income tax benefit 14 14 14 Income before equity in undistributed earnings of subsidiaries 454 345 343 Equity in undistributed earnings of subsidiaries 196 251 168 Net income $ 650 $ 596 $ 511 Condensed Statements of Cash Flows Years Ended December 31, (in millions) 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 650 $ 596 $ 511 Change in other assets (3 ) (22 ) — Change in other liabilities (4 ) 1 — Other, net (130 ) 32 30 Equity in undistributed earnings of subsidiaries (196 ) (251 ) (168 ) Net cash provided by operating activities 317 356 373 CASH FLOWS FROM INVESTING ACTIVITIES: Cash acquired in business acquisition 34 — — Change in receivable from subsidiaries, net 5 (3 ) 2 Net cash provided by (used in) investing activities 39 (3 ) 2 CASH FLOWS FROM FINANCING ACTIVITIES: Treasury stock repurchased (24 ) (16 ) (59 ) Cash dividends paid on common and preferred stock (350 ) (349 ) (348 ) Net cash used in financing activities (374 ) (365 ) (407 ) Net decrease in cash and cash equivalents (18 ) (12 ) (32 ) Cash and cash equivalents at beginning of year 139 151 183 Cash and cash equivalents at end of year $ 121 $ 139 $ 151 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, 2022 Common Equity Tier 1 Total Leverage Capital (dollars in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 6,335 9.06 % $ 6,838 9.78 % $ 8,154 11.66 % $ 6,838 9.70 % Minimum for capital 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 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, 2022 Common Tier 1 Total Leverage (dollars in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 7,653 10.96 % $ 7,653 10.96 % $ 7,982 11.43 % $ 7,653 10.87 % Minimum for capital adequacy 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 % 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 % with qualitative factor adjustments made for differences in current loan-specific risk characteristics as well as for changes in environmental conditions. March New York, New York March 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 New York Community Bancorp, Inc., 2020 Omnibus Incentive 10.11 Employment Agreement between New York Community Bancorp, Inc. and John T. 10.12 Amended and Restated Non-Competition and Non-Solicitation Agreement, dated November 28, 2022, by and between Flagstar Bancorp, Inc. (New York Community Bancorp, Inc. as Successor Company) and Alessandro 10.13 Flagstar Bancorp, Inc. 2016 Stock Award and Incentive Plan (as assumed by New York Community Bancorp, Inc. effective December 1, 2022) 10.14 Employment Agreement between New York Community Bancorp, Inc. and Reginald E. 10.15 Employment Agreement between New York Community Bancorp, Inc. and Lee M. 10.16 10.18 23 Consent of KPMG LLP, dated March 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. No. 1-31565) DATE: New York Community Bancorp, Inc. President and Chief Executive Officer20222023 and December 31, 2021,2022, the carrying value of net investment in leases, excluding purchase accounting adjustments was $1.7$3.5 billion and $1.9$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
2022
2021(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
2022operating lease right-of-useother assets and operating leaseother liabilities in the Consolidated Statements of Condition.110For 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,
2022
Months Ended
December 31,
2021(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,
2022
Months Ended
December 31,
2021
2022
2021(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 %
(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 $ 446 111
Maturities of lease liabilities:
2022NOTE 9: MORTGAGE SERVICING RIGHTS1415 - Derivative and Hedging Activities.For the MonthYear Ended December 31, 20232022(in millions) December 1, 20221,033 1,01219-, model changes, and other (1)(8)101,111 1,033December 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 112MSRs.MSRsIncome .Income. Subservicing fee income is recorded for fees earned on subserviced loans, net of third-party subservicing costs.For the Month Ended December 31,2022(in millions)Net return on mortgage servicing rightsServicing fees, ancillary income and late fees (1)$20Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes and other(8)Changes in fair value due to interest rate risk10Loss on MSR derivatives (2)(16)Net transaction costs-Total return (loss) included in net return on mortgage servicing rights$6(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 Servicing fees are recorded on an accrual basis. Ancillary income and late fees are recorded on a cash basis.(2)Changes in the derivatives utilized as economic hedges to offset changes in fair value of the MSRs.The following table summarizes income and fees associated with our mortgage loans subserviced for others:For the Month Ended December 31,2022(in millions)Loan administration income on mortgage loans subservicedServicing fees, ancillary income and late fees (1)$11Charges on subserviced custodial balances (2)(8)Other servicing charges-Total income on mortgage loans subserviced, included in loan administration$3(1)(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 NOTE 10: VARIABLE INTEREST ENTITIES20222023 and December 31, 2021.$191$180 million as of December 31, 20222023 as well as the standard representations and warranties made in conjunction with the loan transfers.113NOTE 11: DEPOSITS20222023 and 2021:2022: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 accounts2021,$3.7 billion, respectively.$4$121 million and $2$4 million, respectively.20222023 were as follows:17,321 9,2472,9222985024521,581 12,546PAA.PAA20222023 and 20212022 were brokered deposits of $5.1$9.5 billion and $5.7$5.1 billion with weighted average interest rates of .493.72 percent and .07.49 percent at the respective year-ends. Brokered money market accounts represented $2.8$1.3 billion and $3.0$2.8 billion of the December 31, 20222023 and 20212022 totals, and brokered interest-bearing checking accounts represented $1.0$1.6 billion and $1.5$1.0 billion, respectively. Brokered CDs represented $1.3$6.6 billion and $1.2$1.3 billion of brokered deposits at December 31, 2023 and 2022, and 2021, respectively.NOTE 12: BORROWED FUNDSfunds at December 31, 2022 and 2021: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 $37 $50 million and $18$37 million, respectively, at December 31, 2022 and 2021.2023, December 31, 2022.11420222023 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 20222023 and 2021,2022, respectively, the Bank had unused lines of available credit with the FHLB-NY of up to $11.3$8.4 billion and $8.4$11.3 billion. The Company had $2.8 billion ofdid not have any overnight advances at December 31, 2022,2023 and no overnight advances$2.8 billion at December 31, 2021.2022. During the twelve monthsyear ended December 31, 2023, the average balance of overnight advances amounted to $624 million, with a weighted average interest rate of 5.08 percent. During the year ended December 31, 2022, the average balance of overnight advances amounted to $318$318 million, with a weighted average interest rate of 3.48 percent.3.48 percent. During the twelve months ended December 31, 2021, the average balances of overnight advances amounted to $6 million, with weighted average interest rates of 0.36 percent.$251$564 million, $233$251 million and $246$233 million, in the years ended December 31, 2023, 2022, and 2021, and 2020, respectively. As of December 31, 2021, the company had $800 million of outstanding repurchase agreements.2022 or 2021.At December 31, 2021, the2023 and 2022.to $2 million.at December 31, 2023. The interest expense on repurchase agreements was $14$14 million and $18 million for the yearyears ended December 31, 2022 and $18 million for each of the years ended December 31, 2021, and 2020.respectively.2022 or 2021.2023 and December 31, 2022.20222023 and 2021,2022, respectively, the average balances of federal funds purchased were $466$196 million and $81$466 million, with weighted average interest rates of 1.655.01 percent and 0.091.65 percent. The interest expense produced by federal funds purchased was $8$10 million, $0$8 million and $1$0 million for the years ended December 31, 2023, 2022 and 2021, and 2020, respectively.11520222023 and 2021,December 31, 2022, the Company had $608$609 million and $361$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.The Trusts are accounted for as unconsolidated subsidiaries, in accordance with GAAP. The proceeds of each issuance were invested in a series of 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.excluding purchase accounting adjustments.2022:
of Capital
Securities
and
Debentures
Subordinated
Debentures
Amount
Outstanding
Securities
Amount
Outstanding
Original Issue
MaturityIssuer 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 $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$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, 2022,2023, this discount totaled $64$64 million.2022,2023, all dividends were current.116$22$48 million, $18$22 million, and $19$18 million, respectively, for the years ended December 31, 2023, 2022, 2021, and 2020.2021.20222023 and 2021,December 31, 2022, the Company had a total of $432$438 million and $296$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 LIBORSOFR rate plus 278 basis point304.16 basis points payable quarterly.4.1254.13 percent through October 31, 2025, and a variable rate tied to SOFR thereafter until maturity. The Company has the option to redeem all or a part of the Notes beginning on November 1, 2025, and on any subsequent interest payment date.The interest expense on subordinated notes amounted to $19 million for the year ended December 31, 2022$18 million for the years ended December 31, 2021, and 2020.Local TaxesNOTE 13: FEDERAL, STATE, AND LOCAL TAXES20222023 and 2021:2022December 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) 11720222023 and 2021.2022.$$8 million and $15 million, 15 million,respectively (net of federal tax impact) which includes total state net operating loss carryforwards of $o303f $185 million at December 31, 2022,2023, that expireexpire if unused in calendar years through 2033.2033. In connection with our ongoing assessment of deferred taxes, we analyzed each state net operating loss separately, determined the amount of net operating loss available and estimated the amount which we expected to expire unused. Based on that assessment, we recorded a valuation allowance of $$5 million at 5December 31, 2023 millionand 2022 to reduce the DTA to the amount which is more likely than not to be realized. 2021,, and 2020:2021: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,, and 2020:118GAAP 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.304 million and $76$304 million, respectively, at December 31, 20222023 and 2021,2022, and included commitments of $183$210 million and $34$183 million that are expected to be funded over the next 5 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 and 2020 were $34 million11 million, $9, $11 million, and $8$9 million, respectively,$10$30 million, $9$10 million, and $6$9 million, respectively, for the amortization of the related investments. No impairment losses were recognized in relation to these investments for the years ended December 31, 2023, 2022, 2021, and 2020.2021.40 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, 2023 and 2022 that would have affected the effective tax rate, if recognized, was $32 million.$34 million a2021, and 2020,2021, the Company recognized income tax expense attributed to interest and penalties of $8 million4 million, $4, $4 million, and $3$4 million, respectively. Accrued interest and penalties on tax liabilities were $26$34 million and $22$26 million, respectively, at December 31, 20222023 and 2021.2022. 2021,, and 2020:2021December 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 20152018 through the present.•Federal 201921 million due to completion of tax authorities’ exams and the expiration of statutes of limitations.119As a savings institution, theThe Bank is subject to a special federal tax provision regarding its frozen tax bad debt reserve. At December 31, 2022,2023, the Bank’s federal tax bad debt base-year reserve was $62 million62 million,, with a related federal deferred tax liability of $13 $13 million, which has not been recognized since the Bank does not expect that this 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.NOTE 14. DERIVATIVE AND HEDGING ACTIVITIESYear 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 instruments.instruments. The Company has designated certain interest rate swaps as cash flow hedges on LIBOR and overnight SOFR-based variable interest payments on federal home loan bank advances. Changes in the fair value of derivatives 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 hedgehedged transaction is recognized in earnings. At December 31, 2022,2023, the Company had $52 $10 million (net-of-tax) of unrealized gains on derivatives classified as cash flow hedges recorded in accumulated other comprehensive loss. The Company had $9 $52 million (net-of-tax)(net-of-tax) of unrealized lossesgains on derivatives classified as cash flow hedges recorded in accumulated other comprehensive loss at December 31, 2021.2022.2022.2023.had entered into anhas interest rate swapswaps with a notional amountamounts of $2.0$2.0 billion to hedge certain real estate loans. Interestmulti-family loans using the portfolio layer method. For the year ended December 31, 2023, the floating rate received related to the net settlement of these interest rate swaps was greater than the fixed rate payments. As such, interest income from loans and lease receivables decreased by $6 million and $49 million forleases in the twelve months ended December 31,1202022 and 2021, respectively, related to a $2.0 billion of interest swaps designated in a fair value relationship related to certain real estate loans which matured in February 2022.As of December 31, 2022 and 2021, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges.
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. Since the swap expired in February 2022, at December 31, 2022, the amortized cost basis of the closed portfolios used in these hedging relationships, the cumulative basis adjustments associated with these hedging relationships, and the amount of the designated hedged items, were zero.The following table sets forth the effect of derivative instruments on theaccompanying Consolidated Statements of Income and Comprehensive Income was increased by $24 million for the periods indicated.year ended December 31, 2023 and decreased by $6 million for the year ended December 31, 2022, respectively.
Months Ended
December 31, 2022
Months Ended
December 31, 2021121.table setstables set forth information regarding the Company’s derivative financial instruments at December 31, 2022.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
Liabilitiesderivativederivatives 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 Notional value of cash flow hedging instruments at December 31, 2021 $2.3 billion. Securities pledged at December 31, 2021 was $9 million.(2) Variation margin pledged to, or received from, a Central Counterparty Clearing House to cover the prior days fair value of open positions is considered settlement of the derivative position for accounting purposes.122December 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.earnings.$3.8$5.5 billion and $2.3$3.8 billion as of December 31, 20222023 and December 31, 2021,2022, were designated as cash flow hedges of certain FHLB borrowings.AOCL for the year ending December 31, 2022 and 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, 2022
Months Ended
December 31, 2021the Company estimates that an additional $51interest expense reduction of $98 million willis expected to be reclassified to interest expense.out of AOCL.derivativederivatives not designated as hedging instruments, net of the impact of offsetting positions:
Months Ended
December 31, 2022
Months Ended
December 31, 2021For 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 (in millions) Gross Carrying Amount Balance at December 31, 2022 $ 2,426 Impairment (2,426) Balance at December 31, 2023 $ — NOTE 15: COMMITMENTS AND CONTINGENCIESDecember 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 (in millions) Amortization Expense 2024 $ 132 2025 107 2026 94 2027 81 2028 68 Total $ 482 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 % 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 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 (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 0.0% - 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% Fair 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 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 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 $ — 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 — 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 AtWe had pledged investment securities of $2.8 billion and $434 million at December 31, 2022, the Company had pledged available for sale mortgage-related securities2023 and other debt securities with carrying values of $430 million and $4 million, respectively. At December 31, 2021, the Company had pledged available for sale mortgage-related securities and other debt securities with carrying values of $704 million and $464 million,2022, respectively. In addition, the Company had $44.5$43.1 billion and $33.9$44.5 billion of loans pledged to the FHLB-NY to serve as collateral for its wholesale borrowings at the respective year-ends.123At December 31, 2022 and 2021,Company hadnormal course of business, we have various commitments to originate loans, including unused linesoutstanding which are not included on our Consolidated Statements of credit, of $21.8 billion and $2.8 billion, respectively.Financial Condition. 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 $541 million and $291 million at December 31, 2022 and 2021.credit at December 31, 2022:credit: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)Multi-family and commercial real estate$216One-to-four family including interest rate locks2,066Acquisition, development, and construction3,539Warehouse loan commitments8,042Other loan commitments7,964Total loan commitments$21,827Commercial, performance stand-by, and financial stand-by letters of credit541Total commitments$22,3682022:2023:(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
One Year
One Year
Outstanding
Amount
Potential
Amount of
Future Payments2022,2023, the Company had no commitments to purchase securities.business.business, including stockholder class and derivative actions. All such actions in the aggregate involve amounts that are believed by management to be immaterial to the financial condition and results of operations of the Company.124NOTE 16: INTANGIBLE ASSETSGoodwill The outcome of any pending litigation is presumeduncertain. There can be no assurance (i) that we will not incur material losses due to damages, penalties, costs and/or expenses as a result of such litigation, (ii) that the reserves we have an indefinite useful lifeestablished will be sufficient to cover such losses, or (iii) that such losses will not materially exceed such reserves and is tested for impairment athave a material impact on our financial condition or results of operations. The Company may incur significant legal expenses in defending the reporting unit level, at least once a year. There was no change in goodwilllitigation described above during the year ended December 31, 2022.At December 31, 2022,pendency of these matters, and in connection with any other intangible assets consisted of the following:The estimated amortization expense of CDI and other intangible assetspotential cases, including expenses for the next five years is as follows:potential reimbursement of legal fees of officers and directors under indemnification obligations.NOTE 17: EMPLOYEE BENEFITS125December 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
December 31:
in net periodic benefit cost at December 31:2023, an estimated $72024 $3 million of unrecognized net actuarial loss for the Retirement Plan will be amortized from AOCL into net periodic benefit cost.cost, respectively. The comparable amount recognized as net periodic benefit costactuarial loss for the Retirement Plan in 20222023 was $2 million. No$7 million and no prior service cost was amortized in 2022 or 2021.2022. The discount rates used to determine the benefit obligation at December 31, 2023 and 2022 and 2021 were 4.94.7 percent and 2.64.9 percent, respectively.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) 126Years 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 As of December 31, 2022, Retirement Plan assets were invested in two diversified investment portfolios of the Pentegra Retirement Trust (the “Trust”), a private placement investment fund.Company (in this context, the “Plan Sponsor”) chooses the specific asset allocationprimary long-term objective for the Retirement Plan within the parameters set forth in the Trust’s Investment Policy Statement. The long-term investment objectives areis to maintain the Retirement Plan’s assets at a level that will sufficiently cover future beneficiary obligations. A secondary long-term objective is to achieve long-term growth in assets. The Plan will be structured to include a volatility reducing component (the fixed income commitment) and a growth component (the equity commitment).Sponsor’sin a diversified combination of asset classes, investment strategies, and pooled vehicles. The asset allocation guidelines in the table below reflect the plan sponsor’s risk tolerance and long-term obligations,objectives for the Plan. These parameters will be reviewed on a regular basis and subject to generate a returnchange following discussions between the plan sponsor and the Trustee.those assets thatthe above considerations, the following asset allocation ranges will meet or exceedbe implemented: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% rate at whichTrustee with the latitude for managing the Plan Sponsor’s long-term obligationswithin a minimum and maximum range. The Trustee will grow.Retirement Plan allocates its assets in accordance with the following targets:•To hold 55 percent 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 percent 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 percent inwill maintain a cash equivalents portfoliocomponent (not to exceed 3 percent under normal circumstances) within the fixed income allocation for liquidity purposes.In addition,Retirement Plan holds Company shares, the value of which is approximately equal to 11 percentactual asset segment exposures of the Plan on a regular basis and, periodically, may adjust the asset allocation within the ranges set forth above as it deems appropriate. Periodic reallocation of assets that are held bywill be based on 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 excessTrustee’s perception 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 objectiveschanging risk/return opportunities of the Trust’s respective portfolios.asset classes.1272022:2023:
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.(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 $ — 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 in the U.S.(3)This fund tracks the performance of the S&P 500 Index by purchasing the securities represented in the IndexIndex. The stocks are maintained in approximately the same weightings as the Index.employs an indexing investment approach designed to track the performancecontains stocks of the CRSP US Mid-Cap Value Index.This category employs an indexing investment approach designed to track the performance of the CRSP US Mid-Cap Growth Index.(6)track the performance of the S&P Midcap 400Russell 2000 Index.(7)(6)a selection of investments based onwith long-term growth potential located primarily in Europe, the Russell 2000 Value Index.Pacific Basin, and other developed and emerging markets.(8)(7)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 percent of the market universe, or smaller than the 1000th largest US company.(10)companies in developed and emerging markets.companies. Under normal circumstances, at least 80 percent of total assets will be invested in equity securities, including common stocks, preferred stocks, and convertible securities.128(11)(8)threefour mutual funds, two of which usually hold at least 80 percent of fund assets in investment grade fixed income securities, seeking to outperform the Bloomberg Barclays USU.S. Aggregate Bond IndexIndex. Two of the funds hold at least 80 percent in investment grade fixed-income securities while maintaining a similar duration to that index. The thirdone other holds at least 65 percent; the fourth fund targets investments of 50 percent or more in mortgage-backed securities guaranteed by the US government and its agencies.(12)(9)This category contains large-cap stocks with above-average yield. The portfolio typically holds between 60 and 70 stocks.mutualmoney market 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.is used for liquidity purposes.December 31, 2023 2022 Equity securities 61 % 60 % Debt securities 39 % 38 % Cash equivalents — % 2 % Total 100 % 100 % 7 percent.2022.(in millions) 2024 $ 8 2025 8 2026 8 2027 8 2028 8 2029 and thereafter 43 Total $ 83 $7$21 million and $6$7 million for the twelve monthsyear ended December 31, 20222023 and 2021,2022, respectively. Flagstar also maintains a defined contribution qualified savings plan in the form of a 401(k) plan in which certain employees are able to participate.129December 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)
the year ended December 31:
in net periodic benefit cost at December 31:2022 and 2022.2.3 percent at December 31, 2021.20232024 are $0 and $0,less than $1 million, respectively.2022, 202131, 2023 and 20202022 were less than $1$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 130$1$1 million to the Health & Welfare Plan to pay premiums and claims in the fiscal year ending December 31, 2022.2023.NOTE 18: STOCK-RELATED BENEFIT PLANSStock Based CompensationAt December 31, 2022, the Company had a total of 9,799,865 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 3,710,689 shares of restricted stock, with an average fair value of $11.23 per share on the date of grant, during the twelve months ended December 31, 2022.During the years ended December 31, 2021 and 2020, the Company granted 3,131,949 shares and 2,421,345 shares, respectively, of restricted stock, which had average fair values of $11.20 and $11.61 per share on the respective grant dates. Compensation and benefits expense related to the restricted stock grants is recognized on a straight-line basis over the vesting period and totaled $25 million, $27 million, and $28 million, respectively, for the years ended December 31, 2022, 2021, and 2020.The following table provides a summary of activity with regard to restricted stock awards:
December 31, 2022
Average
Grant Date
Fair ValueAs of December 31, 2022, unrecognized compensation cost relating to unvested restricted stock totaled $74 million. This amount will be recognized over a remaining weighted average period of 2.5 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, 2022:131
Shares
Average
Grant Date
Fair Value
Period
Vesting
DatePSUs 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 $3 million, $5 million and $1 million for the twelve months ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022, unrecognized compensation cost relating to unvested restricted stock totaled $4 million. This amount will be recognized over a remaining weighted average period of 1.6 years. As of December 31, 2022, the Company believes it is probable that the performance conditions will be met.New 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. For of the years ended December 31, 2021 and 2020, the Company recorded expense of $4 million.Supplemental Executive Retirement PlanThe Bank had 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 and subsequently fully distributed during the year ended December 31, 2022. Trust-held assets, consisting entirely of Company common stock, amounted to 1,006,186 at December 31, 2021, including shares purchased through dividend reinvestment. The cost of these shares was reflected as a reduction of paid-in capital in excess of par in the Consolidated Statements of Condition.132NOTE 19: FAIR VALUE MEASUREMENTSGAAP 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:•Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.•Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.(in millions) 2024 $ 1 2025 1 2026 1 2027 1 2028 1 2029 and thereafter 2 Total $ 7 •Level 3 – Inputs to the valuation methodology are significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants use in pricing an asset or liability.A financial instrument’s categorization within this valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.133The following tables present assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2022 and 2021, and that were included in the Company’s Consolidated Statements of Condition at those dates:
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Adjustments
Fair
Value
Available for Sale:134
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:The Company reviews and updates the fair value hierarchy classifications for its assets on a quarterly basis. Changes from one quarter to the next that are related to the observability of inputs for a fair value measurement may result in a reclassification from one hierarchy level to another.A description of the methods and significant assumptions utilized in estimating the fair values of securities follows:Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government securities and exchange-traded securities.If quoted market prices are not available for a specific security, then fair values are estimated by using pricing models. These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices, and credit spreads. In addition to observable market information, models incorporate transaction details such as maturity and cash flow assumptions. Securities valued in this manner would generally be classified within Level 2 of the valuation hierarchy, and primarily include such instruments as mortgage-related and corporate debt securities.Periodically, the Company uses fair values supplied by independent pricing services to corroborate the fair values derived from the pricing models. In addition, the Company reviews the fair values supplied by independent pricing services, as well as their underlying pricing methodologies, for reasonableness. The Company challenges pricing service valuations that appear to be unusual or unexpected.135While the Company believes its valuation methods are appropriate, and consistent with those of other market participants, the use of different methodologies or assumptions to determine the fair values of certain financial instruments could result in different estimates of fair values at a reporting date.Fair Value Measurements Using Significant Unobservable InputsThe following tables include a roll forward of the Consolidated Statements of Condition amounts (including the change in fair value) for financial instruments classified by us within Level 3 of the valuation hierarchy:1.We utilized swaptions, futures, forward agency and loan sales and interest rate swaps to manage the risk associated with mortgage servicing rights and rate lock commitments. Gains and losses for individual lines do not reflect the effect of our risk management activities related to such Level 3 instruments.2.Rate lock commitments are reported on a fallout-adjusted basis. Transfers out of Level 3 represent the settlement value of the commitments that are transferred to LHFS, which are classified as Level 2 assets.The following tables present the quantitative information about recurring Level 3 fair value financial instruments and the fair value measurements as of December 31, 2022:(1)Unobservable inputs were weighted by their relative fair value of the instruments.136Assets Measured at Fair Value on a Non-Recurring BasisCertain assets are measured at fair value on a non-recurring basis. Such instruments are subject to fair value adjustments under certain circumstances (e.g., when there is evidence of impairment). The following tables present assets that were measured at fair value on a non-recurring basis as of December 31, 2022 and 2021, 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)
Value(1)Represents the fair value of certain loans individually assessed for impairment, based on the value of the collateral.(2)Represents the fair value of repossessed assets, based on the appraised value of the collateral subsequent to its initial classification as repossessed 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.
in Active
Markets for
Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Value(1)Represents the fair value of impaired loans, based on the value of the collateral.(2)Represents the fair value of repossessed assets, based on the appraised value of the collateral subsequent to its initial classification as repossessed assets.The fair values of collateral-dependent impaired loans are determined using various valuation techniques, including consideration of appraised values and other pertinent real estate and other market data.Other Fair Value DisclosuresFor the disclosure of fair value information about the Company’s on- and off-balance sheet financial instruments, when available, quoted market prices are used as the measure of fair value. In cases where quoted market prices are not available, fair values are based on present-value estimates or other valuation techniques. Such fair values are significantly affected by the assumptions used, the timing of future cash flows, and the discount rate.Because assumptions are inherently subjective in nature, estimated fair values cannot be substantiated by comparison to independent market quotes. Furthermore, in many cases, the estimated fair values provided would not necessarily be realized in an immediate sale or settlement of such instruments.137The 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, 2022 and 2021:
Value
Fair Value
in Active
Markets
for Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)(1)Carrying value and estimated fair value are at cost.(2)Interest-bearing checking and money market accounts, savings accounts, and non-interest-bearing accounts.(3)Certificates of deposit.
Value
Fair Value
in Active
Markets
for Identical
Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)(1)Carrying value and estimated fair value are at cost.(2)Interest-bearing checking and money market accounts, savings accounts, and non-interest-bearing accounts.(3)Certificates of deposit.The methods and significant assumptions used to estimate fair values for the Company’s financial instruments follow:Cash and Cash EquivalentsCash and cash equivalents include cash and due from banks and federal funds sold. The estimated fair values of cash and cash equivalents are assumed to equal their carrying values, as these financial instruments are either due on demand or have short-term maturities.SecuritiesIf quoted market prices are not available for a specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices, and credit spreads. In addition to observable market information, pricing models also incorporate transaction details such as maturities and cash flow assumptions.138Federal Home Loan Bank StockOwnership in equity securities of the FHLB is generally restricted and there is no established liquid market for their resale. The carrying amount approximates the fair value.LoansThe Company discloses the fair value of loans measured at amortized cost using an exit price notion. The Company determined the fair value on substantially all of its loans for disclosure purposes, on an individual loan basis. The discount rates reflect current market rates for loans with similar terms to borrowers having similar credit quality on an exit price basis. The 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.MSRsThe significant unobservable inputs used in the fair value measurement of the MSRs are option adjusted spreads, prepayment rates and cost to service. Significant increases (decreases) in all three assumptions in isolation result in a significantly lower (higher) fair value measurement. Weighted average life (in years) is used to determine the change in fair value of MSRs. For December 31, 2022, the weighted average life (in years) for the entire MSR portfolio was 7.3.Rate lock commitmentsThe significant unobservable input used in the fair value measurement of the rate lock commitments is the pull through rate. The pull through rate is a statistical analysis of our actual rate lock fallout history to determine the sensitivity of the residential mortgage loan pipeline compared to interest rate changes and other deterministic values. New market prices are applied based on updated loan characteristics and new fallout ratios (i.e. the inverse of the pull through rate) are applied accordingly. Significant increases (decreases) in the pull through rate in isolation result in a significantly higher (lower) fair value measurement.DepositsThe fair values of deposit liabilities with no stated maturity (i.e., interest-bearing checking and money market accounts, savings accounts, and non-interest-bearing accounts) are equal to the carrying amounts payable on demand. The fair values of CDs represent contractual cash flows, discounted using interest rates currently offered on deposits with similar characteristics and remaining maturities. These estimated fair values do not include the intangible value of core deposit relationships, which comprise a portion of the Company’s deposit base.Borrowed FundsThe estimated fair value of borrowed funds is based either on bid quotations received from securities dealers or the discounted value of contractual cash flows with interest rates currently in effect for borrowed funds with similar maturities and structures.Off-Balance Sheet Financial InstrumentsThe fair values of commitments to extend credit and unadvanced lines of credit are estimated based on an analysis of the interest rates and fees currently charged to enter into similar transactions, considering the remaining terms of the commitments and the creditworthiness of the potential borrowers. The estimated fair values of such off-balance sheet financial instruments were insignificant at December 31, 2022 and 2021.Fair Value OptionWe elected the fair value option for certain items as discussed throughout the Notes to the Consolidated Financial Statements to more closely align the accounting method with the underlying economic exposure. Interest income on LHFS is accrued on the principal outstanding primarily using the "simple-interest" method.139The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected:The following table reflects the difference between the aggregate fair value and aggregate remaining contractual principal balance outstanding for assets and liabilities for which the fair value option has been elected:140NOTE 20: 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 subsidiaries141Years 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 142NOTE 21: 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, 2022 and 2021, 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, 2022, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by 366 basis points and the fully phased-in capital conservation buffer by 116 basis points.The Bank$2,500 per share, shares of Series D NVCE Stock, each share of Series D NVCE Stock is subject to the provisions of the National Bank Act and other statutes governing national banks, as well as the rules and regulations of the OCC, CFPB, and FDIC (the “Regulators”). The Bank is also governed by numerous federal 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 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, 2022, the Bank exceeded all the capital adequacy requirements to which they were subject.As of December 31, 2022, 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 percent; a minimum tier 1 risk-based capital ratio of 8.00 percent; a minimum total risk-based capital ratio of 10.00 percent; and a minimum leverage capital ratio of 5.00 percent. In the opinion of management, no conditions or events have transpired since December 31, 2022 to change these capital adequacy classifications.143The following tables present the actual capital amounts and ratios for the Bank at December 31, 2022 and 2021 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 percent 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, 2022, the Company has repurchased a total of 30 million shares at an average price of $8.88 or an aggregate purchase of $286 million. During the year ended December 31, 2022, the Company repurchased 0.9 million shares, at a cost of $8 million. The Company had no repurchases during 2021.144Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of DirectorsReport of Independent Registered Public Accounting Firm 20222023 and 2021,2022, 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, 2022,2023, 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, 20222023 and 2021,2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022,2023, in conformity with U.S. generally accepted accounting principles.2022,2023, 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 March 1, 202314, 2024 expressed an unqualifiedadverse opinion on the effectiveness of the Company’s internal control over financial reporting.62 and 7 to the consolidated financial statements, the Company’s total allowance for credit losses (ACL) on loans and leases as of December 31, 20222023 was $393$992 million, a substantial portion of which is related to the legacy New York Community Bancorp, Inc.one-to-four family first mortgage, multi-family, commercial and industrial, specialty finance, and commercial real estate portfolio segments (legacy NYCB portfolios), and the acquired Flagstar Bancorp, Inc. one-to-four family first mortgage, commercial real estate, commercial and industrial, and acquisition, development and construction portfolio segments (acquired Flagstar portfolios). The allowance for credit losses on loans and leases for the legacy NYCB portfolios and acquired Flagstar portfolios is 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. The loss drivers for certain loans within the commercial and industrial portfolio are derived using credit ratings. The Company estimates the exposure-at-default using prepayment methods and models which projectforecasts 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,145 for the legacy NYCB portfolios and the acquired Flagstar portfolios 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 periods.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.for the legacy NYCB portfolios, including controls over the:changes made tothe PD, LGD, and prepayment modelsperformance monitoring of the PD, LGD, and prepayment models and• for both the legacy NYCB portfolios and the acquired Flagstar portfolios 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:forecasts,forecast scenarios including the weighting of the scenarios,related weightings, and underlying macroeconomic assumptionseconomic parameters by comparing itthem to the Company’s business environment and relevant industry practicespractices andpracticefactorsfactor 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.for both the legacy NYCB portfolios and the acquired Flagstar portfolios by evaluating the:146mortgage servicing rights in the acquisition of Flagstar Bancorp, Inc.core deposit intangible assetNotesNote 3 and 9 to the consolidated financial statements, the Company acquired Flagstar Bancorp, Inc.certain assets and assumed certain liabilities of Signature Bridge Bank, N.A. on December 1, 2022.March 20, 2023. The Company accounted for this transaction as a business combination with the assets acquired and liabilities assumed being measured based on their estimated fair values. As part of the acquisition, the Company acquired loans and mortgage servicing rights (MSRs)established a core deposit intangible (CDI) asset with a fair value of $18.0$12.0 billion and $1.0 billion,$464 million, respectively. As of December 31, 2022, the fair value of the MSRs was $1.0 billion with any changes in fair value recognized in earnings. The fair value of acquired loans was based on a discounted cash flow methodology which incorporated discount rates, prepayment rates, probability of default and loss given default rates, and other market assumptions. The fair value of MSRsthe CDI asset was measured using a discounted cash flow methodology which utilized option-adjusted spreads, constant prepayment speeds, costs to service,discount rates, customer attrition rates, and other market assumptions.MSRsthe CDI asset at the acquisition date and the MSRs as of December 31, 2022 as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complexsubjective assumptions,significant assumptions: including discount rates, prepayment rates, probability of default and loss given default rates for acquired loansloans; and option-adjusted spreads, constant prepaymentdiscount rates and cost to servicecustomer attrition rates for MSRs.the CDI asset.MSRsthe CDI asset at the date of acquisition.acquisition date. This included controls related to the (1) determination of certain subjectivesignificant assumptions used in the discounted cash flow methodologymethodologies for acquired loans and MSRs,the CDI asset, and (2) assessment of the overall fair value measurement for acquired loans and (3) assessment of the overall fair value measurement, including comparisons of the fair value to independent appraisals, for MSRs.CDI asset. We evaluated the Company’s process to determine the estimated fair value of acquired loans and MSRsthe CDI asset at the acquisition date and the fair value of MSRs as of December 31, 2022, 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:valuationfair value methodologies for compliance with U.S. generally accepted accounting principlesassessing option-adjusted spreads, constant prepayment rates, and cost to serviceevaluating the significant assumptions, relatedincluding the timing of any significant updates made to the MSRs fair value estimate by comparingassumptions during the year, based on an analysis of backtesting results and a comparison of significant assumptions to external market and industry data as well as available data fromfor comparable entities and independent appraisals.third-party valuations.
We have served as the Company’s auditor since 1993./s/ KPMG LLP We have served as the Company’s auditor since 1993. New York, New York 1, 202314, 2024147Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm2022,2023, 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, 2022,2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.20222023 and 2021,2022, 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, 2022,2023, and the related notes (collectively, the consolidated financial statements), and our report dated March 1, 202314, 2024 expressed an unqualified opinion on those consolidated financial statements.Flagstar Bancorp, Inc.Signature Bridge Bank, N.A. during 2022,2023, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, Flagstar Bancorp, Inc.2023, Signature Bridge Bank, N.A.’s internal control over financial reporting associated with total acquired assets of approximately $25.8$38 billion and total revenues associated with the acquired assets and liabilities assumed of approximately $132 million$1 billion included in the consolidated financial statements of the Company as of and for the year ended December 31, 2022.2023. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Flagstar Bancorp, Inc.Signature Bridge Bank, N.A.
/s/ KPMG LLP 1, 202314, 2024148Item 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.Flagstar BancorpSignature Bridge Bank, N.A. on December 1, 2022.March 20, 2023. The scope of management’s assessment of the effectiveness of the Company’s internal controlscontrol over financial reporting as of December 31, 2022,2023, excludes the internal control over financial reporting associated with total acquired assets of approximately $25.8$38 billion and total revenues associated with the acquired assets and liabilities assumed of approximately $132 million$1 billion included in the consolidated financial statements of the Company as of and for the year ended December 31, 2022.2023.2022,2023, 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, 2022 was2023.using this criteria.risk assessment and monitoring activities.The effectivenessCompany’sallowance for credit losses on loans and leases.2022 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, 2022, 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, 2022.Directors with extensive experience as financial experts in our industry and backgrounds in risk management. Additionally, several members of the Board of Directors resigned.149FlagstarSignature into its overall internal control over financial reporting processes. Except for changes made in connection with this integration of Flagstar,Signature, and the material weaknesses in internal control over financial reporting noted above, there have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.Item 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 applicable150Item 10. Directors, Executive Officers of the Registrant and Corporate Governance IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCEon June 1, 2023for fiscal year 2024 (hereafter referred to as our “2023“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 COMPENSATION20232024 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 MATTERS2022:2023:
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 —9,799,865— ———— $ — 16,143,893 —9,799,86520232024 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 15120232024 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: 185.185.20232024 Proxy Statement under the caption “Audit and Non-Audit Fees,” and is incorporated herein by this reference.152Item 15. Exhibits, Financial Statement Schedules PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES20212023 and 2022;2022;2022;2022;2023; and153 4.4(10)(11) (11)(12) 4.6Robert Wann, Thomas R. Cangemi,and John J. Pinto and R. Patrick Quinn** (12) (13)Officers**Officers (13)(14)Plan**Plan (13)(14)Bank**Bank (14)(15)Bank**Bank (13)(14)Plan**Plan (13)(14)** (15)(16)** (16)(17)10.10Plan** Plan (18)10.12Adams** Adams (19)10.13DiNello** DiNello(20)10.14** (21)10.15Davis** (attached hereto)Davis (22)10.16Smith** (attached hereto)Smith (22)21.010.17Subsidiaries information incorporated herein by reference to Part I, “Subsidiaries”(23)22.010.1910.20 10.21 21 Subsidiaries of the Registrant (previously filed) 22 23.01, 202314, 2024 (attached hereto)32.0New York Community Bancorp, Inc. Clawback Policy (previously filed) 101101.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, 2022, 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. 104 154(1) Incorporated by reference to Exhibits to the Company's Form 8-K filed with the Securities and Exchange Commission on April 27, 2021 (File0-22278)(5)(6)(6)(7)(7)(8)(8)(9)Exhibit 3.2 filed withExhibits to the Company’sRegistrant’s Current Report on Form 8-K (File No. 1-31565), as filed with the Securities and Exchange Commission on December 1, 2022 (File No. 1-31565)(9)(10)(10)(11)(11)(12)(12)(13)(13)(14)(14)(15)(15)(16)(16)(17)(17)Incorporated by reference to Exhibits filed with the Company’s Form 8-K filed with the Securities and Exchange Commission on November 6, 2018 (File No. 1-31565)Item 16. Form 10-K Summary ITEM 16. FORM 10-K SUMMARYNone.155SIGNATURESMarch 1, 202314, 2024(Registrant) /s/ Alessandro P. DiNello /s/ Thomas R. CangemiAlessandro P. DiNello Thomas R. Cangemi(Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated./s/ Thomas R. Cangemi3/1/23/s/ John J. Pinto3/1/23Thomas R. CangemiJohn J. PintoPresident, Chief Executive Officer, and DirectorSenior Executive Vice President and Chief Financial Officer(Principal Executive Officer)(Principal Financial Officer and Principal Accounting Officer)/s/ Alessandro P. DiNello3/1/23/s/ Hanif W. Dahya3/1/23Alessandro P. DiNelloHanif W. DahyaNon-Executive ChairmanPresiding Director/s/ James R. Carpenter3/1/23/s/ Leslie D. Dunn3/1/23James R. CarpenterLeslie D. DunnDirectorDirector/s/ Toan C. Huynh3/1/23/s/ Marshall Lux3/1/23Toan C. HuynhMarshall LuxDirectorDirector/s/ Lawrence Rosano, Jr3/1/23/s/ Ronald A. Rosenfeld3/1/23Lawrence Rosano, Jr.Ronald A. RosenfeldDirectorDirector/s/ Lawrence J. Savarese3/1/23/s/ Peter Schoels3/1/23Lawrence J. SavaresePeter SchoelsDirectorDirector/s/ David L. Treadwell3/1/23/s/ Robert Wann3/1/23David L. TreadwellRobert WannDirectorDirector/s/ Jennifer R. Whip3/1/23Jennifer R. WhipDirector156