~~(1)~~

~~Includes $~~21 ~~million and $~~15 ~~million of amortization of operating lease right-of-use assets for the nine months ended September 30, 2022 and 2021, respectively.~~

~~(2)~~

~~Includes $~~21 ~~million and $~~15 ~~million of amortization of operating lease liability for the nine months ended September 30, 2022 and 2021, respectively.~~

~~See accompanying notes to the consolidated financial statements.~~

~~NEW YORK COMMUNITY BANCORP, INC.~~

~~NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Note 1. Organization, Basis of Presentation, and Impact of Recent Accounting Pronouncements~~

~~Organization~~

New York Community Bancorp, Inc. (on a stand-alone basis, the “Parent Company” or, collectively with its subsidiaries, the “Company”) was organized under Delaware law on July 20, 1993 and is the holding company for New York Community Bank (hereinafter referred to as the “Bank”).

Founded on April 14, 1859 and formerly known as Queens County Savings Bank, the Bank converted from a state-chartered mutual savings bank to the capital stock form of ownership on November 23, 1993, at which date the Company issued its initial offering of common stock (par value: $~~0.01~~ ~~per share) at a price of $25.00~~ ~~per share (~~$~~0.93~~ ~~per share on a split-adjusted basis, reflecting the impact of nine stock splits between 1994 and 2004~~).

~~The Bank currently operates~~ ~~237~~ ~~branches,~~ 18 ~~of which operate directly under the New York Community Bank name. The remaining~~ ~~219~~ Community Bank branches operate through eight divisional banks: 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; AmTrust Bank in Florida and Arizona; and Ohio Savings Bank in Ohio.

~~Basis of Presentation~~

The following is a description of the significant accounting and reporting policies that the Company and its subsidiaries follow in preparing and presenting their consolidated financial statements, which conform to U.S. generally accepted accounting principles (“GAAP”) and to general practices within the banking industry. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates that are particularly susceptible to change in the near term are used in connection with the determination of the allowance for credit losses and the evaluation of goodwill for impairment.

The accompanying consolidated financial statements include the accounts of the Company and other entities in which the Company has a controlling financial interest. All inter-company accounts and transactions are eliminated in consolidation. The Company currently has certain unconsolidated subsidiaries in the form of wholly-owned statutory business trusts, which were formed to issue guaranteed capital securities. See Note 7, Borrowed Funds, for additional information regarding these trusts.

~~Impact of Recent Accounting Pronouncements~~

~~Recently Adopted Accounting Standards~~

The Company adopted ASU No. 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method in the first quarter of 2022 upon issuance. The amendments expand the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method. In addition, the amendments expand the scope of the portfolio layer method to include non-prepayable assets; specify eligible hedging instruments in a single-layer hedge; provide additional guidance on the accounting for and disclosure of hedge basis adjustments; specify how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. To date, the guidance has not had any impact on the Company’s Consolidated Statements of Condition, results of operations, or cash flows.

~~Note 2. Computation of Earnings per Common Share~~

Basic EPS is computed by dividing the net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the same method as basic EPS, however, the computation reflects the potential dilution that would occur if outstanding in-the-money stock options were exercised and converted into common stock.

Unvested stock-based compensation awards containing non-forfeitable rights to dividends paid on the Company’s common stock are considered participating securities, and therefore are included in the two-class method for calculating EPS. Under the two-class method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends on the common stock. The Company grants restricted stock to certain employees under its stock-based compensation plan. Recipients receive cash dividends during the vesting periods of these awards, including on the unvested

~~portion of such awards. Since these dividends are non-forfeitable, the unvested awards are considered participating securities and therefore have earnings allocated to them.~~ ~~The following table presents the Company’s computation of basic and diluted EPS for the periods indicated:~~

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in millions, except share and per share amounts)

2022

2021

2022

2021

Net income available to common stockholders

$
144

$
140

$
453

$
421

Less: Dividends paid on and earnings allocated
   to participating securities

(2
)

(2
)

(6
)

(5
)
Earnings applicable to common stock

$
142

$
138

$
447

$
416

Weighted average common shares outstanding

465,115,180

464,047,337

465,354,754

463,813,827

Basic earnings per common share

$
0.31

$
0.30

$
0.96

$
0.90

Earnings applicable to common stock

$
142

$
138

$
447

$
416

Weighted average common shares outstanding

465,115,180

464,047,337

465,354,754

463,813,827

Potential dilutive common shares

979,177

834,612

926,184

744,292

Total shares for diluted earnings per common
   share computation

466,094,357

464,881,949

466,280,938

464,558,119

Diluted earnings per common share and
   common share equivalents

$
0.30

$
0.30

$
0.96

$
0.90

~~Note 3: Reclassifications out of Accumulated Other Comprehensive Loss~~


~~(in millions)~~		~~For the Nine Months Ended September 30,~~
~~Details about Accumulated Other Comprehensive Loss~~		Amount Reclassified out of Accumulated Other Comprehensive Loss ~~(1)~~			Affected Line Item in the Consolidated Statements of Income and Comprehensive Income
~~Unrealized gains on available-for-sale securities:~~	$		—		~~Net gain on securities~~
			—		~~Income tax expense~~
	$		—		~~Net gain on securities, net of tax~~
~~Unrealized loss on cash flow hedges:~~	$		(4	)	~~Interest expense~~
			1		~~Income tax benefit~~
	$		(3	)	~~Net loss on cash flow hedges, net of tax~~
~~Amortization of defined benefit pension plan items:~~
~~Past service liability~~	$		—		~~Included in the computation of net periodic credit~~ ~~(2)~~
~~Actuarial losses~~			(2	)	~~Included in the computation of net periodic cost~~ ~~(2)~~
			(2	)	~~Total before tax~~
			—		~~Income tax benefit~~
	$		(2	)	~~Amortization of defined benefit pension plan items, net of tax~~
~~Total reclassifications for the period~~	$		(5	)

~~(1)~~

~~Amounts in parentheses indicate expense items.~~

~~(2)~~

~~See Note 8, “Pension and Other Post-Retirement Benefits,” for additional information.~~

~~Note 4. Securities~~

~~The following tables summarize the Company’s portfolio of debt securities available for sale and equity investments with readily determinable fair values at September 30, 2022 and December 31, 2021:~~

September 30, 2022

(in millions)

Amortized
Cost

Gross
Unrealized
Gain

Gross
Unrealized
Loss

Fair
Value

Debt securities available-for-sale

Mortgage-Related Debt Securities:

GSE certificates

$

1,115

$

—

$

171

$

944

GSE CMOs

1,562

—

276

1,286

Total mortgage-related debt securities

$

2,677

$

—

$

447

$

2,230

Other Debt Securities:

U. S. Treasury obligations

$

1,677

$

—

$

5

$

1,672

GSE debentures

1,749

—

343

1,406

Asset-backed securities (1)

401

—

10

391

Corporate bonds

884

2

31

855

Municipal bonds

18

—

—

18

Foreign notes

25

—

—

25

Capital trust notes

96

6

10

92

Total other debt securities

$

4,850

$

8

$

399

$

4,459

Total debt securities available for sale

$

7,527

$

8

$

846

$

6,689

Equity securities:

Mutual funds

$

16

$

—

$

2

$

14

Total equity securities

$

16

$

—

$

2

$

14

Total securities (2)

$

7,543

$

8

$

848

$

6,703

~~(1)~~

~~The underlying assets of the asset-backed securities are substantially guaranteed by the U.S. Government.~~

~~(2)~~

~~Excludes accrued interest receivable of $~~23 ~~million included in other assets in the Consolidated Statements of Condition.~~

December 31, 2021

(in millions)

Amortized
Cost

Gross
Unrealized
Gain

Gross
Unrealized
Loss

Fair
Value

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

Corporate bonds

821

18

1

838

Municipal bonds

25

—

—

25

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

~~(1)~~

~~The underlying assets of the asset-backed securities are substantially guaranteed by the U.S. Government.~~

~~(2)~~

~~Excludes accrued interest receivable of $~~15 ~~million included in other assets in the Consolidated Statements of Condition.~~

~~At September 30, 2022 and December 31, 2021, respectively, the Company had $630~~ ~~million and $734~~ million of FHLB-NY stock, at cost. 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.

~~Net losses on equity securities recognized in earnings for the nine months ended September 30, 2022 and 2021 were $~~2 ~~and $~~0~~, respectively.~~

~~The following table summarizes, by contractual maturity, the amortized cost of securities at September 30, 2022:~~

Mortgage-
Related
Securities

U.S.
Government
and GSE
Obligations

State,
County,
and
Municipal

Other
Debt
Securities (1)

Fair
Value

(in millions)

Available-for-Sale Debt
Securities:

Due within one year

$

4

$

1,677

$

—

$

25

$

1,701

Due from one to five years

143

247

—

428

807

Due from five to ten years

219

1,077

18

527

1,544

Due after ten years

2,311

425

—

426

2,637

Total debt securities available
for sale

$

2,677

$

3,426

$

18

$

1,406

$

6,689

~~(1)~~

~~Includes corporate bonds, capital trust notes, foreign notes and asset-backed securities.~~

~~The following table presents securities with no related allowance having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of September 30, 2022:~~

Less than Twelve Months

Twelve Months or Longer

Total

(in millions)

Fair Value

Unrealized
Loss

Fair Value

Unrealized
Loss

Fair Value

Unrealized
Loss

Temporarily Impaired Securities:

U. S. Treasury obligations

$

1,476

$

5

$

—

$

—

$

1,476

$

5

GSE certificates

572

62

371

109

943

171

GSE CMOs

448

41

838

235

1,286

276

U.S. Government agency and GSE obligations

394

43

1,012

300

1,406

343

Asset-backed securities

125

2

224

8

349

10

Corporate bonds

720

27

95

4

815

31

Municipal bonds

11

—

7

1

18

1

Foreign notes

25

—

—

—

25

—

Capital trust notes

46

1

36

8

82

9

Equity securities

4

—

11

2

15

2

Total temporarily impaired
securities

$

3,821

$

181

$

2,594

$

667

$

6,415

$

848

~~The following table presents securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of December 31, 2021:~~

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
$

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

Corporate bonds

—

—

99

1

99

1

Municipal bonds

—

—

8

—

8

—

Foreign notes

5

—

—

—

5

—

Capital trust notes

—

—

37

7

37

7

Equity securities

12

—

—

—

12

—

Total temporarily impaired
securities
$

1,846

$

44

$

1,683

$

72

$

3,529

$

116

~~The investment securities designated as having a continuous loss position for twelve months or more at September 30, 2022 consisted of~~ ~~103~~ ~~agency MBS,~~ 18 ~~agency CMOs,~~ ~~five~~ ~~capital trust notes,~~ ~~six~~ ~~asset-backed securities,~~ ~~two~~ ~~corporate bonds,~~ 28 ~~U.S. government agency bonds,~~ ~~one~~ ~~municipal bond and~~ ~~one~~ ~~equity security. 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,~~ 20 ~~US government agency bonds,~~ 21 ~~agency mortgage-backed securities and~~ ~~one~~ ~~municipal bond.~~

The Company evaluates available-for-sale debt securities in unrealized loss positions at least quarterly to determine if an allowance for credit losses is required. 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.

We first 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 is 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 is 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.

None of the unrealized losses identified as of September 30, 2022 or December 31, 2021 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 recorded with respect to debt securities as of or during the nine months ended September 30, 2022.

Management has made the accounting policy election to exclude accrued interest receivable on available-for-sale securities from the estimate of credit losses. Available-for-sale debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status.

~~Note 5. Loans and Leases~~

~~The following table sets forth the composition of the loan portfolio at the dates indicated:~~

September 30, 2022

December 31, 2021

(dollars in millions)
Amount

Percent of
Loans
Held for
Investment

Amount

Percent of
Loans
Held for
Investment

Loans and Leases Held for Investment:

Mortgage Loans:

Multi-family
$
37,179

75.98

%

$
34,603

75.75

%
Commercial real estate

6,603

13.49

6,698

14.66

One-to-four family

123

0.25

160

0.35

Acquisition, development, and construction

203

0.41

209

0.46

Total mortgage loans held for investment (1)

44,108

90.13

41,670

91.22

Other Loans:

Commercial and industrial

3,122

6.38

2,236

4.89

Lease financing, net of unearned income
of $84 and $95 respectively

1,697

3.48

1,770

3.88

Total commercial and industrial loans (2)

4,819

9.86

4,006

8.77

Other

6

0.01

5

0.01

Total other loans held for investment

4,825

9.87

4,011

8.78

Total loans and leases held for investment (1)
$
48,933

100.00

%

$
45,681

100.00

%
Net deferred loan origination costs

51

57

Allowance for loan and lease losses

(218
)

(199
)

Total loans and leases, net
$
48,766

$
45,539

~~(1)~~

~~Excludes accrued interest receivable of $203~~ ~~million and $199~~ ~~million at September 30, 2022 and December 31, 2021, respectively, which is included in other assets in the Consolidated Statements of Condition.~~

~~(2)~~

~~Includes specialty finance loans and leases of $4.2~~ ~~billion and $3.5~~ ~~billion, respectively, at September 30, 2022 and December 31, 2021, and other C&I loans of $577~~ ~~million and $527~~ ~~million, respectively, at September 30, 2022 and December 31, 2021.~~

~~Loans Held for Investment~~

The 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.

The Company also originates one-to-four family loans for investment. One-to-four family loans held for investment were primarily originated through the Company’s former mortgage banking operation and primarily consisted of jumbo adjustable rate mortgages made to borrowers with a solid credit history. These loan balances include certain mixed-use CRE loans with less than five residential units classified as one-to-four family loans.

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.

The 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 and the local economy. 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 long-term relationships with its experienced lending officers. 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. 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.

~~Included in loans held for investment at September 30, 2022 and December 31, 2021 were loans of $~~6 million to certain officers, directors, and their related interests and parties. There were no loans to principal shareholders at that date. As of the second quarter of 2021, the Board of Directors adopted a revised policy in which the Bank shall no longer make loans or extensions of credit to executive officers and directors of the Company, and firms that employ directors. Any loans and extensions of credit made to an executive officer or director, or any firms that employ directors, prior to the adoption of these revisions have been grandfathered but remain subject to oversight and review of the Board of Directors.

~~Asset Quality~~

A 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 the Company no longer expects to collect all amounts due according to the contractual terms of the loan agreement. When a loan is placed on non-accrual status, management ceases the accrual of interest owed, and previously accrued interest is charged against interest income. A loan is generally returned to accrual status when the loan is current and management has reasonable assurance that the loan will be fully collectible. Interest income on non-accrual loans is recorded when received in cash. At September 30, 2022 and December 31, 2021, all of our non-performing loans were non-accrual loans.

~~The following table presents information regarding the quality of the Company’s loans held for investment at September 30, 2022:~~

(in millions)

Loans
30-89
Days
Past Due

Non-
Accrual
Loans

Loans 90
Days or
More
Delinquent
and Still
Accruing
Interest

Total
Past Due
Loans

Current
Loans

Total
Loans
Receivable

Multi-family

$
31

$
13

$
—

$
44

$
37,135

$
37,179

Commercial real estate

1

28

—

29

6,574

6,603

One-to-four family

7

1

—

8

115

123

Acquisition, development, and
construction

—

—

—

—

203

203

Commercial and industrial(1) (2)

—

3

—

3

4,816

4,819

Other

—

—

—

—

6

6

Total

$
39

$
45

$
—

$
84

$
48,849

$
48,933

~~(1)~~

~~Includes $~~3 ~~million of taxi medallion-related loans that were 90 days or more past due. There were~~ no ~~taxi medallion-related loans that were 30 to 89 days past due.~~

~~(2)~~

~~Includes lease financing receivables, all of which were current.~~

~~The following table presents information regarding the quality of the Company’s loans held for investment at December 31, 2021:~~

(in millions)

Loans
30-89
Days
Past Due

Non-
Accrual
Loans

Loans 90
Days or
More
Delinquent
and Still
Accruing
Interest

Total
Past Due
Loans

Current
Loans

Total
Loans
Receivable

Multi-family

$
57

$
10

$
—

$
67

$
34,536

$
34,603

Commercial real estate

2

16

—

18

6,680

6,698

One-to-four family

8

1

—

9

151

160

Acquisition, development, and
construction

—

—

—

—

209

209

Commercial and industrial(1) (2)

—

6

—

6

4,000

4,006

Other

—

—

—

—

5

5

Total

$
67

$
33

$
—

$
100

$
45,581

$
45,681

~~(1)~~

~~Includes $~~6 ~~million of taxi medallion-related loans that were 90 days or more past due. There were~~ no ~~taxi medallion-related loans that were 30 to 89 days past due.~~

~~(2)~~

~~Includes lease financing receivables, all of which were current.~~

~~The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at September 30, 2022.~~

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(1)

Other

Total
Other
Loans

Credit Quality Indicator:

Pass

$
35,688

$
5,834

$
107

$
185

$
41,814

$
4,816

$
6

$
4,822

Special mention

830

464

8

18

1,320

—

—

—

Substandard

661

305

8

—

974

3

—

3

Doubtful

—

—

—

—

—

—

—

—

Total

$
37,179

$
6,603

$
123

$
203

$
44,108

$
4,819

$
6

$
4,825

~~(1)~~

~~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:~~

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(1)

Other

Total
Other
Loans

Credit Quality Indicator:

Pass

$
33,011

$
5,874

$
137

$
204

$
39,226

$
3,959

$
5

$
3,964

Special mention

981

643

14

5

1,643

2

—

2

Substandard

611

181

9

—

801

45

—

45

Doubtful

—

—

—

—

—

—

—

—

Total

$
34,603

$
6,698

$
160

$
209

$
41,670

$
4,006

$
5

$
4,011

~~(1)~~

~~Includes lease financing receivables, all of which were classified as Pass.~~

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.

~~The following table presents, by credit quality indicator, loan class, and year of origination, the amortized cost basis of the Company’s loans and leases as of September 30, 2022.~~

Vintage Year

(in millions)
Risk Rating Group

2022

2021

2020

2019

2018

Prior To
2018

Revolving
Loans

Total

Pass

$
7,655

$
9,310

$
8,727

$
4,960

$
3,825

$
7,354

$
12

$
41,843

Special Mention

—

—

95

221

277

728

—

1,321

Substandard

—

—

37

201

130

605

—

973

Total mortgage loans

$
7,655

$
9,310

$
8,859

$
5,382

$
4,232

$
8,687

$
12

$
44,137

Pass

757

642

457

423

78

223

2,263

4,843

Special Mention

—

—

—

—

—

—

—

—

Substandard

—

—

—

1

2

1

—

4

Total other loans

757

642

457

424

80

224

2,263

4,847

Total

$
8,412

$
9,952

$
9,316

$
5,806

$
4,312

$
8,911

$
2,275

$
48,984

When management determines that foreclosure is probable, for loans that are individually evaluated the expected credit losses are based on the fair value of the collateral adjusted for selling costs. When the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, the collateral-dependent practical expedient has been elected and expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. For CRE loans, collateral properties include office buildings, warehouse/distribution buildings, shopping centers, apartment buildings, residential and commercial tract development. The primary source of repayment on these loans is expected to come from the sale, permanent financing or lease of the real property collateral. CRE loans are impacted by fluctuations in collateral values, as well as the ability of the borrower to obtain permanent financing.

~~The following table summarizes the extent to which collateral secures the Company’s collateral-dependent loans held for investment by collateral type as of September 30, 2022:~~

Collateral Type

(in millions)

Real
Property

Other

Multi-family

$
13

$
—

Commercial real estate

43

—

One-to-four family

—

—

Acquisition, development, and construction

—

—

Commercial and industrial

—

4

Other

—

—

Total collateral-dependent loans held for investment

56

4

~~Other collateral type consists of taxi medallions, cash, accounts receivable and inventory.~~

~~There were no significant changes in the extent to which collateral secures the Company’s collateral-dependent financial assets during the nine months ended September 30, 2022.~~

~~Troubled Debt Restructurings~~

The Company is required to account for certain loan modifications and restructurings as TDRs. In general, a modification or restructuring of a loan constitutes a TDR if the Company grants a concession to a borrower experiencing financial difficulty. A loan modified as a TDR generally is placed on non-accrual status until the Company determines 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, reasonably expected TDRs are individually evaluated and consist of criticized, classified, or maturing loans that will have a modification processed within the next three months.

In an effort to proactively manage delinquent loans, the Company has selectively extended to certain borrowers concessions such as rate reductions, extension of maturity dates, and forbearance agreements. As of September 30, 2022, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $45 ~~million.~~

~~The CARES Act was enacted on March 27, 2020. Under the CARES Act,~~ the Company made the election to deem that loan modifications do not result in TDRs if they are (1) related to the novel coronavirus disease (“COVID-19”); (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the National Emergency or (B) December 31, 2020. This includes short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. In December 2020, Congress amended the CARES Act through the Consolidated Appropriation Act of 2021, which provided additional COVID-19 relief to American families and businesses, including extending TDR relief under the CARES Act until the earlier of December 31, 2021 or 60 days following the termination of the national emergency.

The eligibility of a borrower for work-out concessions of any nature depends upon the facts and circumstances of each loan, which may change from period to period, and involves judgment by Company personnel regarding the likelihood that the concession will result in the maximum recovery for the Company.

~~The following table presents information regarding the Company's TDRs as of September 30, 2022 and December 31, 2021:~~

September 30, 2022

December 31, 2021

(in millions)

Accruing

Non-
Accrual

Total

Accruing

Non-
Accrual

Total

Loan Category:

Multi-family

$

—

$

6

$

6

$

—

$

7

$

7

Commercial real estate

16

19

35

16

—

16

One-to-four family

—

—

—

—

—

—

Acquisition, development, and
construction

—

—

—

—

—

—

Commercial and industrial (1)

—

4

4

—

6

6

Total

$

16

$

29

$

45

$

16

$

13

$

29

~~(1) Includes $~~4 ~~million and $~~6 ~~million of taxi medallion-related loans at September 30, 2022 and December 31, 2021, respectively.~~

~~The financial effects of the Company’s TDRs for the three months ended September 30, 2022 and 2021 are summarized as follows:~~

For the Three Months Ended September 30, 2022

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

—

$
—

$
—

0
%
0
%

$
—

$
—

For the Three Months Ended September 30, 2021

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

$
4

$
4

6.00
%
3.55
%

$
—

$
—

~~The financial effects of the Company’s TDRs for the nine months ended September 30, 2022 and 2021 are summarized as follows:~~

For the Nine Months Ended September 30, 2022

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

$
—

For the Nine Months Ended September 30, 2021

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

$
4

$
4

6.00

%

3.55

%
$
—

$
—

~~At September 30, 2022 and September 30, 2021,~~ no ~~loans have been modified as TDRs that were in payment default during the twelve months ended at that date.~~

The Company does not consider a payment to be in default when the loan is in forbearance, or otherwise granted a delay of payment, when the agreement to forebear or allow a delay of payment is part of a modification.

Subsequent to the modification, the loan is not considered to be in default until payment is contractually past due in accordance with the modified terms. However, the Company may consider a loan with multiple modifications or forbearance periods to be in default, and would consider a loan to be in default if the borrower were in bankruptcy or if the loan were partially charged off subsequent to modification. Management takes into consideration all TDR modifications in determining the appropriate level of the allowance.

~~Note 6. Allowance for Credit Losses on Loans and Leases~~

~~Allowance for Credit Losses on Loans and Leases~~

~~The following table summarizes activity in the allowance for credit losses on loans and leases for the periods indicated:~~

For the Nine Months Ended September 30,

2022

2021

(in millions)

Mortgage

Other

Total

Mortgage

Other

Total

Balance, beginning of period

$
178

$
21

$
199

$
176

$
18

$
194

Charge-offs

(5
)

—

(5
)

(2
)

(3
)

(5
)
Recoveries

4

6

10

2

10

12

Provision for (recovery of) credit
losses on loans and leases

31

(17
)

14

1

—

1

Balance, end of period

$
208

$
10

$
218

$
177

$
25

$
202

~~Separately, at September 30, 2022, the Company had an allowance for unfunded commitments of $~~7 ~~million, as compared to $~~12 ~~million at December 31, 2021.~~

For the nine months ended September 30, 2022, the allowance for credit losses on loan and leases increased primarily as a result of loan portfolio growth combined with reduced prepayment estimates lengthening the average portfolio life, primarily offset by improvements in environmental factors surrounding the COVID-19 pandemic, specifically those affecting the New York City area.

The macroeconomic forecast factors in increasing costs of higher global energy prices and tighter financial market conditions on the U.S. economy. Gross Domestic Product (“GDP”) is now expected to rise at an annualized rate of 1.6% and 1.5% respectively for 2022 and 2023. Unemployment continues to subside from the historic shock of 2020, as peak unemployment rates are forecasted to be approximately 3.6% in 2022 and 3.9% in 2023. Federal Reserve continues to aggressively tighten monetary policy. As a result, the federal funds rate is now forecast to average 1.5% in 2022 and 3.3% in 2023, compared with 1.1% in 2022 and 2.7% in 2023 in the previous quarter Baseline scenario. The 10-year U.S. Treasury yield is expected to steadily increase over the next few years.

In addition to these quantitative inputs, several qualitative factors were considered in estimating our allowance for loan and lease credit losses, including attributes related to a concentrated commercial real estate portfolio, specifically those affecting commercial real estate in the New York City area, as well as changes in credit policies and underwriting guidelines and laws and regulations.

The Company charges off loans, or portions of loans, in the period that such loans, or portions thereof, are deemed uncollectible. The collectability of individual loans is determined through an assessment of the financial condition and repayment capacity of the borrower and/or through an estimate of the fair value of any underlying collateral. For non-real estate-related consumer credits, the following past-due time periods determine when charge-offs are typically recorded: (1) closed-end credits are charged off in the quarter that the loan becomes 120 days past due; (2) open-end credits are charged off in the quarter that the loan becomes 180 days past due; and (3) both closed-end and open-end credits are typically charged off in the quarter that the credit is 60 days past the date the Company received notification that the borrower has filed for bankruptcy.

~~The following table presents additional information about the Company’s nonaccrual loans at September 30, 2022:~~

(in millions)

Recorded
Investment

Related
Allowance

Interest
Income
Recognized

Nonaccrual loans with no related allowance:

Multi-family

$
13

$
—

$
—

Commercial real estate

27

—

1

One-to-four family

—

—

—

Acquisition, development, and construction

—

—

—

Other

3

—

—

Total nonaccrual loans with no related allowance

$
43

$
—

$
1

Nonaccrual loans with an allowance recorded:

Multi-family

$
—

$
—

$
—

Commercial real estate

1

—

—

One-to-four family

1

—

—

Acquisition, development, and construction

—

—

—

Other

—

—

—

Total nonaccrual loans with an allowance recorded

$
2

$
—

$
—

Total nonaccrual loans:

Multi-family

$
13

$
—

$
—

Commercial real estate

28

—

1

One-to-four family

1

—

—

Acquisition, development, and construction

—

—

—

Other

3

—

—

Total nonaccrual loans

$
45

$
—

$
1

~~The following table presents additional information about the Company’s nonaccrual loans at December 31, 2021:~~

(in millions)

Recorded
Investment

Related
Allowance

Interest
Income
Recognized

Nonaccrual loans with no related allowance:

Multi-family

$
9

$
—

$
1

Commercial real estate

14

—

—

One-to-four family

—

—

—

Acquisition, development, and construction

—

—

—

Other

6

—

—

Total nonaccrual loans with no related allowance

$
29

$
—

$
1

Nonaccrual loans with an allowance recorded:

Multi-family

$
1

$
—

$
—

Commercial real estate

2

—

—

One-to-four family

1

—

—

Acquisition, development, and construction

—

—

—

Other

—

—

—

Total nonaccrual loans with an allowance recorded

$
4

$
—

$
—

Total nonaccrual loans:

Multi-family

$
10

$
—

$
1

Commercial real estate

16

—

—

One-to-four family

1

—

—

Acquisition, development, and construction

—

—

—

Other

6

—

—

Total nonaccrual loans

$
33

$
—

$
1

~~Note 7. Borrowed Funds~~

~~The following table summarizes the Company’s borrowed funds at the dates indicated:~~

September 30,

December 31,

(in millions)

2022

2021

Wholesale borrowings:

FHLB advances

$
12,840

$
15,105

Repurchase agreements

300

800

Total wholesale borrowings

$
13,140

$
15,905

Junior subordinated debentures

361

361

Subordinated notes

297

296

Total borrowed funds

$
13,798

$
16,562

~~The following table summarizes the Company’s repurchase agreements accounted for as secured borrowings at September 30, 2022:~~

Remaining Contractual Maturity of the Agreements

(in millions)

Overnight and
Continuous

Up to
30 Days

30–90 Days

Greater than
90 Days

GSE obligations

$
—

$
—

$
—

$
300

~~Subordinated Notes~~

~~At September 30, 2022 and December 31, 2021, the Company had $297~~ ~~million and $296~~ ~~million of fixed-to-floating rate subordinated notes outstanding:~~

Date of Original Issue

Stated Maturity

Interest Rate(1)

Original Issue
Amount

(dollars in millions)

Nov. 6, 2018

Nov. 6, 2028

5.90
%

$
300

~~(1)~~

~~From and including the date of original issuance to, but excluding November 6, 2023, the Notes will bear interest at an initial rate of~~ ~~5.90~~% per annum payable semi-annually. Unless redeemed, from and including November 6, 2023 to but excluding the maturity date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month ~~LIBOR rate plus~~ ~~278~~ ~~basis points~~ ~~payable quarterly.~~

~~Junior Subordinated Debentures~~

~~At September 30, 2022 and December 31, 2021, the Company had $361~~ million 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.

~~The following junior subordinated debentures were outstanding at September 30, 2022:~~

Issuer

Interest Rate
of Capital
Securities
and
Debentures

Junior
Subordinated
Debentures
Amount
Outstanding

Capital
Securities
Amount
Outstanding

Date of
Original Issue

Stated
Maturity

First Optional
Redemption
Date

(dollars in millions)

New York Community Capital
   Trust V (BONUSESSM Units)

6.00
%

$

147

$

140

Nov. 4, 2002

Nov. 1, 2051

Nov. 4, 2007
(1)
New York Community Capital
   Trust X

4.89

124

120

Dec. 14, 2006

Dec. 15, 2036

Dec. 15, 2011
(2)
PennFed Capital Trust III

6.54

31

30

June 2, 2003

June 15, 2033

June 15, 2008
(2)
New York Community Capital
   Trust XI

5.32

59

58

April 16, 2007

June 30, 2037

June 30, 2012
(2)
Total junior subordinated debentures

$

361

$

348

~~(1)~~

~~Callable subject to certain conditions as described in the prospectus filed with the SEC on November 4, 2002.~~

~~(2)~~

~~Callable from this date forward.~~

~~Note 8. Pension and Other Post-Retirement Benefits~~

~~The following table sets forth certain disclosures for the Company’s pension and post-retirement plans for the periods indicated:~~

For the Three Months Ended September 30,

2022

2021

Post

Post

Pension

Retirement

Pension

Retirement

(in millions)

Benefits

Benefits (1)

Benefits

Benefits (1)

Components of net periodic pension expense (credit):

Interest cost

$
1

$
—

$
1

$
—

Expected return on plan assets

(4
)

—

(4
)

—

Amortization of net actuarial loss

1

—

2

—

Net periodic (credit) expense

$
(2
)

$
—

$
(1
)

$
—

For the Nine Months Ended September 30,

2022

2021

Post

Post

Pension

Retirement

Pension

Retirement

(in millions)

Benefits

Benefits (1)

Benefits

Benefits (1)

Components of net periodic pension expense (credit):

Interest cost

$
3

$
—

$
3

$
—

Expected return on plan assets

(12
)

—

(12
)

—

Amortization of net actuarial loss

2

—

5

—

Net periodic (credit) expense

$
(7
)

$
—

$
(4
)

$
—

~~(1)~~

~~Post-retirement benefits balances round to zero.~~

~~The Company expects to contribute $~~1 ~~million to its post-retirement plan to pay premiums and claims for the fiscal year ending December 31, 2022. The Company does~~ no~~t expect to make any contributions to its pension plan in 2022.~~

~~Note 9. Stock-Based Compensation~~

~~At September 30, 2022, the Company had a total of~~ ~~5,350,487~~ ~~shares available for grants as restricted stock, options, or other forms of related rights. The Company granted~~ ~~3,096,694~~ ~~shares of restricted stock, with an average fair value of $11.62~~ ~~per share on the date of grant, during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company granted~~ ~~3,131,949~~ ~~shares of restricted stock, with an average fair value of $11.20~~ ~~per share.~~

~~The shares of restricted stock that were granted during the nine months ended September 30, 2022 and 2021, vest over a~~ ~~one-~~ or ~~five year~~ ~~period. Compensation and benefits expense related to the restricted stock grants is recognized on a straight-line basis over the vesting period and totaled $~~21 ~~million and $~~22 ~~million for the nine months ended September 30, 2022 and 2021, including $~~7 ~~million and $~~7 ~~million for the three months ended September 30, 2022 and September 30, 2021, respectively.~~

~~The following table provides a summary of activity with regard to restricted stock awards in the nine months ended September 30, 2022:~~

For the Nine Months Ended
September 30, 2022

Number of Shares

Weighted
Average
Grant Date
Fair Value

Unvested at beginning of year

6,950,335

$
11.68

Granted

3,096,694

11.62

Vested

(2,288,069
)

12.27

Canceled

(426,785
)

11.49

Unvested at end of year

7,332,175

11.49

~~As of September 30, 2022, unrecognized compensation cost relating to unvested restricted stock totaled $~~66 ~~million. This amount will be recognized over a remaining weighted average period of~~ ~~3.1~~ ~~years.~~

~~The following table provides a summary of activity with regard to Performance-Based Restricted Stock Units ("PSUs") in the nine months ended September 30, 2022:~~


	Number of Shares			Performance Period	Expected Vesting Dates
~~Outstanding at beginning of year~~		~~834,612~~
~~Granted~~		~~473,211~~
~~Released~~		(~~176,090~~	)
~~Canceled~~		(~~152,556~~	)
~~Outstanding at end of period~~		~~979,177~~		~~January 1, 2021 - December 31, 2023~~	~~March 31, 2023 and 2024~~

PSUs 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 $1 ~~million and $~~2 ~~million for the three and nine months ended September 30, 2022 and September 30, 2021. As of September 30, 2022, unrecognized compensation cost relating to unvested restricted stock totaled $~~5 ~~million. This amount will be recognized over a remaining weighted average period of~~ ~~1.7~~ ~~years. As of September 30, 2022, the Company believes it is probable that the performance conditions will be met.~~

~~The Company matches a portion of employee 401(k) plan contributions. Such expense totaled $~~2 ~~million and $~~5 ~~million for the three and nine months ended September 30, 2022 and September 30, 2021.~~

~~Note 10. Fair Value Measurements~~

GAAP sets forth a definition of fair value, establishes a consistent framework for measuring fair value, and requires disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. GAAP also clarifies that fair value is an “exit” price, representing the amount that would be received when selling an asset, or paid when transferring a liability, in an orderly transaction between market participants. Fair value is thus a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

•

~~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.

•

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.~~

The following tables present assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, and that were included in the Company’s Consolidated Statements of Condition at those dates:

Fair Value Measurements at September 30, 2022

(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

Assets:

Mortgage-related Debt Securities
Available for Sale:

GSE certificates
$
—

$
944

$
—

$
944

GSE CMOs

—

1,286

—

1,286

Total mortgage-related debt securities
$
—

$
2,230

$
—

$
2,230

Other Debt Securities Available for Sale:

U. S. Treasury obligations
$
1,672

$
—

$
—

$
1,672

GSE debentures

—

1,406

—

1,406

Asset-backed securities

—

391

—

391

Municipal bonds

—

18

—

18

Corporate bonds

—

855

—

855

Foreign notes

—

25

—

25

Capital trust notes

—

92

—

92

Total other debt securities
$
1,672

$
2,787

$
—

$
4,459

Total debt securities available for sale
$
1,672

$
5,017

$
—

$
6,689

Equity securities:

Preferred stock
$
—

$
—

$
—

$
—

Mutual funds and common stock

—

14

—

14

Total equity securities
$
—

$
14

$
—

$
14

Total securities
$
1,672

$
5,031

$
—

$
6,703

Fair Value Measurements at December 31, 2021

(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

Assets:

Mortgage-Related Debt Securities
Available for Sale:

GSE certificates

$
—

$
1,107

$
—

$
1,107

GSE CMOs

—

1,683

—

1,683

Total mortgage-related debt securities

$
—

$
2,790

$
—

$
2,790

Other Debt Securities Available
for Sale:

U.S. Treasury obligations

$
45

$
—

$
—

$
45

GSE debentures

—

1,480

—

1,480

Asset-backed securities

—

479

—

479

Municipal bonds

—

25

—

25

Corporate bonds

—

838

—

838

Foreign notes

—

26

—

26

Capital trust notes

—

97

—

97

Total other debt securities

$
45

$
2,945

$
—

$
2,990

Total debt securities available for sale

$
45

$
5,735

$
—

$
5,780

Equity securities:

—

Preferred stock

$
—

$
—

$
—

$
—

Mutual funds and common stock

—

16

—

16

Total equity securities

$
—

$
16

$
—

$
16

Total securities

$
45

$
5,751

$
—

$
5,796

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.

While 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.

~~Assets Measured at Fair Value on a Non-Recurring Basis~~

~~Certain 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 and liabilities that were~~

~~measured at fair value on a non-recurring basis as of September 30, 2022 and December 31, 2021, and that were included in the Company’s Consolidated Statements of Condition at those dates:~~

Fair Value Measurements at September 30, 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

Certain loans (1)

$
—

$
—

$
25

$
25

Other assets(2)

—

—

38

38

Total

$
—

$
—

$
63

$
63

~~(1)~~

~~Represents the fair value 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 investments without readily determinable fair values. These equity investments are classified as Level 3 due to the infrequency of the observable prices and/or the restrictions on the shares.

Fair Value Measurements at December 31, 2021 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

Certain loans (1)

$
—

$
—

$
32

$
32

Other assets (2)

—

—

32

32

Total

$
—

$
—

$
64

$
64

~~(1)~~

~~Represents the fair value based on the value of the collateral.~~

~~(2)~~

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 Disclosures~~

For 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.

The following tables summarize the carrying values, estimated fair values, and fair value measurement levels of financial instruments that were not carried at fair value on the Company’s Consolidated Statements of Condition at September 30, 2022 and December 31, 2021:

September 30, 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, cash equivalents and due from banks

$

1,700

$

1,700

$

1,700

$

—

$
—

FHLB stock (1)

630

630

—

630

—

Loans and leases, net

48,766

45,725

—

—

45,725

Financial Liabilities:

Deposits

$

41,705

$

41,448

$

32,596

(2)

$

8,852

(3)

$
—

Borrowed funds

13,798

13,615

—

13,615

—

~~(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.~~

December 31, 2021

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, cash equivalents and due from banks

$
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

—

~~(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, Cash Equivalents and Due From Banks~~

Cash, cash equivalents and due from banks include cash and due from banks and federal funds sold. The estimated fair values of cash, cash equivalents and due from banks are assumed to equal their carrying values, as these financial instruments are either due on demand or have short-term maturities.

~~Securities~~

If 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.

~~Federal Home Loan Bank Stock~~

~~Ownership in equity securities of the FHLB-NY is generally restricted and there is no established liquid market for their resale. The carrying amount approximates the fair value.~~

~~Loans~~

The 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.

~~Deposits~~

The 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 (total deposits excluding CDs) relationships, which comprise a significant portion of the Company’s deposit base.

~~Borrowed Funds~~

The 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 Instruments~~

The 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 September 30, 2022 and December 31, 2021.

~~Note 11. Leases~~

~~Lessor Arrangements~~

The Company is a lessor in the equipment finance business where it has executed direct financing leases (“lease finance receivables”). The Company produces lease finance receivables through a specialty finance subsidiary that participates in syndicated loans that are brought to them, and equipment loans and leases that are assigned to them, by a select group of nationally recognized sources, and are generally 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. Lease finance receivables are carried at the aggregate of lease payments receivable plus the estimated residual value of the leased assets and any initial direct costs incurred to originate these leases, less unearned income, which is accreted to interest income over the lease term using the interest method.

~~The standard leases are typically repayable on a level monthly basis with terms ranging from~~ 24 to ~~120~~ months. At the end of the lease term, the lessee usually has the option to return the equipment, to renew the lease or purchase the equipment at the then fair market value (“FMV”) price. For leases with a FMV renewal/purchase option, the relevant residual value assumptions are based on the estimated value of the leased asset at the end of lease term, including evaluation of key factors, such as, the estimated remaining useful life of the leased asset, its historical secondary market value including history of the lessee executing the FMV option, overall credit evaluation and return provisions. The Company acquires the leased asset at fair market value and provides funding to the respective lessee at acquisition cost, less any volume or trade discounts, as applicable. Therefore, there is generally no selling profit or loss to recognize or defer at inception of a lease.

The residual value component of a lease financing receivable represents the estimated fair value of the leased equipment at the end of the lease term. In establishing residual value estimates, the Company may rely on industry data, historical experience, and independent appraisals and, where appropriate, information regarding product life cycle, product upgrades and competing products. Upon expiration of a lease, residual assets are remarketed, resulting in an extension of the lease by the lessee, a lease to a new customer or purchase of the residual asset by the lessee or another party. Impairment of residual values arises if the expected fair value is less than the carrying amount. The Company assesses its net investment in lease financing receivables (including residual values) for impairment on an annual basis with any impairment losses recognized in accordance with the impairment guidance for financial instruments. As such, net investment in lease financing receivables may be reduced by an allowance for credit losses with changes recognized as provision expense. On certain lease financings, the Company obtains residual value insurance from third parties to manage and reduce the risk associated with the residual value of the leased assets. At September 30, 2022 and December 31, 2021, the carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $34~~million and $~~61 ~~million, respectively.~~

~~The Company uses the interest rate implicit in the lease to determine the present value of its lease financing receivables.~~

~~The components of lease income were as follows:~~

(in millions)

For the
Three
Months
Ended
September 30,
2022

For the
Nine
Months
Ended
September 30,
2022

For the
Three
Months
Ended
September 30,
2021

For the
Nine
Months
Ended
September 30,
2021

Interest income on lease financing (1)

$
14

$
38

$
13

$
41

~~(1)~~

~~Included in Interest Income – Loans and leases in the Consolidated Statements of Income and Comprehensive Income.~~

~~At September 30, 2022 and December 31, 2021, the carrying value of net investment in leases was $1.8~~ ~~billion and $1.9~~ ~~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)

September 30,
2022

December 31,
2021

Net investment in the lease - lease payments receivable

$
1,722

$
1,790

Net investment in the lease - unguaranteed residual assets

59

75

Total lease payments

$
1,781

$
1,865

The following table presents the remaining maturity analysis of the undiscounted lease receivables as of September 30, 2022, as well as the reconciliation to the total amount of receivables recognized in the Consolidated Statements of Condition:

(in millions)

September 30,
2022

2022

$

3

2023

86

2024

186

2025

375

2026

373

Thereafter

758

Total lease payments

1,781

Plus: deferred origination costs

20

Less: unearned income

(84
)
Total lease finance receivables, net

$

1,717

~~Lessee Arrangements~~

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets and operating lease liabilities in the Consolidated Statements of Condition.

date based on the present value of lease payments over the lease term. As most leases do not provide an implicit rate, the incremental borrowing rate (FHLB borrowing rate) is used in determining the present value of lease payments. The implicit rate is used when readily determinable. The operating lease ROU asset is measured at cost, which includes the initial measurement of the lease liability, prepaid rent and initial direct costs incurred by the Company, less incentives received. The lease terms include options to extend the lease when it is reasonably certain that we will exercise that option. For the vast majority of the Company’s leases, we are reasonably certain we will exercise our options to renew to the end of all renewal option periods. As such, substantially all of our future options to extend the leases have been included in the lease liability and ROU assets.

Variable costs such as the proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance are not included in the lease liability and are recognized in the period in which they are incurred. Amortization of the ROU assets was $21~~million and $~~15 ~~million for the nine months ended September 30, 2022 and September 30, 2021, respectively. Included in these amounts was $~~5 ~~million and $~~5 ~~million for the three months ended September 30, 2022 and September 30, 2021, respectively.~~

~~The Company has operating leases for corporate offices, branch locations, and certain equipment. The Company’s leases have remaining lease terms of~~ ~~one year~~ ~~to approximately~~ ~~25 years~~, ~~the vast majority of which include one or more options to extend the leases for up to five years resulting in lease terms up to 40 years.~~

~~The components of lease expense were as follows:~~

(in millions)

For the Three
Months Ended
September 30,
2022

For the Nine
Months Ended
September 30,
2022

For the Three
Months Ended
September 30,
2021

For the Nine
Months Ended
September 30,
2021

Operating lease cost

$
7

$
21

$
7

$
20

Sublease income

—

—

—

—

Total lease cost

$
7

$
21

$
7

$
20

~~Supplemental cash flow information related to the leases for the following periods:~~

(in millions)

For the Three
Months Ended
September 30,
2022

For the Nine
Months Ended
September 30,
2022

For the Three
Months Ended
September 30,
2021

For the Nine
Months Ended
September 30,
2021

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$
7

$
21

$
7

$
20

~~Supplemental balance sheet information related to the leases for the following periods:~~

(in millions, except lease term and discount rate)

September 30,
2022

December 31,
2021

Operating Leases:

Operating lease right-of-use assets

$
227

$
249

Operating lease liabilities

$
227

$
249

Weighted average remaining lease term

13 years

16 years

Weighted average discount rate%

3.23
%

3.05
%

(in millions)
Maturities of lease liabilities:

September 30,
2022

2022

$

7

2023

27

2024

26

2025

25

2026

24

Thereafter

171

Total lease payments

280

Less: imputed interest

(53
)
Total present value of lease liabilities

$

227

~~Note 12. Derivative and Hedging Activities~~

The Company’s derivative financial instruments consist of interest rate swaps. The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposure to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate and liquidity risks, primarily by managing the amount, sources, and duration of its assets and liabilities and, from time to time, the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

Title VII of the DFA requires all standardized derivatives, including most interest rate swaps, to be submitted for clearing to central counterparties to reduce counterparty risk. Two of the central counterparties are the Chicago Mercantile Exchange (“CME”) and the London Clearing House (“LCH”). As of September 30, 2022, all of the Company’s $~~1.5~~ billion notional derivative contracts were cleared on the LCH. Daily variation margin payments on derivatives cleared through the LCH are accounted for as legal settlement. For derivatives cleared through LCH, the net gain (loss) position includes the variation margin amounts as settlement of the derivative and not collateral against the fair value of the derivative, which includes accrued interest; therefore, those interest rate and derivative contracts the Company clears through the LCH are reported at a fair value of approximately zero at September 30, 2022.

The Company’s exposure is limited to the value of the derivative contracts in a gain position less any collateral held and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterparty to be zero. At September 30, 2022, the Company had a net positive exposure.

~~Fair Value of Hedges of Interest Rate Risk~~

The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Such derivatives were used to hedge the changes in fair value of certain of its pools of prepayable fixed rate assets. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

~~The Company entered into an interest rate swap with a notional amount of $2.0~~ ~~billion to hedge certain real estate loans. This swap expired in~~ ~~February 2022~~ and was not renewed. For the nine months ended September 30, 2022, the floating rate received related to the net settlement of this interest rate swap was less than the fixed rate payments. As such, interest income from Loans and leases in the accompanying Consolidated Statements of Income and Comprehensive Income was decreased by $6 million for the nine months ended September 30, 2022. For the three and nine months ended September 30, 2021, the floating rate received related to the net settlement of this interest rate swap was less than the fixed rate payments. As such, interest income from Loans and leases in the accompanying Consolidated Statements of Income and Comprehensive Income was decreased by $12 ~~million and $~~37 ~~million for the three and nine months ended September 30, 2021.~~

~~As of September 30, 2022, and December 31, 2021 the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:~~

(in millions)

September 30, 2022

December 31, 2021

Line Item in the Consolidated Statements of
Condition in which the Hedge Item is Included

Carrying
Amount of
the Hedged
Assets

Cumulative
Amount of
Fair Value
Hedging
Adjustments
Included in
the Carrying
Amount of
the Hedged
Assets

Carrying
Amount of
the Hedged
Assets

Cumulative
Amount of
Fair Value
Hedging
Adjustments
Included in
the Carrying
Amount of
the Hedged
Assets

Total loans and leases, net (1)
$

-

$

-

$

2,025

$

25

~~(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 September 30, 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 the Consolidated Statements of Income and Comprehensive Income for the periods indicated.~~

(in millions)
For the Three
Months Ended
September 30, 2022

For the Nine
Months Ended
September 30, 2022

For the Three
Months Ended
September 30, 2021

For the Nine
Months Ended
September 30, 2021

Derivative – interest rate swap:

Interest income
$
—

$
25

$
25

$
49

Hedged item – loans:

Interest income
$
—

$
(25
)

$
(25
)

$
(49
)

~~Cash Flow Hedges of Interest Rate Risk~~

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of amounts subject to variability caused by changes in interest rates from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes in the fair value of derivatives designated and that qualify as cash flow hedges are initially recorded in other comprehensive income and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings.

~~Interest rate swaps with notional amounts totaling $1.5~~ ~~billion and $2.3~~ ~~billion as of September 30, 2022 and December 31, 2021, respectively, were designated as cash flow hedges of certain FHLB borrowings.~~

~~The following table summarizes information about the interest rate swaps designated as cash flow hedges at September 30, 2022 and December 31, 2021:~~

(dollars in millions)

September 30,
2022

December 31,
2021

Notional amounts

$
1,500

$
2,250

Cash collateral received (posted)

58

(12
)
Weighted average pay rates

1.51
%

1.27
%
Weighted average receive rates

2.89
%

0.18
%
Weighted average maturity

2.2 years

0.9 years

~~The following table presents the effect of the Company's cash flow derivative instruments on AOCL for the nine months ended September 30, 2022 and 2021:~~

(in millions)

For the Nine
Months Ended
September 30, 2022

For the Nine
Months Ended
September 30, 2021

Amount of (loss) gain recognized in AOCL

$
64

$
2

Amount of reclassified from AOCL to interest expense

4

18

~~Gains (losses) included in the Consolidated Statements of Income related to interest rate derivatives designated as cash flow hedges during the nine months ended September 30, 2022 was $~~4 million. Amounts reported in AOCL related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate borrowings. During the next twelve months, the Company estimates that an additional $21 ~~million will be reclassified to interest expense.~~

~~Note 13. Pending Acquisition~~

~~Receipt of OCC Approval for Bank Merger and Merger Extension~~

On October 28, 2022, the Company and Flagstar Bancorp, Inc. ("Flagstar") jointly announced the receipt of approval from the Office of the Comptroller of the Company (the "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 being the surviving entity.

The acquisition of Flagstar by the Company is still subject to the approval of the FRB, as well as the satisfaction of certain other customary closing conditions under the merger agreement, as amended, between the two companies (the “Merger Agreement”). The OCC approval is subject to a statutory 15-day waiting period that provides that the bank merger cannot be consummated until 15 days after OCC approval has been received, which in this case is November 11, 2022. There is no associated waiting period with the FRB approval. NYCB and Flagstar intend to consummate the holding company and bank merger promptly after FRB approval is received and the OCC waiting period ends.

~~In addition, NYCB and Flagstar announced that they have mutually agreed to extend the Merger Agreement to~~ ~~December 31, 2022~~ ~~from~~ ~~October 31, 2022~~ to provide additional time to obtain regulatory approval from the FRB. The extension was approved by the Boards of Directors of both companies. Pursuant to the terms of the Merger Agreement, Flagstar shareholders will receive ~~4.0151~~ ~~shares of Company common stock for each Flagstar share they own.~~

~~Note 14. Legal Proceedings~~

Following the announcement of the Merger Agreement, the first of four lawsuits was filed on June 23, 2021 in United States Federal District Courts by alleged stockholders of NYCB against NYCB and the members of its board of directors challenging the accuracy or completeness of the disclosures contained in the Form S-4 filed on June 25, 2021 by NYCB with the SEC relating to the proposed Merger. Four additional lawsuits were filed by alleged Flagstar stockholders in state and federal courts against Flagstar and its board of directors (and, in one instance, NYCB and 615 Corp.) challenging the proposed Merger or Flagstar’s disclosures relating to the Merger, and those four lawsuits have since been resolved and dismissed. The complaints in the actions against NYCB allege, among other things, that the defendants caused a materially incomplete and misleading Form S-4 relating to the proposed Merger to be filed with the SEC in violation of Section 14(a) and Section 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 14a-9 promulgated thereunder. Two of the lawsuits against NYCB have been voluntarily dismissed, without prejudice. In the two remaining actions, none of the NYCB defendants has been served with the complaint, and NYCB believes that these claims are without merit.

~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

For the purpose of this Quarterly Report on Form 10-Q, the words “we,” “us,” “our,” and the “Company” are used to refer to New York Community Bancorp, Inc. and our consolidated subsidiary, ~~New York Community~~Flagstar Bank, N.A. (the “Bank”).

•

the ability to pay future ~~dividends at currently expected rates;~~ dividends;

•

the ability to hire and retain key personnel;

•

the ability to attract new customers and retain existing ones in the manner anticipated;

•

changes in our customer base or in the financial or operating performances of our customers’ businesses;

•

any interruption in customer service due to circumstances beyond our control;

•

the outcome of pending or threatened litigation, or of matters before regulatory agencies, whether currently existing or commencing in the ~~future;~~ future, including with respect to any litigation or regulatory actions related to the business practices of acquired companies, including our recent acquisition of Flagstar Bancorp, Inc. and the purchase and assumption of certain assets and liabilities of Signature Bridge Bank;

•

environmental conditions that exist or may exist on properties owned by, leased by, or mortgaged to the Company;

•

cybersecurity incidents, including any interruption or breach of security resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems;

•

operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to industry changes in information technology systems, on which we are highly dependent;

•

the ability to keep pace with, and implement on a timely basis, technological changes;

•

changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, and other changes pertaining to banking, securities, taxation, rent regulation and housing (the New York Housing Stability and Tenant Protection Act of 2019), financial accounting and reporting, environmental protection, insurance, and the ability to comply with such changes in a timely manner;

•

changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System;

•

changes in accounting principles, policies, practices, and guidelines;

•

changes in regulatory expectations relating to predictive models we use in connection with stress testing and other forecasting or in the assumptions on which such modeling and forecasting are predicated;

•

changes to federal, state, and local income tax laws;

•

changes in our credit ratings or in our ability to access the capital markets;

•

increases in our FDIC insurance premium;

•

legislative and regulatory initiatives related to climate change;

•

the potential impact to the Company from climate change, including higher regulatory compliance, increased expenses, operational changes, and reputational risks;

•

unforeseen or catastrophic events including natural disasters, war, terrorist activities, and the emergence of a pandemic;

•

the impacts related to or resulting from ~~Russia's~~Russia’s military action in Ukraine and conflicts in the Middle East, including the broader impacts to financial markets and the global macroeconomic and geopolitical environment;

•

the effects of COVID-19, which includes, but are not limited to, the length of time that the pandemic continues, the effectiveness and acceptance of the COVID-19 vaccination program, the potential imposition of further restrictions on business operations and/or travel or movement in the future, the remedial actions and stimulus measures adopted by federal, state, and local governments, the health of our employees and the inability of employees to work due to illness, quarantine, or government mandates, the business continuity plans of our customers and our vendors, the increased likelihood of cybersecurity risk, data breaches, or fraud due to employees working from home, the ability of our borrowers to continue to repay their loan obligations, the lack of property transactions and asset sales, potential impact on collateral values, and the effect of the pandemic on the general economy and businesses of our borrowers; and

•

other economic, competitive, governmental, regulatory, technological, and geopolitical factors affecting our operations, pricing, and services.

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:

•

the ability to successfully integrate branches and operations and to implement appropriate internal controls and regulatory functions relating to such activities;

•

the ability to limit the outflow of deposits, and to successfully retain and manage any loans;

•

the ability to attract new deposits, and to generate new interest-earning assets, in geographic areas that have not been previously served;

•

~~the~~our ability to effectively manage liquidity, including our success in deploying any liquidity arising from a transaction into assets bearing sufficiently high yields without incurring unacceptable credit or interest rate risk;

•

the ability to obtain cost savings and control incremental non-interest expense;

•

the ability to retain and attract appropriate personnel;

•

the ability to generate acceptable levels of net interest income and non-interest income, including fee income, from acquired operations;

•

the diversion of management’s attention from existing operations;

•

the ability to address an increase in working capital requirements; and

•

limitations on the ability to successfully reposition our post-merger balance sheet when deemed appropriate.

See ~~Part I,~~ Item 1A, Risk Factors, in our Form 10-K for the year ended December 31, ~~2021~~2022, our Forms 10-Q for the quarters ended June 30, 2023 and March 31, 2023, and this Form 10-Q, 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.

~~RECONCILIATIONS OF STOCKHOLDERS’ EQUITY, COMMON STOCKHOLDERS’ EQUITY,~~

~~AND TANGIBLE COMMON STOCKHOLDERS’ EQUITY;~~

~~TOTAL ASSETS AND TANGIBLE ASSETS; AND THE RELATED MEASURES~~

~~(unaudited)~~

While stockholders’ equity, common stockholders’ equity, total assets, and book value per common share are financial measures that are recorded in accordance with GAAP, tangible common stockholders’ equity, tangible assets, and tangible book value per common share are not. It is management’s belief that these non-GAAP measures should be disclosed in this report and others we issue for the following reasons:

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.

Tangible book value per common share and the ratio of tangible common stockholders’ equity to tangible assets are among the capital measures considered by current and prospective investors, both independent of, and in comparison with, the Company’s peers.

Tangible common stockholders’ equity, tangible assets, and the related non-GAAP measures should not be considered in isolation or as a substitute for stockholders’ equity, common stockholders’ equity, total assets, or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate these non-GAAP measures may differ from that of other companies reporting non-GAAP measures with similar names.

Reconciliations of our stockholders’ equity, common stockholders’ equity, and tangible common stockholders’ equity; our total assets and tangible assets; and the related financial measures for the respective periods follow:

At or for the

At or for the

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(dollars in millions)
2022

2022

2021

2022

2021

Total Stockholders’ Equity
$
6,746

$
6,824

$
6,967

$
6,746

$
6,967

Less: Goodwill

(2,426
)

(2,426
)

(2,426
)

(2,426
)

(2,426
)
Preferred stock

(503
)

(503
)

(503
)

(503
)

(503
)
Tangible common stockholders’ equity
$
3,817

$
3,895

$
4,038

$
3,817

$
4,038

Total Assets
$
62,956

$
63,093

$
57,890

$
62,956

$
57,890

Less: Goodwill

(2,426
)

(2,426
)

(2,426
)

(2,426
)

(2,426
)
Tangible Assets
$
60,530

$
60,667

$
55,464

$
60,530

$
55,464

Average common stockholders’ equity
$
6,389

$
6,398

$
6,474

$
6,443

$
6,404

Less: Average goodwill

(2,426
)

(2,426
)

(2,426
)

(2,426
)

(2,426
)
Average tangible common stockholders’ equity
$
3,963

$
3,972

$
4,048

$
4,017

$
3,978

Average Assets
$
63,269

$
61,988

$
57,307

$
61,729

$
57,246

Less: Average goodwill

(2,426
)

(2,426
)

(2,426
)

(2,426
)

(2,426
)
Average tangible assets
$
60,843

$
59,562

$
54,881

$
59,303

$
54,820

GAAP MEASURES:

Return on average assets (1)

0.96
%

1.10
%

1.04
%

1.03
%

1.04
%
Return on average common stockholders' equity (2)

9.01

10.18

8.69

9.39

8.77

Book value per common share
$
13.39

$
13.56

$
13.90

$
13.39

$
13.90

Common stockholders’ equity to total assets

9.92

10.02

11.17

9.92

11.17

NON-GAAP MEASURES:

Return on average tangible assets (1)

1.02
%

1.17
%

1.08
%

1.10
%

1.08
%
Return on average tangible common stockholders’ equity (2)

14.81

16.73

13.89

15.43

14.12

Tangible book value per common share
$
8.19

$
8.35

$
8.68

$
8.19

$
8.68

Tangible common stockholders’ equity to tangible assets

6.31

6.42

7.28

6.31

7.28

~~(1)~~

To calculate return on average assets for a period, we divide net income generated during that period by average assets recorded during that period. To calculate return on average tangible assets for a period, we divide net income by average tangible assets recorded during that period.

PART I. FINANCIAL INFORMATION

~~(2)~~

To calculate return on average common stockholders’ equity for a period, we divide net income available to common shareholders generated during that period by average common stockholders’ equity recorded during that period. To calculate return on average tangible common stockholders’ equity for a period, we divide net income available to common shareholders generated during that period by average tangible common stockholders’ equity recorded during that period.


ITEM 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

~~Executive Summary~~

New York Community Bancorp, Inc. is the holding company for New York Community Bank, a New York State-chartered savings bank, headquartered in Hicksville, New York. The Bank is subject to regulation by the NYSDFS, the FDIC, and the CFPB. In addition, the holding company is subject to regulation by the FRB, the SEC, and to the requirements of the NYSE, where shares of our common stock trade under the symbol “NYCB” and shares of our preferred stock trade under the symbol “NYCB PA”.

Reflecting our growth through a series of acquisitions, the Company currently operates 237 branch locations through eight local divisions, each with a history of service and strength. In New York, we operate as Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, Roosevelt Savings Bank, and Atlantic Bank; in New Jersey as Garden State Community Bank; in Ohio as the Ohio Savings Bank; and as AmTrust Bank in Arizona and Florida.

~~Third Quarter 2022 Overview~~

At September 30, ~~2022,~~2023, total assets were ~~$63.0~~$111.2 billion, up $3.4 billion or 8% annualized compared to December 31, 2021. The year-to-date increase was due primarily to growth in our loan portfolio, and to a lesser extent, growth in the securities portfolio, offset slightly by a decline in the level of cash and cash equivalents.

~~Total loans held for investment increased $3.2 billion or 9% annualized, ending the quarter at $49.0~~$21.1 billion compared to December 31, ~~2021. Our loan growth continues~~2022. Total deposits were $82.7 billion at September 30, 2023, up $24.0 billion from December 31, 2022. These year-to-date increases were primarily due to ~~be driven by growth in two categories: multi-family loans~~our March 20, 2023, assumption of a substantial amount of the deposits and ~~specialty finance loans.~~

~~During~~certain identified liabilities and the ~~current third quarter,~~acquisition of certain assets and lines of business of Signature Bridge Bank, from the Company reinvested a portion of its cash balances in short-term treasury securities. Accordingly, total available-for-sale securities increased by $1.0 billion to $6.7 billion, up 18% (not annualized) comparedFDIC as receiver for Signature Bridge Bank (the “Signature Transaction”). See Note 3 “Business Combinations” to the ~~second quarter of~~Consolidated Financial Statements for further information regarding the ~~year. At the same time, the level of cash balances declined $1.6 billion to $1.7 billion.~~Signature Transaction

~~On the liability front, total deposits increased $6.6 billion or 25% annualized to $41.7 billion. Once again, the deposit growth was driven by growth in our BaaS business and loan-related deposits.~~

~~Given the strong year-to-date deposit growth, wholesale borrowings declined $2.8 billion or 23% annualized to $13.1 billion compared to December 31, 2021.~~

For the three months ended September 30, ~~2022, the Company reported~~2023, net income ~~of $152~~was $207 million ~~up 2%~~as compared to ~~the $149~~$413 million ~~that the Company reported~~ for the three months ended ~~September~~June 30, ~~2021.~~2023. Net income available to common stockholders for the three months ended September 30, ~~2022 totaled $144~~2023 was $199 million, ~~up 3%~~ compared to ~~the $140~~$405 million ~~that the Company reported~~ for the three months ~~September~~ended June 30, ~~2021.~~2023. Diluted EPS ~~were $0.30~~totaled $0.27 for the three months ended September 30, 2023 compared to $0.55 for the three months ended June 30, 2023.

Third quarter 2023 and second quarter 2023 net income and diluted EPS were impacted by merger related expenses of $91 million and $109 million, respectively, related to both the Signature Transaction and the Flagstar acquisition.

Loan Portfolio

At September 30, 2023, total C&I loans were $24.4 billion compared to $12.3 billion at December 31, 2022. The majority of the increase is attributable to the $10.0 billion of C&I loans acquired in the Signature Transaction along with growth in specialty finance and MSR lending, partially offset by seasonally lower mortgage warehouse balances.

The multi-family loan portfolio was $37.7 billion at September 30, 2023, down slightly compared to $38.1 billion at December 31, 2022. At September 30, 2023, multi-family loans represented 45 percent of total loans, compared to 55 percent at December 31, 2022, ~~unchanged~~further demonstrating the reduction of our concentration in this asset class.

Commercial loans (commercial real estate and acquisition, development and construction loans) increased $2.9 billion at September 30, 2023 to $13.4 billion compared to $10.5 billion at December 31, 2022 largely attributable to the Signature Transaction and growth in our home builder finance portfolio.

One-to-four family residential loans totaled $5.9 billion at September 30, 2023, representing seven percent of total loans compared to $5.8 billion or eight percent of total loans at December 31, 2022. Other loans totaled $2.6 billion at September 30, 2023 compared to $2.3 billion at December 31, 2022. The other loan portfolio consists mostly of HELOC and other consumer loans.

Loans held-for-sale at September 30, 2023 totaled $1.9 billion, up from $1.1 billion at December 31, 2022, which reflects seasonally lower balances and the continued impact of higher mortgage rates.

Deposit Base

Deposits at September 30, 2023 totaled $82.7 billion up $24.0 billion compared to $58.7 billion at December 31, 2022 primarily driven by the Signature Transaction.

Our deposit base includes $31.3 billion of uninsured deposits at September 30, 2023 a net increase of $14.8 billion as compared to December 31, 2022 due to the Signature Transaction. This represents 37.8 percent of our total deposits. These amounts were determined based on the same methodologies and assumptions used for regulatory reporting purposes and exclude internal accounts. We also have $31.2 billion of total ready liquidity (cash and cash equivalents, unpledged securities, and FHLB borrowing capacity). Our total ready liquidity approximately matches the balance of our uninsured deposits.

Net Interest Income

For the three months ended September 30, 2023, net interest income totaled $882 million, down $18 million or 2 percent compared to the three months ended ~~September 31, 2021.~~June 30, 2023. The decrease was driven by lower average earning assets, partially offset by a six basis point increase in net interest margin and lower average interest-bearing liabilities.

~~Included in~~

For the three months ended September 30, ~~2022 results are $4~~2023, net interest margin was 3.27 percent up six basis points compared to the three months ended June 30, 2023. We continued to benefit from the higher interest rate environment and recently acquired loans, which positively impacted the yields on our assets.

Asset Quality

At September 30, 2023, NPA to total assets equaled 0.40 percent compared to 0.21 percent at June 30, 2023 while NPL to total loans equaled 0.52 percent compared to 0.28 percent at June 30, 2023. The increase in NPLs were primarily related to two commercial real estate loans in the office sector that added $139 million in ~~merger-related expenses~~the third quarter of 2023 and multi-family increased $91 million of which the largest individual loan was $42 million. Repossessed assets of $12 million were slightly lower compared to $6$13 million in the prior quarter.

Recent Events

Declaration of Dividend on Common Shares

On October 24, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.17 per share on the Company's common stock. The dividend is payable on November 16, 2023 to common stockholders of record as of November 6, 2023.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is our primary source of income. Its level is a function of the average balance of our interest-earning assets, the average balance of our interest-bearing liabilities, and the spread between the yield on such assets and the cost of such liabilities. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by various external factors, including the local economy, competition for loans and deposits, the monetary policy of the FOMC, and market interest rates.

The cost of our deposits and borrowed funds is largely based on short-term rates of interest, the level of which is partially impacted by the actions of the FOMC.

While the target federal funds rate generally impacts the cost of our short-term borrowings and deposits, the yields on our held-for-investment loans and other interest-earning assets are not as sensitive to intermediate-term market interest rates.

Another factor that impacts the yields on our interest-earning assets—and our net interest income—is the income generated by our multi-family and CRE loans and securities when they prepay. Since prepayment income is recorded as interest income, an increase or decrease in its level will also be reflected in the average yields (as applicable) on our loans, securities, and interest-earning assets, and therefore in our net interest income, our net interest rate spread, and our net interest margin.

It should be noted that the level of prepayment income on loans recorded in any given period depends on the volume of loans that refinance or prepay during that time. Such activity is largely dependent on such external factors as current market conditions, including real estate values, and the perceived or actual direction of market interest rates. This impact is most prevalent in our multi-family and CRE portfolios, and to a lesser extent in our C&I and ADC portfolios.. In addition, while a decline in market interest rates may trigger an increase in refinancing and, therefore, prepayment income, so too may an increase in market interest rates. It is not unusual for borrowers to lock in lower interest rates when they expect, or see, that market interest rates are rising rather than risk refinancing later at a still higher interest rate. The impact of prepayments on the current quarter and year was minimal.

Comparison to Prior Quarter

Net interest income for the three months ended September 30, 2023 was $882 million, down $18 million or 2.0 percent compared to the three months ended June 30, 2023 primarily due to the following:

•Interest income on cash and cash equivalents decreased $84 million driven by a decrease in the average balance of $7.5 billion due to a decrease in custodial deposits associated with the Signature Transaction partially offset by a 28 basis point increase in the average yield to 5.3 percent.

•Interest expense on average interest-bearing deposits increased $50 million to $491 million during the three months ended September 30, 2023, driven by a 35 basis point increase in the average cost of interest-bearing deposits due to rising interest rates and competition for deposits.

•Interest income on loans and leases increased $90 million primarily from rising commercial loan rates and increased income from acquired loans.

•Interest expense on borrowed funds decreased $18 million or 11.5 percent to $139 million primarily driven by a $2.6 billion or 14.3 percent decrease in the average balances partially offset by a 6 basis point increase in rates.

Comparison to Prior Year to Date

For the nine months ended September 30, 2023, net interest income totaled $2.3 billion, up $1.3 billion or 130 percent compared to $1.0 billion for the nine months ended September 30, 2022.The year-over-year increase was primarily the result of the Flagstar acquisition, which closed late last year, and the Signature Transaction, which closed in late March of this year and were not part of the Company in the first three quarters of 2022.

•Interest income on mortgages and other loans was driven by a $33.4 billion or 70.8 percent increase in average loan balances to $80.6 billion. This is primarily driven by the December 2022 acquisition of Flagstar and the March 2023 Signature Transaction. Additionally, we had a 187 basis point increase in the average loan yield to 5.4 percent in the current year quarter due primarily to the rising interest rate environment.

•Interest income on securities was positively impacted by a 168 basis point increase in the average yield to 4.11 percent from 2.4 percent along with a 3.5 billion or 50.3 percent increase in the average securities balance to $10.3 billion primarily driven by the nine month contribution from the Flagstar acquisition.

•Interest-earning cash and cash equivalents reflected a 399 basis point increase in the average yield to 5.1 percent driven by higher short-term market rates and an increase in the average balance of $8.8 billion driven by the Signature Transaction.

•Interest expense on average interest-bearing deposits increased $1.0 billion to $1.2 billion during the nine months ended September 30, 2023, driven by a 223 basis point increase in the average cost of interest-bearing deposits due to rising interest rates. Average interest earning deposits grew $20.9 billion, or 60.8 percent, to $55.3 billion. The balance growth primarily reflects the December acquisition of Flagstar and the March Signature Transaction.

•Interest expense on borrowed funds increased $281 million or 133.18 percent to $492 million driven by a 168 basis point increase in rates in addition to a $3.3 billion or 21.8 percent increase in the average balance to $18.7 billion primarily driven by the December acquisition of Flagstar.

Net Interest Margin

The following table sets forth certain information regarding our average balance sheet for the periods 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 periods 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.


	Three Months Ended,
	September 30, 2023						June 30, 2023
(dollars in millions)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
ASSETS:
Interest-earning assets:
Mortgage and other loans and leases , net (1)	$	85,691	$	1,251	5.82	%	$	83,810	$	1,161	5.55	%
Securities (2) (3)	10,317		111		4.30	%	9,781		102		4.18	%
Reverse repurchase agreements	299		5		6.11	%	429		6		5.85	%
Interest-earning cash and cash equivalents	10,788		145		5.31	%	18,279		229		5.03	%
Total interest-earning assets	$	107,095	$	1,512	5.62	%	$	112,299	$	1,498	5.34	%
Non-interest-earning assets	7,179						8,974
Total assets	$	114,274					$	121,273
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing deposits:
Interest-bearing checking and money market accounts	$	31,321	$	268	3.40	%	$	30,647	$	232	3.05	%
Savings accounts	9,628		43		1.76	%	10,015		40		1.61	%
Certificates of deposit	17,545		180		4.06	%	18,587		169		3.61	%
Total interest-bearing deposits	$	58,494	$	491	3.33	%	$	59,249	$	441	2.98	%
Short term borrowed funds	5,632		62		4.38	%	6,807		75		4.46	%
Other borrowed funds	9,964		77		3.04	%	11,393		82		2.88	%
Total Borrowed funds	$	15,596	$	139	3.53	%	$	18,200	$	157	3.47	%
Total interest-bearing liabilities	$	74,090	$	630	3.37	%	$	77,449	$	598	3.10	%
Non-interest-bearing deposits	25,703						24,613
Other liabilities	3,286						8,321
Total liabilities	$	103,079					$	110,383
Stockholders’ equity	11,195						10,890
Total liabilities and stockholders’ equity	$	114,274					$	121,273
Net interest income/interest rate spread			$	882	2.25	%			$	900	2.24	%
Net interest margin					3.27	%					3.21	%
Ratio of interest-earning assets to interest-bearing liabilities					1.45	x					1.45	x

(1)Amounts are net of net deferred loan origination costs/(fees) and includes loans held for sale and non-performing loans.

(2)Amounts are at amortized cost.

(3)Includes FHLB stock and FRB stock.


	Nine Months Ended,
	September 30, 2023						September 30, 2022
(dollars in millions)	Average Balance		Interest		Average Yield/Cost		Average Balance		Interest		Average Yield/Cost
ASSETS:
Interest-earning assets:
Mortgage and other loans and leases , net (1)	$	80,569	$	3,279	5.43	%	$	47,158	$	1,259	3.56	%
Securities (2) (3)	10,314		318		4.11	%	6,864		125		2.43	%
Reverse repurchase agreements	503		21		5.74	%	388		7		2.35	%
Interest-earning cash and cash equivalents	11,127		426		5.11	%	2,326		20		1.12	%
Total interest-earning assets	$	102,513	$	4,044	5.27	%	$	56,736	$	1,411	3.32	%
Non-interest-earning assets	7,582						4,993
Total assets	$	110,095					$	61,729
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing deposits:
Interest-bearing checking and money market accounts	$	28,385	$	657	3.09	%	$	16,915	$	104	0.82	%
Savings accounts	10,240		122		1.60	%	9,245		33		0.49	%
Certificates of deposit	16,627		436		3.50	%	8,197		46		0.75	%
Total interest-bearing deposits	$	55,252	$	1,215	2.94	%	$	34,357	$	183	0.71	%
Short term borrowed funds	7,146		241		4.50	%	1,925		17		1.16	%
Other borrowed funds	11,537		251		2.91	%	13,419		194		1.93	%
Total Borrowed funds	$	18,683	$	492	3.52	%	$	15,344	$	211	1.84	%
Total interest-bearing liabilities	$	73,935	$	1,707	3.09	%	$	49,701	$	394	1.06	%
Non-interest-bearing deposits	21,214						4,332
Other liabilities	4,518						750
Total liabilities	$	99,667					$	54,783
Stockholders’ equity	10,428						6,946
Total liabilities and stockholders’ equity	$	110,095					$	61,729
Net interest income/interest rate spread			$	2,337	2.18	%			$	1,017	2.26	%
Net interest margin					3.05	%					2.39	%
Ratio of interest-earning assets to interest-bearing liabilities					1.39	x					1.14	x

(1)Amounts are net of net deferred loan origination costs/(fees) and includes loans held for sale and non-performing loans.

(2)Amounts are at amortized cost.

(3)Includes FHLB stock and FRB stock.

The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities affected our interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) the changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) the changes attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.


	Three Months Ended,						Nine Months Ended,
	September 30, 2023 compared to June 30, 2023 Increase/(Decrease) Due to:						September 30, 2023 compared to September 30, 2022 Increase/(Decrease) Due to:
(in millions)	Volume		Rate		Net		Volume		Rate		Net
INTEREST-EARNING ASSETS:
Mortgage and other loans and leases, net	$	27	$	63	$	90	$	1,361	$	659	$	2,020
Securities	$	6	$	3	$	9	$	106	$	87	$	193
Reverse repurchase agreements	$	(2)	$	1	$	(1)	$	5	$	9	$	14
Interest Earning Cash & Cash Equivalent	$	(99)	$	15	$	(84)	$	337	$	69	$	406
Total interest-earnings assets	$	(68)	$	82	$	14	$	1,809	$	824	$	2,633
INTEREST-BEARING LIABILITIES:
Interest-bearing checking and money market accounts	$	6	$	30	$	36	$	266	$	287	$	553
Savings accounts	$	(2)	$	5	$	3	$	12	$	77	$	89
Certificates of deposit	$	(11)	$	22	$	11	$	221	$	169	$	390
Short Term Borrowed Funds	$	(10)	$	(3)	$	(13)	$	176	$	48	$	224
Other Borrowed Funds	$	(16)	$	11	$	(5)	$	(41)	$	98	$	57
Total interest-bearing liabilities	$	(33)	$	65	$	32	$	634	$	679	$	1,313
Change in net interest income	$	(35)	$	17	$	(18)	$	1,175	$	145	$	1,320

Comparison to Prior Quarter

The Company's net interest margin for the three months ended September 30, 2023, was 3.27 percent, up six basis points compared to the three months ended June 30, 2023. The increase was driven by both a higher level of average earnings assets due to the Signature Transaction, along with higher yields on those assets.

Average loan balances increased $1.9 billion, or 2%, to $85.7 billion compared to the previous quarter, while the loan yield increased 27 basis points on a quarter-over-quarter basis to 5.82%. Average cash balances decreased to $10.8 billion during the third quarter compared to $18.3 billion during the second quarter, while the average yield rose 28 basis points to 5.31% from 5.03%.

Average interest-bearing liabilities decreased $3.4 billion, or 4%, to $74.1 billion on a quarter-over-quarter basis with the average cost increasing 27 basis points to 3.37% compared to 3.10%. Average interest-bearing deposits decreased $755 million, or 1%, to $58.5 billion, while the average cost rose 35 basis points to 3.33%. Average borrowed funds declined $2.6 billion, or 14%, to $15.6 billion, while the average cost of borrowed funds increased six basis points to 3.53%. Average non-interest-bearing deposit balances rose $1.1 billion, or 4%, to $25.7 billion compared to the previous quarter.

Comparison to Prior Year to Date

For the nine months ended September 30, 2023, the net interest margin was 3 percent, up 66 basis points compared to the nine months ended September 30, 2022. The year-over-year increase was primarily the result of a larger balance sheet driven by both the Flagstar acquisition and the Signature Transaction, and due to organic loan growth, along with the impact of higher interest rates. Average interest-earning assets increased $45.8 billion, or 81 percent, on a year-over-year basis to $102.5 billion for the nine months ended September 30, 2023, while the average yield rose 195 basis points to 5.27 percent.

Average loan balances rose $33.4 billion, or 71 percent, to $80.6 billion while the average loan yield rose 187 basis points to 5.43 percent on a year-over-year basis. Average cash balances increased $8.8 billion to $11.1 billion, while the average yield rose to 5.11 percent from 1.12 percent. Average securities increased $3.5 billion, or 50 percent, to $10.3 billion, while the average yield improved to 4.11 percent from 2.43 percent.

Average interest-bearing liabilities increased $24.2 billion, or 49 percent, to $73.9 billion while the average cost increased to 3.09 percent from 1.06 percent. Average interest-bearing deposits rose $20.9 billion, or 61 percent, while the average cost of deposits increased to 2.94 percent compared to 0.71 percent. Average borrowed funds increased $3.3 billion to $18.7 billion while the average cost rose to 3.52 percent from 1.84 percent. Average non-interest-bearing deposits rose $16.9 billion to $21.2 billion.

Provision for Credit Losses

Comparison to Prior Quarter

The three months ended September 30, 2023 the provision for credit losses totaled $62 million compared to a $49 million provision for the three months ended June 30, 2023.

During the third quarter 2023, we incorporated the commercial loans and unfunded commitments acquired in the Signature Transaction in the Company's allowance for credit loss models which resulted in a net provision benefit of $13 million.The $75 million provision on the remainder of the portfolio was driven by increases to our estimated loan loss and unfunded commitment reserves as a result of changes in the macroeconomic environment, specifically 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, the increase reflects unfavorable market conditions in the CRE portfolio (primarily office). During the quarter we had net charge-offs totaling $24 million.

The second quarter 2023 provision of $49 million included increases of $13 million related to specific reserves for new non-accrual loans and the remainder was driven by changes in the macroeconomic forecast.

Comparison to Prior Year to Date

The nine months ended September 30, 2023 provision for credit losses was $281 million compared to $9 million for the nine months ended September 30, 2022. The 2023 provision includes a $132 million initial provision for credit losses related to the initial ACL measurement of non-PCD acquired loans from the Signature Transaction and a $20 million provision for credit losses on legacy Signature Bank debt securities held by the Company prior to the transaction. The remaining $129 million was driven by increases to our estimated loan loss and unfunded commitment reserves as a result of changes in the macroeconomic environment discussed above. During the nine months ended September 30, 2023, we had net charge-offs totaling $23 million.

For additional information about our methodologies for recording recoveries of, and provisions for, credit losses, please refer to Critical Accounting Policies in our Form 10-K for the year ended December 31, 2022, which is available on our website, under the Investor Relations section, or on the website of the Securities and Exchange Commission, at sec.gov.

Non-Interest Income

We generate non-interest income through a variety of sources, including—among others—fee income (in the form of retail deposit fees and charges on loans); net return on our MSR asset; net gain on loan sales 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.

The following table summarizes our non-interest income for the respective periods:


	Three Months Ended,				Nine Months Ended,
(in millions)	September 30, 2023		June 30, 2023		September 30, 2023		September 30, 2022
Bargain purchase gain	$	—	$	141	$	2,142	$	—
Fee income	58		48		133		17
Net return on mortgage servicing rights	23		25		70		—
Net gain on loan sales and securitizations	28		25		73		—
Other	21		14		46		10
Bank-owned life insurance	11		11		32		24
Net loan administration income	19		39		65		—
Net (loss) gain on securities	—		$	(1)	(1)		(2)
Total non-interest income	$	160	$	302	$	2,560	$	49

Comparison to Prior Quarter

For the three months ended September 30, 2023, non-interest income totaled $160 million as compared to $302 million in the second quarter, primarily due by the following:

•There was no income impact related to the bargain gain as compared to $141 million in recorded in the second quarter related to the Signature Transaction.

•Net loan administration income totaled $19 million for the three months ended September 30, ~~2021.~~2023 compared to $39 million for the three months ended June 30, 2023 driven by a reduction in subservicing income related to a decrease in loans being serviced for the FDIC related to the Signature Transaction.

•The net return on mortgage servicing rights was $23 million or 8.0 percent for the third quarter compared to $25 million or 9.7 percent for the second quarter.

•Third quarter 2023 non-interest income includes a gain on loan sales of $28 million compared to $25 million during the second quarter, with a gain on sale margin of 59 basis points compared to 51 basis points last quarter.

Comparison to Prior Year to Date

Non-interest income increased $2.5 billion for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily due to the bargain purchase gain of $2.1 billion related to the Signature Transaction. Increases in non-interest income were also driven by the inclusion of the Flagstar acquisition and Signature Transaction including $116 million increase in fee income, net return on mortgage servicing rights of $70 million, gain on loan sales of $73 million and loan administration income of $65 million.

Non-Interest Expense

Comparison to Prior Quarter

For the three months ended September 30, 2023, non-interest expenses totaled $712 million, up $51 million, or 8 percent compared to the three months ended June 30, 2023.

Total operating expenses for the three months ended September 30, 2023 were $585 million, up $70 million compared to $515 million for the second quarter 2023. The increase was primarily driven by higher compensation and benefits due to the impact of recently added private banking teams and revenue-driven performance.

Comparison to Prior Year to Date

Non-interest expense increased $1.4 billion for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. Total operating expenses for the nine months ended September 30, 2023 were up $1.1 billion compared to the nine months ended September 30, 2022. Both increases were primarily due the inclusion of Flagstar and Signature activity.

Income Tax Expense

Comparison to Prior Quarter

For the three months ended September 30, 2023, the Company reported a provision for income taxes of $61 million compared to $79 million for the three months ended June 30, 2023. Income tax expense for both the current quarter and for the second quarter 2023 was impacted by the Signature Transaction and Flagstar acquisition. The effective tax rate was 22.7 percent for the third quarter 2023.

Comparison to Prior Year to Date

For the nine months ended September 30, ~~2022, net~~2023, the Company reported a provision for income ~~totaled $478~~taxes of $141 million, ~~up 7%~~ compared to ~~$446~~$164 million for the nine months ended September 30, ~~2021. Net income available to common stockholders~~2022. Income tax expense for the ~~nine months ended~~current year was impacted by the Signature Transaction and Flagstar acquisition.

FINANCIAL CONDITION

Balance Sheet Summary

Total assets increased $21.1 billion to $111.2 billion as of September 30, ~~2022 totaled $453 million, up 8%~~2023, compared to ~~$421 million for~~$90.1 billion at December 31, 2022 due to the ~~three months ended September 30, 2021.~~Signature Transaction, which closed on March 20, 2023, and organic loan growth.

~~Diluted EPS for~~

The Company acquired approximately $12 billion of loans, net of purchase accounting adjustments ("PAA"), $34 billion of deposits, net of PAA, and $2 billion of other liabilities related to the ~~nine months ended September 30, 2022 were $0.96, up 7% compared to $0.90 for the nine months ended September 30, 2021.~~Signature Transaction.

~~Included in the nine months ended September 30, 2022 were merger-related expenses of $15 million, down modestly compared to $16 million for the nine months ended September 30, 2021.~~

~~The key trends in the third quarter of 2022 were:~~

~~Continued Portfolio Loan Growth~~

~~At September 30, 2022, total~~

Total loans and leases held for investment were $49.0 billion compared to $45.7 billion, up 9% on an annualized basis. The loan portfolio has now grown over the past four consecutive quarters and continues to be driven by growth in both our multi-family and specialty finance businesses. The multi-family portfolio totaled $37.2$84.0 billion at September 30, ~~2022, up $2.6 billion or 10% annualized~~2023 compared to $69.0 billion at December 31, ~~2021 and $407 million or 4% annualized compared to June 30, 2022. The specialty~~

~~finance portfolio also continued to increase, growing $755 million or 29% annualized to $4.3 billion compared to December 31, 2021 and $117 million or 11% annualized compared to June 30, 2022.~~

The growth in the multi-family portfolio was driven by ongoing market share gains in our non-luxury. rent regulated niche within the New York City multi-family market. Growth in the specialty finance portfolio was primarily driven by draw downs on existing commitments.

~~Another Strong Quarter of Deposit Growth~~

~~Total deposits at September 30, 2022 were $41.7 billion, up $6.6 billion or 25% annualized compared to December 31, 2021 and up $461 million or 4% annualized compared to June 30,~~ 2022. The increase was driven by ~~growth in~~ the ~~Company's BaaS business~~aforementioned loans acquired from the Signature Transaction and ~~in loan-related deposits from our borrowers.~~organic loan growth.

~~BaaS deposits~~

The securities portfolio totaled $8.7 billion at September 30, ~~2022 totaled $7.9 billion, up $5.8 billion on a year-to-date basis. Loan-related deposits totaled $4.8 billion, up $793 million or 26% annualized~~2023, compared to $9.1 billion at December 31, ~~2021.~~

~~Stable Non-Interest Expenses~~

~~For the three months ended~~2022. As of September 30, ~~2022, non-interest expenses totaled $136 million, up 1%~~2023, the Company has no held-to-maturity securities portfolio and all of the Company’s securities were designated as “Available-for-Sale”, unchanged from December 31, 2022.

Total deposits grew $24.0 billion, or 41 percent to $82.7 billion at September 30, 2023 compared to $58.7 billion at December 31, 2022 primarily driven by the ~~$135 million we reported for~~deposits assumed in the ~~three months ended September 30, 2021, but down 1% compared to the $138 million we reported during the three months ended June 30, 2022.~~Signature Transaction. Included in the ~~current third quarter amount~~September 30, 2023 balance are ~~$4 million~~$2.0 billion in ~~merger-related expenses, unchanged~~non-interest-bearing custodial deposits related to the Signature Transaction.

Wholesale borrowings at September 30, 2023 were $13.6 billion compared to ~~the second-quarter 2022 amount and down $2 million compared to the $6 million in merger-related expenses we reported during third-quarter 2021.~~

~~Recent Events~~

~~Declaration of Dividend on Common Shares~~

On October 25, 2022, our Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.17 per share. The dividend is payable on November 17, 2022 to common shareholders of record as of November 7, 2022.

~~Receipt of OCC Approval for Bank Merger and Merger Extension~~

The acquisition of Flagstar by the Company is still subject to the approval of the FRB, as well as the satisfaction of certain other customary closing conditions under the merger agreement, as amended, between the two companies (the "Merger Agreement"). The OCC approval is subject to a statutory 15-day waiting period that provides that the bank merger cannot be consummated until 15 days after OCC approval has been received, which in this case is November 11, 2022. There is no associated waiting period with the FRB approval. NYCB and Flagstar intend to consummate the holding company and bank merger promptly after FRB approval is received and the OCC waiting period ends.

~~In addition, NYCB and Flagstar announced that they have mutually agreed to extend the Merger Agreement to~~$20.3 billion at December 31, 2022, ~~from October 31, 2022 to provide additional time to obtain regulatory approval~~reflecting the use of some of the cash acquired from the ~~FRB.~~ Signature Transaction to reduce the level of FHLB-NY borrowings.

Loans held-for-investment

The ~~extension was approved by~~following table summarizes the ~~Boards of Directors of both companies. Pursuant to the terms of the Merger Agreement, Flagstar shareholders will receive 4.0151 shares of Company common stock for each Flagstar share they own.~~

~~Critical Accounting Policies~~

~~We consider certain accounting policies to be critically important to the portrayal~~composition of our ~~financial condition and results of operations, since they require management to make complex or subjective judgments, some of which may relate to matters that are inherently uncertain.~~ loan portfolio:


	September 30, 2023				December 31, 2022
(dollars in millions)	Amount		Percent of Loans Held for Investment		Amount		Percent of Loans Held for Investment
Mortgage Loans:
Multi-family	$	37,698	44.9	%	$	38,130	55.3	%
Commercial real estate	10,486		12.5	%	8,526		12.4	%
One-to-four family first mortgage	5,882		7.0	%	5,821		8.4	%
Acquisition, development, and construction	2,910		3.5	%	1,996		2.9	%
Total mortgage loans	$	56,976	67.8	%	$	54,473	78.9	%
Other Loans:
Commercial and industrial	$	24,423	29.1	%	$	12,276	17.8	%
Other loans	2,596		3.1	%	2,252		3.3	%
Total other loans held for investment	$	27,019	32.2	%	$	14,528	21.1	%
Total loans and leases held for investment	$	83,995	100.0	%	$	69,001	100.0	%
Allowance for credit losses on loans and leases	(619)				(393)
Total loans and leases held for investment, net	$	83,376			$	68,608
Loans held for sale	1,926				1,115
Total loans and leases, net	$	85,302			$	69,723

The ~~inherent sensitivity of~~following table summarizes our consolidated financial statements to these critical accounting policies, and the judgments, estimates, and assumptions used therein, could have a material impact on our financial condition or results of operations.

~~We have identified the following to be critical accounting policies: the determination of the allowance for credit losses on loans and leases.~~

The judgments used by management in applying these critical accounting policies may be influenced by adverse changes in the economic environment, which may result in changes to future financial results.

~~Allowance for Credit Losses~~

The Company’s January 1, 2020, adoption of ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments,” resulted in a significant change to our methodology for estimating the allowance since December 31, 2019. ASU No. 2016-13 replaced the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loan receivables. It also applies to off-balance sheet exposures not accounted for as insurance and net investments in leases accounted for under ASC Topic 842.

The allowance for credit losses on loans and leases is deducted from the amortized cost basis of a financial asset or a group of financial assets so that the balance sheet reflects the net amount the Company expects to collect. Amortized cost is the unpaid loan balance, net of deferred fees and expenses, and includes negative escrow. Subsequent changes (favorable and unfavorable) in expected credit losses are recognized immediately in net income as a credit loss expense or a reversal of credit loss expense. Management estimates the allowance by projecting and multiplying together the probability-of-default, loss-given-default and exposure-at-default depending on economic parameters for each month of the remaining contractual term. Economic parameters are developed using available information relating to past events, current conditions, and economic forecasts. The Company’s economic forecast period is 24 months, and afterwards reverts to a historical average loss rate on a straight-line basis over a 12-month period. Historical credit experience provides the basis for the estimation of expected credit losses, with qualitative adjustments made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency levels and terms, as well as for changes in environmental conditions, such as changes in legislation, regulation, policies, administrative practices or other relevant factors. Expected credit losses are estimated over the contractual term of the loans, adjusted for forecasted prepayments when appropriate. The contractual term excludes potential extensions or renewals. The methodology used in the estimation of the allowance for loan and lease losses, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions. Each quarter the Company reassesses the appropriateness of the economic forecasting period, the reversion period and historical mean at the portfolio segment level, considering any required adjustments for differences in underwriting standards, portfolio mix, and other relevant data shifts over time.

The allowance for credit losses on loans and leases is measured on a collective (pool) basis when similar risk characteristics exist. The portfolio segment represents the level at which a systematic methodology is applied to estimate credit losses. Management believes the products within each of the entity’s portfolio segments exhibit similar risk characteristics. Smaller pools of homogenous financing receivables with homogeneous risk characteristics were modeled using the methodology selected for the portfolio segment. The macroeconomic data used in the quantitative models are based on a reasonable and supportable forecast period of 24 months. The Company leverages economic projections including property market and prepayment forecasts from established independent third parties to inform its loss drivers in the forecast. Beyond this forecast period, the Company reverts to a historical average loss rate. This reversion to the historical average loss rate is performed on a straight-line basis over 12 months.

Loans that do not share risk characteristics are evaluated on an individual basis. These include loans that are in nonaccrual status with balances above management determined materiality thresholds depending on loan class and also loans that are designated as TDR or “reasonably expected TDR” (criticized, classified, or maturing loans that will have a modification processed within the next three months). In addition, all taxi medallion loans are individually evaluated. If a loan is determined to be collateral dependent, or meets the criteria to apply the collateral dependent practical expedient, expected credit losses are determined based on the fair value of the collateral at the reporting date, less costs to sell as appropriate.

The Company maintains an allowance for credit losses on off-balance sheet credit exposures. At September 30, 2022 and December 31, 2021, the allowance for credit losses on off-balance sheet exposures was $7 million and $12 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 on off-balance sheet credit exposures is adjusted as a provision for credit losses expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated life. The Company examined historical credit conversion factor (“CCF”) trends to estimate utilization rates, and chose an appropriate mean CCF based on both management judgment and quantitative analysis. Quantitative analysis involved examination of CCFs over a range of fund-up windows (between 12 and 36 months) and comparison of the mean CCF for each fund-up window with management judgment determining whether the highest mean CCF across fund-up windows made business sense. The Company applies the same standards and estimated loss rates to the credit exposures as to the related class of loans.

When applying this critical accounting policy, we incorporate several inputs and judgments that may be influenced by changes period to period. These include, but are not limited to changes in the economic environment and forecasts, changes in the credit profile and characteristics of the loan portfolio, and changes in prepayment assumptions which will result in provisions to or recoveries from the balance of the allowance for credit losses.

While changes to the economic environment forecasts, and portfolio characteristics will change from period to period, portfolio prepayments are an integral assumption in estimating the allowance for credit losses on our mortgage loan portfolio, are subject to estimation uncertainty and changes in this assumption could have a material impact to our estimation process. Prepayment assumptions are sensitive to interest rates and existing loan terms and determine the weighted average life of the mortgage loan portfolio. Excluding other factors, as the weighted average life of the portfolio increases or decreases, so will the required amount of the allowance for credit losses on mortgage loans.

~~Balance Sheet Summary~~

At September 30, 2022, total assets were $63.0 billion, relatively unchanged compared to the previous quarter and up $3.4 billion or 8% annualized compared to December 31, 2021. The year-to-date increase was driven primarily by loan growth and to a lesser extent, growth in the securities portfolio. The linked-quarter change was driven by loan growth offset largely by a decline in cash balances.

Total loans held for investment increased $3.2 billion or 9% annualized to $49.0 billion compared to December 31, 2021 and up $447 million or 4% annualized compared to June 30, 2022. Loan growth continues to be driven by growth in both the multi-family and specialty finance portfolios.

On the liability side, total deposits increased $6.6 billion or 25% annualized to $41.7 billion compared to December 31, 2021 and rose $461 million or 4% annualized compared to June 30, 2022. At the same time, borrowed funds declined $2.8 billion or 22% annualized to $13.8 billion compared to December 31, 2021 and $509 million or 14% annualized compared to June 30, 2022.

~~Loans and Leases~~

~~Loans and Leases Originated for Investment~~

~~The majority of the loans we originate are loans and leases held for investment and most of the held-for-investment loans we produce are multi-family loans. Our~~ production of multi-family loans began over five decades ago in the five boroughs of New York City, where the majority of the rental units currently consist of non-luxury, rent-regulated apartments featuring below-market rents. In addition to multi-family loans, our portfolio of loans held for ~~investment contains a number of CRE loans, most of which are secured by income-producing properties located in New York City and Long Island.~~investment:


	Three Months Ended,				Nine Months Ended,
	September 30, 2023		June 30, 2023		September 30, 2023		September 30, 2022
(dollars in millions)	Amount		Amount		Amount		Amount
Mortgage Loan Originated for Investment:
Multi-family	$	204	$	217	$	761	$	7,065
Commercial real estate	280		278		867		737
One-to-four family first mortgage	115		98		487		157
Acquisition, development, and construction	495		593		1,273		83
Total mortgage loans originated for investment	$	1,094	$	1,186	$	3,388	$	8,042
Other Loans Originated for Investment:
Specialty finance	$	2,228	$	1,905	$	5,468	$	4,075
Commercial and industrial	1,192		1,581		3,270		433
Other	406		312		1,056		5
Total other loans originated for investment	$	3,826	$	3,797	$	9,793	$	4,513
Total loans originated for investment	$	4,920	$	4,983	$	13,181	$	12,555

In addition to multi-family and CRE loans, our specialty finance loans and leases have become an increasingly larger portion of our overall loan portfolio. The remainder of our portfolio includes smaller balances of C&I loans, one-to-four family loans, ADC loans, and other loans held for investment. The majority of C&I loans consist of loans to small- and mid-size businesses.

Loan originations for the three months ended September 30, 2022 totaled $3.8 billion, up 27% compared to the three months ended September 30, 2021, but down 29% compared to the record amount of loans the Company originated during the three months ended June 30, 2022. Third quarter 2022 originations exceeded the prior quarter's pipeline of $2.5 billion by $1.2 billion or 147%.

During the current third quarter, multi-family originations totaled $1.7 billion, down slightly compared to the year-ago third quarter and down $1.2 billion compared to the record second-quarter origination volumes. Specialty finance originations totaled $1.6 billion during the current third quarter, up nearly double compared to the third quarter of 2021 and down $317 million compared to second quarter 2022.

For the nine months ended September 30, 2022, total loan originations were $12.6 billion, up $4 billion or 47% compared to the nine months ended September 30, 2021. On a year-over-year basis, multi-family originations increased 32% to $7.1 billion, while specialty finance originations more than doubled to $4.1 billion.

~~The following table presents information about the loans held for investment we originated for the respective periods:~~

For the Three Months Ended

For the Nine Months Ended
(dollars in millions)

September 30, 2022
June 30,
2022
September 30, 2021

September 30, 2022
September 30, 2021
Mortgage Loan Originated for Investment:

Multi-family

$1,716
$2,939
$1,796

$7,065
$5,341
Commercial real estate

  243
  213
  143

  737
  655
One-to-four family residential

  13
  82
  70

  157
  138
Acquisition, development, and construction

  11
  32
  18

  83
  94
Total mortgage loans originated for investment

  1,983
  3,266
  2,027

  8,042
  6,228
Other Loans Originated for Investment:

Specialty finance

  1,560
  1,877
  796

  4,075
  1,943
Other commercial and industrial

  215
  116
  127

  433
  383
Other

  2
  1
  2

  5
  5
Total other loans originated for investment

  1,777
  1,994
  925

  4,513
  2,331
Total loans originated for investment

$3,760
$5,260
$2,952

$12,555
$8,559

~~Loans and Leases Held for Investment~~

~~The individual held-for-investment loan portfolios are discussed in detail below.~~

Multi-Family Loans

~~Multi-family loans are our principal asset.~~

The multi-family loans we produce are primarily secured by non-luxury residential apartment buildings in New York City that ~~are~~feature rent-regulated units and feature below-market rents—a market we refer to as our “Primary Lending Niche.” The majority of our multi-family loans are made to long-term owners of buildings with apartments that are subject to rent regulation and feature below-market rents.

The multi-family loan portfolio was $37.7 billion at September 30, 2023, down slightly compared to $38.1 billion at December 31, 2022 ~~total multi-family loans represented $37.2 billion or 76%~~due to a combination of ~~total loans~~higher interest rates and ~~leases held for investment.~~our loan diversification strategy.

~~At September 30, 2022, 71%~~

The majority of our multi-family loans were secured by rental apartment buildings in the New York City metro area and 3% were secured by buildings elsewhere in New York State. The remaining multi-family loans were secured by buildings outside these markets, including in the four other states in which we operate.buildings.

~~In addition, 60%~~At September 30, 2023, $21.5 billion or ~~$22.4 billion~~57 percent of the ~~Company's overall~~Company’s total multi-family loan portfolio is secured by properties in New York State, many of which ~~$19.5 billion~~ are, subject to rent regulation laws. The weighted average LTV of the ~~rent-regulated segment~~New York State rent regulated multi-family portfolio was 59 percent as of September 30, 2023 as compared to 61 percent atDecember 31, 2022.

In addition to underwriting multi-family loans on the basis of the ~~multi-family portfolio was 57.05%, as~~buildings’ income and condition, we consider the borrowers’ credit history, profitability, and building management expertise. Borrowers are required to present evidence of ~~September 30, 2022, 358 bps below~~their ability to repay the ~~overall multi-family weighted average LTV~~loan from the buildings’ current rent rolls, their financial statements, and related documents.

While a percentage of ~~60.63%.~~

~~Our emphasis on~~our multi-family loans are ten-year fixed rate credits, the vast majority of our multi-family loans feature a term of ten or twelve years, with a fixed rate of interest for the first five or seven years of the loan, and an alternative rate of interest in years six through ten or eight through twelve. The rate charged in the first five or seven years is ~~driven by several factors, including their structure, which reduces~~generally based on intermediate-term interest rates plus a spread.

During the remaining years, the loan resets to an annually adjustable 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 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.

Multi-family loans that refinance within the first five or seven years are typically subject to an established prepayment penalty schedule. 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. If a loan extends past the fifth or seventh year and the borrower selects the fixed-rate option, the prepayment penalties typically reset 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.

Because prepayment penalties assessed to the borrower are recorded as interest income, they are reflected in the average yields on our ~~exposure to~~loans and interest-earning assets, our net interest rate ~~volatility~~spread and net interest margin, and the level of net interest income we record. No assumptions are involved in the recognition of prepayment income, as such income is recorded when the cash is received.

Our success as a multi-family lender partly reflects the solid relationships we have developed with the market’s leading mortgage brokers and generational direct relationships, who are familiar with our lending practices, our underwriting standards, and our long-standing practice of basing our loans on the cash flows produced by the properties. The process of producing such loans is generally four to ~~some degree. Another factor driving~~six weeks in duration.

We believe our ~~focus on~~underwriting quality of multi-family lending ~~has been the comparative quality of the loans we produce. Reflecting~~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,~~origination. Historically, a relatively small percentage of the multi-family loans that have transitioned to non-performing status have ~~actually~~ resulted in actual losses, even when the credit cycle has taken a downward turn.

We primarily underwrite our multi-family loans based on the current cash flows produced by the collateral property, with a reliance on the “income” approach to appraising the properties, rather than the “sales” approach. ~~The sales approach is subject to fluctuations in the real estate market, as well as general economic conditions, and is therefore likely to be more risky in the event of a downward credit cycle turn.~~ We also consider a variety of other factors, including the physical condition of the underlying property; the net operating income of the mortgaged premises prior to debt service; the DSCR, which is the ratio of the property’s net operating income to its debt service; and the ratio of the loan amount to the appraised value (i.e., the LTV) of the property.

In addition to requiring a minimum DSCR of ~~125%~~120 percent on multi-family buildings, we obtain a security interest in the personal property located on the premises, and an assignment of rents and leases. Our multi-family loans generally represent no more than ~~75%~~75 percent of the lower of the appraised value or the sales price of the underlying property, and typically feature an amortization period of 30 years. In addition, ~~some of~~ our multi-family loans may contain an initial interest-only period which typically does not exceed two years; however, these loans are underwritten on a fully amortizing basis. Exceptions to these levels are

made to borrowers on a case by case basis and approved by the joint authority of credit and lending officers and when necessary, the Board Credit Committee of the Board.

We continue to monitor our loans held for investment portfolio and the related allowance for credit losses, particularly given the economic pressures facing the commercial real estate and multi-family markets. While our multi-family lending 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. 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.

The following table presents a geographical analysis of the multi-family loans in our held-for-investment loan portfolio:


	At September 30, 2023
	Multi-Family Loans
(dollars in millions)	Amount		Percent of Total
New York City:
Manhattan	$	6,960	19	%
Brooklyn	6,199		16	%
Bronx	3,645		10	%
Queens	2,834		8	%
Staten Island	134		—	%
Total New York City	$	19,772	53	%
New Jersey	5,092		14	%
Long Island	511		1	%
Total Metro New York	$	25,375	68	%
Other New York State	1,242		3	%
Pennsylvania	3,729		10	%
Florida	1,690		4	%
Ohio	1,015		3	%
Arizona	435		1	%
All other states	4,212		11	%
Total	$	37,698	100	%

Commercial Real Estate ~~Loans~~

At September 30, ~~2022,~~2023, CRE loans represented ~~$6.6~~$10.5 billion, or ~~13%~~12.5 percent, of total loans ~~and leases~~ held for investment, ~~unchanged~~reflecting a $2.0 billion increase when compared to $8.5 billion at December 31, 2022. Approximately $1.9 billion of CRE loans were acquired in the ~~previous quarter.~~Signature Transaction.

CRE loans represented $280 million, or 5.7 percent, of the loans we originated in the third quarter 2023 as compared to $278 million, or 5.6 percent in the second quarter 2023.

The CRE loans ~~originated by the Company~~we produce are ~~also~~ secured by income-producing properties such as office buildings, retail centers, mixed-use buildings, ~~(retail storefront on the ground floor and apartment units above the ground floor), retail centers,~~ and multi-tenanted light industrial properties. At September 30, ~~2022, 83%~~2023, the largest concentration of ~~our~~ CRE loans were secured by properties in the metro New York City ~~metro area, while~~area. Refer to the Geographical Analysis table included below for additional details.

Approximately $3.4 billion of the CRE portfolio are office properties with an average balance of approximately $10 million and located primarily in ~~other parts of~~the New York ~~State accounted for 2%~~metro area.

The terms of ~~the properties securing~~more than half of our CRE loans 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.

Prepayment penalties apply to certain of our CRE loans, as they do our multi-family credits. 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. If a loan extends past the fifth or seventh year and the borrower selects the fixed rate option, the prepayment penalties typically reset to a range of five points to one point over years six through ten or eight through twelve.

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 loan also 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, 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.

The following table presents a geographical analysis of the CRE loans in our held-for-investment loan portfolio:


	At September 30, 2023
	Commercial Real Estate Loans
(dollars in millions)	Amount		Percent of Total
New York	$	5,413	52	%
Michigan	990		9	%
New Jersey	589		6	%
Florida	415		4	%
Texas	103		1	%
Pennsylvania	376		3	%
Ohio	119		1	%
All other states	2,481		24	%
Total	$	10,486	100	%

Acquisition, Development, and Construction Loans

At September 30, 2023, our ADC loans represented $2.9 billion, or 3.5 percent, of total loans held for investment, reflecting an increase of $914 million compared to December 31, 2022.

Because ADC loans are generally considered to have a higher degree of credit risk, especially during a downturn in the credit cycle, borrowers are required to provide a guarantee of repayment and completion. 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.

When applicable, as a condition to closing an ADC loan, it is our practice to require that properties meet pre-sale or pre-lease requirements prior to funding.

C&I Loans

At September 30, 2023 C&I loans totaled $24.4 billion or 29.1 percent of total loans held-for-investment. Included in ~~all~~this portfolio is $5.6 billion in warehouse loans that allow mortgage lenders to fund the closing of residential mortgage loans.

The non-warehouse C&I loans we produce are primarily made to small and mid-size businesses and finance companies. Such loans are tailored to meet the specific needs of our borrowers, and include term loans, demand loans, revolving lines of credit, and, to a much lesser extent, loans that are partly guaranteed by the Small Business Administration.

A broad range of C&I loans, both collateralized and unsecured, are made available to businesses for working capital (including inventory and accounts receivable), business expansion, the purchase of machinery and equipment, and other ~~states accounted~~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.

Also included in our C&I portfolio is our national warehouse lending platform with relationship managers across the country. We offer warehouse lines of credit to other mortgage lenders which allow the lender to fund the closing of residential mortgage loans. Each extension, advance, or draw-down on the line is fully collateralized by residential mortgage loans and is paid off when the lender sells the loan to an outside investor or, in some instances, to the Bank.

Underlying mortgage loans are predominantly originated using the agencies' underwriting standards. The guideline for ~~15% combined.~~debt to tangible net worth is 15 to 1. At September 30, 2023, we had $5.6 billion outstanding warehouse loans to other mortgage lenders and have relationships in place to lend up

to $11.6 billion at our discretion.

The interest rates on our C&I loans can be fixed or floating, with floating-rate loans being tied to SOFR, prime or some other market index, plus an applicable spread. Our floating-rate loans may or may not feature a floor rate of interest. The decision to require a floor on C&I loans depends on the level of competition we face for such loans from other institutions, the direction of market interest rates, and the profitability of our relationship with the borrower.

Specialty Finance ~~Loans and Leases~~

At September 30, ~~2022,~~2023, specialty finance loans and leases totaled ~~$4.3~~$5.2 billion or 9%6 percent of total loans ~~and leases~~ held for ~~investment.~~investment, up $753 million or 17 percent compared to December 31, 2022.

We produce our specialty finance loans and leases through a subsidiary that is staffed by a group of industry veterans with expertise in originating and underwriting senior securitized debt and equipment loans and leases. The subsidiary participates in syndicated loans that are brought to them, and equipment loans and leases that are assigned to them, by a select group of nationally recognized sources, and are generally 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.

The specialty finance loans and leases we fund fall into three categories: asset-based lending, dealer floor-plan lending, and equipment loan and ~~lease~~lease 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. ~~Asset-based~~As of September 30, 2023, 82 percent of specialty finance loan commitments are structured as floating rate obligations which will benefit in a rising rate environment.

In the third quarter of 2023, the Company originated $2.2 billion of specialty finance loans and ~~dealer floor-plan loans are priced at floating rates predominately tied~~leases, representing 45 percent of total originations compared to ~~SOFR or LIBOR-replacement rates, while our equipment financing credits are priced at fixed rates at a spread over Treasuries.~~$1.6 billion for the same period in 2022, representing 41 percent of total originations.

Since launching our specialty finance business in the third quarter of 2013, no losses have been recorded on any of the loans or leases in this portfolio.

One-to-Four Family Loans

~~C&I Loans~~

At September 30, ~~2022, C&I~~2023, one-to-four family loans ~~totaled $578~~represented $5.9 billion, including $925 million of LGG, or 1%7 percent, of total loans ~~and leases held for investment.~~

The C&I loans we produce are primarily made to small and mid-size businesses in the five boroughs of New York City and on Long Island. Such loans are tailored to meet the specific needs of our borrowers, and include term loans, demand loans, revolving lines of credit, and, to a much lesser extent, loans that are partly guaranteed by the Small Business Administration.

A broad range of C&I loans, both collateralized and unsecured, are made available to businesses for working capital (including inventory and accounts receivable), business expansion, the purchase of machinery and equipment, and other general corporate needs. In determining the term and structure of C&I loans, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. C&I loans are typically secured by business assets and personal guarantees of the borrower, and include financial covenants to monitor the borrower’s financial stability.

The interest rates on our other C&I loans can be fixed or floating, with floating-rate loans being tied to prime or some other market index, plus an applicable spread. Our floating-rate loans may or may not feature a floor rate of interest. The decision to require a floor on other C&I loans depends on the level of competition we face for such loans from other institutions, the direction of market interest rates, and the profitability of our relationship with the borrower.

~~Acquisition, Development, and Construction Loans~~

~~ADC loans at September 30, 2022 totaled $203 million and represented 0.41% of total loans and leases~~ held for investment. ~~Because ADC~~As of September 30, 2023, the repurchase liability on LGG loans ~~are generally considered to have a higher degree~~was $362 million. As of ~~credit risk, especially during a downturn in the business cycle, borrowers are required to provide a guarantee of repayment and completion.~~

~~One-to-Four Family Loans~~

~~At September 30,~~December 31, 2022 one-to-four family loans totaled ~~$123 million~~$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 ~~0.25%~~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 exceeding 80 percent are required to obtain mortgage insurance. As of ~~total~~September 30, 2023, non-government guaranteed loans in this portfolio had an average current FICO score of 741 and ~~leases~~an average LTV of 53.

Substantially all LGG are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs. Nonperforming repurchased loans in this portfolio earn interest at a rate based upon the 10-year U.S. Treasury note rate from the time the underlying loan becomes 60 days delinquent until the loan is conveyed to HUD (if foreclosure timelines are met), which is not paid by the FHA until claimed. The Bank has a unilateral option to repurchase loans sold to GNMA if the loan is due, but unpaid, for three consecutive months (typically referred to as 90 days past due) and can recover losses through a claims process from the guarantor. These loans are recorded in loans held for ~~investment. These loan balances include certain mixed-use CRE with less than five~~investment and the liability to repurchase the loans is recorded in other liabilities on the Consolidated Statements of Condition. Certain loans within our portfolio may be subject to indemnifications and insurance limits which expose us to limited credit risk. We have reserved for these risks within other assets and as a component of our ACL on residential ~~units classified as one-to-four family loans.~~first mortgages.

Other Loans

~~Other~~

At September 30, 2023, other loans totaled ~~$6 million at September 30, 2022~~$2.6 billion and consisted ~~mainly~~primarily of ~~overdraft loans and loans to non-profit organizations. We currently do not offer home equity loans or~~ home equity lines of ~~credit.~~credit, boat and recreational vehicle indirect lending, point of sale consumer loans and other consumer loans, including overdraft loans.

~~Lending Authority~~Our home equity portfolio includes HELOANs, second mortgage loans, and HELOCs. These loans are underwritten and priced in an effort to ensure credit quality and loan profitability. Our debt-to-income ratio on HELOANs and HELOCs is capped at 43 percent and 45 percent, respectively. We currently limit the maximum CLTV to 89.99 percent and FICO scores to a minimum of 700. Second 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 September 30, 2023, loans in this portfolio had an average current FICO score of 750.

As of September 30, 2023, loans in our indirect portfolio had an average current FICO score of 745. Point of sale loans consist of unsecured consumer installment loans originated primarily for home improvement purposes through a third-party financial technology company who also provides us a level of credit loss protection.

Loans Held for Sale

Loans held-for-sale at September 30, 2023 totaled $1.9 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 ~~investment are subject~~nearly all of this portfolio, except the SBA loans. We estimate the fair value of mortgage loans based on quoted market prices for securities backed by similar types of loans, where available, or by discounting estimated cash flows using observable inputs inclusive of interest rates, prepayment speeds and loss assumptions for similar collateral.

Lending Authority

We maintain credit limits in compliance with regulatory requirements. Under regulatory guidance, the Bank may not make a loan or extend credit to ~~federal~~a single or related group of borrowers in excess of 15 percent of Tier 1 plus Tier 2 capital and ~~state laws~~any portion of the ACL not included in Tier 2 capital. We have a tracking and ~~regulations,~~reporting process to monitor lending concentration levels, and ~~are underwritten in accordance with loan underwriting policies~~all new commercial real estate credit exposures to relationships that exceed $200 million and all other commercial credit exposures to relationships that exceed $100 million must be approved by ~~the Management Credit Committee,~~ the Board Credit Committee ~~and~~of the Board. Exceptions to these levels are made to borrowers on a case by case basis, with the approval of the Board ~~of Directors~~Credit Committee of the ~~Bank.~~

~~C&I loans~~Board. Relationships less than ~~or equal to $3 million~~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. C&I loans in excess of $3 million and all multi-family, CRE, ADC, and Specialty Finance loans regardless of amount are required to be presented to the Management Credit Committee for approval. Multi-family, CRE, and C&I loans in excess of $5 million and Specialty Finance in excess of $15 million are also required to be presented to the Commercial Credit Committee and the Mortgage and Real Estate Committee of the Board, as applicable so that the Committees can review the loan’s associated risks. The Commercial Credit and Mortgage and Real Estate Committees have authority to direct changes in lending practices as they deem necessary or appropriate in order to address individual or aggregate risks and credit exposures in accordance with the Bank’s strategic objectives and risk appetites.

~~The Board of Directors updated certain aspects of the Company's lending authority as detailed below. These changes were effective as of July 21, 2021.~~

Multi-family, CRE, ADC, and specialty finance loans less than or equal to $10 million and C&I loans less than or equal to $5 million are approved by the joint authority of lending officers. C&I loans in excess of $5 million and all multi-family, CRE, ADC, and specialty finance loans in excess of $10 million are required to be presented to the Management Credit Committee for approval. Multi-family, CRE, ADC, and specialty finance loans in excess of $50 million and C&I loans in excess of $10 million are also required to be presented to the Board Credit Committee of the Board, so that the Committee can review the loan’s associated risks and approve the credit. 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.

~~In addition, all loans of $50 million or more originated by the Bank continue to be reported to the Board of Directors.~~

At September 30, 2023 and December 31, 2022, the largest mortgage loan in our portfolio was a $329 million multi-family loan, which is collateralized by ~~six~~ properties located in Brooklyn, New York. As of the date of this report, the loan has been current since origination.

~~Geographical Analysis of the Portfolio of Loans Held for Investment~~

Asset Quality

All asset quality information excludes LGG that are insured by U.S government agencies.

The following table presents ~~a geographical analysis of~~ the ~~multi-family~~Company's asset quality measures at the respective dates:


	September 30, 2023		December 31, 2022
Non-performing loans to total loans held for investment	0.52	%	0.20	%
Non-performing assets to total assets	0.40		0.17
Allowance for credit losses on loans and leases to non-performing loans	142.79		278.87
Allowance for credit losses on loans and leases to total loans held for investment	0.74		0.57

Delinquent and ~~CRE loans in our held-for-investment loan portfolio at September 30, 2022:~~

At September 30, 2022

Multi-Family Loans

Commercial Real Estate Loans

(dollars in millions)

Amount

Percent
of Total

Amount

Percent
of Total

New York City:

Manhattan
$

7,410

19.93

%

$

2,760

41.80

%
Brooklyn

6,448

17.34

340

5.14

Bronx

3,731

10.04

147

2.22

Queens

2,941

7.91

564

8.54

Staten Island

127

0.34

51

0.78

Total New York City
$

20,657

55.56

%

$

3,862

58.48

%
New Jersey

5,012

13.48

562

8.51

Long Island

540

1.45

1,030

15.60

Total Metro New York
$

26,209

70.49

%

$

5,454

82.59

%
Other New York State

1,163

3.13

141

2.14

Pennsylvania

3,740

10.06

318

4.82

Florida

1,730

4.65

208

3.15

Ohio

780

2.10

40

0.61

Arizona

412

1.11

33

0.50

All other states

3,145

8.46

409

6.19

Total
$

37,179

100.00

%

$

6,603

100.00

%

~~At September 30, 2022, the largest concentration of ADC~~non-performing loans held for investment ~~was located in Metro New York, with a total of $174 million at that date. The majority of our other loans held for investment were secured by properties and/or businesses located in Metro New York.~~

~~Asset Quality~~

~~Non-Performing Loans~~ and Repossessed Assets

Non-performing assets at September 30, 2022 declined $6 million or 11% to $50 million compared to June 30, 2022. This represents 0.08% of total assets compared to 0.09% at June 30, 2022. Total non-performing loans declined $5 million or 10% to $45 million compared to $50 million at June 30, 2022 and represent 0.09% of total loans at September 30, 2022 compared to 0.10% of total loans at June 30, 2022. Repossessed assets, consisting primarily of repossessed taxi medallion loans totaled $5 million at September 30, 2022, down $1 million or 17% compared to June 30, 2022. Total

The following table presents our loans, 30 to 89 days past due ~~increased $9 million or 30% to $39 million at September 30, 2022 compared to June 30, 2022.~~

~~The following table presents our non-performing loans~~ by loan type and the changes in the respective ~~balances from December 31, 2021 to September 30, 2022:~~

Change from
December 31, 2021
to
September 30, 2022

(dollars in millions)

September 30,
2022

December 31,
2021

Amount

Percent

Non-Performing Loans:

Non-accrual mortgage loans:

Multi-family
$

13

$

10

$

3

30

%
Commercial real estate

28

16

12

75

One-to-four family

1

1

—

—

Acquisition, development, and construction

—

—

—

—

Total non-accrual mortgage loans

42

27

15

56

Non-accrual other loans (1)

3

6

(3
)

(50
)

Total non-performing loans
$

45

$

33

$

12

36

balances:

~~(1)~~

~~Includes $3 million and $6 million of non-accrual taxi medallion-related loans at September 30, 2022 and December 31, 2021, respectively.~~


					September 30, 2023
					compared to
					December 31, 2022
(dollars in millions)	September 30, 2023		December 31, 2022		Amount		Percent
Loans 30 to 89 Days Past Due:
Multi-family	$	60	$	34	$	26	76	%
Commercial real estate	26		2		24		1200	%
One-to-four family first mortgage	19		21		(2)		(10)	%
Acquisition, development, and construction	1		—		1		NM
Commercial and industrial	43		2		41		2050	%
Other loans	20		11		9		82	%
Total loans 30-89 days past due	$	169	$	70	99		141	%

~~The following table sets forth the changes in non-performing loans over the nine months ended September 30, 2022:~~


~~(dollars in millions)~~
~~Balance at December 31, 2021~~	$	33
~~New non-accrual~~		38
~~Charge-offs~~		(1	)
~~Transferred to repossessed assets~~		—
Loan payoffs, including dispositions and principal pay-downs		~~(24~~	)
~~Restored to performing status~~		(1	)
~~Balance at September 30, 2022~~	$	45

A loan generally is classified as a ~~non-accrual~~“non-accrual” loan when it is 90 days or more past due or when it is deemed to be impaired because ~~the Company~~we no longer ~~expects~~expect to collect all amounts due according to the contractual terms of the loan agreement. When a loan is placed on non-accrual status, ~~management ceases~~we cease the accrual of interest owed, and previously accrued interest is reversed and charged against interest income. At September 30, 2023 and December 31, 2022, all of our non-performing loans were non-accrual loans. A loan is generally returned to accrual status when the loan is current and ~~management has~~we have reasonable assurance that the loan will be fully collectible. ~~Interest income on non-accrual loans is recorded when received in cash. At September 30, 2022 and December 31, 2021, all of our non-performing loans were non-accrual loans.~~

We monitor non-accrual loans both within and beyond our primary lending area ~~which is defined as including: (a) the counties that comprise our CRA Assessment area, and (b) the entirety of the following states: Arizona; Florida; New York; New Jersey; Ohio; and Pennsylvania,~~ 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/or retained~~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 and~~status. advancing funds as needed; and ~~appointing~~seeking approval from the courts to appoint a receiver, ~~whenever possible,~~when necessary to protect the Bank’s interests, including to collect rents, manage ~~the~~property operations, ~~provide information,~~ and ~~maintain~~ensure maintenance of the collateral properties.

It is our policy to order updated appraisals for all non-performing loans ~~irrespective of loan type,~~90 days or more past due that are collateralized by multi-family buildings, CRE properties, or land, ~~in the event that such a loan is 90 days or more past due, and~~ 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 ~~generally~~ 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. ~~We do not analyze LTVs on a portfolio-wide basis.~~

The following table presents our non-performing loans held for investment by loan type and the changes in the respective balances:


					Change from
					December 31, 2022
					to
					September 30, 2023
(dollars in millions)	September 30, 2023		December 31, 2022		Amount		Percent
Non-Performing Loans(1):
Non-accrual mortgage loans:
Multi-family	$	102	$	13	$	89	685	%
Commercial real estate	157		20		137		685	%
One-to-four family first mortgage	90		92		(2)		(2)	%
Acquisition, development, and construction	$	1	$	—	1		NM
Total non-accrual mortgage loans	$	350	$	125	225		180	%
Commercial and industrial	65		3		62		2067	%
Other non-accrual loans(2)	19		13		6		46	%


Total non-performing loans	$	434	$	141	293		208	%
Repossessed assets	12		12		—		—	%
Total non-performing assets	$	446	$	153	293		192	%

(1)Unpaid principal balance.

51(2)

Includes home equity, consumer and other loans.

The following table sets forth the changes in non-accrual loans over the nine months ended September 30, 2023:


(in millions)
Balance at December 31, 2022	$	141
New non-accrual, including acquired from acquisition	384

Charge-offs	(20)
Transferred to repossessed assets	(3)
Loan payoffs, including dispositions and principal pay-downs	(34)
Restored to performing status	(34)
Balance at September 30, 2023	$	434

At September 30, 2023 total non-accrual mortgage loans increased $225 million to $350 million, while commercial and industrial increased $62 million to $65 million and other non-accrual loans increased $6 million to $19 million compared December 31, 2022. The increase in NPLs were primarily related to two commercial real estate loans in the office sector that added $139 million in the third quarter of 2023 and multi-family increased $91 million of which the largest individual loan was $42 million.

At September 30, 2023, NPAs to total assets equaled 0.40 percent compared to 0.21 percent at June 30, 2023 while NPLs to total loans equaled 0.52 percent compared to 0.20 percent at December 31, 2022. Repossessed assets of $12 million were relatively unchanged compared to the $13 million recorded in the prior quarter.

Non-performing loans are reviewed regularly by management and discussed on a monthly basis with the ~~Management Credit Committee, the~~ Board Credit Committee, and the ~~Boards~~Board of Directors of the ~~Company and the~~ Bank, as applicable. ~~Collateral-dependent~~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 ~~either OREO or~~ repossessed assets, and are recorded at fair value at the date of acquisition, less the estimated cost of selling the ~~property/asset.~~property. Subsequent declines in the fair value of ~~OREO or repossessed~~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 ~~(in accordance with our Environmental Risk Policy)~~ of properties classified as OREO before foreclosure, and to re-appraise the ~~properties/assets~~properties on an as-needed basis, and not less than annually, until they are sold. We dispose of such ~~properties/assets~~properties as quickly and prudently as possible, given current market conditions and the property’s ~~or asset’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 closing, with a member of the Board Credit Committee participating in inspections on multi-family, CRE, and ADC loans to be originated in excess of $50 million. We continue to conduct inspections as per the aforementioned policy, however, due to the COVID-19 pandemic, currently full access to some properties and buildings may be limited.approval. Furthermore, independent appraisers, whose appraisals are carefully reviewed by our experienced in-house appraisal officers and staff, perform appraisals on collateral properties. ~~In many cases, a second independent appraisal review is performed.~~

In addition to underwriting multi-family loans on the basis of the buildings’ income and condition, we consider the borrowers’ credit history, profitability, and building management expertise. Borrowers are required to present evidence of their ability to repay the loan from the buildings’ current rent rolls, their financial statements, and related documents.

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 ~~new rent regulation~~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. While our multi-family lending 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. In general, buildings that are subject to rent regulation have 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 exclude any short-term property tax exemptions and abatement benefits the property owners receive when we underwrite our multi-family loans.

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 ~~125%~~120 percent for multi-family loans and ~~130%~~130 percent for CRE loans. ~~Although~~At origination, we typically lend up to ~~75%~~75 percent of the appraised value on multi-family buildings and up to ~~65%~~65 percent on commercial ~~properties, the average LTVs of such credits at origination were below those amounts at September 30, 2022.~~ properties. Exceptions to these DSCR and LTV limitations are minimal and ~~are reviewed on a case-by-case basis.~~approved by the joint authority of credit and lending officers and when necessary, the Board Credit Committee of the Board.

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, and generally requires a minimum DSCR of 130% and a maximum LTV of 65%. 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,management. Given that 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.~~

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~~Lower 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%~~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%.~~80 percent. With respect to commercial construction loans, we typically lend up to ~~65%~~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.

To 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 ~~typically underwritten~~based on ~~the basis~~numerous criteria, including historical and

projected financial information, strength of ~~the cash flows produced by~~management, acceptable collateral, and market conditions and trends in the borrower’s ~~business, and~~industry.These loans are generally collateralized by various business assets, including, but not limited to, inventory, equipment, and accounts receivable. As a result, the capacity of the borrower to repay is substantially dependent on the degree tovariable rate loans in which the business is successful. Furthermore, the collateral underlying the loan may depreciate over time, may not be conducive to appraisal, and may fluctuate in value, based upon the operating results of the business. Accordingly, personal guarantees are alsointerest rate fluctuates with a ~~normal requirement for other C&I loans.~~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.

~~The following table presents our loans 30 to 89 days past due by loan type and the changes in the respective balances from December 31, 2021 to September 30, 2022:~~

Change from
December 31, 2021
to
September 30, 2022

(dollars in millions)

September 30,
2022

December 31,
2021

Amount

Percent

Loans 30-89 Days Past Due:

Multi-family

$
31

$
57

$
(26
)

-46
%
Commercial real estate

1

2

(1
)

-50

One-to-four family

7

8

(1
)

-13

Acquisition, development, and construction

—

—

—

NM

Other loans (1)

—

—

—

NM

Total loans 30-89 days past due

$
39

$
67

$
(28
)

-42
%

~~(1)~~

~~Does not include any past due taxi medallion-related loans at September 30, 2022 and December 31, 2021.~~

During the nine months ended September 30, 2022, total loans 30-89 days past due decreased to $39 million compared to $67 million at December 31, 2021, primarily due to two multi-family loans that became current during the nine months ending September 30, 2022.

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,~~TDM, 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.

(2)

Includes corporate bonds, capital trust notes, foreign notes, and asset-backed securities.

Federal Reserve and Federal Home Loan Bank Stock

~~As a member of the FHLB-NY, the Bank is required to acquire and hold shares of its capital stock, and to the extent FHLB borrowings are utilized, may further invest in FHLB stock.~~

At September 30, 2023 the Company had $578 million and $329 million of FHLB-NY stock, at cost, and FHLB-Indianapolis stock, at cost, respectively. At December 31, 2022, the Company had $762 million and $329 million of FHLB-NY stock, at cost and FHLB-Indianapolis stock, at cost, respectively. The Company maintains an investment in FHLB-NY stock and, as a result of the Flagstar acquisition, FHLB-Indianapolis stock, partly in conjunction with its membership in the FHLB and partly related to its access to the FHLB funding it utilizes. In addition, the Company had Federal Reserve Bank stock, at cost, of $203 million and $176 million at September 30, 2023 and December 31, ~~2021, the Bank held FHLB-NY stock in the amount of $630 million and $734 million,~~2022, respectively. ~~FHLB-NY stock continued to be valued at par, with no impairment required at that date.~~

Dividends from the FHLB-NY to the Bank totaled $9 million and $8 million, respectively, in the three months ended September 30, 2022 and 2021, and $25 million for both nine months ended September 30, 2022 and 2021.

Bank-Owned Life Insurance

BOLI is recorded at the total cash surrender value of the policies in the Consolidated Statements of Condition, and the income generated by the increase in the cash surrender value of the policies is recorded in ~~Non-Interest Income~~“Non-interest income” in the Consolidated Statements of Income and Comprehensive Income. Reflecting an increase in the cash surrender value of the underlying policies, our investment in BOLI ~~increased $16~~at September 30, 2023 rose $15 million to ~~$1.2~~$1.6 billion ~~at September 30, 2022 from~~ compared to December 31, ~~2021.~~2022.

Goodwill

We record goodwill in our ~~Consolidated Statements~~consolidated statements of ~~Condition~~condition in connection with certain of our business combinations. Goodwill, which is tested at least annually for impairment, refers to the difference between the purchase price and the fair value of an acquired company’s assets, net of the liabilities assumed. ~~Goodwill totaled $2.4 billion at both~~As of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022 goodwill was $2.4 billion.

Sources of Funds

The Parent Company ~~(i.e., the Company on an unconsolidated basis)~~ has three 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 ~~stock;~~securities; and funding raised through the issuance of debt instruments.

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; ~~the~~ cash flows generated through the repayment and sale of loans; and ~~the~~ cash flows generated through the repayment and sale of securities.

Loan repayments and sales totaled $9.3 billion in the nine months ended September 30, 2022, up $2.1 billion from the $7.2 billion recorded in the year-earlier nine months. Cash flows from the repayment and sales of securities totaled $571 million and $1.4 billion, respectively, in the corresponding periods, while purchases of securities totaled $2.2 billion and $1.6 billion, respectively.

Deposits

~~Deposits~~

Our 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).

AsDepending on their availability and pricing relative to other funding sources, we also include brokered deposits in our deposit mix. Brokered deposits accounted for $8.1 billion of our deposits at September 30, ~~2022,~~2023, compared to $5.1 billionat December 31, 2022. Brokered money market accounts represented $2.3 billion of total brokered deposits ~~totaled $41.7~~at September 30, 2023 and $2.8 billion ~~up $6.6~~at December 31, 2022; brokered interest-bearing checking accounts represented $0.7 billion ~~or 25% annualized~~and $1.0 billion, respectively. At September 30, 2023, we had $5.1 billion of brokered CDs, compared to $1.3 billion at December 31, 2022.

Our uninsured deposits are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000). These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes and excludes internal accounts. At September 30, 2023 our deposit base includes $31.3 billion of uninsured deposits a net increase of $14.8 billion as compared to December 31, 2021 and up $461 million or 4% annualized compared to June 30, 2022. The strong increase on a year-to-date basis was driven by growth in the Company's BaaS initiative and growth in loan-related deposits. This growth moderated during the current third quarter2022 due to ~~seasonally lower loan growth and~~ the ~~impact~~Signature Transaction. This represents 38 percent of ~~higher market interest rates.~~our total deposits.

Our BaaS deposits fall into three verticals: traditional BaaS, consisting primarily of deposits from FinTech companies; banking as a service for governmental agencies, including various municipalities and the U.S. Treasury's prepaid debit card program; and mortgage as a service, catering to mortgage companies, and consisting of escrow deposit accounts for principal, interest payments, and tax payments. At September 30, 2022, traditional BaaS deposits totaled $5.3 billion, government BaaS deposits totaled $579 million, and mortgage as a service deposits totaled $2.0 billion.

The following table indicates the amount of time deposits, by account, that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until ~~maturity as~~maturity:


(in millions)	September 30, 2023		December 31, 2022
Portion of U.S. time deposits in excess of insurance limit	$	4,893	$	3,749
Time deposits otherwise uninsured with a maturity of:
3 months or less	1,733		969
Over 3 months through 6 months	1,032		604
Over 6 months through 12 months	1,624		1,269
Over 12 months	504		907
Total time deposits otherwise uninsured	$	4,893	$	3,749

Borrowed Funds

The majority of ~~September 30, 2022:~~

September 30,

(dollars in millions)

2022

Portion of U.S. time deposits in excess of insurance limit

$
3,025

Time deposits otherwise uninsured with a maturity of:

3 months or less

$
639

Over 3 months through 6 months

610

Over 6 months through 12 months

749

Over 12 months

1,027

Total time deposits otherwise uninsured

$
3,025

~~Borrowed Funds~~

~~Borrowed~~our borrowed funds ~~consist primarily of~~are wholesale borrowings ~~(i.e., FHLB-NY advances, repurchase agreements,~~(FHLB-NY and ~~federal funds purchased)~~FHLB-Indianapolis advances) and, to a ~~far~~ lesser extent, junior subordinated debentures and subordinated notes. At September 30, ~~2022,~~2023, total borrowed funds ~~declined $2.8~~decreased $6.7 billion ~~or 22% annualized~~ to ~~$13.8~~$14.6 billion compared to the balance at December 31, ~~2021 and down $509 million~~2022 primarily driven by the paydown of wholesale borrowings with cash received in the Signature Transaction.

Wholesale Borrowings

Wholesale borrowings at September 30, 2023 were $13.6 billion compared to ~~June~~$20.3 billion at December 31, 2022.

FHLB-NY and FHLB-Indianapolis advances accounted for $13.0 billion and $20.3 billion at September 30, ~~2022.~~2023 and December 31, 2022, respectively. 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. At September 30, 2023 and December 31, 2022, ~~total~~$3.2 billion and $6.8 billion of our wholesale borrowings ~~represented 22%~~had callable features, respectively.

We had $547 million of ~~total assets~~federal funds outstanding at September 30, 2023. At December 31, 2022, there were no federal funds outstanding.

Junior Subordinated Debentures

Junior subordinated debentures totaled $578 million at September 30, 2023 compared to ~~28% of total assets~~$575 million at December 31, ~~2021 and 23% of total assets at June 30,~~ 2022. The year-to-date decline was mainly due to a $2.3 billion or 20% annualized decrease in FHLB-NY borrowings to $12.8 billion combined with a $500 million decrease in repurchase agreements to $300 million. The linked-quarter decrease was largely due to the decrease in repurchase agreements.

Subordinated Notes

On November 6, 2018, the Company issued $300 million aggregate principal amount of its 5.90% Fixed-to-Floating Rate Subordinated Notes due 2028. The Company has used $286 million of the net proceeds from the offering to repurchase shares of its common stock pursuant to its previously announced share repurchase program, and may use the balance of the offering towards the repurchase of its common stock or for other general corporate purposes. The Notes were offered to the public at 100% of their face amount. At September 30, ~~2022,~~2023, the balance of subordinated notes was ~~$297~~$437 million, ~~which excludes certain costs related~~including $135 million assumed from the Flagstar acquisition, as compared to ~~their issuance.~~

~~Junior Subordinated Debentures~~

~~Junior subordinated debentures totaled $361~~$432 million ~~at September 30, 2022, comparable to the balance~~ at December 31, ~~2021.~~2022.

~~Risk Definitions~~

~~The following section outlines the definitions of interest rate risk, market risk,~~

See Note 11, “Borrowed Funds,” in Item 8, “Financial Statements and ~~liquidity risk, and how the Company manages market and interest rate risk:~~

~~Interest Rate Risk~~ – Interest rate risk is the risk to earnings or capital arising from movements in interest rates. Interest rate risk arises from differences between the timing of rate changes and the timing of cash flows (re-pricing risk); from changing rate

relationships among different yield curves affecting Company activities (basis risk); from changing rate relationships across the spectrum of maturities (yield curve risk); and from interest-related options embedded inSupplementary Data” for a bank’s products (options risk). The evaluation of interest rate risk must consider the impact of complex, illiquid hedging strategies or products, and also the potential impact on fee income (e.g. prepayment income) which is sensitive to changes in interest rates. In those situations where trading is separately managed, this refers to structural positions and not trading portfolios.

~~Market Risk –~~ Market risk is the risk to earnings or capital arising from changes in the value of portfolios of financial instruments. This risk arises from market-making, dealing, and position-taking activities in interest rate, foreign exchange, equity, and commodities markets. Many banks use the term “price risk” interchangeably with market risk; this is because market risk focuses on the changes in market factors (e.g., interest rates, market liquidity, and volatilities) that affect the value of traded instruments. The primary accounts affected by market risk are those which are revalued for financial presentation (e.g., trading accounts for securities, derivatives, and foreign exchange products).

~~Liquidity Risk –~~ Liquidity risk is the risk to earnings or capital arising from a bank’s inability to meet its obligations when they become due, without incurring unacceptable losses. Liquidity risk includes the inability to manage unplanned decreases or changes in funding sources. Liquidity risk also arises from a bank’s failure to recognize or address changes in market conditions that affect the ability to liquidate assets quickly and with minimal loss in value.

~~Management of Market and Interest Rate Risk~~

We 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, risk appetite, 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 and Interest Rate Risk~~

As a financial institution, we are focused on reducing our exposure to interest rate volatility. Changes in interest rates pose one of the greatest challenges to our financial performance, as such changes can have a significant impact on the level of income and expense recorded on a large portionfurther discussion 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 Boards 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 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 largest determinants of prepayments are interest rates and the availability of refinancing opportunities.

We manage our interest rate risk by taking the following actions: continue to emphasize the origination and retention of intermediate-term assets, primarily in the form of multi-family and CRE loans; continue to originate certain floating rate C&I loans; depending on funding needs, replace maturing wholesale borrowings, ~~with longer term borrowings;~~our junior subordinated debentures and ~~as needed, execute interest rate swaps.~~

~~LIBOR Transition Process~~

The discontinuation of LIBOR has been developing since 2017 when the United Kingdom’s Financial Conduct Authority (“FCA”) first called for LIBOR to be phased out by 2021. The ICE Benchmark Administration, the publisher of LIBOR discontinued publication of the one-week and two-month US Dollar LIBOR on December 31, 2021, and will discontinue publication of overnight, one-month, three-month, six-month, and twelve-month US Dollar LIBORs on June 30, 2023, although its use for new business was restricted after December 31, 2021, with limited exceptions.

In October 2020, the International Swaps and Derivatives Association announced fallback language for derivative contracts incorporating SOFR, as well as a process by which counterparties to such contracts could elect to apply the fallback language to existing derivatives on or after January 25, 2021. SOFR was identified by the Alternative Reference Rates Committee (ARRC), a group of private-market participants convened to help ensure a successful transition from LIBOR in the United States, as the recommended replacement to US Dollar LIBOR in the United States. The adoption of the fallback protocols does not change the index for subject agreements from LIBOR to SOFR, but simply creates the legal framework for the appropriate mechanisms to occur in the future.

The Bank established a sub-committee of ALCO to address issues related to the phase out and transition away from LIBOR. The sub-committee is led by our Chief Financial Officer and consists of personnel from various departments throughout the Bank. The Company has identified certain LIBOR-based contracts that extend beyond June 30, 2023, which may include loans and leases, securities, wholesale borrowings, derivative financial instruments, and long-termsubordinated debt. The sub-committee has reviewed the associated contracts and legal agreements for conformance to the ARRC aligned fallback language and noted that certain contracts will require some form of standardization in accordance with LIBOR transition recommended fallback provisions.

The FRB, the FDIC, and the OCC issued supervisory guidance encouraging banks to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021. In accordance with guidance, as of after December 31, 2021 the Bank does not offer LIBOR indexed products.

~~Interest Rate Sensitivity Analysis~~

The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive” and by monitoring a bank’s interest rate sensitivity “gap.” An asset or liability is said to be interest rate sensitive within a specific time frame if it will mature or reprice within that period of time. The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time frame and the amount of interest-bearing liabilities maturing or repricing within that same period of time.

In a rising interest rate environment, an institution with a negative gap would generally be expected, absent the effects of other factors, to experience a greater increase in the cost of its interest-bearing liabilities than it would in the yield on its interest-earning assets, thus producing a decline in its net interest income. Conversely, in a declining rate environment, an institution with a negative gap would generally be expected to experience a lesser reduction in the yield on its interest-earning assets than it would in the cost of its interest-bearing liabilities, thus producing an increase in its net interest income.

In a rising interest rate environment, an institution with a positive gap would generally be expected to experience a greater increase in the yield on its interest-earning assets than it would in the cost of its interest-bearing liabilities, thus producing an increase in its net interest income. Conversely, in a declining rate environment, an institution with a positive gap would generally be expected to experience a lesser reduction in the cost of its interest-bearing liabilities than it would in the yield on its interest-earning assets, thus producing a decline in its net interest income.

At September 30, 2022, our one-year gap was a negative 26.11%, compared to a negative 7.43% at December 31, 2021. The change in our one-year gap from December 31, 2021, primarily reflects an increase in borrowings that will mature or are projected to get put back to the Company and an increase in new deposit balances that are indexed to short term rates.

The table on the following page sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at September 30, 2022 which, based on certain assumptions stemming from our historical experience, are expected to reprice or mature in each of the future time periods shown. Except as stated below, the amounts of assets and liabilities shown as repricing or maturing during a particular time period were determined in accordance with the earlier of (1) the term to repricing, or (2) the contractual terms of the asset or liability.

The table provides an approximation of the projected repricing of assets and liabilities at September 30, 2022 on the basis of contractual maturities, anticipated prepayments, and scheduled rate adjustments within a three-month period and subsequent selected time intervals. For residential mortgage-related securities, prepayment rates are forecasted at a weighted average CPR of 7.16% per annum; for multi-family and CRE loans, prepayment rates are forecasted at weighted average CPRs of 7.39% and 6.82% per annum, respectively. Borrowed funds were not assumed to prepay.

Savings, interest bearing checking and money market accounts were assumed to decay based on a comprehensive statistical analysis that incorporated our historical deposit experience. Based on the results of this analysis, savings accounts were assumed to decay at a rate of 60% for the first five years and 40% for years six through ten. Interest-bearing checking accounts were assumed to decay at a rate of 86% for the first five years and 14% for years six through ten. The decay assumptions reflect the prolonged low

interest rate environment and the uncertainty regarding future depositor behavior. Including those accounts having specified repricing dates, money market accounts were assumed to decay at a rate of 80% for the first five years and 20% for years six through ten.

At September 30, 2022

(dollars in millions)

Three
Months
or Less

Four to
Twelve
Months

More Than
One Year
to Three
Years

More Than
Three
Years to
Five Years

More Than
Five Years
to 10 Years

More Than
10 Years

Total

INTEREST-EARNING ASSETS:

Mortgage and other loans (1)

$

6,889

$

5,578

$

14,332

$

14,414

$

7,726

$

—

$

48,939

Mortgage-related securities (2)(3)

153

176

491

330

258

822

2,230

Other securities (2)

1,735

1,821

351

53

704

425

5,089

Interest-earning cash, cash equivalents
and due from banks

1,558

—

—

—

—

—

1,558

Total interest-earning assets

10,335

7,575

15,174

14,797

8,688

1,247

57,816

INTEREST-BEARING LIABILITIES:

Interest-bearing checking and money
   market accounts

13,004

463

2,758

583

3,089

—

19,897

Savings accounts

2,685

1,956

361

270

3,588

—

8,860

Certificates of deposit

1,558

5,252

2,259

40

—

—

9,109

Borrowed funds

6,529

2,900

3,725

500

—

144

13,798

Total interest-bearing liabilities

23,776

10,571

9,103

1,393

6,677

144

51,664

Interest rate sensitivity gap per period (4)

$

(13,441
)

$

(2,996
)

$

6,071

$

13,404

$

2,011

$

1,103

$

6,152

Cumulative interest rate sensitivity gap

$

(13,441
)

$

(16,437
)

$

(10,366
)

$

3,038

$

5,049

$

6,152

Cumulative interest rate sensitivity gap
   as a percentage of total assets

(21.35
)
%

(26.11
)
%

(16.47
)
%

4.83

%

8.02

%

9.77

%

Cumulative net interest-earning assets as a
   percentage of net interest-bearing liabilities

43.47

%

52.14

%

76.14

%

106.77

%

109.80

%

111.91

%

~~(1)~~

~~For the purpose of the gap analysis, loans held for sale, non-performing loans and the allowances for loan losses have been excluded.~~

~~(2)~~

~~Mortgage-related and other securities, including FHLB stock, are shown at their respective carrying amounts.~~

~~(3)~~

~~Expected amount based, in part, on historical experience.~~

~~(4)~~

~~The interest rate sensitivity gap per period represents the difference between interest-earning assets and interest-bearing liabilities.~~

Prepayment and deposit decay rates can have a significant impact on our estimated gap. While we believe our assumptions to be reasonable, there can be no assurance that the assumed prepayment and decay rates will approximate actual future loan and securities prepayments and deposit withdrawal activity.

To validate our prepayment assumptions for our multi-family and CRE loan portfolios, we perform a quarterly analysis, during which we review our historical prepayment rates and compare them to our projected prepayment rates. We continually review the actual prepayment rates to ensure that our projections are as accurate as possible, since prepayments on these types of loans are not as closely correlated to changes in interest rates as prepayments on one-to-four family loans tend to be. In addition, we review the call provisions, if any, in our borrowings and investment portfolios and, on a monthly basis, compare the actual calls to our projected calls to ensure that our projections are reasonable.

As of September 30, 2022, the impact of a 100 bp decline in market interest rates would have increased our projected prepayment rates for multi-family and CRE loans by a constant prepayment rate of 0.81% per annum.

Certain shortcomings are inherent in the method of analysis presented in the preceding Interest Rate Sensitivity Analysis. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of the market, while interest rates on other types may lag behind changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset. Furthermore, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate from those assumed in calculating the table. Also, the ability of some borrowers to repay their adjustable-rate loans may be adversely impacted by an increase in market interest rates.

Interest rate sensitivity is also monitored through the use of a model that generates estimates of the change in our Economic Value of Equity (“EVE”) 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 similar to those utilized in formulating the preceding Interest Rate Sensitivity Analysis.

~~Based on the information and assumptions in effect at September 30, 2022, the following table reflects the estimated percentage change in our EVE, assuming the changes in interest rates noted:~~


Change in Interest Rates (in basis points)		Estimated Percentage Change in Economic Value of Equity
~~-200 over one year~~		~~10.37%~~
~~-100 over one year~~		~~9.27%~~
~~+100 over one year~~		~~-6.91%~~
~~+ 200 over one year~~		~~-14.45%~~

~~The net changes in EVE presented in the preceding table are within the limits approved by the Boards of Directors of the Company and the Bank.~~

As with the Interest Rate Sensitivity Analysis, certain shortcomings are inherent in the methodology used in the preceding interest rate risk measurements. 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 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. Furthermore, the model does not consider 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 simulation incorporates various market-based assumptions regarding the impact of changing interest rates on future levels of our financial assets and liabilities. The assumptions used in the net interest income simulation are inherently uncertain. Actual results may differ significantly from those presented in the following table, due to the frequency, timing, and magnitude of changes in interest rates; changes in spreads between maturity and repricing categories; and prepayments, among other factors, coupled with any actions taken to counter the effects of any such changes.

Based on the information and assumptions in effect at September 30, 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 year~~		~~6.65%~~
~~-100 over one year~~		~~3.32%~~
~~+100 over one year~~		~~-3.22%~~
~~+200 over one year~~		~~-6.52%~~

~~(1)~~

~~In general, short- and long-term rates are assumed to increase in parallel fashion across all four quarters 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:

•

~~Our ALCO Committee would inform the Board of Directors of the variance, and present recommendations to the Board regarding proposed courses of action to restore conditions to within-policy tolerances.~~

•

In formulating appropriate strategies, the ALCO Committee would ascertain the primary causes of the variance from policy tolerances, the expected term of such conditions, and the projected effect on capital and earnings.

Where temporary changes in market conditions or volume levels result in significant increases in risk, strategies may involve reducing open positions or employing synthetic hedging techniques to more immediately reduce 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 September 30, 2022, our analysis indicated that an immediate inversion of the yield curve would be expected to result in a 5.66% decrease in net interest income; conversely, an immediate steepening of the yield curve would be expected to result in a 22.10% increase in net interest income. It should be noted that the yield curve changes in these scenarios were updated, given the changing market rate environment, which resulted in an increase in the income sensitivity in the steepening scenario.

Liquidity, Contractual Obligations and Off-Balance Sheet Commitments, and Capital Position

Liquidity

~~Liquidity~~

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 ~~$1.7~~$6.9 billion and ~~$2.2~~$2.0 billion, ~~respectively,~~ at September 30, ~~2022~~2023 and December 31, ~~2021. As~~2022, respectively. The $4.9 billion increase in ~~the past, our loan and securities portfolios provided meaningful liquidity in 2022, with~~ cash ~~flows from the repayment and sale of loans totaling $9.3 billion~~ and cash ~~flows from~~equivalents includes custodial deposits related to the ~~repayment~~Signature Transaction.

At September 30, 2023, our total ready liquidity (cash and ~~sale~~cash equivalents, unpledged securities, and FHLB borrowing capacity),was $31.2 billion , approximately matching the balance of ~~securities totaling $571 million.~~our uninsured deposits.

Additional liquidity stems from deposits and from our use of wholesale funding sources, including wholesale borrowings and brokered ~~deposits and wholesale borrowings.~~deposits. 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 September 30, ~~2022,~~2023 our available borrowing capacity with the FHLB-NY was ~~$12.2~~$16.9 billion. InIn addition, the Bank had available-for-sale securities of ~~$6.7~~$8.7 billion, of which, ~~$6.1~~$7.4 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~~our liquidity. In ~~connection~~connection with these agreements, the Bank has pledged certain loans and securities to collateralize any funds ~~they~~we may borrow. ~~At September 30, 2022, the~~The maximum amount the Bank could borrow from the FRB-NY was ~~$1.1 billion.~~ $1.0 billion.There were no borrowings against these lines of credit at September 30, ~~2022.~~2023.

Our primary investing activity is loan production, and the volume of loans we originated for investment totaled $12.6 billion in 2022. During this time, the net cash used in investing activities totaled $4.7 billion; the net cash provided by our operating activities totaled $631 million. Our financing activities provided net cash of $3.6 billion.

CDs due to mature or reprice in one year or less from September 30, ~~2022~~2023 totaled ~~$6.8~~$15.7 billion, representing ~~75%~~90 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.

The Parent Company is a separate legal entity from the Bank and must provide for its own liquidity. At September 30, 2023 the Parent Company held cash and cash equivalents of $160 million. In addition to operating expenses 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.

~~The Parent~~

Various legal restrictions limit the extent to which the Company’s ~~ability to pay dividends may also depend, in part, upon dividends it receives from the Bank. The ability of the Bank to pay dividends and other capital distributions~~subsidiary bank can supply funds to the Parent Company ~~is generally limited by New York State Banking Law~~ and regulations, and by certain regulations of the FDIC. In addition, the Superintendent of the New York State Department of Financial Services (the “Superintendent”), the FDIC, and the FRB, for reasons of safety and soundness, may prohibit the payment of dividends that are otherwise permissible by regulations.

~~Under New York State Banking Law, a New York State-chartered stock-form savings bank or commercial bank may declare and pay dividends out of~~ its ~~net profits, unless there is an impairment of capital. However,~~non-bank subsidiaries. The Bank would require the approval of the ~~Superintendent is required~~OCC if the ~~total of all~~ dividends ~~declared~~it declares in aany calendar year ~~would~~were to exceed the total of ~~a bank’s~~its respective net profits for that year combined with its respective retained net profits for the preceding two ~~years. In 2022,~~calendar years, less any required transfer to paid-in capital. The term “net profits” is defined as net income for a given period less any dividends paid during that period. As a result of our acquisition of Flagstar, we are also required to seek regulatory approval from the ~~Bank paid dividends totaling $250 million to~~OCC for the ~~Parent Company, leaving $675 million that it could~~payment of any dividend to the Parent Company ~~without~~through at least the period ending November 1, 2024. In connection with receiving regulatory approval ~~at year-end. Additional sources~~from the OCC for the Signature

Transaction, the Bank has committed that (i) for a period of ~~liquidity available~~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 the nine months ended September 30, 2023, dividends of $430 million were paid by the Bank to the Parent ~~Company at~~Company. At September 30, ~~2022 included $104 million in cash and cash equivalents. If~~2023, the Bank ~~was~~had $555 million available for additional dividends, excluding bargain purchase gain from retained earnings.

At September 30, 2023, we believe the Company has sufficient liquidity and capital resources to ~~apply to~~meet its cash flow obligations over the ~~Superintendent~~next 12 months and for ~~approval to make a dividend or capital distribution in excess of~~ the ~~dividend amounts permitted under the regulations, there can be no assurance that such application would be approved.~~foreseeable future.

Contractual Obligations and ~~Off-Balance Sheet~~ Commitments

In the normal course of business, we enter into a variety of contractual obligations in order to manage our assets and liabilities, fund loan growth, operate our branch network, and address our capital needs.

For example, we offer CDs with contractual terms to our customers, and borrow funds under contract from the ~~FHLB-NY and various brokerage firms.~~FHLB-NY. These contractual obligations are reflected in the Consolidated Statements of Condition under “Deposits” and “Borrowed funds,” respectively. At September 30, ~~2022,~~2023, we had CDs of ~~$9.1~~$17.3 billion and long-term debt (defined as borrowed funds with an original maturity one year or more) of ~~$10.3~~$7.7 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 $456 million at September 30, 2023 an increase of $334 million compared to $122 million at December 31, 2022 driven by the Signature Transaction.

At September 30, ~~2022,~~2023, we also had 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 $5.2 billion.~~credit. These ~~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.

The following table summarizes the Company’s commitments to originate loans and letters of credit:


(in millions)	September 30, 2023		December 31, 2022
Multi-family and commercial real estate	$	85	$	216
One-to-four family including interest rate locks	2,054		2,066
Acquisition, development, and construction	4,076		3,539
Warehouse loan commitments	6,489		8,042
Other loan commitments	11,690		7,964
Total loan commitments	$	24,394	$	21,827
Commercial, performance stand-by, and financial stand-by letters of credit	578		541
Total commitments	$	24,972	$	22,368

The letters of credit we issue consist of performance stand-by, financial stand-by, and commercial letters of credit. Financial stand-by letters of credit primarily are issued for the benefit of other financial institutions, municipalities, or landlords on behalf of certain of our current borrowers, and obligate us to guarantee payment of a specified financial obligation. Performance stand-by letters of credit are primarily issued for the benefit of local municipalities on behalf of certain of our borrowers. Performance letters of credit obligate us to make payments in the event that a specified third party fails to perform under non-financial contractual obligations. Commercial letters of credit act as a means of ensuring payment to a seller upon shipment of goods to a buyer. Although commercial letters of credit are used to effect payment for domestic transactions, the majority are used to settle payments in international trade. Typically, such letters of credit require the presentation of documents that describe the commercial transaction, and provide evidence of shipment and the transfer of title. The fees we collect 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, and ready liquidity of $31.2 billion, 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.

For the three months ended September 30, ~~2022,~~2023, we did not engage in any off-balance sheet transactions ~~reasonably likely~~that we expect to have a material effect on our financial condition, results of operations or cash flows.

At September 30, ~~2022,~~2023, we had no commitments to purchase securities.

~~Capital Position~~

On March 17, 2017, we issued 515,000 shares of preferred stock. The offering generated capital of $503 million, net of underwriting and other issuance costs, for general corporate purposes, with the bulk of the proceeds being distributed to the Bank.

On October 24, 2018, the Company announced that it had received regulatory approval to repurchase its common stock. Accordingly, the Board of Directors approved a $300 million common share repurchase program. The repurchase program was funded through the issuance of a like amount of subordinated notes. As of September 30, 2022, the Company has repurchased a total of 29.7 million shares at an average price of $9.61 or an aggregate purchase price of $286 million, leaving $9 million remaining under the current authorization.

Stockholders’ equity, common stockholders’ equity, and tangible common stockholders’ equity include AOCL, which decreased $517 million from the balance at the end of last year and $510 million from the year-ago quarter to $602 million at September 30, 2022. The year-to-date decrease was primarily the result of a $567 million decrease in the net unrealized loss on available-for-sale securities, net of tax, and a $49 million change in the net unrealized gain (loss) on cash flow hedges, net of tax, to $40 million.

Regulatory Capital

The Bank is subject to regulation, examination, and supervision by the ~~NYSDFS~~OCC and the ~~FDIC~~Federal Reserve (the “Regulators”). The Bank is also governed by numerous federal and state laws and regulations, including the FDIC Improvement Act of 1991, which established five categories of capital adequacy ranging from “well capitalized” to “critically undercapitalized.” Such classifications are used by the FDIC to determine various matters, including prompt corrective action and each institution’s FDIC deposit insurance premium assessments. Capital amounts and classifications are also subject to the Regulators’ qualitative judgments about the components of capital and risk weightings, among other factors.

The quantitative measures established to ensure capital adequacy require that banks maintain minimum amounts and ratios of leverage capital to average assets and of common equity tier 1 capital, tier 1 capital, and total capital to risk-weighted assets (as such measures are defined in the regulations). At September 30, ~~2022,~~2023, our capital measures continued to exceed the minimum federal requirements for a bank holding company and for a bank. The following table sets forth our common equity tier 1, tier 1 risk-based, total risk-based, and leverage capital amounts and ratios on a consolidated basis and for the Bank on a stand-alone basis, as well as the respective minimum regulatory capital requirements, at that date:

The following tables present the actual capital amounts and ratios for the Company:


	Risk-Based Capital
September 30, 2023	Common Equity Tier 1				Tier 1				Total				Leverage Capital
(dollars in millions)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital	$	8,382	9.59	%	$	8,885	10.17	%	$	10,462	11.97	%	$	8,885	7.92	%
Minimum for capital adequacy purposes	3,932		4.50		5,242		6.00		6,990		8.00		4,487		4.00
Excess	$	4,450	5.09	%	$	3,643	4.17	%	$	3,472	3.97	%	$	4,398	3.92	%
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	%

The following tables present the actual capital amounts and ratios for the Bank:

~~Regulatory Capital Analysis (the Company)~~


	Risk-Based Capital
September 30, 2023	Common Equity Tier 1				Tier 1				Total				Leverage Capital
(dollars in millions)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital	$	9,690	11.10	%	$	9,690	11.10	%	$	10,274	11.77	%	$	9,690	8.64	%
Minimum for capital adequacy purposes	3,929		4.50		5,239		6.00		6,985		8.00		4,484		4.00
Excess	$	5,761	6.60	%	$	4,451	5.10	%	$	3,289	3.77	%	$	5,206	4.64	%
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	%

Risk-Based Capital

At September 30, 2022
Common Equity
Tier 1

Tier 1

Total

Leverage Capital

(dollars in millions)
Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total capital
$
4,440

9.24

%
$
4,942

10.29

%
$
5,793

12.06

%
$
4,942

8.06

%
Minimum for capital adequacy
purposes

2,162

4.50

2,883

6.00

3,844

8.00

2,453

4.00

Excess
$
2,278

4.74

%
$
2,059

4.29

%
$
1,949

4.06

%
$
2,489

4.06

%

~~Regulatory Capital Analysis (New York Community Bank)~~

Risk-Based Capital

At September 30, 2022
Common Equity
Tier 1

Tier 1

Total

Leverage Capital

(dollars in millions)
Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total capital
$
5,467

11.39

%
$
5,467

11.39

%
$
5,673

11.82

%
$
5,467

8.92

%
Minimum for capital adequacy
purposes

2,160

4.50

2,880

6.00

3,840

8.00

2,451

4.00

Excess
$
3,307

6.89

%
$
2,587

5.39

%
$
1,833

3.82

%
$
3,016

4.92

%

At September 30, ~~2022,~~2023, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by ~~406 bps~~397 basis points and the ~~fully-phased in~~fully phased-in capital conservation buffer by ~~156 bps.~~147 basis points.

The Bank also exceeded the minimum capital requirements to be categorized as “Well Capitalized.” To be categorized as well capitalized, a bank must maintain a minimum common equity tier 1 ratio of ~~6.50%;~~6.50 percent; a minimum tier 1 risk-based capital ratio of ~~8.00%;~~8 percent; a minimum total risk-based capital ratio of ~~10.00%;~~10 percent; and a minimum leverage capital ratio of ~~5.00%.~~5 percent.

~~Earnings Summary~~

Other Recent Developments

In May 2023, the FDIC proposed a special deposit insurance assessment on banking organizations with greater than $5 billion in assets to recover the costs associated with bank failures that have occurred since March 2023. As proposed, the special assessment would be collected by the FDIC over an anticipated total of eight quarterly assessments beginning with the first quarter of 2024. The comment period for the ~~Three Months Ended~~proposed rule has ended and the final rule is expected to be issued later in 2023. While the ultimate impact of the special assessment will be dependent on the final rule, the Company has estimated that its special assessment under the provisions of the proposed rule would be approximately $36 million, which is expected to be recognized in earnings upon issuance of the final rule. The Company continues to monitor regulatory changes related to these developments which have also increased regulatory and market focus on the liquidity, asset-liability management and unrealized securities losses of banks.

On July 27, 2023, the Federal Banking Agencies, the FDIC, the Federal Reserve, and the OCC, released a notice of proposed rulemaking that would make significant amendments to the Basel III Capital Rules applicable to both the Company and the Bank. In general, the proposed rule would align the regulatory capital calculation methodology for Category III and IV banking organizations with the methodology applicable to Category I and II banking organizations. In addition to calculating risk-weighted assets under the current U.S. standardized approach, the proposal introduces a new “Expanded Risk-Based Approach,” including standardized approaches for credit risk, operational risk and credit valuation adjustment risk, as well as a new approach for market risk that would be based upon internal models and standardized supervisory models. If adopted as proposed, the Company would be required to calculate its risk-based capital ratios under both the current U.S. standardized approach and the Expanded Risk-Based Approach and would be subject to the lower of the two resulting ratios for each risk-based capital ratio. In addition, the proposal would require banking organizations to recognize most elements of AOCI in regulatory capital, including unrealized gains and losses on available-for-sale securities, and lower thresholds for deductions from CET1 capital for mortgage servicing assets and deferred tax assets, among other things. The proposal, if enacted, would have an effective date of July 1, 2025, with certain elements, such as the recognition of AOCI in regulatory capital and changes in risk-weighted assets calculated under the Expanded Risk-Based Approach, having a three-year phase-in period. We are in the process of evaluating this proposed rulemaking and assessing its potential impact on the Company and the Bank if adopted as proposed.

Market Risk

As 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) Continue to increase the Investments portfolio with an overall shorter duration profile; (2) The use of derivatives to manage our interest rate position; (3) Increased the focus on retaining and increasing our branch deposits base.

Uninsured Deposits

We 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. As a result, we have $31.2 billion of total ready liquidity (cash and cash equivalents, unpledged securities, and FHLB borrowing capacity), approximately matching the balance of our uninsured deposits. Our uninsured deposits are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000). These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes and excludes internal accounts. At September 30, 2023 our deposit base includes $31.3 billion of uninsured deposits, reflecting a net increase of $14.8 billion as compared to December 31, 2022 due to the Signature Transaction. This represents 38 percent of our total deposits.

Interest Rate Sensitivity Analysis

Interest rate sensitivity is monitored through the use of a model that generates estimates of the change in our Economic Value of Equity (EVE) 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 and MBS prepayment rates, current market value spreads, and deposit decay rates and betas.

Based on the information and assumptions in effect at September 30, 2023, the following table sets forth our EVE, assuming the changes in interest rates noted:


Change in Interest Rates (in basis points)						Estimated Percentage Change in Economic Value of Equity
-200 over one year						1.8%
-100 over one year						0.9%
+100 over one year						(1.4)%
+200 over one year						(3.1)%

The net changes in EVE presented in the preceding table are within the parameters approved by the Boards of Directors of the Company and the Bank.

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.

Interest Rate Risk is also monitored through the use of a model that generates Net Interest Income (NII) simulations over a range of interest rate scenarios.

Modeling 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. 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. The assumptions used in the net interest income simulation are inherently uncertain. Actual results may differ significantly from those presented in the following table, due to the frequency, timing, and magnitude of changes in interest rates; changes in spreads between maturity and repricing categories; and prepayments, among other factors, coupled with any actions taken to counter the effects of any such changes.

Based on the information and assumptions in effect at September 30, 2023, 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 year						(3.0)%
-100 over one year						(2.0)%
+100 over one year						2.2%
+200 over one year						4.4%

(1)In general, short- and long-term rates are assumed to increase in parallel instantaneously and then remain unchanged.

The net changes in NII presented in the preceding table are within the parameters approved by the Boards of Directors of the Company and the Bank.

Future changes in our mix of assets and liabilities may result in greater changes to our EVE, and/or NII simulations.

•In formulating appropriate strategies, the ALCO Committee would ascertain the primary causes of the variance from policy tolerances, the expected term of such conditions, and the projected effect on capital and earnings.

•Our ALCO Committee would inform the Board of Directors of the variance, and present recommendations to the Board regarding proposed courses of action to restore conditions to within-policy tolerances.

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 September 30, 2023, our analysis indicated that a further inversion of the yield curve would be expected to result in a 0.9 decrease in net interest income; conversely, an immediate steepening of the yield curve would be expected to result in a 1.6 percent increase in net interest income.

Critical Accounting Estimates

Various elements of our accounting policies, by their nature, are subject to estimation techniques, valuation assumptions and other subjective assessments. Certain accounting policies that, due to the judgment, estimates and assumptions are critical to an understanding of our Consolidated Financial Statements and the Notes, are described in Item 1. These policies relate to: (a) the determination of our ACL, (b) fair value measurements and (c) the acquisition method of accounting. We believe the judgment, estimates and assumptions used in the preparation of our Consolidated Financial Statements and the Notes are appropriate given the factual circumstances at the time. However, given the sensitivity of our Consolidated Financial Statements and the Notes to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in our results of operations and/or financial condition.

For further information on our critical accounting policies, please refer to our Form 10-K for the year ended December 31, 2022, which is available on our website, under the Investor Relations section, or on the website of the Securities and Exchange Commission, at sec.gov.

Signature Transaction - Certain Financial Information

In accordance with the guidance provided in Staff Accounting Bulletin Topic 1:K, “Financial Statements of Acquired Troubled Financial Institutions” (“SAB 1:K”) the Company has omitted certain financial information on the Signature Transaction required by Rule 3-05 of Regulation S-X and Article 11 of Regulation S-X. SAB 1:K provides relief from the requirements of Rule 3-05 and Article 11 of Regulation S-X under certain circumstances, including a transaction such as the Signature Transaction, in which the registrant engages in an acquisition of a troubled financial institution for which historical financial statements are not reasonably available or relevant and in which federal assistance is an essential and significant part of the transaction.

Reportable Segment and Reporting Units

We operate in a single reportable segment and have identified one reporting unit which is the same as our operating segment. Following the acquisition of Flagstar Bank, N.A. and closing the Signature Transaction, we are currently in the process of reassessing our reportable segments and reporting units, which may result in a change to either or both in future reporting periods.


ITEM 1.			FINANCIAL STATEMENTS

New York Community Bancorp, Inc.

Consolidated Statements of Condition


	September 30, 2023		December 31, 2022
(in millions, except per share data)	(unaudited)
ASSETS:
Cash and cash equivalents	$	6,929	$	2,032
Securities:
Debt Securities available-for-sale ($1,380 and $434 pledged at September 30, 2023 and December 31, 2022, respectively)	8,723		9,060
Equity investments with readily determinable fair values, at fair value	13		14
Total securities	8,736		9,074
Loans held for sale ($1,325 and $1,115 measured at fair value, respectively)	1,926		1,115
Loans and leases held for investment, net of deferred loan fees and costs	83,995		69,001
Less: Allowance for credit losses on loans and leases	(619)		(393)
Total loans and leases held for investment, net	83,376		68,608
Federal Home Loan Bank stock and Federal Reserve Bank stock, at cost	1,110		1,267
Premises and equipment, net	638		491
Core deposit and other intangibles	661		287
Goodwill	2,426		2,426
Mortgage servicing rights	1,135		1,033
Bank-owned life insurance	1,576		1,561
Other assets	2,717		2,250
Total assets	$	111,230	$	90,144
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Interest-bearing checking and money market accounts	$	31,087	$	22,511
Savings accounts	9,415		11,645
Certificates of deposit	17,310		12,510
Non-interest-bearing accounts	24,863		12,055
Total deposits	82,675		58,721
Borrowed funds:
Federal Home Loan Bank advances	13,023		20,325
Fed funds purchased	547		—

Total wholesale borrowings	13,570		20,325
Junior subordinated debentures	578		575
Subordinated notes	437		432
Total borrowed funds	14,585		21,332
Other liabilities	2,977		1,267
Total liabilities	100,237		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
Common stock at par $0.01 (900,000,000 shares authorized; 744,520,822 and 705,429,386 shares issued; and 722,485,257 and 681,217,334 shares outstanding, respectively)	7		7
Paid-in capital in excess of par	8,217		8,130
Retained earnings	3,278		1,041
Treasury stock, at cost ($22,035,565 and 24,212,052 shares, respectively)	(217)		(237)
Accumulated other comprehensive loss, net of tax:
Net unrealized loss on securities available for sale, net of tax of $324 and $240, respectively	(863)		(626)
Net unrealized loss on pension and post-retirement obligations, net of tax of $17 and $18, respectively	(42)		(46)
Net unrealized gain on cash flow hedges, net of tax of $(41) and $(20), respectively	110		52
Total accumulated other comprehensive loss, net of tax	(795)		(620)
Total stockholders’ equity	10,993		8,824
Total liabilities and stockholders’ equity	$	111,230	$	90,144

See accompanying notes to the consolidated financial statements.

New York Community Bancorp, Inc.

Consolidated Statements of Income and Comprehensive Income
(unaudited)


	Three Months Ended September 30,				Nine months ended September 30,
(in millions, except per share data)	2023		2022		2023		2022
INTEREST INCOME:
Loans and leases	$	1,251	$	442	$	3,279	$	1,259
Securities and money market investments	261		67		765		152
Total interest income	1,512		509		4,044		1,411
INTEREST EXPENSE:
Interest-bearing checking and money market accounts	268		72		657		104
Savings accounts	43		15		122		33
Certificates of deposit	180		23		436		46
Borrowed funds	139		73		492		211
Total interest expense	630		183		1,707		394
Net interest income	882		326		2,337		1,017
Provision for (recovery of) credit losses	62		2		281		9
Net interest income after provision for credit loan losses	820		324		2,056		1,008
NON-INTEREST INCOME:
Fee income	58		5		133		17
Bank-owned life insurance	11		10		32		24
Net (loss) on securities	—		(1)		(1)		(2)
Net return on mortgage servicing rights	23		—		70		—
Net gain on loan sales and securitizations	28		—		73		—
Net Loan administration income	19		—		65		—
Bargain purchase gain	—		—		2,142		—
Other	21		3		46		10
Total non-interest income	160		17		2,560		49
NON-INTEREST EXPENSE:
Operating expenses:
Compensation and benefits	346		79		854		238
Occupancy and equipment	55		22		142		67
General and administrative	184		31		496		95
Total operating expense	585		132		1,492		400
Intangible asset amortization	36		—		90		—
Merger-related and restructuring expenses	91		4		267		15
Total non-interest expense	712		136		1,849		415
Income before income taxes	268		205		2,767		642
Income tax expense	61		53		141		164
Net income	$	207	$	152	$	2,626	$	478
Preferred stock dividends	8		8		25		25
Net income available to common stockholders	$	199	$	144	$	2,601	$	453
Basic earnings per common share	$	0.27	$	0.31	$	3.62	$	0.96
Diluted earnings per common share	$	0.27	$	0.30	$	3.61	$	0.96
Net income	$	207	$	152	$	2,626	$	478
Other comprehensive loss, net of tax:
Change in net unrealized loss on securities available for sale, net of tax of $69; $67; $84 and $217, respectively	(195)		(176)		(237)		(567)
Change in pension and post-retirement obligations, net of tax of $—; $—; $(1) and $—, respectively	—		—		2		(1)
Change in net unrealized gain on cash flow hedges, net of tax of $(17); $(11); $(26) and $(18), respectively	47		28		72		46

Reclassification adjustment for defined benefit pension plan, net of tax of $—; $—; $— and $—, respectively	1		1		2		2
Reclassification adjustment for net (loss) gain on cash flow hedges included in net income, net of tax $2; $1; $5 and $(1), respectively	(6)		(2)		(14)		3
Total other comprehensive loss, net of tax	(153)		(149)		(175)		(517)
Total comprehensive income (loss), net of tax	$	54	$	3	$	2,451	$	(39)

See accompanying notes to the consolidated financial statements.

New York Community Bancorp, Inc.

Consolidated Statements of Changes in Stockholders' Equity

(unaudited)


(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
Three Months Ended September 30, 2023
Balance at June 30, 2023	722,475,755	$	503	$	7	$	8,204	$	3,205	$	(217)	$	(642)	$	11,060
Shares issued for restricted stock, net of forfeitures	43,458	—		—		—		—		—		—		—
Compensation expense related to restricted stock awards	0	—		—		13		—		—		—		13
Net income	0	—		—		—		207		—		—		207
Dividends paid on common stock ($0.17)	0	—		—		—		(125)		—		—		(125)
Dividends paid on preferred stock ($15.94)	0	—		—		—		(9)		—		—		(9)
Purchase of common stock	(33,956)	—		—		—		—		—		—		—
Other comprehensive loss, net of tax	0	—		—		—		—		—		(153)		(153)
Balance at September 30, 2023	722,485,257	$	503	$	7	$	8,217	$	3,278	$	(217)	$	(795)	$	10,993

Three Months Ended September 30, 2022
Balance at June 30, 2022	466,243,078	$	503	$	5	$	6,114	$	893	$	(238)	$	(453)	$	6,824
Shares issued for restricted stock, net of forfeitures	—	—		—		—		—		—		—		—
Compensation expense related to restricted stock awards	—	—		—		7		—		—		—		7
Net income	—	—		—		—		152		—		—		152
Dividends paid on common stock ($0.17)	—	—		—		—		(80)		—		—		(80)
Dividends paid on preferred stock ($15.94)	—	—		—		—		(8)		—		—		(8)
Purchase of common stock	(107,022)	—		—		—		—		—		—		—
Other comprehensive loss, net of tax	—	—		—		—		—		—		(149)		(149)
Balance at September 30, 2022	466,136,056	$	503	$	5	$	6,121	$	957	$	(238)	$	(602)	$	6,746

See accompanying notes to the consolidated financial statements.

New York Community Bancorp, Inc.

Consolidated Statements of Changes in Stockholders' Equity

(unaudited)


(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
Nine Months Ended September 30, 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	3,436,504	—		—		(31)		—		31		—		—
Compensation expense related to restricted stock awards	—	—		—		33		—		—		—		33
Net income	—	—		—		—		2,626		—		—		2,626
Dividends paid on common stock ($0.51)	—	—		—		—		(364)		—		—		(364)
Dividends paid on preferred stock ($47.82)	—	—		—		—		(25)		—		—		(25)
Purchase of common stock	(1,200,587)	—		—		—		—		(11)		—		(11)
Other comprehensive loss, net of tax	—	—		—		—		—		—		(175)		(175)
Balance at September 30, 2023	722,485,257	$	503	$	7	$	8,217	$	3,278	$	(217)	$	(795)	$	10,993

Nine Months Ended September 30, 2022
Balance at December 31, 2021	465,015,643	$	503	$	5	$	6,126	$	741	$	(246)	$	(85)	$	7,044
Shares issued for restricted stock, net of forfeitures	2,939,365	—		—		(27)		—		27		—		—
Compensation expense related to restricted stock awards	—	—		—		22		—		—		—		22
Net income	—	—		—		—		478		—		—		478
Dividends paid on common stock ($0.51)	—	—		—		—		(237)		—		—		(237)
Dividends paid on preferred stock ($47.82)	—	—		—		—		(25)		—		—		(25)
Purchase of common stock	(1,818,952)	—		—		—		—		(19)		—		(19)
Other comprehensive loss, net of tax	—	—		—		—		—		—		(517)		(517)
Balance at September 30, 2022	466,136,056	$	503	$	5	$	6,121	$	957	$	(238)	$	(602)	$	6,746

See accompanying notes to the consolidated financial statements.

New York Community Bancorp, Inc.

Consolidated Statements of Cash Flows

(unaudited)


	For the Nine Months Ended September 30,
(in millions)	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,626	$	478
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses	281		9
Amortization of intangibles	90		—
Depreciation	29		13
Amortization of discounts and premiums, net	(221)		(8)
Net (gain) loss on securities	1		2
Net (gain) loss on sales of loans	(73)		—
Net gain on sales of fixed assets	—		(2)
Gain on business acquisition	(2,142)		—
Stock-based compensation	33		22
Deferred tax expense	(32)		—
Changes in operating assets and liabilities:
Decrease (increase) in other assets	(135)		65
(Decrease) increase in other liabilities	(358)		51
Purchases of securities held for trading	(10)		(75)
Proceeds from sales of securities held for trading	10		75
Change in loans held for sale, net	(615)		—

Net cash (used in) provided by operating activities	(516)		631
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from repayment of securities available for sale	1,254		571
Proceeds from sales of securities available for sale	1,341		—
Purchase of securities available for sale	(2,346)		(2,190)
Redemption of Federal Home Loan Bank stock	1,069		311
Purchases of Federal Home Loan Bank and Federal Reserve Bank stock	(912)		(207)
Proceeds from bank-owned life insurance, net	27		5

Purchases of loans	—		(157)
Net Proceeds from sales of MSR's	50		—
Other changes in loans, net	(3,077)		(3,084)
(Purchases) dispositions of premises and equipment, net	(42)		9
Cash acquired in business acquisition	25,043		—
Net cash provided by (used in) investing activities	22,407		(4,742)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits	(9,641)		6,646
Net decrease in short-term borrowed funds	(705)		115
Proceeds from long-term borrowed funds	3,675		6,930
Repayments of long-term borrowed funds	(9,725)		(9,810)
Net receipt of payments of loans serviced for others	(48)		—
Cash dividends paid on common stock	(364)		(237)
Cash dividends paid on preferred stock	(25)		(25)
Treasury stock repurchased	—		(7)
Payments relating to treasury shares received for restricted stock award tax payments	(11)		(12)
Net cash (used in) provided by financing activities	(16,844)		3,600
Net increase in cash, cash equivalents, and restricted cash (1)	5,047		(511)
Cash, cash equivalents, and restricted cash at beginning of year (1)	2,082		2,211
Cash, cash equivalents, and restricted cash at end of year (1)	$	7,129	$	1,700
Supplemental information:


Cash paid for interest	$	1,656	$	399
Cash paid for income taxes	32		13
Non-cash investing and financing activities:
Transfers to repossessed assets from loans	$	4	$	—
Securitization of loans to mortgage-backed securities available for sale	109		157




Shares issued for restricted stock awards	31		27
Business Combination:
Fair value of tangible assets acquired	37,526		—
Intangible assets	464		—

Liabilities assumed	35,763		—
Issuance of FDIC Equity appreciation instrument	85		—

(1) For further information on restricted cash, see Note 14 - Derivative and Hedging Activities

See accompanying notes to the consolidated financial statements.

New York Community Bancorp, Inc.

Notes to the Consolidated Financial Statements

Note 1 - Organization and Basis of Presentation

Organization

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.

The Company is subject to regulation, examination and supervision by the Federal Reserve. The Bank is a National Association, subject to federal regulation and oversight by the OCC.

On November 23, 1993, the Company issued its initial offering of common stock (par value: $0.01 per share) at a price of $25.00 per share ($0.93 per share on a split-adjusted basis, reflecting the impact of nine stock splits between 1994 and 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 and the Signature Transaction which closed on March 20, 2023.

Flagstar Bank, N.A. currently operates 436 branches across nine 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 3,000 third-party mortgage originators. Flagstar Bank N.A. also operates through eight local divisions, each with a history of service and strength: 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.

Basis of Presentation

The following is a description of the significant accounting and reporting policies that the Company and its subsidiaries follow in preparing and presenting their consolidated financial statements, which conform to U.S. generally accepted accounting principles and to general practices within the banking industry. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates are used in connection with the determination of the allowance for credit losses, mortgage servicing rights, the Flagstar acquisition and the Signature Transaction.

The accompanying consolidated financial statements include the accounts of the Company and other entities in which the Company has a controlling financial interest. All inter-company accounts and transactions are eliminated in consolidation. The Company currently has certain unconsolidated subsidiaries in the form of wholly-owned statutory business trusts, which were formed to issue guaranteed capital securities. See Note 11 “Borrowed Funds,” for additional information regarding these trusts.

When necessary, certain reclassifications have been made to prior-year amounts to conform to the current-year presentation.

Loans

Effective January 1, 2023, the Corporation adopted the provisions of Accounting Standards Update (ASU) No. 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures" (ASU 2022-02), which eliminated the accounting for troubled debt restructurings (TDRs) while expanding loan modification and vintage disclosure requirements. Under ASU 2022-02, the Corporation assesses all loan modifications to determine whether one is granted to a borrower experiencing financial difficulty, regardless of whether the modified loan terms include a concession. Modifications granted to borrowers experiencing financial difficulty may be in the form of an interest rate reduction, an other-than-insignificant payment delay, a term extension, principal forgiveness or a combination thereof (collectively referred to as Troubled Debt Modifications or TDMs).

Adoption of New Accounting Standards


Standard	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.

Note 2 - Computation of Earnings per Common Share

Earnings per Common Share (Basic and Diluted)

The following table presents the Company’s computation of basic and diluted earnings per common share:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except share and per share amounts)	2023		2022		2023		2022
Net income available to common stockholders	$	199	$	144	$	2,601	$	453
Less: Dividends paid on and earnings allocated to participating securities	(2)		(2)		(27)		(6)
Earnings applicable to common stock	$	197	$	142	$	2,574	$	447
Weighted average common shares outstanding	722,486,509		465,115,180		710,684,522		465,354,754
Basic earnings per common share	$	0.27	$	0.31	$	3.62	$	0.96
Earnings applicable to common stock	$	197	$	142	$	2,574	$	447
Weighted average common shares outstanding	722,486,509		465,115,180		710,684,522		465,354,754
Potential dilutive common shares	2,426,381		979,177		1,753,527		926,184
Total shares for diluted earnings per common share computation	724,912,890		466,094,357		712,438,049		466,280,938
Diluted earnings per common share and common share equivalents	$	0.27	$	0.30	$	3.61	$	0.96

Note 3 - Business Combinations

Signature Bridge Bank

On 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 Signature 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.

Pursuant to the terms of the Agreement, the Company was not required to make a cash payment to the FDIC on March 20, 2023 as consideration for the acquired assets and assumed liabilities. As the Company and the FDIC remain engaged in ongoing discussions which may impact the assets and liabilities acquired or assumed by the Company in the Signature Transaction, the Company may be required to make a payment to the FDIC or the FDIC may be required to make a payment to the Company on the Settlement Date, which will be one year after March 20, 2023, or as agreed upon by the FDIC and the Company.

In addition, as part of the consideration for the Signature Transaction, the Company granted the FDIC equity appreciation rights in the common stock of the Company under an equity appreciation instrument (the "Equity Appreciation Instrument"). On March 31, 2023, the Company issued 39,032,006 shares of Company common stock to the FDIC pursuant to the Equity Appreciation Instrument. On May 19, 2023, the FDIC completed the secondary offering of those shares.

The Company has determined that the Signature Transaction constitutes a business combination as defined by ASC 805, Business Combinations ("ASC 805"). ASC 805 establishes principles and requirements 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 acquiree. Accordingly, the assets acquired and liabilities assumed have been recorded based on their estimated fair values based on initial valuations as of March 20, 2023.

Under the Agreement, the Company is expected to provide certain services to the FDIC to assist the FDIC in its administration of certain assets and liabilities which were not assumed by the Company and which remain under the control of the FDIC (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 Servicing may include other ancillary services requested by the FDIC to assist in 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 such services. As the FDIC 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.

The Company did not enter into a loss sharing arrangement with the FDIC in connection with the Signature Transaction.

As the Company finalizes its analysis of the assets acquired and liabilities assumed, there may be adjustments to the recorded carrying values. In many cases, the determination of the fair value of the assets acquired and liabilities assumed required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. While the Company believes that the information available on September 30, 2023, provided a reasonable basis for estimating fair value, the Company may obtain additional information and evidence during the measurement period that may result in changes to the estimated fair value amounts. Fair values subject to change include, but are not limited to, those related to loans and leases, certain deposits, intangibles, deferred tax assets and liabilities and certain other assets and other liabilities.

A summary of the net assets acquired and the estimated fair value adjustments resulting in the bargain purchase gain is as follows:


(in millions)	March 20, 2023
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	53
Change in deferred tax liability	88
Bargain purchase gain on Signature Transaction, as adjusted	$	2,142

In connection with the Signature Transaction, the Company recorded a bargain purchase gain, as adjusted, of approximately $2.1 billion during the nine months ended September 30, 2023, which is included in non-interest income in the Company’s Consolidated Statement of Income and Comprehensive Income.

The bargain purchase gain represents the excess of the estimated fair value of the assets acquired (including cash payments received from the FDIC) over the estimated fair value of the liabilities assumed and is influenced significantly by the FDIC-assisted transaction process. Under the FDIC-assisted transaction process, only certain assets and liabilities are transferred to the acquirer and, depending on the nature and amount of the acquirers bid, the FDIC may be required to make a cash payment to the Company and the Company may be required to make a cash payment to the FDIC.

The assets acquired and liabilities assumed and consideration paid in the Signature Transaction were initially recorded at their estimated fair values based on management’s best estimates using information available at the date of the Signature Transaction, and are subject to adjustment for up to one year after the closing date of the Signature Transaction. The Company and the FDIC are engaged in ongoing discussions and settlement payments have been made that have impacted certain assets acquired or certain liabilities assumed by the Company on March 20, 2023 and are included as measurement period adjustments in the table below.


(in millions)	As Initially Reported		Measurement Period Adjustments		As Adjusted
Purchase Price consideration	$	85	$	—	$	85

Fair value of assets acquired:
Cash & cash equivalents	25,043		—		25,043
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		(646)		37,990
Fair value of liabilities assumed:
Deposits	33,568		—		33,568
Other liabilities	2,982		(787)		2,195
Total liabilities assumed	36,550		(787)		35,763
Fair value of net identifiable assets	2,086		141		2,227
Bargain purchase gain	$	2,001	$	141	$	2,142

During the nine months ended September 30, 2023, the Company recorded preliminary measurement period adjustments to adjust the estimated fair value of loans and leases acquired and adjust other assets and accrued expenses and other liabilities for balances ultimately retained by the FDIC. Additionally, $449 million of loans were returned to the FDIC in accordance with the purchase and sale agreement. The Company also recognized a net change in the deferred tax liability due to the measurement period adjustments and the secondary offering of shares completed by the FDIC.

Fair Value of Assets Acquired and Liabilities Assumed

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, reflecting assumptions that a market participant would use when pricing an asset or liability. In some cases, the estimation of fair values requires management to make estimates about discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature and are subject to change. Described below are the methods used to determine the fair values of the significant assets acquired and liabilities assumed in the Signature Transaction.

Cash and Cash Equivalents

The estimated fair value of cash and cash equivalents approximates their stated face amounts, as these financial instruments are either due on demand or have short-term maturities.

Loans and leases

The fair value for loans was based on a discounted cash flow methodology that considered credit loss expectations, market interest rates and other market factors such as liquidity from the perspective of a market participant. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. The probability of default, loss given default and prepayment assumptions were the key factors driving credit losses which were embedded into the estimated cash flows. These assumptions were informed by internal data on loan characteristics, historical loss experience, and current and forecasted economic conditions. The interest and liquidity component of the estimate was determined by discounting interest and principal cash flows through the expected life of each loan. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity. The discount rates do not include a factor for credit losses as that has been included as a reduction to the estimated cash flows. Acquired loans were marked to fair value and adjusted for any PCD gross up as of the date of the Signature Transaction.

Deposit Liabilities

The fair value of deposit liabilities with no stated maturity (i.e., non-interest-bearing and interest-bearing checking accounts) is equal to the carrying amounts payable on demand. The fair value of certificates of deposit represents contractual cash flows, discounted using interest rates currently offered on deposits with similar characteristics and remaining maturities.

Core Deposit Intangible

Core deposit intangible (“CDI”) is a measure of the value of non-interest-bearing and interest-bearing checking accounts, savings accounts, and money market accounts that are acquired in a business combination. The fair value of the CDI stemming from any given business combination is based on the present value of the expected cost savings attributable to the core deposit funding, relative to an alternative source of funding. The CDI relating to the Signature Transaction will be amortized over an estimated useful life of 10 years using the sum of years digits depreciation method. The Company evaluates such identifiable intangibles for impairment when an indication of impairment exists. CDI does not significantly impact our liquidity or capital ratios.

PCD loans

Purchased loans that reflect a more 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 allowance for credit losses (“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 Signature Transaction with credit deterioration and the associated credit loss reserve at acquisition:


(in millions)	Total
Par value (UPB)	$	583
ACL at acquisition	(13)
Non-credit (discount)	(76)
Fair value	$	494

Unaudited Pro Forma Information – Signature Transaction

The Company’s operating results for the quarter and year-to-date periods ended September 30, 2023 include the operating results of the acquired assets and assumed liabilities of Signature Bridge Bank, N.A. subsequent to the acquisition on March 20, 2023. Due to the use of multiple systems and integration of the operating activities into those of the Company, historical reporting for the former Signature operations is impracticable and thus disclosures of the revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to acquisition.

Signature Bridge Bank, N.A. was only in operation from March 12 to March 20, 2023 and does not have historical financial information on which we could base pro forma information. Additionally, we did not acquire all assets or 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.

Flagstar Bank

On December 1, 2022, the Company closed the acquisition of Flagstar Bancorp, Inc. (“Flagstar Bancorp”) in an all-stock transaction. The acquisition of Flagstar has been accounted for as a business combination. The Company recorded the estimate of fair value based on initial valuations available at December 1, 2022. The Company continues to review these valuations and certain of these estimated fair values are considered preliminary as of September 30, 2023, and subject to adjustment for up to one year after December 1, 2022. While the Company believes that the information available on December 1, 2022 provided a reasonable basis for estimating fair value, the Company may obtain additional information and evidence during the measurement period 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 and liabilities and certain other assets and other liabilities.

Note 4 - Accumulated Other Comprehensive Income

The following table sets forth the components in accumulated other comprehensive income:


(in millions)	For the Nine Months Ended September 30, 2023
Details about Accumulated Other Comprehensive Loss	Amount Reclassified out of Accumulated Other Comprehensive Loss (1)		Affected Line Item in the Consolidated Statements of Income and Comprehensive Income
Unrealized gains on available-for-sale securities:	$	—	Net gain on securities
	—		Income tax expense
	$	—	Net gain on securities, net of tax
Unrealized gains on cash flow hedges:	$	19	Interest expense
	(5)		Income tax benefit
	$	14	Net gain on cash flow hedges, net of tax
Amortization of defined benefit pension plan items:
Past service liability	$	—	Included in the computation of net periodic credit (2)
Actuarial losses	(2)		Included in the computation of net periodic cost (2)
	(2)		Total before tax
	—		Income tax benefit
	$	(2)	Amortization of defined benefit pension plan items, net of tax
Total reclassifications for the period	$	12

(1)Amounts in parentheses indicate expense items.

(2)See Note 12 - Pension and Other Post-Retirement Benefits for additional information.

Note 5 - Investment Securities

The following tables summarize the Company’s portfolio of debt securities available for sale and equity investments with readily determinable fair values:


	September 30, 2023
(in millions)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Debt securities available-for-sale
Mortgage-Related Debt Securities:
GSE certificates	$	1,378	$	—	$	214	$	1,164
GSE CMOs	4,883		—		532		4,351
Private Label CMOs	177		—		3		174
Total mortgage-related debt securities	$	6,438	$	—	$	749	$	5,689
Other Debt Securities:
U. S. Treasury obligations	$	195	$	—	$	—	$	195
GSE debentures	2,041		1		383		1,659
Asset-backed securities (1)	319		—		6		313
Municipal bonds	7		—		1		6
Corporate bonds	769		3		35		737
Foreign notes	35		—		2		33
Capital trust notes	97		5		11		91
Total other debt securities	$	3,463	$	9	$	438	$	3,034
Total debt securities available for sale	$	9,901	$	9	$	1,187	$	8,723
Equity securities:
Mutual funds	$	16	$	—	$	3	$	13
Total equity securities	$	16	$	—	$	3	$	13
Total securities (2)	$	9,917	$	9	$	1,190	$	8,736

(1)The underlying assets of the asset-backed securities are substantially guaranteed by the U.S. Government.

(2)Excludes accrued interest receivable of $39 million included in other assets in the Consolidated Statements of Condition.


	December 31, 2022
(in millions)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Debt securities available-for-sale
Mortgage-Related Debt Securities:
GSE certificates	$	1,457	$	—	$	160	$	1,297
GSE CMOs	3,600		1		300		3,301
Private Label CMOs	185		6		—		191
Total mortgage-related debt securities	$	5,242	$	7	$	460	$	4,789
Other Debt Securities:
U. S. Treasury obligations	$	1,491	$	—	$	4	$	1,487
GSE debentures	1,749		—		351		1,398
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 other 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

(1)The underlying assets of the asset-backed securities are substantially guaranteed by the U.S. Government.

(2)Excludes accrued interest receivable of $31 million included in other assets in the Consolidated Statements of Condition.

At September 30, 2023, the Company had $578 million and $329 million of FHLB-NY stock, at cost and FHLB-Indianapolis stock, at cost, respectively. At December 31, 2022, the Company had $762 million and $329 million of FHLB-NY stock, at cost and FHLB-Indianapolis stock, at cost, respectively. The Company maintains an investment in FHLB-NY stock partly in conjunction with its membership in the FHLB and partly related to its access to the FHLB funding it utilizes. In addition, at September 30, 2023, the Company had $203 million of Federal Reserve Bank stock, at cost. The Company had $176 million of Federal Reserve Bank stock, at December 31, 2022.

There were no unrealized losses on equity securities recognized in earnings for the three months ended September 30, 2023. For the three months ended September 30, 2022 there were unrealized losses on equity securities of $1 million recognized in earnings. For the nine months ended September 30, 2023 and 2022 there were unrealized losses on equity securities of $1 million and $2 million recognized in earnings, respectively.

The following table summarizes, by contractual maturity, the amortized cost of securities at September 30, 2023:


	Mortgage- Related Securities		U.S. Government and GSE Obligations		State, County, and Municipal		Other Debt Securities (1)		Fair Value
( in millions)
Available-for-Sale Debt Securities:
Due within one year	$	20	$	492	$	—	$	—	$	508
Due from one to five years	179		150		—		457		776
Due from five to ten years	319		1,427		7		407		1,714
Due after ten years	5,920		167		—		356		5,725
Total debt securities available for sale	$	6,438	$	2,236	$	7	$	1,220	$	8,723

(1)Includes corporate bonds, capital trust notes, foreign notes, and asset-backed securities.

The following table presents securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of September 30, 2023:


	Less than Twelve Months				Twelve Months or Longer				Total
(in millions)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Temporarily Impaired Securities:
U. S. Treasury obligations	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government agency and GSE obligations	216		1		1,367		382		1,583		383
GSE certificates	341		23		823		191		1,164		214
Private Label CMOs	140		3		—		—		140		3
GSE CMOs	3,234		180		1,117		352		4,351		532
Asset-backed securities	—		—		280		6		280		6
Municipal bonds	—		—		6		1		6		1
Corporate bonds	—		—		405		35		405		35
Foreign notes	24		1		9		1		33		2
Capital trust notes	—		—		81		11		81		11
Equity securities	—		—		13		3		13		3
Total temporarily impaired securities	$	3,955	$	208	$	4,101	$	982	$	8,056	$	1,190

The following table presents securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of December 31, 2022:


	Less than Twelve Months				Twelve Months or Longer				Total
(in millions)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Temporarily Impaired Securities:
U. S. Treasury obligations	$	1,487	$	4	$	—	$	—	$	1,487	$	4
U.S. Government agency and GSE obligations	243		5		1,156		346		1,399		351
GSE certificates	871		46		420		114		1,291		160
GSE CMOs	2,219		36		925		264		3,144		300
Asset-backed securities	61		2		262		12		323		14
Municipal bonds	9		—		7		—		16		—
Corporate bonds	698		27		97		3		795		30
Foreign notes	20		—		—		—		20		—
Capital trust notes	46		2		34		10		80		12
Equity securities	4		—		10		2		14		2
Total temporarily impaired securities	$	5,658	$	122	$	2,911	$	751	$	8,569	$	873

The investment securities designated as having a continuous loss position for twelve months or more at September 30, 2023 consisted of sixty-three agency collateralized mortgage obligations, six capital trusts notes, nine asset-backed securities, thirteen corporate bonds, forty-one US government agency bonds, 302 mortgage-backed securities, one mutual fund, one municipal bond, and one foreign note. 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, 133 mortgage-backed securities, one mutual fund, and one municipal bond.

The Company evaluates available-for-sale debt securities in unrealized loss positions at least quarterly to determine if an allowance for credit losses is required. We also 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.

In the first quarter of 2023, the company held a $20 million corporate bond in Signature Bank which was placed into receivership on March 12, 2023. We have taken a $20 million provision for credit loss and charged-off this security during the three months ended March 31, 2023.

None of the remaining unrealized losses identified as of September 30, 2023 or December 31, 2022 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 remains with respect to debt securities as of September 30, 2023.

Note 6 - Loans and Leases

The Company classifies loans that we have the intent and ability to hold for the 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 unamortized fair value for acquired loans:


	September 30, 2023				December 31, 2022
(dollars in millions)	Amount		Percent of Loans Held for Investment		Amount		Percent of Loans Held for Investment
Loans and Leases Held for Investment:
Mortgage Loans:
Multi-family	$	37,698	44.9	%	$	38,130	55.3	%
Commercial real estate	10,486		12.5	%	8,526		12.4	%
One-to-four family first mortgage	5,882		7.0	%	5,821		8.4	%
Acquisition, development, and construction	2,910		3.5	%	1,996		2.8	%
Total mortgage loans held for investment (1)	$	56,976	67.9	%	$	54,473	78.9	%
Other Loans:
Commercial and industrial	21,275		25.3	%	10,597		15.4	%
Lease financing, net of unearned income of $243 and $85, respectively	3,148		3.7	%	1,679		2.4	%
Total commercial and industrial loans (2)	24,423		29.0	%	12,276		17.8	%
Other	2,596		3.1	%	2,252		3.3	%
Total other loans held for investment	27,019		32.1	%	14,528		21.1	%
Total loans and leases held for investment (1)	$	83,995	100.0	%	$	69,001	100.0	%
Allowance for credit losses on loans and leases	(619)				(393)
Total loans and leases held for investment, net	83,376				68,608
Loans held for sale, at fair value	1,926				1,115
Total loans and leases, net	$	85,302			$	69,723

(1)Excludes accrued interest receivable of $405 million and $292 million at September 30, 2023 and December 31, 2022, respectively, which is included in other assets in the Consolidated Statements of Condition.

(2)Includes specialty finance loans and leases of $5.2 billion and $4.4 billion at September 30, 2023 and December 31, 2022, respectively.

Loans with Government Guarantees

Substantially all LGG are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs. Nonperforming repurchased loans in this portfolio earn interest at a rate based upon the 10-year U.S. Treasury note rate from the time the underlying loan becomes 60 days delinquent until the loan is conveyed to HUD (if foreclosure timelines are met), which is not paid by the FHA until claimed. The Bank has a unilateral option to repurchase loans sold to GNMA if the loan is due, but unpaid, for three consecutive months (typically referred to as 90 days past due) and can recover losses through a claims process from the guarantor. These loans are recorded in loans held for investment and the liability to repurchase the loans is recorded in other liabilities on the Consolidated Statements of Condition. Certain loans within our portfolio may be subject to

indemnifications and insurance limits which expose us to limited credit risk. As of September 30, 2023, LGG loans totaled $563 million and the repurchase liability was $362 million.

Repossessed assets and the associated net claims related to government guaranteed loans are recorded in other assets and was $12 million at September 30, 2023.

Loans Held-for-Sale

Loans held-for-sale at September 30, 2023 totaled $1.9 billion, up from $1.1 billion at December 31, 2022. The Signature Transaction contributed $360 million in 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, 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.

Asset Quality

All asset quality information excludes LGG that are insured by U.S government agencies.

A 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 the Company no longer expects to collect all amounts due according to the contractual terms of the loan agreement. When a loan is placed on non-accrual status, management ceases the accrual of interest owed, and previously accrued interest is charged against interest income. A loan is generally returned to accrual status when the loan is current and management has reasonable assurance that the loan will be fully collectible. Interest income on non-accrual loans is recorded when received in cash. At September 30, 2023 and December 31, 2022 we had no loans that were nonperforming and still accruing.

The following table presents information regarding the quality of the Company’s loans held for investment at September 30, 2023:


(in millions)	Loans 30-89 Days Past Due		Non- Accrual Loans		Total Past Due Loans		Current Loans		Total Loans Receivable
Multi-family	$	60	$	102	$	162	$	37,536	$	37,698
Commercial real estate	26		157		183		10,303		10,486
One-to-four family first mortgage	19		90		109		5,773		5,882
Acquisition, development, and construction	1		1		2		2,908		2,910
Commercial and industrial(1)	43		65		108		24,315		24,423
Other	20		19		39		2,557		2,596
Total	$	169	$	434	$	603	$	83,392	$	83,995

(1)Includes lease financing receivables, all of which were current.

The following table presents information regarding the quality of the Company’s loans held for investment at December 31, 2022:


(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
Commercial and industrial(1)	2		3		5		12,271		12,276
Other	11		13		24		2,228		2,252
Total	$	70	$	141	$	211	$	68,790	$	69,001

(1)Includes lease financing receivables, all of which were current.

The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at September 30, 2023:


	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(1)		Other		Total Other Loans
Credit Quality Indicator:
Pass(2)	$	36,027	$	9,248	$	5,780	$	2,894	$	53,949	$	24,162	$	2,572	$	26,734
Special mention	776		425		3		15		1,219		94		—		94
Substandard	895		813		99		1		1,808		160		24		184
Doubtful	—		—		—		—		—		7		—		7
Total	$	37,698	$	10,486	$	5,882	$	2,910	$	56,976	$	24,423	$	2,596	$	27,019

(1)Includes lease financing receivables, all of which were classified as Pass.

(2)Pass includes 1-6W.

The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at December 31, 2022:


	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(1)		Other		Total Other Loans
Credit Quality Indicator:
Pass(2)	$	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

(1)Includes lease financing receivables, all of which were classified as Pass.

(2) Pass includes 1-6W.

The following table presents, by credit quality indicator, loan class, and year of origination, the amortized cost basis of the Company’s loans and leases as of September 30, 2023:


	Vintage Year
(in millions)	2023		2022				2021		2020		2019		Prior To 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Pass(1)	$	2,218	$	13,695			$	10,148	$	9,547	$	5,247	$	11,115	$	1,972	$	7	$	53,949
Special Mention	2		46				26		176		211		758		—		—		1,219
Substandard	44		18				32		38		331		1,342		—		3		1,808
Doubtful	—		—				—		—		—		—		—		—		—
Total mortgage loans	$	2,264	$	13,759			$	10,206	$	9,761	$	5,789	$	13,215	$	1,972	$	10	$	56,976

Current-period gross writeoffs	—		—				—		—		(2)		(17)		—		—		(19)

Pass(1)	$	8,458	$	3,924			$	1,980	$	1,619	$	993	$	1,021	$	8,418	$	321	$	26,734
Special Mention	7		24				6		3		37		13		4		—		94
Substandard	16		28				21		16		5		46		42		10		184
Doubtful	—		—				7		—		—		—		—		—		7
Total other loans	$	8,481	$	3,976			$	2,014	$	1,638	$	1,035	$	1,080	$	8,464	$	331	$	27,019

Current-period gross writeoffs	$	(6)	$	(2)			$	(1)	$	(1)	$	(2)	$	(3)	$	—	$	—	$	(15)

Total	$	10,745	$	17,735	$	—	$	12,220	$	11,399	$	6,824	$	14,295	$	10,436	$	341	$	83,995

(1) Pass includes 1-6W.

The following table summarizes the extent to which collateral secures the Company’s collateral-dependent loans held for investment by collateral type as of September 30, 2023:


	Collateral Type
(in millions)	Real Property		Other
Multi-family	$	102	$	—
Commercial real estate	170		—
One-to-four family first mortgage	100		—

Commercial and industrial	—		33
Other	—		—
Total collateral-dependent loans held for investment	$	372	$	33

Other collateral type consists of taxi medallions, cash, accounts receivable and inventory.

There were no significant changes in the extent to which collateral secures the Company’s collateral-dependent financial assets during the three and nine months ended September 30, 2023.

At September 30, 2023 and December 31, 2022, the Company had $92 million and $121 million of residential mortgage loans in the process of foreclosure and no residential mortgage loans in the process of foreclosure, respectively.

Modifications to Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, the Company adopted ASU 2022-02- Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information on the adoption, refer to Note 1 - Organization and Basis of Presentation.

When borrowers are experiencing financial difficulty, the Company may make certain loan modifications as part of loss mitigation strategies to maximize expected payment. Modifications in the form of 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.

The following 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
Three months ended September 30, 2023
Multi-family	$	100	$	—	$	—	$	100	0.95	%
Commercial real estate	67		—		—		67		0.64	%
One-to-four family first mortgage	3		1		2		6		0.10	%
Commercial and Industrial	1		11		2		14		0.07	%
Other Consumer	—		—		1		1		0.04	%
Total	$	171	$	12	$	5	$	188
Nine months ended September 30, 2023
Multi-family	$	100	$	—	$	—	$	100	0.95	%
Commercial real estate	119		—		—		119		1.13	%
One-to-four family first mortgage	3		4		5		12		0.20	%
Commercial and Industrial	1		18		2		21		0.09	%
Other Consumer	$	—	$	—	$	1	1		0.04	%
Total	$	223	$	22	$	8	$	253

The following table describes the financial effect of the modification made to borrowers experiencing financial difficulty:


	Interest Rate Reduction				Term Extension
	Weighted-average contractual interest rate
	From		To		Weighted-average Term (in years)
Three months ended September 30, 2023
Multi-family	7.73	%	6.17	%
Commercial real estate	10.77	%	4.32	%
One-to-four family first mortgage	—	%	—	%	9.9
Commercial and industrial	8.02	%	7.74	%	0.36
Other Consumer	9.28	%	4.75	%	4.8
Nine months ended September 30, 2023
Multi-family	7.73	%	6.17	%
Commercial real estate	10.48	%	4.18	%
One-to-four family first mortgage	—	%	—	%	12.1
Commercial and industrial	8.02	%	7.74	%	0.46
Other Consumer	14.49	%	8.00	%	4.8

As of September 30, 2023, there were $3 million one-to-four family first mortgages that were modified for borrowers experiencing financial difficulty that received term extension and subsequently defaulted during the period and $5 million one-to-four family first mortgages that were combination modifications and subsequently defaulted during the period.

The performance of loans made to borrowers experiencing financial difficulty in which modifications were made is closely monitored to understand the effectiveness of modification efforts. Loans are considered to be in payment default at 90 or more days past due. The following table depicts the performance of loans that have been modified during the reporting period:


	September 30, 2023
(dollars in millions)	Current		30 - 89 Past Due		90+ Past Due		Total


One-to-four family first mortgage	1		—		9		10
Commercial and industrial	21		—		—		21
Other Consumer	1		—		—		1
Total	$	23	$	—	$	9	$	32

Troubled Debt Restructurings Prior to Adoption of ASU 2022-02

Prior to the adoption of ASU 2022-02, the Company accounted for certain loan modifications and restructurings as TDRs. In general, a modification or restructuring of a loan constituted a TDR if the Company granted a concession to a borrower experiencing financial difficulty. A loan modified as a TDR was generally placed on non-accrual status until the Company determined 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 loan and lease losses, 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.

The following table presents information regarding the Company's TDRs as of September 30, 2022:


	September 30, 2022
(dollars in millions)	Accruing		Non- Accrual		Total
Loan Category:
Multi-family	$	—	$	6	$	6
Commercial real estate	16		19		35


Commercial and industrial (1)	—		4		4
Total	$	16	$	29	$	45

(1) Includes $4 million of taxi medallion-related loans at September 30, 2022.

The financial effects of the Company’s TDRs for the three and nine months ended September 30, 2022 are summarized as follows:


						Weighted Average Interest Rate
(dollars in millions)	Number of Loans	Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification		Post- Modification		Charge- off Amount		Capitalized Interest
Loan Category:
Three Months Ended September 30, 2022
Commercial real estate	0	$	—	$	—	—	%	—	%	$	—	$	—
Nine Months Ended September 30, 2022
Commercial real estate	2	$	22	$	19	6.00	%	4.02	%	$	3	$	—

Note 7 - Allowance for Credit Losses on Loans and Leases

Allowance for Credit Losses on Loans and Leases

The following table summarizes activity in the allowance for credit losses for the periods indicated:


	For the Nine Months Ended September 30,
	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		—		—		—
Charge-offs	(19)		(15)		(34)		(5)		—		(5)
Recoveries	—		11		11		4		6		10
Provision for (recovery of) credit losses on loans and leases	108		128		236		31		(17)		14
Balance, end of period	$	379	$	240	$	619	$	208	$	10	$	218

As of September 30, 2023, the allowance for credit losses on loans and leases totaled ~~$152~~$619 million, up 2%$226 million compared to ~~$149~~December 31, 2022. The day 1 impact of the Signature Transaction that closed on March 20, 2023 added $138 million to the reserve. The remaining net increase of approximately $88 million was driven by changes in the macroeconomic forecasts, specifically 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, the increase reflects unfavorable market conditions in the CRE portfolio (primarily office).

As of September 30, 2023 and December 31, 2022, the allowance for unfunded commitments totaled $48 million and $23 million, respectively.

The following table presents additional information about the Company’s nonaccrual loans at September 30, 2023:


(in millions)	Recorded Investment		Related Allowance		Interest Income Recognized
Nonaccrual loans with no related allowance:
Multi-family	$	58	$	—	$	1
Commercial real estate	42		—		1
One-to-four family first mortgage	84		—		—
Acquisition, development, and construction	—		—		—
Other (includes C&I)	38		—		—
Total nonaccrual loans with no related allowance	$	222	$	—	$	2
Nonaccrual loans with an allowance recorded:
Multi-family	$	44	$	1	$	1
Commercial real estate	115		4		3
One-to-four family first mortgage	6		—		—
Acquisition, development, and construction	1		1		—
Other (includes C&I)	46		32		—
Total nonaccrual loans with an allowance recorded	$	212	$	38	$	4
Total nonaccrual loans:
Multi-family	$	102	$	1	$	2
Commercial real estate	157		4		4
One-to-four family first mortgage	90		—		—
Acquisition, development, and construction	1		1		—
Other (includes C&I)	84		32		—
Total nonaccrual loans	$	434	$	38	$	6

The following table presents additional information about the Company’s nonaccrual loans at December 31, 2022:


(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

Note 8 - Leases

Lessor Arrangements

carried at the aggregate of lease payments receivable plus the estimated residual value of the leased assets and any initial direct costs incurred to originate these leases, less unearned income, which is accreted to interest income over the lease term using the interest method.

The standard leases are typically repayable on a level monthly basis with terms ranging from 24 to 120 months. At the end of the lease term, the lessee usually has the option to return the equipment, to renew the lease or purchase the equipment at the then fair market value (“FMV”) price. For leases with a FMV renewal/purchase option, the relevant residual value assumptions are based on the estimated value of the leased asset at the end of the lease term, including evaluation of key factors, such as, the estimated remaining useful life of the leased asset, its historical secondary market value including history of the lessee executing the FMV option, overall credit evaluation and return provisions. The Company acquires the leased asset at fair market value and provides funding to the respective lessee at acquisition cost, less any volume or trade discounts, as applicable. Therefore, there is generally no selling profit or loss to recognize or defer at inception of a lease.

The residual value component of a lease financing receivable represents the estimated fair value of the leased equipment at the end of the lease term. In establishing residual value estimates, the Company may rely on industry data, historical experience, and independent appraisals and, where appropriate, information regarding product life cycle, product upgrades and competing products. Upon expiration of a lease, residual assets are remarketed, resulting in either an extension of the lease by the lessee, a lease to a new customer or purchase of the residual asset by the lessee or another party. Impairment of residual values arises if the expected fair value is less than the carrying amount. The Company assesses its net investment in lease financing receivables (including residual values) for impairment on an annual basis with any impairment losses recognized in accordance with the impairment guidance for financial instruments. As such, net investment in lease financing receivables may be reduced by an allowance for credit losses with changes recognized as provision expense. On certain lease financings, the Company obtains residual value insurance from third parties to manage and reduce the risk associated with the residual value of the leased assets. At September 30, 2023 and December 31, 2022, the carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $256 million and $32 million, respectively.

The Company uses the interest rate implicit in the lease to determine the present value of its lease financing receivables.

The components of lease income were as follows:


(in millions)	For the three months ended September 30, 2023		For the nine months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2022
Interest income on lease financing (1)	$	28	$	80	$	14	$	38

(1)Included in Interest Income – Loans and leases in the Consolidated Statements of Income and Comprehensive Income.

At September 30, 2023 and December 31, 2022, the carrying value of net investment in leases, excluding purchase accounting adjustments was $3.5 billion and $1.7 billion, respectively. The components of net investment in direct financing leases, including the carrying amount of the lease receivables, as well as the unguaranteed residual asset were as follows:


(in millions)	September 30, 2023		December 31, 2022
Net investment in the lease - lease payments receivable	$	3,161	$	1,685
Net investment in the lease - unguaranteed residual assets	296		60
Total lease payments	$	3,457	$	1,745

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)	September 30, 2023
2023	$	159
2024	573
2025	659
2026	800
2027	503
Thereafter	763
Total lease payments	$	3,457
Plus: deferred origination costs	17
Less: unearned income	(243)
Less: purchase accounting adjustment	$	(83)
Total lease finance receivables, net	$	3,148

Lessee Arrangements

The Company has operating leases for corporate offices, branch locations, and certain equipment. These leases generally have terms of 20 years or less, determined based on the contractual maturity of the lease, and include periods covered by options to extend or terminate the lease when the Company is reasonably certain that it will exercise those options. For the vast majority of the Company’s leases, we are not reasonably certain we will exercise our options to renew to the end of all renewal option periods. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets and operating lease liabilities in the Consolidated Statements of Condition.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the vast majority of the leases do not provide an implicit rate, the incremental borrowing rate (FHLB borrowing rate) is used based on the information available at commencement date in determining the present value of lease payments. The implicit rate is used when readily determinable. The operating lease ROU asset is measured at cost, which includes the initial measurement of the lease liability, prepaid rent and initial direct costs incurred by the Company, less incentives received.

The components of lease expense were as follows:


(in millions)	For the three months ended September 30, 2023		For the nine months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2022
Operating lease cost	$	25	$	60	$	7	$	21
Sublease income	—		—		—		—
Total lease cost	$	25	$	60	$	7	$	21

Supplemental cash flow information related to the leases for the following periods:


(in millions)	For the three months ended September 30, 2023		For the nine months ended September 30, 2023		For the three months ended September 30, 2022		For the nine months ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	16	$	46	$	7	$	21

Supplemental balance sheet information related to the leases for the following periods:


(in millions, except lease term and discount rate)	September 30, 2023			December 31, 2022
Operating Leases:
Operating lease right-of-use assets (1)	$	442		$	119
Operating lease liabilities (2)	$	456		$	122
Weighted average remaining lease term	11.9 years			6 years
Weighted average discount rate %	4.53		%	3.85		%

(1)Included in Other assets in the Consolidated Statements of Condition.

(2)Included in Other liabilities in the Consolidated Statements of Condition.


(in millions)	September 30, 2023
Maturities of lease liabilities:
2023	$	6
2024	68
2025	62
2026	54
2027	48
Thereafter	379
Total lease payments	$	617
Less: imputed interest	$	(161)
Total present value of lease liabilities	$	456

Note 9 - Mortgage Servicing Rights

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 14 - Derivative and Hedging Activities.

Changes in the fair value of residential first mortgage MSRs were as follows:


(in millions)	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
Balance at beginning of period	$	1,031	$	1,033
Additions from loans sold with servicing retained	67		148
Reductions from sales	—		(51)
Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes, and other (1)	(20)		(54)
Changes in estimates of fair value due to interest rate risk (1) (2)	57		59
Fair value of MSRs at end of period	$	1,135	$	1,135

(1)Changes in fair value are included within net return on mortgage servicing rights on the Consolidated Statements of Income and Comprehensive Income.

(2)Represents estimated MSR value change resulting primarily from market-driven changes which we manage through the use of derivatives.

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:


	September 30, 2023
				Fair Value
(dollars in millions)	Actual			10% adverse change		20% adverse change
Option adjusted spread	5.6		%	$	1,114	$	1,094
Constant prepayment rate	7.3		%	1,100		1,068
Weighted average cost to service per loan	$	69		$	1,124	$	1,114


	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

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. Changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in 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 MSRs, see Note 16 - Fair Value Measures.

Contractual servicing and subservicing fees, including late fees and other ancillary income are presented below. Contractual servicing fees are included within net return on mortgage servicing rights on the Consolidated Statements of Income and Comprehensive Income. Contractual subservicing fees including late fees and other ancillary income are included within loan administration income on the Consolidated Statements of Income and Comprehensive Income. Subservicing fee income is recorded for fees earned on subserviced loans, net of third-party subservicing costs.

The following table summarizes income and fees associated with owned MSRs:


(in millions)	Three months ended September 30, 2023		Nine months ended September 30, 2023
Net return on mortgage servicing rights
Servicing fees, ancillary income and late fees (1)	$	59	$	169
Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes and other	(20)		(54)
Changes in fair value due to interest rate risk	57		59
Gain on MSR derivatives (2)	(73)		(105)
Net transaction costs	—		1
Total return (loss) included in net return on mortgage servicing rights	$	23	$	70

(1)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:


(in millions)	Three months ended September 30, 2023		Nine months ended September 30, 2023
Loan administration income on mortgage loans subserviced
Servicing fees, ancillary income and late fees (1)	$	42	$	116
Charges on subserviced custodial balances (2)	(55)		(124)
Other servicing charges	(1)		(3)
Total loss on mortgage loans subserviced, included in loan administration income	$	(14)	$	(11)

(1)Servicing fees are recorded on an accrual basis. Ancillary income and late fees are recorded on a cash basis.

(2)Charges on subserviced custodial balances represent interest due to MSR owner.

Note 10 - Variable Interest Entities

We have no consolidated VIEs as of September 30, 2023 and December 31, 2022.

In connection with our non-qualified mortgage securitization activities, we have retained a five percent interest in the investment securities of certain trusts ("other MBS") and are contracted as the subservicer of the underlying loans, compensated based on market rates, which constitutes a continuing involvement in these trusts. Although we have a variable interest in these securitization trusts, we are not their primary beneficiary due to the relative size of our investment in comparison to the total amount of securities issued by the VIE and our inability to direct activities that most significantly impact the VIE’s economic performance. As a result, we have not consolidated the assets and liabilities of the VIE in our Consolidated Statements of Condition. The Bank’s maximum exposure to loss is limited to our five percent retained interest in the investment securities that had a fair value of $174 million as of September 30, 2023 as well as the standard representations and warranties made in conjunction with the loan transfers.

Note 11 - Borrowed Funds

The following table summarizes the Company’s borrowed funds:


(in millions)	September 30, 2023		December 31, 2022
Wholesale borrowings:
FHLB advances	$	13,023	$	20,325
Fed Funds purchased	547		—

Total wholesale borrowings	$	13,570	$	20,325
Junior subordinated debentures	578		575
Subordinated notes	437		432
Total borrowed funds	$	14,585	$	21,332

Accrued interest on borrowed funds is included in “Other liabilities” in the Consolidated Statements of Condition and amounted to $46 million and $37 million, respectively, at September 30, 2023 and December 31, 2022.

Junior Subordinated Debentures

At September 30, 2023 and December 31, 2022, the Company had $609 million and $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, excluding purchase accounting adjustments.

The following table presents contractual terms of the junior subordinated debentures outstanding at September 30, 2023:


Issuer	Interest Rate of Capital Securities and Debentures	Junior Subordinated Debentures Amount Outstanding (3)		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)	7.27	124		120		Dec. 14, 2006	Dec. 15, 2036
PennFed Capital Trust III (2)	8.92	31		30		June 2, 2003	June 15, 2033
New York Community Capital Trust XI (2)	7.31	59		58		April 16, 2007	June 30, 2037
Flagstar Statutory Trust II (2)	8.91	26		25		Dec. 26, 2002	Dec. 26, 2032
Flagstar Statutory Trust III (2)	8.82	26		25		Feb. 19, 2003	April 7, 2033
Flagstar Statutory Trust IV (2)	8.91	26		25		Mar. 19, 2003	Mar 19, 2033
Flagstar Statutory Trust V (2)	7.57	26		25		Dec 29, 2004	Jan. 7, 2035
Flagstar Statutory Trust VI (2)	7.57	26		25		Mar. 30, 2005	April 7, 2035
Flagstar Statutory Trust VII (2)	7.42	51		50		Mar. 29, 2005	June 15, 2035
Flagstar Statutory Trust VIII (2)	7.07	26		25		Sept. 22, 2005	Oct. 7, 2035
Flagstar Statutory Trust IX (2)	7.12	26		25		June 28, 2007	Sept. 15, 2037
Flagstar Statutory Trust X (2)	8.17	15		15		Aug. 31, 2007	Sept 15, 2037
Total junior subordinated debentures (3)		$	609	$	589

(1)Callable subject to certain conditions as described in the prospectus filed with the SEC on November 4, 2002.

(2)Callable at any time.

(3)Excludes Flagstar Acquisition fair value adjustments of $31 million.

Subordinated Notes

At September 30, 2023 and December 31, 2022, the Company had a total of $437 million and $432 million subordinated notes outstanding; respectively, of fixed-to-floating rate subordinated notes outstanding:


Date 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

(1)From and including the date of original issuance to, but excluding November 6, 2023, the Notes will bear interest at an initial rate of 5.90 percent per annum payable semi-annually. Unless redeemed, from and including November 6, 2023 to but excluding the maturity date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month SOFR rate plus 304.16 basis points payable quarterly.

(2)From and including the date of original issuance, the Notes will bear interest at a fixed rate of 4.125 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.

Note 12 - Pension and Other Post-Retirement Benefits

The following table sets forth certain disclosures for the Company’s pension and post-retirement plans for the periods indicated:


	For the three months ended September 30,
	2023				2022
(in millions)	Pension Benefits		Post Retirement Benefits (2)		Pension Benefits		Post Retirement Benefits
Components of net periodic pension expense (credit):(1)
Interest cost	$	1	$	—	$	1	$	—
Expected return on plan assets	(4)		—		(4)		—
Amortization of net actuarial loss	2		—		1		—
Net periodic (credit) expense	$	(1)	$	—	$	(2)	$	—


	For the Nine Months Ended September 30,
	2023				2022
(in millions)	Pension Benefits		Post Retirement Benefits (2)		Pension Benefits		Post Retirement Benefits
Components of net periodic pension expense (credit):(1)
Interest cost	$	4	$	—	$	3	$	—
Expected return on plan assets	(11)		—		(12)		—
Amortization of net actuarial loss	5		—		2		—
Net periodic (credit) expense	$	(2)	$	—	$	(7)	$	—

(1)Amounts are included in General and administrative expense on the Consolidated Statements of Income and Comprehensive Income.

(2)Post-retirement benefits balances round to zero.

The Company expects to contribute $1 million to its post-retirement plan to pay premiums and claims for the fiscal year ending December 31, 2023. The Company does not expect to make any contributions to its pension plan in 2023.

Note 13 - Stock-Related Benefits Plans

Stock Based Compensation

At September 30, 2023, the Company had a total of 16,285,640 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 9,521,787 shares of restricted stock, with an average fair value of $10.23 per share on the date of grant, during the nine months ended September 30, 2023.

The shares of restricted stock that were granted during the nine months ended September 30, 2023 and 2022, vest over a one- or five years period. Compensation and benefits expense related to the restricted stock grants is recognized on a straight-line basis over the vesting period and totaled $31 million and $21 million for the nine months ended September 30, 2023 and 2022, including $12 million and $7 million for the three months ended September 30, ~~2021. Net income available~~2023 and September 30, 2022.

The following table provides a summary of activity with regard to ~~common stockholders for~~restricted stock awards:


	For the Nine Months Ended September 30, 2023
	Number of Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of year	9,576,602	$	10.92
Granted	9,521,787	10.23
Vested	(2,973,101)	11.07
Forfeited	(904,537)	10.60
Unvested at end of period	15,220,751	$	10.48

As of September 30, 2023, unrecognized compensation cost relating to unvested restricted stock totaled $131 million. This amount will be recognized over a remaining weighted average period of 2.9 years.

The following table provides a summary of activity with regard to Performance-Based Restricted Stock Units ("PSUs") in the ~~three~~nine months ended September 30, 2023:


	Number of Shares	Weighted Average Grant Date Fair Value		Performance Period	Expected Vesting Date
Outstanding 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

PSUs 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 and $2 million for the nine months ended September 30, 2023 and 2022, ~~was $144~~including $1 million ~~up 3% compared to $140~~and $1 million for the three months ended September 30, ~~2021. Diluted EPS were $0.30 for the three months ended~~2023 and 2022. As of September 30, ~~2022, unchanged compared~~2023, unrecognized compensation cost relating to ~~the three months ended~~unvested restricted stock totaled $6 million. This amount will be recognized over a remaining weighted average period of 1.8 years. As of September 30, ~~2021. Both net income~~2023, the Company believes it is probable that the performance conditions will be met.

Note 14 - Derivative and ~~net income available~~Hedging Activities

The Company is exposed to ~~common stockholders include $3 million~~certain risks arising from both its business operations and economic conditions. The Company principally manages its exposure to a wide variety of ~~merger-related expenses, net~~business and operational risks through management of ~~income taxes, while~~its core business activities. The Company manages economic risks, including interest rate and liquidity risks, primarily by managing the ~~three months ended September 30, 2021 contain merger-related expenses~~amount, sources, and duration of ~~$5 million, net of income taxes.~~

~~Net Interest Income~~

~~Net interest income is our primary source of income. Its level is a function of the average balance of our interest-earning~~its assets ~~the average balance of our interest-bearing~~and liabilities and, the ~~spread between~~use of derivative financial instruments. Specifically, the ~~yield on such~~Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

Derivative financial instruments are recorded at fair value in other assets and other liabilities on the ~~cost~~Consolidated Statements of ~~such liabilities. These factors~~Condition. The Company's policy is to present our derivative assets and derivative liabilities on the Consolidated Statement of Condition on a gross basis, even when provisions allowing for set-off are ~~influenced~~in place. However, for derivative contracts cleared through certain central clearing parties, variation margin payments are recognized as settlements. We are exposed to non-performance risk by ~~both~~ the ~~pricing and mix~~counterparties to our various derivative financial instruments. A majority of our ~~interest-earning assets~~derivatives are centrally cleared through a Central Counterparty Clearing House or consist of residential mortgage interest rate lock commitments further limiting our exposure to non-performance risk. We believe that the non-performance risk inherent in

our remaining derivative contracts is minimal based on credit standards and ~~our interest-bearing liabilities which, in turn, are impacted by various external factors, including~~ the ~~local economy, competition for loans and deposits, the monetary policy~~collateral provisions of the ~~FOMC,~~derivative agreements.

Derivatives not designated as hedging instruments. The Company maintains a derivative portfolio of interest rate swaps, foreign currency swaps, futures and ~~market~~forward commitments used to manage exposure to changes in interest ~~rates.~~rates and MSR asset values and to meet the needs of customers. The Company also enters into interest rate lock commitments, which are commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. Market risk on interest rate lock commitments and mortgage LHFS is managed using corresponding forward sale commitments and US Treasury futures. Changes in the fair value of derivatives not designated as hedging instruments are recognized on the Consolidated Statements of Income and Comprehensive Income.

Derivatives designated as hedging instruments

~~Net~~. The Company has designated certain interest rate swaps as cash flow hedges on 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 hedge transaction is ~~also influenced by~~recognized in earnings. At September 30, 2023, the ~~level~~Company had $110 million (net-of-tax) of ~~prepayment income primarily generated~~unrealized gains on derivatives classified as cash flow hedges recorded in ~~connection with~~accumulated other comprehensive loss. The Company had $52 million (net-of-tax) of unrealized gains on derivatives classified as cash flow hedges recorded in accumulated other comprehensive loss at December 31, 2022.

Derivatives that are designated in hedging relationships are assessed for effectiveness using regression analysis at inception and qualitatively thereafter, unless regression analysis is deemed necessary. All designated hedge relationships were, and are expected to be, highly effective as of September 30, 2023.

Fair Value of Hedges of Interest Rate Risk

The Company is exposed to changes in the ~~prepayment~~fair value of ~~our multi-family~~certain of its fixed-rate assets due to changes in interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Such derivatives were used to hedge the changes in fair value of certain of its pools of prepayable fixed rate assets. For derivatives designated and ~~CRE loans,~~that qualify as fair value hedges, the gain or loss on the derivative as well as ~~securities. Since prepayment income is recorded as~~the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest ~~income, an increase or decrease in its level will also be reflected in the average yields (as applicable) on our loans, securities, and interest-earning assets, and therefore in our~~income.

The Company has interest rate ~~spread and net interest margin.~~

~~It should be noted that the level~~swaps with a notional amounts of prepayment income on loans recorded in any given period depends on the volume of loans that refinance or prepay during that time. Such activity is largely dependent on such external factors as current market conditions, including$2.0 billion to hedge certain real estate ~~values, and~~loans using the perceived or actual direction of market interest rates. In addition, while a decline in market interest rates may trigger an increase in refinancing and, therefore, prepayment income, so too may an increase in market interest rates. It is not unusual for borrowers to lock in lower interest rates when they expect, or see, that market interest rates are rising rather than risk refinancing later at a still higher interest rate.

~~Year-Over-Year Comparison~~

portfolio layer method. For the three months ended September 30, ~~2022,~~2023, the floating rate received related to the net settlement of this interest rate swap was greater than the fixed rate payments. As such, interest income from loans and leases in the accompanying Consolidated Statements of Income and Comprehensive Income was increased by $8 million ~~or 3% to $326~~and $15 million for three months and nine months September 30, 2023, respectively.

The fair value basis adjustment on ~~a year-over-year basis, but decreased $33~~our hedged real estate loans is included in loans and leases held for investment on our Consolidated Statements of Condition. The carrying amount of our hedged loans was $6.4 billion at September 30, 2023, of which unrealized gains of $46 million or 9% on a linked-quarter basis. While interest income rose on a year-over-year basis, the aggressive pace of interest rate increases during the past quarter led to a significant increase in interest expense. This waswere due to ~~both an increase~~the fair value hedge relationship. We have designated $2.0 billion of this portfolio of loans in ~~the average balance~~a hedging relationship as of ~~interest-bearing liabilities along with a higher cost of funds.~~

~~Details of the change in net interest income are as follows:~~

•

Total interest income increased $94 million or 23% to $509 million on a year-over-year basis. This was primarily due to growth in average loan balances, along with higher yields and growth in average securities.

•

~~Total interest expense almost doubled on a year-over-year basis, increasing $86 million or 89% to $183 million compared to $97 million for the three months ended~~ September 30, ~~2021. The increase was due to both an increase in average interest-bearing liabilities and in the cost of funds.~~2023.

•

~~Average loans increased $5.3 billion or 12% on a year-over-year basis to $48.5 billion, while~~The following tables set forth information regarding the ~~average loan yield rose 16 basis points to 3.64%.~~Company’s derivative financial instruments:


	September 30, 2023
			Fair Value
(in millions)	Notional Amount		Other Assets		Other Liabilities
Derivatives designated as cash flow hedging instruments:
Interest rate swaps on FHLB advances	$	5,500	$	—	$	5
Total	$	5,500	$	—	$	5
Derivatives designated as fair value hedging instruments:
Interest rate swaps on multi-family loans held for investment	$	2,000	$	—	$	1
Derivatives not designated as hedging instruments:
Assets
Futures	$	2,630	$	1	$	—
Mortgage-backed securities forwards	1,861		37		—
Rate lock commitments	1,352		6		—
Interest rate swaps and swaptions	5,937		140		—

Total	$	11,780	$	184	$	—
Liabilities
Mortgage-backed securities forwards	$	710	$	—	$	16
Rate lock commitments	702		—		12
Interest rate swaps and swaptions	2,706		—		79

Total derivatives not designated as hedging instruments	$	4,118	$	—	$	107


	December 31, 2022
			Fair Value
(in millions)	Notional Amount		Other Assets		Other Liabilities
Derivatives designated as cash flow hedging instruments:
Interest rate swaps	$	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

•

Average securities balances rose $711 million or 11% on a year-over-year basis to $7.4 billion as the Company redeployed a portion of its cash balances into short-term securities. During the same time period, the average yield on securities rose 53 basis points to 2.74%.

•

Interest expense on average interest-bearing deposits increased $84 million to $110 million on a year-over-year basis as the average balance of interest-bearing deposits rose $7.7 billion or 26% to $37.2 billion while the average cost of interest-bearing deposits increased 83 basis points to 1.18%.

•

Most of the increase was in the interest-bearing checking and MMA category. Average interest-bearing checking and MMA balances increased $6.7 billion or 52% on a year-over-year basis to $19.4 billion. The average cost of these deposits increased 124 basis points to 1.47%.

•

Interest expense on average borrowed funds increased $2 million on a year-over-year basis to $73 million. While average borrowings declined 7% to $14.5 billion, the average cost rose 16 basis points to 2.00%.

•

~~Average non-interesting bearing deposits declined $425 million or 10% to $4.0 billion.~~

~~Net Interest Margin~~

~~For the three months ended September 30, 2022, the NIM declined 30 basis points to 2.22% compared to the previous quarter and declined 22 basis points compared to the third quarter of 2021.~~

Prepayment income contributed seven basis points to the third quarter 2022 NIM, compared to 14 basis points in the previous quarter and 12 basis points in the year-ago quarter. Excluding the impact from prepayment income, the third-quarter 2022 NIM on a non-GAAP basis was 2.15%, down 23 basis points compared to the previous quarter and down 17 basis points compared to the year-ago quarter.

The following table ~~summarizes~~presents the ~~contribution~~derivative subject to a master netting agreement, including the cash pledged as collateral:


	September 30, 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	$	5	$	—	$	5	$	4	$	80
Interest rate swaps on multi-family loans held for investment(1)	$	1	$	—	$	1	$	—	$	31
Derivatives not designated as hedging instruments:
Assets
Mortgage-backed securities forwards	$	37	$	—	$	37	$	—	$	(6)
Interest rate swaptions	140		—		140		—		(37)
Futures	1		—		1		—		1
Total derivative assets	$	178	$	—	$	178	$	—	$	(42)
Liabilities
Futures	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities forwards	16		—		16		—		15
Interest rate swaps (1)	79		—		79		—		42
Total derivative liabilities	$	95	$	—	$	95	$	—	$	57

(1)Variation margin pledged to, or received from, a Central Counterparty Clearing House to cover the prior days fair value of ~~loan~~open positions is considered settlement of the derivative position for accounting purposes.

The following table presents the derivative subject to a master netting agreement, including the cash pledged as collateral:


	December 31, 2022
							Gross Amounts Not Offset in the Statements of Condition
(in millions)	Gross Amount		Gross Amounts Netted in the Statements of Condition		Net Amount Presented in the Statements of Condition		Financial Instruments		Cash Collateral Pledged (Received)
Derivatives designated hedging instruments:
Interest rate swaps on FHLB advances	$	5	$	—	$	5	$	4	$	27
Derivatives not designated as hedging instruments:
Assets
Mortgage-backed securities forwards	$	36	$	—	$	36	$	—	$	(9)
Interest rate swaptions	182		—		182		—		(36)
Futures	2				2				1
Total derivative assets	$	220	$	—	$	220	$	—	$	(44)
Liabilities
Mortgage-backed securities forwards	$	61	$	—	$	61	$	—	$	54
Interest rate swaps (1)	65		—		65		—		29
Total derivative liabilities	$	126	$	—	$	126	$	—	$	83

(1)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.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and ~~securities prepayment~~to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of amounts subject to variability caused by changes in interest rates from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes in the fair value of derivatives designated and that qualify as cash flow hedges are initially recorded in other comprehensive income and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings.

Interest rate swaps with notional amounts totaling $5.5 billion and $3.8 billion as of September 30, 2023 and December 31, 2022, were designated as cash flow hedges of certain FHLB borrowings.

The following table presents the effect of the Company’s cash flow derivative instruments on AOCL:


(in millions)	For the Nine Months Ended September 30, 2023		For the Year Ended December 31, 2022		For the Nine Months Ended September 30, 2022
Amount of gain (loss) recognized in AOCL	$	98	$	88	$	64
Amount of reclassified from AOCL to interest expense	$	(19)	$	(4)	$	4

Amounts reported in AOCL related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate borrowings. During the next twelve months, additional interest ~~income and NIM for the respective periods:~~expense reduction of $124 million is expected to be reclassified out of AOCL.

September 30, 2022

For the Three
Months Ended

Compared to

(dollars in millions)

September 30,
2022

June 30,
2022

September 30,
2021

June 30,
2022

September 30,
2021

Total Interest Income

$
509

$
473

$
415

8

%

23

%
Prepayment Income:

Loans

$
10

$
19

$
15

(47
)
%

(33
)
%
Securities

—

1

1

(100
)
%

(100
)
%
Total prepayment income

$
10

$
20

$
16

(50
)
%

(38
)
%
GAAP Net Interest Margin

2.22

%
2.52

%
2.44

%

(30
)
bp

(22
)
bp
Less:

Prepayment income from loans

-7

bp
-13

bp
-11

bp

6

bp
4

bp
Prepayment income from securities

0

-1

-1

1

bp

1

bp
Total prepayment income contribution to net interest margin

-7

bp
-14

bp
-12

bp

7

bp

5

bp
Adjusted Net Interest Margin (non-GAAP)

2.15

%
2.38

%
2.32

%

(23
)
bp

(17
)
bp

The following table ~~sets forth certain information regarding our average balance sheet for~~presents the three-month periods, 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 quarters 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.

~~Net Interest Income Analysis~~

For the Three Months Ended

September 30, 2022

June 30, 2022

September 30, 2021

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)
$

48,495

$

442

3.64

%
$
47,144

$

424

3.61

%
$
43,159

$
376

3.48

%
Securities (2)(3)

7,368

51

2.74

6,676

40

2.40

6,657

37

2.21

Reverse repurchase agreements

521

4

3.34

348

2

1.93

497

1

1.22

Interest-earning cash, cash equivalents, and due from banks

2,192

12

2.15

2,861

7

0.93

1,612

1

0.15

Total interest-earning assets

58,576

509

3.47

57,029

473

3.32

51,925

415

3.20

Non-interest-earning assets

4,693

4,959

5,382

Total assets
$

63,269

$
61,988

$
57,307

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Interest-bearing deposits:

Interest-bearing checking and money market accounts
$

19,443

$

72

1.47

%
$
17,456

$

24

0.55

%
$
12,783

$
8

0.23

%
Savings accounts

9,297

15

0.69

9,228

10

0.41

7,974

7

0.36

Certificates of deposit

8,416

23

1.07

8,102

12

0.62

8,716

11

0.53

Total interest-bearing deposits

37,156

110

1.18

34,786

46

0.53

29,473

26

0.35

Short term borrowed funds

2,080

13

2.48

1,959

5

0.96

2,258

1

0.35

Other borrowed funds

12,403

60

1.92

13,050

63

1.94

13,271

70

2.09

Total Borrowed funds

14,483

73

2.00

15,009

68

1.81

15,529

71

1.84

Total interest-bearing liabilities

51,639

183

1.41

49,795

114

0.92

45,002

97

0.87

Non-interest-bearing deposits

4,037

4,568

4,462

Other liabilities

701

724

866

Total liabilities

56,377

55,087

50,330

Stockholders’ equity

6,892

6,901

6,977

Total liabilities and stockholders’ equity
$

63,269

61,988

$
57,307

Net interest income/interest rate spread

$

326

2.06

%

$

359

2.40

%

$
318

2.33

%
Net interest margin

2.22

%

2.52

%

2.44

%
Ratio of interest-earning assets to interest-bearing
liabilities

1.13x

1.15x

1.15x

~~(1)~~

~~Amounts are~~ net ~~of net deferred loan origination costs/(fees) and the allowances for loan losses and include loans held for sale and non-performing loans.~~

~~(2)~~

~~Amounts are at amortized cost.~~

~~(3)~~

~~Includes FHLB stock.~~

~~Provision for (Recovery of) Credit Losses~~

~~For the three months ended September 30, 2022, the provision for credit losses totaled $2 million compared to a recovery of credit losses of $1 million~~gain (loss) recognized in the year-ago quarter and $9 million in the previous quarter of 2022. During the current third quarter, we recorded net charge-offs of zero, unchanged compared to the year-ago quarter and compared to a $7 million net recovery during second-quarter 2022.

For additional information about our provisions for and recoveries of loan losses, see the discussion of the allowances for loan losses under “Critical Accounting Policies” and the discussion of “Asset Quality” that appear earlier in this report.

~~Non-Interest Income~~

We generate non-interest income through a variety of sources, including—among others—fee income (in the form of retail deposit fees and charges on loans); income from our investment in BOLI; gains on the sale of securities; and revenues produced through the sale of third-party investment products.

For the three months ended September 30, 2022, non-interest income totaled $17 million, up $2 million or 13% compared to the third quarter of 2021, but down $1 million or 6% compared to the second quarter of 2022. The current third quarter includes net losses on securities of $1 million compared to no such net gains or losses on securities in either the prior-quarter or the year-ago quarter. The prior quarter included a $1.7 million gain on the sale of the Company's former headquarters building in Westbury, N.Y.

~~The following table summarizes our non-interest income for the respective periods:~~

For the Three Months Ended

September 30,

June 30,

September 30,

(dollars in millions)

2022

2022

2021

Fee income

$
5

$
6

$
6

BOLI income

10

7

7

Net gain (loss) on securities

(1
)

—

—

Other income:

Third-party investment product sales

1

1

—

Other

2

4

2

Total other income

3

5

2

Total non-interest income

$
17

$
18

$
15

~~Non-Interest Expense~~

For the three months ended September 30, 2022, total non-interest expenses were $136 million, up 1% compared to the $135 million reported for the three months ended September 30, 2021, but down 1% compared to the $138 million reported during the three months ended June 30, 2022. Included in the current third quarter are $4 million in merger-related expenses, unchanged compared to second-quarter 2022, but down 33% compared to $6 million during the third-quarter 2021. Excluding this item, total operating expenses for the three months ended September 30, 2022 were $132 million, down $2 million or 1% compared to the previous quarter, but up $3 million or 2% compared to the year-ago quarter. The efficiency ratio during the current third quarter was 38.57% compared to 35.57% during second-quarter 2022 and 38.84% during the year-ago third quarter.

~~Income Tax Expense~~

For the three months ended September 30, 2022, income tax expense totaled $53 million, reflecting an effective tax rate of 25.66% compared to income tax expense of $59 million with an effective tax rate of 25.60% in the previous quarter and income tax expense of $50 million, reflecting an effective tax rate of 25.19% in the year-ago quarter. The linked-quarter decrease in our income tax expense was driven primarily by a lower amount of pre-tax income.

~~Earnings Summary for the Nine Months Ended September 30, 2022~~

For the nine months ended September 30, 2022, net income totaled $478 million, up 7% compared to the nine months ended September 30, 2021. Net income available to common stockholders for the nine months ended September 30, 2022 totaled $453 million, up 8% compared to $421 million for the nine months ended September 30, 2021. Diluted EPS for the nine months ended September 30, 2022 were $0.96, up 7% compared to $0.90 for the nine months ended September 30, 2021. Included in both nine month periods are merger-related expenses and other one-time items of $11 million, net of income taxes and $15 million net of income taxes, respectively, for the nine months ended September 30, 2022 and 2021, respectively.

~~Net Interest Income~~

Net interest income for the nine months ended September 30, 2022 was $1.0 billion compared to $967 million for the nine months ended September 30, 2021, up 5%. The year-over-year increase was driven by a $142 million or 11% increase in total interest income to $1.4 billion, partially offset by a $92 million or 30% increase in total interest expense.

~~Details of the change in net interest income are as follows:~~

•

~~Average interest-earnings assets increased $4.7 billion or 9% to $56.7 billion, while the average yield on interest-earnings assets rose seven basis points to 3.32%.~~

•

~~Average interest-bearing liabilities grew $4.6 billion or 10% to $49.7 billion, while the average cost of interest-bearing liabilities increased 16 basis points to 1.06%.~~

•

~~Interest~~ income on ~~average loans increased $114 million or 10% to $1.3 billion, driven by a $4.3 billion or 10% increase in average loan balances, while the average yield was unchanged at 3.56%.~~

•

~~Average securities balances rose 3% to $6.9 billion and the average yield increased five basis points to 2.43%.~~

•

~~Interest expense on average deposits increased $96 million or 110% to $183 million, while the average cost~~derivative instruments, net of ~~deposits increased 31 basis points to 0.71%.~~

•

The majority of the increase in interest expense on deposits was in the interest-bearing checking and MMA category. The average balance of interest-bearing checking and MMA rose $4.2 billion or 33% to $16.9 billion. The average cost of these deposits increased 57 basis points to 0.82%.

•

~~Interest expense on average borrowed funds was down $4 million to $211 million due to a $404 million or 3% decline in average balances and a one basis point increase in the average cost to 1.84%.~~

~~Net Interest Margin~~

For the nine months ended September 20, 2022, the NIM was 2.39%, down nine basis points compared to 2.48% for the nine months ended September 30, 2021. Prepayment income totaled $42 million compared to $63 million in the year-ago period, and contributed 10 basis points to the NIM compared to 16 basis points in the year-ago period. Excluding the impact from prepayment income, the NIM, on a non-GAAP basis was 2.29% for the nine months ended September 30, 2022, down three basis points compared to the nine months ended September 30, 2021.

For the Nine
Months Ended

(dollars in millions)

September 30,
2022

September 30,
2021

% Change

Total Interest Income

$
1,411

$
1,269

11

%
Prepayment Income:

Loans

$
40

$
56

(29
)
%
Securities

2

7

(71
)
%
Total prepayment income

$
42

$
63

(33
)
%
GAAP Net Interest Margin

2.39

%
2.48

%

(9
)
bp
Less:

Prepayment income from loans

-9

bp
-14

bp

5

bp
Prepayment income from securities

-1

-2

1

bp
Total prepayment income contribution to net interest margin

-10

bp
-16

bp

6

bp
Adjusted Net Interest Margin
(non-GAAP)

2.29

%

2.32

%

(3
)
bp

~~The following table sets forth certain information regarding our average balance sheet for the six-month periods, 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 quarters 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.

~~Net Interest Income Analysis~~

For the Nine Months Ended

September 30, 2022

September 30, 2021

Average

Average

Average

Yield/

Average

Yield/

(dollars in millions)

Balance

Interest

Cost

Balance

Interest

Cost

ASSETS:

Interest-earning assets:

Mortgage and other loans and leases, net (1)
$

47,158

$

1,259

3.56

%

$
42,905

$
1,145

3.56

%
Securities (2)(3)

6,864

125

2.43

6,655

118

2.38

Reverse repurchase agreements

388

7

2.35

410

3

1.00

Interest-earning cash, cash equivalents, and due from banks

2,326

20

1.12

2,044

3

0.17

Total interest-earning assets

56,736

1,411

3.32

52,014

1,269

3.25

Non-interest-earning assets

4,993

5,232

Total assets
$

61,729

$
57,246

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Interest-bearing deposits:

Interest-bearing checking and money market
accounts
$

16,915

$

104

0.82

%

$
12,703

$
24

0.25

%
Savings accounts

9,245

33

0.49

7,396

20

0.36

Certificates of deposit

8,197

46

0.75

9,280

43

0.63

Total interest-bearing deposits

34,357

183

0.71

29,379

87

0.40

Short term borrowed funds

1,925

17

1.16

2,253

6

0.35

Other borrowed funds

13,419

194

1.93

13,495

209

2.07

Total Borrowed funds

15,344

211

1.84

15,748

215

1.83

Total interest-bearing liabilities

49,701

394

1.06

45,127

302

0.90

Non-interest-bearing deposits

4,332

4,402

Other liabilities

750

810

Total liabilities

54,783

50,339

Stockholders’ equity

6,946

6,907

Total liabilities and stockholders’ equity
$

61,729

$
57,246

Net interest income/interest rate spread

$

1,017

2.26

%

$
967

2.35

%
Net interest margin

2.39

%

2.48

%
Ratio of interest-earning assets to interest-bearing
liabilities

1.14x

1.15x

~~Provision for (Recovery of) Credit Losses~~

For the nine months ended September 30, 2022, the provision for credit losses totaled $9 million compared to a net recovery of credit losses of $1 million for the nine months ended September 30, 2021. On a year-to-date basis, we recorded a net recovery of $5 million compared to a net recovery of $7 million for 2021 year-to-date.

~~Non-Interest Income~~

For the nine-months ended September 30, 2022, non-interest income totaled $49 million, up $4 million or 9% compared to the nine months ended September 30, 2021. Included in the current year-to-date period is a $2 million net loss on securities compared to no such gain or loss in the year-ago year-to-date period. Also included in the current year-to-date period is the previously mentioned gain on the sale of the Company's former headquarters building.

~~The following table summarizes our non-interest income for the respective periods:~~

~~Non-Interest Income Analysis~~

For the Nine Months Ended

September 30,

September 30,

(dollars in millions)

2022

2021

Fee income

$
17

$
17

BOLI income

24

22

Net gain (loss) on securities

(2
)

—

Other income:

Third-party investment product sales

4

—

Other

6

6

Total other income

10

6

Total non-interest income

$
49

$
45

~~Non-Interest Expense~~

For the nine-months ended September 30, 2022, non-interest expense totaled $415 million, up $9 million or 2% compared to the nine months ended September 30, 2021. Merger-related expenses for the nine months ended September 30, 2022 totaled $15 million compared to $16 million for the nine months ended September 30, 2021. Excluding the impact of ~~merger-related expenses, total operating expenses~~offsetting positions:


(dollars in millions)		Three months ended September 30, 2023		Nine months ended September 30, 2023
Derivatives not designated as hedging instruments	Location of Gain (Loss)
Futures	Net return on mortgage servicing rights	$	—	$	3
Interest rate swaps and swaptions	Net return on mortgage servicing rights	(61)		(83)
Mortgage-backed securities forwards	Net return on mortgage servicing rights	(12)		(25)
Rate lock commitments and US Treasury futures	Net gain on loan sales	1		39

Interest rate swaps (1)	Other non-interest income	—		1

Total derivative (loss) gain		$	(72)	$	(65)

(1) Includes customer-initiated commercial interest rate swaps.

Note 15 - Intangible Assets

Goodwill is presumed to have an indefinite useful life and is tested for impairment at the nine months ended September 30, 2022 were $400 million, up $10 million or 3% compared to $390 million for the nine months ended September 30, 2021. The efficiency ratio for the nine months ended September 30, 2022reporting unit level, at least once a year. There was ~~37.53% compared to 38.58%~~no change in goodwill during the nine months ended September 30, ~~2021.~~2023.

~~Income Tax Expense~~

~~For~~

As a result of the ~~nine-months ended~~Signature Transaction, the Company recorded $464 million of core deposit intangible and other intangible assets that are amortizable.

At September 30, ~~2022, total income tax expense was $164 million, up slightly compared to total income tax~~2023, intangible assets consisted of the following:


	September 30, 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	$	(81)	$	619	$	250	$	(4)	$	246
Other intangible assets	56		(14)		42		42		(1)		41
Total other intangible assets	$	756	$	(95)	$	661	$	292	$	(5)	$	287

The estimated amortization expense of ~~$161 million~~CDI and other intangible assets for the ~~nine months ended~~next five years is as follows:


(in millions)	Amortization Expense
2023	$	36
2024	133
2025	107
2026	94
2027	81
Total	$	451

Note 16 - Fair Value Measures

•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.

•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.

The following tables present assets and liabilities that were measured at fair value on a recurring basis as of September 30, ~~2021. This represents~~2023 and December 31, 2022, and that were included in the Company’s Consolidated Statements of Condition at those dates:


	September 30, 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	$	—			$	1,164	$	—	$	—	$	1,164
GSE CMOs	$	—			$	4,351	$	—	$	—	$	4,351
Private Label CMOs	$	—			$	142	$	32	$	—	$	174
Total mortgage-related debt securities	$	—			$	5,657	$	32	$	—	$	5,689
Other Debt Securities Available for Sale:
U. S. Treasury obligations	$	195			$	—	$	—	$	—	$	195
GSE debentures	$	—			$	1,659	$	—	$	—	$	1,659
Asset-backed securities	$	—			$	313	$	—	$	—	$	313
Municipal bonds	$	—			$	6	$	—	$	—	$	6
Corporate bonds	$	—			$	737	$	—	$	—	$	737
Foreign notes	$	—			$	33	$	—	$	—	$	33
Capital trust notes	$	—			$	91	$	—	$	—	$	91
Total other debt securities	$	195			$	2,839	$	—	$	—	$	3,034
Total debt securities available for sale	$	195			$	8,496	$	32	$	—	$	8,723
Equity securities:
Mutual funds and common stock	$	—			$	13	$	—	$	—	$	13
Total equity securities	$	—			$	13	$	—	$	—	$	13
Total securities	$	195			$	8,509	$	32	$	—	$	8,736
Loans held-for-sale
Residential first mortgage loans	$	—			$	1,148	$	—	$	—	$	1,148
Acquisition, development, and construction	$	—			$	168	$	—	$	—	$	168
Commercial and industrial loans	$	—	$	—	$	9	$	—	$	—	$	9
Derivative assets
Interest rate swaps and swaptions	$	—			$	140	$	—	$	—	$	140
Futures	$	—			$	1	$	—	$	—	$	1
Rate lock commitments (fallout-adjusted)	$	—			$	—	$	6	$	—	$	6
Mortgage-backed securities forwards	$	—			$	37	$	—	$	—	$	37
Mortgage servicing rights	$	—			$	—	$	1,135	$	—	$	1,135
Total assets at fair value	$	195			$	10,012	$	1,173	$	—	$	11,380
Derivative liabilities
Mortgage-backed securities forwards	$	—			$	16	$	—	$	—	$	16
Interest rate swaps and swaptions	$	—			$	79	$	—	$	—	$	79
Rate lock commitments (fallout-adjusted)	$	—			$	—	$	12	$	—	$	12
Total liabilities at fair value	$	—			$	95	$	12	$	—	$	107


	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

A description of the methods and significant assumptions utilized in estimating the fair values of securities follows:

Where quoted prices are available in an ~~effective tax~~active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government securities and exchange-traded securities.

Fair Value Measurements Using Significant Unobservable Inputs

The 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:


(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
Three Months Ended September 30, 2023
Assets
Mortgage servicing rights (1)	$	1,031	$	37	$	67	$	—	—		—		$	1,135
Private Label CMOs	—		—		—		—		—		32		32
Rate lock commitments (net) (1)(2)	—		(42)		30		—		—		6		(6)
Totals	$	1,031	$	(5)	$	97	$	—	$	—	$	38	$	1,161
Nine Months Ended September 30, 2023
Assets
Mortgage servicing rights (1)	$	1,033	$	5	$	148	$	(51)	—		—		$	1,135
Private Label CMOs	—		—		—		—		—		32		32
Rate lock commitments (net) (1)(2)	(1)		(70)		90		—		—		(25)		(6)
Totals	$	1,032	$	(65)	$	238	$	(51)	$	—	$	7	$	1,161

(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 ~~25.48%~~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 ~~26.48%, respectively, for~~ the ~~nine months ended~~fair value measurements as of September 30, 2023:


	Fair Value		Valuation Technique	Unobservable Input (1)	Range (Weighted Average)
	(dollars in millions)
Assets
Mortgage servicing rights	$	1,135	Discounted cash flows	Option adjusted spread	5.2% - 21.7% 5.6%
				Constant prepayment rate	—% - 10.0% 7.3%
				Weighted average cost to service per loan	$65 - $90 $69

Private Label CMOs	$	32	Discounted cash flows	Constant default rates	0.10% - 0.30%
				Weighted average life	8.2 - 11.9

Rate lock commitments (net)	$	(6)	Consensus pricing	Origination pull-through rate	71.10%

(1)Unobservable inputs were weighted by their relative fair value of the instruments.

Assets Measured at Fair Value on a Non-Recurring Basis

Certain 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 September 30, 2023 and December 31, 2022, and ~~2021, respectively.~~

~~The year-ago nine-month period~~that were included ~~$2 million~~in the Company’s Consolidated Statements of ~~income tax expense~~Condition at those dates:


	Fair Value Measurements at September 30, 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
Certain impaired loans (2)					$	162	$	162
Other assets(1)					$	46	$	46
Total	$	—	$	—	$	208	$	208

(1)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 ~~revaluation~~infrequency of ~~deferred taxes related~~the observable prices and/or the restrictions on the shares.

(2)Represents the fair value of impaired loans, based on the value of the collateral.


	Fair Value Measurements at December 31, 2022 Using
(in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Certain impaired loans (2)	$	—	$	—	$	28	$	28
Other assets (1)	—		—		41		41
Total	$	—	$	—	$	69	$	69

(1)Represents the fair value of repossessed assets, based on the appraised value of the collateral subsequent to ~~a change in~~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 ~~New York State tax rate.~~infrequency of the observable prices and/or the restrictions on the shares.

(2)Represents the fair value of impaired loans, based on the value of the collateral.

~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~Quantitative~~

The fair values of collateral-dependent impaired loans are determined using various valuation techniques, including consideration of appraised values and ~~qualitative disclosures~~other pertinent real estate and other market data.

Other Fair Value Disclosures


	September 30, 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	$	6,929	$	6,929	$	6,929		$	—		$	—
FHLB and FRB stock (1)	1,110		1,110		—			1,110			—
Loans and leases held for investment, net	83,376		80,331		—			—			80,331
Financial Liabilities:
Deposits	$	82,675	$	82,494	$	65,365	(2)	$	17,129	(3)	$	—
Borrowed funds	14,585		14,317		—			14,317			—

(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.


	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		$	—		$	—
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			—

(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 Equivalents

Cash 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.

Securities

Federal Home Loan Bank Stock

Ownership 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.

Loans

MSRs

The 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 September 30, 2023, the weighted average life (in years) for the entire portfolio was 7.44.

Rate lock commitments

The 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.

Deposits

The 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 Funds

Off-Balance Sheet Financial Instruments

Fair Value Option

We 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.

The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected:


	For the Three Months ended September 30,		For the Nine Months Ended September 30,
(dollars in millions)	2023		2023
Assets
Loans held-for-sale	$	—	$	—
Net gain on loan sales	$	(25)	$	4

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:


	September 30, 2023
(dollars in millions)	Unpaid Principal Balance		Fair Value		Fair Value Over / (Under) UPB
Assets:
Nonaccrual loans:
Loans held-for-sale	$	2	$	2	$	—
Loans held-for-investment	—		—		—
Total non-accrual loans	$	2	$	2	$	—
Other performing loans:
Loans held-for-sale	$	1,310	$	1,316	$	6
Total other performing loans	$	1,310	$	1,316	$	6
Total loans:
Loans held-for-sale	$	1,312	$	1,318	$	6
Total loans	$	1,312	$	1,318	$	6


	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


Item 3.			Quantitative and Qualitative Disclosures about Market Risk

A discussion regarding our management of market risk ~~were presented on pages 68 through 72 of our 2021 Annual Report on Form 10-K, filed with the SEC on February 25, 2022. Subsequent changes~~is included in ~~the Company’s market risk profile and interest rate sensitivity are detailed in the discussion entitled “Management of Market and Interest Rate Risk” earlier~~"Market Risk" in this ~~quarterly report.~~report in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" which is incorporated herein by reference.


Item 4.			Controls and Procedures

~~ITEM 4. CONTROLS AND PROCEDURES~~

(a) Evaluation of Disclosure Controls and Procedures

~~Disclosure~~

As of September 30, 2023, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), an evaluation was performed by the Company’s Management, including our principal executive and financial officers, regarding the design and effectiveness of our disclosure controls and procedures. Based upon that evaluation, the principal executive and financial officers have concluded that our current disclosure controls and procedures ~~are the controls and other procedures that are designed~~were effective to ensure that information required to be disclosed by the Company in the reports that ~~the Company~~it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the ~~U.S. Securities and Exchange Commission’s (the “SEC’s”)~~Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e), as adopted by the SEC under the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effectiveforms as of ~~the end of the period.~~September 30, 2023.

(b) Changes in Internal ~~Control~~Controls.

Certain assets and liabilities of Signature Bridge Bank were acquired on March 20, 2023. We have extended oversight and monitoring processes that support internal control over ~~Financial Reporting~~

financial reporting to include the acquired operations. There have ~~not~~ been ~~any~~no 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~~Rule 13a-15(d) of the Exchange Act) during the ~~fiscal quarter to which this report relates~~three months ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

PART II –- OTHER INFORMATION


Item 1.			Legal Proceedings

~~Item 1. Legal Proceedings~~

~~Refer~~

The Company is involved in various legal actions arising in the ordinary course of its business. All such actions in the aggregate involve amounts that are believed by management to ~~“Part I, Financial Information, Item 1, Financial Statements, Note 14 Legal Proceedings”, which is incorporated by reference into this item.~~

~~Item 1A. Risk Factors~~

~~In addition~~be immaterial to the ~~other information set forth in this report, readers should carefully consider~~financial condition and results of operations of the ~~factors discussed in Part I,~~Company.


Item 1A.			Risk Factors

Please see “Item 1A. Risk Factors” inof the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021 as such~~2022 and the Company’s Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023 for information regarding risk factors that could materially affect the Company’s business, financial condition, or future results of operations. ~~There~~Other than as set forth below, there have been ~~no material~~ changes inwith regard to the risk factors ~~as discussed~~disclosed in “Item 1A. Risk Factors” of the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022 and the Company’s Form 10-Q for the quarter ended March 31, 2023.

~~Item 2. Unregistered Sales~~The Company, entities that we have acquired, and certain of ~~Equity Securities~~our service providers have experienced information technology security breaches and ~~Use~~may be vulnerable to future security breaches.These incidents have resulted in, and could result in, additional expenses, exposure to civil litigation, increased regulatory scrutiny, losses, and a loss of ~~Proceeds~~customers , any of which could adversely impact our financial condition, results of operations, and the market price of our stock.

Communication and information systems are essential to the conduct of our business, as we use such systems, and those maintained and provided to us by third-party service providers, to manage our customer relationships, our general ledger, our deposits, and our loans. In addition, our operations rely on the secure processing, storage, and transmission of confidential and other information in our computer systems and networks. Although we, and entities we have acquired, take and have taken protective measures and endeavor to modify them as circumstances warrant, the security of our computer systems, software, and networks, as well as the security of the computer systems, software, and networks of certain of our service providers, have been , and may in the future be, vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code and cyber-attacks that have had and could have an impact on information security. With the rise and permeation of online and mobile banking, the financial services industry in particular faces substantial cybersecurity risk due to the type of sensitive information provided by customers. We, and our third-party service providers, have been and may in the future be subject to cybersecurity incidents, including those that involve the unauthorized access to customer information affecting other financial institutions and industry groups. Our systems and those of our third-party service providers and customers are regularly the subject of attempted attacks that are increasingly sophisticated, and it is possible that we or they could experience a significant event in the future that could adversely affect our business or operations. In addition, breaches of security have in the past and may in the future occur through intentional or unintentional acts by those having authorized or unauthorized access to our confidential or other information, or that of our customers, clients, or counterparties. Certain previously identified cyber incidents have resulted, and future such events could result, in the breach of confidential and other information processed and stored in our computer systems and networks. These events could cause interruptions or malfunctions in our operations or the operations of our customers, clients, or counterparties. Further, we may not know that an attack occurred until well after the event. Even after discovering an attempt or breach occurred, we may not know the extent of the impact of the attack for some period of time. This could cause us significant reputational damage or result in our experiencing significant losses.

While we diligently assess applicable regulatory and legislative developments affecting our business, laws and regulations relating to cybersecurity have been frequently changing, imposing new requirements on us. In light of these conditions, we face the potential for additional regulatory scrutiny that will lead to increasing compliance and technology expenses and, in some cases, possible limitations on the achievement of our plans for growth and other strategic objectives. We may also be required to expend significant additional resources to modify our protective measures or investigate and remediate vulnerabilities or other exposures arising from operational and security risks, including expenses for third-party expert consultants or outside counsel. We are currently subject to litigation regarding cyber incidents, and we also may be subject to future litigation and financial losses that either are not insured against or not fully covered through any insurance we maintain or any third-party indemnification or insurance. We believe that the impact of any previously identified cyber incidents, including those subject to ongoing investigation and remediation, will not have a material financial impact.

In addition, we routinely transmit and receive personal, confidential, and proprietary information by e-mail and other electronic means. We have discussed, and worked with our customers, clients, and counterparties to develop secure

transmission capabilities, but we do not have, and may be unable to put in place, secure capabilities with all of these constituents, and we may not be able to ensure that these third parties have appropriate controls in place to protect the confidentiality of such information. We maintain disclosure controls and procedures to ensure we will timely and sufficiently notify our investors of material cybersecurity risks and incidents, including the associated financial, legal, or reputational consequence of such an event, as well as reviewing and updating any prior disclosures relating to the risk or event. While we have established information security policies, procedures and controls, including an Incident Response Plan, to prevent or limit the impact of systems failures and interruptions, we may not be able to anticipate all possible security breaches that could affect our systems or information and there can be no assurance that such events will not occur or will be adequately prevented or mitigated by our policies, procedures and controls if they do.


Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds

Shares Repurchased Pursuant to the Company’s Stock-Based Incentive Plans

Participants in the Company’s stock-based incentive plans may have shares of common stock withheld to fulfill the income tax obligations that arise in connection with the vesting of their stock awards. Shares that are withheld for this purpose are repurchased pursuant to the terms of the applicable stock-based incentive plan, rather than pursuant to the share repurchase program authorized by the Board of Directors, described below.

Shares Repurchased Pursuant to the Board of Directors’ Share Repurchase Authorization

On October 23, 2018, the Board of Directors authorized the repurchase of up to $300 million of the Company’s common stock. Under said authorization, shares may be repurchased on the open market or in privately negotiated transactions. As of September 30, ~~2022,~~2023, the Company has ~~repurchased $286~~ approximately $9 million ~~of its common stock under this repurchase authorization, leaving $9 million available for repurchase~~remaining under this repurchase authorization.

Shares that are repurchased pursuant to the Board of Directors’ authorization, and those that are repurchased pursuant to the Company’s stock-based incentive plans, are held in our Treasury account and may be used for various corporate purposes, including, but not limited to, merger transactions and the vesting of restricted stock awards.


(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
Third Quarter 2023
July 1 - 31, 2023	10,323	$	12.11	$	—	—
August 1 - 31, 2023	12,555	13.53		—		—
September 1 - 30, 2023	11,078	11.69		—		—
Total Third Quarter 2023	33,956	$	12.50	$	—	—

(amounts in millions, except share data)
Period

Total Shares
of Common
Stock
Repurchased

Average Price
Paid per
Common
Share

Total
Allocation

Third Quarter 2022

July

94,243

$

9.09

$

1

August

1,077

10.80

0

September

11,702

9.57

0

Total Third Quarter 2022

107,022

9.16

$

1

~~Item 3. Defaults upon Senior Securities~~

~~Not applicable.~~

~~Item 4. Mine Safety Disclosures~~

~~Not applicable.~~

~~Item 5. Other Information~~

~~Not applicable.~~

~~Item 6. Exhibits~~


Item 3.			Defaults Upon Senior Securities

The Company had no defaults on senior securities.


Item 4.			Mine Safety Disclosures

None.


Item 5.			Other Information

During the fiscal quarter ended September 30, 2023, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K, except as described in the table below.

Name & Title

Date of Adoption / Termination

Character of Trading Arrangement (1)

Aggregate Number of Shares of Common Stock to be Purchased or Sold Pursuant to Trading Arrangement

Duration (2)

James Carpenter, Director

Adopted on September 21, 2023

Rule 10b5-1 Trading Arrangement (3)

Up to 125,000 shares may be sold

December 21, 2023 – December 12, 2024

1. Except as indicated by footnote, each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is

intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).

2. The Rule 10b5-1Trading Arrangement only permits transactions after the indicated duration start date and, in any case, upon expiration of the applicable mandatory cooling-off period under the Rule, and through (i) the earlier of the indicated duration end date or completion of all sales contemplated in the Rule 10b5-1 Trading Arrangement, (ii) the receipt of notice of the director’s death, (iii) the receipt of notice of the commencement or impending commencement of any proceedings in respect of or triggered by the director’s bankruptcy or insolvency, (iv) the public announcement of certain merger, reorganization, or similar transactions involving the Company or the dissolution or liquidation of the Company; (v) the director’s failure to comply with applicable laws and/or the director’s obligations under the Rule 10b5-1 Trading Arrangement or the Rule 10b5-1 Trading Arrangement no longer complying with applicable laws; (vi) a modification or change in the amount, price or timing of the sale of shares subject to the Rule 10b5-1 Trading Arrangement; or (vii) the otherwise termination or suspension of the Rule 10b5-1 Trading Arrangement pursuant to its terms.

3. Complied with the then-applicable requirements of Rule 10b5-1(c) when adopted in September 2023.


Item 6.			Exhibits


Exhibit No.
3.1
~~2.1~~	Agreement and Plan of Merger, dated as of April 24, 2021, by and among New York Community Bancorp, Inc., 615 Corp., a wholly-owned subsidiary of New York Community Bancorp, Inc. and Flagstar Bancorp, Inc. * ~~(1)~~

~~2.2~~	~~Amendment No 1, dated April 26, 2022, to the Agreement and Plan of Merger, dated April 24, 2021 by and among New York Community Bancorp, Inc., 615 Corp., and Flagstar Bancorp, Inc.~~ ~~(2)~~

~~2.3~~	~~Amendment No 2, dated October 27, 2022, to the Agreement and Plan of Merger, dated April 24, 2021 by and among New York Community Bancorp, Inc., 615 Corp., and Flagstar Bancorp, Inc.(3)~~

~~3.1~~	Amended and Restated Certificate of ~~Incorporation.~~Incorporation ~~(4)~~(1)
3.2
~~3.2~~	Certificates of Amendment of Amended and Restated Certificate of ~~Incorporation.~~Incorporation ~~(5)~~(2)
3.3
~~3.3~~	Certificate of Amendment of Amended and Restated Certificate of ~~Incorporation.~~Incorporation ~~(6)~~(3)
3.4
~~3.4~~	Certificate of Designations of the Registrant with respect to the Series A Preferred Stock, dated March 16, 2017, filed with the Secretary of State of the State of Delaware and effective March 16, ~~2017.~~2017 ~~(7)~~(4)
3.5
~~3.5~~	Amended and Restated ~~Bylaws.~~Bylaws~~(8)~~(5)
4.1			Specimen Stock Certificate (6)
~~4.1~~4.2			~~Specimen Stock Certificate.(9)~~

~~4.2~~	Deposit Agreement, dated as of March 16, 2017, by and among the Registrant, Computershare, ~~Inc.,~~Inc, and Computershare Trust Company, N.A., as joint depositary, and the holders from time to time of the depositary receipts described ~~therein.~~therein ~~(10)~~(7)
4.3
~~4.3~~	Form of certificate representing the Series A Preferred ~~Stock.~~Stock ~~(10)~~(7)
4.4
~~4.4~~	Form of depositary receipt representing the Depositary ~~Shares.~~Shares ~~(10)~~(7)
4.6
~~4.5~~	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.
21			Subsidiaries of the Registrant
31.1			Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (attached hereto).
31.2
~~31.2~~	Rule 13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (attached hereto).
32
~~32.0~~	Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 (attached hereto).

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101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.



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104				~~The cover page of New York Community Bancorp, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted~~Cover Page Interactive Date File (formatted in Inline XBRL ~~(included within the~~and contained in Exhibit ~~101 attachments).~~101)

*Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request.

** Management plan or compensation plan arrangement.

(1)

~~Incorporated by reference to Exhibits to the Company's Form 8-K filed with the Securities and Exchange Commission on April 27, 2021 (File No. 1-31565).~~

~~(2)~~

~~Incorporated by reference to Exhibits to the Company's Form 8-K filed with the Securities and Exchange Commission on April 27, 2022 (File No. 1-31565).~~

~~(3)~~

~~Incorporated by reference to Exhibits to the Company’s Form 8-K filed with the Securities and Exchange Commission on October 28, 2022 (File No. 1-31565).~~

~~(4)~~

Incorporated by reference to Exhibits filed with the Company’s Form 10-Q for the quarterly period ended March 31, 2001 (File No. 0-22278).

~~(5)~~(2)

Incorporated by reference to Exhibits filed with the Company’s Form 10-K for the year ended December 31, 2003 (File No. 1-31565).

~~(6)~~(3)

Incorporated by reference to Exhibits to the Company’s Form 8-K filed with the Securities and Exchange Commission on April 27, 2016 (File No. 1-31565).

~~(7)~~(4)

Incorporated herein by reference to ~~Exhibits~~Exhibit 3.4 of the ~~Company’s~~Registrant’s Registration Statement on Form 8-A (File No. 333-210919), as filed with the Securities and Exchange Commission on March 16, ~~2017.~~

2017

~~(8)~~(5)

Incorporated by reference to ~~Exhibits~~Exhibit 3.2 filed with the Company’s Form 8-K filed with the Securities and Exchange Commission on ~~June 8,~~December 1, 2022 (File No. 1-31565).

~~(9)~~(6)

Incorporated by reference to Exhibits filed with the Company’s Form 10-Q for the quarterly period ended September 30, 2017 (File No. 1-31565).

~~(10)~~(7)

Incorporated by reference to Exhibits filed with the Company’s Form 8-K filed with the Securities and Exchange Commission on March 17, 2017 (File No. 1-31565).

SIGNATURES

~~NEW YORK COMMUNITY BANCORP, INC.~~

~~SIGNATURES~~

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


DATE:		November 9, 2023		New York Community Bancorp, Inc.
				(Registrant)

				~~New York Community Bancorp, Inc.~~
		~~(Registrant)~~

~~DATE: November 4, 2022~~	~~BY:~~	/s/ Thomas R. Cangemi
				Thomas R. Cangemi
				~~Chairman,~~ President and Chief Executive Officer
				(Principal Executive Officer)
~~DATE: November 4, 2022~~			~~BY:~~

				/s/ John J. Pinto
				John J. Pinto
				Senior Executive Vice President and Chief Financial Officer
				(Principal Financial Officer)


~~ACL—Allowance for Credit Losses~~		~~FDIC—Federal Deposit Insurance Corporation~~

~~ADC—Acquisition, development, and construction loan~~		~~FHLB—Federal Home Loan Bank~~

~~ALCO—Asset and Liability Management Committee~~		~~FHLB-NY—Federal Home Loan Bank of New York~~

~~AMT—Alternative minimum tax~~		~~FOMC—Federal Open Market Committee~~

~~AOCL—Accumulated other comprehensive loss~~		~~FRB—Federal Reserve Board~~

~~ASC—Accounting Standards Codification~~		~~FRB-NY—Federal Reserve Bank of New York~~

~~ASU—Accounting Standards Update~~		~~Freddie Mac—Federal Home Loan Mortgage Corporation~~

~~BaaS—Banking as a Service~~		~~FTEs—Full-time equivalent employees~~

~~BOLI—Bank-owned life insurance~~		~~GAAP—U.S. generally accepted accounting principles~~

~~BP—Basis point(s)~~		~~GLBA—The Gramm Leach Bliley Act~~

~~CARES Act~~—~~Coronavirus Aid, Relief, and Economic Security Act~~		~~GNMA—Government National Mortgage Association~~

~~C&I—Commercial and industrial loan~~		~~GSE—Government-sponsored enterprises~~

~~CDs—Certificates of deposit~~		~~LIBOR—London Interbank Offered Rate~~

~~CECL—Current Expected Credit Loss~~		~~LTV—Loan-to-value ratio~~

~~CFPB—Consumer Financial Protection Bureau~~		~~MBS—Mortgage-backed securities~~

~~CMOs—Collateralized mortgage obligations~~		~~MSRs—Mortgage servicing rights~~

~~CMT—Constant maturity treasury rate~~		~~NIM—Net interest margin~~

~~CPI—Consumer Price Index~~		~~NOL—Net operating loss~~

~~CPR—Constant prepayment rate~~		~~NPAs—Non-performing assets~~

~~CRA—Community Reinvestment Act~~		~~NPLs—Non-performing loans~~

~~CRE—Commercial real estate loan~~		~~NPV—Net Portfolio Value~~

~~DIF—Deposit Insurance Fund~~		~~NYSDFS—New York State Department of Financial Services~~

~~DFA—Dodd-Frank Wall Street Reform and Consumer Protection Act~~		~~NYSE—New York Stock Exchange~~

~~DSCR~~—~~Debt service coverage ratio~~		~~OCC—Office of the Comptroller of the Currency~~

~~EAR—Earnings at Risk~~		~~OFAC—Office of Foreign Assets Control~~

~~EPS—Earnings per common share~~		~~OREO—Other real estate owned~~

~~ERM—Enterprise Risk Management~~		~~OTTI—Other-than-temporary impairment~~

~~ESOP—Employee Stock Ownership Plan~~		~~PPP—Paycheck Protection Program~~

~~EVE—Economic Value of Equity at Risk~~		~~ROU—Right of use asset~~

~~Fannie Mae—Federal National Mortgage Association~~		~~SEC—U.S. Securities and Exchange Commission~~
~~FASB—Financial Accounting Standards Board~~		~~SIFI—Systemically Important Financial Institution~~
~~FCA—the United Kingdom's Financial Conduct Authority~~		~~SOFR—Secured Overnight Financing Rate~~

~~FDI Act—Federal Deposit Insurance Act~~		~~TDR—Troubled debt restructurings~~


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



PART I. – FINANCIAL INFORMATION							~~Page No.~~

			~~Glossary~~	3

	~~List of Abbreviations and Acronyms~~	6

~~Part I.~~	~~FINANCIAL INFORMATION~~	7

Item 1.	Financial Statements			7

	Consolidated Statements of Financial Condition ~~as of~~– September 30, ~~2022~~2023 (unaudited) and December 31, ~~2021~~ 2022	740

	Consolidated Statements of Income and Comprehensive Income ~~for~~– For the three and nine months ended September 30, 2023 and 2022 ~~and 2021~~ (unaudited)	841

	Consolidated ~~Statement~~Statements of ~~Changes in~~ Stockholders’ Equity ~~for~~– For the three and nine months ended September 30, 2023 and 2022 ~~and 2021~~ (unaudited)	942

	Consolidated Statements of Cash Flows ~~for~~– For the nine months ended September 30, 2023 and 2022 ~~and 2021~~ (unaudited)	1144

	Notes to the Consolidated Financial Statements (unaudited)	12
			Note 1 - Organization Basis of Presentation		46
			Note 2 - Computation of Earnings Per Common Share		47
			Note 3 - Business Combination		48
			Note 4 - Accumulated Other Comprehensive Income		52
			Note 5 - Investment Securities		53
			Note 6 - Loans and Leases		56
			Note 7 - Allowance for Credit Losses		62
			Note 8 - Leases		63
			Note 9 - Mortgage Servicing Rights		66
			Note 10 -Variable Interest Entities		68
			Note 11 - Borrowed Funds		68
			Note 12 - Pension and Other Post-Retirement Benefits		69
			Note 13 - Stock-Related Benefit Plans		69
			Note 14 - Derivative and Hedging Activities		70
			Note 15 - Intangible Assets		74
			Note 16 - Fair Value Measures		75
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		3910

Item 3.	Quantitative and Qualitative Disclosures about Market Risk			7282

Item 4.	Controls and Procedures			7282

~~Part~~PART II.					– OTHER INFORMATION	73

Item 1.	Legal Proceedings			7383

Item 1A.	Risk Factors			7383

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			7384

Item 3.	Defaults upon Senior Securities			7384

Item 4.	Mine Safety Disclosures			7384

Item 5.	Other Information			7384

Item 6.	Exhibits			7485

~~Signatures~~SIGNATURES					7687


	September 30,			December 31,
	2022			2021
(in millions, except share data)	(unaudited)
ASSETS:
Cash, cash equivalents and due from banks	$	1,700		$	2,211
Securities:
Debt securities available-for-sale ($561 and $1,168 pledged at September 30, 2022 and December 31, 2021, respectively)		6,689			5,780
Equity investments with readily determinable fair values, at fair value		14			16
Total securities		6,703			5,796
Loans and leases held for investment, net of deferred loan fees and costs		48,984			45,738
Less: Allowance for credit losses on loans and leases		(218	)		(199	)
Total loans and leases, net		48,766			45,539
Federal Home Loan Bank stock, at cost		630			734
Premises and equipment, net		250			270
Operating lease right-of-use assets		227			249
Goodwill		2,426			2,426
Bank-owned life insurance		1,200			1,184
Other assets		1,054			1,118
Total assets	$	62,956		$	59,527
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Deposits:
Interest-bearing checking and money market accounts	$	19,897		$	13,209
Savings accounts		8,860			8,892
Certificates of deposit		9,109			8,424
Non-interest-bearing accounts		3,839			4,534
Total deposits		41,705			35,059
Borrowed funds:
Wholesale borrowings:
Federal Home Loan Bank advances		12,840			15,105
Repurchase agreements		300			800
Total wholesale borrowings		13,140			15,905
Junior subordinated debentures		361			361
Subordinated notes		297			296
Total borrowed funds		13,798			16,562
Operating lease liabilities		227			249
Other liabilities		480			613
Total liabilities		56,210			52,483
Stockholders’ equity:
Preferred stock at par $0.01 (5,000,000 shares authorized): Series A (515,000 shares issued and outstanding)		503			503
Common stock at par $0.01 (900,000,000 shares authorized; 490,439,070 and 490,439,070 shares issued; and 466,136,056 and 465,015,643 shares outstanding, respectively)		5			5
Paid-in capital in excess of par		6,121			6,126
Retained earnings		957			741
Treasury stock, at cost (24,303,014 and 25,423,427 shares, respectively)		(238	)		(246	)
Accumulated other comprehensive loss, net of tax:
Net unrealized loss on securities available for sale, net of tax of $234 and $17, respectively		(612	)		(45	)
Net unrealized loss on pension and post-retirement obligations, net of tax of $12 and $12 respectively		(30	)		(31	)
Net unrealized gain (loss) on cash flow hedges, net of tax of $(16) and $3, respectively		40			(9	)
Total accumulated other comprehensive loss, net of tax		(602	)		(85	)
Total stockholders’ equity		6,746			7,044
Total liabilities and stockholders’ equity	$	62,956		$	59,527

See accompanying notes to the consolidated financial statements.


	For the						For the
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions, except per share data)	2022			2021			2022			2021
INTEREST INCOME:
Loans and leases	$	442		$	376		$	1,259		$	1,145
Securities and money market investments		67			39			152			124
Total interest income		509			415			1,411			1,269

INTEREST EXPENSE:
Interest-bearing checking and money market accounts		72			8			104			24
Savings accounts		15			7			33			20
Certificates of deposit		23			11			46			43
Borrowed funds		73			71			211			215
Total interest expense		183			97			394			302
Net interest income		326			318			1,017			967
Provision for credit losses		2			(1	)		9			(1	)
Net interest income after provision for credit loan losses		324			319			1,008			968

NON-INTEREST INCOME:
Fee income		5			6			17			17
Bank-owned life insurance		10			7			24			22
Net loss on securities		(1	)		—			(2	)		—
Other		3			2			10			6
Total non-interest income		17			15			49			45

NON-INTEREST EXPENSE:
Operating expenses:
Compensation and benefits		79			77			238			229
Occupancy and equipment		22			22			67			65
General and administrative		31			30			95			96
Total operating expense		132			129			400			390
Merger-related expenses		4			6			15			16
Total non-interest expense		136			135			415			406
Income before income taxes		205			199			642			607
Income tax expense		53			50			164			161
Net income	$	152		$	149		$	478		$	446
Preferred stock dividends		8			9			25			25
Net income available to common stockholders	$	144		$	140		$	453		$	421
Basic earnings per common share	$	0.31		$	0.30		$	0.96		$	0.90
Diluted earnings per common share	$	0.30		$	0.30		$	0.96		$	0.90

Net income	$	152		$	149		$	478		$	446
Other comprehensive loss, net of tax:
Change in net unrealized gain (loss) on securities available-for-sale, net of tax of $67; $9; $217 and $34, respectively		(176	)		(23	)		(567	)		(89	)
Change in pension and post-retirement obligations, net of tax of $0; $0; $0 and $(1), respectively		—			1			(1	)		3
Change in net unrealized (loss) gain on cash flow hedges, net of tax of $(11); $0; $(18) and $0, respectively		28			(2	)		46			1
Less: Reclassification adjustment for sales of available-for-sale securities, net of tax of $0; $0; $0 and $0, respectively		—			—			—			—
Reclassification adjustment for defined benefit pension plan, net of tax of $0; $0; $0 and $(1), respectively		1			1			2			4
Reclassification adjustment for net gain on cash flow hedges included in net income, net of tax $1; $(2); $(1) and $(4), respectively		(2	)		6			3			14
Total other comprehensive loss, net of tax		(149	)		(17	)		(517	)		(67	)
Total comprehensive income (loss), net of tax	$	3		$	132		$	(39	)	$	379


(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
Three Months Ended September 30, 2022
Balance at June 30, 2022		466,243,078		$	503	$	5	$	6,114	$	893		$	(238	)	$	(453	)	$	6,824
Shares issued for restricted stock, net of forfeitures		—			—		—		—		—			—			—			—
Compensation expense related to restricted stock awards		—			—		—		7		—			—			—			7
Net income		—			—		—		—		152			—			—			152
Dividends paid on common stock ($0.17)		—			—		—		—		(80	)		—			—			(80	)
Dividends paid on preferred stock ($15.94)		—			—		—		—		(8	)		—			—			(8	)
Purchase of common stock		(107,022	)		—		—		—		—			—			—			—
Other comprehensive income, net of tax		—			—		—		—		—			—			(149	)		(149	)
Balance at September 30, 2022		466,136,056		$	503	$	5	$	6,121	$	957		$	(238	)	$	(602	)	$	6,746

Three Months Ended September 30, 2021
Balance at June 30, 2021		465,056,962		$	503	$	5	$	6,111	$	617		$	(245	)	$	(75	)	$	6,916
Shares issued for restricted stock, net of forfeitures		—			—		—		—		—			—			—			—
Compensation expense related to restricted stock awards		—			—		—		8		—			—			—			8
Net income		—			—		—		—		149			—			—			149
Dividends paid on common stock ($0.17)		—			—		—		—		(79	)		—			—			(79	)
Dividends paid on preferred stock ($15.94)		—			—		—		—		(9	)		—			—			(9	)
Purchase of common stock		(36,163	)		—		—		—		—			(1	)		—			(1	)
Other comprehensive loss, net of tax		—			—		—		—		—			—			(17	)		(17	)
Balance at September 30, 2021		465,020,799		$	503	$	5	$	6,119	$	678		$	(246	)	$	(92	)	$	6,967


		September 30, 2022
(in millions)		Amortized Cost			Gross Unrealized Gain			Gross Unrealized Loss			Fair Value
Debt securities available-for-sale
Mortgage-Related Debt Securities:
GSE certificates	$		1,115	$		—	$		171	$		944
GSE CMOs			1,562			—			276			1,286
Total mortgage-related debt securities	$		2,677	$		—	$		447	$		2,230
Other Debt Securities:
U. S. Treasury obligations	$		1,677	$		—	$		5	$		1,672
GSE debentures			1,749			—			343			1,406
Asset-backed securities (1)			401			—			10			391
Corporate bonds			884			2			31			855
Municipal bonds			18			—			—			18
Foreign notes			25			—			—			25
Capital trust notes			96			6			10			92
Total other debt securities	$		4,850	$		8	$		399	$		4,459
Total debt securities available for sale	$		7,527	$		8	$		846	$		6,689
Equity securities:
Mutual funds	$		16	$		—	$		2	$		14
Total equity securities	$		16	$		—	$		2	$		14
Total securities (2)	$		7,543	$		8	$		848	$		6,703


	December 31, 2021
(in millions)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
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
Corporate bonds		821		18		1		838
Municipal bonds		25		—		—		25
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


		Mortgage- Related Securities			U.S. Government and GSE Obligations			State, County, and Municipal			Other Debt Securities (1)			Fair Value
(in millions)
Available-for-Sale Debt Securities:
Due within one year	$		4	$		1,677	$		—	$		25	$		1,701
Due from one to five years			143			247			—			428			807
Due from five to ten years			219			1,077			18			527			1,544
Due after ten years			2,311			425			—			426			2,637
Total debt securities available for sale	$		2,677	$		3,426	$		18	$		1,406	$		6,689


(in millions)	Loans 30-89 Days Past Due		Non- Accrual Loans		Loans 90 Days or More Delinquent and Still Accruing Interest		Total Past Due Loans		Current Loans		Total Loans Receivable
Multi-family	$	31	$	13	$	—	$	44	$	37,135	$	37,179
Commercial real estate		1		28		—		29		6,574		6,603
One-to-four family		7		1		—		8		115		123
Acquisition, development, and construction		—		—		—		—		203		203
Commercial and industrial(1) (2)		—		3		—		3		4,816		4,819
Other		—		—		—		—		6		6
Total	$	39	$	45	$	—	$	84	$	48,849	$	48,933


	Vintage Year
(in millions) Risk Rating Group	2022		2021		2020		2019		2018		Prior To 2018		Revolving Loans		Total
Pass	$	7,655	$	9,310	$	8,727	$	4,960	$	3,825	$	7,354	$	12	$	41,843
Special Mention		—		—		95		221		277		728		—		1,321
Substandard		—		—		37		201		130		605		—		973
Total mortgage loans	$	7,655	$	9,310	$	8,859	$	5,382	$	4,232	$	8,687	$	12	$	44,137
Pass		757		642		457		423		78		223		2,263		4,843
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		1		2		1		—		4
Total other loans		757		642		457		424		80		224		2,263		4,847
Total	$	8,412	$	9,952	$	9,316	$	5,806	$	4,312	$	8,911	$	2,275	$	48,984


	Collateral Type
(in millions)	Real Property		Other
Multi-family	$	13	$	—
Commercial real estate		43		—
One-to-four family		—		—
Acquisition, development, and construction		—		—
Commercial and industrial		—		4
Other		—		—
Total collateral-dependent loans held for investment		56		4


	For the Three Months Ended September 30, 2022
							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		—	$	—	$	—	0	%	0	%	$	—	$	—


(in millions)	Recorded Investment		Related Allowance		Interest Income Recognized
Nonaccrual loans with no related allowance:
Multi-family	$	13	$	—	$	—
Commercial real estate		27		—		1
One-to-four family		—		—		—
Acquisition, development, and construction		—		—		—
Other		3		—		—
Total nonaccrual loans with no related allowance	$	43	$	—	$	1
Nonaccrual loans with an allowance recorded:
Multi-family	$	—	$	—	$	—
Commercial real estate		1		—		—
One-to-four family		1		—		—
Acquisition, development, and construction		—		—		—
Other		—		—		—
Total nonaccrual loans with an allowance recorded	$	2	$	—	$	—
Total nonaccrual loans:
Multi-family	$	13	$	—	$	—
Commercial real estate		28		—		1
One-to-four family		1		—		—
Acquisition, development, and construction		—		—		—
Other		3		—		—
Total nonaccrual loans	$	45	$	—	$	1


	Remaining Contractual Maturity of the Agreements
(in millions)	Overnight and Continuous		Up to 30 Days		30–90 Days		Greater than 90 Days
GSE obligations	$	—	$	—	$	—	$	300


Date of Original Issue	Stated Maturity	Interest Rate(1)			Original Issue Amount
(dollars in millions)
Nov. 6, 2018	Nov. 6, 2028		5.90	%	$	300


Issuer	Interest Rate of Capital Securities and Debentures				Junior Subordinated Debentures Amount Outstanding			Capital Securities Amount Outstanding		Date of Original Issue	Stated Maturity	First Optional Redemption Date
					(dollars in millions)
New York Community Capital Trust V (BONUSESSM Units)		6.00	%	$		147	$		140	Nov. 4, 2002	Nov. 1, 2051	Nov. 4, 2007	(1)
New York Community Capital Trust X	4.89					124			120	Dec. 14, 2006	Dec. 15, 2036	Dec. 15, 2011	(2)
PennFed Capital Trust III	6.54					31			30	June 2, 2003	June 15, 2033	June 15, 2008	(2)
New York Community Capital Trust XI	5.32					59			58	April 16, 2007	June 30, 2037	June 30, 2012	(2)
Total junior subordinated debentures				$		361	$		348


	Fair Value Measurements at September 30, 2022
(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
Assets:
Mortgage-related Debt Securities Available for Sale:
GSE certificates	$	—	$	944	$	—	$	944
GSE CMOs		—		1,286		—		1,286
Total mortgage-related debt securities	$	—	$	2,230	$	—	$	2,230
Other Debt Securities Available for Sale:
U. S. Treasury obligations	$	1,672	$	—	$	—	$	1,672
GSE debentures		—		1,406		—		1,406
Asset-backed securities		—		391		—		391
Municipal bonds		—		18		—		18
Corporate bonds		—		855		—		855
Foreign notes		—		25		—		25
Capital trust notes		—		92		—		92
Total other debt securities	$	1,672	$	2,787	$	—	$	4,459
Total debt securities available for sale	$	1,672	$	5,017	$	—	$	6,689
Equity securities:
Preferred stock	$	—	$	—	$	—	$	—
Mutual funds and common stock		—		14		—		14
Total equity securities	$	—	$	14	$	—	$	14
Total securities	$	1,672	$	5,031	$	—	$	6,703


	Fair Value Measurements at December 31, 2021
(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
Assets:
Mortgage-Related Debt Securities Available for Sale:
GSE certificates	$	—	$	1,107	$	—	$	1,107
GSE CMOs		—		1,683		—		1,683
Total mortgage-related debt securities	$	—	$	2,790	$	—	$	2,790
Other Debt Securities Available for Sale:
U.S. Treasury obligations	$	45	$	—	$	—	$	45
GSE debentures		—		1,480		—		1,480
Asset-backed securities		—		479		—		479
Municipal bonds		—		25		—		25
Corporate bonds		—		838		—		838
Foreign notes		—		26		—		26
Capital trust notes		—		97		—		97
Total other debt securities	$	45	$	2,945	$	—	$	2,990
Total debt securities available for sale	$	45	$	5,735	$	—	$	5,780
Equity securities:						—
Preferred stock	$	—	$	—	$	—	$	—
Mutual funds and common stock		—		16		—		16
Total equity securities	$	—	$	16	$	—	$	16
Total securities	$	45	$	5,751	$	—	$	5,796


	Fair Value Measurements at September 30, 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
Certain loans (1)	$	—	$	—	$	25	$	25
Other assets(2)		—		—		38		38
Total	$	—	$	—	$	63	$	63


(in millions)	For the Three Months Ended September 30, 2022		For the Nine Months Ended September 30, 2022		For the Three Months Ended September 30, 2021		For the Nine Months Ended September 30, 2021
Interest income on lease financing (1)	$	14	$	38	$	13	$	41


(in millions)	September 30, 2022		December 31, 2021
Net investment in the lease - lease payments receivable	$	1,722	$	1,790
Net investment in the lease - unguaranteed residual assets		59		75
Total lease payments	$	1,781	$	1,865


(in millions)	For the Three Months Ended September 30, 2022		For the Nine Months Ended September 30, 2022		For the Three Months Ended September 30, 2021		For the Nine Months Ended September 30, 2021
Operating lease cost	$	7	$	21	$	7	$	20
Sublease income		—		—		—		—
Total lease cost	$	7	$	21	$	7	$	20


(in millions)	For the Three Months Ended September 30, 2022		For the Nine Months Ended September 30, 2022			For the Three Months Ended September 30, 2021			For the Nine Months Ended September 30, 2021
Derivative – interest rate swap:
Interest income	$	—	$	25		$	25		$	49
Hedged item – loans:
Interest income	$	—	$	(25	)	$	(25	)	$	(49	)


	At or for the									At or for the
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(dollars in millions)	2022			2022			2021			2022			2021
Total Stockholders’ Equity	$	6,746		$	6,824		$	6,967		$	6,746		$	6,967
Less: Goodwill		(2,426	)		(2,426	)		(2,426	)		(2,426	)		(2,426	)
Preferred stock		(503	)		(503	)		(503	)		(503	)		(503	)
Tangible common stockholders’ equity	$	3,817		$	3,895		$	4,038		$	3,817		$	4,038

Total Assets	$	62,956		$	63,093		$	57,890		$	62,956		$	57,890
Less: Goodwill		(2,426	)		(2,426	)		(2,426	)		(2,426	)		(2,426	)
Tangible Assets	$	60,530		$	60,667		$	55,464		$	60,530		$	55,464

Average common stockholders’ equity	$	6,389		$	6,398		$	6,474		$	6,443		$	6,404
Less: Average goodwill		(2,426	)		(2,426	)		(2,426	)		(2,426	)		(2,426	)
Average tangible common stockholders’ equity	$	3,963		$	3,972		$	4,048		$	4,017		$	3,978

Average Assets	$	63,269		$	61,988		$	57,307		$	61,729		$	57,246
Less: Average goodwill		(2,426	)		(2,426	)		(2,426	)		(2,426	)		(2,426	)
Average tangible assets	$	60,843		$	59,562		$	54,881		$	59,303		$	54,820

GAAP MEASURES:
Return on average assets (1)		0.96	%		1.10	%		1.04	%		1.03	%		1.04	%
Return on average common stockholders' equity (2)		9.01			10.18			8.69			9.39			8.77
Book value per common share	$	13.39		$	13.56		$	13.90		$	13.39		$	13.90
Common stockholders’ equity to total assets		9.92			10.02			11.17			9.92			11.17
NON-GAAP MEASURES:
Return on average tangible assets (1)		1.02	%		1.17	%		1.08	%		1.10	%		1.08	%
Return on average tangible common stockholders’ equity (2)		14.81			16.73			13.89			15.43			14.12
Tangible book value per common share	$	8.19		$	8.35		$	8.68		$	8.19		$	8.68
Tangible common stockholders’ equity to tangible assets		6.31			6.42			7.28			6.31			7.28


	For the Three Months Ended			For the Nine Months Ended
(dollars in millions)	September 30, 2022	June 30, 2022	September 30, 2021	September 30, 2022	September 30, 2021
Mortgage Loan Originated for Investment:
Multi-family	$1,716	$2,939	$1,796	$7,065	$5,341
Commercial real estate	243	213	143	737	655
One-to-four family residential	13	82	70	157	138
Acquisition, development, and construction	11	32	18	83	94
Total mortgage loans originated for investment	1,983	3,266	2,027	8,042	6,228
Other Loans Originated for Investment:
Specialty finance	1,560	1,877	796	4,075	1,943
Other commercial and industrial	215	116	127	433	383
Other	2	1	2	5	5
Total other loans originated for investment	1,777	1,994	925	4,513	2,331
Total loans originated for investment	$3,760	$5,260	$2,952	$12,555	$8,559


	At September 30, 2022
		Multi-Family Loans					Commercial Real Estate Loans
(dollars in millions)		Amount		Percent of Total			Amount		Percent of Total
New York City:
Manhattan	$		7,410		19.93	%	$	2,760		41.80	%
Brooklyn			6,448		17.34			340		5.14
Bronx			3,731		10.04			147		2.22
Queens			2,941		7.91			564		8.54
Staten Island			127		0.34			51		0.78
Total New York City	$		20,657		55.56	%	$	3,862		58.48	%
New Jersey			5,012		13.48			562		8.51
Long Island			540		1.45			1,030		15.60
Total Metro New York	$		26,209		70.49	%	$	5,454		82.59	%
Other New York State			1,163		3.13			141		2.14
Pennsylvania			3,740		10.06			318		4.82
Florida			1,730		4.65			208		3.15
Ohio			780		2.10			40		0.61
Arizona			412		1.11			33		0.50
All other states			3,145		8.46			409		6.19
Total	$		37,179		100.00	%	$	6,603		100.00	%


(dollars in millions)		Accruing			Non- Accrual				Total
Balance at December 31, 2021	$		16	$		13		$		29
New TDRs			—			19				19
Charge-offs			—			—				—
Transferred from performing			—			—				—
Loan payoffs, including dispositions and principal pay-downs			—			(3	)			(3	)
Balance at September 30, 2022	$		16	$		29		$		45


~~(dollars in millions)~~
~~New York~~	$	43
~~New Jersey~~		1
~~All other states~~		1
~~Total non-performing loans~~	$	45


		At September 30, 2022
(dollars in millions)		Three Months or Less					Four to Twelve Months					More Than One Year to Three Years					More Than Three Years to Five Years				More Than Five Years to 10 Years				More Than 10 Years				Total
INTEREST-EARNING ASSETS:
Mortgage and other loans (1)	$		6,889			$		5,578			$		14,332			$		14,414		$		7,726		$		—		$		48,939
Mortgage-related securities (2)(3)			153					176					491					330				258				822				2,230
Other securities (2)			1,735					1,821					351					53				704				425				5,089
Interest-earning cash, cash equivalents and due from banks			1,558					—					—					—				—				—				1,558
Total interest-earning assets			10,335					7,575					15,174					14,797				8,688				1,247				57,816
INTEREST-BEARING LIABILITIES:
Interest-bearing checking and money market accounts			13,004					463					2,758					583				3,089				—				19,897
Savings accounts			2,685					1,956					361					270				3,588				—				8,860
Certificates of deposit			1,558					5,252					2,259					40				—				—				9,109
Borrowed funds			6,529					2,900					3,725					500				—				144				13,798
Total interest-bearing liabilities			23,776					10,571					9,103					1,393				6,677				144				51,664
Interest rate sensitivity gap per period (4)	$		(13,441	)		$		(2,996	)		$		6,071			$		13,404		$		2,011		$		1,103		$		6,152
Cumulative interest rate sensitivity gap	$		(13,441	)		$		(16,437	)		$		(10,366	)		$		3,038		$		5,049		$		6,152
Cumulative interest rate sensitivity gap as a percentage of total assets			(21.35	)	%			(26.11	)	%			(16.47	)	%			4.83	%			8.02	%			9.77	%
Cumulative net interest-earning assets as a percentage of net interest-bearing liabilities			43.47		%			52.14		%			76.14		%			106.77	%			109.80	%			111.91	%