UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

~~QUARTERLY REPORT PURSUANT TO SECTION13~~

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023

OR ~~15(d)~~

~~OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017~~


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission ~~File Number1-31565~~

file number: 001-16577

NEW YORK COMMUNITY BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware

06-1377322

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

102 Duffy Avenue,

Hicksville,

New York

11801

(Address of principal executive offices)

(Zip Code)

~~615 Merrick Avenue, Westbury, New York 11590~~

~~(Address of principal executive offices)~~

(

Registrant’s telephone number, including area ~~code)~~code: (516) 683-4100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value per share

NYCB

New York Stock Exchange

Bifurcated Option Note Unit SecuritiESSM

NYCB PU

New York Stock Exchange

Depositary Shares each representing a 1/40th interest in a share of Fixed-to-Floating Rate Series A Noncumulative Perpetual Preferred Stock

NYCB PA

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

☒

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the ~~definition~~definitions of ~~“large~~"large accelerated filer,~~” “accelerated~~" "accelerated filer,~~” “smaller~~" "smaller reporting ~~company”~~company," and ~~“emerging~~"emerging growth ~~company”~~company" in Rule12b-2 of the Exchange Act. ~~(Check one)~~

Large ~~accelerated filer~~Accelerated Filer

☒

Accelerated Filer

~~Accelerated filer~~☐

Smaller Reporting Company

☐

Non-Accelerated Filer

☐

Emerging growth company

☐

~~Non-Accelerated filer~~

~~☐ (Do not check if a smaller reporting company)~~

~~Smaller Reporting Company~~

☐

~~Emerging Growth Company~~

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

☐.

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the ~~Exchange~~ Act). Yes ☐ No ☒


		~~489,054,449~~
		~~Number of shares of common stock~~ ~~outstanding at November 6, 2017~~

The number of shares of the registrant’s common stock outstanding as of August 7, 2023 was 722,475,292 shares.

NEW YORK COMMUNITY BANCORP, INC.

FORM10-Q

~~Quarter Ended September~~

FOR THE QUARTER ENDED June 30, ~~2017~~

2023

TABLE OF CONTENTS


~~INDEX~~			~~Page No.~~
~~Part I.~~	~~FINANCIAL INFORMATION~~

~~Item 1.~~						~~Financial Statements~~			PART I. – FINANCIAL INFORMATION

Item 1.		Financial Statements
		Consolidated Statements of Financial Condition ~~as of September~~– June 30, ~~2017~~2023 (unaudited) and December 31, ~~2016~~ 2022							1	41

	Consolidated Statements of Income and Comprehensive Income ~~for~~– For the ~~Three~~three and ~~Nine Months Ended September~~six months ended June 30, ~~2017~~2023 and ~~2016~~2022 (unaudited)					2	42
		Consolidated Statements of Stockholders’ Equity – For the three and six months ended June 30, 2023 and 2022 (unaudited)			43
					~~Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2017 (unaudited)~~			3

	Consolidated Statements of Cash Flows ~~for~~– For the ~~Nine Months Ended September~~six months ended June 30, ~~2017~~2023 and ~~2016~~2022 (unaudited)					4	45

	Notes to the Consolidated Financial Statements (unaudited)					5
		Note 1 - Organization Basis of Presentation			47
		Note 2 - Computation of Earnings Per Common Share			48
		Note 3 - Business Combination			49
		Note 4 - Accumulated Other Comprehensive Income			53
		Note 5 - Investment Securities			54
		Note 6 - Loans and Leases			57
		Note 7 - Allowance for Credit Losses			63
		Note 8 - Leases			64
		Note 9 - Mortgage Servicing Rights			67
		Note 10 -Variable Interest Entities			69
		Note 11 - Borrowed Funds			69
		Note 12 - Pension and Other Post-Retirement Benefits			70
		Note 13 - Stock-Related Benefit Plans			70
		Note 14 - Derivative and Hedging Activities			71
		Note 15 - Intangible Assets			75
		Note 16 - Fair Value Measures			76
Item 2.					Management’s Discussion and Analysis of Financial Condition and Results of Operations					41	10

Item 3.			Quantitative and Qualitative Disclosures about Market Risk	83
Item 4.		Controls and Procedures			83

~~Item 4.~~						~~Controls and Procedures~~PART II. – OTHER INFORMATION			83

~~Part II.~~			~~OTHER INFORMATION~~

Item 1.			Legal Proceedings					84

Item 1A.			Risk Factors					84

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	85
Item 3.		Defaults upon Senior Securities			84 85
Item 4.		Mine Safety Disclosures			85
Item 5.		Other Information			85
Item 6.		Exhibits			85

~~Item 3.~~ SIGNATURES					87

GLOSSARY OF ABBREVIATIONS AND ACRONYMS

The following list of abbreviations and acronyms are provided as a tool for the reader and may be used throughout this Report, including the Consolidated Financial Statements and Notes:

~~Defaults upon Senior Securities~~

~~Item 4.~~Term

~~Mine Safety Disclosures~~

Definition

Term

Definition

ACL

Allowance for Credit Losses

FHLB

Federal Home Loan Bank

~~Item 5.~~ADC

~~Other Information~~

Acquisition, development, and construction loan

FHLB-NY

Federal Home Loan Bank of New York

ALCO

Asset and Liability Management Committee

FOAL

Fallout-Adjusted Locks

~~Item 6.~~

~~Exhibits~~

~~Signatures~~

~~Exhibits~~

AOCL

~~NEW YORK COMMUNITY BANCORP, INC.~~

~~CONSOLIDATED STATEMENTS OF CONDITION~~

~~(in thousands, except share data)~~

   September 30,
2017 December 31,
2016
   (unaudited)
Assets:

Cash and cash equivalents
   $ 3,277,427 $ 557,850
Securities:

Available-for-sale ($1,162,014 pledged at September 30, 2017)
   3,031,026 104,281
Held-to-maturity ($1,930,533 pledged and fair value of $3,813,959 at December 31, 2016)
   —   3,712,776


Total securities
   3,031,026 3,817,057


Loans held for sale
   104,938 409,152
Non-covered loans held for investment, net of deferred loan fees and costs
   37,506,199 37,382,722
Less: Allowance for losses onnon-covered loans
   (158,918 ) (158,290 )


Non-covered loans held for investment, net
   37,347,281 37,224,432
Covered loans
   —   1,698,133
Less: Allowance for losses on covered loans
   —   (23,701 )


Covered loans, net
   —   1,674,432


Total loans, net
   37,452,219 39,308,016
Federal Home Loan Bank stock, at cost
   579,474 590,934
Premises and equipment, net
   375,482 373,675
FDIC loss share receivable
   —   243,686
Goodwill
   2,436,131 2,436,131
Core deposit intangibles
   —   208
Bank-owned life insurance
   961,412 949,026
Other assets (includes $16,990 of other real estate owned covered by Loss Share Agreements at December 31, 2016)
   344,720 649,972


Total assets
   $ 48,457,891 $ 48,926,555


Liabilities and Stockholders’ Equity:

Deposits:

Interest-bearing checking and money market accounts
   $ 12,338,949 $ 13,395,080
Savings accounts
   4,996,578 5,280,374
Certificates of deposit
   8,802,573 7,577,170
Non-interest-bearing accounts
   2,755,097 2,635,279


Total deposits
   28,893,197 28,887,903


Borrowed funds:

Wholesale borrowings:

Federal Home Loan Bank advances
   11,554,500 11,664,500
Repurchase agreements
   450,000 1,500,000
Federal funds purchased
   —   150,000


Total wholesale borrowings
   12,004,500 13,314,500
Junior subordinated debentures
   359,102 358,879


Total borrowed funds
   12,363,602 13,673,379
Other liabilities
   441,438 241,282


Total liabilities
   41,698,237 42,802,564


Stockholders’ equity:

Preferred stock at par $0.01 (5,000,000 shares authorized): Series A (515,000 shares issued and outstanding)
   502,840 —
Common stock at par $0.01 (900,000,000 shares authorized; 489,072,101 and 487,067,889 shares issued; and 489,061,848 and 487,056,676 shares outstanding, respectively)
   4,891 4,871
Paid-in capital in excess of par
   6,063,813 6,047,558
Retained earnings
   192,607 128,435
Treasury stock, at cost (10,253 and 11,213 shares, respectively)
   (130 ) (160 )
Accumulated other comprehensive loss, net of tax:

Net unrealized gain (loss) on securities available for sale, net of tax of $34,189 and $534, respectively
   47,917 (753 )
Net unrealized loss on thenon-credit portion of other-than-temporary impairment (“OTTI”) losses on securities, net of tax of $3,338 and $3,351, respectively
   (5,221 ) (5,241 )
Net unrealized loss on pension and post-retirement obligations, net of tax of $31,744 and $34,355, respectively
   (47,063 ) (50,719 )


Total accumulated other comprehensive loss, net of tax
   (4,367 ) (56,713 )


Total stockholders’ equity
   6,759,654 6,123,991


Total liabilities and stockholders’ equity
   $ 48,457,891 $ 48,926,555

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

~~NEW YORK COMMUNITY BANCORP, INC.~~

~~CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME~~

~~(in thousands, except per share data)~~

~~(unaudited)~~

   For the
Three Months Ended
September 30, For the
Nine Months Ended
September 30,
   2017 2016 2017 2016
Interest Income:

Mortgage and other loans
   $ 350,990 $ 367,932 $ 1,070,722 $ 1,099,137
Securities and money market investments
   42,685 48,164 121,147 160,384


Total interest income
   393,675 416,096 1,191,869 1,259,521


Interest Expense:

Interest-bearing checking and money market accounts
   27,620 15,866 71,413 45,771
Savings accounts
   7,109 7,439 21,069 25,001
Certificates of deposit
   27,649 20,501 73,786 55,129
Borrowed funds
   54,954 53,867 166,572 161,758


Total interest expense
   117,332 97,673 332,840 287,659


Net interest income
   276,343 318,423 859,029 971,862
Provision for losses on non-covered loans
   44,585 1,234 58,017 6,699
Recovery of losses on covered loans
   —   (1,289 ) (23,701 ) (6,035 )


Net interest income after provision for (recovery of) loan losses
   231,758 318,478 824,713 971,198


Non-Interest Income:

Mortgage banking income
   1,486 12,925 19,446 24,020
Fee income
   7,972 8,640 23,983 24,480
Bank-owned life insurance
   8,314 7,029 21,170 23,208
Net (loss) gain on sales of loans
   (76 ) 3,465 1,055 15,118
Net gain on sales of securities
   —   237 28,915 413
FDIC indemnification expense
   —   (1,031 ) (18,961 ) (4,828 )
Gain on sale of covered loans and mortgage banking operations
   82,026 —   82,026 —
Other
   9,206 9,330 33,903 30,787


Total non-interest income
   108,928 40,595 191,537 113,198


Non-Interest Expense:

Operating expenses:

Compensation and benefits
   91,594 86,079 280,008 261,230
Occupancy and equipment
   25,133 24,347 73,595 73,837
General and administrative
   45,483 48,506 139,131 139,309


Total operating expenses
   162,210 158,932 492,734 474,376
Amortization of core deposit intangibles
   24 542 208 1,994
Merger-related expenses
   —   2,211 —   4,674


Total non-interest expense
   162,234 161,685 492,942 481,044


Income before income taxes
   178,452 197,388 523,308 603,352
Income tax expense
   67,984 72,089 193,628 221,684


Net income
   $ 110,468 $ 125,299 $ 329,680 $ 381,668
Preferred stock dividends
   8,207 —   16,414 —


Net income available to common shareholders
   $ 102,261 $ 125,299 $ 313,266 $ 381,668


Basic earnings per common share
   $0.21 $0.26 $0.64 $0.78


Diluted earnings per common share
   $0.21 $0.26 $0.64 $0.78


Net income
   $ 110,468 $ 125,299 $ 329,680 $ 381,668
Other comprehensive (loss) income, net of tax:

Change in net unrealized gain/loss on securities available for sale, net of tax of $3,049; $396; $35,493; and $1,186, respectively
   (4,285 ) (558 ) 49,748 1,684
Change in the non-credit portion of OTTI losses recognized in other comprehensive income, net of tax of $0; $12; $13; and $36, respectively
   —   19 20 57
Change in pension and post-retirement obligations, net of tax of $870; $946; $2,611 and $2,837, respectively
   1,219 1,336 3,656 4,007
Less: Reclassification adjustment for sales of available-for-sale securities, net of tax of $770
   —   —   (1,078 ) —


Total other comprehensive (loss) income, net of tax
   (3,066 ) 797 52,346 5,748


Total comprehensive income, net of tax
   $ 107,402 $ 126,096 $ 382,026 $ 387,416

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

~~NEW YORK COMMUNITY BANCORP, INC.~~

~~CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~(in thousands, except share data)~~

~~(unaudited)~~

   For the
Nine Months Ended
September 30, 2017
Preferred Stock (Par Value: $0.01):

Balance at beginning of year
   $ —
Issuance of preferred stock (515,000 shares)
   502,840


Balance at end of period
   502,840


Common Stock (Par Value: $0.01):

Balance at beginning of year
   4,871
Shares issued for restricted stock awards (2,004,212 shares)
   20


Balance at end of period
   4,891


Paid-in Capital in Excess of Par:

Balance at beginning of year
   6,047,558
Shares issued for restricted stock awards, net of forfeitures
   (11,028 )
Compensation expense related to restricted stock awards
   27,283


Balance at end of period
   6,063,813


Retained Earnings:

Balance at beginning of year
   128,435
Net income
   329,680
Dividends paid on common stock ($0.51 per share)
   (249,094 )
Dividends paid on preferred stock ($31.88 per share)
   (16,414 )


Balance at end of period
   192,607


Treasury Stock:

Balance at beginning of year
   (160 )
Purchase of common stock (712,877 shares)
   (10,978 )
Shares issued for restricted stock awards (713,837 shares)
   11,008


Balance at end of period
   (130 )


Accumulated Other Comprehensive Loss, Net of Tax:

Balance at beginning of year
   (56,713 )
Other comprehensive income, net of tax
   52,346


Balance at end of period
   (4,367 )


Total stockholders’ equity
   $ 6,759,654

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

~~NEW YORK COMMUNITY BANCORP, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(in thousands)~~

~~(unaudited)~~

   For the Nine Months Ended
September 30,
   2017 2016
Cash Flows from Operating Activities:

Net income
   $ 329,680 $ 381,668
Adjustments to reconcile net income to net cash provided by operating activities:

Provision for loan losses
   34,316 664
Depreciation and amortization
   24,915 24,603
Amortization of discounts and premiums, net
   (3,381 ) (25,114 )
Amortization of core deposit intangibles
   208 1,994
Net gain on sales of securities
   (28,915 ) (413 )
Net gain on sales of loans
   (87,200 ) (49,809 )
Stock-based compensation
   27,283 24,611
Deferred tax (benefit) expense
   (12,324 ) 37,569
Changes in operating assets and liabilities:

Decrease in other assets
   536,552 353,403
Increase (decrease) in other liabilities
   181,400 (11,608 )
Origination of loans held for sale
   (1,623,848 ) (3,579,435 )
Proceeds from sales of loans originated for sale
   1,936,162 3,237,704


Net cash provided by operating activities
   1,314,848 395,837


Cash Flows from Investing Activities:

Proceeds from repayment of securities held to maturity
   175,375 2,356,766
Proceeds from repayment of securities available for sale
   336,429 50,010
Proceeds from sales of securities held to maturity
   547,925 —
Proceeds from sales of securities available for sale
   246,209 264,413
Purchases of securities held to maturity
   (13,030 ) (10,086 )
Purchase of securities available for sale
   (390,932 ) (271,836 )
Redemption of Federal Home Loan Bank stock
   79,254 463,623
Purchase of Federal Home Loan Bank stock
   (67,794 ) (386,007 )
Proceeds from sales of loans
   2,260,687 1,354,796
Other changes in loans, net
   (664,320 ) (2,623,161 )
Purchase of premises and equipment, net
   (26,722 ) (69,665 )


Net cash provided by investing activities
   2,483,081 1,128,853


Cash Flows from Financing Activities:

Net increase in deposits
   5,294 712,841
Net decrease in short-term borrowed funds
   (460,000 ) (1,927,800 )
(Repayments of) proceeds from long-term borrowed funds
   (850,000 ) 181,000
Net proceeds from issuance of preferred stock
   502,840 —
Cash dividends paid on common stock
   (249,094 ) (248,081 )
Cash dividends paid on preferred stock
   (16,414 ) —
Payments relating to treasury shares received for restricted stock award tax payments
   (10,978 ) (8,542 )


Net cash used in financing activities
   (1,078,352 ) (1,290,582 )


Net increase in cash and cash equivalents
   2,719,577 234,108
Cash and cash equivalents at beginning of period
   557,850 537,674


Cash and cash equivalents at end of period
   $ 3,277,427 $ 771,782


Supplemental information:

Cash paid for interest
   $ 330,182 $ 283,418
Cash paid for income taxes
   110,651 135,192
Non-cash investing and financing activities:

Transfers to other real estate owned from loans
   $ 9,558 $ 18,691
Transfer of loans from held for investment to held for sale
   1,881,532 1,339,679
Shares issued for restricted stock awards
   11,028 8,985
Securities transferred from held to maturity to available for sale
   3,040,305 —

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

~~NEW YORK COMMUNITY BANCORP, INC.~~

~~NOTES TO THE UNAUDITED 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”) was organized under Delaware law on July 20, 1993 and is the holding company for New York Community Bank and New York Commercial Bank (hereinafter referred to as the “Community Bank” and the “Commercial Bank,” respectively, and collectively as the “Banks”). For the purpose of these Consolidated Financial Statements, the “Community Bank” and the “Commercial Bank” refer not only to the respective banks but also to their respective subsidiaries.

The Community Bank is the primary banking subsidiary of the Company, which was formerly known as Queens County Bancorp, Inc. Founded on April 14, 1859 and formerly known as Queens County Savings Bank, the Community 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 Commercial Bank was established on December 30, 2005.

Reflecting its growth through acquisitions, the Community Bank currently operates 225 branches, two of which operate directly under the Community Bank name. The remaining 223 Community Bank branches operate through seven divisional banks: Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, and Roosevelt Savings Bank in New York; Garden State Community Bank in New Jersey; AmTrust Bank in Florida and Arizona; and Ohio Savings Bank in Ohio.

The Commercial Bank currently operates 30 branches in Manhattan, Queens, Brooklyn, Westchester County, and Long Island (all in New York), including 18 branches that operate under the name “Atlantic Bank.”

~~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 allowances for loan losses; the evaluation of goodwill for impairment; and the evaluation of the need for a valuation allowance on the Company’s deferred tax assets.

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 (“capital securities”). See Note 7, “Borrowed Funds,” for additional information regarding these trusts.

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

Basic earnings per common share (“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 containingnon-forfeitable~~ ~~rights to dividends paid on the Company’s common stock are considered participating securities, and therefore are included in thetwo-class~~ ~~method for calculating EPS. Under thetwo-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:~~

   Three Months Ended    Nine Months Ended
   September 30,    September 30,
(in thousands, except share and per share data)    2017    2016    2017    2016
Net income available to common shareholders
   $ 102,261    $ 125,299    $ 313,266    $ 381,668
Less: Dividends paid on and earnings allocated to participating securities
   (823 )    (973 )    (2,512 )    (2,928 )








Earnings applicable to common stock
   $ 101,438    $ 124,326    $ 310,754    $ 378,740








Weighted average common shares outstanding
   487,274,303    485,352,998    487,025,614    485,087,197








Basic earnings per common share
   $ 0.21    $ 0.26    $ 0.64    $ 0.78








Earnings applicable to common stock
   $ 101,438    $ 124,326    $ 310,754    $ 378,740








Weighted average common shares outstanding
   487,274,303    485,352,998    487,025,614    485,087,197
Potential dilutive common shares⁽¹⁾
   —      —      —      —








Total shares for diluted earnings per share computation
   487,274,303    485,352,998    487,025,614    485,087,197








Diluted earnings per common share and common share equivalents
   $ 0.21    $ 0.26    $ 0.64    $ 0.78

~~(1)~~

~~At September 30, 2017 and 2016, there were no stock options outstanding.~~

~~Note 3. Reclassifications Out of~~ Accumulated ~~Other Comprehensive Loss~~

(in thousands)    For the Nine Months Ended September 30, 2017
                        Details about
Accumulated Other Comprehensive Loss
   Amount Reclassified
from Accumulated
Other Comprehensive
Loss⁽¹⁾
Affected Line Item in the
Consolidated Statement of Operations
and Comprehensive Income
Unrealized gains onavailable-for-sale securities
   $ 1,848
Net gain on sales of securities
   (770 )
Income tax expense



   $ 1,078
Net gain on sales of securities, net of tax



Amortization of defined benefit pension plan items:

Past service liability
   $ 187
Included in the computation of net periodic (credit) expense⁽²⁾
Actuarial losses
   (6,363 )
Included in the computation of net periodic (credit) expense⁽²⁾



   (6,176 )
Total before tax
   2,574
Tax benefit



   $ (3,602 )
Amortization of defined benefit pension plan items, net of tax



Total reclassifications for the period
   $ (2,524 )

~~(1)~~

~~Amounts in parentheses indicate expense items.~~

~~(2)~~

~~See Note 9, “Pension and Other Post-Retirement Benefits,” for additional information.~~

~~Note 4. Securities~~

~~The following tables summarize the Company’s portfolio of securities available for sale at the dates indicated:~~

   September 30, 2017
(in thousands)    Amortized
Cost    Gross
Unrealized
Gain    Gross
Unrealized
Loss    Fair
Value
Mortgage-Related Securities:

GSE⁽¹⁾ certificates
   $ 1,904,431    $ 57,138    $ 1,217    $ 1,960,352
GSE CMOs⁽²⁾
   530,365    19,812    —      550,177








Total mortgage-related securities
   $ 2,434,796    $ 76,950    $ 1,217    $ 2,510,529








Other Securities:

U. S. Treasury obligations
   $ 199,838    $ 37    $ —      $ 199,875
GSE debentures
   88,242    2,592    —      90,834
Corporate bonds
   74,580    11,557    —      86,137
Municipal bonds
   71,079    137    849    70,367
Capital trust notes
   48,217    3,489    10,939    40,767
Preferred stock
   15,293    46    —      15,339
Mutual funds and common stock⁽³⁾
   16,874    488    184    17,178








Total other securities
   $ 514,123    $ 18,346    $ 11,972    $ 520,497








Total securities available for sale⁽⁴⁾
   $ 2,948,919    $ 95,296    $ 13,189    $ 3,031,026

~~(1)~~

~~Government-sponsored enterprise.~~

~~(2)~~

~~Collateralized mortgage obligations.~~

~~(3)~~

~~Primarily consists of mutual funds that are Community ReinvestmentAct-qualified~~ ~~investments.~~

~~(4)~~

~~The amortized cost includes thenon-credit~~ ~~portion of other-than-temporary impairment (“OTTI”) recorded in accumulated~~ other comprehensive loss ~~(“AOCL”). At September 30, 2017,~~

FOMC

Federal Open Market Committee

ASC

Accounting Standards Codification

FRB

Federal Reserve Board

ASU

Accounting Standards Update

FRB-NY

Federal Reserve Bank of New York

BaaS

Banking as a Service

Freddie Mac

Federal Home Loan Mortgage Corporation

BOLI

Bank-owned life insurance

FTEs

Full-time equivalent employees

Basis point(s)

GAAP

U.S. generally accepted accounting principles

C&I

Commercial and industrial loan

GLBA

The Gramm Leach Bliley Act

CDs

Certificates of deposit

GNMA

Government National Mortgage Association

CECL

Current Expected Credit Loss

GSE

Government-sponsored enterprises

CFPB

Consumer Financial Protection Bureau

HPI

Housing Price Index

CMOs

Collateralized mortgage obligations

LGG

Loans with government guarantees

CMT

Constant maturity treasury rate

LHFS

Loans Held-for-Sale

CPI

Consumer Price Index

LIBOR

London Interbank Offered Rate

CPR

Constant prepayment rate

LTV

Loan-to-value ratio

CRA

Community Reinvestment Act

MBS

Mortgage-backed securities

CRE

Commercial real estate loan

MSRs

Mortgage servicing rights

DIF

Deposit Insurance Fund

NIM

Net interest margin

DFA

Dodd-Frank Wall Street Reform and Consumer Protection Act

NOL

Net operating loss

DSCR

Debt service coverage ratio

NPAs

Non-performing assets

EAR

Earnings at Risk

NPLs

Non-performing loans

EPS

Earnings per common share

NPV

Net Portfolio Value

ERM

Enterprise Risk Management

NYSE

New York Stock Exchange

ESOP

Employee Stock Ownership Plan

OCC

Office of the~~non-credit~~ ~~portion~~ Comptroller of ~~OTTI recorded in AOCL was $8.6 million (before taxes).~~the Currency

EVE

Economic Value of Equity at Risk

OREO

Other real estate owned

Fannie Mae

Federal National Mortgage Association

PAA

Purchase accounting adjustments

FASB

Financial Accounting Standards Board

ROU

Right of use asset

FCA

the United Kingdom's Financial Conduct Authority

SBA

Small Business Administration

FDI Act

Federal Deposit Insurance Act

Signature

Signature Bridge Bank, N.A.

FDIC

Federal Deposit Insurance Corporation

SEC

U.S. Securities and Exchange Commission

FHA

Federal Housing Administration

SOFR

Secured Overnight Financing Rate

FHFA

Federal Housing Finance Agency

TDR

Troubled debt restructurings

   December 31, 2016
(in thousands)    Amortized
Cost    Gross
Unrealized
Gain    Gross
Unrealized
Loss    Fair
Value
Mortgage-Related Securities:

GSE certificates
   $ 7,786    $ —      $ 460    $ 7,326








Other Securities:

Municipal bonds
   $ 583    $ 48    $ —      $ 631
Capital trust notes
   9,458    2    2,217    7,243
Preferred stock
   70,866    1,446    328    71,984
Mutual funds and common stock
   16,874    484    261    17,097








Total other securities
   $ 97,781    $ 1,980    $ 2,806    $ 96,955








Total securities available for sale
   $ 105,567    $ 1,980    $ 3,266    $ 104,281

GLOSSARY

BARGAIN PURCHASE GAIN

The ~~following table summarizes the Company’s portfolio of securities held to maturity at December 31, 2016:~~

(in thousands)    Amortized
Cost    Carrying
Amount    Gross
Unrealized
Gain    Gross
Unrealized
Loss    Fair Value
Mortgage-Related Securities:

GSEcertificates
   $ 2,193,489    $ 2,193,489    $ 64,431    $ 2,399    $ 2,255,521
GSE CMOs
   1,019,074    1,019,074    36,895    57    1,055,912










Total mortgage-related securities
   $ 3,212,563    $ 3,212,563    $ 101,326    $ 2,456    $ 3,311,433










Other Securities:

U. S. Treasury obligations
   $ 200,293    $ 200,293    $ —      $ 73    $ 200,220
GSE debentures
   88,457    88,457    3,836    —      92,293
Corporate bonds
   74,217    74,217    9,549    —      83,766
Municipal bonds
   71,554    71,554    —      1,789    69,765
Capital trust notes
   74,284    65,692    2,662    11,872    56,482










Total other securities
   $ 508,805    $ 500,213    $ 16,047    $ 13,734    $ 502,526










Total securities held to maturity⁽¹⁾
   $ 3,721,368    $ 3,712,776    $ 117,373    $ 16,190    $ 3,813,959

~~(1)~~

~~Held-to-maturity~~ ~~securities are reported at a carrying amount equal to amortized cost less thenon-credit~~ ~~portion of OTTI recorded in AOCL. At December 31, 2016, thenon-credit~~ ~~portion of OTTI recorded in AOCL was $8.6 million (before taxes).~~

~~At September 30, 2017 and December 31, 2016, respectively, the Company had $579.5 million and $590.9 million ofFHLB-NY~~ ~~stock, at cost. The Company is required to maintain an investment inFHLB-NY~~ ~~stock in order to have access to the funding it provides.~~

~~The following table summarizes the gross proceeds and gross realized gains from the sale ofavailable-for-sale~~ ~~securities during the periods indicated:~~

   For the Nine Months Ended
September 30,
(in thousands)    2017    2016
Gross proceeds
   $ 246,209    $ 264,413
Gross realized gains
   1,986    413

~~In addition, during the nine months ended September 30, 2017, the Company sought to take advantage of favorable bond market conditions and soldheld-to-maturity~~ securities with an amortized cost of $521.0 million resulting in gross proceeds of $547.9 million including a gross realized gain of $26.9 million. Accordingly, the Company transferred the remaining $3.0 billion of~~held-to-maturity~~ ~~securities toavailable-for-sale~~ ~~with a net unrealized gain of $82.8 million classified in other comprehensive loss in the Consolidated Statements of Condition. Having our securities portfolio classified asavailable-for-sale~~ improves the Company’s interest rate risk sensitivity and liquidity measures and provides the Company with more options in meeting the expected future Liquidity Coverage Ratio (“LCR”) requirements.

~~In the following table, the beginning balance represents the credit loss component for debt securities on~~amount by which OTTI occurred prior to January 1, 2017. For credit-impaired debt securities, OTTI recognized in earnings after that date is presented as an addition in two components, based upon whether the current period is the first time a debt security was credit-impaired (initial credit impairment) or is not the first time a debt security was credit-impaired (subsequent credit impairment).

(in thousands)    For the
Nine Months Ended
September 30, 2017
Beginning credit loss amount as of December 31, 2016
   $ 197,552
Add:
Initial other-than-temporary credit losses    —
Subsequent other-than-temporary credit losses    —
Amount previously recognized in AOCL    —
Less:
Realized losses for securities sold    —
Securities intended or required to be sold    —
Increase in cash flows on debt securities    126


Ending credit loss amount as of September 30, 2017
   $ 197,426

~~The following table summarizes, by contractual maturity, the amortized cost ofavailable-for-sale~~ ~~securities at September 30, 2017:~~

(dollars in thousands)    Mortgage-
Related
Securities Average
Yield U.S. Treasury
and GSE
Obligations    Average
Yield State, County,
and Municipal    Average
Yield⁽¹⁾ Other Debt
Securities ⁽²⁾    Average
Yield Fair Value
Available-for-Sale Securities:⁽³⁾

Due within one year
   $ — %    $ 259,207    1.82 % $ 150    6.47 % $ —      — % $ 260,064
Due from one to five years
   1,101,945 3.13 6,950    3.84 438    6.59 48,351    3.51 1,192,831
Due from five to ten years
   1,152,156 3.33 21,923    3.52 —      —   26,228    9.06 1,251,712
Due after ten years
   180,695 3.01 —      —   70,491    2.88 48,218    3.70 293,902








Total securities available for sale
   $ 2,434,796 3.21 % $ 288,080    2.00 % $ 71,079    2.91 % $ 122,797    4.77 % $ 2,998,509

~~(1)~~

~~Not presented on atax-equivalent~~ ~~basis.~~

~~(2)~~

~~Includes corporate bonds and capital trust notes.~~

~~(3)~~

~~As equity securities have no contractual maturity, they have been excluded from this table.~~

~~The following table presentsavailable-for-sale~~ ~~securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of September 30, 2017:~~

   Less than Twelve Months    Twelve Months or Longer    Total
(in thousands)    Fair Value    Unrealized Loss    Fair Value    Unrealized Loss    Fair Value    Unrealized Loss
Temporarily ImpairedAvailable-for-Sale Securities:

GSE certificates
   $ 197,953    $ 662    $ 18,195    $ 555    $ 216,148    $ 1,217
U. S. Treasury obligations
   —      —      —      —      —      —
Municipal bonds
   52,715    849    —      —      52,715    849
Capital trust notes
   —      —      32,787    10,939    32,787    10,939
Equity securities
   11,621    184    —      —      11,621    184












Total temporarily impairedavailable-for-sale securities
   $ 262,289    $ 1,695    $ 50,982    $ 11,494    $ 313,271    $ 13,189

~~The following table presentsheld-to-maturity~~ ~~andavailable-for-sale~~ ~~securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of December 31, 2016:~~

   Less than Twelve Months    Twelve Months or Longer    Total
(in thousands)    Fair Value    Unrealized Loss    Fair Value    Unrealized Loss    Fair Value    Unrealized Loss
Temporarily ImpairedHeld-to-Maturity Securities:

GSE certificates
   $ 268,891    $ 2,399    $ —      $ —      $ 268,891    $ 2,399
GSE CMOs
   42,980    57    —      —      42,980    57
U. S. Treasury obligations
   200,220    73    —      —      200,220    73
Municipal bonds
   69,765    1,789    —      —      69,765    1,789
Capital trust notes
   —      —      24,364    11,872    24,364    11,872












Total temporarily impairedheld-to-maturity securities
   $ 581,856    $ 4,318    $ 24,364    $ 11,872    $ 606,220    $ 16,190












Temporarily ImpairedAvailable-for-Sale Securities:

GSE certificates
   $ 7,326    $ 460    $ —      $ —      $ 7,326    $ 460
Capital trust notes
   —      —      5,241    2,217    5,241    2,217
Equity securities
   29,059    589    —      —      29,059    589












Total temporarily impairedavailable-for-sale securities
   $ 36,385    $ 1,049    $ 5,241    $ 2,217    $ 41,626    $ 3,266

An OTTI loss on impaired debt securities must be fully recognized in earnings if an investor has the intent to sell the debt security, or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost. However, even if an investor does not expect to sell a debt security, it must evaluate the expected cash flows to be received and determine if a credit loss has occurred. In the event that a credit loss occurs, only the amount of impairment associated with the credit loss is recognized in earnings. Amounts of impairment relating to factors other than credit losses are recorded in AOCL.

At September 30, 2017, the Company had unrealized losses on certain GSE mortgage-related securities, municipal bonds, capital trust notes, and equity securities. The unrealized losses on the Company’s GSE mortgage-related securities, municipal bonds, and capital trust notes at September 30, 2017 were primarily caused by movements in market interest rates and spread volatility, rather than credit risk. These securities are not expected to be settled at a price that is less than the amortized cost of the Company’s investment.

The Company reviews quarterly financial information related to its investments in capital trust notes, as well as other information that is released by each of the issuers of such notes, to determine their continued creditworthiness. The Company continues to monitor these investments and currently estimates that the present value of expected cash flows is not less than the amortized cost of the securities. It is possible that these securities will perform worse than is currently expected, which could lead to adverse changes in cash flows from these securities and potential OTTI losses in the future. Future events that could trigger material unrecoverable declines in the fair values of the Company’s investments, and thus result in potential OTTI losses, include, but are not limited to, government intervention; deteriorating asset quality and credit metrics; significantly higher levels of default and loan loss provisions; losses in value on the underlying collateral; net operating losses; and illiquidity in the financial markets.

~~The Company considers a decline in~~ the fair value of equity securities to be other than temporary if the Company does not expect to recover the entire amortized cost basis of the security. The unrealized losses on the Company’s equity securities at September 30, 2017 were caused by market volatility. The Company evaluated the near-term prospects of recoveringassets purchased exceeds the fair value of ~~these securities, together with~~liabilities assumed and consideration given.

BASIS POINT

Throughout this filing, the ~~severity~~year-over-year changes that occur in certain financial measures are reported in terms of basis points. Each basis point is equal to one hundredth of a percentage point, or 0.01 percent.

BOOK VALUE PER COMMON SHARE

Book value per common share refers to the amount of common stockholders’ equity attributable to each outstanding share of common stock, and ~~duration~~is calculated by dividing total stockholders’ equity less preferred stock at the end of ~~impairment~~a period, by the number of shares outstanding at the same date.

BROKERED DEPOSITS

Refers to ~~date,~~funds obtained, directly or indirectly, by or through deposit brokers that are then deposited into one or more deposit accounts at a bank.

CHARGE-OFF

Refers to the amount of a loan balance that has been written off against the allowance for credit losses.

COMMERCIAL REAL ESTATE LOAN

A mortgage loan secured by either an income-producing property owned by an investor and determined that they were not other-than-temporarily impaired. Nonetheless, it is possible that these equity securities will perform worse than is currently expected, which could lead to adverse changes in their fair value,leased primarily for commercial purposes or, to ~~the failure of the securities to fully recover~~a lesser extent, an owner-occupied building used for business purposes. The CRE loans in ~~value as currently anticipated~~our portfolio are typically secured by management. Either event could cause the Company to record an OTTI loss in a future period. Events that could trigger a material decline in the fair value of these securities include, but are not limited to, deterioration in the equity markets; a decline in the quality of the loan portfolio of the issuer in which the Company has invested; and the recording of higher loan loss provisions and net operating losses by such issuer.

The investment securities designated as having a continuous loss position for twelve months or more at September 30, 2017 consisted of five capital trust notes and five agency mortgage-related securities. At December 31, 2016 securities designated as having a continuous loss position for twelve months or more consisted of five capital trust notes. At September 30, 2017, the fair value of securities having a continuous loss position for twelve months or more was 18.4% below the collective amortized cost of $62.5 million. At December 31, 2016, the fair value of such securities was 32.2% below the collective amortized cost of $43.7 million. At September 30, 2017 and December 31, 2016, the combined market value of the respective securities represented unrealized losses of $11.5 million and $14.1 million, respectively.

~~Note 5: Loans~~

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

   September 30, 2017 December 31, 2016
   Amount Percent of
Non-Covered
Loans Held
for
Investment Amount Percent of
Non-Covered
Loans Held
for
Investment
(dollars in thousands)
Non-Covered Loans Held for Investment:

Mortgage Loans:

Multi-family
   $ 27,145,397 72.43 % $ 26,945,052 72.13 %
Commercial real estate
   7,550,387 20.14 7,724,362 20.68
One-to-four family
   413,235 1.10 381,081 1.02
Acquisition, development, and construction
   385,876 1.03 381,194 1.02


Total mortgage loans held for investment
   $ 35,494,895 94.70 $ 35,431,689 94.85


Other Loans:

Commercial and industrial
   1,404,278 3.75 1,341,216 3.59
Lease financing, net of unearned income of $58,870 and $60,278, respectively
   577,865 1.54 559,229 1.50


Total commercial and industrial loans⁽¹⁾
   1,982,143 5.29 1,900,445 5.09
Purchased credit-impaired loans
   —   —   5,762 0.01
Other
   3,666 0.01 18,305 0.05


Total other loans held for investment
   1,985,809 5.30 1,924,512 5.15


Totalnon-covered loans held for investment
   $ 37,480,704 100.00 % $ 37,356,201 100.00 %


Net deferred loan origination costs
   25,495 26,521
Allowance for losses onnon-covered loans
   (158,918 ) (158,290 )


Non-covered loans held for investment, net
   $ 37,347,281 $ 37,224,432


Covered loans
   —   1,698,133
Allowance for losses on covered loans
   —   (23,701 )


Covered loans, net
   $ —   $ 1,674,432
Loans held for sale
   104,938 409,152


Total loans, net
   $ 37,452,219 $ 39,308,016

~~(1)~~

Includes specialty finance loans of $1.4 billion at September 30, 2017 and $1.3 billion at December 31, 2016, and other commercial and industrial loans of $545.5 million and $632.9 million, respectively, at September 30, 2017 and December 31, 2016.

~~Non-Covered~~ ~~Loans~~

~~Non-Covered~~ ~~Loans Held for Investment~~

~~The majority of the loans the Company originates for investment are multi-family loans, most of which are collateralized bynon-luxury~~ apartment buildings in New York City with rent-regulated units and below-market rents. In addition, the Company originates commercial real estate (“CRE”) loans, most of which are collateralized by income-producing properties such aseither office buildings, retail shopping centers,~~mixed-use~~ ~~buildings, and multi-tenanted~~ light industrial ~~properties that are located in New York City~~centers with multiple tenants, or mixed-use properties.

COST OF FUNDS

The interest expense associated with interest-bearing liabilities, typically expressed as a ratio of interest expense to the average balance of interest-bearing liabilities for a given period.

CRE CONCENTRATION RATIO

Refers to the sum of multi-family, non-owner occupied CRE, and ~~on Long Island.~~

~~To a lesser extent, the Company also originatesone-to-four~~ ~~family loans,~~ acquisition, development, and construction (“ADC”) loans ~~and commercial and industrial (“C&I”) loans, for investment.One-to-four~~ ~~family loans held for investment were originated through~~divided by total risk-based capital.

DEBT SERVICE COVERAGE RATIO

An indication of a borrower’s ability to repay a loan, the Company’s mortgage banking operation and primarily consisted of jumbo prime adjustable rate mortgages made to borrowers with a solid credit history. ADC loans are primarily originated for multi-family and residential tract projects in New York City and on Long Island. C&I loans consist of asset-based loans, equipment loans and leases, and dealer floor-plan loans (together, “specialty finance loans and leases”) thatDSCR 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 ofmeasures the cash flows ~~being produced~~available to a borrower over the course of a year as a percentage of the annual interest and principal payments owed during that time.

DERIVATIVE

A term used to define a broad base of financial instruments, including swaps, options, and futures contracts, whose value is based upon, or derived from, an underlying rate, price, or index (such as interest rates, foreign currency, commodities, or prices of other financial instruments such as stocks or bonds).

EFFICIENCY RATIO

Measures total operating expenses as a percentage of the sum of net interest income and non-interest income.

GOODWILL

Refers to the difference between the purchase price and the fair value of an acquired company’s assets, net of the liabilities assumed. Goodwill is reflected as an asset on the balance sheet and is tested at least annually for impairment.

GOVERNMENT-SPONSORED ENTERPRISES

Refers to a group of financial services corporations that were created by the ~~underlying property. In addition, multi-family buildings, CRE properties,~~United States Congress to enhance the availability, and ~~ADC projects are inspected as a prerequisite to approval, and independent appraisers, whose appraisals are carefully reviewed by the Company’sin-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 andloan-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,reduce the cost of, ~~completion is greater than expected, or~~credit to certain targeted borrowing sectors, including home finance. The GSEs include, but are not limited to, the ~~length of time to complete and/or sell or lease~~Federal National Mortgage Association (“Fannie Mae”), the collateral property is greater than anticipated, the property could have a value upon completion that is insufficient to assure full repayment of the loan. This could have a material adverse effect on the quality of the ADC loan portfolio, and could result in losses or delinquencies. In addition, the Company utilizes the same stringent appraisal process for ADC loans as it does for its multi-family and CRE loans.

To minimize the risk involved in specialty finance lending and leasing, the Company participates in syndicated loans that are brought to it, and equipment loans and leases that are assigned to it, by a select group of nationally recognized sources who have had long-term relationships with its experienced lending officers. Each of these credits is secured with a perfected first security interest or outright ownership in the underlying collateral, and structured as senior debt or as a~~non-cancelable~~ ~~lease. To further minimize the risk involved in specialty finance lending and leasing, each transaction isre-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 innon-covered~~ loans held for investment at September 30, 2017 and December 31, 2016, respectively, were loans of $58.7 million and $91.8 million to officers, directors, and their related interests and parties. There were no loans to principal shareholders at either of those dates.

~~At December 31, 2016, the Company hadnon-covered~~ purchased credit-impaired (“PCI”) loans, with a carrying value of $5.8 million and an unpaid principal balance of $7.0 million at that date. PCI loans had been covered under Loss Share Agreements (“LSA”) with the FDIC that expired in March 2015 and had been included in~~non-covered~~ ~~loans. Such loans were accounted for under Accounting Standards Codification (“ASC”)310-30~~ ~~and were initially measured at fair value, which included estimated future credit losses expected to be incurred over the lives of the loans. Under ASC310-30,~~ purchasers are permitted to aggregate acquired loans into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. There were no such loans accounted for under ASC~~310-30~~ ~~at September 30, 2017.~~

~~Loans Held for Sale~~

As previously disclosed, on June 27, 2017, the Company entered into an agreement to sell its mortgage banking business, which was acquired as part of its 2009 FDIC-assisted acquisition of AmTrust Bank (“AmTrust”) and is reported under the Company’s Residential Mortgage Banking segment, to FreedomFederal Home Loan Mortgage Corporation (“~~Freedom”~~Freddie Mac”)~~. Accordingly, on September 29, 2017, the sale was completed with proceeds received in the amount of $226.6 million, resulting in a gain of $7.4 million, which is included in“Non-interest~~ income” in the accompanying Consolidated Statement of Income and Comprehensive Income. Freedom acquired both the Company’s origination and servicing platforms, as well as its mortgage servicing loan portfolio of $20.5 billion and related mortgage servicing rights (“MSRs”) asset of $208.8 million.

Additionally, as previously disclosed, the Company received approval from the FDIC to sell assets covered under our LSA, early terminate the LSA, and enter into an agreement to sell the majority of our~~one-to-four~~ family residential mortgage-related assets, including those covered under the LSA, to an affiliate of Cerberus Capital Management, L.P. (“Cerberus”). On July 28, 2017, the Company completed the sale, resulting in the receipt of proceeds of $1.9 billion from Cerberus, and the ~~FDIC~~Federal Home Loan Banks (the “FHLBs”).

GSE OBLIGATIONS

Refers to GSE mortgage-related securities (both certificates and ~~settled the related FDIC loss share receivable, resulting in a gain of $74.6 million which is included in“Non-interest~~ ~~income” in the accompanying Consolidated Statement of Income~~collateralized mortgage obligations) and ~~Comprehensive Income. Effective October 31, 2017, the Company and the FDIC completed termination of the LSA.~~

~~The Community Bank’s mortgage banking operations originated, aggregated, sold, and servicedone-to-four~~ ~~family loans. Community banks, credit unions, mortgage companies, and mortgage brokers used its proprietaryweb-accessible~~ ~~mortgage banking platform~~GSE debentures.

INTEREST RATE SENSITIVITY

Refers to ~~originate and closeone-to-four~~ ~~family loans nationwide. These loans were generally sold to GSEs, servicing retained. To a much lesser extent, the Community Bank used its mortgage banking platform to originate jumbo loans.~~

~~Asset Quality~~

~~The following table presents information regarding the quality of the Company’snon-covered~~ ~~loans held for investment at September 30, 2017:~~

(in thousands)    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
   $ 602    $ 11,018    $ —      $ 11,620    $ 27,133,777    $ 27,145,397
Commercial real estate
   450    4,923    —      5,373    7,545,014    7,550,387
One-to-four family
   676    2,179    —      2,855    410,380    413,235
Acquisition, development, and construction
   —      6,200    —      6,200    379,676    385,876
Commercial and industrial^{(1) (2)}
   3,419    44,640    —      48,059    1,934,084    1,982,143
Other
   6    10    —      16    3,650    3,666












Total
   $ 5,153    $ 68,970    $ —      $ 74,123    $ 37,406,581    $ 37,480,704

~~(1)~~

~~Includes $3.4 million and $43.4 million of taxi medallion-related loans that were 30 to 89 days past due and 90 days or more past due, respectively.~~

~~(2)~~

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

~~The following table presents information regarding the quality of the Company’snon-covered~~ ~~loans held for investment (excludingnon-covered~~ ~~PCI loans) at December 31, 2016:~~

(in thousands)    Loans
30-89 Days
Past Due⁽¹⁾    Non-Accrual
Loans⁽¹⁾    Loans
90 Days or
More
Delinquent and
Still Accruing
Interest    Total
Past Due
Loans    Current
Loans    Total Loans
Receivable
Multi-family
   $ 28    $ 13,558    $ —      $ 13,586    $ 26,931,466    $ 26,945,052
Commercial real estate
   —      9,297    —      9,297    7,715,065    7,724,362
One-to-four family
   2,844    9,679    —      12,523    368,558    381,081
Acquisition, development, and construction
   —      6,200    —      6,200    374,994    381,194
Commercial and industrial^{(2) (3)}
   7,263    16,422    —      23,685    1,876,760    1,900,445
Other
   248    1,313    —      1,561    16,744    18,305












Total
   $ 10,383    $ 56,469    $ —      $ 66,852    $ 37,283,587    $ 37,350,439

~~(1)~~

~~Excludes $6 thousand and $869 thousand ofnon-covered~~ ~~PCI loans that were 30 to 89 days past due and 90 days or more past due, respectively.~~

~~(2)~~

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

~~(3)~~

~~Includes $6.8 million and $15.2 million of taxi medallion loans that were 30 to 89 days past due and 90 days or more past due, respectively.~~

~~The following table summarizes the Company’s portfolio ofnon-covered~~ ~~loans held for investment by credit quality indicator at September 30, 2017:~~

Mortgage Loans Other Loans
(in thousands) 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
$ 27,059,736 $ 7,521,387 $ 411,056 $ 320,081 $ 35,312,260 $ 1,882,662    $ 3,656    $ 1,886,318
Special mention
27,884 10,724 —   50,043 88,651 47,628    —      47,628
Substandard
57,777 18,276 2,179 15,752 93,984 51,853    10    51,863
Doubtful
—   —   —   —   —   —      —      —





Total
$ 27,145,397 $ 7,550,387 $ 413,235 $ 385,876 $ 35,494,895 $ 1,982,143    $ 3,666    $ 1,985,809

~~(1)~~

~~Includes lease financing receivables, all of which were classified as “pass.”~~

~~The following table summarizes the Company’s portfolio ofnon-covered~~ ~~loans held for investment (excludingnon-covered~~ ~~PCI loans) by credit quality indicator at December 31, 2016:~~

Mortgage Loans Other Loans
(in thousands) 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
$ 26,754,622 $ 7,701,773 $ 371,179 $ 341,784 $ 35,169,358 $ 1,771,975    $ 16,992    $ 1,788,967
Special mention
164,325 12,604 —   33,210 210,139 54,979    —      54,979
Substandard
26,105 9,985 9,902 6,200 52,192 73,491    1,313    74,804
Doubtful
—   —   —   —   —   —      —      —





Total
$ 26,945,052 $ 7,724,362 $ 381,081 $ 381,194 $ 35,431,689 $ 1,900,445    $ 18,305    $ 1,918,750

~~(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. In addition,~~one-to-four~~ ~~family loans are classified based on the duration of the delinquency.~~

~~Troubled Debt Restructurings~~

~~The Company is required to account for certainheld-for-investment~~ loan modifications and restructurings as troubled debt restructurings (“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 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, 2017, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $41.5 million; loans on which forbearance agreements were reached amounted to $1.8 million.

~~The following table presents information regarding the Company’s TDRs as of the dates indicated:~~

   September 30, 2017    December 31, 2016
(in thousands)    Accruing    Non-Accrual    Total    Accruing    Non-Accrual    Total
Loan Category:

Multi-family
   $ 1,457    $ 7,608    $ 9,065    $ 1,981    $ 8,755    $ 10,736
Commercial real estate
   —      373    373    —      1,861    1,861
One-to-four family
   —      1,076    1,076    222    1,749    1,971
Commercial and industrial
   177    23,974    24,151    1,263    3,887    5,150
Acquisition, development, and construction
   8,652    —      8,652
Other
   —      —      —      —      202    202












Total
   $ 10,286    $ 33,031    $ 43,317    $ 3,466    $ 16,454    $ 19,920

~~The eligibility of a borrower forwork-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~~interest earned on assets and the interest paid on liabilities will change as a result of fluctuations in market interest rates.

INTEREST RATE SPREAD

The difference between the ~~maximum recovery for~~yield earned on average interest-earning assets and the ~~Company.~~

~~The financial effects~~cost of average interest-bearing liabilities.

LOAN-TO-VALUE RATIO

Measures the balance of a loan as a percentage of the ~~Company’s TDRs for the periods indicated are summarized as follows:~~

   For the Three Months Ended September 30, 2017
            Weighted Average
Interest Rate
(dollars in thousands)    Number
of
Loans    Pre-Modification
Recorded
Investment    Post-Modification
Recorded
Investment    Pre-Modification Post-
Modification Charge-off
Amount    Capitalized
Interest
Loan Category:

Acquisition, development, and construction
   2    $ 8,652    $ 8,652    5.50 % 5.50 % $ —      $ —
Commercial and industrial
   22    18,002    7,620    3.18 2.91 6,350    —










Total
   24    $ 26,654    $ 16,272    $ 6,350    $ —










   For the Three Months Ended September 30, 2016
            Weighted Average
Interest Rate
(dollars in thousands)    Number
of
Loans    Pre-Modification
Recorded
Investment    Post-Modification
Recorded
Investment    Pre-Modification Post-
Modification Charge-off
Amount    Capitalized
Interest
Loan Category:

One-to-four family
   —      $ —      $ —      — % — % $ —      $ —
Commercial and industrial
   2    1,314    1,273    3.22 3.22 41    —










Total
   2    $ 1,314    $ 1,273    $ 41    $ —

~~The financial effects of the Company’s TDRs for the periods indicated are summarized as follows:~~

   For the Nine Months Ended September 30, 2017
            Weighted Average
Interest Rate
(dollars in thousands)    Number
of
Loans    Pre-Modification
Recorded
Investment    Post-Modification
Recorded
Investment    Pre-Modification Post-
Modification Charge-off
Amount    Capitalized
Interest
Loan Category:

One-to-four family
   4    $ 810    $ 990    5.93 % 2.21 % $ —      $ 12
Acquisition, development, and construction
   2    8,652    8,652    5.50 5.50 —      —
Commercial and industrial
   52    48,716    23,673    3.36 3.29 11,079    —










Total
   58    $ 58,178    $ 33,315    $ 11,079    $ 12










   For the Nine Months Ended September 30, 2016
            Weighted Average
Interest Rate
(dollars in thousands)    Number
of
Loans    Pre-Modification
Recorded
Investment    Post-Modification
Recorded
Investment    Pre-Modification Post-
Modification Charge-off
Amount    Capitalized
Interest
Loan Category:

Multi-family
   1    $ 9,340    $ 8,303    4.63 % 4.00 % $ —      $ —
One-to-four family
   3    477    628    3.62 3.07 —      6
Commercial and industrial
   4    2,712    2,560    3.26 3.21 89    —










Total
   8    $ 12,529    $ 11,491    $ 89    $ 6

~~At September 30, 2017, twonon-coveredone-to-four~~ family loans, totaling $497,000 and six C&I loans, totaling $1.4 million that had been modified as TDRs during the twelve months ended at that date were in payment default. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. The Company does not consider a payment to be in default when the loan is in forbearance, or otherwise granted a delay of payment, or when the agreement to forebear or allow a delay of payment is part of a modification.

Subsequent to the modification, the loan is not considered to be in default until payment is contractually past due in accordance with the modified terms. However, the Company does consider a loan with multiple modifications or forbearance periods to be in default, and would also consider a loan to be in default if the borrower were in bankruptcy or if the loan were partially charged off subsequent to modification.

~~Covered Loans~~

~~As previously discussed, the Company sold its covered loan portfolio during the third quarter of 2017; therefore, the Company does not have any covered loans outstanding as of September 30, 2017.~~

The Company referred to certain loans acquired in the AmTrust and Desert Hills Bank (“Desert Hills”) transactions as “covered loans” because the Company was being reimbursed for a substantial portion of losses on these loans under the terms of the LSA. Covered loans were accounted for under ASC~~310-30~~ ~~and were initially measured at fair value, which included estimated future credit losses expected to be incurred over the lives of the loans. Under ASC310-30,~~ purchasers are permitted to aggregate acquired loans into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.

~~The following table presents the carrying value of covered loans which were acquired in the acquisitions of AmTrust and Desert Hills as of December 31, 2016.~~

(dollars in thousands)    Amount    Percent of
Covered Loans
Loan Category:

One-to-four family
   $ 1,609,635    94.8 %
Other loans
   88,498    5.2




Total covered loans
   $ 1,698,133    100.0 %

~~At December 31, 2016, the unpaid principal balance of covered loans was $2.1 billion and the carrying value of such loans was $1.7 billion.~~

At December 31, 2016, the Company estimated the fair values of the AmTrust and Desert Hills loan portfolios, which represented the expected cash flows from the portfolios, discounted at market-based rates. In estimating such fair values, the Company: (a) calculated the contractual amount and timing of undiscounted principal and interest payments (the “undiscounted contractual cash flows”); and (b) estimated the expected amount and timing of undiscounted principal and interest payments (the “undiscounted expected cash flows”). The amount by which the undiscounted expected cash flows exceed the estimated fair value (the “accretable yield”) was accreted into interest income over the lives of the loans. The amount by which the undiscounted contractual cash flows exceed the undiscounted expected cash flows is referred to as the~~“non-accretable~~ ~~difference.” Thenon-accretable~~ ~~difference represented an estimate of the credit risk in the loan portfolios at the respective acquisition dates.~~

The accretable yield was affected by changes in interest rate indices for variable rate loans, changes in prepayment assumptions, and changes in expected principal and interest payments over the estimated lives of the loans. Changes in interest rate indices for variable rate loans increased or decreased the amount of interest income expected to be collected, depending on the direction of interest rates. Prepayments affected the estimated lives of covered loans and could have changed the amount of interest income and principal expected to be collected. Changes in expected principal and interest payments over the estimated lives of covered loans were driven by the credit outlook and by actions that may be taken with borrowers. As of September 30, 2017, the accretable yield was reduced to zero.

On a quarterly basis, the Company had evaluated the estimates of the cash flows it expected to collect. Expected future cash flows from interest payments were based on variable rates at the time of the quarterly evaluation. Estimates of expected cash flows that were impacted by changes in interest rate indices for variable rate loans and prepayment assumptions were treated as prospective yield adjustments and included in interest income.

~~In the nine months ended September 30, 2017, changes in the accretable yield for covered loans were as follows:~~

(in thousands)    Accretable Yield
Balance at beginning of period
   $ 647,470
Accretion
   (72,842 )
Reclassification tonon-accretable difference for the six months ended June 30, 2017
   (11,381 )
Changes in expected cash flows due to the sale of the covered loan portfolio
   (563,247 )


Balance at end of period
   $ —

~~In the preceding table, the line item “Reclassification tonon-accretable~~ difference for the six months ended June 30, 2017” includes changes in cash flows that the Company expects to collect due to changes in prepayment assumptions, changes in interest rates on variable rate loans, and changes in loss assumptions. As of the Company’s most recent quarterly evaluation, prepayment assumptions increased, which resulted in a decrease in future expected interest cash flows and, consequently, a decrease in the accretable yield. The effect of this decrease was partially offset with an improvement in the underlying credit assumptions and the resetting of rates on variable rate loans at a slightly higher level, which resulted in an increase in future expected interest cash flows and, consequently, an increase in the accretable yield.

Reflecting the foreclosure of certain loans acquired in the AmTrust and Desert Hills acquisitions, the Company owned certain other real estate owned (“OREO”) that was covered under its LSA (“covered OREO”). Covered OREO was initially recorded at its estimated fair value on the respective dates of acquisition, based on independent appraisals, less the estimated selling costs. Any subsequent write-downs due to declines in fair value were charged to~~non-interest~~ ~~expense, and were partially offset by loss reimbursements under the LSA. Any recoveries of previous write-downs have been credited tonon-interest~~ ~~expense and partially offset by the portion of the recovery that was due to the FDIC. As previously discussed, the Company’s covered OREO was sold during the third quarter of 2017.~~

~~The FDIC loss share receivable represented the present~~appraised value of the ~~estimated losses to be reimbursed~~underlying property.

MULTI-FAMILY LOAN

A mortgage loan secured by a rental or cooperative apartment building with more than four units.

NET INTEREST INCOME

The difference between the ~~FDIC. The estimated losses were based on the same cash flow estimates used in determining the fair value of the covered loans. The FDIC loss share receivable was reduced as losses on covered~~interest income generated by loans ~~were recognized~~ and as loss sharing payments were received from the FDIC. Realized losses in excess of acquisition-date estimates resulted in an increase in the FDIC loss share receivable. Conversely, if realized losses were lower than the acquisition-date estimates, the FDIC loss share receivable was reduced by amortization to interest income. Effective October 31, 2017, the Companysecurities and the ~~FDIC completed termination~~interest expense produced by deposits and borrowed funds.

NET INTEREST MARGIN

Measures net interest income as a percentage of ~~the LSA.~~

At December 31, 2016, the Company held residential mortgage loans of $78.6 million that were in the process of foreclosure. The vast majority of such loans were covered loans. The Company had no residential mortgage loans that were in the process of foreclosure at September 30, 2017.

~~The following table presents information regarding the Company’s covered loans at December 31, 2016 that were 90 days or more past due:~~

(in thousands)
Covered Loans 90 Days or More Past Due:

One-to-four family
   $ 124,820
Other loans
   6,645


Total covered loans 90 days or more past due
   $ 131,465

~~The following table presents information regarding the Company’s covered loans at December 31, 2016 that were 30 to 89 days past due:~~

(in thousands)
Covered Loans30-89 Days Past Due:

One-to-four family
   $ 21,112
Other loans
   1,536


Total covered loans30-89 days past due
   $ 22,648

~~As noted above, at December 31, 2016, the Company had $22.6 million of covered loans that were 30 to 89 days past due, and covered loans of $131.5 million that were~~average interest-earning assets.

NON-ACCRUAL LOAN

A loan generally is classified as a “non-accrual” loan when it is 90 days or more past due ~~but considered~~or when it is deemed to be ~~performing due to the application of the yield accretion method under ASC310-30.~~ ~~The remainder of the Company’s covered loan portfolio totaled $1.5 billion at December 31, 2016 and were considered current at that date.~~

~~Loans that may have been classified asnon-performing~~ ~~loans by AmTrust or Desert Hills were~~impaired because we no longer ~~classified asnon-performing~~ by the Company because, at the respective dates of acquisition, the Company believed that it would fully collect the new carrying value of these loans. The new carrying value represented the contractual balance, reduced by the portion that was expected to be uncollectible (i.e., the~~non-accretable~~ ~~difference) and by an accretable yield (discount) that was recognized as interest income. It is important to note that management’s judgment was required in reclassifying loans subject to ASC310-30~~ ~~as performing loans, and such judgment was dependent on having a reasonable expectation about the timing and amount of the cash flows to be collected, even if the loan was contractually past due.~~

The primary credit quality indicator for covered loans is the expectation of underlying cash flows. In the nine months ended September 30, 2017, the Company recorded recoveries of losses on covered loans of $23.7 million. The recoveries were largely due to an increase in expected cash flows in the acquired portfolios of~~one-to-four~~ ~~family and home equity loans, and were partly offset by FDIC indemnification expense of $19.0 million that was recorded in“Non-interest~~ ~~income.”~~

The Company recovered losses on covered loans of $6.0 million during the nine months ended September 30, 2016, which was largely offset by FDIC indemnification expense of $4.8 million. In the three months ended September 30, 2016, the Company recorded recoveries of losses on covered loans of $1.3 million and FDIC indemnification expense of $1.0 million.

~~Note 6. Allowances for Loan Losses~~

~~The following tables provide additional information regarding the Company’s allowances for losses onnon-covered~~ ~~loans and covered loans, based upon the method of evaluating loan impairment:~~

(in thousands)    Mortgage    Other    Total
Allowances for Loan Losses at September 30, 2017:

Loans individually evaluated for impairment
   $ —      $ —      $ —
Loans collectively evaluated for impairment
   122,522    36,396    158,918






Total
   $ 122,522    $ 36,396    $ 158,918






(in thousands)    Mortgage    Other    Total
Allowances for Loan Losses at December 31, 2016:

Loans individually evaluated for impairment
   $ —      $ 577    $ 577
Loans collectively evaluated for impairment
   123,925    32,022    155,947
Acquired loans with deteriorated credit quality
   11,984    13,483    25,467






Total
   $ 135,909    $ 46,082    $ 181,991

~~The following tables provide additional information regarding the methods used to evaluate the Company’s loan portfolio for impairment:~~

(in thousands)    Mortgage    Other    Total
Loans Receivable at September 30, 2017:

Loans individually evaluated for impairment
   $ 29,431    $ 45,682    $ 75,113
Loans collectively evaluated for impairment
   35,465,464    1,940,127    37,405,591






Total
   $ 35,494,895    $ 1,985,809    $ 37,480,704






(in thousands)    Mortgage    Other    Total
Loans Receivable at December 31, 2016:

Loans individually evaluated for impairment
   $ 29,660    $ 18,592    $ 48,252
Loans collectively evaluated for impairment
   35,402,029    1,900,158    37,302,187
Acquired loans with deteriorated credit quality
   1,614,755    89,140    1,703,895






Total
   $ 37,046,444    $ 2,007,890    $ 39,054,334

~~Allowance for Losses onNon-Covered~~ ~~Loans~~

~~The following table summarizes activity in the allowance for losses onnon-covered~~ ~~loans for the periods indicated:~~

   For the Nine Months Ended September 30,
   2017 2016
(in thousands)    Mortgage Other Total Mortgage Other Total
Balance, beginning of period
   $ 125,416 $ 32,874 $ 158,290 $ 124,478 $ 22,646 $ 147,124
Charge-offs
   (375 ) (58,203 ) (58,578 ) (170 ) (1,155 ) (1,325 )
Recoveries
   595 594 1,189 1,251 956 2,207
(Recovery of) provision fornon-covered loan losses
   (3,114 ) 61,131 58,017 675 6,024 6,699


Balance, end of period
   $ 122,522 36,396 $ 158,918 $ 126,234 $ 28,471 $ 154,705

~~See “Critical Accounting Policies” for additional information regarding the Company’s allowance for losses onnon-covered~~ ~~loans.~~

~~The following table presents additional information about the Company’s impairednon-covered~~ ~~loans at September 30, 2017:~~

(in thousands)    Recorded
Investment    Unpaid
Principal
Balance    Related
Allowance    Average
Recorded
Investment    Interest
Income
Recognized
Impaired loans with no related allowance:

Multi-family
   $ 9,071    $ 11,548    $ —      $ 10,016    $ 378
Commercial real estate
   2,628    7,743    —      4,517    13
One-to-four family
   1,980    2,086    —      2,898    38
Acquisition, development, and construction
   15,752    25,952    —      8,588    435
Other
   45,682    98,084    —      32,556    1,486










Total impaired loans with no related allowance
   $ 75,113    $ 145,413    $ —      $ 58,575    $ 2,350










Impaired loans with an allowance recorded:

Multi-family
   $ —      $ —      $ —      $ —      $ —
Commercial real estate
   —      —      —      —      —
One-to-four family
   —      —      —      —      —
Acquisition, development, and construction
   —      —      —      —      —
Other
   —      —      —      3,278    —










Total impaired loans with an allowance recorded
   $ —      $ —      $ —      $ 3,278    $ —










Total impaired loans:

Multi-family
   $ 9,071    $ 11,548    $ —      $ 10,016    $ 378
Commercial real estate
   2,628    7,743    —      4,517    13
One-to-four family
   1,980    2,086    —      2,898    38
Acquisition, development, and construction
   15,752    25,952    —      8,588    435
Other
   45,682    98,084    —      35,834    1,486










Total impaired loans
   $ 75,113    $ 145,413    $ —      $ 61,853    $ 2,350

~~The following table presents additional information about the Company’s impairednon-covered~~ ~~loans at December 31, 2016:~~

(in thousands)    Recorded
Investment    Unpaid
Principal
Balance    Related
Allowance    Average
Recorded
Investment    Interest
Income
Recognized
Impaired loans with no related allowance:

Multi-family
   $ 10,742    $ 13,133    $ —      $ 11,431    $ 627
Commercial real estate
   9,117    14,868    —      10,461    143
One-to-four family
   3,601    4,267    —      3,079    124
Acquisition, development, and construction
   6,200    15,500    —      1,550    414
Other
   6,739    7,955    —      8,261    92










Total impaired loans with no related allowance
   $ 36,399    $ 55,723    $ —      $ 34,782    $ 1,400










Impaired loans with an allowance recorded:

Multi-family
   $ —      $ —      $ —      $ —      $ —
Commercial real estate
   —      —      —      —      —
One-to-four family
   —      —      —      —      —
Acquisition, development, and construction
   —      —      —      —      —
Other
   11,853    13,529    577    4,574    213










Total impaired loans with an allowance recorded
   $ 11,853    $ 13,529    $ 577    $ 4,574    $ 213










Total impaired loans:

Multi-family
   $ 10,742    $ 13,133    $ —      $ 11,431    $ 627
Commercial real estate
   9,117    14,868    —      10,461    143
One-to-four family
   3,601    4,267    —      3,079    124
Acquisition, development, and construction
   6,200    15,500    —      1,550    414
Other
   18,592    21,484    577    12,835    305










Total impaired loans
   $ 48,252    $ 69,252    $ 577    $ 39,356    $ 1,613

~~Allowance for Losses on Covered Loans~~

Covered loans were reported exclusive of the FDIC loss share receivable. The covered loans acquired in the AmTrust and Desert Hills acquisitions were reviewed for collectability based on the expectations of cash flows from these loans. Covered loans were aggregated into pools of loans with common characteristics. In determining the allowance for losses on covered loans, the Company periodically performed an analysis to estimate the expected cash flows for each of the pools of loans. The Company recorded a provision for (recovery of) losses on covered loans to the extent that the expected cash flows from a loan pool had decreased or increased since the acquisition date.

Accordingly, if there was a decrease in expected cash flows due to an increase in estimated credit losses (as compared to the estimates made at the respective acquisition dates), the decrease in the present value of expected cash flows was recorded as a provision for covered loan losses charged to earnings, and the allowance for covered loan losses was increased. A related credit to~~non-interest~~ ~~income and an increase in the LSA are recognized at the same time, and measured based on the applicable loss sharing agreement percentage.~~

If there was an increase in expected cash flows due to a decrease in estimated credit losses (as compared to the estimates made at the respective acquisition dates), the increase in the present value of expected cash flows was recorded as a recovery of the prior-period impairment charged to earnings, and the allowance for covered loan losses was reduced. A related debit to~~non-interest~~ ~~income and a decrease in the LSA was recognized at the same time, and measured based on the applicable Loss Share Agreement percentage.~~

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

   For the Nine Months Ended
September 30,
(in thousands)    2017    2016
Balance, beginning of period
   $ 23,701    $ 31,395
Recovery of losses on covered loans⁽¹⁾
   (23,701 )    (6,035 )




Balance, end of period
   $ —      $ 25,360

~~(1)~~

~~Due to the sale of the covered loan portfolio.~~

~~Note 7. Borrowed Funds~~

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

(in thousands)    September 30,
2017    December 31,
2016
Wholesale Borrowings:

FHLB advances
   $ 11,554,500    $ 11,664,500
Repurchase agreements
   450,000    1,500,000
Federal funds purchased
   —      150,000




Total wholesale borrowings
   $ 12,004,500    $ 13,314,500
Junior subordinated debentures
   359,102    358,879




Total borrowed funds
   $ 12,363,602    $ 13,673,379

~~The following table summarizes the Company’s repurchase agreements accounted for as secured borrowings at September 30, 2017:~~

   Remaining Contractual Maturity of the Agreements
(in thousands)    Overnight and
Continuous    Up to
30 Days    30–90 Days    Greater than
90 Days
GSE debentures and mortgage-related securities
   $ —      $ —      $ —      $ 450,000

At September 30, 2017 and December 31, 2016, the Company had $359.1 million and $358.9 million, respectively, of outstanding junior subordinated deferrable interest debentures (“junior subordinated debentures”) held by statutory business trusts (the “Trusts”) that issued guaranteed capital securities.

The Trusts are accounted for as unconsolidated subsidiaries, in accordance with GAAP. The proceeds of each issuance were invested in a series of junior subordinated debentures of the Company and the underlying assets of each statutory business trust are the relevant debentures. The Company has fully and unconditionally guaranteed the obligations under each trust’s capital securities to the extent set forth in a guarantee by the Company to each trust. The Trusts’ capital securities are each subject to mandatory redemption, in whole or in part, upon repayment of the debentures at their stated maturity or earlier redemption.

~~The following junior subordinated debentures were outstanding at September 30, 2017:~~

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 thousands)
New York Community Capital Trust V (BONUSES^SMUnits)
6.000 % $ 145,176 $ 138,825 Nov. 4, 2002 Nov. 1, 2051 Nov. 4, 2007 ⁽¹⁾
New York Community Capital Trust X
2.920 123,712 120,000 Dec. 14, 2006 Dec. 15, 2036 Dec. 15, 2011 ⁽²⁾
PennFed Capital Trust III
4.570 30,928 30,000 June 2, 2003 June 15, 2033 June 15, 2008 ⁽²⁾
New York Community Capital Trust XI
2.985 59,286 57,500 April 16, 2007 June 30, 2037 June 30, 2012 ⁽²⁾

Total junior subordinated debentures
$ 359,102 $ 346,325

~~(1)~~

~~Callable subject to certain conditions as described in the prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 4, 2002.~~

~~(2)~~

~~Callable from this date forward.~~

~~Note 8. Mortgage Servicing Rights~~

The Company records a separate servicing asset representing the right to service third-party loans. Such MSRs are initially recorded at their fair value as a component of the sale proceeds. The fair values of MSRs are based on an analysis of discounted cash flows that incorporates estimates of (1) market servicing costs, (2) market-based estimates of ancillary servicing revenue, (3) market-based prepayment rates, and (4) market profit margins.

MSRs are subsequently measured at either fair value or are amortized in proportion to, and over the period of, estimated net servicing income. The Company elects one of those methods on a class basis. A class is determined based on (1) the availability of market inputs used in determining the fair value of servicing assets, and/or (2) the Company’s method for managing the risks of servicing assets.

As previously discussed, the Company completed the sale of its mortgage banking business in the third quarter of 2017, and consequently sold substantially all of its mortgage servicing assets. Accordingly, the value of the MSR asset declined to $6.9 million at September 30, 2017, compared to $225.4 million at June 30, 2017 and $234.0 million at December 31, 2016. These balances all consisted of two classes of MSRs for which the Company separately manages the economic risk: residential MSRs and participation MSRs (i.e., MSRs on loans sold through participations).

Residential MSRs are carried at fair value, and at September 30, 2017 reflected only loans sold through the FHLB’s Mortgage Partnership Finance Program, with changes in fair value recorded as a component of~~non-interest~~ income in each period. The Company uses various derivative instruments to mitigate the income statement-effect of changes in fair value due to changes in valuation inputs and assumptions regarding its residential MSRs. The effects of changes in the fair value of the derivatives are recorded as “Mortgage banking income,” which is included in~~“Non-interest~~ income” in the Consolidated Statements of Income and Comprehensive Income. MSRs do not trade in an active open market with readily observable prices. Accordingly, the Company utilizes a third-party valuation specialist to determine the fair value of its MSRs. This specialist determines fair value based on the present value of estimated future net servicing income cash flows, and incorporates assumptions that market participants would use to estimate fair value, including estimates of prepayment speeds, discount rates, default rates, refinance rates, servicing costs, escrow account earnings, contractual servicing fee income, and ancillary income. The specialist and the Company evaluate, and periodically adjust, as necessary, these underlying inputs and assumptions to reflect market conditions and changes in the assumptions that a market participant would consider in valuing MSRs.

The value of residential MSRs at any given time is significantly affected by the mortgage interest rates that are then available in the marketplace. These, in turn, influence mortgage loan prepayment speeds. The rate of prepayment of serviced residential loans is the most significant estimate involved in the measurement process. Actual prepayment rates may differ from those projected by management due to changes in a variety of economic factors, including prevailing interest rates and the availability of alternative financing sources to borrowers.

During periods of declining interest rates, the value of residential MSRs generally declines as an increase in mortgage refinancing activity results in an increase in prepayments and a decrease in the carrying value of residential MSRs through a charge to earnings in the current period. Conversely, during periods of rising interest rates, the value of residential MSRs generally increases as mortgage refinancing activity declines and the actual prepayments of loans being serviced occur more slowly than had been expected. This results in the carrying value of residential MSRs and servicing income being higher than previously anticipated. Accordingly, the value of residential MSRs that is actually realized could differ from the value initially recorded.

The collective amount of contractually specified servicing fees, late fees, and ancillary fees, which is recorded as “Mortgage banking income” in the Consolidated Statements of Income and Comprehensive Income, was $483,000 and $1.1 million for the three and nine months ended September 30, 2017, respectively, and $351,000 and $983,000 for the three and nine months ended September 30, 2016, respectively.

Participation MSRs are initially carried at fair value and are subsequently amortized and carried at the lower of their fair value or amortized amount. The amortization is recorded in proportion to, and over the period of, estimated net servicing income, with impairment of those servicing assets evaluated through an assessment of their fair value via a discounted cash-flow method. The net carrying value is compared to the discounted estimated future net cash flows to determine whether adjustments should be made to carrying values or amortization schedules. Impairment of participation MSRs is recognized through a valuation allowance and a charge to current-period earnings if it is considered to be temporary, or through a direct write-down of the asset and a charge to current-period earnings if it is considered to be other than temporary. The predominant risk characteristics of the underlying loans that are used to stratify the participation MSRs for measurement purposes generally include the (1) loan origination date, (2) loan rate, (3) loan type and size, (4) loan maturity date, and (5) geographic location. Changes in the carrying value of participation MSRs due to amortization or declines in fair value (i.e., impairment), if any, are reported in “Other income” in the period during which such changes occur. In the nine months ended September 30, 2017 and 2016, there was no impairment related to the Company’s participation MSRs.

~~The following tables set forth the changes in the balances of residential MSRs and participation MSRs for the periods indicated:~~

   For the Three Months Ended
   September 30, 2017    September 30, 2016
(in thousands)    Residential    Participation    Residential    Participation
Carrying value, beginning of period
   $ 220,586    $ 4,853    $ 188,331    $ 5,663
Additions
   6,072    39    12,005    731
Sales
   (208,827 )    —      —      —
Increase (decrease) in fair value:

Due to changes in interest rates
   (222 )    —      5,668    —
Due to model assumption changes⁽¹⁾
   —      —      —      —
Due to loan payoffs
   (7,855 )    —      (12,818 )    —
Due to passage of time and other changes
   (6,972 )    —      (1,767 )    —
Amortization
   —      (813 )    —      (618 )








Carrying value, end of period
   $ 2,782    $ 4,079    $ 191,419    $ 5,776

~~(1)~~

~~Represents changes in fair value driven by changes to the inputs to the valuation model related to assumed prepayment speeds.~~

   For the Nine Months Ended
   September 30, 2017    September 30, 2016
(in thousands)    Residential    Participation    Residential    Participation
Carrying value, beginning of period
   $ 228,099    $ 5,862    $ 243,389    $ 4,345
Additions
   18,054    595    31,185    2,999
Sales
   (208,827 )    —      —      —
Increase (decrease) in fair value:

Due to changes in interest rates
   (2,130 )    —      (32,139 )    —
Due to model assumption changes⁽¹⁾
   —      —      (13,088 )    —
Due to loan payoffs
   (22,524 )    —      (31,939 )    —
Due to passage of time and other changes
   (9,890 )    —      (5,989 )    —
Amortization
   —      (2,378 )    —      (1,568 )








Carrying value, end of period
   $ 2,782    $ 4,079    $ 191,419    $ 5,776

~~(1)~~

~~Represents changes in fair value driven by changes to the inputs to the valuation model related to assumed prepayment speeds.~~

~~The following table presents the key assumptions used in calculating the fair value of the Company’s residential MSRs at the dates indicated:~~

   September 30, 2017 December 31, 2016
Expected weighted average life
   87 months 82 months
Constant prepayment speed
   9.89 % 8.70 %
Discount rate
   12.00 10.05
Primary mortgage rate to refinance
   4.00 4.11
Cost to service (per loan per year):

Current
   $70 $64
30-59 days or less delinquent
   220 214
60-89 days delinquent
   370 364
90-119 days delinquent
   470 464
120 days or more delinquent
   870 864

The increase in the constant prepayment speed was primarily attributable to an increase in the housing price index used by the Company’s third-party valuation specialist, suggesting that homebuyer demand has increased and newly created equity could lead to more refinancing.

In connection with the aforementioned sale of the Company’s MSR portfolio, the Company will temporarily continue to service the $20.5 billion of loans and, consequently, the total unpaid principal balance of loans serviced for others remained largely unchanged at $24.5 billion and $25.1 billion at September 30, 2017 and December 31, 2016, respectively.

~~Note 9. 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,
   2017    2016
(in thousands)    Pension
Benefits    Post-
Retirement
Benefits    Pension
Benefits    Post-
Retirement
Benefits
Components of net periodic (credit) expense:

Interest cost
   $ 1,404    $ 144    $ 1,470    $ 160
Service cost
   —      —      —      1
Expected return on plan assets
   (4,073 )    —      (3,906 )    —
Amortization of prior-service costs
   —      (62 )    —      (62 )
Amortization of net actuarial loss
   2,053    68    2,262    81








Net periodic (credit) expense
   $ (616 )    $ 150    $ (174 )    $ 180

   For the Nine Months Ended September 30,
   2017    2016
(in thousands)    Pension
Benefits    Post-
Retirement
Benefits    Pension
Benefits    Post-
Retirement
Benefits
Components of net periodic (credit) expense:

Interest cost
   $ 4,211    $ 433    $ 4,411    $ 479
Service cost
   —      —      —      3
Expected return on plan assets
   (12,217 )    —      (11,720 )    —
Amortization of prior-service costs
   —      (187 )    —      (187 )
Amortization of net actuarial loss
   6,157    206    6,786    245








Net periodic (credit) expense
   $ (1,849 )    $ 452    $ (523 )    $ 540

~~The Company expects to contribute $1.3 million to its post-retirement plan to pay premiums and claims for the fiscal year ending December 31, 2017. The Company does not~~ expect to ~~make any contributions~~collect all amounts due according to ~~its pension plan in 2017.~~

~~Note 10. Stock-Based Compensation~~

At September 30, 2017, the Company had a total of 6,912,431 shares available for grants as options, restricted stock, or other forms of related rights under the New York Community Bancorp, Inc. 2012 Stock Incentive Plan (the “2012 Stock Incentive Plan”), which was approved by the Company’s shareholders at its Annual Meeting on June 7, 2012. The Company granted 2,941,249 shares of restricted stock during the nine months ended September 30, 2017. The shares had an average fair value of $15.18 per share on the date of grant and a vesting period of five years. The nine-month amount includes 122,500 shares that were granted in the third quarter with an average fair value of $12.95 per share on the date of grant. Compensation and benefits expense related to the restricted stock grants is recognized on a straight-line basis over the vesting period, and totaled $27.3 million and $24.6 million, respectively, in the nine months ended September 30, 2017 and 2016, including $9.1 million and $8.2 million, respectively, in the three months ended at those dates.

~~The following table provides a summary of activity with regard to restricted stock awards in the nine months ended September 30, 2017:~~

   Number of Shares    Weighted Average
Grant Date
Fair Value
Unvested at beginning of year
   6,930,306    $ 15.37
Granted
   2,941,249    15.18
Vested
   (2,291,234 )    15.02
Canceled
   (206,920 )    15.58



Unvested at end of period
   7,373,401    15.40

As of September 30, 2017, unrecognized compensation cost relating to unvested restricted stock totaled $90.9 million. This amount will be recognized over a remaining weighted average period of 3.2 years.

~~The Company had no stock options outstanding at September 30, 2017 or December 31, 2016.~~

~~Note 11. 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 for the periods indicated, and that were included in the Company’s Consolidated Statements of Condition at those dates:

   Fair Value Measurements at September 30, 2017
(in thousands)    Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)    Netting
Adjustments⁽¹⁾ Total
Fair Value
Assets:

Mortgage-Related Securities Available for Sale:

GSE certificates
   $ —   $ 1,960,352 $ —      $ —   $ 1,960,352
GSE CMOs
   —   550,177 —      —   550,177




Total mortgage-related securities
   $ —   $ 2,510,529 $ —      $ —   $ 2,510,529




Other Securities Available for Sale:

U.S Treasury Obligations
   $ 199,875 $ —   $ —      $ —   $ 199,875
GSE debentures
   —   90,834 —      —   90,834
Corporate bonds
   —   86,137 —      —   86,137
Municipal bonds
   —   70,367 —      —   70,367
Capital trust notes
   —   40,767 —      —   40,767
Preferred stock
   15,339 —   —      —   15,339
Mutual funds and common stock
   —   17,178 —      —   17,178




Total other securities
   $ 215,214 $ 305,283 $ —      $ —   $ 520,497




Total securities available for sale
   $ 215,214 $ 2,815,812 $ —      $ —   $ 3,031,026




Other Assets:

Loans held for sale
   $ —   $ 104,938 $ —      $ —   $ 104,938
Mortgage servicing rights
   —   —   2,782    —   2,782
Interest rate lock commitments
   —   —   269    —   269
Derivative assets-other⁽²⁾
   157 836 —      (674 ) 319
Liabilities:

Derivative liabilities
   $ (144 ) $ (1,322 ) $ —      $ 1,248 $ (218 )

~~(1)~~

~~Includes cash collateral received from, and paid to, counterparties.~~

~~(2)~~

~~Includes $144 thousand to purchase Treasury options.~~

   Fair Value Measurements at December 31, 2016
(in thousands)    Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)    Netting
Adjustments⁽¹⁾ Total
Fair Value
Assets:

Mortgage-Related Securities Available for Sale:

GSE certificates
   $ —   $ 7,326 $ —      $ —   $ 7,326




Total mortgage-related securities
   $ —   $ 7,326 $ —      $ —   $ 7,326




Other Securities Available for Sale:

Municipal bonds
   $ —   $ 631 $ —      $ —   $ 631
Capital trust notes
   —   7,243 —      —   7,243
Preferred stock
   42,724 29,260 —      —   71,984
Mutual funds and common stock
   —   17,097 —      —   17,097




Total other securities
   $ 42,724 $ 54,231 $ —      $ —   $ 96,955




Total securities available for sale
   $ 42,724 $ 61,557 $ —      $ —   $ 104,281




Other Assets:

Loans held for sale
   $ —   $ 409,152 $ —      $ —   $ 409,152
Mortgage servicing rights
   —   —   228,099    —   228,099
Interest rate lock commitments
   —   —   982    —   982
Derivative assets-other⁽²⁾
   2,611 16,829 —      (17,861 ) 1,579
Liabilities:

Derivative liabilities
   $ (6,009 ) $ (17,719 ) $ —      $ 16,588 $ (7,140 )

~~(1)~~

~~Includes cash collateral received from, and paid to, counterparties.~~

~~(2)~~

~~Includes $1.9 million to purchase Treasury options.~~

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 ofavailable-for-sale~~ ~~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, exchange-traded securities, and derivatives.

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.

The Company carries loans held for sale at fair value. The fair value of loans held for sale is primarily based on quoted market prices for securities backed by similar types of loans. Changes in the fair value of these assets are largely driven by changes in interest rates subsequent to loan funding, and changes in the fair value of servicing associated with the mortgage loans held for sale. Loans held for sale are classified within Level 2 of the valuation hierarchy.

MSRs do not trade in an active open market with readily observable prices. The Company bases the fair value of its MSRs on the present value of estimated future net servicing income cash flows, utilizing a third-party valuation specialist. The specialist estimates future net servicing income cash flows with assumptions that market participants would use to estimate fair value, including estimates of prepayment speeds, discount rates, default rates, refinance rates, servicing costs, escrow account earnings, contractual servicing fee income, and ancillary income. The Company periodically adjusts the underlying inputs and assumptions to reflect market conditions and assumptions that a market participant would consider in valuing the MSR asset. MSR fair value measurements use significant unobservable inputs and, accordingly, are classified within Level 3.

Exchange-traded derivatives that are valued using quoted prices are classified within Level 1 of the valuation hierarchy. The majority of the Company’s derivative positions are valued using internally developed models that use readily observable market parameters as their basis. These are parameters that are actively quoted and can be validated by external sources, including industry pricing services. Where the types of derivative products have been in existence for some time, the Company uses models that are widely accepted in the financial services industry. These models reflect the contractual terms of the ~~derivatives, including~~loan agreement. When a loan is placed on non-accrual status, we cease the period to maturity, and market-based parameters such as interest rates, volatility, and the credit quality of the counterparty. Furthermore, many of these models do not contain a high level of subjectivity, as the methodologies used in the models do not require significant judgment, and inputs to the models are readily observable from actively quoted markets, as is the case for “plain vanilla” interest rate swaps and option contracts. Such instruments are generally classified within Level 2 of the valuation hierarchy. Derivatives that are valued based on models with significant unobservable market parameters, and that are normally traded less actively, have trade activity that is~~one-way,~~ ~~and/or are traded in less-developed markets, are classified within Level 3 of the valuation hierarchy.~~

~~The fair values~~accrual of interest ~~rate lock commitments (“IRLCs”) for residential mortgage~~owed, and previously accrued interest is reversed and charged against interest income. A loan generally is returned to accrual status when the loan is current and we have reasonable assurance that the loan will be fully collectible.

NON-PERFORMING LOANS AND ASSETS

Non-performing loans consist of non-accrual loans and loans that ~~the Company intends to sell~~ are based on internally developed models. The key model inputs primarily include the sum of the value of the forward commitment based on the loans’ expected settlement dates and the projected values of the MSRs, loan level price adjustment factors, and historical IRLC closing ratios. The closing ratio is computed by the Company’s mortgage banking operation and is periodically reviewed by management for reasonableness. Such derivatives are classified as Level 3.

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.

~~Fair Value Option~~

~~Loans Held for Sale~~

~~The Company has elected the fair value option for its loans held for sale. These loans held for sale consist ofone-to-four~~ ~~family mortgage loans, none of which was~~ 90 days or more past due ~~at September 30, 2017. Management believes that the mortgage banking business operates on a short-term cycle. Therefore, in order to reflect the most relevant valuations for the key components~~and still accruing interest. Non-performing assets consist of ~~this business,~~non-performing loans, OREO and ~~to reduce timing differences in amounts recognized in earnings,~~other repossessed assets.

OREO AND OTHER REPOSSESSED ASSETS

Includes real estate owned by the Company ~~has elected to record loans held for sale at fair value to match the recognition of IRLCs, MSRs, and derivatives, all of~~ which was acquired either through foreclosure or default. Repossessed assets are ~~recorded at fair value in earnings. Fair value is based on independent quoted market prices of mortgage-backed securities comprised of loans with~~ similar, ~~features to those of the Company’s loans held for sale, where available, and adjusted as necessary for such items as servicing value, guaranty fee premiums, and credit spread adjustments.~~

~~The following table reflects the difference between the fair value carrying amount of loans held for sale, for which the Company has elected the fair value option, and the unpaid principal balance:~~

   September 30, 2017    December 31, 2016
(in thousands)    Fair Value
Carrying
Amount    Aggregate
Unpaid
Principal    Fair Value
Carrying Amount
Less Aggregate
Unpaid Principal    Fair Value
Carrying
Amount    Aggregate
Unpaid
Principal    Fair Value
Carrying Amount
Less Aggregate
Unpaid Principal
Loans held for sale
   $ 104,938    $ 102,236    $ 2,702    $ 409,152    $ 408,928    $ 224

~~Gains and Losses Included in Income for Assets Where the Fair Value Option Has Been Elected~~

The assets accounted for under the fair value option are initially measured at fair value. Gains and losses from the initial measurement and subsequent changes in fair value are recognized in earnings. The following table presents the changes in fair value related to initial measurement, and the subsequent changes in fair value included in earnings, for loans held for sale and MSRs for the periods indicated:

   Gain (Loss) Included in
Mortgage Banking Income
from Changes in Fair Value⁽¹⁾
   For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
(in thousands)    2017 2016⁽²⁾ 2017 2016⁽²⁾
Loans held for sale
   $ 464 $ (1,020 ) $ 1,059 $ 2,782
Mortgage servicing rights
   (9,743 ) (8,917 ) (20,092 ) (76,998 )


Total loss
   $ (9,279 ) $ (9,937 ) $ (19,033 ) $ (74,216 )

~~(1)~~

~~Does not include the effect of economic hedging activities, which is included in “Othernon-interest~~ ~~income.”~~

~~(2)~~

~~The presentation of the amounts for the three and nine months ended September 30, 2016 has been modified to conform to the presentation for the three and nine months ended September 30, 2017.~~

~~The Company has determined that there is no instrument-specific credit risk related to its loans held for sale, due to the short duration of such assets.~~

~~Changes in Level 3 Fair Value Measurements~~

The following tables present, for the nine months ended September 30, 2017 and 2016, a roll-forward of the balance sheet amounts (including changes in fair value) for financial instruments classified in Level 3 of the valuation hierarchy:

(in thousands)    Fair Value
January 1,
2017    Total Realized/Unrealized
Gains/(Losses) Recorded in    Issuances    Settlements Transfers
to/(from)
Level 3    Fair Value at
September 30,
2017    Change in
Unrealized Gains/
(Losses) Related to
Instruments Held at
September 30, 2017
      Income/
(Loss) Comprehensive
(Loss) Income
Mortgage servicing rights
   $ 228,099    $ (34,544 ) $ —      $ 18,054    $ (208,827 ) $ —      $ 2,782    $ (182 )
Interest rate lock commitments
   982    (713 ) —      —      —   —      269    269
(in thousands)    Fair Value
January 1,
2016    Total Realized/Unrealized
Gains/(Losses) Recorded in    Issuances    Settlements Transfers
to/(from)
Level 3    Fair Value at
September 30,
2016    Change in
Unrealized Gains/
(Losses) Related to
Instruments Held at
September 30, 2016
      Income/
(Loss) Comprehensive
(Loss) Income
Mortgage servicing rights
   $ 243,389    $ (83,155 ) $ —      $ 31,185    $ —   $ —      $ 191,419    $ (58,546 )
Interest rate lock commitments
   2,526    4,408 —      —      —   —      6,934    6,934

The Company’s policy is to recognize transfers in and out of Levels 1, 2, and 3 as of the end of the reporting period. There were no transfers in or out of Levels 1, 2, or 3 during the nine months ended September 30, 2017 or 2016.

~~For Level 3 assets and liabilities measured at fair value on a recurring basis as of September 30, 2017, the significant unobservable inputs used in the fair value measurements were as follows:~~

(dollars in thousands)
Fair Value at
September 30, 2017

Valuation Technique

Significant Unobservable Inputs
   Significant
Unobservable
Input Value
Mortgage servicing rights
   $2,782
Discounted Cash Flow

Weighted Average Constant Prepayment Rate⁽¹⁾
   9.89 %

Weighted Average Discount Rate
   12.00
Interest rate lock commitments
   269
Discounted Cash Flow

Weighted Average Closing Ratio
   69.88

~~(1)~~

~~Represents annualized loan repayment rate assumptions.~~

The significant unobservable inputs used in the fair value measurement of the Company’s MSRs are the weighted average constant prepayment rate and the weighted average discount rate. Significant increases or decreases in either of those inputs in isolation could result in significantly lower or higher fair value measurements. Although the constant prepayment rate and the discount rateexcept they are not ~~directly interrelated, they generally move in opposite directions.~~

The significant unobservable input used in the fair value measurement of the Company’s IRLCs is the closing ratio, which represents the percentage of loans currently in an interest rate lock position that management estimates will ultimately close. Generally, the fair value of an IRLC is positive if the prevailing interest rate is lower than the IRLC rate, and the fair value of an IRLC is negative if the prevailing interest rate is higher than the IRLC rate. Therefore, an increase in the closing ratio (i.e., a higher percentage of loans estimated to close) will result in the fair value of the IRLC increasing if in a gain position, or decreasing if in a loss position. The closing ratio is largely dependent on the stage of processing that a loan is currently in, and the change in prevailing interest rates from the time of the interest rate lock.

~~Assets Measured at Fair Value on aNon-Recurring~~ ~~Basis~~

~~Certain assets are measured at fair value on anon-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, 2017 and December 31, 2016, and that were included in the Company’s Consolidated Statements of Condition at those dates:~~

   Fair Value Measurements at September 30, 2017 Using
(in thousands)    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⁽¹⁾
   $ —      $ —      $ 42,581    $ 42,581
Other assets⁽²⁾
   —      —      1,493    1,493








Total
   $ —      $ —      $ 44,074    $ 44,074

~~(1)~~

~~Represents the fair value of impaired loans, based on the value of the collateral.~~

~~(2)~~

~~Represents the fair value of OREO, based on the appraised value of the collateral subsequent to its initial classification as OREO.~~

   Fair Value Measurements at December 31, 2016 Using
(in thousands)    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⁽¹⁾
   $ —      $ —      $ 15,635    $ 15,635
Other assets⁽²⁾
   —      —      5,684    5,684








Total
   $ —      $ —      $ 21,319    $ 21,319

~~(1)~~

~~Represents the fair value of impaired loans, based on the value of the collateral, primarily taxi medallion loans.~~

~~(2)~~

~~Represents the fair value of OREO, based on the appraised value of the collateral subsequent to its initial classification as OREO.~~

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

~~Other Fair Value Disclosures~~

~~GAAP requires the disclosure of fair value information about the Company’son-~~ ~~andoff-balance~~ ~~sheet financial instruments. When available, quoted market prices are used as the measure of fair value.~~ estate-related assets.

RENT-REGULATED APARTMENTS

In ~~cases~~New York City, 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 the dates indicated:

   September 30, 2017
      Fair Value Measurement Using
(in thousands)    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
   $ 3,277,427    $ 3,277,427    $ 3,277,427 $ —   $ —
FHLB stock⁽¹⁾
   579,474    579,474    —   579,474 —
Loans, net
   37,452,219    37,671,152    —   —   37,671,152
Financial Liabilities:

Deposits
   $ 28,893,197    $ 28,869,413    $ 20,090,624 ⁽²⁾ $ 8,778,789 ⁽³⁾ $ —
Borrowed funds
   12,363,602    12,277,697    —   12,277,697 —

~~(1)~~

~~Carrying value and estimated fair value are at cost.~~

~~(2)~~

~~Interest-bearing checking and money market accounts, savings accounts, andnon-interest-bearing~~ ~~accounts.~~

~~(3)~~

~~Certificates of deposit.~~

   December 31, 2016
      Fair Value Measurement Using
(in thousands)    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
   $ 557,850    $ 557,850    $ 557,850 $ —   $ —
Securities held to maturity
   3,712,776    3,813,959    200,220 3,613,739 —
FHLB stock⁽¹⁾
   590,934    590,934    —   590,934 —
Loans, net
   39,308,016    39,416,469    —   —   39,416,469
Financial Liabilities:

Deposits
   $ 28,887,903    $ 28,888,064    $ 21,310,733 ⁽²⁾ $ 7,577,331 ⁽³⁾ $ —
Borrowed funds
   13,673,379    13,633,943    —   13,633,943 —

~~(1)~~

~~Carrying value and estimated fair value are at cost.~~

~~(2)~~

~~Interest-bearing checking and money market accounts, savings accounts, andnon-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~~

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 is restricted and there is no established market for their resale. The carrying amount approximates the fair value.~~

~~Loans~~

The loan portfolio is segregated into various components for valuation purposes in order to group loans based on their significant financial characteristics, such as loan type (mortgage or other) and payment status (performing or~~non-performing).~~ The estimated fair values of mortgage and other loans are computed by discounting the anticipated cash flows from the respective portfolios. The discount rates reflect current market rates for loans with similar terms to borrowers of similar credit quality. The estimated fair values of~~non-performing~~ ~~mortgage and other loans are based on recent collateral appraisals.~~

The methods used to estimate the fair values of loans are extremely sensitive to the assumptions and estimates used. While management has attempted to use assumptions and estimates that best reflect the Company’s loan portfolio and current market conditions, a greater degree of subjectivity is inherent in these values than in those determined in active markets. Accordingly, readers are cautioned in using this information for purposes of evaluating the financial condition and/or value of the Company in and of itself, or in comparison with that of any other company.

~~Mortgage Servicing Rights~~

MSRs do not trade in an active market with readily observable prices. Accordingly, the Company bases the fair value of its MSRs on a valuation performed by a third-party valuation specialist. This specialist determines fair value based on the present value of estimated future net servicing income cash flows, and incorporates assumptions that market participants would use to estimate fair value, including estimates of prepayment speeds, discount rates, default rates, refinance rates, servicing costs, escrow account earnings, contractual servicing fee income, and ancillary income. The specialist and the Company evaluate, and periodically adjust, as necessary, these underlying inputs and assumptions to reflect market conditions and changes in the assumptions that a market participant would consider in valuing MSRs.

~~Derivative Financial Instruments~~

For exchange-traded futures and exchange-traded options, fair value is based on observable quoted market prices in an active market. For forward commitments to buy and sell loans and mortgage-backed securities, fair value is based on observable market prices for similar loans and securities in an active market. The fair value of IRLCs for~~one-to-four~~ family mortgage loans that the Company intends to sell is based on internally developed models. The key model inputs primarily include the sum of the value of the forward commitment based on the loans’ expected settlement dates, the value of MSRs arrived at by an independent MSR broker, government agency price adjustment factors, and historical IRLC~~fall-out~~ ~~factors.~~

~~Deposits~~

~~The fair values of deposit liabilities with no stated maturity (i.e., interest-bearing checking and money market accounts, savings accounts, andnon-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 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, 2017 and December 31, 2016.~~

~~Note 12. Derivative Financial Instruments~~

The Company’s derivative financial instruments consist of financial forward and futures contracts, interest rate swaps, IRLCs, and options. These derivatives relate to mortgage banking operations, residential MSRs, and other risk management activities, and seek to mitigate or reduce the Company’s exposure to losses from adverse changes in interest rates. These activities will vary in scope based on the level and volatility of interest rates, other changing market conditions, and the types of assets held.

In accordance with the applicable accounting guidance, the Company takes into account the impact of collateral and master netting agreements that allow it to settle all derivative contracts held with a single counterparty on a net basis, and to offset the net derivative position with the related collateral when recognizing derivative assets and liabilities. As a result, the Company’s Statements of Financial Condition could reflect derivative contracts with negative fair values that are included in derivative assets, and contracts with positive fair values that are included in derivative liabilities.

The Company held derivatives with a notional amount of $765.9 million at September 30, 2017. Changes in the fair value of these derivatives are reflected in current-period earnings. None of these derivatives are designated as hedges for accounting purposes.

The Company uses various financial instruments, including derivatives, in connection with its strategies to reduce pricing risk resulting from changes in interest rates. Derivative instruments may include IRLCs entered into with borrowers or correspondents/brokers to acquire agency-conforming fixed and adjustable rate residential mortgage loans that will be held for sale, as well as Treasury options and Eurodollar futures.

The Company enters into forward contracts to sell fixed rate mortgage-backed securities to protect against changes in the prices of agency-conforming fixed rate loans held for sale. Forward contracts are entered into with securities dealers in an amount related to the portion of IRLCs that is expected to close. The value of these forward sales contracts moves inversely with the value of the loans in response to changes in interest rates.

~~To manage the price risk associated with fixed-ratenon-conforming~~ mortgage loans, the Company generally enters into forward contracts on mortgage-backed securities or forward commitments to sell loans to approved investors. Short positions in Eurodollar futures contracts are used to manage price risk on adjustable rate mortgage loans held for sale.

The Company uses interest rate swaps to hedge the fair value of its residential MSRs. The Company also purchases put and call options to manage the risk associated with variations in the amount of IRLCs that ultimately close.

~~The following table sets forth information regarding the Company’s derivative financial instruments at September 30, 2017:~~

(in thousands)    Notional
Amount    Unrealized⁽¹⁾
      Gain    Loss
Treasury options
   $ 20,000    $ —      $ 144
Eurodollar futures
   20,000    1    —
Forward commitments to sell loans/mortgage-backed securities
   365,000    836    461
Forward commitments to buy loans/mortgage-backed securities
   305,000    —      861
Interest rate lock commitments
   55,886    269    —






Total derivatives
   $ 765,886    $ 1,106    $ 1,466

~~(1)~~

~~Derivatives in a net gain position are recorded as “Other assets” and derivatives in a net loss position are recorded as “Other liabilities” in the Consolidated Statements of Condition.~~

In addition, the Company mitigates a portion of the risk associated with changes in the value of its residential MSRs. The general strategy for mitigating this risk is to purchase derivative instruments, the value of which changes in the opposite direction of interest rates. This action partially offsets changes in the value of its servicing assets, which tends to move in the same direction as interest rates. Accordingly, the Company purchases Eurodollar futures and call options on Treasury securities, and enters into forward contracts to purchase mortgage-backed securities.

~~The following table sets forth the effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the periods indicated:~~

   Gain (Loss) Included in
Mortgage Banking Income
   For the Three Months
Ended September 30,    For the Nine Months
Ended September 30,
(in thousands)    2017    2016    2017    2016
Treasury options
   $ (1,147 )    $ (6,245 )    $ (4,397 )    $ 3,619
Treasury and Eurodollar futures
   (90 )    17    (163 )    (38 )
Interest rate swaps
   (2,449 )    (1,751 )    (202 )    2,427
Forward commitments to buy/sell loans/mortgage-backed securities
   (442 )    1,768    (3,522 )    48








Total (loss)/gain
   $ (4,128 )    $ (6,211 )    $ (8,284 )    $ 6,056

The Company has in place an enforceable master netting arrangement with every counterparty. All master netting arrangements include rights to offset associated with the Company’s recognized derivative assets, derivative liabilities, and the cash collateral received and pledged. Accordingly, the Company, where appropriate, offsets all derivative asset and liability positions with the cash collateral received and pledged.

~~The following tables present the effect of the master netting arrangements on the presentation of the derivative assets in the Consolidated Statements of Condition as of the dates indicated:~~

   September 30, 2017
(in thousands)    Gross Amount
of Recognized
Assets⁽¹⁾    Gross Amount
Offset in the
Statements of
Condition    Net Amount of
Assets Presented
in the
Statements of
Condition    Gross Amounts Not
Offset in the
Consolidated
Statements of Condition    Net
Amount
            Financial
Instruments    Cash
Collateral
Received
Derivatives
   $ 1,262    $ 674    $ 588    $ —      $ —      $ 588

~~(1)~~

~~Includes $144 thousand to purchase Treasury options.~~

   December 31, 2016
(in thousands)    Gross Amount
of Recognized
Assets⁽¹⁾    Gross Amount
Offset in the
Statements of
Condition    Net Amount of
Assets Presented
in the
Statements of
Condition    Gross Amounts Not
Offset in the
Consolidated
Statements of Condition    Net
Amount
            Financial
Instruments    Cash
Collateral
Received
Derivatives
   $ 20,422    $ 17,861    $ 2,561    $ —      $ —      $ 2,561

~~(1)~~

~~Includes $1.9 million to purchase Treasury options.~~

~~The following tables present the effect the master netting arrangements had on the presentation of the derivative liabilities in the Consolidated Statements of Condition as of the dates indicated:~~

   September 30, 2017
(in thousands)    Gross Amount
of Recognized
Liabilities    Gross Amount
Offset in the
Statements of
Condition    Net Amount of
Liabilities
Presented in the
Statements of
Condition    Gross Amounts Not
Offset in the
Consolidated
Statements of Condition    Net
Amount
            Financial
Instruments    Cash
Collateral
Pledged
Derivatives
   $ 1,466    $ 1,248    $ 218    $ —      $ —      $ 218

   December 31, 2016
(in thousands)    Gross Amount
of Recognized
Liabilities    Gross Amount
Offset in the
Statements of
Condition    Net Amount of
Liabilities
Presented in the
Statements of
Condition    Gross Amounts Not
Offset in the
Consolidated
Statements of Condition    Net
Amount
            Financial
Instruments    Cash
Collateral
Pledged
Derivatives
   $ 23,728    $ 16,588    $ 7,140    $ —      $ —      $ 7,140

~~Note 13. Segment Reporting~~

The Company’s operations are divided into two reportable business segments: Banking Operations and Residential Mortgage Banking. These operating segments have been identified based on the Company’s organizational structure. The segments require unique technology and marketing strategies, and offer different products and services. While the Company is managed as an integrated organization, individual executive managers are held accountable for the operations of these business segments.

The Company measures and presents information for internal reporting purposes in a variety of ways. The internal reporting system presently used by management in the planning and measurement of operating activities, and to which most managers are held accountable, is based on organizational structure.

The management accounting process uses various estimates and allocation methodologies to measure the performance of the operating segments. To determine financial performance for each segment, the Company allocates capital, funding charges and credits, certain~~non-interest~~ expenses, and income tax provisions to each segment, as applicable. Allocation methodologies are subject to periodic adjustment as the internal management accounting system is revised and/or as business or product lines within the segments change. In addition, because the development and application of these methodologies is a dynamic process, the financial results presented may be periodically revised.

The Company seeks to maximize shareholder value by, among other means, optimizing the return on stockholders’ equity and managing risk. Capital is assigned to each segment, the combination of which is equivalent to the Company’s consolidated total, on an economic basis, using management’s assessment of the inherent risks associated with the respective segments.

The Company allocates expenses to the reportable segments based on various factors, including the volume and number of loans produced and the number of full-time equivalent employees. Income taxes are allocated to the various segments based on taxable income and statutory rates applicable to the segment.

~~Banking Operations Segment~~

~~The Banking Operations segment serves consumers and businesses by offering and servicing a variety of loan and deposit products and other financial services.~~

~~Residential Mortgage Banking Segment~~

~~The Residential Mortgage Banking segment originated, aggregated, sold, and servicedone-to-four~~ ~~family mortgage loans. Mortgage loan products consist primarily of agency-conforming, fixed and adjustable rate loans and, to a lesser extent, jumbo loans, for the purpose of purchasing or refinancingone-to-four~~ ~~family homes. The Residential Mortgage Banking segment earns interest on loans held in the warehouse andnon-interest~~ ~~income from the origination and servicing of loans. It also recognizes gains or losses on the sale of such loans.~~

~~The following tables provide a summary of the Company’s segment results for the periods indicated on an internally managed accounting basis:~~

   For the Three Months Ended September 30, 2017
(in thousands)    Banking
Operations    Residential
Mortgage
Banking    Total Company
Net interest income
   $ 273,265    $ 3,078    $ 276,343
Provision for loan losses
   44,585    —      44,585
Non-Interest Income:

Third party⁽¹⁾
   99,596    1,973    101,569
Gain on sale of mortgage banking operations
   —      7,359    7,359
Inter-segment
   (2,411 )    2,411    —






Totalnon-interest income
   97,185    11,743    108,928






Non-interest expense⁽²⁾
   146,869    15,365    162,234






Income (loss) before income tax expense
   178,996    (544 )    178,452
Income tax expense (benefit)
   68,200    (216 )    67,984






Net income (loss)
   $ 110,796    $ (328 )    $ 110,468






Identifiable segment assets(period-end)
   $ 48,457,891    $ —      $ 48,457,891

~~(1)~~

~~Includes ancillary fee income.~~

~~(2)~~

~~Includes both direct and indirect expenses.~~

   For the Three Months Ended September 30, 2016
(in thousands)    Banking
Operations    Residential
Mortgage
Banking    Total Company
Net interest income
   $ 314,081    $ 4,342    $ 318,423
Recovery of loan losses
   (55 )    —      (55 )
Non-Interest Income:

Third party⁽¹⁾
   27,131    13,464    40,595
Inter-segment
   (4,863 )    4,863    —






Totalnon-interest income
   22,268    18,327    40,595






Non-interest expense⁽²⁾
   144,504    17,181    161,685






Income before income tax expense
   191,900    5,488    197,388
Income tax expense
   69,905    2,184    72,089






Net income
   $ 121,995    $ 3,304    $ 125,299






Identifiable segment assets(period-end)
   $ 48,478,288    $ 984,332    $ 49,462,620

~~(1)~~

~~Includes ancillary fee income.~~

~~(2)~~

~~Includes both direct and indirect expenses.~~

~~The following tables provide a summary of the Company’s segment results for the periods indicated on an internally managed accounting basis:~~

   For the Nine Months Ended September 30, 2017
(in thousands)    Banking
Operations    Residential
Mortgage
Banking    Total Company
Net interest income
   $ 850,486    $ 8,543    $ 859,029
Provision for loan losses
   34,316    —      34,316
Non-Interest Income:

Third party⁽¹⁾
   163,221    20,957    184,178
Gain on sale of mortgage banking operations
   —      7,359    7,359
Inter-segment
   (10,222 )    10,222    —






Totalnon-interest income
   152,999    38,538    191,537






Non-interest expense⁽²⁾
   445,910    47,032    492,942






Income before income tax expense
   523,259    49    523,308
Income tax expense
   193,608    20    193,628






Net income
   $ 329,651    $ 29    $ 329,680






Identifiable segment assets(period-end)
   $ 48,457,891    $ —      $ 48,457,891

~~(1)~~

~~Includes ancillary fee income.~~

~~(2)~~

~~Includes both direct and indirect expenses.~~

   For the Nine Months Ended September 30, 2016
(in thousands)    Banking
Operations    Residential
Mortgage
Banking    Total Company
Net interest income
   $ 960,661    $ 11,201    $ 971,862
Provision for loan losses
   664    —      664
Non-Interest Income:

Third party⁽¹⁾
   87,616    25,582    113,198
Inter-segment
   (13,292 )    13,292    —






Totalnon-interest income
   74,324    38,874    113,198






Non-interest expense⁽²⁾
   430,706    50,338    481,044






Income (loss) before income tax expense
   603,615    (263 )    603,352
Income tax expense (benefit)
   221,817    (133 )    221,684






Net income (loss)
   $ 381,798    $ (130 )    $ 381,668






Identifiable segment assets(period-end)
   $ 48,478,288    $ 984,332    $ 49,462,620

~~(1)~~

~~Includes ancillary fee income.~~

~~(2)~~

~~Includes both direct and indirect expenses.~~

~~Note 14. Impact of Recent Accounting Pronouncements, Not Yet Adopted~~

~~In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2017-08,~~ ~~“Receivables~~- ~~Nonrefundable Fees and Other Costs (Subtopic310-20):~~ ~~Premium Amortization on Purchased Callable Debt Securities” (“ASUNo. 2017-08”).~~ ~~ASUNo. 2017-08~~ ~~shortens the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The Company plans to adopt ASUNo. 2017-08~~ ~~effective January 1, 2019 and the adoption is not expected to have a material effect on the Company’s Consolidated Statements of Condition, results of operations, or cash flows.~~

~~In January 2017, the FASB issued ASUNo. 2017-04,~~ ~~“Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASUNo. 2017-04~~ eliminates the second step of the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity will recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill recorded. ASU~~No. 2017-04~~ ~~does not amend the optional qualitative assessment of goodwill impairment. The Company plans to adopt ASUNo. 2017-04~~ ~~beginning January 1, 2020 and its adoption is not expected to have a material effect on the Company’s Consolidated Statements of Condition, results of operations, or cash flows.~~

~~In August 2016, the FASB issued ASUNo. 2016-15,~~ ~~“Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASUNo. 2016-15~~ ~~addresses the following cash flow issues: debt prepayment or debt extinguishment costs; settlement ofzero-coupon~~ ~~debt instruments or other debt instruments with coupon interest rates that are~~

insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The Company plans to adopt ASU~~No. 2016-15~~ ~~beginning January 1, 2018 and its adoption is not expected to have a material effect on the Company’s Consolidated Statements of Condition or results of operations.~~

~~In June 2016, the FASB issued ASUNo. 2016-13,~~ ~~“Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASUNo. 2016-13~~ ~~amends guidance on reporting credit losses for assets held on an amortized cost basis andavailable-for-sale~~ ~~debt securities. For assets held at amortized cost, ASUNo. 2016-13~~ eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For~~available-for-sale~~ ~~debt securities, credit losses should be measured in a manner similar to current GAAP, however ASUNo. 2016-13~~ ~~will require that credit losses be presented as an allowance rather than as a write-down. The amendments affect loans, debt securities, trade receivables, net investments in leases,off-balance~~ ~~sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The Company plans to adopt ASUNo. 2016-13~~ effective January 1, 2020, using the required modified retrospective approach, which includes presenting the cumulative effect of initial application along with supplementary disclosures. The Company is evaluating ASU~~No. 2016-13,~~ ~~initiating implementation efforts across the Company, and planning for loss modeling requirements consistent with lifetime expected loss estimates. The adoption of ASUNo. 2016-13~~ could have a material effect on the Company’s Consolidated Statements of Condition and results of operations. The extent of the impact upon adoption will likely depend on the characteristics of the Company’s loan portfolio and economic conditions at that date, as well as forecasted conditions thereafter.

~~In February 2016, the FASB issued ASUNo. 2016-02,~~ ~~“Leases (Topic 842).” ASUNo. 2016-02~~ ~~will require entities that lease assets to recognize as assets and liabilities on the balance sheet the respective rights and obligations created by those leases. ASUNo. 2016-02~~ also will require disclosures that include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The Company plans to adopt ASU~~No. 2016-02~~ effective January 1, 2019 using the required modified retrospective approach, which includes presenting the cumulative effect of initial application along with supplementary disclosures. As a lessor and lessee, we do not anticipate the classification of our leases to change, but we expect to recognize substantially all of our leases for which we are the lessee as a lease liability and corresponding~~right-of-use~~ asset on our Consolidated Statements of Condition. The Company has assembled a project management team and is presently evaluating all of its leases, as well as contracts that may contain embedded leases, for compliance with the new lease accounting rules.

~~In January 2016, the FASB issued ASUNo. 2016-01,~~ ~~“Financial Instruments—Overall (Subtopic825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities.” ASUNo. 2016-01~~ amends guidance on classification and measurement of financial instruments, including revisions in accounting related to the classification and measurement of investments in equity securities and presentation of certain fair value changes for financial liabilities when the fair value option is elected. ASU~~2016-01~~ ~~also amends certain disclosure requirements associated with the fair value of financial instruments. The company will adopt ASUNo. 2016-01~~ ~~on January 1, 2018, and its adoption is not expected to have a material effect on the Company’s Consolidated Statements of Condition, results of operations, or cash flows.~~

~~In May 2014, the FASB issued ASUNo. 2014-09,~~ “Revenue from Contracts with Customers,” which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company will adopt ASU~~No. 2014-09~~ ~~effective January 1, 2018 using the modified retrospective approach, which includes presenting the cumulative effect of initial application along with supplementary disclosures. ASUNo. 2014-09~~ ~~does not apply to~~ the vast majority of the properties securing our ~~revenue streams, (i.e. interest income) and therefore~~multi-family loans are ~~not in scope. The remaining revenue streams~~located, the amount of rent that ~~are in scope are de minimis and will not have a material impact~~tenants may be charged on the ~~Company’s Consolidated Statements~~apartments in certain buildings is restricted under rent-stabilization laws. Rent-stabilized apartments are generally located in buildings with six or more units that were built between February 1947 and January 1974. Rent-regulated apartments tend to be more affordable to live in because of ~~Condition, results~~the applicable regulations, and buildings with a preponderance of ~~operations, or cash flows.~~

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

such rent-regulated apartments are therefore less likely to experience vacancies in times of economic adversity.

TROUBLED DEBT MODIFICATION

A loan for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties.

WHOLESALE BORROWINGS

Refers to advances drawn by the Bank against its line(s) of credit with the FHLBs, their repurchase agreements with the FHLBs and various brokerage firms, and federal funds purchased.

YIELD

The interest income associated with interest-earning assets, typically expressed as a ratio of interest income to the average balance of interest-earning assets for a given period.

For the ~~purposes~~purpose of this Quarterly Report on Form10-Q, the words “we,” “us,” “our,” and the “Company” are used to refer to New York Community Bancorp, Inc. and our consolidated ~~subsidiaries, including New York Community~~subsidiary, Flagstar Bank, ~~and New York Commercial Bank~~N.A. (the ~~“Community Bank” and the “Commercial Bank,” respectively, and collectively, the “Banks”~~“Bank”).

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING LANGUAGE

This report, like many written and oral communications presented by New York Community Bancorp, Inc. and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of said safe harbor provisions.

Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “seek,” “strive,” “try,” or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. Although we believe that our plans, intentions, and expectations as reflected in these forward-looking statements are reasonable, we can give no assurance that they will be achieved or realized.

Our ability to predict results or the actual effects of our plans and strategies is inherently uncertain. Accordingly, actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements contained in this report.

There are a number of factors, many of which are beyond our control, that could cause actual conditions, events, or results to differ significantly from those described in our forward-looking statements. These factors include, but are not limited to:

•general economic conditions, including higher inflation and its impacts, either nationally or in some or all of the areas in which we and our customers conduct our respective businesses;

•conditions in the securities markets and real estate markets or the banking industry;

•changes in real estate values, which could impact the quality of the assets securing the loans in our portfolio;

•changes in interest rates, which may affect our net income, prepayment ~~income, mortgage banking~~penalty income, and other future cash flows, or the market value of our assets, including our investment securities;

•any uncertainty relating to the LIBOR transition process;

•changes in the quality or composition of our loan or securities portfolios;

•changes in our capital management policies, including those regarding business combinations, dividends, and share repurchases, among others;

potential increases in costs if the Company is designated a “Systemically Important Financial Institution” under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”);

•heightened regulatory focus on ~~CRE concentration and related limits that have been, or may in the future be, imposed by regulators;~~commercial real estate loan concentrations;

~~our use of derivatives to mitigate our interest rate exposure;~~

•changes in competitive pressures among financial institutions or fromnon-financial institutions;

•changes in deposit flows and wholesale borrowing facilities;

•changes in the demand for deposit, loan, and investment products and other financial services in the markets we serve;

•our timely development of new lines of business and competitive products or services in a changing environment, and the acceptance of such products or services by our customers;

•our ability to obtain timely shareholder and regulatory approvals of any merger transactions or corporate restructurings we may ~~propose;~~propose.;

•our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may acquire into our operations, and our ability to realize related revenue synergies and cost savings within expected time ~~frames;~~frames, including our recent acquisition of Flagstar Bancorp, Inc. and the purchase and assumption of certain assets and liabilities of Signature Bridge Bank;

•changes in the estimated fair value of the assets that we recorded in connection with the purchase and assumption of certain assets and liabilities of Signature Bridge Bank;

•potential exposure to unknown or contingent liabilities of companies we have acquired, may acquire, or target for ~~acquisition;~~acquisition, including our recent acquisition of Flagstar Bancorp, Inc. and the purchase and assumption of certain assets and liabilities of Signature Bridge Bank;

~~failure~~•the success of our previously announced investment in, and partnership with, Figure Technologies, Inc., a FinTech company focusing on payment and lending via blockchain technology;

•the ability to ~~obtain applicable~~invest effectively in new information technology systems and platforms;

•changes in future allowance for credit losses requirements under relevant accounting and regulatory ~~approvals for the payment of future dividends;~~requirements;

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

•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, ~~including, but not limited to, the Dodd-Frank Act,~~ 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, ~~and~~ 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, orand guidelines;

~~a material breach in performance by the Community Bank under our Loss Share Agreements with the FDIC;~~

~~changes in our estimates of future reserves based upon the periodic review thereof under relevant regulatory and accounting requirements;~~

•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 ~~terrorist activities;~~resulting from Russia’s military action in Ukraine, including the broader impacts to financial markets and the global macroeconomic and geopolitical environment;

•the effects of the COVID-19, pandemic; and

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

In addition, the timing and occurrence ornon-occurrence of events may be subject to circumstances beyond our control.

Furthermore, on an ongoing basis, we ~~routinely~~ evaluate opportunities to expand through mergers and acquisitions and ~~conduct~~opportunities for strategic combinations with other banking organizations. Our evaluation of such opportunities involves discussions with other parties, due diligence, ~~activities in connection with such opportunities.~~and negotiations. As a result, ~~acquisition discussions and, in some cases, negotiations,~~we may ~~take place~~decide to enter into definitive arrangements regarding such opportunities at any ~~time,~~time.

In addition to the risks and ~~acquisitions involving cash~~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;

•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 ~~debt or equity securities may occur.~~

post-merger balance sheet when deemed appropriate.

See ~~Part II,~~ Item 1A, ~~“Risk~~Risk Factors,~~” in this report and Part I, Item 1A, “Risk Factors,”~~ in our Form10-K for the year ended December 31, ~~2016~~2022, our Form 10-Q for the quarter ended 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,~~

PART I. FINANCIAL INFORMATION


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

EXECUTIVE SUMMARY

At June 30, 2023, total assets were $118.8 billion, up $28.7 billion compared to December 31, 2022. Total deposits were $88.5 billion at June 30, 2023, up $29.8 billion from December 31, 2022. These year-to-date increases were primarily due to our March 20, 2023, assumption of a substantial amount of the deposits and ~~book value per common share are financial measures that are recorded in accordance with U.S. generally accepted accounting principles (“GAAP”), tangible common stockholders’ equity, tangible~~certain identified liabilities and the acquisition of certain assets and ~~tangible book value per common share are not. It is management’s belief that thesenon-GAAP~~ ~~measures should be disclosed in this report and others we issue~~lines of business of Signature Bridge Bank, from the FDIC, as receiver 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 relatednon-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 reportingnon-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:

(in thousands, except per share amounts)    September 30,
2017 December 31,
2016
Stockholders’ Equity
   $ 6,759,654 $ 6,123,991
Less: Goodwill
   (2,436,131 ) (2,436,131 )
Core deposit intangibles
   —   (208 )
Preferred stock
   (502,840 ) —


Tangible common stockholders’ equity
   $ 3,820,683 $ 3,687,652
Total Assets
   $ 48,457,891 $ 48,926,555
Less: Goodwill
   (2,436,131 ) (2,436,131 )
Core deposit intangibles
   —   (208 )


Tangible assets
   $ 46,021,760 $ 46,490,216
Common stockholders’ equity to total assets
   12.91 % 12.52 %
Tangible common stockholders’ equity to tangible assets
   8.30 7.93
Book value per common share
   $12.79 $12.57
Tangible book value per common share
   7.81 7.57

~~Executive Summary~~

~~New York Community Bancorp, Inc. is the holding company for New York Community~~Signature Bridge Bank (the ~~“Community Bank”~~“Signature Transaction”), with 225 branches in Metro New York, New Jersey, Ohio, Florida, and Arizona; and New York Commercial Bank (the “Commercial Bank”), with 30 branches in Metro New York. At September 30, 2017, we had total assets of $48.5 billion, including total loans, net, of $37.5 billion, total deposits of $28.9 billion, and total stockholders’ equity of $6.8 billion.

~~Chartered in~~. See Note 3 “Business Combinations” to the ~~State of New York,~~Consolidated Financial Statements for further information regarding the Community Bank and the Commercial Bank are subject to regulation by the Federal Deposit Insurance Corporation (the “FDIC”), the Consumer Financial Protection Bureau, and the New York State Department of Financial Services. In addition, the holding company is subject to regulation by the Board of Governors of the Federal Reserve System (the “FRB”), the U.S. Securities and Exchange Commission (the “SEC”), and the requirements of the New York Stock Exchange, where shares of our common stock are traded under the symbol “NYCB” and shares of our preferred stock trade under the symbol “NYCB PR A.”

As a publicly traded company, our mission is to provide our shareholders with a solid return on their investment by producing a strong financial performance, maintaining a solid capital position, and engaging in corporate strategies that enhance the value of their shares. InSignature Transaction

For the three months ended ~~September~~June 30, ~~2017, we generated~~2023, net income ~~of $110.5~~was $413 million ~~and net~~as compared to $2.0 billion for the three months ended March 31, 2023. Net income available to common ~~shareholders~~stockholders for the three months ended June 30, 2023 was $405 million, compared to $2.0 billion for the three months ended March 31, 2023. Diluted EPS totaled $0.55 for the three months ended June 30, 2023 compared to $2.87 for the three months ended March 31, 2023.

Second quarter 2023 and first quarter 2023 net income and diluted EPS were impacted by a bargain purchase gain of ~~$102.3~~$141 million and $2.0 billion, respectively arising from the purchase and assumption of certain assets and liabilities in the Signature Transaction. Also included in net income for the three months ended June 30, 2023 and March 31, 2023, were merger related and restructuring expenses of $109 million and $67 million, respectively, related to both the Signature Transaction and the Flagstar acquisition. In addition, first quarter 2023 results were impacted by an initial provision for credit losses totaling $132 million for the loans acquired in the Signature Transaction.

Loan Portfolio

At June 30, 2023, total C&I loans were $23.9 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 the mortgage warehouse portfolio. On a linked quarter basis, mortgage warehouse loans rose $638 million or ~~$0.21 per diluted common share.~~

~~Resumption~~12 percent due to using our market position in this vertical to capitalize on several competitors exiting the market.

The multi-family loan portfolio was $37.8 billion at June 30, 2023, down slightly compared to $38.1 billion at December 31, 2022. The slight decline during this period was due to a combination of ~~Meaningful Loan Growth~~

~~After not growing~~higher interest rates and our increasing ability to diversify our loan portfolio as a result of our recent acquisition. At June 30, 2023, multi-family loans represented 45 percent of total loans, compared to 55 percent at December 31, 2022, further demonstrating the reduction of our concentration in this asset class.

Commercial loans (commercial real estate and acquisition, development and construction) increased $2.6 billion at June 30, 2023 to $13.1 billion compared to $10.5 billion at December 31, 2022 largely attributable to the Signature Transaction.

One-to-four family residential loans totaled $5.9 billion at June 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 June 30, 2023 compared to $2.3 billion at December 31, 2022. The other loan portfolio consists mostly of consumer loans.

Loans held-for-sale at June 30, 2023 totaled $2.2 billion, up from $1.1 billion at December 31, 2022.

Deposit Base

Deposits at June 30, 2023 totaled $88.5 billion up $29.8 billion compared to $58.7 billion at December 31, 2022 driven primarily by an increase to $5.9 billion of custodial deposits related to the Signature transaction.

Our deposit base includes $37.8 billion of uninsured deposits at June 30, 2023 a net increase of $18.2 billion as compared to December 31, 2022 due to the Signature Transaction. This represents 42.7 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 $37.7 billion of total ready liquidity (cash and cash equivalents, unpledged securities, Fed Funds access and FHLB borrowing capacity). Our total ready liquidity approximately matches the balance ~~sheet for nearly~~of our uninsured deposits.

Net Interest Income

For the three ~~years, totalnon-covered~~months ended June 30, 2023, net interest income totaled $900 million, up $345 million or 62 percent compared to the three months ended March 31, 2023. The current quarter’s results include a full-quarter’s contribution from the Signature Transaction, compared to only a partial month Signature contribution in the first quarter of this year.

For the three months ended June 30, 2023, the NIM was 3.21 percent up 61 basis points compared to the three months ended March 31, 2023. The linked-quarter improvement was due to the Signature Transaction which drove higher levels of average interest-earnings assets, specifically loans held for investment ~~grew 2.7% over~~and average cash and cash equivalent balances, including custodial deposits related to the ~~three months~~Signature Transaction. In addition, we continued to benefit from the higher interest rate environment, which positively impacted the yields on ~~an annualized basis to $37.5 billion. Totalnon-covered~~ ~~mortgage loans held for investment grew at an annualized rate of 3.5% to $35.5 billion, including 4.3% annualized growth in~~ our ~~multi-family loan portfolio. This was~~assets partially offset by a ~~2.4% (9.5% annualized) sequential decline in commercial~~higher cost of funds and ~~industrial (“C&I”) loans, largely~~higher average interest-bearing liabilities. Average interest-earning assets increased $25.6 billion or 30 percent to $112.3 billion, while the ~~result~~average yield rose 54 basis points to 5.34 percent. Average interest-bearing liabilities grew $7.2 billion or 10.28 percent to $77.4 billion, while the average cost of ~~prepayments. Total loans originated for investment~~funds increased ~~24% on a sequential~~33 basis points to ~~$2.3 billion, including 50% growth in multi-family originations and 30% growth in commercial real estate (“CRE”) loan originations.~~

~~We Maintained Our Solid Record of~~ 3.10 percent.

Asset Quality

~~Non-performingnon-covered~~ ~~assets declined 7% to $84.7 million, or 0.17%, of totalnon-covered~~ ~~assets at the end of the current third quarter as compared to $91.6 million, or 0.20%, of totalnon-covered~~ ~~assets at June 30, 2017.Non-performingnon-covered~~ ~~loans decreased 16% to $69.0 million, or 0.18%, of totalnon-covered~~ ~~loans at the end of the current third quarter as compared to $82.0 million, or 0.22%, of totalnon-covered~~ ~~loans at June 30, 2017.~~

~~During the quarter,non-accrualnon-covered~~ ~~mortgage loans declined 22% to $24.3 million, while othernon-accrualnon-covered~~ ~~loans, which primarily consisted of taxi medallion-related loans, decreased 12% to $44.7 million. These improvements were partially offset by a 64% increase, to $15.8 million, innon-covered~~ ~~repossessed assets.~~

~~Net charge-offs for the current third quarter rose to $40.4 million, or 0.11%, of average loans compared to $11.4 million, or 0.03%, of average loans in~~

Our asset quality metrics remained strong during the second quarter of ~~2017. The increase was due~~2023 despite increases in NPLs and NPAs attributable to ~~charge-offs~~certain loans acquired in the Signature Transaction and Flagstar acquisition. At June 30, 2023, NPAs to total assets equaled 0.21 percent compared to 0.14 percent at March 31, 2023 while NPLs to total loans equaled 0.28 percent compared to 0.20 percent at December 31, 2022. Repossessed assets of $13 million were relatively unchanged compared to the $13 million recorded in the prior quarter.

Recent Events

Declaration of Dividend on Common Shares

On July 25, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.17 per share on the ~~taxi medallion-related loan portfolio. Taxi medallion-related loans accounted for $40.6 million~~Company's common stock. The dividend is payable on August 17, 2023 to common stockholders of this quarter’s charge-offs compared to $11.3 million in the trailing quarter. Excluding these charge-offs, the Company would have recorded net recoveries during the quarter. At September 30, 2017, the Company’s total taxi medallion-related exposure was $105.6 million.

~~Our~~ record as of August 7, 2023.

RESULTS OF OPERATIONS

Net Interest Income ~~Was Pressured by~~

Net interest income is our primary source of income. Its level is a function of the ~~Rise in Interest Rates~~

~~The FRB has raised its target federal funds rate four times since~~average balance of our interest-earning assets, the ~~fourth quarter~~average balance of ~~2016, including in March~~our interest-bearing liabilities, and ~~June of 2017. This increase in short-term interest rates led to an increase in our~~the spread between the yield on such assets and the cost of ~~funds. As a result~~such liabilities. These factors are influenced by both the pricing and mix of ~~this factor,~~ our ~~net interest income fell $11.4 million, or 4% sequentially, and $42.1 million, or 13% year-over-year, to $276.3 million~~interest-earning assets and our ~~net interest margin fell 12 and 38 basis points, respectively, to 2.53%~~interest-bearing liabilities which, in ~~the third quarter of this year.~~

~~Ongoing Expense Control~~

~~Non-interest~~ expense totaled $162.2 million in the current third quarter, down 1% from the trailing-quarter level and up modestly from the year-earlier quarter. Merger-related expenses were $2.2 million in the year-earlier period; there were no comparable expenses in the third quarter of 2017. The sequential improvement was largely due to lower operating expenses including compensation and benefits expense and general and administrative (“G&A”) expense.

~~External Factors~~

~~The following is a discussion of certain~~turn, are impacted by various external factors, ~~that tend to influence our financial performance~~including the local economy, competition for loans and deposits, the ~~strategic actions we take:~~

~~Interest Rates~~

~~Among~~monetary policy of the ~~external factors that tend to influence our performance, the~~FOMC, and market interest ~~rate environment is key.~~

rates.

The cost of our deposits and ~~short-term~~ borrowed funds is largely based on short-term rates of interest, the level of which is partially impacted by the actions of the ~~Federal Open Market Committee of the Federal Reserve Board of Governors (the “FOMC”). The FOMC reduces, maintains, or increases~~FOMC.

While the target federal funds rate (the rate at which banks borrow funds overnight from one another) as it deems necessary. Since the fourth quarter of 2008, when the target federal funds rate was lowered to a range of 0% to 0.25%, the rate has been raised four times: on December 17, 2015, to a range of 0.25% to 0.50%; on December 14, 2016, to a range of 0.50% to 0.75%; on March 15, 2017, to a range of 0.75% to 1.00%; and most recently on June 14, 2017 to a range of 1.00% to 1.25%.

~~Just as short-term interest rates affect~~generally impacts the cost of our ~~deposits~~short-term borrowings and ~~that of the funds we borrow, market interest rates affect~~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 ~~loans we produce for investment~~ yields on our interest-earning assets—and our net interest income—is the ~~securities in which we invest. As further discussed under “Loans Held for Investment” later on in this discussion, the interest rates on~~income generated by our multi-family and CRE loans ~~generally are based~~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 ~~five-year Constant Maturity Treasury Rate (“CMT”~~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 portfolio. 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 was minimal.

Comparison to Prior Quarter

Net interest income for the three months ended June 30, 2023 was $900 million, up $345 million or 62 percent compared to the three months ended March 31, 2023. This quarter’s results include a full-quarter’s contribution from the Signature Transaction compared to only a partial month contribution in the first quarter of this year which is the primary cause of most of the linked-quarter differences explained below.

•Interest income on mortgage and other loans, net, totaled $1.2 billion, up $294 million compared to first quarter of this year. This increase was driven by a $13.0 billion or 18.42 percent increase in average loan balances to $83.8 billion. This is primarily due to the full quarter activity related to the Signature Transaction. Additionally, we had a 63 basis points increase in the average loan yield to 5.55 percent from 4.92 percent in the prior quarter due primarily to the rising interest rate environment.

•Interest income on securities was positively impacted by a 32 basis points increase in the average yield to 4.18 percent from 3.86 percent along with a $1.1 billion or 9.85 percent decrease in the average securities balance to $9.8 billion.

•Interest income on cash and cash equivalents increased $177 million driven by a seven basis points increase in the average yield to 5.03 percent driven by higher short-term market rates, coupled with an increase in the average balance of $14.0 billion driven by the Signature Transaction.

•Interest expense on average interest-bearing deposits increased $158 million to $441 million during the three months ended June 30, 2023, driven by a 58 basis point increase in the average cost of interest-bearing deposits due to rising interest rates and competition for deposits. Additionally, our average interest earning deposits grew $11.3 billion, or 23.69 percent, to $59.2 billion. The balance growth reflects the December acquisition of Flagstar and the March Signature Transaction.

•Interest expense on borrowed funds decreased $39 million or 20 percent to $157 million driven by a nine basis point decrease in rates in addition to a $4.1 billion or 18.5 percent decrease in the average balance to $18.2 billion, partially due to our shift to lower cost deposits.

Comparison to Prior Year to Date

For the six months ended June 30, 2023, net interest income totaled $1.5 billion, up $764 million or 111 percent compared to the six months ended June 30, 2022.The year-to-date results include a six month contribution from the Flagstar acquisition and three months plus a partial-month contribution from the Signature Transaction which were not part of the Company in the first half of 2022.

•Interest income on mortgages and other loans, net was driven by a $31.0 billion or 66.7 percent increase in average loan balances to $77.5 billion. This is primarily driven by the December 2022 acquisition of Flagstar and the March 2023 Signature Transaction. Additionally, we had a 173 basis point increase in the average loan yield to 5.25 percent in the current year quarter due primarily to the rising interest rate environment.

•Interest income on securities was positively impacted by a 175 basis point increase in the average yield to 4.01 percent from 2.26 percent along with a $3.7 billion or 56.1 percent increase in the average securities balance to $10.3 billion primarily driven by the six month contribution from the Flagstar acquisition.

•Interest-earning cash and cash equivalents reflected a 438 basis point increase in the average yield to 5.02 percent driven by higher short-term market rates and an increase in the average balance of $8.9 billion driven by the Signature Transaction.

•Interest expense on average interest-bearing deposits increased $651 million to $724 million during the six months ended June 30, 2023, driven by a 227 basis point increase in the average cost of interest-bearing deposits due to rising interest rates. Average interest earning deposits grew $20.7 billion, or 62.8 percent, to $53.6 billion. The balance growth primarily reflects the December acquisition of Flagstar and the March Signature Transaction.

•Interest expense on borrowed funds increased $215 million or 156 percent to $353 million driven by a 176 basis point increase in rates in addition to a $4.5 billion or 28.3 percent increase in the average balance to $20.3 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,
	June 30, 2023						March 31, 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)	$	83,810	$	1,161	5.55	%	$	70,774	$	867	4.92	%
Securities (2) (3)	9,781		102		4.18	%	10,850		104		3.86	%
Reverse repurchase agreements	429		6		5.85	%	785		11		5.53	%
Interest-earning cash and cash equivalents	18,279		229		5.03	%	4,257		52		4.96	%
Total interest-earning assets	$	112,299	$	1,498	5.34	%	$	86,666	$	1,034	4.80	%
Non-interest-earning assets	8,974						7,864
Total assets	$	121,273					$	94,530
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing deposits:
Interest-bearing checking and money market accounts	$	30,647	$	232	3.05	%	$	23,098	$	157	2.76	%
Savings accounts	10,015		40		1.61	%	11,093		39		1.44	%
Certificates of deposit	18,587		169		3.61	%	13,712		87		2.57	%
Total interest-bearing deposits	$	59,249	$	441	2.98	%	$	47,903	$	283	2.40	%
Short term borrowed funds	6,807		75		4.46	%	9,036		103		4.61	%
Other borrowed funds	11,393		82		2.88	%	13,290		93		2.85	%
Total Borrowed funds	$	18,200	$	157	3.47	%	$	22,326	$	196	3.56	%
Total interest-bearing liabilities	$	77,449	$	598	3.10	%	$	70,229	$	479	2.77	%
Non-interest-bearing deposits	24,613						13,189
Other liabilities	8,320						1,939
Total liabilities	$	110,383					$	85,357
Stockholders’ equity	10,890						9,173
Total liabilities and stockholders’ equity	$	121,273					$	94,530
Net interest income/interest rate spread			$	900	2.24	%			$	555	2.03	%
Net interest margin					3.21	%					2.60	%
Ratio of interest-earning assets to interest-bearing liabilities					1.45	x					1.23	x

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

(2)Amounts are at amortized cost.

(3)Includes FHLB stock and FRB stock.


	Six Months Ended,
	June 30, 2023						June 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)	$	77,481	$	2,028	5.25	%	$	46,479	$	817	3.52	%
Securities (2) (3)	10,313		206		4.01	%	6,607		75		2.26	%
Reverse repurchase agreements	606		17		5.64	%	320		2		1.56	%
Interest-earning cash and cash equivalents	11,300		281		5.02	%	2,395		8		0.64	%
Total interest-earning assets	$	99,700	$	2,532	5.10	%	$	55,801	$	902	3.24	%
Non-interest-earning assets	8,271						5,145
Total assets	$	107,971					$	60,946
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing deposits:
Interest-bearing checking and money market accounts	$	26,894	$	389	2.91	%	$	15,629	$	32	0.42	%
Savings accounts	10,551		79		1.52	%	9,218		18		0.38	%
Certificates of deposit	16,159		256		3.19	%	8,086		23		0.58	%
Total interest-bearing deposits	$	53,604	$	724	2.72	%	$	32,933	$	73	0.45	%
Short term borrowed funds	7,915		178		4.54	%	2,132		7		0.66	%
Other borrowed funds	12,336		175		2.86	%	13,650		131		1.93	%
Total Borrowed funds	$	20,251	$	353	3.52	%	$	15,782	$	138	1.76	%
Total interest-bearing liabilities	$	73,855	$	1,077	2.94	%	$	48,715	$	211	0.87	%
Non-interest-bearing deposits	18,933						4,483
Other liabilities	5,145						775
Total liabilities	$	97,933					$	53,973
Stockholders’ equity	10,038						6,973
Total liabilities and stockholders’ equity	$	107,971					$	60,946
Net interest income/interest rate spread			$	1,455	2.16	%			$	691	2.37	%
Net interest margin					2.94	%					2.48	%
Ratio of interest-earning assets to interest-bearing liabilities					1.35	x					1.15	x

(1)Amounts are net of net deferred loan origination costs/(fees) and the allowances for loan losses 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,						Six Months Ended,
	June 30, 2023 compared to March 31, 2023 Increase/(Decrease) Due to:						June 30, 2023 compared to June 30, 2022 Increase/(Decrease) Due to:
(in millions)	Volume		Rate		Net		Volume		Rate		Net
INTEREST-EARNING ASSETS:
Mortgage and other loans and leases, net	$	181	$	113	$	294	$	814	$	397	$	1211
Securities	(11)		9		(2)		74		57		131
Reverse repurchase agreements	(5)		—		(5)		8		7		15
Interest Earning Cash & Cash Equivalent	176		1		177		224		49		273
Total interest-earnings assets	$	341	$	123	$	464	$	1120	$	510	$	1630
INTEREST-BEARING LIABILITIES:
Interest-bearing checking and money market accounts	$	58	$	17	$	75	$	164	$	193	$	357
Savings accounts	(4)		5		1		10		51		61
Certificates of deposit	44		38		82		129		104		233
Short Term Borrowed Funds	85		73		158		131		40		171
Other Borrowed Funds	(25)		(3)		(28)		(19)		63		44
Total interest-bearing liabilities	158		130		288		415		451		866
Change in net interest income	$	183	$	(7)	$	176	$	705	$	59	$	764

Comparison to Prior Quarter

The Company's net interest margin for the three months ended June 30, 2023, was 3.21 percent up 61 basis points compared to the three months ended March 31, 2023. The increase was driven by both a higher level of average earnings assets due to the Signature Transaction being included for the entire quarter compared to only a partial month during the first quarter of this year, along with higher yields on those assets. This was partially offset by a higher cost of funds and higher average interest-bearing liabilities reflecting a full quarter impact of the Signature Transaction.

Average interest-earning assets increased $25.6 billion or 29.58 percent to $112.3 billion, while the average yield rose 54 basis points to 5.34 percent. Average interest-bearing liabilities grew $7.2 billion or 10.28 percent to $77.4 billion, while the average cost of funds increased 33 basis points to 3.10 percent.

Comparison to Prior Year to Date

The Company's net interest margin for the six months ended June 30, 2023, was 2.94 percent compared to 2.48 percent for the six months ended June 30, 2022. The increase was driven by both a higher level of average earnings assets due to the Flagstar acquisition and Signature Transaction, along with significantly higher yields on those assets reflecting the higher interest rate environment. This was partially offset by a higher cost of funds and higher average interest-bearing liabilities.

Average interest-earnings assets increased $43.9 billion or 78.67 percent to $99.7 billion, while the average yield increased 186 basis points to 5.10 percent. Average interest-bearing liabilities increased $25.1 billion or 51.61 percent to $73.9 billion, while the average cost of funds increased 207 basis points to 2.94 percent.

Provision for Credit Losses

Comparison to Prior Quarter

The three months ended June 30, 2023 provision for credit losses totaled $49 million including increases of $13 million related to specific reserves for new non-accrual loans and the remainder driven by changes in the macroeconomic forecast. The three months ended March 31, 2023 provision for credit losses was $170 million including 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 difference was primarily driven by loan growth and changes in the macroeconomic forecast.

Comparison to Prior Year to Date

The six months ended June 30, 2023 provision for credit losses was $219 million compared to $7 million for the six months ended June 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, a $20 million provision for credit losses on Signature debt securities held by the Company. The remaining difference was primarily driven by loan growth, specific reserves for new nonaccrual loans and changes in the macroeconomic forecast.

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); income from our investment in BOLI; net return on our MSR asset; net gain on loan sales and securitizations; and “other” sources, including the revenues produced through the sale of third-party investment products and loan subservicing.

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


	Three Months Ended,				Six Months Ended,
(in millions)	June 30, 2023		March 31, 2023		June 30, 2023		June 30, 2022
Bargain purchase gain	$	141	$	2,001	$	2,142	$	—
Fee income	48		27		75		12
Net return on mortgage servicing rights	25		22		47		—
Net gain on loan sales and securitizations	25		20		45		—
Other	14		11		25		7
Bank-owned life insurance	11		10		21		14
Net Loan administration income	39		7		46		—
Net (loss) gain on securities	(1)		—		(1)		(1)
Total non-interest income	$	302	$	2,098	$	2,400	$	32

Comparison to Prior Quarter

For the three months ended June 30, 2023, non-interest income totaled $302 million as compared to $2.1 billion in the first quarter. The second quarter includes a bargain purchase gain of $141 million as compared to $2.0 billion in the first quarter related to the Signature transaction. Second-quarter 2023 non-interest income includes a full-quarter's contribution from Signature compared to a partial month in the first quarter. This benefited fee income and loan administration income which includes a $42 million benefit for income related to servicing loans on behalf of the FDIC receivership. Loan admin income otherwise decreased due to SOFR-referenced costs related to custodial deposits which are net settled as part of certain servicing contracts.

Second quarter 2023 non-interest income includes a gain on loan sales of $25 million compared to $20 million during the first quarter, with a gain on sale margin of 56 basis points compared to 76 basis points last quarter. The net return on mortgage servicing rights was $25 million or 9.7 percent for the second quarter compared to $22 million or 8.5 percent for the first quarter. Net loan administration income totaled $39 million for the three months ended June 30, 2023 compared to $7 million for the three months ended March 31, 2023 driven by subservicing income related to the Signature transaction.

Comparison to Prior Year to Date

Non-interest income increased $2.4 billion for the six months ended June 30, 2023 compared to the six months ended June 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 a $63 million increase in fee income, net return on mortgage servicing rights of $47 million, gain on loan sales of $45 million and loan administration income of $46 million.

Non-Interest Expense

Comparison to Prior Quarter

For the three months ended June 30, 2023, non-interest expenses totaled $661 million, up $185 million, or 39 percent compared to the three months ended March 31, 2023. Total operating expenses for the three months ended June 30, 2023 were $515 million, up $123 million compared to $392 million for the first quarter 2023. The increase was primarily driven by the second quarter 2023 including a full quarter of Signature expenses, including costs to retain key business personnel, compared to only a partial month during first-quarter 2023.

Comparison to Prior Year to Date

Non-interest expense increased $858 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. Total operating expenses for the six months ended June 30, 2023 were up $639 million compared to the six months ended June 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 June 30, 2023, the Company reported a provision for income taxes of $79 million compared $1 million for the three months ended March 31, 2023. Income tax expense for both the current quarter and for the first quarter 2023 was impacted the Signature Transaction and Flagstar acquisition, respectively. The effective tax rate was 16.2 percent for the second quarter 2023.

Comparison to Prior Year to Date

For the six months ended June 30, 2023, the Company reported a provision for income taxes of $80 million, compared to $111 million for the six months ended June 30, 2022. Income tax expense for the current year was impacted the Signature Transaction and Flagstar acquisition.

FINANCIAL CONDITION

Balance Sheet Summary

Total assets increased $28.7 billion to $118.8 billion as of June 30, 2023, compared to $90.1 billion at December 31, 2022 due to the Flagstar acquisition which closed December 1, 2022, the Signature Transaction, which closed on March 20, 2023 and organic loan growth.

The Company acquired approximately $25 billion of cash, 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 Signature Transaction.

Total loans and leases held for investment were $83.3 billion at June 30, 2023 compared to $69.0 billion at December 31, 2022. The increase was driven by the aforementioned loans acquired from the Signature Transaction and organic loan growth.

The securities portfolio totaled $7.8 billion at June 30, 2023, compared to $9.1 billion at December 31, 2022. As of June 30, 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 $29.8 billion, or 51 percent to $88.5 billion at June 30, 2023 compared to $58.7 billion at December 31, 2022 primarily driven by the deposits assumed in the Signature Transaction. Included in the June 30, 2023 balance are $5.9 billion in non-interest-bearing custodial deposits related to the Signature Transaction.

Wholesale borrowings at June 30, 2023 were $15.4 billion compared to $20.3 billion at December 31, 2022, reflecting the use of some of the cash acquired from the Signature transaction to reduce the level of FHLB-NY borrowings.

Loans held-for-investment

The following table summarizes the ~~high, low, and average five- andten-year~~ ~~CMTs in the respective periods:~~

   Five-Year Constant Maturity Treasury Rate    Ten-Year Constant Maturity Treasury Rate
   Sept. 30 June 30, Sept. 30,    Sept. 30, June 30, Sept. 30,
   2017 2017 2016    2017 2017 2016
High
   1.95 % 1.94 % 1.26 % High    2.39 % 2.42 % 1.73 %
Low
   1.63 1.71 0.94 Low    2.05 2.05 1.37
Average
   1.81 1.81 1.13 Average    2.24 2.26 1.56

~~(Source: Bloomberg)~~

Changes in market interest rates generally have a lesser impact on our multi-family and CRE loan production than they do on other types of loans we produce. Because the multi-family and CRE loans we produce generate income when they prepay (which is recorded as interest income), the impact of repayment activity can be meaningful. In the third quarter of 2017, prepayment income from loans contributed $14.1 million to interest income; in the trailing and year-earlier quarters, the contribution was $13.3 million and $13.4 million, respectively.

~~Economic Indicators~~

~~While we attribute our asset quality to the nature of the loans we produce and our conservative underwriting standards, the quality~~composition of our assets can also be impacted by economic conditions in our local markets and throughout the United States. The information that follows consists of recent economic data that we consider to be germane to our performance and the markets we serve.

loan portfolio:


	June 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	$37,831		45.4	%	$	38,130	55.3	%
Commercial real estate	10,613		12.7	%	8,526		12.4	%
One-to-four family first mortgage	5,889		7.1	%	5,821		8.4	%
Acquisition, development, and construction	2,481		3.0	%	1,996		2.9	%
Total mortgage loans	$	56,814	68.2	%	$	54,473	78.9	%
Other Loans:
Commercial and industrial	$	23,861	28.7	%	$	12,276	17.8	%
Other loans	2,603		3.1	%	2,252		3.3	%
Total other loans held for investment	$	26,464	31.8	%	$	14,528	21.1	%
Total loans and leases held for investment	$	83,278	100.0	%	$	69,001	100.0	%
Allowance for credit losses on loans and leases	(594)				(393)
Total loans and leases held for investment, net	$	82,684			$	68,608
Loans held for sale, at fair value	2,194				1,115
Total loans and leases, net	$	84,878			$	69,723

The following table ~~presents the unemployment rates for the United States and~~summarizes our ~~key deposit markets in the months ended September 30, 2017, June 30, 2017, and September 30, 2016. While unemployment declined year-over-year in all~~production of ~~these markets, the sequential comparison indicates declines in certain markets and modest increases in two states and New York City.~~

   For the Month Ended
   September 30,
2017 June 30,
2017 September 30,
2016
Unemployment rate:

United States
   4.1 % 4.5 % 4.8 %
New York City
   5.0 4.4 5.4
Arizona
   4.7 5.3 5.4
Florida
   3.6 4.4 5.1
New Jersey
   4.8 4.3 4.9
New York
   4.7 4.5 4.9
Ohio
   4.7 5.4 4.9

~~(Source: U.S. Department of Labor)~~

Another key economic indicator is the Consumer Price Index (the “CPI”), which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The following table indicates the change in the CPI for the twelve months ended at each of the indicated dates:

   For the Twelve Months Ended
   September
2017 June
2017 September
2016
Change in prices:
   0.5 % (0.1 )% 0.3 %

Yet another pertinent economic indicator is the residential rental vacancy rate in New York, as reported by the U.S. Department of Commerce, and the office vacancy rate in Manhattan, as reported by a leading commercial real estate broker, Jones Lang LaSalle. These measures are important in view of the fact that 64.7% of our multi-family loans and 70.0% of our CRE loans are secured by properties in New York, with Manhattan accounting for 26.9% and 51.3% of our multi-family and CRE loans, respectively.

As reflected in the following table, residential rental vacancy rates in New York increased year-over-year and linked-quarter, while office vacancy rates in Manhattan declined year-over-year and linked quarter.

   For the Three Months Ended
   September 30,
2017 June 30,
2017 September 30,
2016
Rental Vacancy Rates:

New York residential
   5.6 % 5.1 % 5.1 %
Manhattan office
   10.2 10.8 10.5

~~Lastly, the Consumer Confidence Index~~^® ~~increased to 120.6 in September 2017 from 117.3 in June 2017 and 104.1 in September 2016. An index level of 90 or more is considered indicative of a strong economy.~~

~~Recent Events~~

~~Strategic Exit from the Mortgage Banking Business~~

On June 27, 2017, the Company announced that it had entered into an agreement to sell its mortgage banking business, which was acquired as part of its 2009 FDIC-assisted acquisition of AmTrust Bank (“AmTrust”), to Freedom Mortgage Corporation (“Freedom”). The sale of our mortgage banking business effectively takes the Company out of the~~one-to-four~~ family residential wholesale lending business. Additionally, the Company received approval from the FDIC to sell the assets covered under our Loss Share Agreements (“LSA”) and entered into an agreement to sell the majority of our~~one-to-four~~ ~~family residential mortgage-related assets, including those covered under the LSA, to FirstKey Mortgage, LLC, an affiliate of Cerberus Capital Management, L.P. (“Cerberus”).~~

On July 28, 2017, the Company completed the sale, resulting in the receipt of proceeds of $1.9 billion from Cerberus and the FDIC to sell the aforementioned loans and settle the related LSA, resulting in a gain of $74.6 million which is included in~~“Non-interest~~ ~~income” in the accompanying Consolidated Statement of Income and Comprehensive Income. Effective October 31, 2017, the Company and the FDIC completed termination of the LSA.~~

The sale of our mortgage banking business to Freedom, which included both our origination and servicing platforms, as well as our mortgage servicing portfolio with unpaid loan principal balances totaling $20.5 billion and related mortgage servicing rights (“MSRs”) asset of $208.8 million, closed on September 29, 2017. We received proceeds in the amount of $226.6 million, resulting in a~~pre-tax~~ ~~gain of $7.4 million.~~

The decision to sell the mortgage banking business and the assets covered under our LSA was the result of an evaluation with the Board of Directors and our outside advisors. Selling to a large, national, full-service mortgage banking company that would keep certain employees and maintain operations in the region were important considerations during the evaluation process. These actions are consistent with the Company’s strategic objectives. Such sales allow the Company to focus on its core business model, including growth through acquisitions, generate liquidity which will be redeployed into higher-earning assets, and enhance returns through improved efficiencies.

~~The Community Bank’s mortgage banking operation originated, aggregated, sold, and servicedone-to-four~~ ~~family loans. Community banks, credit unions, mortgage companies, and mortgage brokers used its proprietaryweb-accessible~~ ~~mortgage banking platform to originate and closeone-to-four~~ ~~family loans nationwide. These loans were generally sold to GSEs, servicing retained. To a much lesser extent, the Community Bank used its mortgage banking platform to originate jumbo loans.~~

~~Declaration of Dividend on Common Shares~~

On October 24, 2017, the Board of Directors declared a quarterly cash dividend of $0.17 per share on our common stock, payable on November 21, 2017 to shareholders of record at the close of business on November 7, 2017.

~~Critical Accounting Policies~~

We consider certain accounting policies to be critically important to the portrayal 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. The inherent sensitivity of 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 allowances for loan losses onnon-covered~~ ~~loans; the determination of the amount, if any, of goodwill impairment; and the determination of the valuation allowance for deferred tax assets.~~

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 Losses onNon-Covered~~ ~~Loans~~

~~The allowance for losses onnon-covered~~ ~~loans represents our estimate of probable and estimable losses inherent in thenon-covered~~ ~~loan portfolio as of the date of the balance sheet. Losses onnon-covered~~ ~~loans are charged against, and recoveries of losses onnon-covered~~ ~~loans are credited back to, the allowance for losses onnon-covered~~ ~~loans.~~

~~Althoughnon-covered~~ loans are held by either the Community Bank or the Commercial Bank, and a separate loan loss allowance is established for each, the total of the two allowances is available to cover all losses incurred. In addition, except as otherwise noted in the following discussion, the process for establishing the allowance for losses on~~non-covered~~ ~~loans is largely the same for each of the Community Bank and the Commercial Bank.~~

~~The methodology used for the allocation of the allowance fornon-covered~~ ~~loan losses at September 30, 2017 and December 31, 2016 was generally comparable, whereby the Community Bank and the Commercial Bank segregated their loss factors (used for both criticized andnon-criticized~~ loans) into a component that was primarily based on historical loss rates and a component that was primarily based on other qualitative factors that are probable to affect loan collectability. In determining the respective allowances for~~non-covered~~ loan losses, management considers the Community Bank’s and the Commercial Bank’s current business strategies and credit processes, including compliance with applicable regulatory guidelines and with guidelines approved by the respective Boards of Directors with regard to credit limitations, loan approvals, underwriting criteria, and loan workout procedures.

~~The allowance for losses onnon-covered~~ loans is established based on management’s evaluation of incurred losses in the portfolio in accordance with U.S. generally accepted accounting principles (“GAAP”), and is comprised of both specific valuation allowances and general valuation allowances.

~~Specific valuation allowances are established based on management’s analyses of individual loans that are considered impaired. If anon-covered~~ ~~loan is deemed to be impaired, management measures the extent of the impairment and establishes a specific valuation allowance for that amount. Anon-covered~~ loan is classified as “impaired” when, based on current information and/or events, it is probable that we will be unable to collect all amounts due under the contractual terms of the loan agreement. We apply this classification as necessary to~~non-covered~~ loans individually evaluated for impairment in our portfolios. Smaller-balance homogenous loans and loans carried at the lower of cost or fair value are evaluated for impairment on a collective, rather than individual, basis. Loans to certain borrowers who have experienced financial difficulty and for which the terms have been modified, resulting in a concession, are considered troubled debt restructurings (“TDRs”) and are classified as impaired.

We generally measure impairment on an individual loan and determine the extent to which a specific valuation allowance is necessary by comparing the loan’s outstanding balance to either the fair value of the collateral, less the estimated cost to sell, or the present value of expected cash flows, discounted at the loan’s effective interest rate. Generally, when the fair value of the collateral, net of the estimated cost to sell, or the present value of the expected cash flows is less than the recorded investment in the loan, any shortfall is promptly charged off.

~~We also follow a process to assign general valuation allowances tonon-covered~~ ~~loan categories. General valuation allowances are established by applying our loan loss provisioning methodology, and reflect the inherent risk in outstandingheld-for-investment~~ loans. This loan loss provisioning methodology considers various factors in determining the appropriate quantified risk factors to use to determine the general valuation allowances. The factors assessed begin with the historical loan loss experience for each major loan category. We also take into account an estimated historical loss emergence period (which is the period of time between the event that triggers a loss and the confirmation and/or~~charge-off~~ ~~of that loss) for each loan portfolio segment.~~

The allocation methodology consists of the following components: First, we determine an allowance for loan losses based on a quantitative loss factor for loans evaluated collectively for impairment. This quantitative loss factor is based primarily on historical loss rates, after considering loan type, historical loss and delinquency experience, and loss emergence periods. The quantitative loss factors applied in the methodology are periodically~~re-evaluated~~ and adjusted to reflect changes in historical loss levels, loss emergence periods, or other risks. Lastly, we allocate an allowance for loan losses based on qualitative loss factors. These qualitative loss factors are designed to account for losses that may not be provided for by the quantitative loss component due to other factors evaluated by management, which include, but are not limited to:

~~Changes in lending policies and procedures, including changes in underwriting standards and collection, andcharge-off~~ ~~and recovery practices;~~

Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments;

~~Changes in the nature and volume of the portfolio and in the terms of loans;~~

~~Changes in the volume and severity ofpast-due~~ ~~loans, the volume ofnon-accrual~~ ~~loans, and the volume and severity of adversely classified or graded loans;~~

~~Changes in the quality of our loan review system;~~

~~Changes in the value of the underlying collateral for collateral-dependent loans;~~

~~The existence and effect of any concentrations of credit, and changes in the level of such concentrations;~~

~~Changes in the experience, ability, and depth of lending management and other relevant staff; and~~

~~The effect of other external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the existing portfolio.~~

~~By considering the factors discussed above, we determine an allowance fornon-covered~~ ~~loan losses that is applied to each significant loan portfolio segment to determine the total allowance for losses onnon-covered~~ ~~loans.~~

~~The historical loss period we use to determine the allowance for loan losses onnon-covered~~ ~~loans is a rolling27-quarter~~ ~~look-back period, as we believe this produces an appropriate reflection of our historical loss experience.~~

~~The process of establishing the allowance for losses onnon-covered~~ ~~loans also involves:~~

~~Periodic inspections of the loan collateral by qualifiedin-house~~ ~~and external property appraisers/inspectors;~~

~~Regular meetings of executive management with the pertinent Board committee, during which observable trends in the local economy and/or the real estate market are discussed;~~

Assessment of the aforementioned factors by the pertinent members of the Boards of Directors and management when making a business judgment regarding the impact of anticipated changes on the future level of loan losses; and

~~Analysis of the portfolio in the aggregate, as well as on an individual loan basis, taking into consideration payment history, underwriting analyses, and internal risk ratings.~~

~~In order to determine their overall adequacy, each of the respectivenon-covered~~ ~~loan loss allowances is reviewed quarterly by management and the Board of Directors of the Community Bank or the Commercial Bank, as applicable.~~

We charge 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 followingpast-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) Bothclosed-end~~ ~~andopen-end~~ ~~credits are typically charged off in the quarter that the credit is 60 days past the date we received notification that the borrower has filed for bankruptcy.~~

~~The level of future additions to the respectivenon-covered~~ loan loss allowances is based on many factors, including certain factors that are beyond management’s control, such as changes in economic and local market conditions, including declines in real estate values, and increases in vacancy rates and unemployment. Management uses the best available information to recognize losses on loans or to make additions to the loan loss allowances; however, the Community Bank and/or the Commercial Bank may be required to take certain charge-offs and/or recognize further additions to their loan loss allowances, based on the judgment of regulatory agencies with regard to information provided to them during their examinations of the Banks.

~~An allowance for unfunded commitments is maintained separate from the allowances fornon-covered~~ ~~loan losses and is included in “Other liabilities” in the Consolidated Statements of Condition.~~

~~See Note 6, “Allowances for Loan Losses” for a further discussion of our allowance for losses on covered loans, as well as additional information about our allowance for losses onnon-covered~~ ~~loans.~~

~~Goodwill Impairment~~

We have significant intangible assets related to goodwill. In connection with our acquisitions, assets that are acquired and liabilities that are assumed are recorded at their estimated fair values. Goodwill represents the excess of the purchase price of our acquisitions over the fair value of the identifiable net assets acquired, including other identified intangible assets. Our determination of whether or not goodwill is impaired requires us to make significant judgments and requires us to use significant estimates and assumptions regarding estimated future cash flows. If we change our strategy or if market conditions shift, our judgments may change, which may result in adjustments to the recorded goodwill balance.

We test our goodwill for impairment at the reporting unit level. These impairment evaluations are performed by comparing the carrying value of the goodwill of a reporting unit to its estimated fair value. We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. Previously, we had identified two reporting units: our Banking Operations reporting unit and our Residential Mortgage Banking reporting unit. On September 29, 2017, the Company sold the Residential Mortgage Banking reporting unit; accordingly, we have identified only one reporting unit.

For annual goodwill impairment testing, we have the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill and other intangible assets. If we conclude that this is the case, we must perform the~~two-step~~ test described below. If we conclude based on the qualitative assessment that it is notmore likely than not that the fair value of a reporting unit is less than its carrying amount, we have completed our goodwill impairment test and do not need to perform the~~two-step~~ ~~test.~~

~~Under step one of thetwo-step~~ test, we are required to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill and other intangible assets, of such reporting unit. If the fair value exceeds the carrying value, no impairment loss is recognized and the second step, which is a calculation of the impairment, is not performed. However, if the carrying value of the reporting unit exceeds its fair value, an impairment charge is recorded equal to the extent that the carrying amount of goodwill exceeds its implied fair value.

Application of the impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and the determination of the fair value of each reporting unit. In assessing whether goodwill is impaired, we must make estimates and assumptions regarding future cash flows, long-term growth rates of our business, operating margins, discount rates, weighted average cost of capital, and other factors to determine the fair value of our assets. These estimates and assumptions require management’s judgment, and changes to these estimates and assumptions, as a result of changing economic and competitive conditions, could materially affect the determination of fair value and/or impairment. Future events could cause us to conclude that indicators of impairment exist for goodwill, and may result from, among other things, deterioration in the performance of our business, adverse market conditions, adverse changes in applicable laws and regulations, competition, or the sale or disposition of a reporting unit. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations.

As of September 30, 2017, we had goodwill of $2.4 billion. Our goodwill is evaluated for impairment annually at December 31st, or more frequently if conditions exist that indicate that the value may be impaired. During the three months ended September 30, 2017, no triggering events were identified that indicated that the value of goodwill might be impaired as of such date. We performed our annual goodwill impairment test as of December 31, 2016 and, based on the results of our qualitative assessments, found no indication of goodwill impairment at that date.

~~Income Taxes~~

In estimating income taxes, management assesses the relative merits and risks of the tax treatment of transactions, taking into account statutory, judicial, and regulatory guidance in the context of our tax position. In this process, management also relies on tax opinions, recent audits, and historical experience. Although we use the best available information to record income taxes, underlying estimates and assumptions can change over time as a result of unanticipated events or circumstances such as changes in tax laws and judicial guidance influencing our overall or transaction-specific tax position.

We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and the carry forward of certain tax attributes such as net operating losses. A valuation allowance is maintained for deferred tax assets that we estimate are more likely than not to be unrealizable, based on available evidence at the time the estimate is made. In assessing the need for a valuation allowance, we estimate future taxable income, considering the prudence and feasibility of tax planning strategies and the realizability of tax loss carry forwards. Valuation allowances related to deferred tax assets can be affected by changes to tax laws, statutory tax rates, and future taxable income levels. In the event we were to determine that we would not be able to realize all or a portion of our net deferred tax assets in the future, we would reduce such amounts through a charge to income tax expense in the period in which that determination was made. Conversely, if we were to determine that we would be able to realize our deferred tax assets in the future in excess of the net carrying amounts, we would decrease the recorded valuation allowance through a decrease in income tax expense in the period in which that determination was made. Subsequently recognized tax benefits associated with valuation allowances recorded in a business combination would be recorded as an adjustment to goodwill.

~~Balance Sheet Summary~~

At September 30, 2017, we recorded total assets of $48.5 billion, a $110.2 million increase from the balance at June 30, 2017 and a $468.7 million decline from the balance at December 31, 2016. Loans, net, and securities represented $37.5 billion and $3.0 billion, respectively, of the September 30th balance and were down $1.4 billion and $140.1 million, respectively, from the trailing~~quarter-end~~ ~~balances and $1.9 billion and $786.0 million, respectively, from theyear-end~~ ~~balances.~~

Deposits and borrowed funds totaled $28.9 billion and $12.4 billion, respectively, at the end of the current third quarter. The current third quarter deposit balance was comparable to the balances at both the second quarter of this year and year end. Borrowed funds were unchanged from the prior~~quarter-end~~ ~~balance and declined $1.3 billion from year end.~~

~~Total stockholders’ equity rose $635.7 million from theyear-end~~ 2016 balance, due primarily to a $502.8 million preferred stock offering in March, and $24.9 million from the June 30, 2017 balance, to $6.8 billion, at the current third-quarter end. Common stockholders’ equity represented 12.91% of total assets at September 30, 2017 compared to 12.89% and 12.31%, respectively, of total assets at June 30, 2017 and September 30, 2016, and a book value per common share of $12.79 at September 30, 2017 compared to $12.74 at June 30, 2017 and $12.50 at September 30, 2016.

~~Loans~~

~~Loans, net, fell $1.4 billion from the trailingquarter-end~~ ~~and $1.9 billion from year end to $37.5 billion in the three months ended September 30, 2017, representing 77.3% of total assets at that date. Included in thequarter-end~~ ~~balance werenon-covered~~ loans held for ~~investment, net, of $37.3 billion, andnon-covered~~ ~~loans held for sale of $104.9 million, as more fully discussed below.~~

~~Non-Covered~~ ~~Loans Held for Investment~~

~~Non-covered~~ loans held for investment totaled $37.5 billion at the end of the current third quarter, up $255.2 million from the June 30, 2017 balance and up $123.5 million from the balance at December 31, 2016. Loan originations increased $444.6 million, or 24%, sequentially, driven by 50% growth in multi-family originations and 30% growth in CRE originations.

Sales of participations totaled $37.8 million in the three months ended September 30, 2017, as compared to $148.2 million in the trailing three-month period. The pace of loan sale participations has declined due to the Company’s strategic decision to resume its balance sheet growth.

~~In addition to multi-family and CRE loans, theheld-for-investment~~ ~~portfolio includes substantially smaller balances ofone-to-four~~ ~~family loans, ADC loans, and other loans, with specialty finance loans and leases and other C&I loans comprising the bulk of the “Other loan” portfolio.~~

At September 30, 2017, loans secured by multi-family, CRE, and ADC properties (as defined in the FDIC’s CRE Guidance) represented 739.9% of the consolidated Banks’ total risk-based capital, within the 850% limit agreed to with our regulators.

~~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
   Sept. 30,    June 30,    Sept. 30,    Sept. 30,    Sept. 30,
(in thousands)    2017    2017    2016    2017    2016
Mortgage Loans Originated for Investment:

Multi-family
   $ 1,432,424    $ 952,265    $ 1,276,358    $ 3,339,302    $ 4,529,904
Commercial real estate
   249,773    192,072    345,543    692,187    892,676
One-to-four family residential
   22,047    50,697    101,365    116,603    248,020
Acquisition, development, and construction
   21,754    20,836    17,855    55,509    123,849










Total mortgage loans originated for investment
   $ 1,725,998    $ 1,215,870    $ 1,741,121    $ 4,203,601    $ 5,794,449










Other Loans Originated for Investment:

Specialty finance
   $ 468,735    $ 498,918    $ 369,308    $ 1,236,817    $ 907,551
Other commercial and industrial
   115,569    150,787    151,279    388,511    451,340
Other
   700    785    894    2,370    3,010










Total other loans originated for investment
   $ 585,004    $ 650,490    $ 521,481    $ 1,627,698    $ 1,361,901










Total loans originated for investment
   $ 2,311,002    $ 1,866,360    $ 2,262,602    $ 5,831,299    $ 7,156,350

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

investment:

Three Months Ended, Six Months Ended,
June 30, 2023 March 31, 2023 June 30, 2023 June 30, 2022
(dollars in millions) Amount Amount Amount Amount
Mortgage Loan Originated for Investment:
Multi-family $ 217 $ 340 $ 557 $ 5,349
Commercial real estate 278 309 587 494
One-to-four family first mortgage 98 274 372 144
Acquisition, development, and construction 593 185 778 72
Total mortgage loans originated for investment $ 1,186 $ 1,108 $ 2,294 $ 6,059
Other Loans Originated for Investment:
Specialty finance $ 1,905 $ 1,335 $ 3,240 $ 2,515
Commercial and industrial 1,581 497 2,078 218
Other 312 338 650 3
Total other loans originated for investment $ 3,797 $ 2,170 $ 5,967 $ 2,736
Total loans originated for investment $ 4,983 $ 3,278 $ 8,261 $ 8,795

Multi-Family Loans

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

The multi-family loans we produce are primarily secured bynon-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.”~~

~~Multi-family loan originations represented $1.4 billion, or 62.0%, of theheld-for-investment~~ loans we produced in the current third quarter, reflecting a linked-quarter increase of $480.2 million and a $156.1 million increase year-over-year. At September 30, 2017, multi-family loans represented $27.1 billion, or 72.4%, of total~~non-covered~~ ~~loans held for investment, reflecting a $286.2 million increase from the balance at June 30th and a $200.3 million increase from the balance at December 31st.~~

rents.

The ~~average~~ multi-family loan ~~had a principal balance of $5.6 million at the end of the current third quarter, which~~portfolio was ~~modestly higher than the balances~~$37.8 billion at June 30, ~~2017 and~~2023, down slightly compared to $38.1 billion at December 31, ~~2016, respectively.~~

2022 due to a combination of higher interest rates and our loan diversification strategy.

The majority of our multi-family loans ~~are made to long-term owners~~were secured by rental apartment buildings.

At June 30, 2023, $21.8 billion or 59 percent of ~~residential apartment buildings with units that~~the Company’s total multi-family loan portfolio is secured by properties in New York State and, therefore, are subject to the new rent regulation ~~and feature below-market rents. Our borrowers typically use~~laws. The weighted average LTV of the ~~funds we provide for future real estate investments, or to make building-wide improvements and renovations to certain units,~~ New York State rent regulated multi-family portfolio was 61 percent as ~~a result~~ of ~~which they are able to increase the rents their tenants pay. In this way, the borrower creates increased cash flows to service debt and borrow against in future years.~~

June 30, 2023, unchanged from December 31, 2022.

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.

While a ~~small~~ percentage of our multi-family loans areten-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 generally based on intermediate-term interest rates plus a spread.

During the remaining years, the loan resets to an annually adjustable rate that is ~~tied~~indexed to ~~the prime rate of interest,~~CME Term SOFR , plus a spread. Alternately, the borrower may opt for a fixed rate that is tied to the five-year fixed advance rate of the ~~Federal Home Loan Bank of New York (the“FHLB-NY”),~~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~~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.

Our multi-family loans tend to refinance in approximately three years of origination; at September 30, 2017, June 30, 2017, and December 31, 2016, the weighted average life of the multi-family loan portfolio was 2.7 years, 3.2 years, and 2.9 years, respectively.

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~~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, aten-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 loans and interest-earning assets, our net interest rate 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 ~~only~~ 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, 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 six weeks in duration and, because the multi-family market is largely broker-driven, the expense incurred in sourcing such loans is substantially reduced.

~~At September 30, 2017,~~

We believe our underwriting quality of multi-family lending is distinctive. This reflects the ~~majority~~nature of the buildings securing our loans, our underwriting process and standards, and the generally conservative LTV ratios our multi-family loans ~~were secured by rent-regulated rental apartment buildings. In addition, 64.7%~~feature at origination. Historically, a relatively small percentage of ~~our~~the multi-family loans ~~were secured by buildings~~that have transitioned to non-performing status have resulted in ~~New York City and 5.5% were secured by buildings elsewhere in New York State. The remaining multi-family loans were secured by buildings outside these markets, including in~~actual losses, even when the ~~four other states served by our retail branch offices.~~

Our emphasis on multi-family loans is driven by several factors, including their structure, which reduces our exposure to interest rate volatility to some degree. Another factor driving our focus on multi-family lendingcredit cycle has ~~been the comparative quality of the loans we originate.~~

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 ~~debt service coverage ratio (“DSCR”),~~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 (“LTV”).~~

property.

In addition to requiring a minimum DSCR of ~~120%~~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, 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.

Accordingly, 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 ~~the cash flows of~~ our multi-family loans.

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

At June 30, 2023
Multi-Family Loans
(dollars in millions) Amount Percent of Total
New York City:
Manhattan $ 7,175 19 %
Brooklyn 6,285 17 %
Bronx 3,630 10 %
Queens 2,852 8 %
Staten Island 135 — %
Total New York City $ 20,077 54 %
New Jersey 5,087 13 %
Long Island 548 1 %
Total Metro New York $ 25,712 68 %
Other New York State 1,194 3 %
Pennsylvania 3,738 10 %
Florida 1,686 4 %
Ohio 1,035 3 %
Arizona 440 1 %
All other states 4,026 11 %
Total $ 37,831 100 %

Commercial Real Estate ~~Loans~~

At June 30, 2023, CRE loans represented ~~$7.6~~$10.6 billion, or ~~20.1%,~~12.7 percent, of total loans held for investment, ~~at the end of the current third quarter,~~reflecting a ~~$9.8 million~~$2.1 billion increase ~~from the balance at June 30, 2017, but a $174.0 million decrease from the balance~~when compared to $8.5 billion at December 31, ~~2016.~~ 2022. Approximately $1.9 billion was due to the Signature Transaction.

CRE loans represented ~~$249.8~~$278 million, or ~~10.8%,~~5.6 percent, of the loans we originated ~~for investment~~ in the ~~current third~~second quarter ~~reflecting a linked-quarter increase of $57.7~~2023 as compared to $309 million, ~~and a year-over-year decrease of $95.8 million.~~

~~At September 30, 2017,~~or 9.4 percent in the ~~average CRE loan had a principal balance of $5.7 million, unchanged from the average principal balance at June 30, 2017, and up modestly from December 31, 2016.~~

first quarter 2023.

The CRE loans we produce are secured by income-producing properties such as office buildings, retail centers,mixed-use buildings, and multi-tenanted light industrial properties. At ~~September~~June 30, ~~2017, 70.0%~~2023, the largest concentration of ~~our~~ CRE loans were secured by properties in the metro New York City ~~while~~area, refer to the Geographical Analysis table included below for additional details.

Approximately $3.4 billion of the CRE portfolio are office properties ~~on Long Island accounted for 11.6%. Other parts~~with an average balance of approximately $11 million and located primarily in the New York ~~State accounted for 2.6%~~metro area. There are no non-performing loans or recent charge-offs with respect to this portfolio as of ~~the properties securing our CRE credits, while all other states accounted for 15.8%, combined.~~

June 30, 2023.

The terms of more than half of our CRE loans are similar to the terms of our multi-family credits ~~and~~which primarily feature a fixed rate of interest for the ~~same prepayment~~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, 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 ~~also apply. Furthermore,~~apply to certain of our CRE loans, ~~also tend to refinance in approximately three years of origination;~~as they do our multi-family credits. Depending on the ~~weighted average life~~remaining term of the ~~CRE portfolio was 2.9~~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 ~~3.0 years, and 3.4 years at September 30, 2017, June 30, 2017, and December 31, 2016, respectively.~~

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%~~130 percent and a maximum LTV of ~~65%. Furthermore,~~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,~~years; however, these loans are underwritten on a fully amortizing basis.

~~One-to-Four~~ ~~Family~~

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

At June 30, 2023
Commercial Real Estate Loans
(dollars in millions) Amount Percent of Total
New York $ 4,884 46 %
Michigan 1,186 11 %
New Jersey 654 6 %
Florida 543 5 %
Texas 337 3 %
Pennsylvania 324 3 %
Ohio 237 2 %
All other states 2,448 24 %
Total $ 10,613 100 %

Acquisition, Development, and Construction Loans

~~Reflecting~~

At June 30, 2023, our ~~announcement that the Company was exiting the mortgage banking business, the September 30, 2017 balance ofone-to-four~~ ~~family~~ADC loans ~~held for investment was relatively unchanged sequentially at $413.2 million, representing 1.1%~~represented $2.5 billion or 3.0 percent, of total loans held for investment, ~~at that date.~~

~~Acquisition, Development, and Construction Loans~~

~~The balance of ADC loans increased $12.8 million to $385.9 million sequentially, representing 1.0% of totalheld-for-investment~~ ~~loans at the current third-quarter end. In the third quarter of 2017, we originated ADC loans of $21.8 million, a $918,000 increase from the trailing-quarter volume and a year-over-year~~reflecting an increase of ~~$3.9 million.~~

$485 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. InThe risk of loss on an ADC loan is largely dependent upon the ~~nine months ended September~~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 June 30, ~~2017 and 2016, we recovered losses against guarantees of $321,000 and $314,000, respectively.~~

~~Other Loans~~

~~Other~~2023 C&I loans ~~of $2.0~~totaled $23.9 billion ~~were relatively unchanged from the trailing three-month period, representing 5.3%~~or 28.7 percent of total loans ~~at September 30th due to an increase in specialty finance loans and leases to $1.4 billion and a $20.8 million decline in other C&I loans to $545.5 million.~~held-for-investment. Included in ~~the latter amount were taxi medallion-related loans of $99.1 million, representing 0.3% of total loans held for investment. The remainder of the “other loan”~~this portfolio ~~included a nominal amount of consumer loans.~~

~~Originations of other loans totaled $585.0 million~~is $6.0 billion in the current third quarter, reflecting a $65.5 million decrease from the trailing-quarter volume and a $63.5 million increase from the year-earlier amount. Specialty finance loans and leases represented the bulk of the quarter’s other loan originations, at $468.7 million, reflecting a $30.2 million decrease from the trailing-quarter level and a $99.4 million increase from the year-earlier amount. Other C&I loans represented $115.6 million of the other loans produced in the current third quarter, down $35.2 million and $35.7 million, respectively, from the volumes in the earlier periods.

~~Specialty Finance Loans and Leases~~

Our specialty finance subsidiary is based in Foxboro, Massachusetts, and staffed by a group of industry veterans with expertise in originating and underwriting senior secured debt and equipment loans and leases. The subsidiary participates in syndicatedwarehouse loans that ~~are brought~~allow mortgage lenders to ~~us, and equipment loans and leases that are assigned to us, by a select group~~fund the closing of nationally recognized sources, and generally are made to large corporate obligors, many of which are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide.

residential mortgage loans.

The loans and leases we fund fall into three distinct categories: asset-based lending, dealer floor-plan lending, and equipment loan and lease financing. Each of these credits is secured with a perfected first security interest or outright ownership in the underlying collateral, and structured as senior debt or as a~~non-cancelable~~ lease. The pricing of our asset-based and dealer floor-plan loans are at floating rates predominately tied to LIBOR, while our equipment financing credits are at fixed rates at a spread over Treasuries.

~~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.~~

~~Other Commercial and Industrial Loans~~

~~In contrast to the loans produced by our specialty finance subsidiary, the other~~non-warehouse C&I loans we produce are primarily made to small andmid-size businesses ~~in the five boroughs of New York City~~ and ~~on Long Island.~~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 ~~other~~ 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 ~~other~~ C&I loans, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. ~~Other~~ 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 debt to tangible net worth is 15 to 1. We have $6.0 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 ~~other~~ C&I loans can be fixed or floating, with ~~floating rate~~floating-rate loans being tied to SOFR, prime or some other market index, plus an applicable spread. Our ~~floating rate~~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.

~~Lending Authority~~

Specialty Finance

At June 30, 2023, specialty finance loans and leases totaled $4.8 billion or 6 percent of total loans held for investment, up $393 million or 9 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 financing. Each of these credits is secured with a perfected first security interest in, or outright ownership of, the underlying collateral, and structured as senior debt or as a non-cancelable lease.As of June 30, 2023, 81 percent of specialty finance loan commitments are structured as floating rate obligations which will benefit in a rising rate environment.

In the second quarter of 2023, the Company originated $1.9 billion of specialty finance loans and leases, representing 38 percent of total originations compared to $1.9 billion for the same period in 2022, representing 36 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

At June 30, 2023, one-to-four family loans represented $5.9 billion, including $947 million of LGG or 7.1 percent, of total loans held for investment. As of June 30, 2023, the repurchase liability on LGG loans was $333 million. As of December 31, 2022 one-to-four family loans totaled $5.8 billion. These loans include various types of conforming and non-conforming fixed and adjustable rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties. We typically hold certain mortgage loans in LHFI that do not qualify for sale to the Agencies and that have an acceptable yield and risk profile. The LTV requirements on our residential first mortgage loans vary depending on occupancy, property type, loan amount, and FICO scores. Loans with LTVs exceeding 80 percent are required to obtain mortgage insurance. As of June 30, 2023, non-government guaranteed loans in this portfolio had an average current FICO score of 741 and an average LTV of 54.

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. We have reserved for these risks within other assets and as a component of our ACL on residential first mortgages.

Other Loans

At June 30, 2023, other loans totaled $2.6 billion and consisted primarily of home equity lines of credit, boat and recreational vehicle indirect lending, point of sale consumer loans and other consumer loans, including overdraft loans.

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 June 30, 2023, loans in this portfolio had an average current FICO score of 751.

As of June 30, 2023, loans in our indirect portfolio had an average current FICO score of 747. 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 June 30, 2023 totaled $2.2 billion, up from $1.1 billion at December 31, 2022. The Signature Transaction contributed $360 million of Small Business Administration ("SBA") loans to this increase. We classify loans as held for sale when we originate or purchase loans that we intend to sell. We have elected the fair value option for ~~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 ~~procedures~~all other commercial credit exposures to relationships that exceed $100 million must be approved by the ~~Mortgage and Real Estate Committee of the Community Bank (the “Mortgage Committee”), the~~Board Credit Committee of the ~~Commercial Bank (the “Credit Committee”), and~~Board. Exceptions to these levels are made to strong borrowers on a case by case basis, with the ~~respective Boards of Directors~~approval of the ~~Banks.~~

~~Prior to 2017, all loans originated~~Board Credit Committee of the Board. Relationships less than the aforementioned limits are approved by the ~~Banks were presented to the Mortgage Committee or the~~joint authority of credit officers and lending officers. The Board Credit Committee as applicable. Furthermore, all loans of $20.0 million or more originated by the Community Bank, and all loans of $10.0 million or more originated by the Commercial Bank, were reported to the applicable Board of Directors.~~One-to-four~~ ~~family mortgage loans were approved byline-of-business~~ ~~personnel having underwriting authority pursuant to a separate policy applicable to our mortgage banking segment.~~

~~Effective January 27, 2017, and in accordance with the Banks’ credit policies, all loans other thanone-to-four~~ family mortgage loans and C&I loans less than or equal to $3.0 million are required to be presented to the Management Credit Committee for approval. All multi-family, CRE, and “other” C&I loans in excess of $5.0 million, and specialty finance loans in excess of $15.0 million, are also required to be presented to the Mortgage Committee or the Credit Committee, as applicable, so that the Committees can review the loans’ associated risks. The Committees havehas 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 ~~Banks’~~Bank’s strategic objectives and risk appetites.

All mortgage loans in excess of $50.0 million and all “other” C&I loans in excess of $5.0 million require approval by the Mortgage Committee or the Credit Committee. Credit Committee approval also is required for specialty finance loans in excess of $15.0 million.

In addition, all loans of $20.0 million or more originated by the Community Bank, and all loans of $10.0 million or more originated by the Commercial Bank, continue to be reported to the applicable Board of Directors, and all~~one-to-four~~ ~~family mortgage loans and C&I loans less than or equal to $3.0 million continue to be approved byline-of-business~~ ~~personnel.~~

At ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, the largest mortgage loan in our portfolio was a $329 million multi-family loan, ~~originated~~which is collateralized by ~~the Community Bank on June 28, 2013 to the owner of a commercial office building~~properties located in ~~Manhattan.~~Brooklyn, New York. As of the date of this report, the loan has been current since origination. ~~The balance of the loan was $287.5 million at both period-ends.~~

In view of the heightened regulatory focus on CRE concentration, we monitor the ratio of our multi-family, CRE, and ADC loans (as defined in the FDIC’s CRE Guidance) to our total risk-based capital to ensure

Asset Quality

All asset quality information excludes LGG that ~~it remains within the 850% limit we have agreed to with our regulators. At September 30, 2017, the consolidated Banks’ CRE concentration ratio was 739.9%.~~

~~Geographical Analysis of the Portfolio ofNon-Covered~~ ~~Loans Held for Investment~~

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:


	June 30, 2023		December 31, 2022
Non-performing loans to total loans	0.28	%	0.20	%
Non-performing assets to total assets	0.21		0.17
Allowance for losses on loans to non-performing loans	255.40		278.87
Allowance for losses on loans to total loans held for investment	0.71		0.57

Delinquent and ~~CRE loans in ourheld-for-investment~~ ~~loan portfolio at September 30, 2017:~~

   Multi-Family Loans Commercial Real Estate Loans
      Percent    Percent
(dollars in thousands)    Amount    of Total Amount    of Total
New York City:

Manhattan
   $ 7,311,621    26.94 % $ 3,873,867    51.31 %
Brooklyn
   4,237,542    15.61 597,718    7.92
Bronx
   3,697,390    13.62 110,749    1.46
Queens
   2,230,371    8.22 647,450    8.57
Staten Island
   79,177    0.29 56,313    0.75






Total New York City
   $ 17,556,101    64.68 % $ 5,286,097    70.01 %






Long Island
   522,364    1.92 877,343    11.62
Other New York State
   967,434    3.56 193,000    2.56
All other states
   8,099,498    29.84 1,193,947    15.81






Total
   $ 27,145,397    100.00 % $ 7,550,387    100.00 %

~~At September 30, 2017, the largest concentration ofone-to-four~~ ~~family~~non-performing loans held for investment was located in California, with a total of $202.2 million; the largest concentration of ADC loans held for investment was located in New York City, with a total of $282.5 million. The majority of our other loans held for investment were secured by properties and/or businesses located in Metro New York.

~~Non-Covered~~ ~~Loans Held for Sale~~

~~At September 30, 2017,non-covered~~ loans held for sale were $104.9 million, down $304.2 million from the level at December 31, 2016. The decline is attributable to our exit from the mortgage banking business. The Company expects a majority of the current-period balance to be sold during the fourth quarter of 2017.

~~Outstanding Loan Commitments~~

At September 30, 2017, we had outstanding loan commitments of $2.2 billion, down $248.4 million from the level at June 30, 2017. Commitments to originate loans held for investment represented $2.1 billion of the September 30th total, and ~~commitments to originate loans held for sale represented the remaining $50.4 million. At December 31, 2016, the respective commitments were $1.8 billion and $242.5 million.~~

~~Multi-family, CRE, and ADC loans together represented $814.5 million ofheld-for-investment~~ loan commitments at the end of the third quarter, while other loans represented $1.3 billion, respectively. Included in the latter amount were commitments to originate specialty finance loans and leases of $901.9 million and commitments to originate other C&I loans of $403.8 million.

~~In addition to loan commitments, we had commitments to issue financialstand-by,~~ ~~performancestand-by,~~ and commercial letters of credit totaling $339.6 million at September 30, 2017, a $20.7 million decrease from the volume at June 30th. 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.

~~Asset Quality~~

~~Non-Covered~~ ~~Loans Held for Investment andNon-Covered~~ Repossessed Assets

~~Non-performingnon-covered~~ ~~assets represented $84.7 million, or 0.17%, of totalnon-covered~~ ~~assets at September 30, 2017, as compared to $91.6 million, or 0.20% at June 30, 2017 and $68.1 million, or 0.14%, of totalnon-covered~~ ~~assets, at December 31, 2016. The $6.9 million decrease was the net effect of a $13.0 million decline innon-performingnon-covered~~ ~~loans to $69.0 million, and a $6.2 million increase innon-covered~~ ~~repossessed assets to $15.8 million.Non-performingnon-covered~~ ~~loans represented 0.18% of totalnon-covered~~ ~~loans at the end of the third quarter, compared to 0.22% at June 30th and 0.15% at December 31st.~~

~~The increase in bothnon-performingnon-covered~~ ~~loans andnon-performingnon-covered~~ ~~assets in the current nine-month period was largely attributable to the transition tonon-accrual~~ ~~status of taxi medallion-related loans. As reflected in the tables featured later in this discussion, the balance ofnon-accrualnon-covered~~ ~~mortgage loans declined $14.4 million from theyear-end~~ ~~balance to $24.3 million, while the balance ofnon-accrualnon-covered~~ ~~other loans rose $26.9 million to $44.7 million. Taxi medallion-related loans accounted for $43.4 million of this total.~~

~~In addition, the Company recorded net charge-offs of $40.4 million during the current third quarter, representing 0.11% of average loans.~~

~~The following table sets forth the changes innon-performingnon-covered~~ ~~loans over the nine months ended September 30, 2017:~~

(in thousands)
Balance at December 31, 2016
   $ 56,469
Newnon-accrual
   68,616
Charge-offs
   (24,409 )
Transferred to other real estate owned
   (6,607 )
Loan payoffs, including dispositions and principalpay-downs
   (25,009 )
Restored to performing status
   (90 )


Balance at September 30, 2017
   $ 68,970

The following table presents our~~non-performingnon-covered~~ loans, 30 to 89 days past due by loan type and the changes in the respective ~~balances for the nine months ended September 30, 2017:~~

      Change from
December 31, 2016 to
September 30, 2017
(dollars in thousands)    September 30,
2017    December 31,
2016    Amount    Percent
Non-PerformingNon-Covered Loans:

Non-accrualnon-covered mortgage loans:

Multi-family
   $ 11,018    $ 13,558    $ (2,540 )    (18.73 )%
Commercial real estate
   4,923    9,297    (4,374 )    (47.05 )
One-to-four family residential
   2,179    9,679    (7,500 )    (77.49 )
Acquisition, development, and construction
   6,200    6,200    —      —







Totalnon-accrualnon-covered mortgage loans
   24,320    38,734    (14,414 )    (37.21 )
Non-accrualnon-covered other loans⁽¹⁾
   44,650    17,735    26,915    151.76







Totalnon-performingnon-covered loans
   $ 68,970    $ 56,469    $ 12,501    22.14 %

~~(1)~~

~~Includes $43.4 million and $15.2 million ofnon-accrualnon-covered~~ ~~taxi medallion-related loans at September 30, 2017 and at December 31, 2016, respectively.~~

balances:


					June 30, 2023
					compared to
					December 31, 2022
(dollars in millions)	June 30, 2023		December 31, 2022		Amount		Percent
Loans 30 to 89 Days Past Due:
Multi-family	$	79	$	34	$	45	132	%
Commercial real estate	147		2		145		NM
One-to-four family first mortgage	17		21		(4)		(19)	%
Acquisition, development, and construction	29		—		29		NM
Commercial and industrial	45		—		45		NM
Other loans	18		13		5		38	%
Total loans 30-89 days past due	$	335	$	70	265		379	%

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 we no longer expect to collect all amounts due according to the contractual terms of the loan agreement. When a loan is placed onnon-accrual status, we cease the accrual of interest owed, and previously accrued interest is reversed and charged against interest income. At ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, all of ournon-performing loans werenon-accrual loans. A loan is generally returned to accrual status when the loan is current and we have reasonable assurance that the loan will be fully collectible.

We monitornon-accrual loans both within and beyond our primary lending area in the same manner. Monitoring loans generally involves inspecting andre-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 allnon-performing loans 90 days or more past due, irrespective of loan type, 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 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 current LTVs on a portfolio-wide basis.~~

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


					Change from
					December 31, 2022
					to
					June 30, 2023
(dollars in millions)	June 30, 2023		December 31, 2022		Amount		Percent
Non-Performing Loans:
Non-accrual mortgage loans:
Multi-family	$	33	$	13	$	20	154	%
Commercial real estate	36		20		16		80	%
One-to-four family first mortgage	85		92		(7)		(8)	%
Total non-accrual mortgage loans	$	154	$	125	29		23	%
Other non-accrual loans(1)	79		16		63		394	%
Total non-accrual loans	$	233	$	141	92		65	%
Loans 90 days or more past due and still accruing (2)	—		$	—	—		NM
Total non-performing loans	$	233	$	141	92		65	%
Repossessed assets	13		12		1		8	%
Total non-performing assets	$	246	$	153	93		61	%

(1)Includes Commercial and Industrial, Home Equity, Consumer and other loans.

(2)Commercial real estate loans.

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


(in millions)
Balance at December 31, 2022	$	141
New non-accrual	121
Non-accrual acquired from acquisition	13
Charge-offs	(4)
Transferred to repossessed assets	(3)
Loan payoffs, including dispositions and principal pay-downs	(10)
Restored to performing status	(25)
Balance at June 30, 2023	$	233

At June 30, 2023 total non-accrual mortgage loans increased $29 million to $154 million, while other non-accrual loans increased $63 million to $79 million compared December 31, 2022. Included in the June 30, 2023 amount were non-accrual loans of $44 million acquired in the Signature Transaction.

At June 30, 2023, NPAs to total assets equaled 0.21 percent compared to 0.14 percent at March 31, 2023 while NPLs to total loans equaled 0.28 percent compared to 0.20 percent at December 31, 2022. Repossessed assets of $13 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 ~~Mortgage Committee, the~~Board Credit Committee, and the ~~Boards~~Board of Directors of the ~~respective Banks,~~Bank, as applicable. In accordance with ourcharge-off policy, collateral-dependentnon-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 ~~OREO,~~repossessed assets, and are recorded at fair value at the date of acquisition, less the estimated cost of selling the property. Subsequent declines in the fair value of ~~OREO~~the assets are charged to earnings and are included innon-interest expense. It is our policy to require an appraisal and an environmental assessment of properties classified as OREO before foreclosure, and tore-appraise the properties on anas-needed basis, and not less than annually, until they are sold. We dispose of such properties as quickly and prudently as possible, given current market conditions and the property’s condition.

To mitigate the potential for credit losses, we underwrite our loans in accordance with credit standards that we consider to be prudent. In the case of multi-family and CRE loans, we look first at the consistency of the cash flows being generated by the property to determine its economic value using the “income approach,” and then at the market value of the property that collateralizes the loan. The amount of the loan is then based on the lower of the two values, with the economic value more typically used.

The condition of the collateral property is another critical factor. Multi-family buildings and CRE properties are inspected from rooftop to basement as a prerequisite to approval, with a member of the Mortgage or Credit Committee participating in inspections on multi-family loans to be originated in excess of $7.5 million, and a member of the Mortgage or Credit Committee participating in inspections on CRE loans to be originated in excess of $4.0 million.approval. Furthermore, independent appraisers, whose appraisals are carefully reviewed by our experiencedin-house appraisal officers and staff, perform appraisals on collateral properties. ~~In many cases, a second independent appraisal review is performed.~~

In addition, we work with a select group of mortgage brokers who are familiar with our credit standards and whose track record with our lending officers is typically greater than ten years. Furthermore, in New York City, where the majority of the buildings securing our multi-family loans are located, the rents that tenants may be charged on certain apartments are typically restricted under certain rent-control or rent-stabilization laws. As a result, the rents that tenants pay for such apartments are generally lower than current market rents. Buildings with a preponderance of such rent-regulated apartments are less likely to experience vacancies in times of economic adversity.

Reflecting the strength of the underlying collateral for these loans and the collateral structure, a relatively small percentage of ournon-performing multi-family loans have resulted in losses over time.

To further manage our credit risk, our lending policies limit the amount of credit granted to any one borrower, and typically require minimum DSCRs of ~~120%~~120 percent for multi-family loans and ~~130%~~130 percent for CRE loans. Although 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~~June 30, ~~2017.~~2023. Exceptions to these LTV limitations are minimal and are reviewed on acase-by-case basis.

The repayment of loans secured by commercial real estate is often dependent on the successful operation and management of the underlying properties. To minimize our credit risk, we originate CRE loans in adherence with conservative underwriting standards, and require that such loans qualify on the basis of the property’s current income stream and DSCR. The approval of a CRE loan also depends on the borrower’s credit history, profitability, and expertise in property management. Given that our CRE loans are underwritten in accordance with underwriting standards that are similar to those applicable to our multi-family credits, the percentage of ournon-performing CRE loans that have resulted in losses has been comparatively small over time.

Multi-family and CRE loans are generally originated at conservative LTVs and DSCRs, as previously stated. Low LTVs provide a greater likelihood of full recovery and reduce the possibility of incurring a severe loss on a credit; in many cases, they reduce the likelihood of the borrower “walking away” from the property. Although borrowers may default on loan payments, they have a greater incentive to protect their equity in the collateral property and to return their loans to performing status. ~~Furthermore, in the case of multi-family loans, the cash flows generated by the properties are generally below-market and have significant value.~~

~~The following tables present the number and amount ofnon-performing~~ ~~multi-family and CRE loans by originating bank at September 30, 2017 and December 31, 2016:~~

As of September 30, 2017    Non-Performing
Multi-Family
Loans    Non-Performing
Commercial
Real Estate Loans
(dollars in thousands)    Number    Amount    Number    Amount
New York Community Bank
   6    $ 11,012    10    $ 4,923
New York Commercial Bank
   1    6    —      —








Total for New York Community Bancorp
   7    $ 11,018    10    $ 4,923

As of December 31, 2016    Non-Performing
Multi-Family
Loans    Non-Performing
Commercial
Real Estate Loans
(dollars in thousands)    Number    Amount    Number    Amount
New York Community Bank
   11    $ 13,298    7    $ 4,297
New York Commercial Bank
   2    260    2    5,000








Total for New York Community Bancorp
   13    $ 13,558    9    $ 9,297

With regard to ADC loans, we typically lend up to ~~75%~~75 percent of the estimatedas-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 estimatedas-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 anon-cancellable lease. To further minimize the risk involved in specialty finance lending and leasing, were-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.~~

~~In addition,one-to-four~~ ~~family loans, ADC loans, and other loans represented 1.1%, 1.0%, and 5.3%, respectively, of totalnon-covered~~ ~~loans held for investment at September 30, 2017, comparable to, or consistent with, the levels at both June 30, 2017 and December 31, 2016. Furthermore, while 0.5% of ourone-to-four~~ ~~family loans werenon-performing~~ ~~at the end of the current third quarter, 1.6% of our ADC loans and 2.2% of our other loans werenon-performing~~ ~~at that date.~~

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 ourheld-for-investment~~ ~~loans 30 to 89 days past due by loan type and the changes in the respective balances for the nine months ended September 30, 2017:~~

      Change from
December 31, 2016
to September 30, 2017
(dollars in thousands)    September 30,
2017    December 31,
2016    Amount Percent
Non-Covered Loans30-89 Days Past Due:

Multi-family
   $ 602    $ 28    $ 574 2,050.00 %
Commercial real estate
   450    —      450 —
One-to-four family residential
   676    2,844    (2,168 ) (76.23 )
Acquisition, development, and construction
   —      —      —   —
Other loans
   3,425    7,511    (4,086 ) (54.40 )






Totalnon-covered loans30-89 days past due
   $ 5,153    $ 10,383    $ (5,230 ) (50.37 )%

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 eithernon-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.

While we strive to originate loans that will perform fully, adverse economic and market conditions, among other factors, can ~~adversely~~negatively impact a borrower’s ability to repay. ~~Largely reflecting~~Historically, our level of net charge-offs in our multifamily and specialty finance portfolios have been relatively low in downward credit cycles, even when the ~~nature~~volume of non-performing loans has increased. For the six months ended June 30, 2023, our ~~primary lending niche and our conservative underwriting standards, we recorded aggregate~~ net recoveries were $1 million as compared to net recoveries of $5 million over the same period in 2022.

The allowance for credit losses on ~~our core multi-family~~loans and ~~CRE portfolios~~leases increased $201 million, equaling $594 million at June 30, 2023 from $393 million at December 31, 2022. The increase was primarily related to the initial allowance for credit losses of $132 million for the acquired loans in the ~~third quarter~~Signature Transaction, an increase of ~~2017.~~

~~Reflecting management’s assessment~~$13 million in specific reserves primarily related to two loans that have moved to nonaccrual and an increase of ~~the~~$56 million primarily related to our worsening forecast of macroeconomic conditions and origination volume since year-end. The allowance for~~non-covered~~ ~~loan~~ credit losses ~~we recorded a $44.6 million provision for such losses in the current third quarter,~~on loans and leases represented 255 percent of non-performing loans at June 30, 2023, as compared to ~~$11.6 million and $1.2 million, respectively, in~~279 percent at the ~~trailing and year-earlier three months. Reflecting the third-quarter provision, and the aforementioned net charge-offs, the allowance for losses onnon-covered~~ ~~loans increased to $158.9 million at September 30, 2017. This represented 0.42% of totalnon-covered~~ ~~loans and 230.42% ofnon-performingnon-covered~~ ~~loans at that date.~~

prior year-end.

Based upon all relevant and available information ~~as of the end of the current third quarter,~~at June 30, 2023, management believes that the allowance for credit losses on~~non-covered~~ ~~loans was appropriate at that date.~~

~~At September 30, 2017, our three largestnon-performing~~ ~~loans were a C&I loan with a balance of $7.8 million, a multi-family loan with a balance of $7.6 million, and an ADC loan with a balance of $6.2 million.~~

~~Troubled Debt Restructurings~~

In an effort to proactively manage delinquent loans, we have selectively extended to certain borrowers such concessions as rate reductions and extensions of maturity dates, as well as forbearance agreements, when such borrowers have exhibited financial difficulty. In accordance with GAAP, we are required to account for such loan modifications or restructurings as TDRs.

~~The eligibility of a borrower forwork-out~~ concessions of any nature depends upon the facts and circumstances of each transaction, which may change from period to period, and involve management’s judgment regarding the likelihood that the concession will result in the maximum recovery for the Company.

~~Loans modified as TDRs are placed onnon-accrual~~ status until we determine that future collection of principal and interest is reasonably assured. This generally requires that the borrower demonstrate performance according to the restructured terms for at least six consecutive months. At September 30, 2017,~~non-accrual~~ ~~TDRs included taxi medallion-related loans with a combined balance of $43.4 million.~~

At September 30, 2017, loans on which concessions were made with respect to rate reductions and/or extensions of maturity dates totaled $41.5 million; loans in connection with which forbearance agreements were reached totaled $1.8 million at that date.

~~Based on the number of loans performing in accordance with their revised terms, our success rates for restructured multi-family loans, CRE loans,one-to-four~~ ~~family~~ loans and ~~other loans were 100%, 100%, 50%, and 84%, respectively, at September 30, 2017. There were no restructured ADC loans at~~leases represents a reasonable estimate based upon our judgment as that date.

~~Analysis of Troubled Debt Restructurings~~

~~The following table sets forth the changes in our TDRs over the nine months ended September 30, 2017:~~

(in thousands)    Accruing    Non-Accrual    Total
Balance at December 31, 2016
   $ 3,466    $ 16,454    $ 19,920
New TDRs
   8,960    35,297    44,257
Transferred to other real estate owned
   —      (877 )    (877 )
Charge-offs
   —      (11,956 )    (11,956 )
Transferred from accruing tonon-accrual
   (1,254 )    1,254    —
Loan payoffs, including dispositions and principalpay-downs
   (886 )    (7,141 )    (8,027 )






Balance at September 30, 2017
   $ 10,286    $ 33,031    $ 43,317

~~On a limited basis, we may provide additional credit to a borrower after a loan has been placed onnon-accrual~~ status or classified as a TDR if, in management’s judgment, the value of the property after the additional loan funding is greater than the initial value of the property plus the additional loan funding amount. During the nine months ended September 30, 2017, no such additions were made. Furthermore, the terms of our restructured loans typically would not restrict us from cancelling outstanding commitments for other credit facilities to a borrower in the event of~~non-payment~~ ~~of a restructured loan.~~

~~Except for thenon-accrual~~ loans and TDRs disclosed in this filing, we did not have any potential problem loans at the end of the current first quarter that would have caused management to have serious doubts as to the ability of a borrower to comply with present loan repayment terms and that would have resulted in such disclosure if that were the case.

~~Asset Quality Analysis (Excluding Covered Loans, Covered Repossessed Assets, andNon-Covered~~ ~~PCI Loans)~~

The following table presents information ~~regarding our consolidated allowance for losses onnon-covered~~ ~~loans, ournon-performingnon-covered~~ ~~assets, and ournon-covered~~ ~~loans 30 to 89 days past due at September 30, 2017 and December 31, 2016. Covered loans andnon-covered~~ ~~purchased credit-impaired (“PCI”) loans were considered to be performing due to the application of the yield accretion method, as discussed elsewhere in this report. Therefore, covered loans andnon-covered~~ ~~PCI loans are not reflected in the amounts or ratios provided in this table.~~

(dollars in thousands)    At or For the
Nine Months Ended
September 30, 2017 At or For the
Year Ended
December 31, 2016
Allowance for Losses onNon-Covered Loans:

Balance at beginning of period
   $ 158,290 $ 147,124
Provision for losses onnon-covered loans
   58,017 11,874
Charge-offs:

Multi-family
   (279 ) —
Commercial real estate
   —   —
One-to-four family residential
   (96 ) (170 )
Acquisition, development, and construction
   —   —
Other loans
   (58,203 ) (3,413 )


Total charge-offs
   (58,578 ) (3,583 )
Recoveries:

Multi-family
   28 78
Commercial real estate
   398 799
One-to-four family residential
   169 228
Acquisition, development, and construction
   —   167
Other loans
   594 1,603


Total recoveries
   1,189 2,875


Net charge-offs
   (57,389 ) (708 )


Balance at end of period
   $ 158,918 $ 158,290


Non-PerformingNon-Covered Assets:

Non-accrualnon-covered mortgage loans:

Multi-family
   $ 11,018 $ 13,558
Commercial real estate
   4,923 9,297
One-to-four family residential
   2,179 9,679
Acquisition, development, and construction
   6,200 6,200


Totalnon-accrualnon-covered mortgage loans
   $ 24,320 $ 38,734
Othernon-accrualnon-covered loans
   44,650 17,735


Totalnon-performingnon-covered loans⁽¹⁾
   $ 68,970 $ 56,469
Non-covered repossessed assets⁽²⁾
   15,753 11,607


Totalnon-performingnon-covered assets
   $ 84,723 $ 68,076


Asset Quality Measures:

Non-performingnon-covered loans to totalnon-covered loans
   0.18 % 0.15 %
Non-performingnon-covered assets to totalnon-covered assets
   0.17 0.14
Allowance for losses onnon-covered loans tonon-performing
non-covered loans
   230.42 277.19
Allowance for losses onnon-covered loans to totalnon-covered loans
   0.42 0.42
Net charge-offs during the period to average loans outstanding during the period⁽³⁾    0.15 0.00
Non-Covered Loans30-89 Days Past Due:

Multi-family
   $ 602 $ 28
Commercial real estate
   450 —
One-to-four family residential
   676 2,844
Acquisition, development, and construction
   —   —
Other loans
   3,425 7,511


Totalnon-covered loans30-89 days past due⁽⁴⁾
   $ 5,153 $ 10,383

~~(1)~~

~~The December 31, 2016 amount excludes loans 90 days or more past due of $131.5 million that were covered by the LSA andnon-covered~~ ~~PCI loans of $869 thousand.~~

~~(2)~~

~~The September 30, 2017 amount includes $6.5 million of repossessed taxi medallions. The December 31, 2016 amount excludesnon-covered~~ ~~repossessed assets of $17.0 million that were covered by the LSA.~~

~~(3)~~

~~Average loans include covered loans.~~

~~(4)~~

~~The December 31, 2016 amount excludes loans 30 to 89 days past due of $22.6 million that were covered by the LSA and $6 thousand ofnon-covered~~ ~~PCI loans.~~

~~Covered Loans and Covered Other Real Estate Owned~~

In connection with the AmTrust and Desert Hills Bank LSA, we established FDIC loss share receivables of $740.0 million and $69.6 million, respectively, which were the acquisition-date fair values of the respective LSA (i.e., the expected reimbursements from the FDIC over the terms of the agreements). The loss share receivables increased if the losses increased, and decreased if the losses fell short of the expected amounts. Increases in estimated reimbursements were recognized in income in the same period that they were identified and that the allowance for losses on the ~~related covered~~Company's net charge-offs as compared to average loans ~~was recognized.~~

Additionally, as previously disclosed, the Company received approval from the FDIC to sell assets covered under our LSA, early terminate the LSA, and enter into an agreement to sell the majority of our~~one-to-four~~ family residential mortgage-related assets, including those covered under the LSA, to an affiliate of Cerberus. On July 28, 2017, the Company completed the sale, resulting in the receipt of proceeds of $1.9outstanding:


	Six Months Ended,
(dollars in millions)	June 30, 2023			June 30, 2022
Multi-family
Net charge-offs (recoveries) during the period	$	—		$	—
Average amount outstanding	$	37,819		$	35,332
Net charge-offs (recoveries) as a percentage of average loans	—		%	—		%

Commercial real estate
Net charge-offs (recoveries) during the period	$	—		$	—
Average amount outstanding	$	9,619		$	6,669
Net charge-offs (recoveries) as a percentage of average loans	—		%	—		%

One-to-Four Family first mortgage
Net charge-offs (recoveries) during the period	$	3		$	—
Average amount outstanding	$	5,881		$	146
Net charge-offs (recoveries) as a percentage of average loans	—		%	—		%

Acquisition, Development and Construction
Net charge-offs (recoveries) during the period	$	—		$	—
Average amount outstanding	$	2,219		$	228
Net charge-offs (recoveries) as a percentage of average loans	—		%	—		%

Other Loans
Net charge-offs (recoveries) during the period	$	(4)		$	(5)
Average amount outstanding	$	21,943		$	4,104
Net charge-offs (recoveries) as a percentage of average loans	(0.02)		%	(0.12)		%

Total loans
Net charge-offs (recoveries) during the period	$	(1)		$	(5)
Average amount outstanding	$	77,481		$	46,479
Net charge-offs (recoveries) as a percentage of average loans	—		%	-0.01		%

Securities

Total securities were $7.8 billion, ~~from Cerberus and the FDIC to sell the aforementioned loans and settle the related LSA, resulting in a gain of $74.6 million which is included in“Non-interest~~ ~~income” in the accompanying Consolidated Statement of Income and Comprehensive Income. Effective October 31, 2017, the Company and the FDIC completed termination of the LSA.~~

~~Asset Quality Analysis (Including Covered Loans, Covered OREO, andNon-Covered~~ ~~PCI Loans)~~

~~As previously discussed, the covered loan portfolio was sold during the third quarter of 2017; accordingly, the following table presents information regarding ournon-performing~~ ~~assets and loans past due at December 31, 2016 only, including covered loans and covered OREO (collectively, “covered assets”), andnon-covered~~ ~~PCI loans:~~

(dollars in thousands)    At or For the
Year Ended
December 31, 2016
Covered Loans andNon-Covered PCI Loans 90 Days or More Past Due:

Multi-family
   $ —
Commercial real estate
   612
One-to-four family
   125,076
Acquisition, development, and construction
   —
Other loans
   6,646


Total covered loans andnon-covered PCI loans 90 days or more past due
   $ 132,334
Covered other real estate owned
   16,990


Total covered assets andnon-covered PCI loans
   $ 149,324


TotalNon-Performing Assets:

Non-performing loans:

Multi-family
   $ 13,558
Commercial real estate
   9,909
One-to-four family
   134,755
Acquisition, development, and construction
   6,200
Othernon-performing loans
   24,381


Totalnon-performing loans
   $ 188,803
Other real estate owned
   28,598


Totalnon-performing assets
   $ 217,401


Asset Quality Ratios (including the allowance for losses oncovered loans andnon-covered PCI loans):

Totalnon-performing loans to total loans
   0.48 %
Totalnon-performing assets to total assets
   0.44
Allowance for loan losses to totalnon-performing loans
   96.39
Allowance for loan losses to total loans
   0.47
Covered Loans andNon-Covered PCI Loans30-89 Days Past Due:

Multi-family
   $ —
Commercial real estate
   —
One-to-four family
   21,112
Acquisition, development, and construction
   —
Other loans
   1,542


Total covered loans andnon-covered PCI loans30-89 days past due
   $ 22,654


Total Loans30-89 Days Past Due:

Multi-family
   $ 28
Commercial real estate
   —
One-to-four family
   23,956
Acquisition, development, and construction
   —
Other loans
   9,053


Total loans30-89 days past due
   $ 33,037

~~Geographical Analysis ofNon-Performing~~ ~~Loans~~

~~The following table presents a geographical analysis of ournon-performing~~ ~~loans at September 30, 2017:~~

(in thousands)    Total
New York
   $ 49,097
New Jersey
   9,938
Maryland
   6,200
Connecticut
   1,781
Arizona
   1,204
Florida
   475
All other states
   275


Totalnon-performing loans
   $ 68,970

~~Securities~~

~~Securities declined $140.1 million from the current second quarter-end 2017 balance and $786.0 million from theyear-end~~ ~~2016 balance to $3.0 billion, representing 6.3%~~or 7 percent, of total assets at ~~September~~June 30, ~~2017. During~~2023, compared to $9.1 billion, or 10 percent of total assets at December 31, 2022. At June 30, 2023 and December 31, 2022, all of our securities were designated as “Available-for-Sale”. At June 30, 2023, 15 percent of our portfolio are floating rate securities.

As of June 30, 2023, the ~~second quarter~~net unrealized loss on securities available for sale, net of ~~2017,~~tax, was $668 million as compared to $626 million at December 31, 2022, reflecting the ~~Company repositioned~~rising interest rate environment.

At June 30, 2023, available-for-sale securities had an estimated weighted average life of seven years. Included in the quarter-end amount were mortgage-related securities of $5.0 billion and other debt securities of $2.8 billion.

At the prior year-end, available-for-sale securities were $9.1 billion, and had an estimated weighted average life of six years. Mortgage-related securities accounted for $4.8 billion of the year-end balance, with other debt securities accounting for the remaining $4.3 billion.

The following table summarizes the weighted average yields of debt securities for the maturities indicated at June 30, 2023:


	Mortgage- Related Securities		U.S. Government and GSE Obligations		State, County, and Municipal		Other Debt Securities (2)
Available-for-Sale Debt Securities: (1)
Due within one year	2.71	%	3.68	%	—	%	4.76	%
Due from one to five years	3.33		4.83		—		6.39
Due from five to ten years	2.84		1.55		3.16		4.82
Due after ten years	3.72		3.16		—		5.63
Total debt securities available for sale	3.65		2.27		3.16		5.61

(1)The weighted average yields are calculated by multiplying each carrying value by its~~“Held-to-Maturity”~~ ~~securities portfolio~~ yield and dividing the sum of these results by ~~designating~~ the ~~entire portfolio as“Available-for-Sale.”~~ ~~In addition, it took advantage of favorable bond market conditions~~total carrying values and ~~sold approximately $521.0 million of securities, resulting in~~are not presented on a~~pre-tax~~ ~~gain on sale of $26.9 million.~~

tax-equivalent basis.

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

Federal Reserve and Federal Home Loan Bank Stock

~~As members~~

At June 30, 2023 the Company had $605 million and $329 million of ~~the~~FHLB-NY stock, at cost, and FHLB-Indianapolis stock, at cost, respectively. At December 31, 2022, the ~~Community~~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 ~~the Commercial Bank are required to acquire and hold shares of its capital stock. At September~~$176 million at June 30, ~~2017~~2023 and December 31, ~~2016, the Community Bank heldFHLB-NY~~ ~~stock in the amount of $564.3 million and $562.0 million, respectively, and the Commercial Bank heldFHLB-NY~~ ~~stock of $15.1 million and $16.4 million,~~2022, respectively.~~FHLB-NY~~ ~~stock continued to be valued at par, with no impairment required at that date.~~

~~Dividends from theFHLB-NY~~ ~~to the Community Bank totaled $22.8 million and $19.2 million, respectively, in the nine months ended September 30, 2017 and 2016; dividends from theFHLB-NY~~ ~~to the Commercial Bank totaled $701,000 and $1.1 million, respectively, in the corresponding periods.~~

Bank-Owned Life Insurance

~~Bank-owned life insurance (“BOLI”)~~

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~~ “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 at June 30, 2023 rose ~~$12.4~~$6 million to ~~$961.4 million in the nine months ended September 30, 2017.~~

$1.6 billion compared to December 31, 2022.

Goodwill ~~and Core Deposit Intangibles~~

We record goodwill ~~and core deposit intangibles (“CDI”)~~ 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. ~~CDI refers to the fair value~~As of ~~the core deposits acquired in a business combination, and is typically amortized over a period of ten years from the acquisition date.~~

~~While goodwill totaled $2.4 billion at both September~~June 30, ~~2017~~2023 and December 31, ~~2016, the balance of CDI, net, declined from $208,000 to zero as a result of amortization in the first nine months of this year.~~

~~For more information about the Company’s~~2022 goodwill ~~see the discussion of “Critical Accounting Policies” earlier in this report.~~

was $2.4 billion.

Sources of Funds

The Parent Company ~~(i.e., the Company on an unconsolidated basis)~~ has ~~three~~four primary funding sources for the payment of dividends, share repurchases, and other corporate uses: dividends paid to the Parent Company by the ~~Banks;~~Bank; capital raised through the issuance of ~~stock; and~~securities; funding raised through the issuance of debt ~~instruments.~~

instruments; and repayments of, and income from, investment securities.

On a consolidated basis, our funding primarily stems from a combination of the following sources: retail, institutional, and brokered deposits; borrowed funds, primarily in the form of wholesale borrowings; ~~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, 2017, down from the $9.1 billion recorded in the year-earlier nine months. Cash flows from the repayment and sales of securities totaled $1.3 billion and $2.7 billion, respectively, in the corresponding periods, while purchases of securities totaled $404.0 million and $281.9 million, respectively.

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. ~~That said, there~~From time to time, we have ~~been times that we’ve~~ 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.

~~In the nine months ended September~~ 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).

Depending on their availability and pricing relative to other funding sources, we also include brokered deposits in our deposit mix. Brokered deposits accounted for $9.3 billion of our deposits at June 30, ~~2017, total deposits of $28.9~~2023, compared to $5.1 billion ~~were comparable to the level recorded~~ at December 31, ~~2016. Certificates of deposit (“CDs”)~~2022. Brokered money market accounts represented ~~30.5%~~$2.2 billion of total brokered deposits at ~~the end of the third quarter,~~June 30, 2023 and ~~total deposits represented 59.6% of total assets at that date.~~

~~Included in the September 30th balance of deposits were institutional deposits of $2.2 billion and municipal deposits of $791.5 million, as compared to~~ $2.8 billion ~~and $637.7 million, respectively,~~ at December 31, 2016. Brokered deposits dropped $79.1 million during this timeframe, to $3.9 billion, the net effect of an $83.1 million increase in brokered money market accounts to $2.6 billion and a $641.1 million decline in2022; brokered interest-bearing checking accounts ~~to $804.9 million.~~represented $1.0 billion and $1.0 billion, respectively. At ~~September~~June 30, ~~2017,~~2023, we had ~~$478.9 million~~$6.0 billion of brokered ~~CDs. We had no brokered~~ CDs, compared to $1.3 billion at December 31, ~~2016.~~ 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 June 30, 2023 our deposit base includes $37.8 billion of uninsured deposits a net increase of $18.2 billion as compared to December 31, 2022 due to the Signature Transaction. This represents 43 percent of our total deposits. We also have $37.7 billion of total ready liquidity (cash and cash equivalents, unpledged securities, Fed Funds access and FHLB borrowing capacity). Our total ready liquidity approximately matches the balance of our uninsured deposits.

The ~~extent to which we accept brokered~~following table indicates the amount of time deposits, ~~depends on various factors, including~~by account, that are in excess of the ~~availability and pricing of such wholesale funding sources, and the availability and pricing of other sources of funds.~~

FDIC insurance limit (currently $250,000) by time remaining until maturity:

(in millions) June 30, 2023 December 31, 2022
Portion of U.S. time deposits in excess of insurance limit $ 4,847 $ 3,749
Time deposits otherwise uninsured with a maturity of:
3 months or less 1,601 969
Over 3 months through 6 months 1,239 604
Over 6 months through 12 months 1,260 1,269
Over 12 months 747 907
Total time deposits otherwise uninsured $ 4,847 $ 3,749

Borrowed Funds

~~Borrowed~~

The majority of 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. In the three months ended September~~debentures and subordinated notes. At June 30, ~~2017, the balance of~~2023, total borrowed funds ~~was unchanged from the trailing quarter and fell $1.3 billion from year end to $12.4 billion, representing 25.5% of total assets, at that date.~~

~~Wholesale Borrowings~~

~~Wholesale borrowings were unchanged from the trailing quarter but fell $1.3 billion from year end to $12.0 billion, representing 24.8% of total assets, at quarter end.~~

~~FHLB-NY~~ ~~advances declined $110.0 million during this time, to $11.6 billion, while the balance of repurchase agreements dropped $1.1~~decreased $4.9 billion to ~~$450.0 million. In addition, while federal funds purchased amounted to $150.0 million at the end of December, there were no federal funds purchased at September 30, 2017.~~

~~Junior Subordinated Debentures~~

~~Junior subordinated debentures totaled $359.1 million at the end of the current third quarter, comparable~~$16.4 billion compared to the balance at December ~~31st.~~

~~Risk Definitions~~

31, 2022 primarily driven by the paydown of wholesale borrowings with cash received in the Signature Transaction.

Wholesale Borrowings

Wholesale borrowings at June 30, 2023 were $15.4 billion compared to $20.3 billion at December 31, 2022.

FHLB-NY and FHLB-Indianapolis advances accounted for $15.4 billion and $20.3 billion at June 30, 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 June 30, 2023 and December 31, 2022, $5.4 billion and $6.8 billion of our wholesale borrowings had callable features, respectively.

We had no federal funds outstanding at June 30, 2023 and December 31, 2022, respectively.

Junior Subordinated Debentures

Junior subordinated debentures totaled $577 million at June 30, 2023 compared to $575 million at December 31, 2022.

Subordinated Notes

At June 30, 2023, the balance of subordinated notes was $435 million, including $135 million assumed from the Flagstar acquisition.

See Note 11, “Borrowed Funds,” in Item 8, “Financial Statements and Supplementary Data” for a further discussion of our wholesale borrowings, our junior subordinated debentures and subordinated debt.

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

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 $15.8 billion and $2.0 billion, at June 30, 2023 and December 31, 2022, respectively. The ~~following section outlines~~$13.8 billion increase in cash and cash equivalents includes custodial deposits related to the ~~definitions~~Signature Transaction.

Our $37.7 billion of total ready liquidity (cash and cash equivalents, unpledged securities, and FHLB borrowing capacity), approximately matching the balance of our uninsured deposits.

Additional liquidity stems from deposits and from our use of wholesale funding sources, including wholesale borrowings and brokered 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 June 30, 2023 our available borrowing capacity with the FHLB-NY was $15.4 billion. In addition, the Bank had available-for-sale securities of $7.8 billion, of which, $6.5 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 our liquidity. In connection with these agreements, the Bank has pledged certain loans and securities to collateralize any funds we may borrow. The maximum amount the Bank could borrow from the FRB-NY was $1.0 billion.There were no borrowings against these lines of credit at June 30, 2023.

CDs due to mature or reprice in one year or less from June 30, 2023 totaled $16.9 billion, representing 93 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 ~~rate risk, market risk, and liquidity risk, and how~~we offer; 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~~types of ~~rate changes~~products we feature; and the ~~timing~~attractiveness of ~~cash flows(re-pricing~~ ~~risk); from changing rate relationships~~their terms.

Our decision to compete for deposits also depends on numerous factors, including, among ~~different yield curves affecting Company activities (basis risk); from changing rate relationships across~~others, our access to deposits through acquisitions, the ~~spectrum~~availability of ~~maturities (yield curve risk); and from interest-related options embedded in a bank’s products (options risk). The evaluation of interest rate risk must consider~~lower-cost funding sources, the impact of ~~complex, illiquid hedging strategies~~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 June 30, 2023 the Parent Company held cash and cash equivalents of $131 million. In addition to operating expenses and any share repurchases, the Parent Company is responsible for paying any dividends declared to our stockholders. As a Delaware corporation, the Parent Company is able to pay dividends either from surplus or, ~~products,~~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.

Various legal restrictions limit the extent to which the Company’s subsidiary bank can supply funds to the Parent Company and ~~also~~its non-bank subsidiaries. The Bank would require the ~~potential impact on fee~~approval of the OCC if the dividends it declares in any calendar year were to exceed the total of its respective net profits for that year combined with its respective retained net profits for the preceding two calendar years, less any required transfer to paid-in capital. The term “net profits” is defined as net income ~~(e.g. prepayment income) which is sensitive~~for a given period less any dividends paid during that period. As a result of our acquisition of Flagstar, we are also

required to ~~changes in interest rates.~~seek regulatory approval from the OCC for the payment of any dividend to the Parent Company through at least the period ending November 1, 2024. In ~~those situations where trading is separately managed, this refers to structural positions~~connection with receiving regulatory approval from the OCC for the Signature Transaction, the Bank has committed that (i) for a period of two years from the date of the Signature Transaction, it will not declare or pay any dividend without receiving a prior written determination of no supervisory objection from the OCC and (ii) it will not ~~trading portfolios.~~

~~Market Risk –~~~~Market risk is the risk to earnings~~declare 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 focusespay dividends on the ~~changes in market factors (e.g., interest rates, market~~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 six months ended June 30, 2023, dividends of $280 million were paid by the Bank to the Parent Company. At June 30, 2023, the Bank had $479 million available for additional dividends, excluding bargain purchase gain from retained earnings.

At June 30, 2023, we believe the Company has sufficient 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~~resources to meet its cash flow obligations ~~when they become due, without incurring unacceptable losses. Liquidity risk includes~~over the ~~inability~~next 12 months and for the foreseeable future.

Contractual Obligations and Commitments

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

For example, we offer CDs with contractual terms to ~~reduce~~ our ~~exposure~~customers, and borrow funds under contract from the FHLB-NY. These contractual obligations are reflected in the Consolidated Statements of Condition under “Deposits” and “Borrowed funds,” respectively. At June 30, 2023, we had CDs of $18.2 billion and long-term debt (defined as borrowed funds with an original maturity one year or more) of $10.9 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 $536 million at June 30, 2023 an increase of $414 million compared to ~~changes~~$122 million at December 31, 2022 driven by the Signature Transaction.

At June 30, 2023, we also had commitments to extend credit in ~~market interest rates.~~ the form of mortgage and other loan originations, as well as commercial, performance stand-by, and financial stand-by letters of credit. These 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 ~~asset~~following table summarizes the Company’s commitments to originate loans and ~~liability management process has~~letters of credit:


(in millions)	June 30, 2023		December 31, 2022
Multi-family and commercial real estate	$	96	$	216
One-to-four family including interest rate locks	2,497		2,066
Acquisition, development, and construction	4,281		3,539
Warehouse loan commitments	5,479		8,042
Other loan commitments	11,484		7,964
Total loan commitments	$	23,837	$	21,827
Commercial, performance stand-by, and financial stand-by letters of credit	941		541
Total commitments	$	24,778	$	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 $37.7 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 ~~primary objectives:~~months ended June 30, 2023, we did not engage in any off-balance sheet transactions that we expect to ~~evaluate~~have a material effect on our financial condition, results of operations or cash flows.

At June 30, 2023, we had no commitments to purchase securities.

Regulatory Capital

The Bank is subject to regulation, examination, and supervision by the ~~interest rate risk inherent in certain balance sheet accounts;~~OCC and the Federal Reserve (the “Regulators”). The Bank is also governed by numerous federal and state laws and regulations, including the FDIC Improvement Act of 1991, which established five categories of capital adequacy ranging from “well capitalized” to “critically undercapitalized.” Such classifications are used by the FDIC to determine various matters, including prompt corrective action and each institution’s FDIC deposit insurance premium assessments. Capital amounts and classifications are also subject to the ~~appropriate level~~Regulators’ qualitative judgments about the components of ~~risk, given our business strategy, risk appetite, operating environment,~~ capital and ~~liquidity~~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 June 30, 2023, our capital measures continued to exceed the minimum federal requirements for a bank holding company and ~~performance objectives;~~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
June 30, 2023	Common Equity Tier 1				Tier 1				Total				Leverage Capital
(dollars in millions)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital	$	8,269	9.59	%	$	8,772	10.17	%	$	10,304	11.95	%	$	8,772	7.37	%
Minimum for capital adequacy purposes	3,881		4.50		5,175		6.00		6,900		8.00		4,762		4.00
Excess	$	4,388	5.09	%	$	3,597	4.17	%	$	3,404	3.95	%	$	4,010	3.37	%
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:


	Risk-Based Capital
June 30, 2023	Common Equity Tier 1				Tier 1				Total				Leverage Capital
(dollars in millions)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital	$	9,587	11.12	%	$	9,587	11.12	%	$	10,128	11.75	%	$	9,587	8.06	%
Minimum for capital adequacy purposes	3,878		4.50		5,171		6.00		6,895		8.00		4,759		4.00
Excess	$	5,709	6.62	%	$	4,416	5.12	%	$	3,233	3.75	%	$	4,828	4.06	%
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	%

At June 30, 2023, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by 395 basis points and the fully phased-in capital conservation buffer by 145 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 percent; a minimum tier 1 risk-based

capital ratio of 8 percent; a minimum total risk-based capital ratio of 10 percent; and a minimum leverage capital ratio of 5 percent.

RECONCILIATIONS OF SHAREHOLDERS’ EQUITY, COMMON STOCKHOLDERS’ EQUITY, AND TANGIBLE COMMON SHAREHOLDERS’ EQUITY; TOTAL ASSETS AND TANGIBLE ASSETS; AND THE RELATED MEASURES

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

1.Tangible common stockholders’ equity is an important indication of the Company’s ability to grow organically and through business combinations, as well as its ability to pay dividends and to ~~manage that risk~~engage in ~~a manner consistent with guidelines approved by the Boards of Directors of the Company, the Community Bank,~~various capital management strategies.

2.Tangible book value per common share and the ~~Commercial Bank.~~

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.

Three Months Ended, Six months ended
(dollars in millions) June 30, 2023 March 31, 2023 June 30, 2023 June 30, 2022
Stockholders’ Equity $ 11,060 $ 10,782 $ 11,060 $ 6,824
Less: Goodwill and other intangible assets (3,123) (3,160) (3,123) (2,426)
Preferred stock (503) (503) (503) (503)
Tangible common stockholders’ equity $ 7,434 $ 7,119 $ 7,434 $ 3,895
Total Assets $ 118,796 $ 123,706 $ 118,796 $ 63,093
Less: Goodwill and other intangible assets (3,123) (3,160) (3,123) (2,426)
Tangible assets $ 115,673 $ 120,546 $ 115,673 $ 60,667
Common stockholders’ equity to total assets 8.89 % 8.31 % 8.89 % 10.02 %
Tangible common stockholders’ equity to tangible assets 6.43 % 5.91 % 6.43 % 6.42 %
Book value per common share $ 14.61 $ 14.23 $ 14.61 $ 13.56
Tangible book value per common share $ 10.29 $ 9.86 $ 10.29 $ 8.35

Market Risk

As a financial institution, we are focused on reducing our exposure to interest rate ~~volatility.~~volatility, which represents our primary market risk. Changes in market interest rates ~~pose~~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 ~~Boards~~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 ofheld-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 ~~largest determinants of~~factors with the most significant impact on prepayments are market interest rates and the availability of refinancing opportunities.

~~In the first nine months of 2017, we~~

We managed our interest rate risk by taking the following actions: (1) We have continued to emphasize the origination and retention of intermediate-term assets, primarily in the form of multi-family and CRE loans; ~~and~~ (2) We have continued the origination of certain C&I loans that feature floating interest ~~rates.~~

~~In connection with~~rates; (3) Increased the ~~activities~~focus on retaining low costs deposits; and (4) Obtained new low cost deposits as part of the banking-as-a-service initiative (5) The use of derivatives to manage our interest rate position.

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 $37.7 billion of total ready liquidity (cash and cash equivalents, unpledged securities, Fed Funds access and FHLB borrowing capacity), approximately matching the balance of our mortgage banking operation, we enter into contingent commitments to fund or purchase residential mortgage loans by a specified future date at a stated interest rate and corresponding price. Such commitments, whichuninsured deposits. Our uninsured deposits are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000). These amounts were ~~generally known as interest rate lock commitments (“IRLCs”), were considered to be financial derivatives and, as such, were carried at fair value.~~

To mitigate the interest rate risk associated with our IRLCs, we entered into forward commitments to sell mortgage loans or mortgage-backed securities (“MBS”) by a specified future date and at a specified price. These forward-sale agreements were also carried at fair value. Such forward commitments to sell generally obligated us to complete the transaction as agreed, and therefore pose a risk to us if we are not able to deliver the loans or MBS pursuant to the terms of the applicable forward-sale agreement.

~~When we retained the servicing~~estimated based on the ~~loans we sold, we capitalized an MSR asset. Residential MSRs are recorded at fair value, with changes in fair value recorded as~~same methodologies and assumptions used for regulatory reporting purposes and excludes internal accounts. At June 30, 2023 our deposit base includes $37.8 billion of uninsured deposits, reflecting a ~~component~~net increase of~~non-interest~~ income. We estimate the fair value of the MSR asset based upon a number of factors, including current and expected loan prepayment rates, economic conditions, and market forecasts, as well as relevant characteristics of the associated underlying loans. Generally, when market interest rates decline, loan prepayments increase as customers refinance their existing mortgages to take advantage of more favorable interest rate terms. When a mortgage prepays, or when loans are expected to prepay earlier than originally expected, a portion of the anticipated cash flows associated with servicing these loans is terminated or reduced, which can result in a reduction in the fair value of the capitalized MSRs and a corresponding reduction in earnings.

To mitigate the prepayment risk inherent in residential MSRs, we could have sold the servicing of the loans we produced, and thus minimized the potential for earnings volatility. Instead, we opted to mitigate such risk by investing in exchange-traded derivative financial instruments that were expected to experience opposite and partially offsetting changes in fair value as related to the value of our residential MSRs.

~~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, 2017, ourone-year~~ ~~gap was a negative 17.52%,~~ $18.2 billion as compared to ~~a negative 21.37% at~~ December 31, ~~2016. The385-basis~~ ~~point change was largely~~2022 due to ~~an increase in cash balances as a result~~the Signature Transaction. This represents 43 percent of our total deposits.

LIBOR Transition Process and Phase Out

The Company has certain loans, interest rate swap agreements, investment securities, and debt obligations whose interest rate is indexed to LIBOR. In 2017, the FCA, which is responsible for regulating LIBOR, announced that the publication of LIBOR is not guaranteed beyond 2021. In December 2020, the administrator of LIBOR announced its intention to (i) cease the publication of the ~~sale~~one-week and two-month U.S. dollar LIBOR after December 31, 2021, and (ii) cease the publication of all other tenors of U.S. dollar LIBOR (one, three, six, and 12-month LIBOR) after June 30, 2023, and on March 15, 2021, announced that it will permanently cease to publish most LIBOR settings beginning on January 1, 2022 and cease to publish the overnight, one-month, three-month, six-month, and 12-month U.S. dollar LIBOR settings on July 1, 2023. Accordingly, the FCA has stated that it does not intend to persuade or compel banks to submit to LIBOR after such respective dates. Until such time, however, FCA panel banks have agreed to continue to support LIBOR. In October 2021, the Federal bank regulatory agencies issued a Joint Statement on Managing the LIBOR Transition that offered their regulatory expectations and outlined potential supervisory and enforcement consequences for banks that fail to adequately plan for and implement the transition away from LIBOR. The failure to properly transition away from LIBOR may result in increased supervisory scrutiny. The implementation of a substitute index for the calculation of interest rates under the Company's loan agreements may result in disputes or litigation with counterparties over the appropriateness or comparability to LIBOR of the ~~mortgage banking operations and borrowings maturing or repricing within one year, combined with a decrease in loans and deposits maturing or repricing within that time.~~

~~The table~~substitute index, which would have an adverse effect on the following page sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at September 30, 2017 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, 2017 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 constant prepayment rate (“CPR”) of 15% per annum; for multi-family and CRE loans, prepayment rates are forecasted at weighted average CPRs of 15% and 13% 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~~Company's results of this analysis, savings accounts were assumed to decay at a rate of 57% for the first five years and 43% for years six through ten. Interest-bearing checking accounts were assumed to decay at a rate of 70% for the first five years and 30% 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 71% for the first five years and 29% for years six through ten.

~~Interest Rate Sensitivity Analysis~~

At September 30, 2017
Three Four to More Than More Than More Than More
Months Twelve One Year Three Years Five Years Than
(dollars in thousands) or Less Months to Three Years to Five Years to 10 Years 10 Years Total
INTEREST-EARNING ASSETS:

Mortgage and other loans⁽¹⁾
$ 3,404,215 $ 5,395,365 $ 13,855,861 $ 10,974,797 $ 3,759,589 $ 152,340 $ 37,542,167
Mortgage-related securities⁽²⁾⁽³⁾
28,954 48,601 153,528 1,010,056 1,187,286 82,104 2,510,529
Other securities⁽²⁾
694,896 260,513 3,848 10,929 60,632 69,153 1,099,971
Interest-earning cash and cash equivalents
3,114,444 —   —   —   —   —   3,114,444

Total interest-earning assets
7,242,509 5,704,479 14,013,237 11,995,782 5,007,507 303,597 44,267,111

INTEREST-BEARING LIABILITIES:

Interest-bearing checking and money market accounts
6,442,546 436,363 1,007,765 826,948 3,625,327 —   12,338,949
Savings accounts
902,004 824,160 614,154 484,171 2,172,089 —   4,996,578
Certificates of deposit
3,193,359 4,899,393 629,427 67,239 13,155 —   8,802,573
Borrowed funds
1,463,926 3,273,500 7,381,000 100,000 —   145,176 12,363,602

Total interest-bearing liabilities
12,001,835 9,433,416 9,632,346 1,478,358 5,810,571 145,176 38,501,702

Interest rate sensitivity gap per period⁽⁴⁾
$ (4,759,326 ) $ (3,728,937 ) $ 4,380,891 $ 10,517,424 $ (803,064 ) $ 158,421 $ 5,765,409

Cumulative interest rate sensitivity gap
$ (4,759,326 ) $ (8,488,263 ) $ (4,107,372 ) $ 6,410,052 $ 5,606,988 $ 5,765,409

Cumulative interest rate sensitivity gap as a percentage of total assets
(9.82 )% (17.52 )% (8.48 )% 13.23 % 11.57 % 11.90 %
Cumulative net interest-earning assets as a percentage of net interest-bearing liabilities
60.35 % 60.40 % 86.78 % 119.70 % 114.62 % 114.97 %

~~(1)~~

~~For the purpose of the gap analysis,non-performingnon-covered~~ ~~loans and the allowance for non-covered 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,~~operations. Even when robust fallback language is included, there can be no ~~assurance~~assurances that the ~~assumed prepayment~~replacement rate plus any spread adjustment will be economically equivalent to LIBOR, which could result in a lower interest rate being paid to the Company on such assets.

The Alternative Reference Rates Committee (a group of private-market participants convened by the FRB and ~~decay rates will approximate actual future~~the FRB-NY) has identified SOFR as the recommended alternative to LIBOR. The use of SOFR as a substitute for LIBOR is voluntary and may not be suitable for all market participants. SOFR is calculated and observed differently than LIBOR. Given the manner in which SOFR is calculated, it is likely to be lower than LIBOR and is less likely to correlate with the funding costs of financial institutions. Market practices related to SOFR calculation conventions continue to develop and may vary. Inconsistent calculation conventions among financial products may expose is to increased basic rate and resultant costs.

Other alternatives to LIBOR also exist, but, because of the difference in how those alternatives are constructed, they may diverge significantly from LIBOR in a range of situations and market conditions.

The Bank established a sub-committee of ALCO to address issues related to the phase out and transition from LIBOR. This sub-committee consists of personnel from various departments through the Bank including lending, loan administration, credit risk management, finance/treasury, including interest rate risk and ~~securities prepayments~~liquidity management, information technology, and ~~deposit withdrawal activity.~~

~~To validate our prepayment assumptions for our multi-family~~operations. The Company has LIBOR-based contracts that extend beyond June 30, 2023. The sub-committee has monitored the Bank’s LIBOR transition progress and ~~CRE loan portfolios, we perform a monthly analysis, during which we review our historical prepayment rates and compare them to our projected prepayment rates. We continually review~~substantially all contracts have been updated. In complying with industry requirements, the ~~actual prepayment rates to ensure that our projections are as accurate as possible,~~Bank has not offered new LIBOR-based products since ~~prepayments on these types of loans are not as closely correlated to changes in interest rates as prepayments onone-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, 2017, the impact of a100-basis~~ point decline in market interest rates would have increased our projected prepayment rates for multi-family and CRE loans by a constant prepayment rate of 11.23% per annum. Conversely, the impact of a~~100-basis~~ ~~point increase in market interest rates would have decreased our projected prepayment rates for multi-family and CRE loans by a constant prepayment rate of 4.08% per annum.~~

~~Certain shortcomings are inherent in the method of analysis presented in the preceding~~ December 31, 2021.

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.

Analysis

Interest rate sensitivity is ~~also~~ monitored through the use of a model that generates estimates of the change in our ~~net portfolio value (“NPV”)~~Economic Value of Equity (EVE) over a range of interest rate scenarios. ~~NPV~~EVE is defined as the net present value of expected cash flows from assets, liabilities, andoff-balance sheet contracts. The ~~NPV~~EVE ratio, under any interest rate scenario, is defined as the ~~NPV~~EVE in that scenario divided by the market value of assets in the same scenario. The model assumes estimated loan and MBS prepayment rates, ~~reinvestment rates,~~current market value spreads, and deposit decay rates ~~similar to those utilized in formulating the preceding Interest Rate Sensitivity Analysis.~~

and betas.

Based on the information and assumptions in effect at ~~September~~June 30, ~~2017,~~2023, the following table ~~reflects the estimated percentage change in~~sets forth our ~~NPV,~~EVE, assuming the changes in interest rates noted:


Change in Interest Rates ~~(in~~ (in basis points)⁽¹⁾	Estimated Percentage Change in ~~Net Portfolio~~ Economic Value	of Equity
~~+100~~ -200 over one year		~~(2.54~~	)(3.6)%
-100 over one year	(1.5)%
+100 over one year	(0.6)%
+200 over one year		~~(8.93~~	)(1.5)%

~~(1)~~

~~The impact of100-~~ ~~and200-basis~~ ~~point reductions in interest rates is not presented in view of the current level of the federal funds rate and other short-term interest rates.~~

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

~~As with~~Bank.

Accordingly, while the ~~Interest Rate Sensitivity Analysis, certain shortcomings are inherent in the methodology used in the preceding~~EVE analysis provides an indication of our interest rate risk ~~measurements.~~ 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 ~~NPV~~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 ~~NPV Analysis~~NII analysis presented ~~above~~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. Accordingly, while the NPV 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~~June 30, ~~2017,~~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~~ (in basis points)⁽¹⁾⁽²⁾	Estimated Percentage Change in Future Net Interest Income
~~+100~~ -200 over one year		~~(2.34~~	)(8.9)%
-100 over one year	(4.9)%
+100 over one year	5.0%
+200 over one year		~~(5.72~~	)% 10.0%

~~(1)~~

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

~~(2)~~

~~The impact of100-~~ ~~and200-basis~~ ~~point reductions in interest rates is not presented in view of the current level of the federal funds rate and other short-term interest rates.~~

(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 ~~gap, NPV,~~EVE, and/or ~~net interest income simulation.~~

NII simulations.

In the event that our ~~NPV~~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 Management Asset and Liability Committee (the “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.

•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 ~~synthetic hedging techniques~~other balance sheet management activities including the potential use of derivatives to ~~more immediately~~ reduce the risk exposure. Where variance from policy tolerances is triggered by more fundamental imbalances in the risk profiles of core loan and deposit products, a remedial strategy may involve restoring balance through natural hedges to the extent possible before employing synthetic hedging techniques. Other strategies might include:

•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 ofoff-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~~June 30, ~~2017,~~2023, our analysis indicated that ~~an immediate~~a further inversion of the yield curve would be expected to result in a ~~1.83%~~3.8 percent decrease in net interest income; conversely, an immediate steepening of the yield curve would be expected to result in a ~~3.85%~~1.5 percent increase in net interest income.

~~Liquidity~~

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 ~~manage~~believe the judgment, estimates and assumptions used in the preparation of our ~~liquidity~~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 ~~ensure~~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”), and a pending request for relief submitted by the Company to the Securities and Exchange Commission in accordance therewith, 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

(unaudited)


	June 30, 2023		December 31, 2022
(in millions, except per share data)
ASSETS:
Cash and cash equivalents	$	15,806	$	2,032
Securities:
Debt Securities available-for-sale $1,275 and $434 pledged at June 30, 2023 and December 31, 2022, respectively)	7,782		9,060
Equity investments with readily determinable fair values, at fair value	14		14
Total securities	7,796		9,074
Loans held for sale ($1,572 and $1,115 measured at fair value, respectively)	2,194		1,115
Loans and leases held for investment, net of deferred loan fees and costs	83,278		69,001
Less: Allowance for credit losses on loans and leases	(594)		(393)
Total loans and leases held for investment, net	82,684		68,608
Federal Home Loan Bank stock and Federal Reserve Bank stock, at cost	1,136		1,267
Premises and equipment, net	660		491
Core deposit and other intangibles	697		287
Goodwill	2,426		2,426
Mortgage servicing rights	1,031		1,033
Bank-owned life insurance	1,567		1,561
Other assets	2,799		2,250
Total assets	$	118,796	$	90,144
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Interest-bearing checking and money market accounts	$	30,795	$	22,511
Savings accounts	9,762		11,645
Certificates of deposit	18,188		12,510
Non-interest-bearing accounts	29,752		12,055
Total deposits	88,497		58,721
Borrowed funds:
Federal Home Loan Bank advances	15,400		20,325


Junior subordinated debentures	577		575
Subordinated notes	435		432
Total borrowed funds	16,412		21,332
Other liabilities	2,827		1,267
Total liabilities	107,736		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; 744,506,254 and 705,429,386 shares issued; and 722,475,755 and 681,217,334 shares outstanding, respectively)	7		7
Paid-in capital in excess of par	8,204		8,130
Retained earnings	3,205		1,041
Treasury stock, at cost ($22,030,499 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 $255 and $240, respectively	(668)		(626)
Net unrealized loss on pension and post-retirement obligations, net of tax of $17 and $18, respectively	(43)		(46)
Net unrealized gain on cash flow hedges, net of tax of $(26) and $(20), respectively	69		52
Total accumulated other comprehensive loss, net of tax	(642)		(620)
Total stockholders’ equity	11,060		8,824
Total liabilities and stockholders’ equity	$	118,796	$	90,144

See accompanying notes to the consolidated financial statements.

New York Community Bancorp, Inc.

Consolidated Statements of Income and Comprehensive Income


	Three Months Ended June 30,				Six months ended June 30,
(in millions, except per share data)	2023		2022		2023		2022
INTEREST INCOME:
Loans and leases	$	1,161	$	424	$	2,028	$	817
Securities and money market investments	337		49		504		85
Total interest income	1,498		473		2,532		902
INTEREST EXPENSE:
Interest-bearing checking and money market accounts	232		24		389		32
Savings accounts	40		10		79		18
Certificates of deposit	169		12		256		23
Borrowed funds	157		68		353		138
Total interest expense	598		114		1,077		211
Net interest income	900		359		1,455		691
Provision for (recovery of) credit losses	49		9		219		7
Net interest income after provision for credit loan losses	851		350		1,236		684
NON-INTEREST INCOME:
Fee income	48		6		75		12
Bank-owned life insurance	11		7		21		14
Net (loss) on securities	(1)		—		(1)		(1)
Net return on mortgage servicing rights	25		—		47		—
Net gain on loan sales and securitizations	25		—		45		—
Net Loan administration income	39		—		46		—
Bargain purchase gain	141		—		2,142		—
Other	14		5		25		7
Total non-interest income	302		18		2,400		32
NON-INTEREST EXPENSE:
Operating expenses:
Compensation and benefits	289		79		508		159
Occupancy and equipment	50		22		87		45
General and administrative	176		33		312		64
Total operating expense	515		134		907		268
Intangible asset amortization	37		—		54		—
Merger-related and restructuring expenses	109		4		176		11
Total non-interest expense	661		138		1,137		279
Income before income taxes	492		230		2,499		437
Income tax expense	79		59		80		111
Net income	$	413	$	171	$	2,419	$	326
Preferred stock dividends	8		8		16		16
Net income available to common stockholders	$	405	$	163	$	2,403	$	310
Basic earnings per common share	$	0.55	$	0.34	$	3.37	$	0.66
Diluted earnings per common share	$	0.55	$	0.34	$	3.37	$	0.66
Net income	$	413	$	171	$	2,419	$	326
Other comprehensive loss, net of tax:
Change in net unrealized loss on securities available for sale, net of tax of $36; $68; $15 and $150;, respectively	(102)		(176)		(42)		(391)
Change in pension and post-retirement obligations, net of tax of $(1); $0; $(1) and $0;, respectively	1		(1)		2		(1)
Change in net unrealized gain on cash flow hedges, net of tax of $(32); $(3); $(9) and $(7);, respectively	92		6		25		18

Reclassification adjustment for defined benefit pension plan, net of tax of $1; $0; $0 and $0;, respectively	—		1		1		1
Reclassification adjustment for net (loss) gain on cash flow hedges included in net income, net of tax $1; $0; $3 and $(2);, respectively	(4)		1		(8)		5
Total other comprehensive loss, net of tax	(13)		(169)		(22)		(368)
Total comprehensive income (loss), net of tax	$	400	$	2	$	2,397	$	(42)

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 June 30, 2023
Balance at March 31, 2023	722,150,297	$	503	$	7	$	8,197	$	2,923	$	(219)	$	(629)	$	10,782
Shares issued for restricted stock, net of forfeitures	515,635	—		—		(4)		—		4		—		—
Compensation expense related to restricted stock awards		—		—		11		—		—		—		11
Net income		—		—		—		413		—		—		413
Dividends paid on common stock ($0.17)		—		—		—		(123)		—		—		(123)
Dividends paid on preferred stock ($15.94)		—		—		—		(8)		—		—		(8)
Purchase of common stock	(190,177)	—		—		—		—		(2)		—		(2)
Other comprehensive loss, net of tax		—		—		—		—		—		(13)		(13)
Balance at June 30, 2023	722,475,755	$	503	$	7	$	8,204	$	3,205	$	(217)	$	(642)	$	11,060

Three Months Ended June 30, 2022
Balance at March 31, 2022	467,024,144	$	503	$	5	$	6,107	$	809	$	(231)	$	(284)	$	6,909
Shares issued for restricted stock, net of forfeitures	28,930	—		—		—		—		—		—		—
Compensation expense related to restricted stock awards	—	—		—		7		—		—		—		7
Net income	—	—		—		—		171		—		—		171
Dividends paid on common stock ($0.17)	—	—		—		—		(79)		—		—		(79)
Dividends paid on preferred stock ($15.94)	—	—		—		—		(8)		—		—		(8)
Purchase of common stock	(809,996)	—		—		—		—		(7)		—		(7)
Other comprehensive loss, net of tax	—	—		—		—		—		—		(169)		(169)
Balance at June 30, 2022	466,243,078	$	503	$	5	$	6,114	$	893	$	(238)	$	(453)	$	6,824

The accompanying notes are an integral part of these 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
Six Months Ended June 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	3,393,046	—		—		(31)		—		31		—		—
Compensation expense related to restricted stock awards	0	—		—		20		—		—		—		20
Net income	0	—		—		—		2,419		—		—		2,419
Dividends paid on common stock ($0.34)	0	—		—		—		(239)		—		—		(239)
Dividends paid on preferred stock ($31.88)	0	—		—		—		(16)		—		—		(16)
Purchase of common stock	(1,166,631)	—		—		—		—		(11)		—		(11)
Other comprehensive loss, net of tax	0	—		—		—		—		—		(22)		(22)
Balance at June 30, 2023	722,475,755	$	503	$	7	$	8,204	$	3,205	$	(217)	$	(642)	$	11,060

Six Months Ended June 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	—	—		—		15		—		—		—		15
Net income	—	—		—		—		326		—		—		326
Dividends paid on common stock ($0.34)	—	—		—		—		(158)		—		—		(158)
Dividends paid on preferred stock ($31.88)	—	—		—		—		(16)		—		—		(16)
Purchase of common stock	(1,711,930)	—		—		—		—		(19)		—		(19)
Other comprehensive loss, net of tax	—	—		—		—		—		—		(368)		(368)
Balance at June 30, 2022	466,243,078	$	503	$	5	$	6,114	$	893	$	(238)	$	(453)	$	6,824

The accompanying notes are an integral part of these Consolidated Financial Statements.

New York Community Bancorp, Inc.

Consolidated Statements of Cash Flows

(unaudited)


	For the Six Months Ended June 30,
(in millions)	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,419	$	326
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses	219		7
Amortization of intangibles	54		—
Depreciation	18		9
Amortization of discounts and premiums, net	(119)		(2)
Net (gain) loss on securities	1		1
Net (gain) loss on sales of loans	(45)		—
Net gain on sales of fixed assets	—		(2)
Gain on business acquisition	(2,142)		—
Stock-based compensation	20		15
Deferred tax expense	(44)		(15)
Changes in operating assets and liabilities:
Decrease (increase) in other assets	(71)		42
(Decrease) increase in other liabilities	(969)		18
Purchases of securities held for trading	(10)		(35)
Proceeds from sales of securities held for trading	10		35
Change in loans held for sale, net	(911)		—

Net cash (used in) provided by operating activities	(1,570)		399
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from repayment of securities available for sale	1,148		397
Proceeds from sales of securities available for sale	1,341		—
Purchase of securities available for sale	(1,111)		(788)
Redemption of Federal Home Loan Bank stock	967		175
Purchases of Federal Home Loan Bank and Federal Reserve Bank stock	(836)		(76)
Proceeds from bank-owned life insurance, net	24		5

Purchases of loans	—		(144)
Net Proceeds from sales of MSR's	50		—
Other changes in loans, net	(2,433)		(2,650)
(Purchases) dispositions of premises and equipment, net	(53)		11
Cash acquired in business acquisition	25,043		—
Net cash provided by (used in) investing activities	24,140		(3,070)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits	(3,809)		6,185
Net decrease in short-term borrowed funds	(2,050)		(1,700)
Proceeds from long-term borrowed funds	500		2,955
Repayments of long-term borrowed funds	(3,374)		(3,510)
Net receipt of payments of loans serviced for others	367		—
Cash dividends paid on common stock	(239)		(158)
Cash dividends paid on preferred stock	(16)		(16)
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	(8,632)		3,737
Net increase in cash, cash equivalents, and restricted cash (1)	13,938		1,066
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)	$	16,020	$	3,277
Supplemental information:
Cash paid for interest	$	1,043	$	229


Cash paid for income taxes	17		8
Non-cash investing and financing activities:
Transfers to repossessed assets from loans	$	1	$	—
Securitization of loans to mortgage-backed securities available for sale	109		144




Shares issued for restricted stock awards	31		27
Business Combination:
Fair value of tangible assets acquired	37,542		—
Intangible assets	464		—

Liabilities assumed	35,779		—
Issuance of FDIC Equity appreciation instrument	85		—

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

The accompanying notes are an integral part of these Consolidated Financial Statements.

New York Community Bancorp, Inc.

Notes to the Unaudited 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 3000 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 that 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.

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).

Notes to the Consolidated Financial Statements

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.

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 June 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	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 is not expected to 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)

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 earnings per common share:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except share and per share amounts)	2023		2022		2023		2022
Net income available to common stockholders	$	405	$	163	$	2,403	$	310
Less: Dividends paid on and earnings allocated to participating securities	(4)		(2)		(26)		(4)
Earnings applicable to common stock	$	401	$	161	$	2,377	$	306
Weighted average common shares outstanding	722,264,568		465,811,096		704,685,721		465,476,526
Basic earnings per common share	$	0.55	$	0.34	$	3.37	$	0.66
Earnings applicable to common stock	$	401	$	161	$	2,377	$	306
Weighted average common shares outstanding	722,264,568		465,811,096		704,685,721		465,476,526
Potential dilutive common shares	1,462,426		988,976		1,411,524		899,249
Total shares for diluted earnings per common share computation	723,726,994		466,800,072		706,097,245		466,375,775
Diluted earnings per common share and common share equivalents	$	0.55	$	0.34	$	3.37	$	0.66

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 ~~sufficient~~highly subjective in nature and subject to ~~support our operations,~~change. While the Company believes that the information available on June 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 ~~compensate~~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 six months ended June 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 ~~any temporary mismatches~~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		(153)		526
Total assets acquired	38,636		(630)		38,006
Fair value of liabilities assumed:
Deposits	33,568		—		33,568
Other liabilities	2,982		(771)		2,211
Total liabilities assumed	36,550		(771)		35,779
Fair value of net identifiable assets	2,086		141		2,227
Bargain purchase gain	$	2,001	$	141	$	2,142

During the three months ended June 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 ~~sources~~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 ~~uses~~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 ~~funds caused by variable loan~~the significant assets acquired and ~~deposit demand.~~

~~We monitor our liquidity daily to ensure that sufficient funds are available to meet our financial obligations. Our most liquid assets are~~liabilities assumed in the Signature Transaction.

Cash and Cash Equivalents

The estimated fair value of cash and cash equivalents ~~which totaled $3.3 billion~~approximates their stated face amounts, as these financial instruments are either due on demand or have short-term maturities.

Loans and ~~$557.9 million, respectively, at September 30, 2017~~leases

The fair value for loans was based on a discounted cash flow methodology that considered credit loss expectations, market interest rates and ~~December 31, 2016. As~~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 ~~past, our portfolios~~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 securities provided liquidity in the first nine months of the year, with cash flows from the repayment and sale of loans totaling $9.3 billion and cash flows from the repayment and sale of securities totaling $1.3 billion.

Additional liquidity stems from the retail, institutional, and municipal deposits we gather and from our use of wholesale funding sources, including brokered deposits and wholesale borrowings. We also have accessinclude adjustments for liquidity. The discount rates do not include a factor for credit losses as that has been included as a reduction to the ~~Banks’ approved lines of credit with various counterparties, including theFHLB-NY.~~ ~~The availability of these wholesale funding sources is generally based on the available amount of mortgage loan collateral under a blanket lien we have pledged~~estimated cash flows. Acquired loans were marked to ~~the respective institutions~~fair value and ~~to a lesser extent, the available amount of securities that may be pledged to collateralize our borrowings. At September 30, 2017, our available borrowing capacity with theFHLB-NY~~ ~~was $7.5 billion. In addition, the Banks had $3.0 billion ofavailable-for-sale~~ ~~securities, combined, at that date.~~

~~Furthermore, both the Community Bank and the Commercial Bank have agreements with the Federal Reserve Bank of New York (the“FRB-NY”)~~ that enable them to access the discount window as a further means of enhancing their liquidity if need be. In connection with their agreements, the Banks have pledged certain loans and securities to collateralizeadjusted for any ~~funds they may borrow. At September 30, 2017, the maximum amount the Community Bank could borrow from theFRB-NY~~ ~~was $1.3 billion; the maximum amount the Commercial Bank could borrow from theFRB-NY~~ ~~was $77.5 million. There were no borrowings against either of these lines of credit at that date.~~

Our primary investing activity is loan production. In the first nine months of 2017, the volume of loans originated for investment was $5.8 billion. During this time, the net cash provided by investing activities totaled $2.5 billion. Our operating activities provided net cash of $1.3 billion, while the net cash used in our financing activities totaled $1.1 billion.

CDs due to mature in one year or less from September 30, 2017 totaled $8.1 billion, representing 91.9% of total CDs at that date. Our ability to retain these CDs and to attract new deposits depends on numerous factors, including customer satisfaction, the rates of interest we pay on our deposits, the types of products we offer, and the attractiveness of their terms. However, there are times when we may choose not to compete for such deposits, depending on the availability of lower-cost funding, the competitiveness of the market and its impact on pricing, and our need for such deposits to fund loan demand, as previously discussed.

The Parent Company is a separate legal entity from each of the Banks and must provide for its own liquidity. In addition to operating expenses and any share repurchases, the Parent Company is responsible for paying dividends declared to our shareholders. 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.

~~In each of the four quarters of 2016, the Company was required under Supervisory Letter SR09-04~~ ~~to receive anon-objection~~ ~~from the FRB to pay all dividends;non-objections~~ ~~were received from the FRB in all four quarters of the year. The FRB subsequently advised the Company to continue the exchange of written documentation to obtain theirnon-objection~~ ~~to the declaration of dividends in 2017. The Company has received all necessarynon-objections~~ ~~from the FRB for the dividends declared~~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 June 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 June 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 Six Months Ended June 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:	$	12	Interest expense
	(4)		Income tax benefit
	$	8	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	(1)		Included in the computation of net periodic cost (2)
	(1)		Total before tax
	—		Income tax benefit
	$	(1)	Amortization of defined benefit pension plan items, net of tax
Total reclassifications for the period	$	7

(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:


	June 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	$	1,366	$	—	$	162	$	1,204
GSE CMOs	3,942		—		369		3,573
Private Label CMOs	180		4		1		183
Total mortgage-related debt securities	$	5,488	$	4	$	532	$	4,960
Other Debt Securities:
U. S. Treasury obligations	$	—	$	—	$	—	$	—
GSE debentures	1,974		—		330		1,644
Asset-backed securities (1)	332		—		9		323
Municipal bonds	7		—		—		7
Corporate bonds	789		3		39		753
Foreign notes	10		—		2		8
Capital trust notes	96		5		14		87
Total other debt securities	$	3,208	$	8	$	394	$	2,822
Total debt securities available for sale	$	8,696	$	12	$	926	$	7,782
Equity securities:
Mutual funds	$	16	$	—	$	2	$	14
Total equity securities	$	16	$	—	$	2	$	14
Total securities (2)	$	8,712	$	12	$	928	$	7,796

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

(2)Excludes accrued interest receivable of $32 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 June 30, 2023, the Company had $605 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 June 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.

For both the six months ended June 30, 2023 and 2022 there were realized losses on equity securities of $1 million recognized in earnings.

The following table summarizes, by contractual maturity, the amortized cost of securities at June 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	$	247	$	—	$	20	$	283
Due from one to five years	175		200		—		432		795
Due from five to ten years	322		1,377		7		409		1,738
Due after ten years	4,971		150		—		367		4,966
Total debt securities available for sale	$	5,488	$	1,974	$	7	$	1,228	$	7,782

(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 June 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	$	221	$	1	$	1,399	$	328	$	1,620	$	329
GSE certificates	458		14		739		148		1,197		162
Private Label CMOs	20		1		—		—		20		1
GSE CMOs	2,391		81		1,182		288		3,573		369
Asset-backed securities	34		—		289		9		323		9
Municipal bonds	—		—		6		1		6		1
Corporate bonds	38		5		383		34		421		39
Foreign notes	8		2		—		—		8		2
Capital trust notes	1		—		78		14		79		14
Equity securities	—		—		14		2		14		2
Total temporarily impaired securities	$	3,171	$	104	$	4,090	$	824	$	7,261	$	928

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		4		795		31
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	$	752	$	8,569	$	874

The investment securities designated as having a continuous loss position for twelve months or more at June 30, 2023 consisted of fifty-nine agency collateralized mortgage obligations, six capital trusts notes, nine asset-backed securities, ten corporate bonds, thirty-eight US government agency bonds, 249 mortgage-backed securities, one mutual fund, and one municipal bond.The investment securities designated as having a continuous loss position for twelve months or more at December 31, 2022 consisted of twenty-three agency collateralized mortgage obligations, five capital trusts notes, seven asset-backed securities, two corporate bonds, thirty-three US government agency bonds, 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 ~~report.~~

~~The Parent Company’s~~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 June 30, 2023 or December 31, 2022 relates to the marketability of the securities or the issuers’ ability to ~~pay dividends~~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 ~~also depend,~~be at maturity. As such, no allowance for credit losses remains with respect to debt securities as of June 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:


	June 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	$	37,831	45.4	%	$	38,130	55.3	%
Commercial real estate	10,613		12.7	%	8,526		12.4	%
One-to-four family first mortgage	5,889		7.1	%	5,821		8.4	%
Acquisition, development, and construction	2,481		3.0	%	1,996		2.9	%
Total mortgage loans held for investment (1)	56,814		68.2	%	$	54,473	78.9	%
Other Loans:
Commercial and industrial	20,869		25.1	%	10,597		15.4	%
Lease financing, net of unearned income of $219 and $85, respectively	2,992		3.6	%	1,679		2.4	%
Total commercial and industrial loans (2)	23,861		28.7	%	12,276		17.8	%
Other	2,603		3.1	%	2,252		3.3	%
Total other loans held for investment	26,464		31.8	%	14,528		21.1	%
Total loans and leases held for investment (1)	$	83,278	100.0	%	$	69,001	100.0	%
Allowance for credit losses on loans and leases	(594)				(393)
Total loans and leases held for investment, net	82,684				68,608
Loans held for sale, at fair value	2,194				1,115
Total loans and leases, net	$	84,878			$	69,723

(1)Excludes accrued interest receivable of $387 million and $292 million at June 30, 2023 and December 31, 2022, respectively, which is included in ~~part,~~other assets in the Consolidated Statements of Condition.

(2)Includes specialty finance loans and leases of $4.8 billion and $4.4 billion at June 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 ~~dividends it receives~~the 10-year U.S. Treasury note rate from the ~~Banks.~~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 June 30, 2023, LGG loans totaled $614 million and the repurchase liability was $333 million.

Repossessed assets and the associated net claims related to government guaranteed loans are recorded in other assets and was $13 million at June 30, 2023.

Loans Held-for-Sale

Loans held-for-sale at June 30, 2023 totaled $2.2 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 June 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 June 30, 2023:


(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	$	79	$	33	$	—	$	112	$	37,719	$	37,831
Commercial real estate	147		36		—		183		10,430		10,613
One-to-four family first mortgage	17		85		—		102		5,787		5,889
Acquisition, development, and construction	29		—		—		29		2,452		2,481
Commercial and industrial(1)	45		79		—		124		23,737		23,861
Other	18		—		—		18		2,585		2,603
Total	$	335	$	233	$	—	$	568	$	82,710	$	83,278

(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		Loans 90 Days or More Delinquent and Still Accruing Interest		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)	—		7		—		7		12,269		12,276
Other	13		9		—		22		2,230		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 June 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	$	36,423	$	9,731	$	5,785	$	2,473	$	54,412	$	23,659	$	2,582	$	26,241
Special mention	803		261		9		—		1,073		86		—		86
Substandard	605		621		95		8		1,329		109		21		130
Doubtful	—		—		—		—		—		7		—		7
Total	$	37,831	$	10,613	$	5,889	$	2,481	$	56,814	$	23,861	$	2,603	$	26,464

(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, 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	$	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	—		—		—		—		0		—		—		—
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.

The preceding classifications are the most current ones available and generally have been updated within the last twelve months. In addition, they follow regulatory guidelines and can generally be described as follows: pass loans are of satisfactory quality; special mention loans have potential weaknesses that deserve management’s close attention; substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness and there is a possibility that the Company will sustain some loss); and doubtful loans, based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable. In addition, one-to-four family loans are classified based on the duration of the delinquency.

The 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 June 30, 2023:


	Vintage Year
(in millions)	2023		2022				2021		2020		2019		Prior To 2019		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Pass	$	1,903	$	13,645			$	10,819	$	9,880	$	5,598	$	12,288	$	273	$	6	$	54,412
Special Mention	2		2				61		142		251		614		1		—		1,073
Substandard	4		2				31		42		254		993		—		3		1,329
Doubtful	—		—				—		—		—		—		—		—		—
Total mortgage loans	$	1,909	$	13,649			$	10,911	$	10,064	$	6,103	$	13,895	$	274	$	9	$	56,814

Current-period gross writeoffs	—		—				—		—		(1)		(2)		—		—		(3)

Pass	$	6,321	$	2,338			$	2,514	$	3,706	$	2,036	$	1,122	$	7,869	$	335	$	26,241
Special Mention	32		5				4		12		7		21		5		—		86
Substandard	5		5				5		33		2		56		18		6		130
Doubtful	—		—				—		7		—		—		—		—		7
Total other loans	$	6,358	$	2,348			$	2,523	$	3,758	$	2,045	$	1,199	$	7,892	$	341	$	26,464

Current-period gross writeoffs	$	—	$	(1)			$	(1)	$	(1)	$	—	$	(2)	$	—	$	—	$	(5)

Total	$	8,267	$	15,997	$	—	$	13,434	$	13,822	$	8,148	$	15,094	$	8,166	$	350	$	83,278

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 ~~Community Bank~~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 June 30, 2023:


	Collateral Type
(in millions)	Real Property		Other
Multi-family	$	41	$	—
Commercial real estate	33		—
One-to-four family first mortgage	92		—

Commercial and industrial	—		39
Other	12		—
Total collateral-dependent loans held for investment	$	178	$	39

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

There were no significant changes in the ~~Commercial Bank~~extent to ~~pay dividends~~which collateral secures the Company’s collateral-dependent financial assets during the three and other capital distributions to the Parent Company is generally limited by New York State Banking Law and regulations, and by certain regulations of the FDIC. In addition, the Superintendent of the New York State Department of Financial Services (the “Superintendent”), the FDIC, 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, the approval of the Superintendent is required if the total of all dividends declared in a calendar year would exceed the total of a bank’s net profits for that year, combined with its retained net profits for the preceding two years. In the ninesix months ended September 30, 2017, the Banks paid dividends totaling $276.0 million to the Parent Company, leaving $302.4 million they could dividend to the Parent Company without regulatory approval at that date. Additional sources of liquidity available to the Parent Company at September 30, 2017 included $135.8 million in cash and cash equivalents. If either of the Banks were to apply to the Superintendent 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.

~~Derivative Financial Instruments~~

We use various financial instruments, including derivatives, in connection with our strategies to mitigate or reduce our exposure to losses from adverse changes in interest rates. Our derivative financial instruments consist of financial forward and futures contracts, IRLCs, swaps, and options, and relate to our mortgage banking operation, residential MSRs, and other risk management activities. These activities will vary in scope based on the level and volatility of interest rates, the types of assets held, and other changing market conditions. At September 30, 2017, we held derivative financial instruments with a notional value of $765.9 million. (See Note 12, “Derivative Financial Instruments,” for a further discussion of our use of such financial instruments.)

~~Capital Position~~

In March 2017, the Company raised $502.8 million, net of underwriting and other issuance expenses, through an offering of depositary shares, each representing a 1/40 interest in a share of preferred stock. Primarily reflecting the capital raised, total stockholders’ equity rose $635.7 million from the December 31st balance to $6.8 billion at September 30, 2017.

~~Common stockholders’ equity represented 12.91%, 12.89%, and 12.52%, respectively, of total assets at September 30, 2017,~~ June 30, ~~2017,~~2023.

At June 30, 2023 and December 31, ~~2016,~~2022, the Company had $93 million and ~~was equivalent~~$122 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 ~~book value per common share~~borrower experiencing financial difficulty are disclosed along with the financial impact of ~~$12.79, $12.74,~~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 ~~$12.57~~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 June 30, 2023
Commercial real estate	$	8	$	—	$	—	$	8	0.08	%
One-to-four family first mortgage	—		2		2		4		0.07	%
Commercial and Industrial	—		7		—		7		0.03	%

Total	$	8	$	9	$	2	$	19
Six months ended June 30, 2023
Commercial real estate	$	52	$	—	$	—	$	52	0.49	%
One-to-four family first mortgage	$	—	$	3	$	3	6		0.10	%
Commercial and Industrial	$	—	$	7	$	—	7		0.03	%

Total	$	52	$	10	$	3	$	65

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 June 30, 2023
Commercial real estate	8.00	%	4.0	%
One-to-four family first mortgage	6.05	%	4.8	%	13.6
Commercial and industrial					0.76

Six months ended June 30, 2023
Commercial real estate	10.09	%	4.0	%
One-to-four family first mortgage	5.47	%	4.4	%	13.0
Commercial and industrial					0.76

As of June 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 $3 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 ~~respective dates. We calculate book value per common share by dividing~~performance of loans that have been modified during the ~~amount~~reporting period:


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

One-to-four family first mortgage	—		—		6		6


Total	$	—	$	—	$	6	$	6

Troubled Debt Restructurings Prior to Adoption of ~~common stockholders’ equity at~~ASU 2022-02

Prior to the ~~end~~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 byof at least six consecutive months. In determining the ~~number~~Company’s allowance for loan and lease losses, reasonably expected TDRs were individually evaluated and consist of ~~common shares outstanding at~~criticized, classified, or maturing loans that will have a modification processed within the ~~same date. At September 30, 2017,~~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 June 30, ~~2017,~~2022, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $45 million.

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


	June 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 June 30, 2022.

The financial effects of the Company’s TDRs for the three and six months ended June 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 June 30, 2022
Commercial real estate	1	$	—	$	—	4.75	%	9.75	%	$	—	$	—
Six Months Ended June 30, 2022
Commercial real estate	2	$	22	$	19	6.00	%	4.00	%	$	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 Six Months Ended June 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	(3)		(5)		(8)		(4)		—		(4)
Recoveries	—		9		9		4		5		9
Provision for (recovery of) credit losses on loans and leases	43		144		187		30		(18)		12
Balance, end of period	$	330	$	264	$	594	$	208	$	8	$	216

As of June 30, 2023, the allowance for credit losses on loans and leases totaled $594 million, up $201 million compared to December 31, 2022.

The increase in the allowance for credit losses on loans and leases from December 31, 2022 to June 30, 2023 was primarily driven by a combination of increased loan balances as a result of the Signature Transaction and changes in the macroeconomic environment both on a spot and forecasted basis, 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.

As of June 30, 2023 and December 31, ~~2016, we had outstanding common shares~~2022, the allowance for unfunded commitments totaled $34 million and $23 million, respectively.

The Company charges off loans, or portions of ~~489,061,848, 489,023,298,~~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 ~~487,056,676, respectively.~~

~~Tangible common stockholders’ equity was relatively~~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 June 30, 2023:


(in millions)	Recorded Investment		Related Allowance		Interest Income Recognized
Nonaccrual loans with no related allowance:
Multi-family	$	32	$	—	$	—
Commercial real estate	34		—		1
One-to-four family first mortgage	78		—		—

Other (includes C&I)	59		—		—
Total nonaccrual loans with no related allowance	$	203	$	—	$	1
Nonaccrual loans with an allowance recorded:
Multi-family	$	1	$	—	$	—
Commercial real estate	2		—		—
One-to-four family first mortgage	7		3		—

Other (includes C&I)	20		15		—
Total nonaccrual loans with an allowance recorded	$	30	$	18	$	—
Total nonaccrual loans:
Multi-family	$	33	$	—	$	—
Commercial real estate	36		—		1
One-to-four family first mortgage	85		3		—

Other (includes C&I)	79		15		—
Total nonaccrual loans	$	233	$	18	$	1

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

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 ~~$3.8 billion, representing 8.30%~~the aggregate of ~~tangible~~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 ~~tangible book value per common share of $7.81 at September 30, 2017.~~level monthly basis with terms ranging from 24 to 120 months. At the end of the ~~second quarter, tangible common stockholders’ equity also totaled $3.8 billion~~lease term, the lessee usually has the option to return the equipment, to renew the lease or ~~8.27%~~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 tangible assets and a tangible book value per common share of $7.76. At December 31, 2016, tangible common stockholders’ equity totaled $3.7 billion, representing 7.93% of tangible assets, and a tangible book value per common share of $7.57.

~~We calculate tangible common stockholders’ equity by subtracting~~ the ~~amount of goodwill and CDI recorded~~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 ~~period from~~lease.

The residual value component of a lease financing receivable represents the ~~amount~~estimated fair value of ~~common stockholders’ equity recorded at~~ the same date. At September 30, 2017, June 30, 2017, and December 31, 2016, we recorded goodwill of $2.4 billion; CDI was zero, $24,000, and $208,000, respectively, at the corresponding dates. (See the discussion and reconciliations of stockholders’ equity, common stockholders’ equity, and tangible common stockholders’ equity; total assets and tangible assets; and the related financial measures that appear earlier in this report.)

~~Stockholders’ equity, common stockholders’ equity, and tangible common stockholders’ equity include AOCL, which increased $3.1 million from the balance~~leased equipment at the end of ~~June~~the lease term. In establishing residual value estimates, the Company may rely on industry data, historical experience, and ~~decreased $52.3 million from the end of December to $4.4 million at September 30, 2017. The increase was the result~~independent appraisals and, where appropriate, information regarding product life cycle, product upgrades and competing products. Upon expiration of a ~~$4.3~~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 June 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 $428 million ~~increase~~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 June 30, 2023		For the six months ended June 30, 2023		For the three months ended June 30, 2022		For the six months ended June 30, 2022
Interest income on lease financing (1)	$	32	$	52	$	12	$	24

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

At June 30, 2023 and December 31, 2022, the carrying value of net ~~unrealized gain onavailable-for-sale~~ ~~securities,~~investment in leases, excluding purchase accounting adjustments was $3.3 billion and $1.7 billion, respectively. The components of net investment in direct financing leases, including the carrying amount of ~~tax, to $47.9 million and a $1.2 million decrease in pension and post-retirement obligations, net of tax, to $47.1 million.~~

~~At September 30, 2017, our capital measures continued to exceed~~ the minimum federal requirements for a bank holding company. 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,lease receivables, as well as the ~~respective minimum regulatory capital requirements, at that date:~~

~~Regulatory Capital Analysis (the Company)~~

   Risk-Based Capital
At September 30, 2017    Common Equity
Tier 1 Tier 1 Total Leverage Capital
(dollars in thousands)    Amount    Ratio Amount    Ratio Amount    Ratio Amount    Ratio
Total capital
   $ 3,823,765    11.54 % $ 4,326,605    13.06 % $ 4,832,749    14.59 % $ 4,326,605    9.40 %
Minimum for capital adequacy purposes
   1,490,799    4.50 1,987,732    6.00 2,650,309    8.00 1,840,256    4.00










Excess
   $ 2,332,966    7.04 % $ 2,338,873    7.06 % $ 2,182,440    6.59 % $ 2,486,349    5.40 %

~~Basel III calls for~~unguaranteed residual asset were as follows:


(in millions)	June 30, 2023		December 31, 2022
Net investment in the lease - lease payments receivable	$	2,822	$	1,685
Net investment in the lease - unguaranteed residual assets	461		60
Total lease payments	$	3,283	$	1,745

The following table presents the~~phase-in~~ of a capital conservation buffer over a five-year period beginning with 0.625% in 2016 and reaching 2.50% in 2019, when fully phased in. At September 30, 2017, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by 659 basis points and the fully-phased in capital conservation buffer by 409 basis points.

~~As reflected in the following tables, the capital ratios for the Community Bank and the Commercial Bank also continued to exceed the minimum regulatory capital levels required at September 30, 2017:~~

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

   Risk-Based Capital
At September 30, 2017    Common Equity
Tier 1 Tier 1 Total Leverage Capital
(dollars in thousands)    Amount    Ratio Amount    Ratio Amount    Ratio Amount    Ratio
Total capital
   $ 4,176,102    13.60 % $ 4,176,102    13.60 % $ 4,304,995    14.02 % $ 4,176,102    9.80 %
Minimum for capital adequacy purposes
   1,381,593    4.50 1,842,123    6.00 2,456,165    8.00 1,703,799    4.00










Excess
   $ 2,794,509    9.10 % $ 2,333,979    7.60 % $ 1,848,830    6.02 % $ 2,472,303    5.80 %

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

   Risk-Based Capital
At September 30, 2017    Common Equity
Tier 1 Tier 1 Total Leverage Capital
(dollars in thousands)    Amount    Ratio Amount    Ratio Amount    Ratio Amount    Ratio
Total capital
   $ 372,817    15.30 % $ 372,817    15.30 % $ 403,287    16.55 % $ 372,817    11.07 %
Minimum for capital adequacy purposes
   109,671    4.50 146,227    6.00 194,970    8.00 134,716    4.00










Excess
   $ 263,146    10.80 % $ 226,590    9.30 % $ 208,317    8.55 % $ 238,101    7.07 %

As of September 30, 2017, the Community Bank and the Commercial 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%; a minimum tier 1 risk-based capital ratio of 8.00%; a minimum total risk-based capital ratio of 10.00%; and a minimum leverage capital ratio of 5.00%.

~~Earnings Summary for the Three Months Ended September 30, 2017~~

Net income available to common shareholders (“net income”) totaled $102.3 million in the current third quarter, equivalent to $0.21 per diluted common share. In the trailing and year-earlier quarters, net income totaled $107.0 million and $125.3 million, and was equivalent to $0.22 and $0.26 per diluted common share, respectively. The sequential and year-over-year declines in net income were primarily due to a decrease in net interest income, as further discussed below.

~~Net Interest Income~~

~~Net interest income is our primary source of income. Its level is a function~~ remaining maturity analysis 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 short-term borrowed funds is largely based on short-term rates of interest, the level of which is partially impacted by the actions of the FOMC. The FOMC reduces, maintains, or increases the target federal funds rate (the rate at which banks borrow funds overnight from one another) as it deems necessary. Since the fourth quarter of 2008, when the target federal funds rate was lowered to a range of 0% to 0.25%, the rate has been raised three times: on December 17, 2015, to a range of 0.25% to 0.50%; on December 14, 2016, to a range of 0.50% to 0.75%; on March 15, 2017, to a range of 0.75% to 1.00%, and, most recently on June 14, 2017 to a range of 1.00% to 1.25%.

~~While the target federal funds rate generally impacts the cost of our short-term borrowings and deposits, the yields on ourheld-for-investment~~ loans and other interest-earning assets are typically impacted by intermediate-term market interest rates. In the third quarter of 2017, the average five-year CMT was 1.81%, unchanged from the trailing quarter and as compared to 1.13% for the year-earlier quarter. The average~~ten-year~~ ~~CMT was 2.24% in the current third quarter, as compared to 2.26% and 1.56%, respectively, in the prior periods.~~

~~Net interest income is also influenced by the level of prepayment income primarily generated in connection with the prepayment of our multi-family and CRE loans,~~undiscounted lease receivables, as well as ~~securities. Since prepayment income is recorded as interest income, an increase or decrease in its level will also be reflected~~the reconciliation to the total amount of receivables recognized in the ~~average yields (as applicable) on our loans, securities,~~Consolidated Statements of Condition:


(in millions)	June 30, 2023
2023	$	396
2024	526
2025	677
2026	574
2027	473
Thereafter	637
Total lease payments	$	3,283
Plus: deferred origination costs	18
Less: unearned income	(219)
Less: purchase accounting adjustment	$	(90)
Total lease finance receivables, net	$	2,992

Lessee Arrangements

The Company has operating leases for corporate offices, branch locations, and ~~interest-earning assets, and therefore in our interest rate spread and net interest margin.~~

~~It should be noted that the level~~certain equipment. These leases generally have terms of ~~prepayment income on loans recorded in any given period depends~~20 years or less, determined based on the ~~volume~~contractual maturity of ~~loans~~the lease, and include periods covered by options to extend or terminate the lease when the Company is reasonably certain 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~~it will exercise those options. For the ~~perceived or actual direction~~vast majority 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 isthe Company’s leases, we are not ~~unusual for borrowers~~reasonably certain we will exercise our options 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 Company recorded net interest income of $276.3 million in the current second quarter, an $11.4 million decrease from the trailing-quarter level and a $42.1 million decrease from the year-earlier amount.

~~Linked-Quarter Comparison~~

~~The sequential decline in net interest income was attributable~~renew to ~~a variety of factors, including an increase in our cost of funds, as short-term interest rates rose in the quarter. Additionally, the sale of our covered loan portfolio, which closed at~~ the end of ~~July~~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 ~~resulted~~operating lease liabilities in ~~excess liquidity being invested~~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 ~~lower yields, negatively impacted net interest income. This was partially offset by modest loan growth along with stable loan yields. Details~~commencement date based on the present value of lease payments over the lease term. As the vast majority of the ~~linked-quarter decline~~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 ~~net interest income follow:~~

~~Interest income~~determining the present value of ~~$393.7 million~~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.

Variable costs such as the proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance are not included in the ~~current third quarter declined $5.4 million from the amount reported~~lease liability and are recognized in the ~~trailing quarter. Interest income from loans declined $10.3 million~~period in which they are incurred.

The components of lease expense were as follows:


(in millions)	For the three months ended June 30, 2023		For the six months ended June 30, 2023		For the three months ended June 30, 2022		For the six months ended June 30, 2022
Operating lease cost	$	25	$	35	$	7	$	14
Sublease income	—		—		—		—
Total lease cost	$	25	$	35	$	7	$	14

Supplemental cash flow information related to ~~$351.0 million, while interest income from securities and interest-earning cash and cash equivalents rose $4.9 million~~the leases for the following periods:


(in millions)	For the three months ended June 30, 2023		For the six months ended June 30, 2023		For the three months ended June 30, 2022		For the six months ended June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	20	$	30	$	7	$	14

Supplemental balance sheet information related to ~~$42.7 million.~~the leases for the following periods:

~~The decrease~~


(in millions, except lease term and discount rate)	June 30, 2023			December 31, 2022
Operating Leases:
Operating lease right-of-use assets (1)	$	529		$	119
Operating lease liabilities (2)	$	536		$	122
Weighted average remaining lease term	9 years			6 years
Weighted average discount rate %	4.38		%	3.85		%

(1)Included in ~~interest income from loans was driven by a $1.3 billion decrease~~Other assets in the ~~average balance to $37.8 billion and aone-basis~~ ~~point increase~~Consolidated Statements of Condition.

(2)Included in Other liabilities in the ~~average yield to 3.71%. The decrease in the average balance was largely due to the sale~~Consolidated Statements of our covered loan portfolio early in the quarter. The increase in the average yield was a function of the increase in prepayment income. Prepayment income on loans contributed 15 basis points to the average yield on loans, an increase of one basis point.Condition.


(in millions)	June 30, 2023
Maturities of lease liabilities:
2023	$	26
2024	79
2025	73
2026	63
2027	59
Thereafter	416
Total lease payments	$	716
Less: imputed interest	$	(180)
Total present value of lease liabilities	$	536

Note 9 - Mortgage Servicing Rights

The ~~increase~~Company has investments in the interest income from securities and interest-earning cash and cash equivalents was due to increases in both the average balances and in the average yields. The average balance rose $1.8 billion to $6.1 billion due to the aforementioned investment of the cash proceedsMSRs that result from the sale of ~~our covered loan portfolio. Prepayment income on securities contributed 28 basis points~~loans to the ~~average yield on securities, an increase of 11 basis points.~~

Assecondary 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 ~~the average balance~~ of ~~interest-earning~~higher than anticipated prepayments due to loan refinancing prompted, in part, by declining interest rates or government intervention. Conversely, these assets ~~rose $514.9 million sequentially, to $43.9 billion and the average yield on such assets declined nine basis points to 3.59%.~~

~~Interest expense rose $6.0 million sequentially to $117.3 million, as a $7.1 million~~generally increase in value in a rising interest ~~expense on total interest-bearing deposits combined with a $1.1 million decrease~~rate environment to the extent that prepayments are slower than anticipated. The Company utilizes derivatives as economic hedges to offset changes in the ~~interest expense on borrowed funds.~~

~~Specifically, interest expense on interest-bearing deposits rose to $62.4 million, due to a $153.2 million decline in~~fair value of the average balance to $26.2 billion combined with a nine-basis point increase in the average cost of such funds to 0.94%. However, interest expense on borrowed funds dropped to $55.0 million as a $798.3 million decline in the average balance to $12.4 billion was offset by a~~six-basis~~ ~~point increase in the average cost to 1.76%.~~

~~As a result, the average balance of interest-bearing liabilities fell $645.2 million sequentially, to $38.6 billion and the average cost of funds rose seven basis points to 1.21%.~~

~~Year-Over-Year Comparison~~

~~The following factors contributed to the year-over-year reduction in net interest income:~~

Interest income fell $22.4 million year-over-year as a $5.5 million decline in the interest income from securities and interest-earning cash and cash equivalents was coupled with a $16.9 million decline in the interest income from loans.

The decline in the interest income from loans was largely due to a $1.5 billion decline in the average balance and a three-basis point decline in the average yield. In addition, prepayment income contributed $13.4 million to the interest income from loans and 14 basis points to the average yield on such assets in the year-earlier quarter.

~~The year-over-year reduction in interest income from securities was driven by a $829.0 million increase in the average balance, offset by a53-basis~~ ~~point drop in the average yield.~~

~~As a result, the average balance of interest-earning assets rose $90.8 million~~MSRs resulting from the ~~year-earlier level and the average yield fell 21 basis points.~~

~~Interest expense rose $19.7 million year-over-year as the interest expense on deposits rose $18.6 million and the interest expense on borrowed funds rose $1.1 million.~~

~~The year-over-year rise~~actual or anticipated changes in ~~interest expense~~prepayments stemming from ~~deposits was due to~~changing interest rate environments. There is also a~~28-basis~~ ~~point rise in the average cost~~ risk of ~~such funds~~valuation decline due to higher ~~short-term interest~~than expected default rates, ~~offset by an $18.0 million decrease~~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 June 30, 2023		Six Months Ended June 30, 2023
Balance at beginning of period	$	1,034	$	1,033
Additions from loans sold with servicing retained	43		81
Reductions from sales	(51)		(51)
Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes, and other (1)	(16)		(34)
Changes in estimates of fair value due to interest rate risk (1) (2)	21		2
Fair value of MSRs at end of period	$	1,031	$	1,031

(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 ~~balance.~~ of certain significant assumptions used in valuing these assets:


	June 30, 2023
				Fair Value
(dollars in millions)	Actual			10% adverse change		20% adverse change
Option adjusted spread	5.6		%	$	1,011	$	993
Constant prepayment rate	8.2		%	997		966
Weighted average cost to service per loan	$	69		$	1,021	$	1,011


	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 ~~increase in the interest income from borrowed funds was driven by a21-basis~~ ~~point rise in the average cost of such funding~~sensitivity calculations above are hypothetical and ~~mitigated by a $1.4 billion decline in the average balance from the year-earlier amount.~~

~~As a result, the average balance of interest-bearing liabilities fell $1.4 million and the average cost of funds rose 24 basis points year-over-year.~~

~~Net Interest Margin~~

The direction of the Company’s net interest margin was consistent with that of its net interest income, and generally was driven by the same factors as those described above. At 2.53%, the margin was 12 basis points narrower than the trailing-quarter measure and 38 basis points narrower than the margin recorded in the third quarter of last year. The respective reductions were due, in part, to a decline in prepayment income from the levels recorded in the trailing and year-earlier quarters, as reflected in the following table:

   For the Three Months Ended
(dollars in thousands)    September 30,
2017 June 30,
2017 September 30,
2016
Total interest income
   $ 393,675 $ 399,075 $ 416,096
Prepayment income:

From loans
   $ 14,076 $ 13,285 $ 13,422
From securities
   2,488 1,708 8,947


Total prepayment income
   $ 16,564 $ 14,993 $ 22,369


Net interest margin (including the contribution of prepayment income)
   2.53 % 2.65 % 2.91 %
Less:

Contribution of prepayment income to net interest margin:

From loans
   13 bps 12 bps 12 bps
From securities
   3 2 8


Total contribution of prepayment income to net interest margin
   16 bps 14 bps 20 bps


Adjusted net interest margin (i.e., excluding the contribution of prepayment income)⁽¹⁾
   2.37 % 2.51 % 2.71 %

~~(1)~~

~~“Adjusted net interest margin” is anon-GAAP~~ ~~financial measure, as more fully discussed below.~~

While our net interest margin, including the contribution of prepayment income, is recorded in accordance with GAAP, adjusted net interest margin, which excludes the contribution of prepayment income, is not. Nevertheless, management uses this~~non-GAAP~~ ~~measure in its analysis of our performance, and believes that thisnon-GAAP~~ ~~measure should be disclosed in this report and other investor communications for the following reasons:~~

Adjusted net interest margin gives investors a better understanding of the effect of prepayment income on our net interest margin. Prepayment income in any given period depends on the volume of loans that refinance or prepay, or securities that prepay, during that period. Such activity is largely dependent on external factors such as current market conditions, including real estate values, and the perceived or actual direction of market interest rates.

~~Adjusted net interest margin is among the measures considered by current and prospective investors, both independent of, and in comparison with, our peers.~~

~~Adjusted net interest margin~~ should not be considered to be predictive of future performance. Changes in ~~isolation~~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.

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 June 30, 2023		Six months ended June 30, 2023
Net return on mortgage servicing rights
Servicing fees, ancillary income and late fees (1)	$	54	$	110
Decrease in MSR fair value due to pay-offs, pay-downs, run-off, model changes and other	(16)		(34)
Changes in fair value due to interest rate risk	21		2
Gain on MSR derivatives (2)	(35)		(32)
Net transaction costs	2		1
Total return (loss) included in net return on mortgage servicing rights	$	26	$	47

(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 June 30, 2023		Six months ended June 30, 2023
Loan administration income on mortgage loans subserviced
Servicing fees, ancillary income and late fees (1)	$	38	$	74
Charges on subserviced custodial balances (2)	(40)		(69)
Other servicing charges	(1)		(2)
Total income on mortgage loans subserviced, included in loan administration	$	(3)	$	3

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

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

Note 10 - Variable Interest Entities

We have no consolidated VIEs as of June 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 ~~calculated~~limited to our five percent retained interest in ~~accordance~~the investment securities that had a fair value of $183 million as of June 30, 2023 as well as the standard representations and warranties made in conjunction with ~~GAAP. Moreover,~~ the ~~manner~~loan transfers.

Note 11 - Borrowed Funds

The following table summarizes the Company’s borrowed funds:


(in millions)	June 30, 2023		December 31, 2022
Wholesale borrowings:
FHLB advances	$	15,400	$	20,325

Total wholesale borrowings	$	15,400	$	20,325
Junior subordinated debentures	577		575
Subordinated notes	435		432
Total borrowed funds	$	16,412	$	21,332

Accrued interest on borrowed funds is included in ~~which we calculate thisnon-GAAP~~ ~~measure may differ~~“Other liabilities” in the Consolidated Statements of Condition and amounted to $40 million and $37 million, respectively, at June 30, 2023 and December 31, 2022.

Junior Subordinated Debentures

At June 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 June 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)	0.06	$	147	$	141	Nov. 4, 2002	Nov. 1, 2051
New York Community Capital Trust X (2)	7.15	124		120		Dec. 14, 2006	Dec. 15, 2036
PennFed Capital Trust III (2)	8.8	31		30		June 2, 2003	June 15, 2033
New York Community Capital Trust XI (2)	7.19	58		58		April 16, 2007	June 30, 2037
Flagstar Statutory Trust II (2)	8.79	26		25		Dec. 26, 2002	Dec. 26, 2032
Flagstar Statutory Trust III (2)	8.51	26		25		Feb. 19, 2003	April 7, 2033
Flagstar Statutory Trust IV (2)	8.41	26		25		Mar. 19, 2003	Mar 19, 2033
Flagstar Statutory Trust V (2)	7.26	26		25		Dec 29, 2004	Jan. 7, 2035
Flagstar Statutory Trust VI (2)	7.26	26		25		Mar. 30, 2005	April 7, 2035
Flagstar Statutory Trust VII (2)	7.30	52		50		Mar. 29, 2005	June 15, 2035
Flagstar Statutory Trust VIII (2)	6.76	26		25		Sept. 22, 2005	Oct. 7, 2035
Flagstar Statutory Trust IX (2)	7.00	26		25		June 28, 2007	Sept. 15, 2037
Flagstar Statutory Trust X (2)	8.05	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 $32 million.

Subordinated Notes

At June 30, 2023 and December 31, 2022, the Company had a total of $435 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 ~~that~~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 point payable quarterly.

(2)From and including the date of ~~other companies reporting~~original issuance, the Notes will bear interest at a~~non-GAAP~~ ~~measure with~~ fixed rate of 4.125 percent through October 31, 2025, and a ~~similar name.~~

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 ~~information regarding our average balance sheet~~disclosures for the ~~quarters indicated, including the average yields on our interest-earning assets~~Company’s pension 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 balancespost-retirement plans for the ~~quarters~~periods indicated:


	For the three months ended June 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	$	2	$	—	$	1	$	—
Expected return on plan assets	(3)		—		(4)		—
Amortization of net actuarial loss	1		—		1		—
Net periodic (credit) expense	$	—	$	—	$	(2)	$	—


	For the Six Months Ended June 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	$	3	$	—	$	2	$	—
Expected return on plan assets	(7)		—		(8)		—
Amortization of net actuarial loss	3		—		1		—
Net periodic (credit) expense	$	(1)	$	—	$	(5)	$	—

(1)Amounts are ~~derived from average~~included in G&A expense on the Consolidated Statements of Income and Comprehensive Income.

(2)Post-retirement benefits balances ~~that are calculated daily.~~ round to zero.

The ~~average yields and costs include fees, as well as~~Company expects to contribute $1 million to its post-retirement plan to pay premiums and ~~discounts (includingmark-to-market~~ ~~adjustments~~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 June 30, 2023, the Company had a total of 19,213,596 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 ~~acquisitions), that are considered adjustments to such~~the legacy Flagstar Bancorp, Inc. 2016 Stock Plan. The Company granted 6,388,840 shares of restricted stock, with an average ~~yields and costs.~~

~~Net Interest Income Analysis~~

   For the Three Months Ended
   September 30, 2017 June 30, 2017 September 30, 2016
(dollars in thousands)    Average
Balance    Interest    Average
Yield/
Cost Average
Balance    Interest    Average
Yield/
Cost Average
Balance    Interest    Average
Yield/
Cost
Assets:

Interest-earning assets:

Mortgage and other loans, net⁽¹⁾
   $ 37,791,476    $ 350,990    3.71 % $ 39,113,348    $ 361,330    3.70 % $ 39,337,380    $ 367,932    3.74 %
Securities⁽²⁾⁽³⁾
   3,597,699    34,359    3.81 4,226,369    37,732    3.55 4,426,703    48,160    4.34
Interest-earning cash and cash equivalents⁽²⁾
   2,474,307    8,326    1.34 8,858    13    0.59 8,629    4    0.18














Total interest-earning assets
   43,863,482    393,675    3.59 43,348,575    399,075    3.68 43,772,712    416,096    3.80
Non-interest-earning assets
   4,662,777       5,720,589       5,386,459







Total assets
   $ 48,526,259       $ 49,069,164       $ 49,159,171







Liabilities and Stockholders’ Equity:

Interest-bearing deposits:

Interest-bearing checking and money market accounts
   $ 12,672,720    $ 27,620    0.86 % $ 12,971,440    $ 24,084    0.74 % $ 13,356,174    $ 15,866    0.47 %
Savings accounts
   5,006,499    7,109    0.56 5,260,397    7,150    0.55 5,629,135    7,439    0.53
Certificates of deposit
   8,533,404    27,649    1.29 7,827,633    24,006    1.23 7,245,325    20,501    1.13














Total interest-bearing deposits
   26,212,623    62,378    0.94 26,059,470    55,240    0.85 26,230,634    43,806    0.66
Borrowed funds
   12,397,681    54,954    1.76 13,195,987    56,066    1.70 13,802,662    53,867    1.55














Total interest-bearing liabilities
   38,610,304    117,332    1.21 39,255,457    111,306    1.14 40,033,296    97,673    0.97
Non-interest-bearing deposits
   2,766,701       2,960,164       2,832,569
Other liabilities
   383,622       203,237       212,303







Total liabilities
   41,760,627       42,418,858       43,078,168
Stockholders’ equity
   6,765,632       6,650,306       6,081,003







Total liabilities and stockholders’ equity
   $ 48,526,259       $ 49,069,164       $ 49,159,171







Net interest income/interest rate spread
      $ 276,343    2.38 %    $ 287,769    2.54 %    $ 318,423    2.83 %












Net interest margin
         2.53 %       2.65 %       2.91 %






Ratio of interest-earning assets to interest-bearing liabilities
         1.14x       1.10x       1.09x

~~(1)~~

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

~~(2)~~

~~Amounts are at amortized cost.~~

~~(3)~~

~~Includes FHLB stock.~~

~~Provision for Losses on Non-Covered Loans~~

~~The provision for losses onnon-covered~~ ~~loans is based~~fair value of $9.57 per share on the ~~methodology used by management in calculating~~date of grant, during the ~~allowance for losses~~six months ended June 30, 2023.

The shares of restricted stock that were granted during the six months ended June 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 ~~such loans. Reflecting this methodology, which is discussed in detail under “Critical Accounting Policies,” we recorded~~ a ~~$44.6 million provision fornon-covered~~ ~~loan losses in~~straight-line basis over the ~~current third quarter, as compared to $11.6~~vesting period and totaled $18 million and ~~$1.2~~$14 million infor the six months ended June 30, 2023 and 2022, including $9 million and $7 million for the three months ended June 30, ~~2017~~2023 and ~~September~~June 30, ~~2016.~~ 2022.

The ~~elevated loan loss provision~~following table provides a summary of activity with regard to restricted stock awards:


	For the Six Months Ended June 30, 2023
	Number of Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of year	9,576,602	$	10.92
Granted	6,388,840	9.57
Vested	(2,885,476)	11.08
Forfeited	(592,118)	10.72
Unvested at end of period	12,487,848	$	10.20

As of June 30, 2023, unrecognized compensation cost relating to unvested restricted stock totaled $110 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 six months ended June 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	0	—
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 $2 million for the ~~current third quarter was~~three and six months ended June 30, 2023, and $1 million for the three and six months June 30, 2022. As of June 30, 2023, unrecognized compensation cost relating to unvested restricted stock totaled $7 million. This amount will be recognized over a remaining weighted average period of 2.0 years. As of June 30, 2023, 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 $10 million and $3 million for the six months ended June 30, 2023 and June 30, 2022, including $4 million and $1 million for the three months ended June 30, 2023 and June 30, 2022.

Note 14 - Derivative and Hedging Activities

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, 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.

Derivative financial instruments are recorded at fair value in other assets and other liabilities on the Consolidated Statements of 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 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 the counterparties to our various derivative financial instruments. A majority of our 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 the collateral provisions of the derivative agreements.

Derivatives not designated as hedging instruments. The Company maintains a derivative portfolio of interest rate swaps, foreign currency swaps, futures and forward commitments used to manage exposure to changes in interest 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. 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 recognized in earnings. At June 30, 2023, the Company had $69 million (net-of-tax) of unrealized gains on derivatives classified as cash flow hedges recorded in accumulated other comprehensive loss. The Company had $52 million (net-of-tax) of unrealized gains on derivatives classified as cash flow hedges recorded in accumulated other comprehensive loss at December 31, 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 June 30, 2023.

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 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 has entered into interest rate swaps with a notional amounts of $2.0 billion to hedge certain real estate loans using the portfolio layer method. For the three months ended June 30, 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 $6 million.

The fair value basis adjustment on our ~~taxi medallion-related loans. In~~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 June 30, 2023, of which unrealized gains of $34 million were due to the ~~third quarter~~fair value hedge relationship. We have designated $2.0 billion of ~~2017,~~this portfolio of loans in a hedging relationship as of June 30, 2023.

The following tables set forth information regarding the Company’s derivative financial instruments:


	June 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	$	1	$	—
Total	$	5,500	$	1	$	—
Derivatives designated as fair value hedging instruments:
Interest rate swaps on multi-family loans held for investment	$	2,000	$	—	$	—
Derivatives not designated as hedging instruments:
Assets
Futures	$	2,530	$	3	$	—
Mortgage-backed securities forwards	2,372		21		—
Rate lock commitments	1,954		10		—
Interest rate swaps and swaptions	7,414		136		—
Foreign currency swaps	19,825		—		—
Total	$	34,095	$	170	$	—
Liabilities
Mortgage-backed securities forwards	$	727	$	—	$	7
Rate lock commitments	543		—		10
Interest rate swaps and swaptions	1,442		—		61
Foreign currency swaps	$	18,213	$	—	$	—
Total derivatives not designated as hedging instruments	$	20,925	$	—	$	78


	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

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


	June 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	$	1	$	—	$	1	$	—	$	92
Interest rate swaps on multi-family loans held for investment(1)	$	—	$	—	$	—	$	—	$	34
Derivatives not designated as hedging instruments:
Assets
Mortgage-backed securities forwards	$	21	$	—	$	21	$	—	$	(4)
Interest rate swaptions	136		—		136		—		(15)
Futures	3		—		3		—		—
Total derivative assets	$	160	$	—	$	160	$	—	$	(19)
Liabilities
Futures	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities forwards	7		—		7		—		6
Interest rate swaps (1)	61		—		61		—		26
Total derivative liabilities	$	68	$	—	$	68	$	—	$	32

(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.

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

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 income.

Interest rate swaps with notional amounts totaling $5.5 billion and $2.3 billion as of June 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 Six Months Ended June 30, 2023		For the Year Ended December 31, 2022		For the Six Months Ended June 30, 2022
Amount of gain (loss) recognized in AOCL	$	34	$	88	$	25
Amount of reclassified from AOCL to interest expense	$	(12)	$	(4)	$	7

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 expense reduction of $120 million is expected to be reclassified out of AOCL.

The following table presents the net gain (loss) recognized in income on derivative instruments, net of the impact of offsetting positions:


(dollars in millions)		Three months ended June 30, 2023		Six months ended June 30, 2023
Derivatives not designated as hedging instruments	Location of Gain (Loss)
Futures	Net return on mortgage servicing rights	$	5	$	3
Interest rate swaps and swaptions	Net return on mortgage servicing rights	(29)		(22)
Mortgage-backed securities forwards	Net return on mortgage servicing rights	(11)		(13)
Rate lock commitments and US Treasury futures	Net gain on loan sales	18		38

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

Total derivative (loss) gain		$	(16)	$	7

(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 reporting unit level, at least once a year. There was no change in goodwill during the six months ended June 30, 2023.

As a result of the Signature Transaction, the Company recorded ~~net charge-offs of $40.4~~$462 million of core deposit intangible and other intangible assets that are amortizable.

At June 30, 2023, intangible assets consisted of the following:


	June 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	$	(50)	$	650	$	250	$	(4)	$	246
Other intangible assets	56		(9)		47		42		(1)		41
Total other intangible assets	$	756	$	(59)	$	697	$	292	$	(5)	$	287

The estimated amortization expense of CDI and other intangible assets for the next five years is as follows:


(in millions)	Amortization Expense
2023	$	49
2024	108
2025	88
2026	79
2027	71
Total	$	395

Note 16 - Fair Value Measures

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 ~~$40.6 million was~~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 June 30, 2023 and December 31, 2022, and that were included in the Company’s Consolidated Statements of Condition at those dates:


	June 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	$	—		$	1,204	$	—	$	—	$	1,204
GSE CMOs	—			3,573		—		—		3,573
Private Label CMOs	—			183		—		—		183
Total mortgage-related debt securities	$	—		$	4,960	$	—	$	—	$	4,960
Other Debt Securities Available for Sale:
U. S. Treasury obligations	$	—		$	—	$	—	$	—	$	—
GSE debentures	—			1,644		—		—		1,644
Asset-backed securities	—			323		—		—		323
Municipal bonds	—			7		—		—		7
Corporate bonds	—			753		—		—		753
Foreign notes	—			8		—		—		8
Capital trust notes	—			87		—		—		87
Total other debt securities	$	—		$	2,822	$	—	$	—	$	2,822
Total debt securities available for sale	$	—		$	7,782	$	—	$	—	$	7,782
Equity securities:
Mutual funds and common stock	—			14		—		—		14
Total equity securities	—			14		—		—		14
Total securities	$	—		$	7,796	$	—	$	—	$	7,796
Loans held-for-sale
Residential first mortgage loans	$	—		$	1,406	$	—	$	—	$	1,406
Acquisition, development, and construction	—			157		—		—		157
Commercial and industrial loans	—		9	9		—		—		9
Derivative assets
Interest rate swaps and swaptions	—			137		—		—		137
Futures	—			3		—		—		3
Rate lock commitments (fallout-adjusted)	—			—		10		—		10
Mortgage-backed securities forwards	—			21		—		—		21
Mortgage servicing rights	—			—		1,031		—		1,031
Total assets at fair value	$	—		$	9,529	$	1,041	$	—	$	10,570
Derivative liabilities
Mortgage-backed securities forwards	—			7		—		—		7
Interest rate swaps and swaptions	—			61		—		—		61
Rate lock commitments (fallout-adjusted)	—			—		10		—		10
Total liabilities at fair value	$	—		$	68	$	10	$	—	$	78


	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

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 ~~taxi medallion-related loans, compared~~the observability of inputs for a fair value measurement may result in a reclassification from one hierarchy level to another.

A description of the ~~year-earlier quarter during which~~methods and significant assumptions utilized in estimating the fair values of securities follows:

Periodically, the Company ~~recorded net recoveries of $412,000, of which $49,000 was related~~uses fair values supplied by independent pricing services to ~~taxi medallion-related loans.~~

~~For additional information about our provisions for and recoveries of loan losses, see~~corroborate 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 generatenon-interest~~ income through a variety of sources, including—among others—mortgage banking income; 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 and those produced through our wholly-owned subsidiary, Peter B. Cannell & Co., Inc. (“PBC”), an investment advisory firm.

~~Non-interest~~ ~~income totaled $108.9 million in the current third quarter, up $58.5 million~~fair values derived from the trailing-quarter level and $68.3 million from the year-earlier amount. The linked-quarter improvement was primarily driven by an $82.0 million gain on sale of covered loans and mortgage banking operations. This was partially offset by a $6.7 million decline in mortgage banking income. The year-over-year increase reflects contributions from the same factors which impacted the linked-quarter results.

~~The following table summarizes our mortgage banking income for the periods indicated:~~

   For the Three Months Ended
   September 30,    June 30,    September 30,
(in thousands)    2017    2017    2016
Mortgage Banking Income:

Income from originations
   $ 2,109    $ 4,394    $ 10,884
Servicing (loss) income
   (623 )    3,802    2,041






Total mortgage banking income
   $ 1,486    $ 8,196    $ 12,925

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

~~Non-Interest~~ ~~Income Analysis~~

   For the Three Months Ended
   September 30,    June 30,    September 30,
(in thousands)    2017    2017    2016
Mortgage banking income
   $ 1,486    $ 8,196    $ 12,925
Fee income
   7,972    8,151    8,640
BOLI income
   8,314    6,519    7,029
Net (loss) gain on sales of loans
   (76 )    1,397    3,465
Net gain on sales of securities
   —      26,936    237
FDIC indemnification expense
   —      (14,325 )    (1,031 )
Gain on sale of covered loans and mortgage banking operations
   82,026    —      —
Other income:

Peter B. Cannell & Co., Inc.
   5,502    5,476    5,535
Third-party investment product sales
   2,888    3,205    2,467
Other
   816    4,882    1,328






Total other income
   9,206    13,563    9,330






Totalnon-interest income
   $ 108,928    $ 50,437    $ 40,595

~~Non-Interest~~ ~~Expense~~

~~Non-interest~~ expense has two primary components: operating expenses, which consist of compensation and benefits expense, occupancy and equipment expense, and G&A expense, and the amortization of the CDI stemming from certain merger transactions.

~~Non-interest~~ expense totaled $162.2 million in the current third quarter, a $1.5 million decrease from the trailing-quarter level and a $549,000 increase from the year-earlier amount. Merger-related expenses added $2.2 million to~~non-interest~~ ~~expense in the year-earlier quarter; there were no comparable expenses in the current quarter.~~

~~The majority of the Company’snon-interest~~ expense consists of operating expenses, which totaled $162.2 million in the current third quarter, as compared to $163.7 million and $158.9 million, respectively, in the trailing and year-earlier periods. The linked-quarter decrease was driven by a $1.3 million decline in compensation and benefits expense to $91.6 million and a $2.0 million decrease in G&A expense to $45.5 million, partially offset by a $1.7 million increase in occupancy and equipment expense to $25.1 million.

The year-over-year increase in operating expenses was largely due to a $5.5 million increase in compensation and benefits expense coupled with a $3.0 million decrease in G&A expense. The year-over-year rise in compensation and benefits expense was generally attributable to the addition of senior level staff in various departments, while the year-over-year decline in G&A expense was largely attributable to lower FDIC insurance premiums.

~~Income Tax Expense~~

~~Income tax expense totaled $68.0 million in the current third quarter, $2.5 million higher than the trailing-quarter level and $4.1 million lower than the year-earlier third-quarter amount.~~

~~Whilepre-tax~~ ~~income declined $2.3 million sequentially, to $178.5 million, the effective tax rate increased to 38.10% in the current third quarter from 36.22% in the trailing three-month period.~~

~~In the third quarter of 2016,pre-tax~~ ~~income was $18.9 million higher than the current third-quarter level, and the effective tax rate was 36.52%.~~

~~Earnings Summary for the Nine Months Ended September 30, 2017~~

In the first nine months of 2017, we generated net income available to common shareholders of $313.3 million or $0.64 per diluted common share as compared to net income available to common shareholders of $381.7 million, or $0.78 per diluted common share, in the first nine months of 2016.

~~Merger-related expenses totaled $4.7 million in the year-earlier nine months; there were no merger-related expenses in the current nine-month period.~~

~~Net Interest Income~~

Net interest income fell $112.8 million year-over-year to $859.0 million in the nine months ended September 30, 2017. The decrease was the net effect of a $67.7 million decrease in interest income to $1.2 billion and a $45.2 million increase in interest expense to $332.8 million. During this time, our net interest margin fell 32 basis points to 2.63%.

~~The following factors contributed to the year-over-year decrease in net interest income and margin:~~

~~Prepayment penalty income contributed $43.7 million to net interest income in the first nine months of 2017, a $28.7 million decrease from the amount contributed in the first nine months of 2016.~~pricing models. In addition, the ~~current nine-month amount contributed 13 basis points~~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 ~~our net~~be unusual or unexpected.

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 June 30, 2023
Assets
Mortgage servicing rights (1)	$	1,034	$	5	$	43	$	(51)	—		—		$	1,031
Rate lock commitments (net) (1)(2)	8		(17)		25						(16)		—
Totals	$	1,042	$	(12)	$	68	$	(51)	$	—	$	(16)	$	1,031
Six Months Ended June 30, 2023
Assets
Mortgage servicing rights (1)	$	1,033	$	(32)	$	81	$	(51)			—		$	1,031
Rate lock commitments (net) (1)(2)	(1)		(28)		60		—		—		(31)		—
Totals	$	1,032	$	(60)	$	141	$	(51)	$	—	$	(31)	$	1,031

(1)We utilized swaptions, futures, forward agency and loan sales and interest ~~margin, a nine basis-point decline from~~rate swaps to manage the ~~year-earlier contribution.~~

~~Average interest-earning assets fell $416.0 million year-over-year to $43.5 billion,~~risk associated with mortgage servicing rights and rate lock commitments. Gains and losses for individual lines do not reflect the ~~net~~ effect of our risk management activities related to such Level 3 instruments.

(2)Rate lock commitments are reported on a ~~$226.0 million decrease~~fallout-adjusted basis. Transfers out of Level 3 represent the settlement value of the commitments that are transferred to LHFS, which are classified as Level 2 assets.

The following tables present the quantitative information about recurring Level 3 fair value financial instruments and the fair value measurements as of June 30, 2023:

Fair Value

Valuation Technique

Unobservable Input (1)

Range (Weighted Average)

(dollars in millions)

Assets

Option adjusted spread

5.3% - 21.5% (5.6)%

Mortgage servicing rights

1,031

Discounted cash flows

Constant prepayment rate

0% - 9.8% (8.2)%

Weighted average cost to service per loan

$65 - $90 $(69)

Rate lock commitments (net)

—

Consensus pricing

Origination pull-through rate

80.20%

(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 June 30, 2023 and December 31, 2022, and that were included in ~~average~~the Company’s Consolidated Statements of Condition at those dates:


	Fair Value Measurements at June 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
Other assets(1)	$	—	$	—	$	45	$	45
Total	$	—	$	—	$	45	$	45

(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 infrequency of the observable prices and/or the restrictions on the shares.


	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

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

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 ~~$38.7 billion~~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 ~~a $190.0 million reduction in average securities~~fair value measurement levels of financial instruments that were not carried at fair value on the Company’s Consolidated Statements of Condition at June 30, 2023 and ~~interest-earning~~December 31, 2022:


	June 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	$	15,806	$	15,806	$	15,806
FHLB and FRB stock (1)	1,136		1,136		—			1,136
Loans and leases held for investment, net	82,684		79,144		—						79,144
Financial Liabilities:
Deposits	$	88,497	$	88,245	$	70,309	(2)	$	17,936	(3)
Borrowed funds	16,412		16,161					16,161

(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			0
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 ~~$4.9 billion, partly offset~~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

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~~17-basis~~ ~~point decline~~ discounted cash flow technique was not considered reliable, the Company used a quoted market price for each individual loan.

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 ~~yield on interest-earning assets~~life (in years) is used to ~~3.65%~~determine the change in fair value of MSRs. For June 30, 2023, the weighted average life (in years) for the entire MSR portfolio was 6.96.

Rate lock commitments

The significant unobservable input used in the ~~first nine months~~fair value measurement of ~~this year. While~~ the ~~average yield~~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 ~~loans fell~~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 ~~modest eight basis points year-over-year~~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 ~~3.69%,~~ the ~~average yield~~carrying amounts payable on ~~securities declined 50 basis points to 3.72%.~~

~~Average interest-bearing liabilities declined $1.1 billion year-over-year to $39.1 billion, reflecting~~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 ~~$1.1 billion decrease in average borrowed funds to $13.0 billion and a $20.4 million decrease in average interest-bearing deposits to $26.1 billion. During this time,~~portion of the ~~average cost of funds rose 19 basis points to 1.14%, as the average cost~~Company’s deposit base.

Borrowed Funds

The estimated fair value of borrowed funds ~~rose 18 basis points~~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 ~~1.71%,~~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 ~~average cost~~creditworthiness of ~~interest-bearing deposits increased 21 basis points~~the potential borrowers. The estimated fair values of such off-balance sheet financial instruments were insignificant at June 30, 2023 and December 31, 2022.

Fair Value Option

We elected the fair value option for certain items as discussed throughout the Notes to ~~0.85%.~~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 ~~summarizes~~reflects the ~~contribution~~change in fair value included in earnings of ~~prepayment income from loans~~financial instruments for which the fair value option has been elected:


	For the Three Months ended June 30,		For the Six Months Ended June 30,
(dollars in millions)	2023		2023
Assets
Loans held-for-sale	$	—	$	—
Net gain on loan sales	$	29	$	57

The following table reflects the difference between the aggregate fair value and ~~securities to~~aggregate remaining contractual principal balance outstanding for assets and liabilities for which the fair value option has been elected:


	June 30, 2023
(dollars in millions)	Unpaid Principal Balance		Fair Value		Fair Value Over / (Under) UPB
Assets:
Nonaccrual loans:
Loans held-for-sale	$	1	$	1	$	—
Loans held-for-investment	—		—		—
Total non-accrual loans	$	1	$	1	$	—
Other performing loans:
Loans held-for-sale	$	1,556	$	1,571	$	15
Total other performing loans	$	1,556	$	1,571	$	15
Total loans:
Loans held-for-sale	$	1,557	$	1,572	$	15
Total loans	$	1,557	$	1,572	$	15


	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 ~~interest income and net interest margin~~management of market risk is included in ~~the nine months ended September 30, 2017 and 2016:~~

   For the Nine Months
Ended September 30,
(dollars in thousands)    2017 2016
Total interest income
   $ 1,191,869 $ 1,259,521
Prepayment income:

From loans
   $ 36,926 $ 42,648
From securities
   6,744 29,695


Total prepayment income
   $ 43,670 $ 72,343


Net interest margin (including the contribution of prepayment income)
   2.63 % 2.95 %
Less:

Contribution of prepayment income to net interest margin:

From loans
   11 bps 13 bps
From securities
   2 9


Total contribution of prepayment income to net interest margin
   13 bps 22 bps


Adjusted net interest margin (i.e., excluding the contribution of prepayment income)⁽¹⁾
   2.50 % 2.73 %

~~(1) “Adjusted net interest margin” is anon-GAAP~~ ~~financial measure, as more fully discussed below.~~

While our net interest margin, including the contribution of prepayment income, is recorded in accordance with GAAP, adjusted net interest margin, which excludes the contribution of prepayment income, is not. Nevertheless, management uses this~~non-GAAP~~ ~~measure in its analysis of our performance, and believes that thisnon-GAAP~~ ~~measure should be disclosed~~"Market Risk" in this report in "Management’s Discussion and ~~other investor communications for the following reasons:~~

~~Adjusted net interest margin is among the measures considered by current and prospective investors, both independent of, and in comparison with, our peers.~~

~~Adjusted net interest margin should not be considered in isolation or as a substitute for net interest margin,~~Analysis of Financial Condition and Results of Operations" which is ~~calculated in accordance with GAAP. Moreover, the manner in which we calculate thisnon-GAAP~~ ~~measure may differ from that of other companies reporting anon-GAAP~~ ~~measure with a similar name.~~

The following table sets forth certain information regarding our average balance sheet for the nine-month periods indicated, including the average yields on our interest-earning assets and the average costs of our interest-bearing liabilities. Average yields are calculatedincorporated herein 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 nine-month 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.~~

~~Net Interest Income Analysis~~

   For the Nine Months Ended September 30,
   2017 2016
         Average       Average
   Average       Yield/ Average       Yield/
(dollars in thousands)    Balance    Interest    Cost Balance    Interest    Cost
Assets:

Interest-earning assets:

Mortgage and other loans, net⁽¹⁾
   $ 38,652,113    $ 1,070,722    3.69 % $ 38,878,111    $ 1,099,137    3.77 %
Securities⁽²⁾⁽³⁾
   4,052,154    112,800    3.72 5,065,917    160,373    4.22
Interest-earning cash and cash equivalents⁽²⁾
   832,463    8,347    1.34 8,749    11    0.17










Total interest-earning assets
   43,536,730    1,191,869    3.65 43,952,777    1,259,521    3.82
Non-interest-earning assets
   5,239,745       5,316,971





Total assets
   $ 48,776,475       $ 49,269,748





Liabilities and Stockholders’ Equity:

Interest-bearing deposits:

Interest-bearing checking and money market accounts
   $ 12,950,570    $ 71,413    0.74 % $ 13,349,201    $ 45,771    0.46 %
Savings accounts
   5,171,645    21,069    0.54 6,112,342    25,001    0.55
Certificates of deposit
   8,019,142    73,786    1.23 6,700,188    55,129    1.10










Total interest-bearing deposits
   26,141,357    166,268    0.85 26,161,731    125,901    0.64
Borrowed funds
   12,992,691    166,572    1.71 14,083,459    161,758    1.53










Total interest-bearing liabilities
   39,134,048    332,840    1.14 40,245,190    287,659    0.95
Non-interest-bearing deposits
   2,820,923       2,817,043
Other liabilities
   269,132       179,471





Total liabilities
   42,224,103       43,241,704
Stockholders’ equity
   6,552,372       6,028,044





Total liabilities and stockholders’ equity
   $ 48,776,475       $ 49,269,748





Net interest income/interest rate spread
      $ 859,029    2.51 %    $ 971,862    2.87 %








Net interest margin
         2.63 %       2.95 %




Ratio of interest-earning assets to interest-bearing liabilities
         1.11x       1.09x

reference.

~~(1)~~	~~Amounts are net of net deferred loan origination costs/(fees)~~
Item 4.			Controls and ~~the allowances for loan losses, and include loans held for sale andnon-performing~~ ~~loans.~~Procedures

~~(2)~~

~~Amounts are at amortized cost.~~

~~(3)~~

~~Includes FHLB stock.~~

~~Provision for Loan Losses~~

~~Provision for Losses onNon-Covered~~ ~~Loans~~

~~Reflecting the methodology used by management to calculate the allowance fornon-covered~~ ~~loan losses, we recorded a provision for losses onnon-covered~~ loans of $58.0 million in the nine months ended September 30, 2017 compared to $6.7 million in the year ago nine months. The higher loan loss provision for the nine months ended September 30, 2017 was due to our taxi medallion-related loans. For the nine months ended September 30, 2017, the Company recorded net charge-offs of $57.4 million, of which $54.8 million was due to taxi medallion-related loans. For the nine months ended September 30, 2016, the Company recorded a net recovery of $882,000, with taxi medallion-related charge-offs of $265,000.

~~Provision for (Recovery of) Losses on Covered Loans~~

In the first nine months of 2017, we recovered $23.7 million from the allowance for covered loan losses, reflecting an increase in expected cash flows from certain pools of covered loans as their credit quality improved and the aforementioned sale of the covered loans. In connection with this recovery, we recorded FDIC indemnification expense of $19.0 million in~~“Non-interest~~ ~~income” during the corresponding period.~~

In the first nine months of 2016, we recovered $6.0 million from the allowance for covered loan losses, reflecting an increase in expected cash flows from certain pools of covered loans as their credit quality improved. In connection with this recovery, we recorded FDIC indemnification income of $4.8 million in~~“Non-interest~~ ~~income” during the corresponding period.~~

~~Non-Interest~~ ~~Income~~

~~In the first nine months of 2017, we recordednon-interest~~ income of $191.5 million, as compared to $113.2 million in the first nine months of 2016. The $78.3 million increase was largely driven by the $82.0 million gain on the sale of our covered loans and mortgage banking operations and a net gain on sales of securities of $28.9 million. This was partially offset by lower mortgage banking income and lower gains on sales of loans.

~~The following table summarizes our mortgage banking income for the periods indicated:~~

   For the Nine Months Ended
September 30,
(in thousands)    2017    2016
Mortgage Banking Income:

Income from originations
   $ 11,478    $ 34,691
Servicing income (loss)
   7,968    (10,671 )




Total mortgage banking income
   $ 19,446    $ 24,020

~~The following table summarizes the components ofnon-interest~~ ~~income for the respective periods:~~

~~Non-Interest~~ ~~Income Analysis~~

   For the Nine Months Ended
September 30,
(in thousands)    2017    2016
Mortgage banking income
   $ 19,446    $ 24,020
Fee income
   23,983    24,480
BOLI income
   21,170    23,208
Net gain on sales of loans
   1,055    15,118
Net gain on sales of securities
   28,915    413
FDIC indemnification expense
   (18,961 )    (4,828 )
Gain on sale of covered loans and mortgage banking operations
   82,026    —
Other income:

Peter B. Cannell & Co., Inc.
   16,512    17,100
Third-party investment product sales
   9,262    8,823
Other
   8,129    4,864




Total other income
   33,903    30,787




Totalnon-interest income
   $ 191,537    $ 113,198

~~Non-Interest~~ ~~Expense~~

~~In the first nine months of 2017, we recordednon-interest~~ expense of $492.9 million, reflecting an $11.9 million increase from the year-earlier amount. Operating expenses accounted for $492.7 million of the current nine-month total, and were up $18.4 million year-over-year.

The rise in operating expenses was largely due to an $18.8 million increase in compensation and benefits expense to $280.0 million, while most other expense categories were flat on a year-over-year basis.

~~Income Tax Expense~~

~~Income tax expense fell $28.1 million year-over-year to $193.6 million in the nine months ended September 30, 2017. During this time,pre-tax~~ ~~income declined $80.0 million to $523.3 million, while the effective tax rate rose modestly to 37.00%, as compared to 36.74%.~~

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

~~Quantitative and qualitative disclosures about the Company’s market risk were presented on pages83-87~~ ~~of our 2016 Annual Report on Form10-K,~~ filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 1, 2017. Subsequent changes 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 in this quarterly report.

~~ITEM 4. CONTROLS AND PROCEDURES~~

(a) Evaluation of Disclosure Controls and Procedures

~~Disclosure~~

As of June 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(b),~~ 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.~~

June 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)~~ ~~and15d-15(f)~~ ~~under~~ Rule 13a-15(d) of the Exchange Act) during the ~~fiscal quarter to which this report relates~~three months ended June 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

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 be immaterial to the financial condition and results of operations of the Company.

~~Item 1A. Risk Factors~~

~~In addition to the other information set forth in this report, readers should carefully consider the factors discussed in Part I,~~


Item 1A.			Risk Factors

Please see “Item 1A. Risk Factors” inof the Company’s Annual Report on Form10-K for the year ended December 31, ~~2016, as such~~2022 and the Company’s Form 10-Q for the quarter ended March 31, 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 with regard to the risk factors disclosed in “Item 1A. Risk Factors” of the Company’s ~~2016~~ Annual Report on Form~~10-K.~~

~~The risks described~~ 10-K for the year ended December 31, 2022 and the Company’s Form 10-Q for the quarter ended March 31, 2023.

Any failure, breach, or interruption in service involving our systems or those of our service providers could damage our reputation, cause losses, increase our expenses, and result in a loss of customers, an increase in regulatory scrutiny, heightened cyber risk, or expose us to civil litigation and possibly financial liability, 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 take protective measures and endeavor to modify them as circumstances warrant, the security of our computer systems, software, and networks have been , and may in the ~~2016 Annual Report~~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 ~~Form10-K~~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 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 also may be subject to litigation and financial losses that either are not ~~the only risks~~insured against or not fully covered through any insurance we maintain. We believe that the ~~Company faces. Additional risks~~impact of any previously identified cyber incidents, including those subject to ongoing investigation and ~~uncertainties~~remediation, will not ~~currently known to the Company, or that the Company currently deems to be immaterial, also may~~ have a material ~~adverse~~financial impact onand we have cyber insurance in place.

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 ~~Company’s business,~~

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, ~~condition,~~legal, or ~~results~~reputational consequence of ~~operations.~~

~~Item 2. Unregistered Sales~~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 and procedures, including an Incident Response Plan, to prevent or limit the impact of ~~Equity Securities~~systems failures and ~~Use of Proceeds~~

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 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.

During the three months ended September 30, 2017, the Company allocated $344,000 toward the repurchase of shares of its common stock pursuant to the terms of its stock-based incentive plans, as indicated in the following table:

(dollars in thousands, except per share data)
Third Quarter 2017
   Total Shares of
Common
Stock Repurchased    Average Price
Paid per
Common Share    Total
Allocation
July 1 – July 31
   19,252    $13.04    $ 251
August 1 – August 31
   2,074    12.59    26
September 1 – September 30
   5,344    12.46    67




Total shares repurchased
   26,670    12.89    $ 344

Shares Repurchased Pursuant to the Board of Directors’ Share Repurchase Authorization

On ~~April 20, 2004,~~October 23, 2018, the Board of Directors authorized the repurchase of up to ~~five~~$300 million ~~shares~~ of the Company’s common stock. ~~Of this amount, 1,659,816 shares were still available for repurchase at September 30, 2017.~~ Under said authorization, shares may be repurchased on the open market or in privately negotiated transactions. ~~No shares have been repurchased~~As of June 30, 2023, the Company has approximately $9 million remaining under this ~~authorization since August 2006.~~

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.

~~Item 3. Defaults upon Senior Securities~~

~~Not applicable.~~

~~Item 4. Mine Safety Disclosures~~

~~Not applicable.~~

~~Item 5. Other Information~~

~~Not applicable.~~

~~Item 6. Exhibits~~


(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
Second Quarter 2023
April 1 - 30, 2023	26,330	$	8.93	$	—	—
May 1 - 31, 2023	111,992	10.49		1		—
June 1 - 30, 2023	51,855	10.81		1		—
Total Second Quarter 2023	190,177	$	10.36	$	2	0


~~Exhibit No.~~Item 3.			Defaults Upon Senior Securities

The Company had no defaults on senior securities.


~~3.1~~Item 4.			Mine Safety Disclosures

None.


Item 5.			Other Information

During the fiscal quarter ended June 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.


Item 6.			Exhibits


Exhibit No.


3.1			Amended and Restated Certificate of Incorporation(1)
3.2			Certificates of Amendment of Amended and Restated Certificate of Incorporation (2)
3.3			Certificate of Amendment of Amended and Restated Certificate of Incorporation⁽²⁾(3)
~~3.3~~3.4			~~Certificate of Amendment of Amended and Restated Certificate of Incorporation~~⁽³⁾
~~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(4)
3.5			Amended and Restated Bylaws ~~of the Registrant, as of December 20, 2016~~(5)
4.1			Specimen Stock Certificate ~~(attached hereto)~~(6)
4.2			~~Form of certificate representing the Series A Preferred Stock~~⁽⁶⁾
~~4.3~~	~~Form of depositary receipt representing the Depositary Shares~~⁽⁷⁾
~~4.4~~	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.~~⁽⁸⁾therein (7)
~~4.5~~4.3			Form of certificate representing the Series A Preferred Stock (7)
4.4			Form of depositary receipt representing the Depositary Shares (7)
4.6			Registrant will furnish, upon request, copies of all instruments defining the rights of holders of long-term debt instruments of the registrant and its consolidated subsidiaries.
~~11.0~~21			~~Computation~~Subsidiaries of ~~Earnings per Common Share (See Note 2 to~~ the ~~Consolidated Financial Statements.)~~Registrant
31.1
~~31.1~~		Rule13a-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			Rule13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (attached hereto)
~~32.0~~32			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)
~~101~~101.INS			~~The following materials from~~XBRL Instance Document – the ~~Company’s Quarterly Report on Form10-Q~~ ~~for~~instance document does not appear in the ~~quarter ended September 30, 2017, formatted~~Interactive Data File because iXBRL tags are embedded within the Inline XBRL document.
101.SCH			Inline XBRL Taxonomy Extension Schema Document.
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104			Cover Page Interactive Date File (formatted in Inline XBRL ~~(Extensible Business Reporting Language): (i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Operations~~ and ~~Comprehensive Income, (iii) the Consolidated Statement of Changes~~contained in ~~Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.~~Exhibit 101)

~~(1)~~

~~Incorporated by reference to Exhibit 3.1 to the Company’s Form10-Q~~ ~~for the quarterly period ended March 31, 2001 (FileNo. 0-22278),~~ ~~as filed with the Securities and Exchange Commission on May 11, 2001.~~

~~(2)~~

~~Incorporated by reference to Exhibit 3.2 to the Company’s Form10-K~~ ~~for the year ended December 31, 2003 (FileNo. 1-31565),~~ ~~as filed with the Securities and Exchange Commission on March 15, 2004.~~

~~(3)~~

~~Incorporated by reference to Exhibit 3.1 to the Company’s Form8-K~~ ~~filed with the Securities and Exchange Commission on April 27, 2016 (FileNo. 1-31565).~~

~~(4)~~

~~Incorporated herein by reference to Exhibit 3.4 of the Company’s Registration Statement on Form8-A~~ ~~(FileNo. 333-210919),~~ ~~as filed with the Securities and Exchange Commission on March 16, 2017.~~

~~(5)~~

~~Incorporated herein by reference to Exhibit 3.4 of the Company’s Annual Report on Form10-K~~ ~~(FileNo. 001-31565)~~ ~~for the year ended December 31, 2016, as filed with the Securities and Exchange Commission on March 1, 2017.~~

~~(6)~~

~~Incorporated by reference to Exhibit A to Exhibit 4.1 of the Company’s Form8-K,~~ ~~as filed with the Securities and Exchange Commission on March 17, 2017 (FileNo. 1-31565).~~

~~(7)~~

~~Incorporated by reference to Exhibit B to Exhibit 4.1 of the Company’s Form8-K,~~ ~~as filed with the Securities and Exchange Commission on March 17, 2017 (FileNo. 1-31565).~~

~~(8)~~

~~Incorporated by reference to Exhibit 4.1 of the Company’s Form8-K,~~ ~~as filed with the Securities and Exchange Commission on March 17, 2017 (FileNo. 1-31565).~~

~~NEW YORK COMMUNITY BANCORP, INC.~~

*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 filed with the Company’s Form 10-Q for the quarterly period ended March 31, 2001 (File No. 0-22278)

(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)

(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)

(4)Incorporated herein by reference to Exhibit 3.4 of the Registrant’s Registration Statement on Form 8-A (File No. 333-210919), as filed with the Securities and Exchange Commission on March 16, 2017

(5)Incorporated by reference to Exhibit 3.2 filed with the Company’s Form 8-K filed with the Securities and Exchange Commission on December 1, 2022 (File No. 1-31565)

(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)

(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

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:

August 9, 2023

New York Community Bancorp, Inc.

(Registrant)

~~DATE: November 9, 2017~~

~~BY:~~

/s/ ~~Joseph~~Thomas R. ~~Ficalora~~

Cangemi

Thomas R. Cangemi

~~Joseph R. Ficalora~~

President and Chief Executive Officer

~~and Director~~

(Principal Executive Officer)

~~DATE: November 9, 2017~~

~~BY:~~

~~/s/ Thomas R. Cangemi~~

/s/ John J. Pinto

~~Thomas R. Cangemi~~

John J. Pinto

Senior Executive Vice President

and Chief Financial Officer

(Principal Financial Officer)


	September 30, 2017			December 31, 2016
	(unaudited)
Assets:
Cash and cash equivalents	$	3,277,427		$	557,850
Securities:
Available-for-sale ($1,162,014 pledged at September 30, 2017)		3,031,026			104,281
Held-to-maturity ($1,930,533 pledged and fair value of $3,813,959 at December 31, 2016)		—			3,712,776

Total securities		3,031,026			3,817,057

Loans held for sale		104,938			409,152
Non-covered loans held for investment, net of deferred loan fees and costs		37,506,199			37,382,722
Less: Allowance for losses onnon-covered loans		(158,918	)		(158,290	)

Non-covered loans held for investment, net		37,347,281			37,224,432
Covered loans		—			1,698,133
Less: Allowance for losses on covered loans		—			(23,701	)

Covered loans, net		—			1,674,432

Total loans, net		37,452,219			39,308,016
Federal Home Loan Bank stock, at cost		579,474			590,934
Premises and equipment, net		375,482			373,675
FDIC loss share receivable		—			243,686
Goodwill		2,436,131			2,436,131
Core deposit intangibles		—			208
Bank-owned life insurance		961,412			949,026
Other assets (includes $16,990 of other real estate owned covered by Loss Share Agreements at December 31, 2016)		344,720			649,972

Total assets	$	48,457,891		$	48,926,555

Liabilities and Stockholders’ Equity:
Deposits:
Interest-bearing checking and money market accounts	$	12,338,949		$	13,395,080
Savings accounts		4,996,578			5,280,374
Certificates of deposit		8,802,573			7,577,170
Non-interest-bearing accounts		2,755,097			2,635,279

Total deposits		28,893,197			28,887,903

Borrowed funds:
Wholesale borrowings:
Federal Home Loan Bank advances		11,554,500			11,664,500
Repurchase agreements		450,000			1,500,000
Federal funds purchased		—			150,000

Total wholesale borrowings		12,004,500			13,314,500
Junior subordinated debentures		359,102			358,879

Total borrowed funds		12,363,602			13,673,379
Other liabilities		441,438			241,282

Total liabilities		41,698,237			42,802,564

Stockholders’ equity:
Preferred stock at par $0.01 (5,000,000 shares authorized): Series A (515,000 shares issued and outstanding)		502,840			—
Common stock at par $0.01 (900,000,000 shares authorized; 489,072,101 and 487,067,889 shares issued; and 489,061,848 and 487,056,676 shares outstanding, respectively)		4,891			4,871
Paid-in capital in excess of par		6,063,813			6,047,558
Retained earnings		192,607			128,435
Treasury stock, at cost (10,253 and 11,213 shares, respectively)		(130	)		(160	)
Accumulated other comprehensive loss, net of tax:
Net unrealized gain (loss) on securities available for sale, net of tax of $34,189 and $534, respectively		47,917			(753	)
Net unrealized loss on thenon-credit portion of other-than-temporary impairment (“OTTI”) losses on securities, net of tax of $3,338 and $3,351, respectively		(5,221	)		(5,241	)
Net unrealized loss on pension and post-retirement obligations, net of tax of $31,744 and $34,355, respectively		(47,063	)		(50,719	)

Total accumulated other comprehensive loss, net of tax		(4,367	)		(56,713	)

Total stockholders’ equity		6,759,654			6,123,991

Total liabilities and stockholders’ equity	$	48,457,891		$	48,926,555


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Interest Income:
Mortgage and other loans	$	350,990		$	367,932		$	1,070,722		$	1,099,137
Securities and money market investments		42,685			48,164			121,147			160,384

Total interest income		393,675			416,096			1,191,869			1,259,521

Interest Expense:
Interest-bearing checking and money market accounts		27,620			15,866			71,413			45,771
Savings accounts		7,109			7,439			21,069			25,001
Certificates of deposit		27,649			20,501			73,786			55,129
Borrowed funds		54,954			53,867			166,572			161,758

Total interest expense		117,332			97,673			332,840			287,659

Net interest income		276,343			318,423			859,029			971,862
Provision for losses on non-covered loans		44,585			1,234			58,017			6,699
Recovery of losses on covered loans		—			(1,289	)		(23,701	)		(6,035	)

Net interest income after provision for (recovery of) loan losses		231,758			318,478			824,713			971,198

Non-Interest Income:
Mortgage banking income		1,486			12,925			19,446			24,020
Fee income		7,972			8,640			23,983			24,480
Bank-owned life insurance		8,314			7,029			21,170			23,208
Net (loss) gain on sales of loans		(76	)		3,465			1,055			15,118
Net gain on sales of securities		—			237			28,915			413
FDIC indemnification expense		—			(1,031	)		(18,961	)		(4,828	)
Gain on sale of covered loans and mortgage banking operations		82,026			—			82,026			—
Other		9,206			9,330			33,903			30,787

Total non-interest income		108,928			40,595			191,537			113,198

Non-Interest Expense:
Operating expenses:
Compensation and benefits		91,594			86,079			280,008			261,230
Occupancy and equipment		25,133			24,347			73,595			73,837
General and administrative		45,483			48,506			139,131			139,309

Total operating expenses		162,210			158,932			492,734			474,376
Amortization of core deposit intangibles		24			542			208			1,994
Merger-related expenses		—			2,211			—			4,674

Total non-interest expense		162,234			161,685			492,942			481,044

Income before income taxes		178,452			197,388			523,308			603,352
Income tax expense		67,984			72,089			193,628			221,684

Net income	$	110,468		$	125,299		$	329,680		$	381,668
Preferred stock dividends		8,207			—			16,414			—

Net income available to common shareholders	$	102,261		$	125,299		$	313,266		$	381,668

Basic earnings per common share		$0.21			$0.26			$0.64			$0.78

Diluted earnings per common share		$0.21			$0.26			$0.64			$0.78

Net income	$	110,468		$	125,299		$	329,680		$	381,668
Other comprehensive (loss) income, net of tax:
Change in net unrealized gain/loss on securities available for sale, net of tax of $3,049; $396; $35,493; and $1,186, respectively		(4,285	)		(558	)		49,748			1,684
Change in the non-credit portion of OTTI losses recognized in other comprehensive income, net of tax of $0; $12; $13; and $36, respectively		—			19			20			57
Change in pension and post-retirement obligations, net of tax of $870; $946; $2,611 and $2,837, respectively		1,219			1,336			3,656			4,007
Less: Reclassification adjustment for sales of available-for-sale securities, net of tax of $770		—			—			(1,078	)		—

Total other comprehensive (loss) income, net of tax		(3,066	)		797			52,346			5,748

Total comprehensive income, net of tax	$	107,402		$	126,096		$	382,026		$	387,416


	For the Nine Months Ended September 30, 2017
Preferred Stock (Par Value: $0.01):
Balance at beginning of year	$	—
Issuance of preferred stock (515,000 shares)		502,840

Balance at end of period		502,840

Common Stock (Par Value: $0.01):
Balance at beginning of year		4,871
Shares issued for restricted stock awards (2,004,212 shares)		20

Balance at end of period		4,891

Paid-in Capital in Excess of Par:
Balance at beginning of year		6,047,558
Shares issued for restricted stock awards, net of forfeitures		(11,028	)
Compensation expense related to restricted stock awards		27,283

Balance at end of period		6,063,813

Retained Earnings:
Balance at beginning of year		128,435
Net income		329,680
Dividends paid on common stock ($0.51 per share)		(249,094	)
Dividends paid on preferred stock ($31.88 per share)		(16,414	)

Balance at end of period		192,607

Treasury Stock:
Balance at beginning of year		(160	)
Purchase of common stock (712,877 shares)		(10,978	)
Shares issued for restricted stock awards (713,837 shares)		11,008

Balance at end of period		(130	)

Accumulated Other Comprehensive Loss, Net of Tax:
Balance at beginning of year		(56,713	)
Other comprehensive income, net of tax		52,346

Balance at end of period		(4,367	)

Total stockholders’ equity	$	6,759,654


	For the Nine Months Ended September 30,
	2017			2016
Cash Flows from Operating Activities:
Net income	$	329,680		$	381,668
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		34,316			664
Depreciation and amortization		24,915			24,603
Amortization of discounts and premiums, net		(3,381	)		(25,114	)
Amortization of core deposit intangibles		208			1,994
Net gain on sales of securities		(28,915	)		(413	)
Net gain on sales of loans		(87,200	)		(49,809	)
Stock-based compensation		27,283			24,611
Deferred tax (benefit) expense		(12,324	)		37,569
Changes in operating assets and liabilities:
Decrease in other assets		536,552			353,403
Increase (decrease) in other liabilities		181,400			(11,608	)
Origination of loans held for sale		(1,623,848	)		(3,579,435	)
Proceeds from sales of loans originated for sale		1,936,162			3,237,704

Net cash provided by operating activities		1,314,848			395,837

Cash Flows from Investing Activities:
Proceeds from repayment of securities held to maturity		175,375			2,356,766
Proceeds from repayment of securities available for sale		336,429			50,010
Proceeds from sales of securities held to maturity		547,925			—
Proceeds from sales of securities available for sale		246,209			264,413
Purchases of securities held to maturity		(13,030	)		(10,086	)
Purchase of securities available for sale		(390,932	)		(271,836	)
Redemption of Federal Home Loan Bank stock		79,254			463,623
Purchase of Federal Home Loan Bank stock		(67,794	)		(386,007	)
Proceeds from sales of loans		2,260,687			1,354,796
Other changes in loans, net		(664,320	)		(2,623,161	)
Purchase of premises and equipment, net		(26,722	)		(69,665	)

Net cash provided by investing activities		2,483,081			1,128,853

Cash Flows from Financing Activities:
Net increase in deposits		5,294			712,841
Net decrease in short-term borrowed funds		(460,000	)		(1,927,800	)
(Repayments of) proceeds from long-term borrowed funds		(850,000	)		181,000
Net proceeds from issuance of preferred stock		502,840			—
Cash dividends paid on common stock		(249,094	)		(248,081	)
Cash dividends paid on preferred stock		(16,414	)		—
Payments relating to treasury shares received for restricted stock award tax payments		(10,978	)		(8,542	)

Net cash used in financing activities		(1,078,352	)		(1,290,582	)

Net increase in cash and cash equivalents		2,719,577			234,108
Cash and cash equivalents at beginning of period		557,850			537,674

Cash and cash equivalents at end of period	$	3,277,427		$	771,782

Supplemental information:
Cash paid for interest	$	330,182		$	283,418
Cash paid for income taxes		110,651			135,192
Non-cash investing and financing activities:
Transfers to other real estate owned from loans	$	9,558		$	18,691
Transfer of loans from held for investment to held for sale		1,881,532			1,339,679
Shares issued for restricted stock awards		11,028			8,985
Securities transferred from held to maturity to available for sale		3,040,305			—


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands, except share and per share data)	2017			2016			2017			2016
Net income available to common shareholders	$	102,261		$	125,299		$	313,266		$	381,668
Less: Dividends paid on and earnings allocated to participating securities		(823	)		(973	)		(2,512	)		(2,928	)

Earnings applicable to common stock	$	101,438		$	124,326		$	310,754		$	378,740

Weighted average common shares outstanding		487,274,303			485,352,998			487,025,614			485,087,197

Basic earnings per common share	$	0.21		$	0.26		$	0.64		$	0.78

Earnings applicable to common stock	$	101,438		$	124,326		$	310,754		$	378,740

Weighted average common shares outstanding		487,274,303			485,352,998			487,025,614			485,087,197
Potential dilutive common shares⁽¹⁾		—			—			—			—

Total shares for diluted earnings per share computation		487,274,303			485,352,998			487,025,614			485,087,197

Diluted earnings per common share and common share equivalents	$	0.21		$	0.26		$	0.64		$	0.78


(in thousands)	For the Nine Months Ended September 30, 2017
Details about Accumulated Other Comprehensive Loss	Amount Reclassified from Accumulated Other Comprehensive Loss⁽¹⁾			Affected Line Item in the Consolidated Statement of Operations and Comprehensive Income
Unrealized gains onavailable-for-sale securities	$	1,848		Net gain on sales of securities
		(770	)	Income tax expense

	$	1,078		Net gain on sales of securities, net of tax

Amortization of defined benefit pension plan items:
Past service liability	$	187		Included in the computation of net periodic (credit) expense⁽²⁾
Actuarial losses		(6,363	)	Included in the computation of net periodic (credit) expense⁽²⁾

		(6,176	)	Total before tax
		2,574		Tax benefit

	$	(3,602	)	Amortization of defined benefit pension plan items, net of tax

Total reclassifications for the period	$	(2,524	)


	September 30, 2017
(in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Mortgage-Related Securities:
GSE⁽¹⁾ certificates	$	1,904,431	$	57,138	$	1,217	$	1,960,352
GSE CMOs⁽²⁾		530,365		19,812		—		550,177

Total mortgage-related securities	$	2,434,796	$	76,950	$	1,217	$	2,510,529

Other Securities:
U. S. Treasury obligations	$	199,838	$	37	$	—	$	199,875
GSE debentures		88,242		2,592		—		90,834
Corporate bonds		74,580		11,557		—		86,137
Municipal bonds		71,079		137		849		70,367
Capital trust notes		48,217		3,489		10,939		40,767
Preferred stock		15,293		46		—		15,339
Mutual funds and common stock⁽³⁾		16,874		488		184		17,178

Total other securities	$	514,123	$	18,346	$	11,972	$	520,497

Total securities available for sale⁽⁴⁾	$	2,948,919	$	95,296	$	13,189	$	3,031,026


	December 31, 2016
(in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Mortgage-Related Securities:
GSE certificates	$	7,786	$	—	$	460	$	7,326

Other Securities:
Municipal bonds	$	583	$	48	$	—	$	631
Capital trust notes		9,458		2		2,217		7,243
Preferred stock		70,866		1,446		328		71,984
Mutual funds and common stock		16,874		484		261		17,097

Total other securities	$	97,781	$	1,980	$	2,806	$	96,955

Total securities available for sale	$	105,567	$	1,980	$	3,266	$	104,281


(in thousands)	Amortized Cost		Carrying Amount		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Mortgage-Related Securities:
GSEcertificates	$	2,193,489	$	2,193,489	$	64,431	$	2,399	$	2,255,521
GSE CMOs		1,019,074		1,019,074		36,895		57		1,055,912

Total mortgage-related securities	$	3,212,563	$	3,212,563	$	101,326	$	2,456	$	3,311,433

Other Securities:
U. S. Treasury obligations	$	200,293	$	200,293	$	—	$	73	$	200,220
GSE debentures		88,457		88,457		3,836		—		92,293
Corporate bonds		74,217		74,217		9,549		—		83,766
Municipal bonds		71,554		71,554		—		1,789		69,765
Capital trust notes		74,284		65,692		2,662		11,872		56,482

Total other securities	$	508,805	$	500,213	$	16,047	$	13,734	$	502,526

Total securities held to maturity⁽¹⁾	$	3,721,368	$	3,712,776	$	117,373	$	16,190	$	3,813,959


(in thousands)		For the Nine Months Ended September 30, 2017
Beginning credit loss amount as of December 31, 2016		$	197,552
Add:	Initial other-than-temporary credit losses		—
	Subsequent other-than-temporary credit losses		—
	Amount previously recognized in AOCL		—
Less:	Realized losses for securities sold		—
	Securities intended or required to be sold		—
	Increase in cash flows on debt securities		126

Ending credit loss amount as of September 30, 2017		$	197,426


(dollars in thousands)	Mortgage- Related Securities			Average Yield			U.S. Treasury and GSE Obligations		Average Yield			State, County, and Municipal		Average Yield⁽¹⁾			Other Debt Securities ⁽²⁾		Average Yield			Fair Value
Available-for-Sale Securities:⁽³⁾
Due within one year	$	—	%				$	259,207		1.82	%	$	150		6.47	%	$	—		—	%	$	260,064
Due from one to five years		1,101,945			3.13			6,950		3.84			438		6.59			48,351		3.51			1,192,831
Due from five to ten years		1,152,156			3.33			21,923		3.52			—		—			26,228		9.06			1,251,712
Due after ten years		180,695			3.01			—		—			70,491		2.88			48,218		3.70			293,902

Total securities available for sale	$	2,434,796			3.21	%	$	288,080		2.00	%	$	71,079		2.91	%	$	122,797		4.77	%	$	2,998,509


(in thousands)	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	$	602	$	11,018	$	—	$	11,620	$	27,133,777	$	27,145,397
Commercial real estate		450		4,923		—		5,373		7,545,014		7,550,387
One-to-four family		676		2,179		—		2,855		410,380		413,235
Acquisition, development, and construction		—		6,200		—		6,200		379,676		385,876
Commercial and industrial^{(1) (2)}		3,419		44,640		—		48,059		1,934,084		1,982,143
Other		6		10		—		16		3,650		3,666

Total	$	5,153	$	68,970	$	—	$	74,123	$	37,406,581	$	37,480,704


(in thousands)	Loans 30-89 Days Past Due⁽¹⁾		Non-Accrual Loans⁽¹⁾		Loans 90 Days or More Delinquent and Still Accruing Interest		Total Past Due Loans		Current Loans		Total Loans Receivable
Multi-family	$	28	$	13,558	$	—	$	13,586	$	26,931,466	$	26,945,052
Commercial real estate		—		9,297		—		9,297		7,715,065		7,724,362
One-to-four family		2,844		9,679		—		12,523		368,558		381,081
Acquisition, development, and construction		—		6,200		—		6,200		374,994		381,194
Commercial and industrial^{(2) (3)}		7,263		16,422		—		23,685		1,876,760		1,900,445
Other		248		1,313		—		1,561		16,744		18,305

Total	$	10,383	$	56,469	$	—	$	66,852	$	37,283,587	$	37,350,439


	For the Three Months Ended September 30, 2017
							Weighted Average Interest Rate
(dollars in thousands)	Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Pre-Modification			Post- Modification			Charge-off Amount		Capitalized Interest
Loan Category:
Acquisition, development, and construction		2	$	8,652	$	8,652		5.50	%		5.50	%	$	—	$	—
Commercial and industrial		22		18,002		7,620		3.18			2.91			6,350		—

Total		24	$	26,654	$	16,272							$	6,350	$	—


	For the Three Months Ended September 30, 2016
							Weighted Average Interest Rate
(dollars in thousands)	Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Pre-Modification			Post- Modification			Charge-off Amount		Capitalized Interest
Loan Category:
One-to-four family		—	$	—	$	—		—	%		—	%	$	—	$	—
Commercial and industrial		2		1,314		1,273		3.22			3.22			41		—

Total		2	$	1,314	$	1,273							$	41	$	—


(dollars in thousands)	Amount		Percent of Covered Loans
Loan Category:
One-to-four family	$	1,609,635		94.8	%
Other loans		88,498		5.2

Total covered loans	$	1,698,133		100.0	%


(in thousands)	Accretable Yield
Balance at beginning of period	$	647,470
Accretion		(72,842	)
Reclassification tonon-accretable difference for the six months ended June 30, 2017		(11,381	)
Changes in expected cash flows due to the sale of the covered loan portfolio		(563,247	)

Balance at end of period	$	—


(in thousands)
Covered Loans 90 Days or More Past Due:
One-to-four family	$	124,820
Other loans		6,645

Total covered loans 90 days or more past due	$	131,465


(in thousands)
Covered Loans30-89 Days Past Due:
One-to-four family	$	21,112
Other loans		1,536

Total covered loans30-89 days past due	$	22,648


	For the Nine Months Ended September 30,
	2017									2016
(in thousands)	Mortgage			Other			Total			Mortgage			Other			Total
Balance, beginning of period	$	125,416		$	32,874		$	158,290		$	124,478		$	22,646		$	147,124
Charge-offs		(375	)		(58,203	)		(58,578	)		(170	)		(1,155	)		(1,325	)
Recoveries		595			594			1,189			1,251			956			2,207
(Recovery of) provision fornon-covered loan losses		(3,114	)		61,131			58,017			675			6,024			6,699

Balance, end of period	$	122,522			36,396		$	158,918		$	126,234		$	28,471		$	154,705


(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Multi-family	$	9,071	$	11,548	$	—	$	10,016	$	378
Commercial real estate		2,628		7,743		—		4,517		13
One-to-four family		1,980		2,086		—		2,898		38
Acquisition, development, and construction		15,752		25,952		—		8,588		435
Other		45,682		98,084		—		32,556		1,486

Total impaired loans with no related allowance	$	75,113	$	145,413	$	—	$	58,575	$	2,350

Impaired loans with an allowance recorded:
Multi-family	$	—	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—		—
One-to-four family		—		—		—		—		—
Acquisition, development, and construction		—		—		—		—		—
Other		—		—		—		3,278		—

Total impaired loans with an allowance recorded	$	—	$	—	$	—	$	3,278	$	—

Total impaired loans:
Multi-family	$	9,071	$	11,548	$	—	$	10,016	$	378
Commercial real estate		2,628		7,743		—		4,517		13
One-to-four family		1,980		2,086		—		2,898		38
Acquisition, development, and construction		15,752		25,952		—		8,588		435
Other		45,682		98,084		—		35,834		1,486

Total impaired loans	$	75,113	$	145,413	$	—	$	61,853	$	2,350


	Remaining Contractual Maturity of the Agreements
(in thousands)	Overnight and Continuous		Up to 30 Days		30–90 Days		Greater than 90 Days
GSE debentures and mortgage-related securities	$	—	$	—	$	—	$	450,000


	For the Three Months Ended
	September 30, 2017						September 30, 2016
(in thousands)	Residential			Participation			Residential			Participation
Carrying value, beginning of period	$	220,586		$	4,853		$	188,331		$	5,663
Additions		6,072			39			12,005			731
Sales		(208,827	)		—			—			—
Increase (decrease) in fair value:
Due to changes in interest rates		(222	)		—			5,668			—
Due to model assumption changes⁽¹⁾		—			—			—			—
Due to loan payoffs		(7,855	)		—			(12,818	)		—
Due to passage of time and other changes		(6,972	)		—			(1,767	)		—
Amortization		—			(813	)		—			(618	)

Carrying value, end of period	$	2,782		$	4,079		$	191,419		$	5,776


	For the Nine Months Ended
	September 30, 2017						September 30, 2016
(in thousands)	Residential			Participation			Residential			Participation
Carrying value, beginning of period	$	228,099		$	5,862		$	243,389		$	4,345
Additions		18,054			595			31,185			2,999
Sales		(208,827	)		—			—			—
Increase (decrease) in fair value:
Due to changes in interest rates		(2,130	)		—			(32,139	)		—
Due to model assumption changes⁽¹⁾		—			—			(13,088	)		—
Due to loan payoffs		(22,524	)		—			(31,939	)		—
Due to passage of time and other changes		(9,890	)		—			(5,989	)		—
Amortization		—			(2,378	)		—			(1,568	)

Carrying value, end of period	$	2,782		$	4,079		$	191,419		$	5,776


	September 30, 2017			December 31, 2016
Expected weighted average life		87 months			82 months
Constant prepayment speed		9.89	%		8.70	%
Discount rate		12.00			10.05
Primary mortgage rate to refinance		4.00			4.11
Cost to service (per loan per year):
Current		$70			$64
30-59 days or less delinquent		220			214
60-89 days delinquent		370			364
90-119 days delinquent		470			464
120 days or more delinquent		870			864


	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year		6,930,306		$	15.37
Granted		2,941,249			15.18
Vested		(2,291,234	)		15.02
Canceled		(206,920	)		15.58

Unvested at end of period		7,373,401			15.40


	Fair Value Measurements at September 30, 2017
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Netting Adjustments⁽¹⁾			Total Fair Value
Assets:
Mortgage-Related Securities Available for Sale:
GSE certificates	$	—		$	1,960,352		$	—	$	—		$	1,960,352
GSE CMOs		—			550,177			—		—			550,177

Total mortgage-related securities	$	—		$	2,510,529		$	—	$	—		$	2,510,529

Other Securities Available for Sale:
U.S Treasury Obligations	$	199,875		$	—		$	—	$	—		$	199,875
GSE debentures		—			90,834			—		—			90,834
Corporate bonds		—			86,137			—		—			86,137
Municipal bonds		—			70,367			—		—			70,367
Capital trust notes		—			40,767			—		—			40,767
Preferred stock		15,339			—			—		—			15,339
Mutual funds and common stock		—			17,178			—		—			17,178

Total other securities	$	215,214		$	305,283		$	—	$	—		$	520,497

Total securities available for sale	$	215,214		$	2,815,812		$	—	$	—		$	3,031,026

Other Assets:
Loans held for sale	$	—		$	104,938		$	—	$	—		$	104,938
Mortgage servicing rights		—			—			2,782		—			2,782
Interest rate lock commitments		—			—			269		—			269
Derivative assets-other⁽²⁾		157			836			—		(674	)		319
Liabilities:
Derivative liabilities	$	(144	)	$	(1,322	)	$	—	$	1,248		$	(218	)


	Gain (Loss) Included in Mortgage Banking Income from Changes in Fair Value⁽¹⁾
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(in thousands)	2017			2016⁽²⁾			2017			2016⁽²⁾
Loans held for sale	$	464		$	(1,020	)	$	1,059		$	2,782
Mortgage servicing rights		(9,743	)		(8,917	)		(20,092	)		(76,998	)

Total loss	$	(9,279	)	$	(9,937	)	$	(19,033	)	$	(74,216	)


(in thousands)	Fair Value January 1, 2017		Total Realized/Unrealized Gains/(Losses) Recorded in					Issuances		Settlements			Transfers to/(from) Level 3		Fair Value at September 30, 2017		Change in Unrealized Gains/ (Losses) Related to Instruments Held at September 30, 2017
(in thousands)	Fair Value January 1, 2017		Income/ (Loss)			Comprehensive (Loss) Income		Issuances		Settlements			Transfers to/(from) Level 3		Fair Value at September 30, 2017
Mortgage servicing rights	$	228,099	$	(34,544	)	$	—	$	18,054	$	(208,827	)	$	—	$	2,782	$	(182	)
Interest rate lock commitments		982		(713	)		—		—		—			—		269		269

(in thousands)	Fair Value January 1, 2016		Total Realized/Unrealized Gains/(Losses) Recorded in					Issuances		Settlements			Transfers to/(from) Level 3		Fair Value at September 30, 2016		Change in Unrealized Gains/ (Losses) Related to Instruments Held at September 30, 2016
(in thousands)	Fair Value January 1, 2016		Income/ (Loss)			Comprehensive (Loss) Income		Issuances		Settlements			Transfers to/(from) Level 3		Fair Value at September 30, 2016
Mortgage servicing rights	$	243,389	$	(83,155	)	$	—	$	31,185	$	—		$	—	$	191,419	$	(58,546	)
Interest rate lock commitments		2,526		4,408			—		—		—			—		6,934		6,934


(dollars in thousands)	Fair Value at September 30, 2017	Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Mortgage servicing rights	$2,782	Discounted Cash Flow	Weighted Average Constant Prepayment Rate⁽¹⁾		9.89	%
			Weighted Average Discount Rate		12.00
Interest rate lock commitments	269	Discounted Cash Flow	Weighted Average Closing Ratio		69.88


	Fair Value Measurements at September 30, 2017 Using
(in thousands)	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⁽¹⁾	$	—	$	—	$	42,581	$	42,581
Other assets⁽²⁾		—		—		1,493		1,493

Total	$	—	$	—	$	44,074	$	44,074