UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File Number
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.) |
615 Merrick Avenue, Westbury, New York11590
(Address of principal executive offices)
(Registrant’s telephone number, including area code) (516)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.01 par value per share | NYCB | New York Stock Exchange | ||
Bifurcated Option Note Unit SecuritiES | NYCB PU | New York Stock Exchange | ||
Depository Shares each representing a1/40th interest in a share ofFixed-to-Floating Rate Series A Noncumulative | NYCB PA | New York Stock Exchange |
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
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation(§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, adefinitiondefinitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-Accelerated filer | ☐ | 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 Rule
465,063,850
Number of shares of common stock outstanding at May 4, 2020
NEW YORK COMMUNITY BANCORP, INC.
FORM
Quarter Ended March 31, 2020
Page No. | ||||||
3 | ||||||
6 | ||||||
Part I. | 7 | |||||
Item 1. | 7 | |||||
7 | ||||||
8 | ||||||
9 | ||||||
10 | ||||||
11 | ||||||
Item 2. | 38 | |||||
Item 3. | 71 | |||||
Item 4. | 71 | |||||
Part II. | 72 | |||||
Item 1. | 72 | |||||
Item 1A. | 72 | |||||
Item 2. | 73 | |||||
Item 3. | 73 | |||||
Item 4. | 73 | |||||
Item 5. | 73 | |||||
Item 6. | 74 | |||||
76 |
2
GLOSSARY
BASIS POINT
Throughout this filing, the 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%.
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 is calculated by dividing total stockholders’ equity less preferred stock at the end of a period, by the number of shares outstanding at the same date.
BROKERED DEPOSITS
Refers to 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 loan losses.
COMMERCIAL REAL ESTATE LOAN
A mortgage loan secured by either an income-producing property owned by an investor and leased primarily for commercial purposes or, to a lesser extent, an owner-occupied building used for business purposes. The CRE loans in our portfolio are typically secured by either office buildings, retail shopping centers, light industrial centers with multiple tenants, or
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,
DEBT SERVICE COVERAGE RATIO
An indication of a borrower’s ability to repay a loan, the DSCR generally measures the cash flows 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).
DIVIDEND PAYOUT RATIO
The percentage of our earnings that is paid out to shareholders in the form of dividends. It is determined by dividing the dividend paid per share during a period by our diluted earnings per share during the same period of time.
EFFICIENCY RATIO
Measures total operating expenses as a percentage of the sum of net interest income and
3
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 United States Congress to enhance the availability, and reduce the cost of, credit to certain targeted borrowing sectors, including home finance. The GSEs include, but are not limited to, the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), and the Federal Home Loan Banks (the “FHLBs”).
GSE OBLIGATIONS
Refers to GSE mortgage-related securities (both certificates and collateralized mortgage obligations) and GSE debentures.
INTEREST RATE SENSITIVITY
Refers to the likelihood that the 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 yield earned on average interest-earning assets and the cost of average interest-bearing liabilities.
LOAN-TO-VALUE
Measures the balance of a loan as a percentage of the appraised value of the 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 interest income generated by loans and securities and the interest expense produced by deposits and borrowed funds.
NET INTEREST MARGIN
Measures net interest income as a percentage of average interest-earning assets.
NON-ACCRUAL
A loan generally is classified as a“non-accrual”
NON-PERFORMING
Non-performing
4
OREO AND OTHER REPOSSESSED ASSETS
Includes real estate owned by the Company which was acquired either through foreclosure or default. Repossessed assets are similar, except they are not real estate-related assets.
RENT-REGULATED APARTMENTS
In New York City, where the vast majority of the properties securing our multi-family loans are located, the amount of rent that tenants may be charged on the 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 the applicable regulations, and buildings with a preponderance of such rent-regulated apartments are therefore less likely to experience vacancies in times of economic adversity.
REPURCHASE AGREEMENTS
Repurchase agreements are contracts for the sale of securities owned or borrowed by the Bank with an agreement to repurchase those securities at an agreed-upon price and date. The Bank’s repurchase agreements are primarily collateralized by GSE obligations and other mortgage-related securities, and are entered into with either the FHLBs or various brokerage firms.
SYSTEMICALLY IMPORTANT FINANCIAL INSTITUTION (“SIFI”)
A bank holding company with total consolidated assets that average more than $250 billion over the four most recent quarters is designated a “Systemically Important Financial Institution” under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) of 2010, as amended by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018.
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.
5
LIST OF ABBREVIATIONS AND ACRONYMS
ACL—Allowance for Credit Losses on Loans and Leases | FDI Act—Federal Deposit Insurance Act | |
ADC—Acquisition, development, and construction loan | FDIC—Federal Deposit Insurance Corporation | |
ALCO—Asset and Liability Management Committee | FHLB—Federal Home Loan Bank | |
AMT—Alternative minimum tax | FHLB-NY—Federal Home Loan Bank of New York | |
AmTrust—AmTrust Bank | FOMC—Federal Open Market Committee | |
AOCL—Accumulated other comprehensive loss | FRB—Federal Reserve Board | |
ASC—Accounting Standards Codification | FRB-NY—Federal Reserve Bank of New York | |
ASU—Accounting Standards Update | Freddie Mac—Federal Home Loan Mortgage Corporation | |
BOLI—Bank-owned life insurance | FTEs—Full-time equivalent employees | |
BP—Basis point(s) | GAAP—U.S. generally accepted accounting principles | |
CARES Act—Coronavirus Aid, Relief, and Economic Security Act | GLBA—The Gramm Leach Bliley Act | |
C&I—Commercial and industrial loan | GNMA—Government National Mortgage Association | |
CCAR—Comprehensive Capital Analysis and Review | GSEs—Government-sponsored enterprises | |
CDs—Certificates of deposit | HQLAs—High-quality liquid assets | |
CECL—Current Expected Credit Loss | LIBOR—London Interbank Offered Rate | |
CFPB—Consumer Financial Protection Bureau | LSA—Loss Share Agreements | |
CMOs—Collateralized mortgage obligations | LTV—Loan-to-value ratio | |
CMT—Constant maturity treasury rate | MBS—Mortgage-backed securities | |
CPI—Consumer Price Index | NIM—Net interest margin | |
CPR—Constant prepayment rate | NOL—Net operating loss | |
CRA—Community Reinvestment Act | NPAs—Non-performing assets | |
CRE—Commercial real estate loan | NPLs—Non-performing loans | |
Desert Hills—Desert Hills Bank | NPV—Net Portfolio Value | |
DIF—Deposit Insurance Fund | NYSDFS—New York State Department of Financial Services | |
DFA—Dodd-Frank Wall Street Reform and Consumer Protection Act | NYSE—New York Stock Exchange | |
DSCR—Debt service coverage ratio | OCC—Office of the Comptroller of the Currency | |
EAR—Earnings at Risk | OFAC—Office of Foreign Assets Control | |
EPS—Earnings per common share | OREO—Other real estate owned | |
ERM—Enterprise Risk Management | PPP—Paycheck Protection Program loans administered by the Small Business Administration | |
EVE—Economic Value of Equity at Risk | SEC—U.S. Securities and Exchange Commission | |
Fannie Mae—Federal National Mortgage Association | SIFI—Systemically Important Financial Institution | |
FASB—Financial Accounting Standards Board | TDRs—Troubled debt restructurings | |
6
PART I. FINANCIAL INFORMATION
Item 1. Financial Protection Bureau
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
(in thousands, except share data)
March 31, 2020 | December 31, 2019 | |||||||
(unaudited) | ||||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 1,334,206 | $ | 741,870 | ||||
Securities: | ||||||||
Debt securities available-for-sale ($1,447,566 and $1,372,238 pledged at March 31, 2020 and December 31, 2019, respectively) (Allowance for credit losses of $0,000 at March 31, 2020) | 5,455,245 | 5,853,057 | ||||||
Equity investments with readily determinable fair values, at fair value | 32,616 | 32,830 | ||||||
Total securities | 5,487,861 | 5,885,887 | ||||||
Loans and leases held for investment, net of deferred loan fees and costs | 42,291,759 | 41,894,155 | ||||||
Less: Allowance for loan and lease losses | (162,244 | ) | (147,638 | ) | ||||
Total loans and leases held for investment, net | 42,129,515 | 41,746,517 | ||||||
Federal Home Loan Bank stock, at cost | 663,870 | 647,562 | ||||||
Premises and equipment, net | 306,657 | 312,626 | ||||||
Operating lease right-of-use assets | 281,873 | 286,194 | ||||||
Goodwill | 2,426,379 | 2,426,379 | ||||||
Bank-owned life insurance | 1,152,444 | 1,145,058 | ||||||
Other real estate owned and other repossessed assets | 9,526 | 12,268 | ||||||
Other assets | 468,762 | 436,460 | ||||||
Total assets | $ | 54,261,093 | $ | 53,640,821 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Deposits: | ||||||||
Interest-bearing checking and money market accounts | $ | 10,181,252 | $ | 10,230,144 | ||||
Savings accounts | 4,955,670 | 4,780,007 | ||||||
Certificates of deposit | 14,142,212 | 14,214,858 | ||||||
Non-interest-bearing accounts | 2,693,632 | 2,432,123 | ||||||
Total deposits | 31,972,766 | 31,657,132 | ||||||
Borrowed funds: | ||||||||
Wholesale borrowings: | ||||||||
Federal Home Loan Bank advances | 13,477,661 | 13,102,661 | ||||||
Repurchase agreements | 800,000 | 800,000 | ||||||
Total wholesale borrowings | 14,277,661 | 13,902,661 | ||||||
Junior subordinated debentures | 359,961 | 359,866 | ||||||
Subordinated notes | 295,205 | 295,066 | ||||||
Total borrowed funds | 14,932,827 | 14,557,593 | ||||||
Operating lease liabilities | 281,853 | 285,991 | ||||||
Other liabilities | 436,262 | 428,411 | ||||||
Total liabilities | 47,623,708 | 46,929,127 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock at par $0.01 (5,000,000 shares authorized): Series A (515,000 shares issued and outstanding) | 502,840 | 502,840 | ||||||
Common stock at par $0.01 (900,000,000 shares authorized; 490,439,070 and 490,439,070 shares issued; and 466,360,703 and 467,346,781 shares outstanding, respectively) | 4,904 | 4,904 | ||||||
Paid-in capital in excess of par | 6,101,540 | 6,115,487 | ||||||
Retained earnings | 344,344 | 342,023 | ||||||
Treasury stock, at cost (24,078,367 and 23,092,289 shares, respectively) | (235,678 | ) | (220,717 | ) | ||||
Accumulated other comprehensive loss, net of tax: | ||||||||
Net unrealized gain on securities available for sale, net of tax of $(4,607) | 12,740 | 25,440 | ||||||
Net unrealized loss on pension and post-retirement obligations, net of tax of $21,685 and $22,191, respectively | (57,803 | ) | (59,136 | ) | ||||
Net unrealized (loss) gain on cash flow hedges, net of tax of $13,242 and $(333), respectively | (35,502 | ) | 853 | |||||
Total accumulated other comprehensive loss, net of tax | (80,565 | ) | (32,843 | ) | ||||
Total stockholders’ equity | 6,637,385 | 6,711,694 | ||||||
Total liabilities and stockholders’ equity | $ | 54,261,093 | $ | 53,640,821 | ||||
|
| March 31, |
|
| December 31, |
| ||
|
| (unaudited) |
|
|
|
| ||
Assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 2,722,915 |
|
| $ | 1,947,931 |
|
Securities: |
|
|
|
|
|
| ||
Debt securities available-for-sale ($1,242,310 and $1,278,177 pledged at March 31, 2021 and |
|
| 6,177,905 |
|
|
| 5,813,333 |
|
Equity investments with readily determinable fair values, at fair value |
|
| 15,801 |
|
|
| 31,576 |
|
Total securities |
|
| 6,193,706 |
|
|
| 5,844,909 |
|
Loans held for sale |
|
| 141,435 |
|
|
| 117,136 |
|
Loans and leases held for investment, net of deferred loan fees and costs |
|
| 43,125,139 |
|
|
| 42,883,598 |
|
Less: Allowance for credit losses on loans and leases |
|
| (197,758 | ) |
|
| (194,043 | ) |
Total loans and leases held for investment, net |
|
| 42,927,381 |
|
|
| 42,689,555 |
|
Total loans and leases held for investment and held for sale, net |
|
| 43,068,816 |
|
|
| 42,806,691 |
|
Federal Home Loan Bank stock, at cost |
|
| 698,984 |
|
|
| 714,005 |
|
Premises and equipment, net |
|
| 282,407 |
|
|
| 287,447 |
|
Operating lease right-of-use assets |
|
| 262,196 |
|
|
| 266,864 |
|
Goodwill |
|
| 2,426,379 |
|
|
| 2,426,379 |
|
Bank-owned life insurance |
|
| 1,165,765 |
|
|
| 1,164,196 |
|
Other real estate owned and other repossessed assets |
|
| 8,153 |
|
|
| 8,318 |
|
Other assets |
|
| 827,571 |
|
|
| 839,380 |
|
Total assets |
| $ | 57,656,892 |
|
| $ | 56,306,120 |
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
| ||
Deposits: |
|
|
|
|
|
| ||
Interest-bearing checking and money market accounts |
| $ | 12,665,002 |
|
| $ | 12,610,073 |
|
Savings accounts |
|
| 7,043,602 |
|
|
| 6,415,608 |
|
Certificates of deposit |
|
| 9,614,298 |
|
|
| 10,330,680 |
|
Non-interest-bearing accounts |
|
| 4,874,234 |
|
|
| 3,080,452 |
|
Total deposits |
|
| 34,197,136 |
|
|
| 32,436,813 |
|
Borrowed funds: |
|
|
|
|
|
| ||
Wholesale borrowings: |
|
|
|
|
|
| ||
Federal Home Loan Bank advances |
|
| 14,302,661 |
|
|
| 14,627,661 |
|
Repurchase agreements |
|
| 800,000 |
|
|
| 800,000 |
|
Total wholesale borrowings |
|
| 15,102,661 |
|
|
| 15,427,661 |
|
Junior subordinated debentures |
|
| 360,362 |
|
|
| 360,259 |
|
Subordinated notes |
|
| 295,764 |
|
|
| 295,624 |
|
Total borrowed funds |
|
| 15,758,787 |
|
|
| 16,083,544 |
|
Operating lease liabilities |
|
| 262,169 |
|
|
| 266,846 |
|
Other liabilities |
|
| 642,360 |
|
|
| 677,273 |
|
Total liabilities |
|
| 50,860,452 |
|
|
| 49,464,476 |
|
Stockholders’ equity: |
|
|
|
|
|
| ||
Preferred stock at par $0.01 (5,000,000 shares authorized): Series A (515,000 shares |
|
| 502,840 |
|
|
| 502,840 |
|
Common stock at par $0.01 (900,000,000 shares authorized; 490,439,070 and 490,439,070 |
|
| 4,904 |
|
|
| 4,904 |
|
Paid-in capital in excess of par |
|
| 6,103,251 |
|
|
| 6,122,690 |
|
Retained earnings |
|
| 552,566 |
|
|
| 494,229 |
|
Treasury stock, at cost (25,364,686 and 26,537,262 shares, respectively) |
|
| (245,005 | ) |
|
| (257,541 | ) |
Accumulated other comprehensive loss, net of tax: |
|
|
|
|
|
| ||
Net unrealized (loss) gain on securities available for sale, net of tax of $16,051 and ($25,072), |
|
| (41,809 | ) |
|
| 66,880 |
|
Net unrealized loss on pension and post-retirement obligations, net of tax of $20,198 and |
|
| (54,855 | ) |
|
| (59,345 | ) |
Net unrealized loss on cash flow hedges, net of tax of $9,658 and $12,519, respectively |
|
| (25,452 | ) |
|
| (33,013 | ) |
Total accumulated other comprehensive loss, net of tax |
|
| (122,116 | ) |
|
| (25,478 | ) |
Total stockholders’ equity |
|
| 6,796,440 |
|
|
| 6,841,644 |
|
Total liabilities and stockholders’ equity |
| $ | 57,656,892 |
|
| $ | 56,306,120 |
|
See accompanying notes to the consolidated financial statements.
7
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in thousands, except per share data)
(unaudited)
For the Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Interest Income: | ||||||||
Loans and leases | $ | 391,911 | $ | 379,790 | ||||
Securities and money market investments | 49,131 | 66,384 | ||||||
Total interest income | 441,042 | 446,174 | ||||||
Interest Expense: | ||||||||
Interest-bearing checking and money market accounts | 28,564 | 50,159 | ||||||
Savings accounts | 8,934 | 8,083 | ||||||
Certificates of deposit | 79,555 | 67,775 | ||||||
Borrowed funds | 79,522 | 78,832 | ||||||
Total interest expense | 196,575 | 204,849 | ||||||
Net interest income | 244,467 | 241,325 | ||||||
Provision for (recovery of) credit losses | 20,601 | (1,222 | ) | |||||
Net interest income after provision for (recovery of) credit losses | 223,866 | 242,547 | ||||||
Non-Interest Income: | ||||||||
Fee income | 7,018 | 7,228 | ||||||
Bank-owned life insurance | 7,389 | 6,975 | ||||||
Net gain on securities | 534 | 6,987 | ||||||
Other | 1,958 | 3,595 | ||||||
Total non-interest income | 16,899 | 24,785 | ||||||
Non-Interest Expense: | ||||||||
Operating expenses: | ||||||||
Compensation and benefits | 79,451 | 81,440 | ||||||
Occupancy and equipment | 17,875 | 22,962 | ||||||
General and administrative | 28,196 | 34,365 | ||||||
Total non-interest expense | 125,522 | 138,767 | ||||||
Income before income taxes | 115,243 | 128,565 | ||||||
Income tax expense | 14,915 | 30,988 | ||||||
Net income | $ | 100,328 | $ | 97,577 | ||||
Preferred stock dividends | 8,207 | 8,207 | ||||||
Net income available to common shareholders | $ | 92,121 | $ | 89,370 | ||||
Basic earnings per common share | $ | 0.20 | $ | 0.19 | ||||
Diluted earnings per common share | $ | 0.20 | $ | 0.19 | ||||
Net income | $ | 100,328 | $ | 97,577 | ||||
Other comprehensive (loss) income, net of tax: | ||||||||
Change in net unrealized gain (loss) on securities available for sale, net of tax of $4,611; and $(12,868), respectively | (12,157 | ) | 32,755 | |||||
Change in pension and post-retirement obligations, net of tax of $(19); and $(16), respectively | 45 | 37 | ||||||
Change in net unrealized gain (loss) on cash flow hedges, net of tax of $13,397 | (35,888 | ) | — | |||||
Less: Reclassification adjustment for sales of available-for-sale securities, net of tax of $206; and $1,517, respectively | (543 | ) | (3,892 | ) | ||||
Reclassification adjustment for net gain on cash flow hedges included in net income, net of tax of $178 | (467 | ) | — | |||||
Reclassification adjustment for defined benefit pension plan, net of tax of $(487) and $(695), respectively | 1,288 | 1,783 | ||||||
Total other comprehensive (loss) income, net of tax | (47,722 | ) | 30,683 | |||||
Total comprehensive income, net of tax | $ | 52,606 | $ | 128,260 | ||||
|
| For the |
| |||||
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Interest Income: |
|
|
|
|
|
| ||
Loans and leases |
| $ | 383,430 |
|
| $ | 391,911 |
|
Securities and money market investments |
|
| 39,678 |
|
|
| 49,131 |
|
Total interest income |
|
| 423,108 |
|
|
| 441,042 |
|
Interest Expense: |
|
|
|
|
|
| ||
Interest-bearing checking and money market accounts |
|
| 8,652 |
|
|
| 28,564 |
|
Savings accounts |
|
| 6,255 |
|
|
| 8,934 |
|
Certificates of deposit |
|
| 18,471 |
|
|
| 79,555 |
|
Borrowed funds |
|
| 72,071 |
|
|
| 79,522 |
|
Total interest expense |
|
| 105,449 |
|
|
| 196,575 |
|
Net interest income |
|
| 317,659 |
|
|
| 244,467 |
|
Provision for credit losses |
|
| 3,569 |
|
|
| 20,601 |
|
Net interest income after provision for credit losses |
|
| 314,090 |
|
|
| 223,866 |
|
Non-Interest Income: |
|
|
|
|
|
| ||
Fee income |
|
| 5,539 |
|
|
| 7,018 |
|
Bank-owned life insurance |
|
| 6,890 |
|
|
| 7,389 |
|
Net (loss) gain on securities |
|
| (483 | ) |
|
| 534 |
|
Other |
|
| 2,461 |
|
|
| 1,958 |
|
Total non-interest income |
|
| 14,407 |
|
|
| 16,899 |
|
Non-Interest Expense: |
|
|
|
|
|
| ||
Operating expenses: |
|
|
|
|
|
| ||
Compensation and benefits |
|
| 78,026 |
|
|
| 79,451 |
|
Occupancy and equipment |
|
| 21,481 |
|
|
| 17,875 |
|
General and administrative |
|
| 32,894 |
|
|
| 28,196 |
|
Total non-interest expense |
|
| 132,401 |
|
|
| 125,522 |
|
Income before income taxes |
|
| 196,096 |
|
|
| 115,243 |
|
Income tax expense |
|
| 50,500 |
|
|
| 14,915 |
|
Net income |
|
| 145,596 |
|
|
| 100,328 |
|
Preferred stock dividends |
|
| 8,207 |
|
|
| 8,207 |
|
Net income available to common shareholders |
| $ | 137,389 |
|
| $ | 92,121 |
|
Basic earnings per common share |
| $ | 0.29 |
|
| $ | 0.20 |
|
Diluted earnings per common share |
| $ | 0.29 |
|
| $ | 0.20 |
|
Net income |
| $ | 145,596 |
|
| $ | 100,328 |
|
Other comprehensive loss, net of tax: |
|
|
|
|
|
| ||
Change in net unrealized loss on securities available for sale, |
|
| (108,689 | ) |
|
| (12,157 | ) |
Change in pension and post-retirement obligations, net of tax of |
|
| 3,271 |
|
|
| 45 |
|
Change in net unrealized gain (loss) on cash flow hedges, net of tax |
|
| 3,287 |
|
|
| (35,888 | ) |
Less: Reclassification adjustment for sales of available-for-sale |
|
| 0 |
|
|
| (543 | ) |
Reclassification adjustment for defined benefit pension plan, |
|
| 1,219 |
|
|
| 1,288 |
|
Reclassification adjustment for net gain (loss) on cash flow hedges |
|
| 4,274 |
|
|
| (467 | ) |
Total other comprehensive loss, net of tax |
|
| (96,638 | ) |
|
| (47,722 | ) |
Total comprehensive income, net of tax |
| $ | 48,958 |
|
| $ | 52,606 |
|
See accompanying notes to the consolidated financial statements.
8
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
|
|
|
|
| Preferred |
|
| Common |
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| ||||||||
|
|
|
|
| Stock |
|
| Stock |
|
| Paid-in |
|
|
|
|
|
|
|
| Other |
|
| Total |
| ||||||||
Three Months Ended March 31, 2021 |
| Shares |
|
| (Par |
|
| (Par |
|
| Capital in |
|
| Retained |
|
| Treasury |
|
| Comprehensive |
|
| Stockholders’ |
| ||||||||
Balance at December 31, 2020 |
|
| 463,901,808 |
|
| $ | 502,840 |
|
| $ | 4,904 |
|
| $ | 6,122,690 |
|
| $ | 494,229 |
|
| $ | (257,541 | ) |
| $ | (25,478 | ) |
| $ | 6,841,644 |
|
Shares issued for restricted stock, net of forfeitures |
|
| 2,515,942 |
|
|
| — |
|
|
| — |
|
|
| (28,051 | ) |
|
| — |
|
|
| 28,051 |
|
|
| — |
|
|
| — |
|
Compensation expense related to restricted stock awards |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,612 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,612 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 145,596 |
|
|
| — |
|
|
| — |
|
|
| 145,596 |
|
Dividends paid on common stock ($0.17) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (79,052 | ) |
|
| — |
|
|
| — |
|
|
| (79,052 | ) |
Dividends paid on preferred stock ($15.94) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,207 | ) |
|
| — |
|
|
| — |
|
|
| (8,207 | ) |
Purchase of common stock |
|
| (1,343,366 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (15,515 | ) |
|
| — |
|
|
| (15,515 | ) |
Other comprehensive loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (96,638 | ) |
|
| (96,638 | ) |
Balance at March 31, 2021 |
|
| 465,074,384 |
|
| $ | 502,840 |
|
| $ | 4,904 |
|
| $ | 6,103,251 |
|
| $ | 552,566 |
|
| $ | (245,005 | ) |
| $ | (122,116 | ) |
| $ | 6,796,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Three Months Ended March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Balance at December 31, 2019 |
|
| 467,346,781 |
|
| $ | 502,840 |
|
| $ | 4,904 |
|
| $ | 6,115,487 |
|
| $ | 342,023 |
|
| $ | (220,717 | ) |
| $ | (32,843 | ) |
| $ | 6,711,694 |
|
Opening retained earnings adjustment (1) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (10,468 | ) |
|
|
|
|
| — |
|
|
| (10,468 | ) | |
Adjusted balance, beginning of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 331,555 |
|
|
|
|
|
|
|
|
| 6,701,226 |
| ||||||
Shares issued for restricted stock, net of forfeitures |
|
| 2,321,105 |
|
|
| — |
|
|
| — |
|
|
| (22,198 | ) |
|
| — |
|
|
| 22,198 |
|
|
| — |
|
|
| — |
|
Compensation expense related to restricted stock awards |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,251 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,251 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 100,328 |
|
|
| — |
|
|
| — |
|
|
| 100,328 |
|
Dividends paid on common stock ($0.17) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (79,332 | ) |
|
| — |
|
|
| — |
|
|
| (79,332 | ) |
Dividends paid on preferred stock ($15.94) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,207 | ) |
|
|
|
|
| — |
|
|
| (8,207 | ) | |
Purchase of common stock |
|
| (3,307,183 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (37,159 | ) |
|
| — |
|
|
| (37,159 | ) |
Other comprehensive loss, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (47,722 | ) |
|
| (47,722 | ) |
Balance at March 31, 2020 |
|
| 466,360,703 |
|
| $ | 502,840 |
|
| $ | 4,904 |
|
| $ | 6,101,540 |
|
| $ | 344,344 |
|
| $ | (235,678 | ) |
| $ | (80,565 | ) |
| $ | 6,637,385 |
|
(1) Amount represents a $10.5 million cumulative adjustment, net of tax, to retained earnings as of January 1, 2020, as a result of the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which became effective January 1, 2020.
See accompanying notes to the consolidated financial statements.
9
NEW YORK COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
| For the Three Months Ended March 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Cash Flows from Operating Activities: |
|
|
|
|
|
| ||
Net income |
| $ | 145,596 |
|
| $ | 100,328 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
| ||
Provision for credit losses |
|
| 3,569 |
|
|
| 20,601 |
|
Depreciation |
|
| 5,357 |
|
|
| 6,407 |
|
Amortization of discounts and premiums, net |
|
| 1,344 |
|
|
| 6,384 |
|
Net loss (gain) on securities |
|
| 483 |
|
|
| (534 | ) |
Gain on trading activity |
|
| (94 | ) |
|
| 0 |
|
Net (gain) loss on sales of loans |
|
| (744 | ) |
|
| 4 |
|
Stock-based compensation |
|
| 8,612 |
|
|
| 8,251 |
|
Deferred tax expense |
|
| 31,279 |
|
|
| 44,465 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
| ||
Decrease (increase) in other assets(1) |
|
| 7,891 |
|
|
| (34,397 | ) |
Decrease in other liabilities(2) |
|
| (28,007 | ) |
|
| (20,813 | ) |
Purchases of securities held for trading |
|
| (60,000 | ) |
|
| 0 |
|
Proceeds from sales of securities held for trading |
|
| 60,094 |
|
|
| 0 |
|
Held for sale originations |
|
| (51,766 | ) |
|
| 0 |
|
Net cash provided by operating activities |
|
| 123,614 |
|
|
| 130,696 |
|
Cash Flows from Investing Activities: |
|
|
|
|
|
| ||
Proceeds from repayment of securities available for sale |
|
| 495,342 |
|
|
| 428,098 |
|
Proceeds from sales of securities available for sale |
| — |
|
|
| 369,972 |
| |
Purchase of securities available for sale |
|
| (985,594 | ) |
|
| (483,789 | ) |
Redemption of Federal Home Loan Bank stock |
|
| 15,601 |
|
|
| 72,567 |
|
Purchases of Federal Home Loan Bank stock |
|
| (580 | ) |
|
| (88,875 | ) |
Proceeds from bank-owned life insurance, net |
|
| 7,182 |
|
|
| 1,772 |
|
Proceeds from sales of loans |
|
| 32,929 |
|
|
| 3,124 |
|
Purchases of loans |
|
| (20,723 | ) |
|
| (26,300 | ) |
Other changes in loans, net |
|
| (225,019 | ) |
|
| (380,427 | ) |
Purchases of premises and equipment, net |
|
| (317 | ) |
|
| (438 | ) |
Net cash used in investing activities |
|
| (681,179 | ) |
|
| (104,296 | ) |
Cash Flows from Financing Activities: |
|
|
|
|
|
| ||
Net increase in deposits |
|
| 1,760,323 |
|
|
| 315,634 |
|
Net increase in short-term borrowed funds |
| — |
|
|
| 1,350,000 |
| |
Proceeds from long-term borrowed funds |
|
| 325,000 |
|
|
| 2,150,000 |
|
Repayments of long-term borrowed funds |
|
| (650,000 | ) |
|
| (3,125,000 | ) |
Cash dividends paid on common stock |
|
| (79,052 | ) |
|
| (79,332 | ) |
Cash dividends paid on preferred stock |
|
| (8,207 | ) |
|
| (8,207 | ) |
Treasury stock repurchased |
| — |
|
|
| (28,924 | ) | |
Payments relating to treasury shares received for restricted stock award tax payments |
|
| (15,515 | ) |
|
| (8,235 | ) |
Net cash provided by financing activities |
|
| 1,332,549 |
|
|
| 565,936 |
|
Net increase in cash, cash equivalents, and restricted cash |
|
| 774,984 |
|
|
| 592,336 |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
| 1,947,931 |
|
|
| 741,870 |
|
Cash, cash equivalents, and restricted cash at end of period |
| $ | 2,722,915 |
|
| $ | 1,334,206 |
|
Supplemental information: |
|
|
|
|
|
| ||
Cash paid for interest |
| $ | 113,189 |
|
| $ | 202,459 |
|
Cash paid for income taxes |
|
| 14,005 |
|
|
| 10,000 |
|
Non-cash investing and financing activities: |
|
|
|
|
|
| ||
Transfers to repossessed assets from loans |
| $ | — |
|
| $ | 120 |
|
Securitization of residential mortgage loans to mortgage-backed securities available for sale |
|
| 20,723 |
|
|
| 26,300 |
|
Transfer of loans from held for investment to held for sale |
|
| 47,745 |
|
|
| 3,124 |
|
Shares issued for restricted stock awards |
|
| 28,051 |
|
|
| 22,198 |
|
(1) Includes $4.7 million and $4.1 million of amortization of operating lease right-of-use assets for the three months ended March 31, 2021 and 2020, respectively.
(2) Includes $4.7 million and $4.1 million of amortization of operating lease liability for the three months ended March 31, 2021 and 2020, respectively.
See accompanying notes to the consolidated financial statements.
10
NEW YORK COMMUNITY BANCORP, INC.
For the Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Preferred Stock (Par Value: $0.01): | ||||||||
Balance at beginning of year | $ | 502,840 | $ | 502,840 | ||||
Balance at end of period | 502,840 | 502,840 | ||||||
Common Stock (Par Value: $0.01): | ||||||||
Balance at beginning of year | 4,904 | 4,904 | ||||||
Balance at end of period | 4,904 | 4,904 | ||||||
Paid-in Capital in Excess of Par: | ||||||||
Balance at beginning of year | 6,115,487 | 6,099,940 | ||||||
Shares issued for restricted stock awards, net of forfeitures | (22,198 | ) | (15,058 | ) | ||||
Compensation expense related to restricted stock awards | 8,251 | 7,910 | ||||||
Balance at end of period | 6,101,540 | 6,092,792 | ||||||
Retained Earnings: | ||||||||
Balance at beginning of year | 342,023 | 297,202 | ||||||
Net income | 100,328 | 97,577 | ||||||
Dividends paid on common stock ($0.17 per share) | (79,332 | ) | (79,340 | ) | ||||
Dividends paid on preferred stock ($15.94 per share) | (8,207 | ) | (8,207 | ) | ||||
Effect of adopting ASU No. 2016-13 | (10,468 | ) | — | |||||
Balance at end of period | 344,344 | 307,232 | ||||||
Treasury Stock, at Cost: | ||||||||
Balance at beginning of year | (220,717 | ) | (161,998 | ) | ||||
Purchase of common stock (3,307,183 and 7,816,228, respectively) | (37,159 | ) | (74,788 | ) | ||||
Shares issued for restricted stock awards (2,321,105 and 1,515,760, respectively) | 22,198 | 15,058 | ||||||
Balance at end of period | (235,678 | ) | (221,728 | ) | ||||
Accumulated Other Comprehensive Loss, Net of Tax: | ||||||||
Balance at beginning of year | (32,843 | ) | (87,653 | ) | ||||
Other comprehensive (loss) income, net of tax | (47,722 | ) | 30,683 | |||||
Balance at end of period | (80,565 | ) | (56,970 | ) | ||||
Total stockholders’ equity | $ | 6,637,385 | 6,629,070 | |||||
For the Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 100,328 | $ | 97,577 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Provision for (recovery of) credit losses | 20,601 | (1,222 | ) | |||||
Depreciation | 6,407 | 6,950 | ||||||
Amortization of discounts and premiums, net | 6,384 | 1,195 | ||||||
Net gain on sales of securities | (534 | ) | (5,409 | ) | ||||
Gain on trading activity | — | (35 | ) | |||||
Net loss on sales of loans | 4 | 10 | ||||||
Stock-based compensation | 8,251 | 7,910 | ||||||
Deferred tax expense | 44,465 | 2,811 | ||||||
Changes in operating assets and liabilities: | ||||||||
Increase in other assets (1) | (34,397 | ) | 15,797 | |||||
Decrease in other liabilities (2) | (20,813 | ) | 32,818 | |||||
Purchases of securities held for trading | — | (22,500 | ) | |||||
Proceeds from sales of securities held for trading | — | 22,535 | ||||||
Net cash provided by operating activities | 130,696 | 158,437 | ||||||
Cash Flows from Investing Activities: | ||||||||
Proceeds from repayment of securities available for sale | 428,098 | 316,103 | ||||||
Proceeds from sales of securities available for sale | 369,972 | 272,849 | ||||||
Purchase of securities available for sale | (483,789 | ) | (655,425 | ) | ||||
Redemption of Federal Home Loan Bank stock | 72,567 | 58,643 | ||||||
Purchases of Federal Home Loan Bank stock | (88,875 | ) | (2,250 | ) | ||||
Proceeds from bank-owned life insurance, net | 1,772 | 2,664 | ||||||
Proceeds from sales of loans | 3,124 | 29,326 | ||||||
Purchases of loans | (26,300 | ) | — | |||||
Other changes in loans, net | (380,427 | ) | (391,409 | ) | ||||
Purchase of premises and equipment, net | (438 | ) | 1,946 | |||||
Net cash used in investing activities | (104,296 | ) | (367,553 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Net increase in deposits | 315,634 | 836,695 | ||||||
Net increase in short-term borrowed funds | 1,350,000 | — | ||||||
Proceeds from long-term borrowed funds | 2,150,000 | 749,820 | ||||||
Repayments of long-term borrowed funds | (3,125,000 | ) | (1,700,000 | ) | ||||
Cash dividends paid on common stock | (79,332 | ) | (79,340 | ) | ||||
Cash dividends paid on preferred stock | (8,207 | ) | (8,207 | ) | ||||
Treasury stock repurchased | (28,924 | ) | (67,125 | ) | ||||
Payments relating to treasury shares received for restricted stock award tax payments | (8,235 | ) | (7,663 | ) | ||||
Net cash provided by (used in) financing activities | 565,936 | (275,820 | ) | |||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 592,336 | (484,936 | ) | |||||
Cash, cash equivalents, and restricted cash at beginning of period | 741,870 | 1,474,955 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 1,334,206 | $ | 990,019 | ||||
Supplemental information: | ||||||||
Cash paid for interest | $ | 202,459 | $ | 187,890 | ||||
Cash paid for income taxes | 10,000 | 5,908 | ||||||
Non-cash investing and financing activities: | ||||||||
Transfers to repossessed assets from loans | $ | 120 | $ | 2,840 | ||||
Operating lease liabilities arising from obtaining right-of-use assets as of January 1, 2019 | — | 324,360 | ||||||
Securitization of residential mortgage loans to mortgage-backed securities available for sale | 26,300 | — | ||||||
Transfer of loans from held for investment to held for sale | 3,124 | 29,336 | ||||||
Dispositions of premises and equipment | — | 1,245 | ||||||
Shares issued for restricted stock awards | 22,198 | 15,058 |
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1.
Organization
New York Community Bancorp, Inc. (on a stand-alone basis, the “Parent Company” or, collectively with its subsidiaries, the “Company”) was organized under Delaware law on July 20, 1993 and is the holding company for New York Community Bank (hereinafter referred to as the “Bank”).
Founded on April 14, 1859 and formerly known as Queens County Savings Bank, the Bank converted from a state-chartered mutual savings bank to the capital stock form of ownership on November 23, 1993, at which date the Company issued its initial offering of common stock (par value: $0.01 per share) at a price of $25.00 per share ($0.93 per share on a split-adjusted basis, reflecting the impact of nine stock splits between 1994 and 2004).
The Bank currently operates 237 branches, 19 of which operate directly under the Community Bank name. The remaining 218 Community Bank branches operate through eight divisional banks: Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, Roosevelt Savings Bank, and Atlantic Bank in New York; Garden State Community Bank in New Jersey; AmTrust Bank in Florida and Arizona; and Ohio Savings Bank in Ohio.
Basis of Presentation
The following is a description of the significant accounting and reporting policies that the Company and its subsidiaries follow in preparing and presenting their consolidated financial statements, which conform to U.S. generally accepted accounting principles (“GAAP”) and to general practices within the banking industry. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates that are particularly susceptible to change in the near term are used in connection with the determination of the allowance for credit losses and the evaluation of goodwill for impairment.
The accompanying consolidated financial statements include the accounts of the Company and other entities in which the Company has a controlling financial interest. All inter-company accounts and transactions are eliminated in consolidation. The Company currently has certain unconsolidated subsidiaries in the form of wholly-owned statutory business trusts, which were formed to issue guaranteed capital securities. See Note 7, Borrowed Funds, for additional information regarding these trusts.
When necessary, certain reclassifications have been made to prior-year amounts to conform to the current-year presentation.
Impact of Recent Accounting Pronouncements
Recently Adopted Accounting Standards
The Company adopted ASU No. 2020-04 in the first quarter of 2021 upon issuance. The amendments provide optional expedients and exceptions for certain contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of rate reform. The guidance is effective from the date of issuance until December 31, 2022. If certain criteria are met, the amendments allow exceptions to the designation criteria of the hedging relationship and the assessment of hedge effectiveness during the transition period. At the time of adoption,To date, the guidance didhas not havehad a material impact on the Company’s Consolidated Statements of Condition, results of operations, or cash flows. The Company will continue to assess the impact as the reference rate transition occurs over the next two years.
The Company adopted ASU No.onas of January 1, 2020. ASU No.amends amended guidance on reporting credit losses for assets held on an amortized cost basis andeliminates eliminated the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The amendments in ASU No.replace replaced the incurred loss impairment methodology with a methodology that reflects the measurement of expected credit losses based on relevant information about past events, including historical loss experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of financial assets to present the net amount expected to be collected. For
11
credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.
The Company adopted ASU No.The results for prior period amounts continue to be reported in accordance with previously applicable GAAP. A prospective transition approach iswas required for debt securities for which an OTTI had been recognized before the effective date. The effect of athe prospective transition approach iswas to maintain the same amortized cost basis before and after the effective date of ASU No. will continue to be accreted into income over the remaining life of the asset. Recoveries of amounts previously written off relating to improvements in cash flows after the date of adoption will beare recorded in earnings when received.
(in thousands) | As Reported Under ASU 2016-13 | Pre-ASU 2016-13 | Impact of ASU 2016-13 Adoption | |||||||||
Assets: | ||||||||||||
Allowance for credit losses on debt securities available for sale: | ||||||||||||
Mortgage-backed securities | $ | — | $ | — | $ | — | ||||||
Debt securities | — | — | — | |||||||||
Total allowance for credit losses on securities available for sale | $ | — | $ | — | $ | — | ||||||
Loans | ||||||||||||
Multi-family | $ | 104,918 | $ | 96,751 | $ | 8,167 | ||||||
Commercial real estate | 12,543 | 20,744 | (8,201 | ) | ||||||||
One-to-four family | 1,655 | 1,051 | 604 | |||||||||
Acquisition, development, and construction | 3,678 | 4,148 | (470 | ) | ||||||||
Commercial and industrial | 26,613 | 24,819 | 1,794 | |||||||||
Other | 142 | 125 | 17 | |||||||||
Total allowance for loan and lease losses | $ | 149,549 | $ | 147,638 | $ | 1,911 | ||||||
Liabilities: | ||||||||||||
Allowance for credit losses on off-balance sheet credit exposures | $ | 12,990 | $ | 461 | $ | 12,529 | ||||||
Equity: | ||||||||||||
Decrease in retained earnings, before tax | $ | 14,440 | ||||||||||
The Company adopted, on a prospective basis, ASU No.onas of January 1, 2020. ASU No.will recognizerecognizes 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. The impact of this adoption on the Company’s Consolidated Statements of Condition, results of operations, or cash flows will be dependent upon goodwill impairment determinations made after
The adoption of ASU No. 2017-04 did not have a material effect on the Company’s Consolidated Statements of Condition, results of operations, or cash flows. During the three months ended March 31, 2020,2021, the Company assessed the current environment, including the estimated impact of the COVID-19 pandemic on macroeconomic variables and economic forecasts and how those might impact the fair value of
Note 2. Computation of Earnings per Common Share
Basic EPS is computed by dividing the net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the same method as basic EPS, however, the computation reflects the potential dilution that would occur if outstanding
Unvested stock-based compensation awards containing
|
| For the Three Months Ended March 31, |
| |||||
(in thousands, except share and per share amounts) |
| 2021 |
|
| 2020 |
| ||
Net income available to common shareholders |
| $ | 137,389 |
|
| $ | 92,121 |
|
Less: Dividends paid on and earnings allocated to |
|
| (1,795 | ) |
|
| (1,170 | ) |
Earnings applicable to common stock |
| $ | 135,594 |
|
| $ | 90,951 |
|
Weighted average common shares outstanding |
|
| 463,292,906 |
|
|
| 464,993,970 |
|
Basic earnings per common share |
| $ | 0.29 |
|
| $ | 0.20 |
|
Earnings applicable to common stock |
| $ | 135,594 |
|
| $ | 90,951 |
|
Weighted average common shares outstanding |
|
| 463,292,906 |
|
|
| 464,993,970 |
|
Potential dilutive common shares |
|
| 594,031 |
|
|
| 418,674 |
|
Total shares for diluted earnings per common share |
|
| 463,886,937 |
|
|
| 465,412,644 |
|
Diluted earnings per common share and common share |
| $ | 0.29 |
|
| $ | 0.20 |
|
Three Months Ended March 31, | ||||||||
(in thousands, except share and per share amounts) | 2020 | 2019 | ||||||
Net income available to common shareholders | $ | 92,121 | $ | 89,370 | ||||
Less: Dividends paid on and earnings allocated to participating securities | (1,170 | ) | (1,119 | ) | ||||
Earnings applicable to common stock | $ | 90,951 | $ | 88,251 | ||||
Weighted average common shares outstanding | 464,993,970 | 465,493,702 | ||||||
Basic earnings per common share | $ | 0.20 | $ | 0.19 | ||||
Earnings applicable to common stock | $ | 90,951 | $ | 88,251 | ||||
Weighted average common shares outstanding | 464,993,970 | 465,493,702 | ||||||
Potential dilutive common shares | 418,674 | — | ||||||
Total shares for diluted earnings per common share computation | 465,412,644 | 465,493,702 | ||||||
Diluted earnings per common share and common share equivalents | $ | 0.20 | $ | 0.19 | ||||
12
Note 3: Reclassifications out of Accumulated Other Comprehensive Loss
(in thousands) | For the Three Months Ended March 31, 2020 | |||||
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: | $ | 749 | Net gain on securities | |||
(206 | ) | Income tax expense | ||||
$ | 543 | Net gain on securities, net of tax | ||||
Unrealized gains on cash flow hedges: | $ | 645 | Interest expense | |||
(178 | ) | Income tax expense | ||||
$ | 467 | Net gain on cash flow hedges, net of tax | ||||
Amortization of defined benefit pension plan items: | ||||||
Past service liability | $ | 62 | Included in the computation of net periodic credit (2) | |||
Actuarial losses | (1,837 | ) | Included in the computation of net periodic cost (2) | |||
(1,775 | ) | Total before tax | ||||
487 | Income tax benefit | |||||
$ | (1,288 | ) | Amortization of defined benefit pension plan items, net of tax | |||
Total reclassifications for the period | $ | (278 | ) | |||
(in thousands) |
| For the Three Months Ended March 31, 2021 | ||||
Details about Accumulated Other Comprehensive Loss |
| Amount |
|
| Affected Line Item in the | |
Unrealized gains (losses) on available-for-sale securities: |
| $ | — |
|
| Net gain (losses) on securities |
|
| — |
|
| Income tax expense | |
| $ | — |
|
| Net gain (losses) on securities, net of tax | |
|
|
|
|
|
| |
Unrealized loss on cash flow hedges: |
| $ | (5,891 | ) |
| Interest expense |
|
| 1,617 |
|
| Income tax benefit | |
| $ | (4,274 | ) |
| Net loss on cash flow hedges, net of tax | |
Amortization of defined benefit pension plan items: |
|
|
|
|
| |
Past service liability |
| $ | 62 |
|
| Included in the computation of net periodic credit(2) |
Actuarial losses |
|
| (1,743 | ) |
| Included in the computation of net periodic cost (2) |
|
| (1,681 | ) |
| Total before tax | |
|
| 462 |
|
| Income tax benefit | |
| $ | (1,219 | ) |
| Amortization of defined benefit pension plan items, net of tax | |
Total reclassifications for the period |
| $ | (5,493 | ) |
|
|
(1) Amounts in parentheses indicate expense items.
(2) See Note 8, “Pension and Other Post-Retirement Benefits,” for additional information.
Note 4. Securities
The following tables summarize the Company’s portfolio of debt securities available for sale and equity investments with readily determinable fair values at March 31, 20202021 and December 31, 2019:2020:
|
| March 31, 2021 |
| |||||||||||||
(in thousands) |
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
Debt securities available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage-Related Debt Securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
GSE certificates |
| $ | 1,183,746 |
|
| $ | 40,473 |
|
| $ | 14,901 |
|
| $ | 1,209,318 |
|
GSE CMOs |
|
| 2,007,855 |
|
|
| 28,837 |
|
|
| 50,422 |
|
|
| 1,986,270 |
|
Total mortgage-related debt securities |
| $ | 3,191,601 |
|
| $ | 69,310 |
|
| $ | 65,323 |
|
| $ | 3,195,588 |
|
Other Debt Securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U. S. Treasury obligations |
| $ | 64,993 |
|
| $ | 5 |
|
| $ | — |
|
| $ | 64,998 |
|
GSE debentures |
|
| 1,433,280 |
|
|
| 2,693 |
|
|
| 67,632 |
|
|
| 1,368,341 |
|
Asset-backed securities (1) |
|
| 520,111 |
|
|
| 4,030 |
|
|
| 3,368 |
|
|
| 520,773 |
|
Municipal bonds |
|
| 25,715 |
|
|
| 482 |
|
|
| 186 |
|
|
| 26,011 |
|
Corporate bonds |
|
| 870,886 |
|
|
| 16,594 |
|
|
| 5,410 |
|
|
| 882,070 |
|
Foreign notes |
|
| 25,000 |
|
|
| 993 |
|
|
| — |
|
|
| 25,993 |
|
Capital trust notes |
|
| 95,621 |
|
|
| 6,823 |
|
|
| 8,313 |
|
|
| 94,131 |
|
Total other debt securities |
| $ | 3,035,606 |
|
| $ | 31,620 |
|
| $ | 84,909 |
|
| $ | 2,982,317 |
|
Total debt securities available for sale |
| $ | 6,227,207 |
|
| $ | 100,930 |
|
| $ | 150,232 |
|
| $ | 6,177,905 |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mutual funds |
|
| 15,814 |
|
|
| 116 |
|
|
| 129 |
|
|
| 15,801 |
|
Total equity securities |
| $ | 15,814 |
|
| $ | 116 |
|
| $ | 129 |
|
| $ | 15,801 |
|
Total securities (2) |
| $ | 6,243,021 |
|
| $ | 101,046 |
|
| $ | 150,361 |
|
| $ | 6,193,706 |
|
(1) The underlying assets of the asset-backed securities are substantially guaranteed by the U.S. Government.
(2) Excludes accrued interest receivable of $14.8 million included in other assets in the Consolidated Statements of Condition.
13
|
| December 31, 2020 |
| |||||||||||||
(in thousands) |
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
Debt securities available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage-Related Debt Securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
GSE certificates |
| $ | 1,155,436 |
|
| $ | 54,310 |
|
| $ | 136 |
|
| $ | 1,209,610 |
|
GSE CMOs |
|
| 1,786,896 |
|
|
| 44,691 |
|
|
| 2,872 |
|
|
| 1,828,715 |
|
Total mortgage-related debt securities |
| $ | 2,942,332 |
|
| $ | 99,001 |
|
| $ | 3,008 |
|
| $ | 3,038,325 |
|
Other Debt Securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Treasury obligations |
| $ | 64,984 |
|
| $ | 1 |
|
| $ | — |
|
| $ | 64,985 |
|
GSE debentures |
|
| 1,158,253 |
|
|
| 3,998 |
|
|
| 3,949 |
|
|
| 1,158,302 |
|
Asset-backed securities (1) |
|
| 530,226 |
|
|
| 2,576 |
|
|
| 5,703 |
|
|
| 527,099 |
|
Municipal bonds |
|
| 25,776 |
|
|
| 625 |
|
|
| 90 |
|
|
| 26,311 |
|
Corporate bonds |
|
| 870,745 |
|
|
| 17,928 |
|
|
| 6,447 |
|
|
| 882,226 |
|
Foreign notes |
|
| 25,000 |
|
|
| 538 |
|
|
| — |
|
|
| 25,538 |
|
Capital trust notes |
|
| 95,507 |
|
|
| 5,540 |
|
|
| 10,500 |
|
|
| 90,547 |
|
Total other debt securities |
| $ | 2,770,491 |
|
| $ | 31,206 |
|
| $ | 26,689 |
|
| $ | 2,775,008 |
|
Total other securities available for sale |
| $ | 5,712,823 |
|
| $ | 130,207 |
|
| $ | 29,697 |
|
| $ | 5,813,333 |
|
Equity Securities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Preferred stock |
| $ | 15,292 |
|
| $ | 201 |
|
| $ | — |
|
| $ | 15,493 |
|
Mutual funds |
|
| 15,814 |
|
|
| 269 |
|
|
| — |
|
|
| 16,083 |
|
Total equity securities |
| $ | 31,106 |
|
| $ | 470 |
|
| $ | — |
|
| $ | 31,576 |
|
Total securities(2) |
| $ | 5,743,929 |
|
| $ | 130,677 |
|
| $ | 29,697 |
|
| $ | 5,844,909 |
|
(1) The underlying assets of the asset-backed securities are substantially guaranteed by the U.S. Government.
(2) Excludes accrued interest receivable of $14.9 million included in other assets in the Consolidated Statements of Condition.
March 31, 2020 | ||||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||
Debt securities available-for-sale | ||||||||||||||||
Mortgage-Related Debt Securities: | ||||||||||||||||
GSE certificates | $ | 1,421,081 | $ | 72,190 | $ | 2 | $ | 1,493,269 | ||||||||
GSE CMOs | 1,869,386 | 50,700 | 5,813 | 1,914,273 | ||||||||||||
Total mortgage-related debt securities | $ | 3,290,467 | $ | 122,890 | $ | 5,815 | $ | 3,407,542 | ||||||||
Other D | ||||||||||||||||
U. S. Treasury obligations | $ | 61,812 | $ | 172 | $ | 3 | $ | 61,981 | ||||||||
GSE debentures | 717,495 | 7,737 | — | 725,232 | ||||||||||||
Asset-backed securities (1) | 383,289 | — | 27,906 | 355,383 | ||||||||||||
Municipal bonds | 26,745 | 615 | 614 | 26,746 | ||||||||||||
Corporate bonds | 854,336 | 8,874 | 70,376 | 792,834 | ||||||||||||
Capital trust notes | 95,195 | 5,140 | 14,808 | 85,527 | ||||||||||||
Total other debt securities | $ | 2,138,872 | $ | 22,538 | $ | 113,707 | $ | 2,047,703 | ||||||||
Total debt securities available for sale | $ | 5,429,339 | $ | 145,428 | $ | 119,522 | $ | 5,455,245 | ||||||||
Equity S ecurities: | ||||||||||||||||
Preferred stock | $ | 15,292 | $ | — | $ | 451 | $ | 14,841 | ||||||||
Mutual funds and common stock (2) | 16,871 | 904 | — | 17,775 | ||||||||||||
Total equity securities | $ | 32,163 | $ | 904 | $ | 451 | $ | 32,616 | ||||||||
Total securities (3) | $ | 5,461,502 | $ | 146,332 | $ | 119,973 | $ | 5,487,861 | ||||||||
December 31, 2019 | ||||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||
Debt securities available-for-sale | ||||||||||||||||
Mortgage-Related Debt Securities: | ||||||||||||||||
GSE certificates | $ | 1,530,317 | $ | 26,069 | $ | 3,763 | $ | 1,552,623 | ||||||||
GSE CMOs | 1,783,440 | 21,213 | 3,541 | 1,801,112 | ||||||||||||
Total mortgage-related debt securities | $ | 3,313,757 | $ | 47,282 | $ | 7,304 | $ | 3,353,735 | ||||||||
Other Debt Securities: | ||||||||||||||||
U.S. Treasury obligations | $ | 41,820 | $ | 19 | $ | — | $ | 41,839 | ||||||||
GSE debentures | 1,093,845 | 5,707 | 5,312 | 1,094,240 | ||||||||||||
Asset-backed securities (1) | 384,108 | — | 10,854 | 373,254 | ||||||||||||
Municipal bonds | 26,808 | 559 | 475 | 26,892 | ||||||||||||
Corporate bonds | 854,195 | 15,970 | 2,983 | 867,182 | ||||||||||||
Capital trust notes | 95,100 | 7,121 | 6,306 | 95,915 | ||||||||||||
Total other debt securities | $ | 2,495,876 | $ | 29,376 | $ | 25,930 | $ | 2,499,322 | ||||||||
Total other securities available for sale | $ | 5,809,633 | $ | 76,658 | $ | 33,234 | $ | 5,853,057 | ||||||||
Equity S | ||||||||||||||||
Preferred stock | $ | 15,292 | $ | 122 | $ | — | $ | 15,414 | ||||||||
Mutual funds and common stock (2) | 16,871 | 718 | 173 | 17,416 | ||||||||||||
Total equity securities | $ | 32,163 | $ | 840 | $ | 173 | $ | 32,830 | ||||||||
Total securities (3) | $ | 5,841,796 | $ | 77,498 | $ | 33,407 | $ | 5,885,887 | ||||||||
At March 31, 20202021 and December 31, 2019,2020, respectively, the Company had $663.9$699.0 million and $647.6$714.0 million of
The following table summarizes the gross proceeds, gross realized gains, and gross realized losses from the sale of20202021 and 2019:2020:
|
| For the Three Months Ended |
| |||||
(in thousands) |
| 2021 |
|
| 2020 |
| ||
Gross proceeds |
| — |
|
| $ | 369,972 |
| |
Gross realized gains |
|
| — |
|
|
| 1,811 |
|
Gross realized losses |
|
| �� |
|
|
| 1,062 |
|
For the Three Months Ended March 31, | ||||||||
(in thousands) | 2020 | 2019 | ||||||
Gross proceeds | $ | 369,972 | $ | 272,849 | ||||
Gross realized gains | 1,811 | 5,409 | ||||||
Gross realized losses | 1,062 | — |
Net unrealized losses on equity securities recognized in earnings for the three months ended March 31, 2021 and 2020 were $215,000. Net unrealized gains on equity securities recognized in earnings for the three months ended March 31, 2019 were $1.6 million.
The following table summarizes, by contractual maturity, the amortized cost of securities at March 31, 2020:2021:
|
| Mortgage- |
|
| Average |
|
| U.S. |
|
| Average |
|
| State, |
|
| Average |
|
| Other Debt |
|
| Average |
|
| Fair |
| |||||||||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Available-for-Sale Debt Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Due within one year |
| $ | 23,017 |
|
|
| 3.76 |
| % | $ | 75,943 |
|
|
| 0.54 |
| % | $ | — |
|
|
| — |
| % | $ | 49,817 |
|
|
| 3.01 |
| % | $ | 149,348 |
|
Due from one to five years |
|
| 361,118 |
|
|
| 3.18 |
|
|
| 21,924 |
|
|
| 3.52 |
|
|
| — |
|
|
| — |
|
|
| 223,181 |
|
|
| 1.87 |
|
|
| 637,035 |
|
Due from five to ten years |
|
| 175,554 |
|
|
| 2.48 |
|
|
| 238,052 |
|
|
| 2.16 |
|
|
| 19,840 |
|
|
| 3.51 |
|
|
| 706,390 |
|
|
| 2.03 |
|
|
| 1,146,853 |
|
Due after ten years |
|
| 2,631,912 |
|
|
| 1.98 |
|
|
| 1,162,354 |
|
|
| 1.53 |
|
|
| 5,875 |
|
|
| 3.33 |
|
|
| 532,230 |
|
|
| 1.25 |
|
|
| 4,244,669 |
|
Total debt securities available for sale |
| $ | 3,191,601 |
|
|
| 2.16 |
| % | $ | 1,498,273 |
|
|
| 1.61 |
| % | $ | 25,715 |
|
|
| 3.47 |
| % | $ | 1,511,618 |
|
|
| 1.76 |
| % | $ | 6,177,905 |
|
(1) Not presented on a tax-equivalent basis.
(2) Includes corporate bonds, capital trust notes, and asset-backed securities.
14
Mortgage- Related Securities | Average Yield | U.S. Government and GSE Obligations | Average Yield | State, County, and Municipal | Average Yield (1) | Other Debt Securities (2) | Average Yield | Fair Value | ||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||
Available-for-Sale Debt Securities: | ||||||||||||||||||||||||||||||||||||
Due within one year | $ | 60,163 | 3.37 | % | $ | 61,812 | 0.94 | % | $ | 149 | 6.66 | % | $ | 13,993 | 3.79 | % | $ | 136,509 | ||||||||||||||||||
Due from one to five years | 587,661 | 3.01 | 32,874 | 3.48 | — | — | 179,651 | 3.18 | 816,790 | |||||||||||||||||||||||||||
Due from five to ten years | 255,806 | 3.30 | 463,621 | 3.24 | 20,711 | 3.49 | 749,026 | 2.97 | 1,457,756 | |||||||||||||||||||||||||||
Due after ten years | 2,386,837 | 2.79 | 221,000 | 2.53 | 5,885 | 3.33 | 390,150 | 1.93 | 3,044,190 | |||||||||||||||||||||||||||
Total debt securities available for sale | $ | 3,290,467 | 2.88 | % | $ | 779,307 | 2.87 | % | $ | 26,745 | 3.47 | % | $ | 1,332,820 | 2.70 | % | $ | 5,455,245 |
The following table presents securities with no related allowance having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of March 31, 2020:
Less than Twelve Months | Twelve Months or Longer | Total | ||||||||||||||||||||||
(in thousands) | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
Temporarily Impaired Securities: | ||||||||||||||||||||||||
U.S. Treasury obligations | $ | 9,997 | $ | 3 | $ | — | $ | — | $ | 9,997 | $ | 3 | ||||||||||||
GSE certificates | 2,061 | 2 | — | — | 2,061 | 2 | ||||||||||||||||||
GSE CMOs | 314,957 | 2,795 | 191,806 | 3,018 | 506,763 | 5,813 | ||||||||||||||||||
Asset-backed securities | 124,435 | 7,341 | 230,949 | 20,565 | 355,384 | 27,906 | ||||||||||||||||||
Municipal bonds | — | — | 9,156 | 614 | 9,156 | 614 | ||||||||||||||||||
Corporate bonds | 473,280 | 40,174 | 219,798 | 30,202 | 693,078 | 70,376 | ||||||||||||||||||
Capital trust notes | 42,500 | 4,349 | 33,385 | 10,459 | 75,885 | 14,808 | ||||||||||||||||||
Equity securities | 14,841 | 451 | — | — | 14,841 | 451 | ||||||||||||||||||
Total temporarily impaired securities | $ | 982,071 | $ | 55,115 | $ | 685,094 | $ | 64,858 | $ | 1,667,165 | $ | 119,973 | ||||||||||||
|
| Less than Twelve Months |
|
| Twelve Months or Longer |
|
| Total |
| |||||||||||||||
(in thousands) |
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
| ||||||
Temporarily Impaired Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
GSE certificates |
| $ | 323,281 |
|
| $ | 14,901 |
|
| $ | — |
|
| $ | — |
|
| $ | 323,281 |
|
| $ | 14,901 |
|
GSE CMOs |
|
| 918,257 |
|
|
| 50,422 |
|
|
| — |
|
|
| — |
|
|
| 918,257 |
|
|
| 50,422 |
|
GSE debentures |
|
| 1,244,721 |
|
|
| 67,633 |
|
|
| — |
|
|
| — |
|
|
| 1,244,721 |
|
|
| 67,633 |
|
Asset-backed securities |
|
| 112,149 |
|
|
| 405 |
|
|
| 179,063 |
|
|
| 2,962 |
|
|
| 291,212 |
|
|
| 3,367 |
|
Municipal bonds |
|
| — |
|
|
| — |
|
|
| 8,744 |
|
|
| 186 |
|
|
| 8,744 |
|
|
| 186 |
|
Corporate bonds |
|
| — |
|
|
| — |
|
|
| 319,590 |
|
|
| 5,410 |
|
|
| 319,590 |
|
|
| 5,410 |
|
Capital trust notes |
|
| — |
|
|
| — |
|
|
| 35,601 |
|
|
| 8,313 |
|
|
| 35,601 |
|
|
| 8,313 |
|
Equity securities |
|
| 11,676 |
|
|
| 129 |
|
|
| — |
|
|
| — |
|
|
| 11,676 |
|
|
| 129 |
|
Total temporarily impaired securities |
| $ | 2,610,084 |
|
| $ | 133,490 |
|
| $ | 542,998 |
|
| $ | 16,871 |
|
| $ | 3,153,082 |
|
| $ | 150,361 |
|
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, 2019:2020:
|
| Less than Twelve Months |
|
| Twelve Months or Longer |
|
| Total |
| |||||||||||||||
(in thousands) |
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
|
| Fair |
|
| Unrealized |
| ||||||
Temporarily Impaired Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
U. S. Treasury obligations |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
U. S. Government agency and GSE |
|
| 58,876 |
|
|
| 136 |
|
|
| — |
|
|
| — |
|
|
| 58,876 |
|
|
| 136 |
|
GSE certificates |
|
| 442,207 |
|
|
| 2,807 |
|
|
| 73,568 |
|
|
| 65 |
|
|
| 515,775 |
|
|
| 2,872 |
|
GSE CMOs |
|
| 522,441 |
|
|
| 3,949 |
|
|
| — |
|
|
| — |
|
|
| 522,441 |
|
|
| 3,949 |
|
Asset-backed securities |
|
| — |
|
|
| — |
|
|
| 363,618 |
|
|
| 5,703 |
|
|
| 363,618 |
|
|
| 5,703 |
|
Municipal bonds |
|
| — |
|
|
| — |
|
|
| 8,891 |
|
|
| 90 |
|
|
| 8,891 |
|
|
| 90 |
|
Corporate bonds |
|
| 72,024 |
|
|
| 2,976 |
|
|
| 246,528 |
|
|
| 3,471 |
|
|
| 318,552 |
|
|
| 6,447 |
|
Foreign notes |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Capital trust notes |
|
| — |
|
|
| — |
|
|
| 33,393 |
|
|
| 10,500 |
|
|
| 33,393 |
|
|
| 10,500 |
|
Equity securities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total temporarily impaired securities |
| $ | 1,095,548 |
|
| $ | 9,868 |
|
| $ | 725,998 |
|
| $ | 19,829 |
|
| $ | 1,821,546 |
|
| $ | 29,697 |
|
Less than Twelve Months | Twelve Months or Longer | Total | ||||||||||||||||||||||
(in thousands) | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
Temporarily Impaired Securities: | ||||||||||||||||||||||||
U. S. Treasury obligations | $ | 11,917 | $ | — | $ | — | $ | — | $ | 11,917 | $ | — | ||||||||||||
U. S. Government agency and GSE obligations | 297,179 | 3,916 | 138,189 | 1,396 | 435,368 | 5,312 | ||||||||||||||||||
GSE certificates | 396,930 | 3,718 | 7,542 | 45 | 404,472 | 3,763 | ||||||||||||||||||
GSE CMOs | 609,502 | 2,582 | 133,955 | 959 | 743,457 | 3,541 | ||||||||||||||||||
Asset-backed securities | 256,619 | 10,854 | 116,635 | — | 373,254 | 10,854 | ||||||||||||||||||
Municipal bonds | — | — | 9,349 | 475 | 9,349 | 475 | ||||||||||||||||||
Corporate bonds | 99,300 | 700 | 172,717 | 2,283 | 272,017 | 2,983 | ||||||||||||||||||
Capital trust notes | — | — | 37,525 | 6,306 | 37,525 | 6,306 | ||||||||||||||||||
Equity securities | — | — | 11,633 | 173 | 11,633 | 173 | ||||||||||||||||||
Total temporarily impaired securities | $ | 1,671,447 | $ | 21,770 | $ | 627,545 | $ | 11,637 | $ | 2,298,992 | $ | 33,407 | ||||||||||||
The investment securities designated as having a continuous loss position for twelve months or more at March 31, 20202021 consisted of 5 agency collateralized mortgage obligations, 5 capital trusts notes, 7 asset-backed5 asset-backed securities, 35 corporate bonds, and 1 municipal bond. The investment securities designated as having a continuous loss position for twelve months or more at December 31, 20192020 consisted of 7 US Government4 agency securities,collateralized mortgage obligations, 5 capital trusts notes, 3 agency mortgage-related7 asset-backed securities, 3 agency CMOs, 3 asset-backed securities, 2 corporate bonds, and 1 municipal bond, and 1 mutual fund.
The Company evaluates
We first assess whether (i) we intend to sell, or (ii) it is more likely than not that wewill will be required to sell the security before recovery of its amortized cost basis. If either of these criteria is met, any previously recognized allowancesallowances are charged off and the security’s amortized cost basis is written down to fair value through income. If neither of the aforementioned criteria areis met, we evaluate whether the decline in fair value has resulted from credit losses or other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
15
None of the unrealized losses identified as of March 31, 20202021 or December 31, 2019 relate2020 relates to the marketability of the securities or the issuers’ ability to honor redemption obligations. Rather, the unrealized losses relate to changes in interest rates relative to when the investment securities were purchased, and do not indicate credit-related impairment. Management based this conclusion on an analysis of each issuer including a detailed credit assessment of each issuer. The Company does not intend to sell, and it is not more likely than not that the Company will be required to sell the positions before the recovery of their amortized cost basis, which may be at maturity. As such, no allowance for credit losses was recorded with respect to debt securities as of or during the three months ended March 31, 2020.
Management has made the accounting policy election to exclude accrued interest receivable on
16
Note 5. Loans and Leases
The following table sets forth the composition of the loan portfolio at the dates indicated:
|
| March 31, 2021 |
|
| December 31, 2020 |
|
| ||||||||||
(dollars in thousands) |
| Amount |
|
| Percent of |
|
| Amount |
|
| Percent of |
|
| ||||
Loans and Leases Held for Investment: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Multi-family |
| $ | 32,195,256 |
|
|
| 74.77 |
| % | $ | 32,236,385 |
|
|
| 75.28 |
| % |
Commercial real estate |
|
| 7,027,236 |
|
|
| 16.32 |
|
|
| 6,835,763 |
|
|
| 15.96 |
|
|
One-to-four family |
|
| 208,108 |
|
|
| 0.48 |
|
|
| 235,989 |
|
|
| 0.55 |
|
|
Acquisition, development, and construction |
|
| 115,947 |
|
|
| 0.27 |
|
|
| 89,790 |
|
|
| 0.21 |
|
|
Total mortgage loans held for investment(1) |
|
| 39,546,547 |
|
|
| 91.84 |
|
| $ | 39,397,927 |
|
|
| 92.00 |
|
|
Other Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial and industrial |
|
| 1,610,550 |
|
|
| 3.74 |
|
|
| 1,682,519 |
|
|
| 3.93 |
|
|
Lease financing, net of unearned income of |
|
| 1,898,980 |
|
|
| 4.41 |
|
|
| 1,734,824 |
|
|
| 4.05 |
|
|
Total commercial and industrial loans (2) |
|
| 3,509,530 |
|
|
| 8.15 |
|
|
| 3,417,343 |
|
|
| 7.98 |
|
|
Other |
|
| 5,593 |
|
|
| 0.01 |
|
|
| 6,520 |
|
|
| 0.02 |
|
|
Total other loans held for investment(1) |
|
| 3,515,123 |
|
|
| 8.16 |
|
|
| 3,423,863 |
|
|
| 8.00 |
|
|
Total loans and leases held for investment |
| $ | 43,061,670 |
|
|
| 100.00 |
| % | $ | 42,821,790 |
|
|
| 100.00 |
| % |
Net deferred loan origination costs |
|
| 63,469 |
|
|
|
|
|
| 61,808 |
|
|
|
|
| ||
Allowance for credit losses loans and leases |
|
| (197,758 | ) |
|
|
|
|
| (194,043 | ) |
|
|
|
| ||
Total loans and leases held for investment, net |
| $ | 42,927,381 |
|
|
|
|
| $ | 42,689,555 |
|
|
|
|
| ||
Loans held for sale (3) |
|
| 141,435 |
|
|
|
|
|
| 117,136 |
|
|
|
|
| ||
Total loans and leases, net |
| $ | 43,068,816 |
|
|
|
|
| $ | 42,806,691 |
|
|
|
|
|
(1) Excludes accrued interest receivable of $219.0 million and $219.1 million at March 31, 2021 and December 31, 2020, respectively, which is included in other assets in the Consolidated Statements of Condition.
(2) Includes specialty finance loans and leases of $3.2 billion and $3.0billion, respectively, at March 31, 2021 and December 31, 2020, and other C&I loans of $350.8 million and $393.3 million, respectively, at March 31, 2021 and December 31, 2020.
(3) Includes deferred loan origination fees of $3.8 million and $1.7 million at March 31, 2021 and December 31, 2020, respectively.
March 31, 2020 | December 31, 2019 | |||||||||||||||
(dollars in thousands) | Amount | Percent of Loans Held for Investment | Amount | Percent of Loans Held for Investment | ||||||||||||
Loans and Leases Held for Investment: | ||||||||||||||||
Mortgage Loans: | ||||||||||||||||
Multi-family | $ | 31,271,073 | 74.04 | % | $ | 31,158,672 | 74.46 | % | ||||||||
Commercial real estate | 7,034,720 | 16.67 | 7,081,910 | 16.93 | ||||||||||||
One-to-four family | 352,301 | 0.83 | 380,361 | 0.91 | ||||||||||||
Acquisition, development, and construction | 130,675 | 0.30 | 200,596 | 0.48 | ||||||||||||
Total mortgage loans held for investment (1) | 38,788,769 | 91.84 | $ | 38,821,539 | 92.78 | |||||||||||
Other Loans: | ||||||||||||||||
Commercial and industrial | 1,953,431 | 4.62 | 1,742,380 | 4.16 | ||||||||||||
Lease financing, net of unearned income of $106,450 and $104,826, respectively | 1,484,263 | 3.52 | 1,271,998 | 3.04 | ||||||||||||
Total commercial and industrial loans (2) | 3,437,694 | 8.14 | 3,014,378 | 7.20 | ||||||||||||
Other | 9,514 | 0.02 | 8,102 | 0.02 | ||||||||||||
Total other loans held for investment (1) | 3,447,208 | 8.16 | 3,022,480 | 7.22 | ||||||||||||
Total loans and leases held for investment | $ | 42,235,977 | 100.00 | % | $ | 41,844,019 | 100.00 | % | ||||||||
Net deferred loan origination costs | 55,782 | 50,136 | ||||||||||||||
Allowance for loan and lease losses | (162,244 | ) | (147,638 | ) | ||||||||||||
Total loans and leases held for investment, net | $ | 42,129,515 | $ | 41,746,517 | ||||||||||||
Loans Held for Investment
The majority of the loans the Company originates for investment are multi-family loans, most of which are collateralized by
To a lesser extent, the Company also originates ADC loans for investment.prime adjustable rate mortgages made to borrowers with a solid credit history.
ADC loans are primarily originated for multi-family and residential tract projects in New York City and on Long Island. C&I loans consist of asset-based loans, equipment loans and leases, and dealer floor-plan loans (together, specialty finance loans and leases) that generally are made to large corporate obligors, many of which are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide; and other C&I loans that primarily are made to small and
17
The repayment of multi-family and CRE loans generally depends on the income produced by the underlying properties which, in turn, depends on their successful operation and management. To mitigate the potential for credit losses, the Company underwrites its loans in accordance with credit standards it considers to be prudent, looking first at the consistency of the cash flows being produced by the underlying property. In addition, multi-family buildings, CRE properties, and ADC projects are inspected as a prerequisite to approval, and independent appraisers, whose appraisals are carefully reviewed by the Company’s
To further manage its credit risk, the Company’s lending policies limit the amount of credit granted to any one borrower and typically require conservative debt service coverage ratios and
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
To minimize the risk involved in specialty finance lending and leasing, the Company participates in syndicated loans that are brought to it, and equipment loans and leases that are assigned to it, by a select group of nationally recognized sources who have long-term relationships with its experienced lending officers. Each of these credits is secured with a perfected first security interest in or outright ownership of the underlying collateral, and structured as senior debt or as a
To minimize the risks involved in other C&I lending, the Company underwrites such loans on the basis of the cash flows produced by the business; requires that such loans be collateralized by various business assets, including inventory, equipment, and accounts receivable, among others; and typically requires personal guarantees. However, the capacity of a borrower to repay such a C&I loan is substantially dependent on the degree to which the business is successful. In addition, the collateral underlying such loans may depreciate over time, may not be conducive to appraisal, or may fluctuate in value, based upon the results of operations of the business.
Included in loans held for investment at March 31, 20202021 and December 31, 2019,2020, were mortgage loans of $38.1$7.0 million and $38.2$37.5 million, respectively, to certain officers, directors, and their related interests and parties. There were no loans to principal shareholders at that date.
Asset Quality
A loan generally is classified as a20202021 and December 31, 2019,2020, all of our
18
The following table presents information regarding the quality of the Company’s loans held for investment at March 31, 2020:
(in thousands) | Loans 30-89 DaysPast 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 | $ | 2,679 | $ | 4,242 | $ | — | $ | 6,921 | $ | 31,264,152 | $ | 31,271,073 | ||||||||||||
Commercial real estate | 97 | 16,101 | — | 16,198 | 7,018,522 | 7,034,720 | ||||||||||||||||||
One-to-four family | — | 1,721 | — | 1,721 | 350,580 | 352,301 | ||||||||||||||||||
Acquisition, development, and construction | — | — | — | — | 130,675 | 130,675 | ||||||||||||||||||
Commercial and industrial (1) (2) | 38 | 27,060 | — | 27,098 | 3,410,596 | 3,437,694 | ||||||||||||||||||
Other | 14 | 158 | — | 172 | 9,342 | 9,514 | ||||||||||||||||||
Total | $ | 2,828 | $ | 49,282 | $ | — | $ | 52,110 | $ | 42,183,867 | $ | 42,235,977 | ||||||||||||
(in thousands) |
| Loans |
|
| Non- |
|
| Loans |
|
| Total |
|
| Current |
|
| Total Loans |
| ||||||
Multi-family |
| $ | 961 |
|
| $ | 9,888 |
|
| $ | — |
|
| $ | 10,849 |
|
| $ | 32,184,407 |
|
| $ | 32,195,256 |
|
Commercial real estate |
|
| 19,371 |
|
|
| 11,573 |
|
|
| — |
|
|
| 30,944 |
|
|
| 6,996,292 |
|
|
| 7,027,236 |
|
One-to-four family |
|
| — |
|
|
| 1,466 |
|
|
| — |
|
|
| 1,466 |
|
|
| 206,642 |
|
|
| 208,108 |
|
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 115,947 |
|
|
| 115,947 |
|
Commercial and industrial(1) (2) |
|
| — |
|
|
| 10,247 |
|
|
| — |
|
|
| 10,247 |
|
|
| 3,499,283 |
|
|
| 3,509,530 |
|
Other |
|
| 13 |
|
|
| 4 |
|
|
| — |
|
|
| 17 |
|
|
| 5,576 |
|
|
| 5,593 |
|
Total loans and leases held for investment |
| $ | 20,345 |
|
| $ | 33,178 |
|
| $ | — |
|
| $ | 53,523 |
|
| $ | 43,008,147 |
|
| $ | 43,061,670 |
|
(1) Includes $10.1 million of taxi medallion-related loans that were 90 days or more past due. There were 0 taxi medallion-related loans that were 30 to 89 days past due.
(2) 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, 2019:2020:
(in thousands) |
| Loans |
|
| Non- |
|
| Loans |
|
| Total |
|
| Current |
|
| Total Loans |
| ||||||
Multi-family |
| $ | 4,091 |
|
| $ | 4,068 |
|
| $ | — |
|
| $ | 8,159 |
|
| $ | 32,228,226 |
|
| $ | 32,236,385 |
|
Commercial real estate |
|
| 9,989 |
|
|
| 12,142 |
|
|
| — |
|
|
| 22,131 |
|
|
| 6,813,632 |
|
|
| 6,835,763 |
|
One-to-four family |
|
| 1,575 |
|
|
| 1,696 |
|
|
| — |
|
|
| 3,271 |
|
|
| 232,718 |
|
|
| 235,989 |
|
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 89,790 |
|
|
| 89,790 |
|
Commercial and industrial(1) (2) |
|
| — |
|
|
| 19,866 |
|
|
| — |
|
|
| 19,866 |
|
|
| 3,397,477 |
|
|
| 3,417,343 |
|
Other |
|
| 3 |
|
|
| 13 |
|
|
| — |
|
|
| 16 |
|
|
| 6,504 |
|
|
| 6,520 |
|
Total |
| $ | 15,658 |
|
| $ | 37,785 |
|
| $ | — |
|
| $ | 53,443 |
|
| $ | 42,768,347 |
|
| $ | 42,821,790 |
|
(1) Includes $18.6 million of taxi medallion-related loans that were 90 days or more past due. There were 0 taxi medallion-related loans that were 30 to 89 days past due.
(2) Includes lease financing receivables, all of which were current.
(in thousands) | Loans 30-89 DaysPast 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 | $ | 1,131 | $ | 5,407 | $ | — | $ | 6,538 | $ | 31,152,134 | $ | 31,158,672 | ||||||||||||
Commercial real estate | 2,545 | 14,830 | — | 17,375 | 7,064,535 | 7,081,910 | ||||||||||||||||||
One-to-four family | — | 1,730 | — | 1,730 | 378,631 | 380,361 | ||||||||||||||||||
Acquisition, development, and construction | — | — | — | — | 200,596 | 200,596 | ||||||||||||||||||
Commercial and industrial (1) (2) | — | 39,024 | — | 39,024 | 2,975,354 | 3,014,378 | ||||||||||||||||||
Other | 44 | 252 | — | 296 | 7,806 | 8,102 | ||||||||||||||||||
Total | $ | 3,720 | $ | 61,243 | $ | — | $ | 64,963 | $ | 41,779,056 | $ | 41,844,019 | ||||||||||||
The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at March 31, 2020:
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 | $ | 31,051,107 | $ | 6,810,593 | $ | 348,953 | $ | 97,390 | $ | 38,308,043 | $ | 3,370,054 | $ | 9,356 | $ | 3,379,410 | ||||||||||||||||
Special mention | 181,529 | 156,623 | 1,627 | 33,285 | 373,064 | 22,228 | — | 22,228 | ||||||||||||||||||||||||
Substandard | 38,437 | 67,504 | 1,721 | — | 107,662 | 45,412 | 158 | 45,570 | ||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 31,271,073 | $ | 7,034,720 | $ | 352,301 | $ | 130,675 | $ | 38,788,769 | $ | 3,437,694 | $ | 9,514 | $ | 3,447,208 | ||||||||||||||||
|
| Mortgage Loans |
|
| Other Loans |
| ||||||||||||||||||||||||||
(in thousands) |
| Multi- |
|
| Commercial |
|
| One-to- |
|
| Acquisition, |
|
| Total |
|
| Commercial |
|
| Other |
|
| Total Other |
| ||||||||
Credit Quality Indicator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 30,647,027 |
|
| $ | 5,867,168 |
|
| $ | 194,220 |
|
| $ | 101,958 |
|
| $ | 36,810,373 |
|
| $ | 3,450,432 |
|
| $ | 5,589 |
|
| $ | 3,456,021 |
|
Special mention |
|
| 875,091 |
|
|
| 785,007 |
|
|
| 5,354 |
|
|
| 13,989 |
|
|
| 1,679,441 |
|
|
| 2,071 |
|
|
| — |
|
|
| 2,071 |
|
Substandard |
|
| 673,138 |
|
|
| 375,061 |
|
|
| 8,534 |
|
|
| — |
|
|
| 1,056,733 |
|
|
| 57,027 |
|
|
| 4 |
|
|
| 57,031 |
|
Doubtful |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
| $ | 32,195,256 |
|
| $ | 7,027,236 |
|
| $ | 208,108 |
|
| $ | 115,947 |
|
| $ | 39,546,547 |
|
| $ | 3,509,530 |
|
| $ | 5,593 |
|
| $ | 3,515,123 |
|
19
(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, 2019:2020:
|
| Mortgage Loans |
|
| Other Loans |
| ||||||||||||||||||||||||||
(in thousands) |
| Multi- |
|
| Commercial |
|
| One-to- |
|
| Acquisition, |
|
| Total |
|
| Commercial |
|
| Other |
|
| Total Other |
| ||||||||
Credit Quality Indicator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 31,220,071 |
|
| $ | 5,884,244 |
|
| $ | 221,861 |
|
| $ | 68,233 |
|
| $ | 37,394,409 |
|
| $ | 3,388,293 |
|
| $ | 6,507 |
|
| $ | 3,394,800 |
|
Special mention |
|
| 566,756 |
|
|
| 637,101 |
|
|
| 12,436 |
|
|
| 21,557 |
|
|
| 1,237,850 |
|
|
| 2,842 |
|
|
| — |
|
|
| 2,842 |
|
Substandard |
|
| 449,558 |
|
|
| 314,418 |
|
|
| 1,692 |
|
|
| — |
|
|
| 765,668 |
|
|
| 26,208 |
|
|
| 13 |
|
|
| 26,221 |
|
Doubtful |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
| $ | 32,236,385 |
|
| $ | 6,835,763 |
|
| $ | 235,989 |
|
| $ | 89,790 |
|
| $ | 39,397,927 |
|
| $ | 3,417,343 |
|
| $ | 6,520 |
|
| $ | 3,423,863 |
|
(1) Includes lease financing receivables, all of which were classified as Pass.
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 | $ | 30,903,657 | $ | 6,902,218 | $ | 377,883 | $ | 158,751 | $ | 38,342,509 | $ | 2,960,557 | $ | 7,850 | $ | 2,968,407 | ||||||||||||||||
Special mention | 239,664 | 104,648 | 748 | 41,456 | 386,516 | 1,588 | — | 1,588 | ||||||||||||||||||||||||
Substandard | 15,351 | 75,044 | 1,730 | 389 | 92,514 | 52,233 | 252 | 52,485 | ||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 31,158,672 | $ | 7,081,910 | $ | 380,361 | $ | 200,596 | $ | 38,821,539 | $ | 3,014,378 | $ | 8,102 | $ | 3,022,480 | ||||||||||||||||
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,
The following,2020.2021.
(in thousands) |
| Vintage Year |
| |||||||||||||||||||||||||||||
Risk Rating Group |
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
|
| 2017 |
|
| Prior To |
|
| Revolving |
|
| Total |
| ||||||||
Pass |
| $ | 2,092,263 |
|
| $ | 9,587,201 |
|
| $ | 6,432,567 |
|
| $ | 5,472,277 |
|
| $ | 3,995,854 |
|
| $ | 9,238,124 |
|
| $ | 20,182 |
|
| $ | 36,838,468 |
|
Special Mention |
|
| — |
|
|
| 13,067 |
|
|
| 215,301 |
|
|
| 345,152 |
|
|
| 136,466 |
|
|
| 969,925 |
|
|
| 0 |
|
|
| 1,679,911 |
|
Substandard |
|
| — |
|
|
| — |
|
|
| 193,116 |
|
|
| 249,729 |
|
|
| 109,848 |
|
|
| 503,900 |
|
|
| — |
|
|
| 1,056,593 |
|
Total mortgage loans |
| $ | 2,092,263 |
|
| $ | 9,600,268 |
|
| $ | 6,840,984 |
|
| $ | 6,067,158 |
|
| $ | 4,242,168 |
|
| $ | 10,711,949 |
|
| $ | 20,182 |
|
| $ | 39,574,972 |
|
Pass |
|
| 249,885 |
|
|
| 1,004,860 |
|
|
| 679,606 |
|
|
| 149,190 |
|
|
| 195,499 |
|
|
| 235,594 |
|
|
| 976,916 |
|
|
| 3,491,550 |
|
Special Mention |
|
| — |
|
|
| 0 |
|
|
| 71 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,000 |
|
|
| 2,071 |
|
Substandard |
|
| 0 |
|
|
| 2,132 |
|
|
| 3,723 |
|
|
| 1,840 |
|
|
| 8,688 |
|
|
| 13,844 |
|
|
| 26,319 |
|
|
| 56,546 |
|
Total other loans |
|
| 249,885 |
|
|
| 1,006,992 |
|
|
| 683,400 |
|
|
| 151,030 |
|
|
| 204,187 |
|
|
| 249,438 |
|
|
| 1,005,235 |
|
|
| 3,550,167 |
|
Total |
| $ | 2,342,148 |
|
| $ | 10,607,260 |
|
| $ | 7,524,384 |
|
| $ | 6,218,188 |
|
| $ | 4,446,355 |
|
| $ | 10,961,387 |
|
| $ | 1,025,417 |
|
| $ | 43,125,139 |
|
(in thousands) | Vintage Year | |||||||||||||||||||||||||||||||
Risk Rating Group | 2020 | 2019 | 2018 | 2017 | 2016 | Prior To 2016 | Revolving Loans | Total | ||||||||||||||||||||||||
Pass | $ | 1,810,786 | $ | 7,073,176 | $ | 7,192,253 | $ | 5,482,863 | $ | 4,316,731 | $ | 12,434,784 | $ | 25,270 | $ | 38,335,863 | ||||||||||||||||
Special Mention | — | 8,190 | 37,739 | 59,749 | 145,622 | 121,180 | 790 | 373,270 | ||||||||||||||||||||||||
Substandard | — | — | 4,533 | 616 | 25,322 | 76,424 | — | 106,895 | ||||||||||||||||||||||||
Total mortgage loans | $ | 1,810,786 | $ | 7,081,366 | $ | 7,234,525 | $ | 5,543,228 | $ | 4,487,675 | $ | 12,632,388 | $ | 26,060 | $ | 38,816,028 | ||||||||||||||||
Pass | 237,490 | 975,096 | 229,159 | 251,133 | 174,287 | 164,021 | 1,381,655 | 3,412,841 | ||||||||||||||||||||||||
Special Mention | — | — | — | — | — | — | 22,176 | 22,176 | ||||||||||||||||||||||||
Substandard | 1,095 | 9,050 | 4,638 | 17,041 | 4,200 | 4,536 | 154 | 40,714 | ||||||||||||||||||||||||
Total other loans | 238,585 | 984,146 | 233,797 | 268,174 | 178,487 | 168,557 | 1,403,985 | 3,475,731 | ||||||||||||||||||||||||
Total | $ | 2,049,371 | $ | 8,065,512 | $ | 7,468,322 | $ | 5,811,402 | $ | 4,666,162 | $ | 12,800,945 | $ | 1,430,045 | $ | 42,291,759 | ||||||||||||||||
When management determines that foreclosure is probable, 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
20
The following table summarizes the extent to which collateral secures the Company’s collateral-dependent loans held for investment by collateral type as
|
| Collateral |
| |||||
(in thousands) |
| Real |
|
| Other |
| ||
Multi-family |
| $ | 6,840 |
|
| $ | — |
|
Commercial real estate |
|
| 25,386 |
|
|
| — |
|
One-to-four family |
|
| 329 |
|
|
| — |
|
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
Commercial and industrial |
|
| — |
|
|
| 16,769 |
|
Other |
|
| — |
|
|
| — |
|
Total collateral-dependent loans held for investment |
| $ | 32,555 |
|
| $ | 16,769 |
|
Collateral Type | ||||||||
(in thousands) | Real Property | Other | ||||||
Multi-family | $ | 2,413 | $ | — | ||||
Commercial real estate | 29,885 | — | ||||||
One-to-four family | 577 | — | ||||||
Acquisition, development, and construction | — | — | ||||||
Commercial and industrial | — | 41,144 | ||||||
Other | — | 154 | ||||||
Total collateral-dependent loans held for investment | $ | 32,875 | $ | 41,298 | ||||
Other collateral primarily consists of taxi medallions, cash, accounts receivable and inventory.
There were no significant changes in the extent to which collateral secures the Company’s collateral-dependent financial assets during the three months ended March 31, 2020.
Troubled Debt Restructurings
The Company is required to account for certain loan modifications and restructurings as TDRs. In general, a modification or restructuring of a loan constitutes a TDR if the Company grants a concession to a borrower experiencing financial difficulty. A loan modified as a TDR generally is placed on
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 March 31, 2020,2021, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $25.4$32.1 million; loans on which forbearance agreements were reached amounted to $4.2 million.
The CARES Act was enacted on March 27, 2020. Under the CARES Act, the Company made the election to deem that loan modifications do not result in TDRs if they are (1) related to the novel coronavirus diseaseAdditionally, other short-term modifications made on a good faith basis in response toCOVID-19to borrowers who were current prior to any relief are not TDRs under ASC Subtopic310-40.
The following table presents information regarding the Company’s TDRs as of March 31, 20202021 and December 31, 2019:2020:
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||||||||||||||||||
(in thousands) |
| Accruing |
|
| Non- |
|
| Total |
|
| Accruing |
|
| Non- |
|
| Total |
| ||||||
Loan Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Multi-family |
| $ | — |
|
| $ | 6,840 |
|
| $ | 6,840 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Commercial real estate |
|
| 14,894 |
|
|
| — |
|
|
| 14,894 |
|
|
| 14,967 |
|
|
| — |
|
|
| 14,967 |
|
One-to-four family |
|
| — |
|
|
| 330 |
|
|
| 330 |
|
|
| — |
|
|
| 557 |
|
|
| 557 |
|
Commercial and industrial(1) |
|
| — |
|
|
| 10,134 |
|
|
| 10,134 |
|
|
| — |
|
|
| 18,761 |
|
|
| 18,761 |
|
Total |
| $ | 14,894 |
|
| $ | 17,304 |
|
| $ | 32,198 |
|
| $ | 14,967 |
|
| $ | 19,318 |
|
| $ | 34,285 |
|
(1) Includes $10.0 million and $17.5 million of taxi medallion-related loans at March 31, 2021 and December 31, 2020, respectively.
March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||
(in thousands) | Accruing | Non-Accrual | Total | Accruing | Non-Accrual | Total | ||||||||||||||||||
Loan Category: | ||||||||||||||||||||||||
Multi-family | $ | — | $ | 2,412 | $ | 2,412 | $ | — | $ | 3,577 | $ | 3,577 | ||||||||||||
Commercial real estate | — | — | — | — | — | — | ||||||||||||||||||
One-to-four family | — | 577 | 577 | — | 584 | 584 | ||||||||||||||||||
Acquisition, development, and construction | — | — | — | 389 | — | 389 | ||||||||||||||||||
Commercial and industrial (1) | 865 | 25,621 | 26,486 | 865 | 35,084 | 35,949 | ||||||||||||||||||
Other | — | 154 | 154 | — | — | — | ||||||||||||||||||
Total | $ | 865 | $ | 28,764 | $ | 29,629 | $ | 1,254 | $ | 39,245 | $ | 40,499 | ||||||||||||
21
The eligibility of a borrower for
The financial effects of the Company’s TDRs for the three months ended March 31, 20202021 and 20192020 are summarized as follows:
|
| For the Three Months Ended March 31, 2021 |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Weighted Average |
|
|
|
|
|
|
| ||||||||||
(dollars in thousands) |
| Number |
|
| Pre- |
|
| Post- |
|
| Pre- |
|
| Post- |
|
| Charge- |
|
| Capitalized |
| |||||||
Loan Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Multi-family |
|
| 1 |
|
| $ | 7,515 |
|
| $ | 7,515 |
|
|
| 3.13 | % |
|
| 3.25 | % |
| $ | - |
|
| $ | - |
|
|
| For the Three Months Ended March 31, 2020 |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Weighted Average |
|
|
|
|
|
|
| ||||||||||
(dollars in thousands) |
| Number |
|
| Pre- |
|
| Post- |
|
| Pre- |
|
| Post- |
|
| Charge- |
|
| Capitalized |
| |||||||
Loan Category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Commercial and industrial |
|
| 8 |
|
| $ | 1,920 |
|
| $ | 1,572 |
|
|
| 3.29 | % |
|
| 3.24 | % |
| $ | 348 |
|
| $ | — |
|
For the Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||
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 | |||||||||||||||||||||
Commercial and industrial and other | 8 | $ | 1,920 | $ | 1,572 | 3.29 | % | 3.24 | % | $ | 348 | $ | — |
For the Three Months Ended March 31, 2019 | ||||||||||||||||||||||||||||
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: | ||||||||||||||||||||||||||||
Commercial and industrial | 15 | $ | 4,194 | $ | 3,088 | 3.26 | % | 2.98 | % | $ | 1,106 | $ | — |
At March 31, 2020, five C&I loans and one1-4family residential loan, in the amounts of $600,000 and $140,000 have been modified as a TDR during the twelve months ended at that date, and was in payment default. At March 31, 2019, three2021, 17 C&I loans in the aggregate amount of $566,000 that had$2.1 million have been modified as TDRs
The Company does not consider a payment to be in default when the loan is in forbearance, or otherwise granted a delay of payment, when the agreement to forebear or allow a delay of payment is part of a modification.
Subsequent to the modification, the loan is not considered to be in default until payment is contractually past due in accordance with the modified terms. However, the Company doesmay 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. Management takes into consideration all TDR modifications in determining the appropriate level of the allowance.
Note 6. Allowance for Loan and Lease Losses
Allowance for Credit Losses on Loans and Leases
The following table summarizes activity in the allowance for loancredit losses on loans and lease lossesleases for the periods indicated:
|
| For the Three Months Ended March 31, |
| |||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||
(in thousands) |
| Mortgage |
|
| Other |
|
| Total |
|
| Mortgage |
|
| Other |
|
| Total |
| ||||||
Balance, beginning of period |
| $ | 176,538 |
|
| $ | 17,505 |
|
| $ | 194,043 |
|
| $ | 122,695 |
|
| $ | 24,943 |
|
| $ | 147,638 |
|
Impact of CECL adoption |
|
| — |
|
|
| - |
|
|
| — |
|
|
| (178 | ) |
|
| 2,089 |
|
|
| 1,911 |
|
Adjusted balance, beginning of period |
|
| 176,538 |
|
|
| 17,505 |
|
|
| 194,043 |
|
|
| 122,517 |
|
|
| 27,032 |
|
|
| 149,549 |
|
Charge-offs |
|
| (658 | ) |
|
| (3,666 | ) |
|
| (4,324 | ) |
|
| — |
|
|
| (10,385 | ) |
|
| (10,385 | ) |
Recoveries |
|
| 20 |
|
|
| 4,821 |
|
|
| 4,841 |
|
|
| 11 |
|
|
| 178 |
|
|
| 189 |
|
Provision for credit losses |
|
| 527 |
|
|
| 2,671 |
|
|
| 3,198 |
|
|
| 18,786 |
|
|
| 4,105 |
|
|
| 22,891 |
|
Balance, end of period |
| $ | 176,427 |
|
| $ | 21,331 |
|
| $ | 197,758 |
|
| $ | 141,314 |
|
| $ | 20,930 |
|
| $ | 162,244 |
|
For the Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||
(in thousands) | Mortgage | Other | Total | Mortgage | Other | Total | ||||||||||||||||||
Balance, beginning of period | $ | 122,695 | $ | 24,943 | $ | 147,638 | $ | 130,983 | $ | 28,837 | $ | 159,820 | ||||||||||||
Impact of CECL adoption | (178 | ) | 2,089 | 1,911 | — | — | — | |||||||||||||||||
Charge-offs | — | (10,385 | ) | (10,385 | ) | — | (2,079 | ) | (2,079 | ) | ||||||||||||||
Recoveries | 11 | 178 | 189 | 7 | 110 | 117 | ||||||||||||||||||
(Recovery of) provision for credit losses on loans | 18,786 | 4,105 | 22,891 | (2,224 | ) | 1,002 | (1,222 | ) | ||||||||||||||||
Balance, end of period | $ | 141,314 | $ | 20,930 | $ | 162,244 | $ | 128,766 | $ | 27,870 | $ | 156,636 | ||||||||||||
At March 31, 2021, the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loan receivables. It also applies tooff-balancesheet exposures not accounted for as insurance and net investments in leases accounted for under ASC Topic 842.
Separately, at March 31, 2021, the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable byhad an allowance for unfunded commitments of $12.3 million.
22
For the Company. Thethree months ended March 31, 2021, the allowance for credit losses onoff-balancesheet credit exposures is adjusted as a provision for credit losses expense. loans and leases increased modestly primarily due to qualitative adjustments surrounding the COVID-19 pandemic's continued impact on our primary lending geography and existing portfolio, partially offset by improvement in the macroeconomic forecast. The estimateforecast scenario includes considerationlow single digit growth of Gross Domestic Product (“GDP”), while unemployment remains elevated into the forecasted time horizon. In addition to these economic and quantitative inputs, several qualitative factors were considered, including the risk that the economic decline proves to be more severe and/or prolonged than our baseline forecast. The impact of the likelihood that funding will occurunprecedented fiscal stimulus and an estimate of expected credit losses on commitments expectedchanges to be funded overtheir estimated life. federal and local laws and regulations, including changes to various government sponsored loan programs, was also considered.
The Company examined historical credit conversion factor (“CCF”) trends to estimate utilization rates, and chose an appropriate mean CCF based on both management judgment and quantitative analysis. Quantitative analysis involved examination of CCFs over a range offund-upwindows (between 12 and 36 months) and comparison of the mean CCF for eachfund-upwindow with management judgment determining whether the highest mean CCF acrossfund-upwindows made business sense. The Company applies the same standards and estimated loss rates to the credit exposures as to the related class of loans.
The following table presents additional information about the Company’s nonaccrual loans at March 31, 2020:
(in thousands) | Recorded Investment | Related Allowance | Interest Income Recognized | |||||||||
Nonaccrual loans with no related allowance: | ||||||||||||
Multi-family | $ | 2,412 | $ | — | $ | 64 | ||||||
Commercial real estate | 14,700 | — | 24 | |||||||||
One-to-four family | 577 | — | 5 | |||||||||
Acquisition, development, and construction | — | — | — | |||||||||
Other | 27,218 | — | 551 | |||||||||
Total nonaccrual loans with no related allowance | $ | 44,907 | $ | — | $ | 644 | ||||||
Nonaccrual loans with an allowance recorded: | ||||||||||||
Multi-family | $ | 1,830 | $ | 264 | $ | — | ||||||
Commercial real estate | 1,401 | 110 | 15 | |||||||||
One-to-four family | 1,144 | 10 | 3 | |||||||||
Acquisition, development, and construction | — | — | — | |||||||||
Other | — | — | — | |||||||||
Total nonaccrual loans with an allowance recorded | $ | 4,375 | $ | 384 | $ | 18 | ||||||
Total nonaccrual loans: | ||||||||||||
Multi-family | $ | 4,242 | $ | 264 | $ | 64 | ||||||
Commercial real estate | 16,101 | 110 | 39 | |||||||||
One-to-four family | 1,721 | 10 | 8 | |||||||||
Acquisition, development, and construction | — | — | — | |||||||||
Other | 27,218 | — | 551 | |||||||||
Total nonaccrual loans | $ | 49,282 | $ | 384 | $ | 662 | ||||||
(in thousands) |
| Recorded |
|
| Related |
|
| Interest |
| |||
Nonaccrual loans with no related allowance: |
|
|
|
|
|
|
|
|
| |||
Multi-family |
| $ | 6,840 |
|
| $ | — |
|
| $ | 81 |
|
Commercial real estate |
|
| 10,491 |
|
|
| - |
|
|
| - |
|
One-to-four family |
|
| 330 |
|
|
| - |
|
|
| 3 |
|
Acquisition, development, and construction |
|
| - |
|
|
| - |
|
|
| - |
|
Other |
|
| 10,205 |
|
|
| - |
|
|
| 18 |
|
Total nonaccrual loans with no related allowance |
| $ | 27,866 |
|
| $ | — |
|
| $ | 102 |
|
Nonaccrual loans with an allowance recorded: |
|
|
|
|
|
|
|
|
| |||
Multi-family |
| $ | 3,048 |
|
| $ | 435 |
|
| $ | 0 |
|
Commercial real estate |
|
| 1,082 |
|
|
| 84 |
|
|
| 2 |
|
One-to-four family |
|
| 1,137 |
|
|
| 365 |
|
|
| 3 |
|
Acquisition, development, and construction |
|
| - |
|
|
| - |
|
|
| - |
|
Other |
|
| 45 |
|
|
| 20 |
|
|
| 1 |
|
Total nonaccrual loans with an allowance recorded |
| $ | 5,312 |
|
| $ | 904 |
|
| $ | 6 |
|
Total nonaccrual loans: |
|
|
|
|
|
|
|
|
| |||
Multi-family |
| $ | 9,888 |
|
| $ | 435 |
|
| $ | 81 |
|
Commercial real estate |
|
| 11,573 |
|
|
| 84 |
|
|
| 2 |
|
One-to-four family |
|
| 1,467 |
|
|
| 365 |
|
|
| 6 |
|
Acquisition, development, and construction |
|
| - |
|
|
| - |
|
|
| - |
|
Other |
|
| 10,250 |
|
|
| 20 |
|
|
| 19 |
|
Total nonaccrual loans |
| $ | 33,178 |
|
| $ | 904 |
|
| $ | 108 |
|
23
The following table presents additional information about the Company’s impairednonaccrual loans at December 31, 2019:2020:
(in thousands) |
| Recorded |
|
|
| Related |
|
|
| Interest |
| |||
Nonaccrual loans with no related allowance: |
|
|
|
|
|
|
|
|
|
|
| |||
Multi-family |
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
Commercial real estate |
|
| 2,256 |
|
|
|
| — |
|
|
|
| — |
|
One-to-four family |
|
| 557 |
|
|
|
| — |
|
|
|
| 21 |
|
Acquisition, development, and construction |
|
| — |
|
|
|
| — |
|
|
|
| — |
|
Other |
|
| 19,821 |
|
|
|
| — |
|
|
|
| 820 |
|
Total nonaccrual loans with no related allowance |
| $ | 22,634 |
|
|
| $ | — |
|
|
| $ | 841 |
|
Nonaccrual loans with an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
| |||
Multi-family |
| $ | 4,068 |
|
|
| $ | 589 |
|
|
| $ | 28 |
|
Commercial real estate |
|
| 9,886 |
|
|
|
| 133 |
|
|
|
| 52 |
|
One-to-four family |
|
| 1,139 |
|
|
|
| 370 |
|
|
|
| 14 |
|
Acquisition, development, and construction |
|
| — |
|
|
|
| — |
|
|
|
| — |
|
Other |
|
| 58 |
|
|
|
| 18 |
|
|
|
| 5 |
|
Total nonaccrual loans with an allowance recorded |
| $ | 15,151 |
|
|
| $ | 1,110 |
|
|
| $ | 99 |
|
Total nonaccrual loans: |
|
|
|
|
|
|
|
|
|
|
| |||
Multi-family |
| $ | 4,068 |
|
|
| $ | 589 |
|
|
| $ | 28 |
|
Commercial real estate |
|
| 12,142 |
|
|
|
| 133 |
|
|
|
| 52 |
|
One-to-four family |
|
| 1,696 |
|
|
|
| 370 |
|
|
|
| 35 |
|
Acquisition, development, and construction |
|
| — |
|
|
|
| — |
|
|
|
| — |
|
Other |
|
| 19,879 |
|
|
|
| 18 |
|
|
|
| 825 |
|
Total nonaccrual loans |
| $ | 37,785 |
|
|
| $ | 1,110 |
|
|
| $ | 940 |
|
(in thousands) | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
Impaired loans with no related allowance: | �� | |||||||||||||||||||
Multi-family | $ | 3,577 | $ | 6,790 | $ | — | $ | 4,336 | $ | 266 | ||||||||||
Commercial real estate | 14,717 | 19,832 | — | 6,140 | 371 | |||||||||||||||
One-to-four family | 584 | 602 | — | 811 | 21 | |||||||||||||||
Acquisition, development, and construction | 389 | 1,289 | — | 3,508 | 364 | |||||||||||||||
Other | 37,669 | 114,636 | — | 39,598 | 2,494 | |||||||||||||||
Total impaired loans with no related allowance | $ | 56,936 | $ | 143,149 | $ | — | $ | 54,393 | $ | 3,516 | ||||||||||
Impaired loans with an allowance recorded: | ||||||||||||||||||||
Multi-family | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Commercial real estate | — | — | — | — | — | |||||||||||||||
One-to-four family | — | — | — | — | — | |||||||||||||||
Acquisition, development, and construction | — | — | — | — | — | |||||||||||||||
Other | 1,445 | 4,173 | 116 | 4,111 | 13 | |||||||||||||||
Total impaired loans with an allowance recorded | $ | 1,445 | $ | 4,173 | $ | 116 | $ | 4,111 | $ | 13 | ||||||||||
Total impaired loans: | ||||||||||||||||||||
Multi-family | $ | 3,577 | $ | 6,790 | $ | — | $ | 4,336 | $ | 266 | ||||||||||
Commercial real estate | 14,717 | 19,832 | — | 6,140 | 371 | |||||||||||||||
One-to-four family | 584 | 602 | — | 811 | 21 | |||||||||||||||
Acquisition, development, and construction | 389 | 1,289 | — | 3,508 | 364 | |||||||||||||||
Other | 39,114 | 118,809 | 116 | 43,709 | 2,507 | |||||||||||||||
Total impaired loans | $ | 58,381 | $ | 147,322 | $ | 116 | $ | 58,504 | $ | 3,529 | ||||||||||
Note 7. Borrowed Funds
The following table summarizes the Company’s borrowed funds at the dates indicated:
(in thousands) |
| March 31, |
|
| December 31, |
| ||||||
Wholesale Borrowings: |
|
|
|
|
|
| ||||||
FHLB advances |
| $ | 14,302,661 |
|
| $ | 14,627,661 |
| ||||
Repurchase agreements |
|
| 800,000 |
|
|
| 800,000 |
| ||||
Total wholesale borrowings |
| $ | 15,102,661 |
|
| $ | 15,427,661 |
| ||||
Junior subordinated debentures |
|
| 360,362 |
|
|
| 360,259 |
| ||||
Subordinated notes |
|
| 295,764 |
|
|
| 295,624 |
| ||||
Total borrowed funds |
| $ | 15,758,787 |
|
| $ | 16,083,544 |
|
(in thousands) | March 31, 2020 | December 31, 2019 | ||||||
Wholesale Borrowings: | ||||||||
FHLB advances | $ | 13,477,661 | $ | 13,102,661 | ||||
Repurchase agreements | 800,000 | 800,000 | ||||||
Total wholesale borrowings | $ | 14,277,661 | $ | 13,902,661 | ||||
Junior subordinated debentures | 359,961 | 359,866 | ||||||
Subordinated notes | 295,205 | 295,066 | ||||||
Total borrowed funds | $ | 14,932,827 | $ | 14,557,593 | ||||
The following table summarizes the Company’s repurchase agreements accounted for as secured borrowings at March 31, 2020:2021:
|
| Remaining Contractual Maturity of the Agreements |
| |||||||||||||
(in thousands) |
| Overnight and |
|
| Up to |
|
| 30–90 Days |
|
| Greater than |
| ||||
GSE obligations |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 800,000 |
|
Remaining Contractual Maturity of the Agreements | ||||||||||||||||
(in thousands) | Overnight and Continuous | Up to 30 Days | 30–90 Days | Greater than 90 Days | ||||||||||||
GSE obligations | $ | — | $ | — | $ | — | $ | 800,000 |
Subordinated Notes
At March 31, 20202021 and December 31, 2019,2020, the Company had $295.2$295.8 million and $295.1million,$295.6 million, respectively, of
Date of Original Issue |
| Stated |
| Interest |
|
| Original Issue |
| ||||||
(dollars in thousands) |
| |||||||||||||
Nov. 6, 2018 |
| Nov. 6, 2028 |
|
| 5.90 | % |
| $ | 300,000 |
|
24
(1) From and including the date of original issuance to, but excluding November 6, 2023, the Notes will bear interest at an initial rate of 5.90% per annum payable semi-annually. Unless redeemed, from and including November 6, 2023 to but excluding the maturity date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR rate plus 278 basis points payable quarterly.
Date of Original Issue | Stated Maturity | Interest Rate (1) | Original Issue Amount | |||||||||
(dollars in thousands) | ||||||||||||
Nov. 6, 2018 | Nov. 6, 2028 | 5.90 | % | $ | 300,000 |
Junior Subordinated Debentures
At March 31, 20202021 and December 31, 2019,2020, the Company had $360.0$360.4 million and $359.9
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 March 31, 2020:2021:
Issuer |
| Interest |
|
| Junior |
|
| Capital |
|
| Date of |
| Stated |
| First | |||
(dollars in thousands) | ||||||||||||||||||
New York Community Capital Trust V |
|
| 6.00 | % |
| $ | 146,436 |
|
| $ | 140,085 |
|
| Nov. 4, 2002 |
| Nov. 1, 2051 |
| Nov. 4, 2007(1) |
New York Community Capital Trust X |
|
| 1.78 |
|
|
| 123,712 |
|
|
| 120,000 |
|
| Dec. 14, 2006 |
| Dec. 15, 2036 |
| Dec. 15, 2011 (2) |
PennFed Capital Trust III |
|
| 3.43 |
|
|
| 30,928 |
|
|
| 30,000 |
|
| June 2, 2003 |
| June 15, 2033 |
| June 15, 2008 (2) |
New York Community Capital Trust XI |
|
| 1.85 |
|
|
| 59,286 |
|
|
| 57,500 |
|
| April 16, 2007 |
| June 30, 2037 |
| June 30, 2012 (2) |
Total junior subordinated debentures |
|
|
|
| $ | 360,362 |
|
| $ | 347,585 |
|
|
|
|
|
|
|
(1) Callable subject to certain conditions as described in the prospectus filed with the SEC on November 4, 2002.
(2) Callable from this date forward.
Issuer | Interest Rate of Capital Securities and Debentures | Junior Subordinated Debentures Amount Outstanding | Capital Securities Amount Outstanding | Date of Original Issue | Stated | First Optional Redemption | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
New York Community Capital Trust V (BONUSES SM Units) | 6.00 | % | $ | 146,035 | $ | 139,684 | Nov. 4, 2002 | Nov. 1, 2051 | Nov. 4, 2007 (1) | |||||||||||||||
New York Community Capital Trust X | 2.34 | 123,712 | 120,000 | Dec. 14, 2006 | Dec. 15, 2036 | Dec. 15, 2011 (2) | ||||||||||||||||||
PennFed Capital Trust III | 3.99 | 30,928 | 30,000 | June 2, 2003 | June 15, 2033 | June 15, 2008 (2) | ||||||||||||||||||
New York Community Capital Trust XI | 3.02 | 59,286 | 57,500 | April 16, 2007 | June 30, 2037 | June 30, 2012 (2) | ||||||||||||||||||
Total junior subordinated debentures | $ | 359,961 | $ | 347,184 | ||||||||||||||||||||
Note 8. Pension and Other Post-Retirement Benefits
The following table sets forth certain disclosures for the Company’s pension and post-retirement plans for the periods indicated:
|
| For the Three Months Ended March 31, |
| |||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||
(in thousands) |
| Pension |
|
| Post- |
|
| Pension |
|
| Post- |
| ||||
Components of net periodic (credit) expense: (1) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest cost |
| $ | 912 |
|
| $ | 56 |
|
| $ | 1,173 |
|
| $ | 82 |
|
Expected return on plan assets |
|
| (4,016 | ) |
|
| - |
|
|
| (3,876 | ) |
|
| — |
|
Amortization of prior-service liability |
|
| - |
|
|
| (62 | ) |
|
| — |
|
|
| (62 | ) |
Amortization of net actuarial loss |
|
| 1,732 |
|
|
| 11 |
|
|
| 1,831 |
|
|
| 6 |
|
Net periodic (credit) expense |
| $ | (1,372 | ) |
| $ | 5 |
|
| $ | (872 | ) |
| $ | 26 |
|
(1) Amounts are included in G&A expense on the Consolidated Statements of Income and Comprehensive Income.
For the Three Months Ended March 31, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
(in thousands) | Pension Benefits | Post- Retirement Benefits | Pension Benefits | Post- Retirement Benefits | ||||||||||||
Components of net periodic (credit) expense: | ||||||||||||||||
Interest cost | $ | 1,173 | $ | 82 | $ | 1,415 | $ | 128 | ||||||||
Expected return on plan assets | (3,876 | ) | — | (3,483 | ) | — | ||||||||||
Amortization of prior-service costs | — | (62 | ) | — | (62 | ) | ||||||||||
Amortization of net actuarial loss | 1,831 | 6 | 2,509 | 31 | ||||||||||||
Net periodic (credit) expense | $ | (872 | ) | $ | 26 | $ | 441 | $ | 97 | |||||||
The Company expects to contribute $947,000$915,000 to its post-retirement plan to pay premiums and claims for the fiscal year ending December 31, 2020.2021. The Company does 0t expect to make any contributions to its pension plan in 2020.
25
Note 9. Stock-Based Compensation
At March 31, 2020,2021, the Company had a total of 172,6858,481,554 shares available for grants as restricted stock, options, or other forms of related rights underrights. The Company granted 3,029,949 shares of restricted stock, with an average fair value of $11.15 per share on the 2012 Stock Incentive Plan, which was approved bydate of grant, during the Company’s shareholders at its Annual Meeting on June 7, 2012. Thethree months ended March 31, 2021. During the three months ended March 31, 2020, the Company granted 2,387,645 shares of restricted stock, with an average fair value of $11.64 per share on the date of grant, during the three months ended March 31, 2020. During the three months ended March 31, 2019, the Company granted 1,723,240 shares of restricted stock, with an average fair value of $10.32 per share.
The shares of restricted stock that were granted during the three months ended March 31, 20202021 and 2019,2020, vest over athreeone or five year$7.8$8.0 million and $7.9$7.8 million, respectively, for the three months ended March 31, 20202021 and 2019.
The following table provides a summary of activity with regard to restricted stock awards in the three months ended March 31, 2020:2021:
|
| Number of |
|
| Weighted Average |
| ||
Unvested at beginning of year |
|
| 6,228,048 |
|
| $ | 12.43 |
|
Granted |
|
| 3,029,949 |
|
|
| 11.15 |
|
Vested |
|
| (1,918,654 | ) |
|
| 13.21 |
|
Canceled |
|
| (59,260 | ) |
|
| 11.65 |
|
Unvested at end of period |
|
| 7,280,083 |
|
|
| 11.70 |
|
Number of Shares | Weighted Average Grant Date Fair Value | |||||||
Unvested at beginning of year | 6,516,101 | $ | 13.31 | |||||
Granted | 2,387,645 | 11.64 | ||||||
Vested | (1,964,371 | ) | 14.14 | |||||
Canceled | (52,840 | ) | 12.30 | |||||
Unvested at end of period | 6,886,535 | 12.51 | ||||||
As of March 31, 2020,2021, unrecognized compensation cost relating to unvested restricted stock totaled $82.2$77.6 million. This amount will be recognized over a remaining weighted average period of 3.33.6 years.
The following table provides a summary of activity with regard to Performance-Based Restricted Stock Units (“PSUs”("PSUs"). The in the three months ended March 31, 2021:
Number of | Performance | Expected | ||||||
Outstanding at beginning of year | 477,872 | |||||||
Granted | 307,479 | January 1, 2021 - December 31, 2023 | March 31, 2024 | |||||
Outstanding at end of period | 785,351 |
PSUs have a performance period of January 1, 2019 to December 31, 2021 and vest on April 1, 2022,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 $586,000 and $407,000 for the three months ended March 31, 2020.2021 and March 31, 2020, respectively. As of March 31, 2020,2021, unrecognized compensation cost relating to unvested restricted stock totaled $6.3 million. This amount will be recognized over a remaining weighted average period of 2.1 years. As of March 31, 2021, 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 $1.7million and $1.6 million for the three months ended March 31, 2021 and 2020, the Company began to match employee 401K contributions. Such expense totaled $1.6 million.
Note 10. Fair Value Measurements
GAAP sets forth a definition of fair value, establishes a consistent framework for measuring fair value, and requires disclosure for each major asset and liability category measured at fair value on either a recurring or
26
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 March 31, 20202021 and December 31, 2019,2020, and that were included in the Company’s Consolidated Statements of Condition at those dates:
|
| Fair Value Measurements at March 31, 2021 |
| |||||||||||||||||
(in thousands) |
| Quoted Prices |
|
| Significant |
|
| Significant |
|
| Netting |
|
| Total Fair |
| |||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Mortgage-Related Debt Securities Available for Sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
GSE certificates |
| $ | — |
|
| $ | 1,209,318 |
|
| $ | — |
|
| $ | — |
|
| $ | 1,209,318 |
|
GSE CMOs |
|
| — |
|
|
| 1,986,270 |
|
|
| — |
|
|
| — |
|
|
| 1,986,270 |
|
Total mortgage-related debt securities |
| $ | — |
|
| $ | 3,195,588 |
|
| $ | — |
|
| $ | — |
|
| $ | 3,195,588 |
|
Other Debt Securities Available for Sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
U. S. Treasury obligations |
| $ | 64,998 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 64,998 |
|
GSE debentures |
|
| — |
|
|
| 1,368,341 |
|
|
| — |
|
|
| — |
|
|
| 1,368,341 |
|
Asset-backed securities |
|
| — |
|
|
| 520,773 |
|
|
| — |
|
|
| — |
|
|
| 520,773 |
|
Municipal bonds |
|
| — |
|
|
| 26,011 |
|
|
| — |
|
|
| — |
|
|
| 26,011 |
|
Corporate bonds |
|
| — |
|
|
| 882,070 |
|
|
| — |
|
|
| — |
|
|
| 882,070 |
|
Foreign notes |
|
| — |
|
|
| 25,993 |
|
|
|
|
|
|
|
|
| 25,993 |
| ||
Capital trust notes |
|
| — |
|
|
| 94,131 |
|
|
| — |
|
|
| — |
|
|
| 94,131 |
|
Total other debt securities |
| $ | 64,998 |
|
| $ | 2,917,319 |
|
| $ | — |
|
| $ | — |
|
| $ | 2,982,317 |
|
Total debt securities available for sale |
| $ | 64,998 |
|
| $ | 6,112,907 |
|
| $ | — |
|
| $ | — |
|
| $ | 6,177,905 |
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Mutual funds |
|
| — |
|
|
| 15,801 |
|
|
| — |
|
|
| — |
|
|
| 15,801 |
|
Total equity securities |
| $ | — |
|
| $ | 15,801 |
|
| $ | — |
|
| $ | — |
|
| $ | 15,801 |
|
Total securities |
| $ | 64,998 |
|
| $ | 6,128,708 |
|
| $ | — |
|
| $ | — |
|
| $ | 6,193,706 |
|
27
|
| Fair Value Measurements at December 31, 2020 |
| |||||||||||||||||
(in thousands) |
| Quoted Prices |
|
| Significant |
|
| Significant |
|
| Netting |
|
| Total Fair |
| |||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Mortgage-Related Debt Securities Available for Sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
GSE certificates |
| $ | — |
|
| $ | 1,209,610 |
|
| $ | — |
|
| $ | — |
|
| $ | 1,209,610 |
|
GSE CMOs |
|
| — |
|
|
| 1,828,715 |
|
|
| — |
|
|
| — |
|
|
| 1,828,715 |
|
Total mortgage-related debt securities |
| $ | — |
|
| $ | 3,038,325 |
|
| $ | — |
|
| $ | — |
|
| $ | 3,038,325 |
|
Other Debt Securities Available for Sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
U.S. Treasury obligations |
| $ | 64,985 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 64,985 |
|
GSE debentures |
|
| — |
|
|
| 1,158,302 |
|
|
| — |
|
|
| — |
|
|
| 1,158,302 |
|
Asset-backed securities |
|
| — |
|
|
| 527,099 |
|
|
| — |
|
|
| — |
|
|
| 527,099 |
|
Municipal bonds |
|
| — |
|
|
| 26,311 |
|
|
| — |
|
|
| — |
|
|
| 26,311 |
|
Corporate bonds |
|
| — |
|
|
| 882,226 |
|
|
| — |
|
|
| — |
|
|
| 882,226 |
|
Foreign notes |
|
| — |
|
|
| 25,538 |
|
|
|
|
|
|
|
|
| 25,538 |
| ||
Capital trust notes |
|
| — |
|
|
| 90,547 |
|
|
| — |
|
|
| — |
|
|
| 90,547 |
|
Total other debt securities |
| $ | 64,985 |
|
| $ | 2,710,023 |
|
| $ | — |
|
| $ | — |
|
| $ | 2,775,008 |
|
Total debt securities available for sale |
| $ | 64,985 |
|
| $ | 5,748,348 |
|
| $ | — |
|
| $ | — |
|
| $ | 5,813,333 |
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Preferred stock |
| $ | 15,493 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 15,493 |
|
Mutual funds |
|
| — |
|
|
| 16,083 |
|
|
| — |
|
|
| — |
|
|
| 16,083 |
|
Total equity securities |
| $ | 15,493 |
|
| $ | 16,083 |
|
| $ | — |
|
| $ | — |
|
| $ | 31,576 |
|
Total securities |
| $ | 80,478 |
|
| $ | 5,764,431 |
|
| $ | — |
|
| $ | — |
|
| $ | 5,844,909 |
|
Fair Value Measurements at March 31, 2020 | ||||||||||||||||||||
(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 | Total Fair Value | |||||||||||||||
Assets: | ||||||||||||||||||||
Mortgage-Related Debt Securities Available for Sale: | ||||||||||||||||||||
GSE certificates | $ | — | $ | 1,493,269 | $ | — | $ | — | $ | 1,493,269 | ||||||||||
GSE CMOs | — | 1,914,273 | — | — | 1,914,273 | |||||||||||||||
Total mortgage-related debt securities | $ | — | $ | 3,407,542 | $ | — | $ | — | $ | 3,407,542 | ||||||||||
Other Debt Securities Available for Sale: | ||||||||||||||||||||
U. S. Treasury obligations | $ | 61,981 | $ | — | $ | — | $ | — | $ | 61,981 | ||||||||||
GSE debentures | — | 725,232 | — | — | 725,232 | |||||||||||||||
Asset-backed securities | — | 355,383 | — | — | 355,383 | |||||||||||||||
Municipal bonds | — | 26,746 | — | — | 26,746 | |||||||||||||||
Corporate bonds | — | 792,834 | — | — | 792,834 | |||||||||||||||
Capital trust notes | — | 85,527 | — | — | 85,527 | |||||||||||||||
Total other debt securities | $ | 61,981 | $ | 1,985,722 | $ | — | $ | — | $ | 2,047,703 | ||||||||||
Total debt securities available for sale | $ | 61,981 | $ | 5,393,264 | $ | — | $ | — | $ | 5,455,245 | ||||||||||
Equity securities: | ||||||||||||||||||||
Preferred stock | $ | 14,841 | $ | — | $ | — | $ | — | $ | 14,841 | ||||||||||
Mutual funds and common stock | — | 17,775 | — | — | 17,775 | |||||||||||||||
Total equity securities | $ | 14,841 | $ | 17,775 | $ | — | $ | — | $ | 32,616 | ||||||||||
Total securities | $ | 76,822 | $ | 5,411,039 | $ | — | $ | — | $ | 5,487,861 | ||||||||||
Fair Value Measurements at December 31, 2019 | ||||||||||||||||||||
(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 | Total Fair Value | |||||||||||||||
Assets: | ||||||||||||||||||||
Mortgage-Related Debt Securities Available for Sale: | ||||||||||||||||||||
GSE certificates | $ | — | $ | 1,552,623 | $ | — | $ | — | $ | 1,552,623 | ||||||||||
GSE CMOs | — | 1,801,112 | — | — | 1,801,112 | |||||||||||||||
Total mortgage-related debt securities | $ | — | $ | 3,353,735 | $ | — | $ | — | $ | 3,353,735 | ||||||||||
Other Debt Securities Available for Sale: | ||||||||||||||||||||
U.S. Treasury obligations | $ | 41,839 | $ | — | $ | — | $ | — | $ | 41,839 | ||||||||||
GSE debentures | — | 1,094,240 | — | — | 1,094,240 | |||||||||||||||
Asset-backed securities | — | 373,254 | — | — | 373,254 | |||||||||||||||
Municipal bonds | — | 26,892 | — | — | 26,892 | |||||||||||||||
Corporate bonds | — | 867,182 | — | — | 867,182 | |||||||||||||||
Capital trust notes | — | 95,915 | — | — | 95,915 | |||||||||||||||
Total other debt securities | $ | 41,839 | $ | 2,457,483 | $ | — | $ | — | $ | 2,499,322 | ||||||||||
Total debt securities available for sale | $ | 41,839 | $ | 5,811,218 | $ | — | $ | — | $ | 5,853,057 | ||||||||||
Equity securities: | ||||||||||||||||||||
Preferred stock | $ | 15,414 | $ | — | $ | — | $ | — | $ | 15,414 | ||||||||||
Mutual funds and common stock | — | 17,416 | — | — | 17,416 | |||||||||||||||
Total equity securities | $ | 15,414 | $ | 17,416 | $ | — | $ | — | $ | 32,830 | ||||||||||
Total securities | $ | 57,253 | $ | 5,828,634 | $ | — | $ | — | $ | 5,885,887 | ||||||||||
The Company reviews and updates the fair value hierarchy classifications for its assets on a quarterly basis. Changes from one quarter to the next that are related to the observability of inputs for a fair value measurement may result in a reclassification from one hierarchy level to another.
A description of the methods and significant assumptions utilized in estimating the fair values of securities follows:
Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government securities and exchange-traded securities.
If quoted market prices are not available for a specific security, then fair values are estimated by using pricing models. These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices, and credit spreads. In addition to observable market information, models incorporate transaction details such as maturity and cash flow assumptions. Securities valued in this manner would generally be classified within Level 2 of the valuation hierarchy, and primarily include such instruments as mortgage-related and corporate debt securities.
Periodically, the Company uses fair values supplied by independent pricing services to corroborate the fair values derived from the pricing models. In addition, the Company reviews the fair values supplied by independent pricing services, as well as their underlying pricing methodologies, for reasonableness. The Company challenges pricing service valuations that appear to be unusual or unexpected.
While the Company believes its valuation methods are appropriate, and consistent with those of other market participants, the use of different methodologies or assumptions to determine the fair values of certain financial instruments could result in different estimates of fair values at a reporting date.
28
Assets Measured at Fair Value on a
Certain assets are measured at fair value on a20202021 and December 31, 2019,2020, and that were included in the Company’s Consolidated Statements of Condition at those dates:
|
| Fair Value Measurements at March 31, 2021 Using |
| |||||||||||||
(in thousands) |
| Quoted Prices in |
|
| Significant Other |
|
| Significant |
|
| Total Fair |
| ||||
Certain nonaccrual loans (1) |
| $ | — |
|
| $ | — |
|
| $ | 23,172 |
|
| $ | 23,172 |
|
Other assets(2) |
|
| — |
|
|
| — |
|
|
| 10,583 |
|
|
| 10,583 |
|
Total |
| $ | — |
|
| $ | — |
|
| $ | 33,755 |
|
| $ | 33,755 |
|
(1) Represents the fair value of impaired loans, based on the value of the collateral.
(2) Represents the fair value of repossessed assets, based on the appraised value of the collateral subsequent to its initial classification as repossessed assets and equity investments without readily determinable fair values. These equity investments are classified as Level 3 due to the infrequency of the observable prices and/or the restrictions on the shares.
|
| Fair Value Measurements at December 31, 2020 Using |
| |||||||||||||
(in thousands) |
| Quoted Prices in |
|
| Significant Other |
|
| Significant |
|
| Total Fair |
| ||||
Certain nonaccrual loans (1) |
| $ | — |
|
| $ | — |
|
| $ | 41,066 |
|
| $ | 41,066 |
|
Other assets (2) |
|
| — |
|
|
| — |
|
|
| 5,655 |
|
|
| 5,655 |
|
Total |
| $ | — |
|
| $ | — |
|
| $ | 46,721 |
|
| $ | 46,721 |
|
(1) Represents the fair value of impaired loans, based on the value of the collateral.
(2) Represents the fair value of repossessed assets, based on the appraised value of the collateral subsequent to its initial classification as repossessed assets and equity investments without readily determinable fair values. These equity investments are classified as Level 3 due to the infrequency of the observable prices and/or the restrictions on the shares.
Fair Value Measurements at March 31, 2020 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) | $ | 0 | $ | 0 | $ | 32,401 | $ | 32,401 | ||||||||
Other assets (2) | — | — | 2,862 | 2,862 | ||||||||||||
Total | $ | 0 | $ | 0 | $ | 35,263 | $ | 35,263 | ||||||||
Fair Value Measurements at December 31, 2019 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) | $ | — | $ | — | $ | 42,767 | $ | 42,767 | ||||||||
Other assets (2) | — | — | 1,481 | 1,481 | ||||||||||||
Total | $ | — | $ | — | $ | 44,248 | $ | 44,248 | ||||||||
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
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.
29
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 March 31, 20202021 and December 31, 2019:2020:
|
| March 31, 2021 |
| |||||||||||||||||
|
|
|
|
|
|
|
| Fair Value Measurement Using |
| |||||||||||
(in thousands) |
| Carrying Value |
|
| Estimated |
|
| Quoted Prices |
|
| Significant |
|
| Significant |
| |||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
| $ | 2,722,915 |
|
| $ | 2,722,915 |
|
| $ | 2,722,915 |
|
| $ | — |
|
| $ | — |
|
FHLB stock (1) |
|
| 698,984 |
|
|
| 698,984 |
|
|
| — |
|
|
| 698,984 |
|
|
| — |
|
Loans, net |
|
| 43,068,816 |
|
|
| 42,433,118 |
|
|
| — |
|
|
| — |
|
|
| 42,433,118 |
|
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Deposits |
| $ | 34,197,136 |
|
| $ | 34,215,071 |
|
| $ | 24,582,838 |
| (2) | $ | 9,632,233 |
| (3) | $ | — |
|
Borrowed funds |
|
| 15,758,787 |
|
|
| 16,475,503 |
|
|
| — |
|
|
| 16,475,503 |
|
|
| — |
|
(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, 2020 |
| |||||||||||||||||
|
|
|
|
|
|
|
| Fair Value Measurement Using |
| |||||||||||
(in thousands) |
| Carrying |
|
| Estimated |
|
| Quoted Prices |
|
| Significant |
|
| Significant |
| |||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
| $ | 1,947,931 |
|
| $ | 1,947,931 |
|
| $ | 1,947,931 |
|
| $ | — |
|
| $ | — |
|
FHLB stock (1) |
|
| 714,005 |
|
|
| 714,005 |
|
|
| — |
|
|
| 714,005 |
|
|
| — |
|
Loans, net |
|
| 42,806,691 |
|
|
| 42,376,214 |
|
|
| — |
|
| $ | — |
|
|
| 42,376,214 |
|
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Deposits |
| $ | 32,436,813 |
|
| $ | 32,466,013 |
|
| $ | 22,106,133 |
| (2) | $ | 10,359,880 |
| (3) | $ | — |
|
Borrowed funds |
|
| 16,083,544 |
|
|
| 16,794,338 |
|
|
| — |
|
|
| 16,794,338 |
|
|
| — |
|
(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.
March 31, 2020 | ||||||||||||||||||||
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 | $ | 1,334,206 | $ | 1,334,206 | $ | 1,334,206 | $ | — | $ | — | ||||||||||
FHLB stock (1) | 663,870 | 663,870 | — | 663,870 | — | |||||||||||||||
Loans, net | 42,129,515 | 41,750,688 | — | — | 41,750,688 | |||||||||||||||
Financial Liabilities: | ||||||||||||||||||||
Deposits | $ | 31,972,766 | $ | 32,073,417 | $ | 17,830,554 | (2) | $ | 14,242,863 | (3) | $ | — | ||||||||
Borrowed funds | 14,932,827 | 15,605,636 | — | 15,605,636 | — |
December 31, 2019 | ||||||||||||||||||||
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 | $ | 741,870 | $ | 741,870 | $ | 741,870 | $ | — | $ | — | ||||||||||
FHLB stock (1) | 647,562 | 647,562 | — | 647,562 | — | |||||||||||||||
Loans, net | 41,746,517 | 41,699,929 | — | — | 41,699,929 | |||||||||||||||
Financial Liabilities: | ||||||||||||||||||||
Deposits | $ | 31,657,132 | $ | 31,713,945 | $ | 17,442,274 | (2) | $ | 14,271,671 | (3) | $ | — | ||||||||
Borrowed funds | 14,557,593 | 14,882,776 | — | 14,882,776 | — |
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.
30
Federal Home Loan Bank Stock
Ownership in equity securities of the FHLB-NY is generally restricted and there is no established liquid market for their resale. The carrying amount approximates the fair value.
Loans
The Company discloses the fair value of loans measured at amortized cost using an exit price notion. The Company determined the fair value on substantially all of its loans for disclosure purposes, on an individual loan basis. The discount rates reflect current market rates for loans with similar terms to borrowers having similar credit quality on an exit price basis. The estimated fair values of
Deposits
The fair values of deposit liabilities with no stated maturity (i.e., interest-bearing checking and money market accounts, savings accounts, and
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
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 such20202021 and December 31, 2019.2020.
Note 11. Leases
Lessor Arrangements
The Company is a lessor in the equipment finance business where it has executed direct financing leases (“lease finance receivables”). The Company produces lease finance receivables through a specialty finance subsidiary that participates in syndicated loans that are brought to them, and equipment loans and leases that are assigned to them, by a select group of nationally recognized sources, and are generally made to large corporate obligors, many of which are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide. Lease finance receivables are carried at the aggregate of lease payments receivable plus the estimated residual value of the leased assets and any initial direct costs incurred to originate these leases, less unearned income, which is accreted to interest income over the lease term using the interest method.
31
The standard leases are typically repayable on a level monthly basis with terms ranging from 24 to 120 months. At the end of the lease term, the lessee usually has the option to return the equipment, to renew the lease or purchase the equipment at the then fair market value (“FMV”) price. For leases with a FMV renewal/purchase option, the relevant residual value assumptions are based on the estimated value of the leased asset at the end of lease term, including evaluation of key factors, such as, the estimated remaining useful life of the leased asset, its historical secondary market value including history of the lessee executing the FMV option, overall credit evaluation and return provisions. The Company acquires the leased asset at fair market value and provides funding to the respective lessee at acquisition cost, less any volume or trade discounts, as applicable. Therefore, there is generally no selling profit or loss to recognize or defer at inception of a lease.
The residual value component of a lease financing receivable represents the estimated fair value of the leased equipment at the end of the lease term. In establishing residual value estimates, the Company may rely on industry data, historical experience, and independent appraisals and, where appropriate, information regarding product life cycle, product upgrades and competing products. Upon expiration of a lease, residual assets are remarketed, resulting in an extension of the lease by the lessee, a lease to a new customer or purchase of the residual asset by the lessee or another party. Impairment of residual values arises if the expected fair value is less than the carrying amount. The Company assesses its net investment in lease financing receivables (including residual values) for impairment on an annual basis with any impairment losses recognized in accordance with the impairment guidance for financial instruments. As such, net investment in lease financing receivables may be reduced by an allowance for credit losses with changes recognized as provision expense. On certain lease financings, the Company obtains residual value insurance from third parties to manage and reduce the risk associated with the residual value of the leased assets. TheAt March 31, 2021 and December 31, 2020, the carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $69.8 million.
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 thousands) |
| For the |
|
|
| For the |
|
| ||
Interest income on lease financing (1) |
| $ | 13,871 |
|
|
| $ | 11,949 |
|
|
(1) Included in Interest Income – Loans and leases in the Consolidated Statements of Income and Comprehensive Income.
(in thousands) | For the Three Months ended March 31, 2020 | For the Three Months Ended March 31, 2019 | ||||||
Interest income on lease financing (1) | $ | 11,949 | $ | 7,327 |
At March 31, 20202021 and December 31, 2019,2020, the carrying value of net investment in leases was $1.6$2.0 billion and $1.4$1.9 billion. The components of net investment in direct financing leases, including the carrying amount of the lease receivables, as well as the unguaranteed residual asset were as follows:
(in thousands) |
| March 31, |
|
| December 31, |
| ||
Net investment in the lease - lease payments receivable |
| $ | 1,929,213 |
|
| $ | 1,771,097 |
|
Net investment in the lease - unguaranteed |
|
| 80,349 |
|
|
| 80,093 |
|
Total lease payments |
| $ | 2,009,562 |
|
| $ | 1,851,190 |
|
(in thousands) | March 31, 2020 | December 31, 2019 | ||||||
Net investment in the lease | $ | 1,514,016 | �� | $ | 1,302,760 | |||
Net investment in the lease | 76,697 | 74,064 | ||||||
Total lease payments | $ | 1,590,713 | $ | 1,376,824 | ||||
32
The following table presents the remaining maturity analysis of the undiscounted lease receivables as of March 31, 2020,2021, as well as the reconciliation to the total amount of receivables recognized in the Consolidated Statements of Condition:
(in thousands) |
| March 31, |
| |
2021 |
| $ | 24,349 |
|
2022 |
|
| 111,308 |
|
2023 |
|
| 342,220 |
|
2024 |
|
| 236,013 |
|
2025 |
|
| 427,495 |
|
Thereafter |
|
| 868,177 |
|
Total lease payments |
|
| 2,009,562 |
|
Plus: deferred origination costs |
|
| 30,823 |
|
Less: unearned income |
|
| (110,582 | ) |
Total lease finance receivables, net |
| $ | 1,929,803 |
|
(in thousands) | March 31, 2020 | |||
2020 | $ | 38,441 | ||
2021 | 100,757 | |||
2022 | 284,259 | |||
2023 | 109,564 | |||
2024 | 114,568 | |||
Thereafter | 943,124 | |||
Total lease payments | 1,590,713 | |||
Plus: deferred origination costs | 24,175 | |||
Less: unearned income | (106,450 | ) | ||
Total lease finance receivables, net | $ | 1,508,438 | ||
Lessee arrangements
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most leases do not provide an implicit rate, the incremental borrowing rate (FHLB borrowing rate) is used based on the information available at adoption date in determining the present value of lease payments. The implicit rate is used when readily determinable. The operating lease ROU asset is measured at cost, which includes the initial measurement of the lease liability, prepaid rent and initial direct costs incurred by the Company, less incentives received. The lease terms include options to extend the lease when it is reasonably certain that we will exercise that option. For the vast majority of the Company’s leases, we are reasonably certain we will exercise our options to renew to the end of all renewal option periods. As such, substantially all of our future options to extend the leases have been included in the lease liability and ROU assets.
Variable costs such as the proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance are not included in the lease liability and are recognized in the period in which they are incurred. Amortization of the ROU assets was $4.1 $4.7million and $11.7 $4.1million for the three months ended March 31, 2020
The Company has operating leases for corporate offices, branch locations, and certain equipment. The Company’s leases have remaining lease terms of one year to approximately 25 years, the vast majority of which include one or more options to extend the leases for up to five years resulting in lease terms up to 40 years.
The components of lease expense were as follows:
(in thousands) |
| For the |
|
|
| For the |
|
| ||
Operating lease cost |
| $ | 6,750 |
|
|
| $ | 6,759 |
|
|
Sublease income |
|
| (28 | ) |
|
|
| (11 | ) |
|
Total lease cost |
| $ | 6,722 |
|
|
| $ | 6,748 |
|
|
(in thousands) | For the Three Months Ended March 31, 2020 | For the three Months Ended March 31, 2019 | ||||||
Operating lease cost | $ | 6,759 | $ | 7,348 | ||||
Sublease income | (11 | ) | (22 | ) | ||||
Total lease cost | $ | 6,748 | $ | 7,326 | ||||
33
Supplemental cash flow information related to the leases for the following periods:
(in thousands) |
| For the |
|
|
| For the |
|
| ||
Cash paid for amounts included in the measurement |
|
|
|
|
|
|
|
| ||
Operating cash flows from operating leases |
| $ | 6,750 |
|
|
| $ | 6,759 |
|
|
(in thousands) | For the Three Months ended March 31, 2020 | For the Three Months Ended March 31, 2019 | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | 6,759 | $ | 7,348 |
Supplemental balance sheet information related to the leases for the following periods:
(in thousands, except lease term and discount rate) |
| March 31, |
|
| December 31, |
| ||
Operating Leases: |
|
|
|
|
|
| ||
Operating lease right-of-use assets |
|
| 262,196 |
|
| $ | 266,864 |
|
Operating lease liabilities |
|
| 262,169 |
|
|
| 266,846 |
|
Weighted average remaining lease term |
| 16 years |
|
| 16 years |
| ||
Weighted average discount rate |
|
| 3.08 | % |
|
| 3.12 | % |
Maturities of lease liabilities: |
| March 31, |
|
| |
(in thousands) |
|
|
|
| |
2021 |
| $ | 20,099 |
|
|
2022 |
|
| 25,893 |
|
|
2023 |
|
| 25,435 |
|
|
2024 |
|
| 24,764 |
|
|
2025 |
|
| 24,073 |
|
|
Thereafter |
|
| 222,215 |
|
|
Total lease payments |
|
| 342,479 |
|
|
Less: imputed interest |
|
| (80,310 | ) |
|
Total present value of lease liabilities |
| $ | 262,169 |
|
|
(in thousands, except lease term and discount rate) | March 31, 2020 | December 31, 2019 | ||||||
Operating Leases: | ||||||||
Operating lease right-of-use assets | $ | 281,873 | $ | 286,194 | ||||
Operating lease liabilities | 281,853 | 285,991 | ||||||
Weighted average remaining lease term | 17 years | 17 years | ||||||
Weighted average discount rate | 3.22 | % | 3.23 | % | ||||
Maturities of lease liabilities: | March 31, 2020 | |||||||
(in thousands) | ||||||||
2020 | $ | 20,213 | ||||||
2021 | 26,450 | |||||||
2022 | 25,615 | |||||||
2023 | 25,178 | |||||||
2024 | 24,514 | |||||||
Thereafter | 255,572 | |||||||
Total lease payments | 377,542 | |||||||
Less: imputed interest | (95,689 | ) | ||||||
Total present value of lease liabilities | $ | 281,853 |
Note 12. Derivative and Hedging Activities
The Company’s derivative financial instruments consist of interest rate swaps. The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposure to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate and liquidity risks, primarily by managing the amount, sources, and duration of its assets and liabilities and, from time to time, the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates.
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) requires all standardized derivatives, including most interest rate swaps, to be submitted for clearing to central counterparties to reduce counterparty risk. Two of the central counterparties are the Chicago Mercantile Exchange (“CME”) and the London Clearing House (“LCH”). As of
The Company’s exposure is limited to the value of the derivative contracts in a gain position less any collateral held and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterparty to be zero. At2020,2021, the Company had a net negative exposure.
34
Fair Value of Hedges of Interest Rate Risk
The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Such derivatives were used to hedge the changes in fair value of certain of its pools of prepayable fixed rate assets. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.
The Company has entered into an interest rate swap with a notional amount of $2.0 billion to hedge certain real estate loans. For the three months ended March 31, 2021, the floating rate received related to the net settlement of this interest rate swap was less than the fixed rate payments. As such, interest income from Loans and leases in the accompanying Consolidated Statements of Income and Comprehensive Income was decreased by $12.0million for the three months ended March 31, 2021. For the three months ended March 31, 2020, the floating rate received related to the net settlement of this interest rate swap was less than the fixed rate payments. As such, interest income from Loans and Leasesleases in the accompanying Consolidated Statements of Income and Comprehensive Income was decreased by $3.9 million.
As of March 31, 2020, and increased $239,0002021, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:
(in thousands) |
| March 31, 2021 |
| ||||||||||
Line Item in the Consolidated Statements of Condition in which the Hedge Item is Included |
| Carrying |
|
| Cumulative |
| |||||||
Total loans and leases, net (1) |
| $ | 2,047,999 |
|
| $ | 47,999 |
|
(1) These amounts include the three months endedamortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. At March 31, 2019.
As of MarchDecember 31, 2020, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges:
(in thousands) | March 31, 2020 | |||||||
Line Item in the Consolidated Statements of Condition in which the Hedge Item is Included | Carrying Amount of the Hedged Assets | Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Assets | ||||||
Total loans and leases, net (1) | $ | 2,081,613 | $ | 81,613 |
(1) These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. At |
35
(in thousands) | December 31, 2019 | |||||||
Line Item in the Consolidated Statements of Condition in which the Hedge Item is Included | Carrying Amount of the Hedged Assets | Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Assets | ||||||
Total loans and leases, net (1) | $ | 2,053,483 | $ | 53,483 |
The following table sets forth information regarding the Company’s derivative financial instruments at March 31, 20202021 and December 31, 2019:2020:
|
| Notional |
|
| Other |
|
| Other |
| |||
Derivatives designated as fair value hedging |
|
|
|
|
|
|
|
|
| |||
Interest rate swap |
| $ | 2,000,000 |
|
| $ | 0 |
|
| $ | 0 |
|
Total derivatives designated as fair value hedging |
| $ | 2,000,000 |
|
| $ | 0 |
|
| $ | 0 |
|
Notional Amount | Other Assets | Other Liabilities | ||||||||||
Derivatives designated as fair value hedging instruments: | ||||||||||||
Interest rate swap | $ | 2,000,000 | $ | — | $ | — | ||||||
Total derivatives designated as fair value hedging instruments | $ | 2,000,000 | $ | — | $ | — | ||||||
The following table sets forth the effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the periods indicated.
(in thousands) |
| For the Three |
|
|
| For the Three |
|
| ||
Derivative – interest rate swap: |
|
|
|
|
|
|
|
| ||
Interest income |
| $ | 25,215 |
|
|
| $ | (28,130 | ) |
|
Hedged item – loans: |
|
|
|
|
|
|
|
| ||
Interest income |
| $ | (25,215 | ) |
|
| $ | 28,130 |
|
|
(in thousands) | For the Three Months Ended March 31, 2020 | For the Three Months Ended March 31, 2019 | ||||||
Derivative – interest rate swap: | ||||||||
Interest income | $(28,130) | $ | (18,532 | ) | ||||
Hedged item – loans: | ||||||||
Interest income | $28,130 | $ | 18,532 |
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of amounts subject to variability caused by changes in interest rates from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes in the fair value of derivatives designated and that qualify as cash flow hedges are initially recorded in other comprehensive income and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings.
Interest rate swaps with notional amounts totaling $2.3 billion and $800.0 million as of March 31, 20202021 and December 31, 2019, respectively,2020, were designated as cash flow hedges of certain FHLB borrowings.
The following table summarizes information about the interest rate swaps designated as cash flow hedges at March 31, 20202021 and December 31, 2019:2020:
(dollars in thousands) |
| March 31, |
|
| December 31, |
| ||
Notional amounts |
| $ | 2,250,000 |
|
| $ | 2,250,000 |
|
Cash collateral posted |
|
| 35,109 |
|
|
| 45,532 |
|
Weighted average pay rates |
|
| 1.27 | % |
|
| 1.27 | % |
Weighted average receive rates |
|
| 0.20 | % |
|
| 0.23 | % |
Weighted average maturity |
| 1.7 years |
|
| 1.9 years |
|
(dollars in thousands) | March 31, 2020 | December 31, 2019 | ||||||
Notional amounts | $ | 2,250,000 | $ | 800,000 | ||||
Cash collateral posted | 48,744 | 1,185 | ||||||
Weighted average pay rates | 1.27 | % | 1.62 | % | ||||
Weighted average receive rates | 1.23 | % | 1.90 | % | ||||
Weighted average maturity | 2.7 years | 2.5 years |
Thefollowing table presents the effect of the Company’s cash flow derivative instruments on AOCL for the three months ended March 31, 2020. The Company had no such derivative financial instruments during the three months ended March 31, 2019:2021 and 2020:
(in thousands) |
| For the Three |
|
| For the Three |
| ||
Amount of gain (loss) recognized in AOCL |
| $ | 4,532 |
|
| $ | (49,285 | ) |
Amount of gain (loss) reclassified from AOCL to interest expense |
|
| 5,891 |
|
|
| (645 | ) |
(in thousands) | For the Three Months Ended March 31, 2020 | |||
Amount of loss recognized in AOCL | $ | 49,285 | ||
Amount of loss reclassified from AOCL to interest expense | 645 |
Gains (losses) included in the Consolidated Statements of Income related to interest rate derivatives designated as cash flow hedges during the three months ended March 31, 20202021 was $(645,000).$5.9 million. Amounts reported in AOCL related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate borrowings. During the next twelve months, the Company estimates that an additional $(831,000)as a decrease to interest expense.
36
Note 13. Subsequent Event
Pending Acquisition of Flagstar Bancorp, Inc.
On April 26, 2021, the Company announced that it had entered into a definitive merger agreement under which we would acquire Flagstar Bancorp, Inc. ("Flagstar") in a 100% stock transaction valued at the time at $2.6 billion. Under terms of the agreement, which was unanimously approved by the Boards of Directors of both companies, Flagstar shareholders will receive 4.0151 shares of New York Community common stock for each Flagstar share they own. Following completion of the transaction, New York Community shareholders are expected to own 68% of the combined company, while Flagstar shareholders are expected to own 32% of the combined company. The new company will have over $87 billion in total assets, operate nearly 400 traditional branches in 9 states, and 87 retail home lending offices across a 28-state footprint. It will have its headquarters on Long Island, N.Y. with regional headquarters in Troy, Michigan, including Flagstar's mortgage operations. The transaction is expected to close in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including the receipt of the requisite regulatory approvals and approval by the shareholders of each company.
37
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the purpose of this Quarterly Report on Form
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:
38
In addition, the timing and occurrence or
Furthermore, on an ongoing basis, we routinely evaluate opportunities to expand through mergers and acquisitions and conductopportunities 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 placedecide to enter into definitive arrangements regarding such opportunities at any time,time.
In addition to the risks and acquisitions involving cashchallenges described above, these types of transactions involve a number of other risks and challenges, including:
39
See Part II, Item 1A, Risk Factors, in this report and Part I, Item 1A, Risk Factors, in our Form20192020 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.
40
RECONCILIATIONS OF STOCKHOLDERS’ EQUITY, COMMON STOCKHOLDERS’ EQUITY,
AND TANGIBLE COMMON STOCKHOLDERS’ EQUITY;
TOTAL ASSETS AND TANGIBLE ASSETS; AND THE RELATED MEASURES
(unaudited)
While stockholders’ equity, common stockholders’ equity, total assets, and book value per common share are financial measures that are recorded in accordance with GAAP, tangible common stockholders’ equity, tangible assets, and tangible book value per common share are not. It is management’s belief that these
1. Tangible common stockholders’ equity is an important indication of the Company’s ability to grow organically and through business combinations, as well as its ability to pay dividends and to engage in various capital management strategies.
2. Tangible book value per common share and the ratio of tangible common stockholders’ equity to tangible assets are among the capital measures considered by current and prospective investors, both independent of, and in comparison with, the Company’s peers.
Tangible common stockholders’ equity, tangible assets, and the related
Reconciliations of our stockholders’ equity, common stockholders’ equity, and tangible common stockholders’ equity; our total assets and tangible assets; and the related financial measures for the respective periods follow:
At or for the | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | Dec. 31, | March 31, | ||||||||||
(dollars in thousands) | 2020 | 2019 | 2019 | |||||||||
Total Stockholders’ Equity | $ | 6,637,385 | $ | 6,711,694 | $ | 6,629,070 | ||||||
Less: Goodwill | (2,426,379 | ) | (2,426,379 | ) | (2,426,379 | ) | ||||||
Preferred stock | (502,840 | ) | (502,840 | ) | (502,840 | ) | ||||||
Tangible common stockholders’ equity | $ | 3,708,166 | $ | 3,782,475 | $ | 3,699,851 | ||||||
Total Assets | $ | 54,261,093 | $ | 53,640,821 | $ | 52,131,046 | ||||||
Less: Goodwill | (2,426,379 | ) | (2,426,379 | ) | (2,426,379 | ) | ||||||
Tangible assets | $ | 51,834,714 | $ | 51,214,442 | $ | 49,704,667 | ||||||
Average Common Stockholders’ Equity | $ | 6,188,032 | $ | 6,187,536 | $ | 6,104,442 | ||||||
Less: Average goodwill | (2,426,379 | ) | (2,426,379 | ) | (2,435,806 | ) | ||||||
Average tangible common stockholders’ equity | $ | 3,761,653 | $ | 3,761,157 | $ | 3,668,636 | ||||||
Average Assets | $ | 53,408,504 | $ | 52,477,691 | $ | 51,617,557 | ||||||
Less: Average goodwill | (2,426,379 | ) | (2,426,379 | ) | (2,435,806 | ) | ||||||
Average tangible assets | $ | 50,982,125 | $ | 50,051,312 | $ | 49,181,751 | ||||||
Net Income Available to Common Shareholders | $ | 92,121 | $ | 92,967 | $ | 89,370 | ||||||
GAAP MEASURES: | ||||||||||||
Return on average assets (1) | 0.75 | % | 0.77 | % | 0.76 | % | ||||||
Return on average common stockholders’ equity (2) | 5.95 | 6.01 | 5.86 | |||||||||
Book value per common share | $ | 13.15 | $ | 13.29 | $ | 13.11 | ||||||
Common stockholders’ equity to total assets | 11.31 | 11.57 | 11.75 | |||||||||
NON-GAAP MEASURES: | ||||||||||||
Return on average tangible assets (1) | 0.79 | % | 0.81 | % | 0.79 | % | ||||||
Return on average tangible common stockholders’ equity (2) | 9.80 | 9.89 | 9.74 | |||||||||
Tangible book value per common share | $ | 7.95 | $ | 8.09 | $ | 7.92 | ||||||
Tangible common stockholders’ equity to tangible assets | 7.15 | 7.39 | 7.44 |
|
| At or for the |
| |||||||||
|
| Three Months Ended |
| |||||||||
|
| March 31, |
|
| Dec. 31, |
|
| March 31, |
| |||
(dollars in thousands) |
| 2021 |
|
| 2020 |
|
| 2020 |
| |||
Total Stockholders’ Equity |
| $ | 6,796,440 |
|
| $ | 6,841,644 |
|
| $ | 6,637,385 |
|
Less: Goodwill |
|
| (2,426,379 | ) |
|
| (2,426,379 | ) |
|
| (2,426,379 | ) |
Preferred stock |
|
| (502,840 | ) |
|
| (502,840 | ) |
|
| (502,840 | ) |
Tangible common stockholders’ equity |
| $ | 3,867,221 |
|
| $ | 3,912,425 |
|
| $ | 3,708,166 |
|
Total Assets |
| $ | 57,656,892 |
|
| $ | 56,306,120 |
|
| $ | 54,261,093 |
|
Less: Goodwill |
|
| (2,426,379 | ) |
|
| (2,426,379 | ) |
|
| (2,426,379 | ) |
Tangible Assets |
| $ | 55,230,513 |
|
| $ | 53,879,741 |
|
| $ | 51,834,714 |
|
Average common stockholders’ equity |
| $ | 6,370,579 |
|
| $ | 6,258,720 |
|
| $ | 6,188,032 |
|
Less: Average goodwill |
|
| (2,426,379 | ) |
|
| (2,426,379 | ) |
|
| (2,426,379 | ) |
Average tangible common stockholders’ equity |
| $ | 3,944,200 |
|
| $ | 3,832,341 |
|
| $ | 3,761,653 |
|
Average Assets |
| $ | 56,305,692 |
|
| $ | 54,959,914 |
|
| $ | 53,408,504 |
|
Less: Average goodwill |
|
| (2,426,379 | ) |
|
| (2,426,379 | ) |
|
| (2,426,379 | ) |
Average tangible assets |
| $ | 53,879,313 |
|
| $ | 52,533,535 |
|
| $ | 50,982,125 |
|
Net income available to common stockholders |
| $ | 137,389 |
|
| $ | 181,457 |
|
| $ | 92,121 |
|
GAAP MEASURES: |
|
|
|
|
|
|
|
|
| |||
Return on average assets (1) |
|
| 1.03 | % |
|
| 1.38 | % |
|
| 0.75 | % |
Return on average common stockholders' equity (2) |
|
| 8.63 |
|
|
| 11.60 |
|
|
| 5.95 |
|
Book value per common share |
| $ | 13.53 |
|
| $ | 13.66 |
|
| $ | 13.15 |
|
Common stockholders’ equity to total assets |
|
| 10.92 |
|
|
| 11.26 |
|
|
| 11.31 |
|
NON-GAAP MEASURES: |
|
|
|
|
|
|
|
|
| |||
Return on average tangible assets (1) |
|
| 1.08 | % |
|
| 1.44 | % |
|
| 0.79 | % |
Return on average tangible common stockholders’ equity (2) |
|
| 13.93 |
|
|
| 18.94 |
|
|
| 9.80 |
|
Tangible book value per common share |
| $ | 8.32 |
|
| $ | 8.43 |
|
| $ | 7.95 |
|
Tangible common stockholders’ equity to tangible assets |
|
| 7.00 |
|
|
| 7.26 |
|
|
| 7.15 |
|
(1) To calculate return on average assets for a period, we divide net income generated during that period by average assets recorded during that period. To calculate return on average tangible assets for a period, we divide net income by average tangible assets recorded during that period.
(2) To calculate return on average common stockholders’ equity for a period, we divide net income available to common shareholders generated during that period by average common stockholders’ equity recorded during that period. To calculate return on average tangible common stockholders’ equity for a period, we divide net income available to common shareholders generated during that period by average tangible common stockholders’ equity recorded during that period.
41
Executive Summary
New York Community Bancorp, Inc. is the holding company for New York Community Bank, a New York State-chartered savings bank, headquartered in Westbury, New York. The Community Bank is subject to regulation by the NYSDFS, the FDIC, and the CFPB. In addition, the holding company is subject to regulation by the FRB, the SEC, and to the requirements of the NYSE, where shares of our common stock trade under the symbol “NYCB” and shares of our preferred stock trade under the symbol “NYCB PA”.
Reflecting our growth through a series of acquisitions, the Company currently operates 237 branch locations through eight local divisions, each with a history of service and strength. In New York, we operate as Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, Roosevelt Savings Bank, and Atlantic Bank; in New Jersey as Garden State Community Bank; in Ohio as the Ohio Savings Bank; and as AmTrust Bank in Arizona and Florida.
Now in its 27th
First Quarter 20202021 Overview
At March 31, 2020, we2021, the Company had total assets of $54.3$57.7 billion, total loans and leases held for investment of $42.3$43.1 billion, total deposits of $32.0$34.2 billion, and total stockholders’ equity of $6.6$6.8 billion. For the three months ended March 31, 2020,2021, the Company reported net income of $100.3$145.6 million, up 3%45% compared to the $97.6$100.3 million reported for the three months ended March 31, 2019. Results include a provision for credit losses of $20.6 million due to the application of CECL.
Net income available to common shareholders for the three months ended March 31, 20202021 totaled $92.1$137.4 million, also up 3%49% compared to the $89.4$92.1 million the Company reported infor the three months ended March 31, 2019.2020. On a per share basis, the Company reported diluted EPSearnings per common share of $0.29 for the current first quarter were $0.20,three months ended March 31, 2021, up 5%45% compared to the $0.19 per diluted EPS$0.20 reported for theyear-agofirst quarter.
The key trends in the first quarter of 2021 were:
Continued Net Interest Income
During the first quarter of 2021, the Company's net interest income and net interest margin continued to improve. Net interest income for the first quarter of 2020three months ended March 31, 2021 rose $3.1$73.2 million or 30% to $244.5$317.7 million up 1% compared to the first quarter of 2019 and up $2.0three months ended March 31, 2020. The year-over-year improvement was primarily driven by lower interest expense. Total interest expense for the three months ended March 31, 2021 declined $91.1 million or 3% annualized46% to $105.4 million compared to the fourth quarter of 2019.three months ended March 31, 2020. Prepayment income infor the current first quarter amounted to $10.5three months ended March 31, 2021 totaled $19.7 million, up 87% or $9.1 million compared to $9.6 million in theyear-agoquarter and $17.9 million in the previous quarter.three months ended March 31, 2020. Excluding the impact from prepayment income, in each period, net interest income on a$233.9$298.0 million, up $2.2$64.1 million or 27% compared to the year-ago quarter.
The Company's NIM also continued to improve. For the three months ended March 31, 2021, the NIM increased one bp to 2.48% on a linked-quarter basis and up 47 bps on a year-over-year comparison. As with the improvement in the Company's net interest income, the improvement in the NIM was driven by lower funding costs. The Company's overall cost of funds declined 12 bps on a linked-quarter basis and 88 bps on a year-over-year basis to 0.94%. During the current first quarter, the average cost of deposits decreased to 0.46%, down 15 bps compared to the previous quarter and down 116 bps compared to the year-ago quarter. Prepayment income contributed 15 bps to the current quarter's NIM, down two bps compared to the previous quarter, but up six bps compared to the year-ago quarter. Excluding the contribution from prepayment income, the first quarter NIM, on a non-GAAP basis, would have been 2.33%, up three bps compared to the previous quarter and up 41 bps compared to the year-ago quarter.
Operating Expenses Trended Lower
For the three months ended March 31, 2021, non-interest expenses totaled $132.4 million, down 1% compared to the previous quarter, but up 5% compared to the year-ago quarter. On a linked-quarter basis, compensation and benefits expense increased 8% to $78.0 million, but was partially offset by a 14% decrease in general and administrative expenses. This decrease was primarily due to a decrease in professional fees and a recovery on previously written down repossessed taxi medallions. The efficiency ratio dropped below 40% during the three months ended March 31, 2021 to 39.87% compared to 41.36% in the fourth quarter of 2020 and compared to 48.03% in the first quarter of 2020.
42
Strong Growth in Deposits
At March 31, 2021, total deposits increased $1.8 billion or 22% annualized to $34.2 billion compared to December 31, 2020. During the first quarter, we began working with our technology partners on a program to bring in additional low-cost deposits. The first step of this new relationship was to take in deposits related to the Economic Impact Payments ("EIP") associated with the federal stimulus plans. At quarter-end, these deposits totaled $1.6 billion and were all non-interest bearing accounts. In addition to the growth in non-interest bearing accounts, savings accounts grew $628.0 million or 39% annualized to $7.0 billion compared to the previous quarter, while at the same time, higher cost CD balances continued to decline. Total CDs declined $716.4 million or 28% annualized compared to December 31, 2020.
Asset Quality Remains Pristine
The Company’s asset quality metrics continued to be solid during the current first quarter, reflecting the underlying strength of our loan portfolio. NPAs at March 31, 2021 totaled $41.3 million, down 10% compared to $46.1 million at December 31, 2020, or seven bps of total assets compared to eight bps in the previous quarter. Total NPLs at March 31, 2021 declined 12% to $33.2 million compared to December 31, 2020. This decline was driven primarily by a decline in other non-accrual loans, which consist largely of taxi medallion-related non-accrual loans. Non-performing taxi medallion-related assets at March 31, 2021 were $14.9 million down $10.2 million or 41% compared to December 31, 2020.
During the second quarter of last year, and up $9.3 million or 17% annualized comparedthe Company implemented various loan modification programs with some of its borrowers, in accordance with the CARES Act. These modifications were primarily full-payment deferrals for an initial six-month period, with the ability to extend again at the prior quarter.
Recent Events
Declaration of Dividend on Common Shares
On April 28, 2020,22, 2021, our Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.17 per share. The dividend is payable on May 19, 202018, 2021 to common shareholders of record as of May 9, 2020.
Acquisition of Flagstar Bancorp, Inc. ("Flagstar")
On April 26, 2021, the Company announced that it had entered into a definitive merger agreement under which it would acquire Flagstar in unprecedented disruption on a global level. This includes significant financial market volatility and increased levels of unemployment. New York State, and most other states where we conduct business, have enacted shelter in place policies, whereby all businesses deemednon-essentialwere ordered to close, leading to a dramatic reduction in business output. In response, both100% stock transaction valued at the FRB and Congress reacted swiftly in order to mitigate the longer-term negative impact on the economic well-beingtime at $2.6 billion. Under terms of the country. The FRB has taken unprecedented actions in response toagreement, which was unanimously approved by the pandemic, including, among other actions, the establishmentBoards of a Main Street Lending Program intended to support small- andmid-sizebusinesses. It also lowered its targeted federal funds rate to a rangeDirectors of 0.00% to 0.25%, essentially zero and unveiled several new lending facilities. It is also providing liquidity through the purchaseboth companies, Flagstar shareholders will receive 4.0151 shares of treasury securities, mortgage-backed securities, as well as, other asset classes. Congress, for its part, passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), a $2.2 trillion stimulus package designed to support businesses and the consumer.
The new company will have over $87 billion in total assets, operate nearly 400 traditional branches in nine states, and immediately enacted our Business Continuity Plan and pandemic preparedness procedures.87 retail home lending offices across a 28-state footprint. It will have its headquarters on Long Island, N.Y. with regional headquarters in Troy, Michigan, including Flagstar's mortgage operations. The Company took a number of stepstransaction is expected to ensure the health and safety of its employees and customers and to help those depositors and borrowers who may be experiencing financial difficulties during this time. By the middle of March, nearly 100% of our back-office employees were working remotely and all of our operations were running smoothly. We temporarily closed all of ourin-storebranches, along with several other locations. In total we temporarily closed 74 locations, most of which areclose in the greater New York City region, or approximately 31%fourth quarter of our total locations. In addition, we converted some branches2021, subject todrive-uponly locations adjusted the hourssatisfaction of operation at our remaining branches, andcustomary closing conditions, including the option of banking by appointment. We also took additional safety measures at all of our open locations and at our corporate offices.
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 allowancesallowance for loancredit losses on loans and lease losses;leases; and the determination of the amount, if any, of goodwill impairment.
43
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 LoanCredit Losses on Loans and Lease Losses
The Company’s January 1, 2020, adoption of ASU No.“Measurement “Measurement of Credit Losses on Financial Instruments,” resulted in a significant change to our methodology for estimating the allowance since December 31, 2019. ASU No.
The allowance for loan and lease losses is deducted from the amortized cost basis of a financial asset or a group of financial assets so that the balance sheet reflects the net amount the Company expects to collect. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, fair value hedge accounting adjustments, and deferred fees and costs. Subsequent changes (favorable and unfavorable) in expected credit losses are recognized immediately in net income as a credit loss expense or a reversal of credit loss expense. Management estimates the allowance by projectingreasonable and supportableeconomic forecasts. The Company’s reasonable and supportableeconomic forecast period reverts to a historical norm based on inputs within 36after 24 months. Historical credit experience provides the basis for the estimation of expected credit losses, with adjustments made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency levels and terms, as well as for changes in environmental conditions, such as changes in unemployment rates, property valueslegislation, regulation, policies, administrative practices or other relevant factors. Expected credit losses are estimated over the contractual term of the loans, adjusted for forecasted prepayments when appropriate. The contractual term excludes potential extensions or renewals. The methodology used in the estimation of the allowance for loancredit losses on loans and lease losses,leases, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions. Each quarter, we reassess the appropriateness of the reasonable and supportableeconomic period, the reversion period and historical mean at the Classes of Financing Receivable (“CFR”)portfolio segment level, considering any required adjustments for differences in underwriting standards, portfolio mix, and other relevant data shifts over time.
The allowance for loan and lease losses is measured on a collective (pool) basis when similar risk characteristics exist. Management believes the products within each of the entity’s portfolio classes exhibit similar risk characteristics. Loans that are determined to have unique risk characteristics are evaluated on an individual basis by management. If a loan is determined to be collateral dependent, or meets the criteria to apply the collateral dependent practical expedient, expected credit losses are determined based on the fair value of the collateral at the reporting date, less costs to sell as appropriate. The macroeconomic data used in the quantitative models are based on a reasonable and supportablean economic forecast period of 24 months. The Company leverages economic projections including property market and prepayment forecasts from established independent third parties to inform its loss drivers in the forecast. Beyond this forecast period, we revert to a historical average loss rate. This reversion to the meanhistorical average loss rate is performed on a straight-line basis over 12 months.
The portfolio segment represents the level at which a systematic methodology is applied to estimate credit losses. Smaller pools of homogenous financing receivables with homogeneous risk characteristics were modeled using the methodology selected for the CFRportfolio segment to which factors in the qualitative scorecard include: concentration, modeling and forecast imprecision and limitations, policy and underwriting, prepayment uncertainty, external factors, nature and volume, management, and loan review. Each factor is subject to an evaluation of metrics, consistently applied, to measure adjustments needed for each reporting period.
Loans that do not share risk characteristics are evaluated on an individual basis. These include loans that are in nonaccrual status with balances above management determined materiality thresholds depending on loan class and also loans that are designated as TDR or “reasonably expected TDR” (criticized, classified, or maturing loans that will have a modification processed within the next three months). In addition, all taxi medallion loans are individually evaluated.
The Company maintains an allowance for credit losses on 44 judgment determining whether the highest mean CCF acrossitstheir estimated life. The Company examined historical credit conversion factor (“CCF”) trends to estimate utilization rates, and chose an appropriate mean CCF based on both management judgment and quantitative analysis. Quantitative analysis involved examination of CCFs over a range of
For the three months ended March 31, 20202021 the allowance for loan and lease losses increased primarily due to macroeconomic factors surrounding theprimarilyspecifically the resultant estimated decreases in property values. The forecast scenario includes a sharp decline in gross domestic product in the second quarterlow single digit growth of 2020 with a return to growth by year end. The immediate increase inGross Domestic Product (“GDP”), while unemployment remains elevated throughinto the forecast period.forecasted time horizon. In addition to these quantitative inputs, several qualitative factors were considered, including the risk that the economic decline proves to be more severe and/or prolonged than our baseline forecast which also increased our allowance for loan and lease credit losses. The impact of the unprecedented fiscal stimulus and changes to federal and local laws and regulations, including changes to various government sponsored loan programs, was also considered.
Current Expected Credit Losses
At December 31, 2019, the allowance for loan and lease losses totaled $147.6 million. On January 1, 2020, the Company adopted the CECL methodology under ASU Topic 326. Upon adoption, we recognized an increase in the ALLLACL of $1.9 million as a Day 1“Day 1” transition adjustment from a changes in methodology, with a corresponding decrease in retained earnings. At March 31, 2020,2021, the ALLLACL totaled $162.2$197.8 million, up $14.6$3.7 million compared to December 31, 20192020 driven by a provision for credit losses that exceededof $3.2 million and net charge-offs by $12.7 millionrecoveries of $517,000 during the first quarter. This increase reflects deterioration in forecasted economic conditions entirely due to the COVID-19 pandemic.
Separately, at December 31, 2019, the Company had an allowance for unfunded commitments of $461,000. With the adoption of CECL on January 1, 2020, we recognized a “Day 1” transition adjustment of $12.5 million. At March 31, 2020,2021, the allowance for unfunded commitments totaled $10.7$12.3 million. This was due to loan satisfactions, primarily ADC loans, which were satisfied during the first quarter of 2020.
(in thousands) | Loans and Leases | Unfunded Commitments | ||||||
Allowance for credit losses at December 31, 2019 | $ | 147,638 | $ | 461 | ||||
CECL Day 1 transition adjustment | 1,911 | 12,529 | ||||||
Q1 2020 Provision for (recovery of) credit losses | 22,891 | (2,290 | ) | |||||
Q1 2020 net charge-offs | (10,196 | ) | — | |||||
Allowance for credit losses at March 31, 2020 | $ | 162,244 | $ | 10,700 | ||||
(in thousands) |
| Loans and |
|
| Unfunded |
| ||
Allowance for credit losses on loans and leases at December 31, 2020 |
| $ | 194,043 |
|
| $ | 11,939 |
|
Q1 2021 provision for credit losses |
|
| 3,198 |
|
|
| 371 |
|
Q1 2021 net recoveries |
|
| 517 |
|
|
| — |
|
Allowance for credit losses on loans and leases at March 31, 2021 |
| $ | 197,758 |
|
| $ | 12,310 |
|
See Note 6, Allowance for LoanCredit Losses on Loans and Lease LossesLeases for a further discussion of our allowanceAllowance for loan and lease losses and Note 1, Organization, Basis of Presentation, and Recently Adopted Accounting Standards, for a further discussion of ASU No. 2016-13.
Goodwill Impairment
The Company adopted, on a prospective basis, ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment on January 1, 2020. We have significant intangible assets related to goodwill and as of March 31, 2020, we had2021, including goodwill of $2.4 billion. In connection with our acquisitions, the assets acquired and liabilities assumed are recorded at their estimated fair values. Goodwill represents the excess of the purchase price of our acquisitions over the fair value of identifiable net assets acquired, including other identified intangible assets. We test our goodwill for impairment at the reporting unit level. We have identified one reporting unit which is the same as our operating segment and reportable segment. 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 perform our goodwill impairment test in the fourth quarter of each year, or more often if events or circumstances warrant. 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 would compare the fair value
45
The Company assessed the environment in the first quarter of 2020,2021, including the estimated impact of the COVID-19 pandemic on macroeconomic variables and economic forecasts and how those might impact the fair value of our reporting unit. After consideration of the items above and the first quarter 2020three months of 2021 results, the Company determined it was not more-likely-than-not that the fair value of any reporting unit was below book value as of March 31, 2020.2021. We will continue to monitor and evaluate the impact of COVID-19 and its impact on our market capitalization, overall economic conditions, and any triggering events that may indicate an impairment of goodwill in the future.
Balance Sheet Summary
At March 31, 2020,2021, total assets were $54.3$57.7 billion, up $620.3 million compared to total assets at December 31, 2019, up 5%$1.4 billion or 10% on an annualized basis. Thisbasis compared to December 31, 2020. The growth was driven by several factors, including strong double-digit growth in total deposits, which drove the resultsignificant increase in the level of a 4% annualizedcash and cash equivalents, an increase in the securities portfolio, and modest growth in total loans and leases to $42.3 billion and by a near doubling in the balanceheld for investment.
The level of cash balances increased $775.0 million to $2.7 billion compared to the prior quarter. Total securities, consisting primarily of available-for-sale securities, also increased as the Company continued to buy securities as long-term interest rates increased during the first quarter and cash equivalentsthe yield curve steepened. Total securities grew $348.8 million to $1.3$6.2 billion, offset by a 27%or 24% annualized decline in the securities portfolio. Loan growth was driven by increases in the specialty finance portfolio and in the multi-family portfolio. This growth was funded through a combination of growth in deposits, which increased 4% annualizedcompared to $32.0 billion, and wholesale borrowings.
Total loans and leases held for investment increased $397.6rose $241.5 million to $43.1 million or 4% on an2% annualized basis to $42.3 billion compared to the balance at December 31, 2019. Total2020. The growth during the current first quarter was driven by growth in our specialty finance portfolio and by a rebound in the CRE portfolio, while multi-family loans rose $113.4declined modestly.
At March 31, 2021, the multi-family portfolio was relatively unchanged, declining a modest $40.9 million or 1.5% annualized to $31.3$32.2 billion compared to December 31, 2019.2020, but increased $924.7 million or 3% on a year-over-year basis. The specialty finance portfolio increased $415.0$136.1 million or 16% (63% annualized)18% annualized to $3.0$3.2 billion relativecompared to year-end 2020 and was up $160.3 million or 5% compared to the year-ago quarter. The CRE portfolio rebounded during the current quarter, increasing $191.5 million or 11% annualized compared to December 31, 2019. CRE2020, but was flat compared to the year-ago quarter. C&I loans declined slightly$42.4 million or 43% annualized to $352.0 million and declined $81.9 million or 19% compared to the year-ago quarter.
Total deposits at March 31, 2021 increased $1.8 billion or 22% annualized to $34.2 billion compared to December 31, 2020, primarily due to our new relationship with several of our technology partners. This led to substantial growth in non-interest bearing accounts. Non-interest bearing accounts rose $1.8 billion or 58% (not annualized) compared to December 31, 2020 and up $2.2 billion or 81% compared to the year-ago quarter. The relationship with our technology partners accounted for $1.6 billion of this increase. In addition to the growth in non-interest bearing accounts, we also grew savings accounts $628.0 million to $7.0 billion, at March 31, 2020, down $47.1 millionup 39% annualized compared to the previous quarter and up 42% or 3% annualized. Total C&I loans rose $12.9 million, up 12% annualized to $433.9 million.
Totaled borrowed funds at March 31, 2020 were $14.9 billion, up $375.22021 decreased $324.8 million or 10%8% annualized to $15.8 billion compared to December 31, 2020, but increased $826.0 million or 6% compared to March 31, 2020.
Total stockholders' equity was $6.8 billion at March 31, 2021, relatively unchanged compared to the balanceprevious quarter and rose $159.1 million or 2% compared to the year-ago quarter. Excluding goodwill and preferred stock, tangible common stockholders' equity totaled $3.9 billion as of March 31, 2021, unchanged relative to the previous quarter and up $159.1 million or 4% compared to the year-ago quarter. Book value per common share was $13.53 at March 31, 2021 compared to $13.66 at December 31, 2019. This increase is entirely due2020 and to an increase in wholesale borrowings, consisting of advances from theFHLB-NY.Wholesale borrowings increased $375.0 million to $14.3 billion, up 11% annualized$13.15 compared toyear-end2019.
Common stockholders’stockholders' equity to total assets was 11.31%10.92% at March 31, 20202021 compared to 11.57% at11.26% and 11.31%, as of December 31, 2019, while2020 and March 31, 2020, respectively. On a tangible basis, tangible book value per common share was $13.15 versus $13.29.
Loans and Leases
Loans and Leases Originated for Investment
The majority of the loans we originate are loans and leases held for investment and most of the
46
In addition to multi-family and CRE loans, our specialty finance loans and leases have become an increasingincreasingly larger portion of our overall loan portfolio. The remainder of our portfolio includes smaller balances of C&I loans,
During the current first quarter, of 2020, the Company originated $2.7$2.5 billion of loans and leases held for investment, up 35% on a year-over-year basis. Every segment increased withexceeding the exceptionfourth quarter pipeline by $1.0 billion, but down 34% compared to the fourth quarter of CRElast year and ADC loans, which declined 8% and 59%, respectively. Multi-family originations duringdown 7% compared to the first quarter increased 40%of last year. The linked-quarter decrease was due to $1.4 billion, whilea 47% decline in multi-family loan originations, a 13% decline in CRE loan originations, and a 48% decline in other C&I loan originations. This was offset by a 21% linked-quarter increase in specialty finance origination were $957.4 million, up 40% on a year-over-year basis.
The following table presents information about the loans held for investment we originated for the respective periods:
March 31, 2020 | ||||||||||||||||||||
For the Three Months Ended | compared to | |||||||||||||||||||
March 31, | Dec. 31, | March 31, | Dec 31, | March 31, | ||||||||||||||||
2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Mortgage Loans Originated for Investment: | ||||||||||||||||||||
Multi-family | $ | 1,417,219 | $ | 1,991,636 | $ | 1,009,351 | -29 | % | 40 | % | ||||||||||
Commercial real estate | 191,651 | 326,834 | 207,209 | -41 | % | -8 | % | |||||||||||||
One-to-four family residential | 27,196 | 77,321 | 3,209 | -65 | % | 747 | % | |||||||||||||
Acquisition, development, and construction | 4,908 | 33,173 | 12,024 | -85 | % | -59 | % | |||||||||||||
Total mortgage loans originated for investment | 1,640,974 | 2,428,964 | 1,231,793 | -32 | % | 33 | % | |||||||||||||
Other Loans Originated for Investment: | ||||||||||||||||||||
Specialty Finance | 957,393 | 799,163 | 685,611 | 20 | % | 40 | % | |||||||||||||
Other commercial and industrial | 122,386 | 88,672 | 104,947 | 38 | % | 17 | % | |||||||||||||
Other | 925 | 707 | 920 | 31 | % | 1 | % | |||||||||||||
Total other loans originated for investment | 1,080,704 | 888,542 | 791,478 | 22 | % | 37 | % | |||||||||||||
Total Loans Originated for Investment | $ | 2,721,678 | $ | 3,317,506 | $ | 2,023,271 | -18 | % | 35 | % | ||||||||||
|
| For the Three Months Ended |
| March 31, 2021 |
| |||||||
|
| March 31, |
|
| March 31, |
|
| March 31, |
| |||
|
| 2021 |
|
| 2020 |
|
| 2020 |
| |||
(in thousands) |
|
|
|
|
|
|
|
|
| |||
Mortgage Loans Originated for Investment: |
|
|
|
|
|
|
|
|
| |||
Multi-family |
| $ | 1,465,831 |
|
| $ | 1,417,219 |
|
| $ | 48,612 |
|
Commercial real estate |
|
| 443,207 |
|
|
| 191,651 |
|
|
| 251,556 |
|
One-to-four family residential |
|
| 21,520 |
|
|
| 27,196 |
|
|
| (5,676 | ) |
Acquisition, development, and construction |
|
| 6,622 |
|
|
| 4,908 |
|
|
| 1,714 |
|
Total mortgage loans originated for investment |
|
| 1,937,180 |
|
|
| 1,640,974 |
|
|
| 296,206 |
|
Other Loans Originated for Investment: |
|
|
|
|
|
|
|
|
| |||
Specialty Finance |
|
| 541,494 |
|
|
| 957,393 |
|
|
| (415,899 | ) |
Other commercial and industrial |
|
| 62,507 |
|
|
| 122,386 |
|
|
| (59,879 | ) |
Other |
|
| 1,137 |
|
|
| 925 |
|
|
| 212 |
|
Total other loans originated for investment |
|
| 605,138 |
|
|
| 1,080,704 |
|
|
| (475,566 | ) |
Total Loans Originated for Investment |
| $ | 2,542,318 |
|
| $ | 2,721,678 |
|
| $ | (179,360 | ) |
Loans and Leases Held for Investment
The individual
Multi-Family Loans
Multi-family loans are our principal asset. The loans we produce are primarily secured by
At March 31, 20202021, total multi-family loans represented $31.3$32.2 billion or 74%,75% of total loans and leases held for investment reflecting a $113.4 million increase from the balance at December 31, 2019.investment. The average multi-family loan had a principal balance of $6.4$6.6 million at the end of the current first quarter and an average weighted life of 1.92.4 years.
At March 31, 2021, 79% of our multi-family loans were secured by rental apartment buildings. In addition, 78.0% of our multi-family loans were secured by buildings in the metro New York City metro area and 3.0% were secured by buildings elsewhere in New York State. The remaining multi-family loans were secured by buildings outside these markets, including in the four other states served by our retail branch offices.
In addition, $18.769% or $22.1 billion or 60% of the Company’s totalCompany's overall multi-family portfolio is secured by properties in New York State, andof which $19.3 billion are subject to rent regulation laws. The weighted average LTV of the rent regulatedrent-regulated segment of the multi-family portfolio was 53.13%54.37%, as of March 31, 2020 compared to 56.78% for2021, 312 bps below the overall multi-family portfolio or 365 basis points lower.
47
While a small percentage of our multi-family loans are
Multi-family loans that refinance within the first five or seven years are typically subject to an established prepayment penalty schedule. Depending on the remaining term of the loan at the time of prepayment, the penalties normally range from five percentage points to one percentage point of the then-current loan balance. If a loan extends past the fifth or seventh year and the borrower selects the fixed-rate option, the prepayment penalties typically reset to a range of five points to one point over years six through ten or eight through twelve. For example, a
Because prepayment penalties 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 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 existing,
Our emphasis on multi-family loans is driven by several factors, including their structure, which reduces our exposure to interest rate volatility to some degree. Another factor driving our focus on multi-family lending has been the comparative quality of the loans we produce. Reflecting the nature of the buildings securing our loans, our underwriting standards, and the generally conservative LTV ratios our multi-family loans feature at origination, a relatively small percentage of the multi-family loans that have transitioned to
We primarily underwrite our multi-family loans based on the current cash flows produced by the collateral property, with a reliance on the “income” approach to appraising the properties, rather than the “sales” approach. The sales approach is subject to fluctuations in the real estate market, as well as general economic conditions, and is therefore likely to be more risky in the event of a downward credit cycle turn. We also consider a variety of other factors, including the physical condition of the underlying property; the net operating income of the mortgaged premises prior to debt service; the DSCR, which is the ratio of the property’s net operating income to its debt service; and the ratio of the loan amount to the appraised value (i.e., the LTV) of the property.
In addition to requiring a minimum DSCR of 120% 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% of the lower of the appraised value or the sales price of the underlying property, and typically feature an amortization period of 30 years. In addition, some of our multi-family loans may contain an initial interest-only period which typically does not exceed two years; however, these loans are underwritten on a fully amortizing basis.
Commercial Real Estate Loans
At March 31, 2021, CRE loans represented $7.0 billion or 16.6%,16% of total loans and leases held for investment at the end of the current first quarter, a $47.1 million decrease from the balance at December 31, 2019. At March 31, 2020, theinvestment. The average CRE loan had a principal balance of $6.6$7.0 million and thean average weighted life was 2.3of 2.4 years.
The CRE loans we produceoriginated by the Company are also secured by income-producing properties, such as office buildings, mixed-use buildings (retail storefront on the ground floor and apartment units above the ground floor), retail centers,mixed-usebuildings, and multi-tenanted light industrial properties. At March 31, 2020, 85.5%2021, 85% of our CRE loans were secured by properties in the metro New York City metro area, while properties in other parts of New York State accounted for 2.3%2.2% of the properties securing our CRE credits, whileloans and properties in all other states accounted for 12.2%,12.6% combined.
48
The terms of our CRE loans are similar to the terms of our multi-family credits. While a small percentage of our CRE loans feature
Prepayment penalties also apply to our CRE loans. Depending on the remaining term of the loan at the time of prepayment, the penalties normally range from five percentage points to one percentage point of the then-current loan balance. If a loan extends past the fifth or seventh year and the borrower selects the fixed rate option, the prepayment penalties typically reset to a range of five points to one point over years six through ten or eight through twelve. Our CRE loans tend to refinance within two to three years of origination, as reflected in the expected weighted average life of the CRE portfolio noted above.
Specialty Finance Loans and Leases
At March 31, 2020,2021, specialty finance loans and leases totaled $3.0$3.4 billion or 7.9% of total loans and leases held for investment, up $415.0 million compared to December 31, 2019, representing 7.2% of totalheld-for-investmentloans.
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
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.
C&I Loans
At March 31, 2020,2021, C&I loans totaled $433.9$350.8 million compared to $421.0 million at December 31, 2019.or 0.82% of total loans and leases held for investment. Included in theloans of $33.5 million, representing 0.08% of totalheld-for-investmentloans at March 31, 2020.
The C&I loans we produce are primarily made to small and
A broad range of C&I loans, both collateralized and unsecured, are made available to businesses for working capital (including inventory and accounts receivable), business expansion, the purchase of machinery and equipment, and other general corporate needs. In determining the term and structure of C&I loans, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. C&I loans are typically secured by business assets and personal guarantees of the borrower, and include financial covenants to monitor the borrower’s financial stability.
The interest rates on our other C&I loans can be fixed or floating, with floating-rate loans being tied to prime or some other market index, plus an applicable spread. Our floating-rate loans may or may not feature a floor rate of interest. The decision to require a floor on other C&I loans depends on the level of competition we face for such loans from other institutions, the direction of market interest rates, and the profitability of our relationship with the borrower.
49
Acquisition, Development, and Construction Loans
ADC loans at March 31, 2021 totaled $115.9 million and represented 0.27% of total loans and leases held for investment. Because ADC loans are generally considered to have a higher degree of credit risk, especially during a downturn in the business cycle, borrowers are required to provide a guarantee of repayment and completion.
One-to-Four
At March 31, 2020,held for investment decreased to $352.6totaled $208.1 million representing 0.83%or 0.48% of total loans and leases held for investment at that date.
Other Loans
Other loans totaled $5.6 million at March 31, 2020, other loans totaled $9.5 million2021 and consisted primarilymainly of overdraft loans and loans to
Loans Held for Sale
At March 31, 2021, the Company has $141.4 million in loans held for sale, up $24.3 million compared to December 31, 2020. The majority of these loans in both periods are part of the Paycheck Protection Program (the "PPP"). At March 31, 2020, the Company did not have any loans designated as held for sale.
Lending Authority
The loans we originate for investment are subject to federal and state laws and regulations, and are underwritten in accordance with loan underwriting policies approved by the Management Credit Committee, the Commercial Credit Committee and the Mortgage and Real Estate and Credit Committees of the Board, and the Board of Directors of the Bank.
C&I loans less than or equal to $3.0 million are approved by the joint authority of lending officers. C&I loans in excess of $3.0 million and all multifamily,multi-family, CRE, ADC, and Specialty Finance loans regardless of amount are required to be presented to the Management Credit Committee for approval. Multifamily,Multi-family, CRE, and C&I loans in excess of $5.0 million and Specialty Finance in excess of $15.0 million are also required to be presented to the Commercial Credit Committee and the Mortgage and Real Estate Committee of the Board, as applicable so that the Committees can review the loan’s associated risks. The Commercial Credit and Mortgage and Real Estate Committees have authority to direct changes in lending practices as they deem necessary or appropriate in order to address individual or aggregate risks and credit exposures in accordance with the Bank’s strategic objectives and risk appetites.
All mortgage loans in excess of $50.0 million, specialty finance loans in excess of $15.0 million and all other C&I loans in excess of $5.0 million require approval by the Mortgage and Real Estate Committee or the Credit Committee of the Board, as applicable.
In addition, all loans of $20.0 million or more originated by the Bank continue to be reported to the Board of Directors.
At March 31, 2020,2021, the largest mortgage loan in our portfolio was a $246.0$329.0 million multi-family loan originated by the Bank on February 8, 2018 collateralized by six properties located in Brooklyn, New York. As of the date of this report, the loan has been current since origination.
50
Geographical Analysis of the Portfolio of Loans Held for Investment
The following table presents a geographical analysis of the multi-family and CRE loans in our2020:
At March 31, 2020 | ||||||||||||||||
Multi-Family Loans | Commercial Real Estate Loans | |||||||||||||||
(dollars in thousands) | Amount | Percent of Total | Amount | Percent of Total | ||||||||||||
New York City: | ||||||||||||||||
Manhattan | $ | 7,803,645 | 24.95 | % | $ | 3,355,351 | 47.70 | % | ||||||||
Brooklyn | 5,599,902 | 17.91 | 527,829 | 7.50 | ||||||||||||
Bronx | 3,866,371 | 12.36 | 162,545 | 2.31 | ||||||||||||
Queens | 2,635,911 | 8.43 | 605,349 | 8.61 | ||||||||||||
Staten Island | 129,861 | 0.42 | 54,755 | 0.78 | ||||||||||||
Total New York City | $ | 20,035,690 | 64.07 | % | $ | 4,705,829 | 66.89 | % | ||||||||
New Jersey | 3,779,703 | 12.09 | 544,018 | 7.73 | ||||||||||||
Long Island | 588,004 | 1.88 | 765,449 | 10.88 | ||||||||||||
Total Metro New York | $ | 24,403,397 | 78.04 | % | $ | 6,015,296 | 85.51 | % | ||||||||
Other New York State | 930,149 | 2.97 | 158,882 | 2.26 | ||||||||||||
All other states | 5,937,527 | 18.99 | 860,542 | 12.23 | ||||||||||||
Total | $ | 31,271,073 | 100.00 | % | $ | 7,034,720 | 100.00 | % | ||||||||
|
| At March 31, 2021 |
|
| |||||||||||||
|
| Multi-Family Loans |
|
| Commercial Real Estate |
|
| ||||||||||
(dollars in thousands) |
| Amount |
|
| Percent |
|
| Amount |
|
| Percent |
|
| ||||
New York City: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Manhattan |
| $ | 7,688,174 |
|
|
| 23.88 |
| % | $ | 3,127,924 |
|
|
| 44.51 |
| % |
Brooklyn |
|
| 6,012,604 |
|
|
| 18.68 |
|
|
| 462,638 |
|
|
| 6.58 |
|
|
Bronx |
|
| 3,948,218 |
|
|
| 12.26 |
|
|
| 156,373 |
|
|
| 2.23 |
|
|
Queens |
|
| 2,889,237 |
|
|
| 8.97 |
|
|
| 623,942 |
|
|
| 8.88 |
|
|
Staten Island |
|
| 137,325 |
|
|
| 0.43 |
|
|
| 51,525 |
|
|
| 0.73 |
|
|
Total New York City |
| $ | 20,675,558 |
|
|
| 64.22 |
| % | $ | 4,422,402 |
|
|
| 62.93 |
| % |
New Jersey |
|
| 4,209,730 |
|
|
| 13.08 |
|
|
| 558,601 |
|
|
| 7.95 |
|
|
Long Island |
|
| 486,224 |
|
|
| 1.51 |
|
|
| 1,011,777 |
|
|
| 14.40 |
|
|
Total Metro New York |
| $ | 25,371,512 |
|
|
| 78.81 |
| % | $ | 5,992,780 |
|
|
| 85.28 |
| % |
Other New York State |
|
| 957,057 |
|
|
| 2.97 |
|
|
| 152,803 |
|
|
| 2.17 |
|
|
All other states |
|
| 5,866,687 |
|
|
| 18.22 |
|
|
| 881,653 |
|
|
| 12.55 |
|
|
Total |
| $ | 32,195,256 |
|
|
| 100.00 |
| % | $ | 7,027,236 |
|
|
| 100.00 |
| % |
At March 31, 2020,2021, the largest concentration of ADC loans held for investment was located in Metro New York, City, with a total of $74.8$98.5 million at that date. The majority of our other loans held for investment were secured by properties and/or businesses located in Metro New York.
Outstanding Loan Commitments
At March 31, 2020,2021, we had outstanding loan commitments of $2.0$2.8 billion, unchangedas compared to $2.5 billion from the level at December 31, 2019.
Multi-family, CRE, ADC and ADC1-4 family loans together represented $507.0$628.4 million of$1.5$2.2 billion. Included in the latter amount were commitments to originate specialty finance loans and leases of $987.4 million$1.5 billion and commitments to originate other C&I loans of $455.7$620.6 million.
In addition to loan commitments, we had commitments to issue financial$493.6$288.6 million at March 31, 2020, a $16.32021, an $87.3 million decrease from the volume at December 31, 2019.2020. 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-Performing
NPAs at March 31, 2020 declined $14.72021 totaled $41.3 million, or 20% to $58.8 milliondown 10% compared to $46.1 million at December 31, 2019 as bothnon-performingloans and repossessed assets declined by 20% and 22%, respectively to 0.11%2020, representing 0.07% of total assets as compared to 0.14%0.08% at December 31, 2019.
NPLs at March 31, 2020 were $49.32021 declined 12% to $33.2 million down $12.0 million or 20% compared to $37.8 million at December 31, 2019. This translates into 0.12%2020, representing 0.08% of total loans compared to 0.15% at December 31, 2019.0.09% for the previous quarter. Included in the first quarter amount was $22.9were $10.1 million of$30.4$18.6 million at December 31, 2019.
Total repossessed assets duringat the currentend of the first quarter totaled $9.5were $8.2 million, down $2.7 million or 22%relatively unchanged compared to the fourth quarter$8.3 million at the end of 2019.the previous quarter. At March 31, 2020,2021, repossessed assets included $7.6$4.8 million of repossessed taxi medallions compared to $10.3$6.5 million at December 31, 2019.At March 31, 2020,2020. At the end of the current first quarter, the Company's remaining taxi medallion-related loansassets totaled $16.6 million compared to $25.2 million in the C&I portfolio totaled $33.5 million, down $21.5 million or 39%previous quarter.
For the three months ended March 31, 2021, the Company recorded net recoveries of $517,000 compared to the balances at December 31, 2019. This was mostly due to charge-offs.
51
The following table presents our20192020 to March 31, 2020:
Change from December 31, 2019 to March 31, 2020 | ||||||||||||||||
(dollars in thousands) | March 31, 2020 | December 31, 2019 | Amount | Percent | ||||||||||||
Non-Performing Loans: | ||||||||||||||||
Non-accrual mortgage loans: | ||||||||||||||||
Multi-family | $ | 4,242 | $ | 5,407 | $ | (1,165 | ) | (21.55 | )% | |||||||
Commercial real estate | 16,101 | 14,830 | 1,271 | 8.57 | ||||||||||||
One-to-four family | 1,721 | 1,730 | (9 | ) | (0.52 | ) | ||||||||||
Acquisition, development, and construction | — | — | — | — | ||||||||||||
Total non-accrual mortgage loans | 22,064 | 21,967 | 97 | 0.44 | ||||||||||||
Non-accrual other loans(1) | 27,218 | 39,276 | (12,058 | ) | (30.70 | ) | ||||||||||
Total non-performing loans | $ | 49,282 | $ | 61,243 | $ | (11,961 | ) | (19.53 | )% | |||||||
|
|
|
|
|
|
|
| Change from |
| |||||||
(dollars in thousands) |
| March 31, |
|
| December 31, |
|
| Amount |
|
| Percent |
| ||||
Non-Performing Loans: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-accrual mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Multi-family |
| $ | 9,888 |
|
| $ | 4,068 |
|
| $ | 5,820 |
|
|
| 143 | % |
Commercial real estate |
|
| 11,573 |
|
|
| 12,142 |
|
|
| (569 | ) |
|
| -5 | % |
One-to-four family |
|
| 1,466 |
|
|
| 1,696 |
|
|
| (230 | ) |
|
| -14 | % |
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total non-accrual mortgage loans |
|
| 22,927 |
|
|
| 17,906 |
|
|
| 5,021 |
|
|
| 28 | % |
Non-accrual other loans (1) |
|
| 10,251 |
|
|
| 19,879 |
|
|
| (9,628 | ) |
|
| -48 | % |
Total non-performing loans |
| $ | 33,178 |
|
| $ | 37,785 |
|
| $ | (4,607 | ) |
|
| -12 | % |
(1) Includes $10.1 million and $18.6 million of non-accrual taxi medallion-related loans at March 31, 2021 and December 31, 2020, respectively.
The following table sets forth the changes in2020:
(in thousands) | ||||
Balance at December 31, 2019 | $ | 61,243 | ||
New non-accrual | 1,584 | |||
Charge-offs | (10,133 | ) | ||
Transferred to repossessed assets | (166 | ) | ||
Loan payoffs, including dispositions and principal pay-downs | (3,246 | ) | ||
Restored to performing status | — | |||
Balance at March 31, 2020 | $ | 49,282 | ||
(in thousands) |
|
|
| |
Balance at December 31, 2020 |
| $ | 37,785 |
|
New non-accrual |
|
| 7,849 |
|
Charge-offs |
|
| (4,324 | ) |
Transferred to repossessed assets |
|
| - |
|
Loan payoffs, including dispositions and principal |
|
| (8,132 | ) |
Restored to performing status |
|
| - |
|
Balance at March 31, 2021 |
| $ | 33,178 |
|
A loan generally is classified as a20202021 and December 31, 2019,2020, all of our
52
We monitor
It is our policy to order updated appraisals for allcurrent LTVs on a portfolio-wide basis.
Non-performing
Properties and assets that are acquired through foreclosure are classified as either OREO or repossessed assets, and are recorded at fair value at the date of acquisition, less the estimated cost of selling the property/asset. Subsequent declines in the fair value of OREO or repossessed assets are charged to earnings and are included in
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. We continue to conduct inspections as per the aforementioned policy, however, due to the COVID-19 pandemic, currently full access to some properties and buildings may be limited. Furthermore, independent appraisers, whose appraisals are carefully reviewed by our experienced
In addition to underwriting multi-family loans on the basis of the buildings’ income and condition, we consider the borrowers’ credit history, profitability, and building management expertise. Borrowers are required to present evidence of their ability to repay the loan from the buildings’ current rent rolls, their financial statements, and related documents.
In addition, we work with a select group of mortgage brokers who are familiar with our credit standards and whose track record with our lending officers is typically greater than ten years. Furthermore, in New York City, where the majority of the buildings securing our multi-family loans are located, the rents that tenants may be charged on certain apartments are typically restricted under certain new rent regulation laws. As a result, the rents that tenants pay for such apartments are generally lower than current market rents. Buildings with a preponderance of such rent-regulated apartments are less likely to experience vacancies in times of economic adversity.
Reflecting the strength of the underlying collateral for these loans and the collateral structure, a relatively small percentage of our
53
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% for multi-family loans and 130% for CRE loans. Although we typically lend up to 75% of the appraised value on multi-family buildings and up to 65% on commercial properties, the average LTVs of such credits at origination were below those amounts at March 31, 2020.2021. Exceptions to these LTV limitations are minimal and are reviewed on a
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% and a maximum LTV of 65%. In addition, the origination of CRE loans typically requires a security interest in the fixtures, equipment, and other personal property of the borrower and/or an assignment of the rents and/or leases. In addition, our CRE loans may contain an interest-only period which typically does not exceed three years; however, these loans are underwritten on a fully amortizing basis.
Multi-family and CRE loans are generally originated at conservative LTVs and DSCRs, as previously stated. Low LTVs provide a greater likelihood of full recovery and reduce the possibility of incurring a severe loss on a credit; in many cases, they reduce the likelihood of the borrower “walking away” from the property. Although borrowers may default on loan payments, they have a greater incentive to protect their equity in the collateral property and to return their loans to performing status. Furthermore, in the case of multi-family loans, the cash flows generated by the properties are generally below-market and have significant value.
With regard to ADC loans, we typically lend up to 75% of the estimated
To minimize the risk involved in specialty finance lending and leasing, each of our credits is secured with a perfected first security interest or outright ownership in the underlying collateral, and structured as senior debt or as a
Other C&I loans are typically underwritten on the basis of the cash flows produced by the borrower’s business, and 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 to 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 also a normal requirement for other C&I loans.
The procedures we follow with respect to delinquent loans are generally consistent across all categories, with late charges assessed, and notices mailed to the borrower, at specified dates. We attempt to reach the borrower by telephone to ascertain the reasons for delinquency and the prospects for repayment. When contact is made with a borrower at any time prior to foreclosure or recovery against collateral property, we attempt to obtain full payment, and will consider a repayment schedule to avoid taking such action. Delinquencies are addressed by our Loan Workout Unit and every effort is made to collect rather than initiate foreclosure proceedings.
The following table presents our loans 30 to 89 days past due by loan type and the changes in the respective balances from December 31, 20192020 to March 31, 2020:
Change from December 31, 2019 to March 31, 2020 | ||||||||||||||||
(dollars in thousands) | March 31, 2020 | December 31, 2019 | Amount | Percent | ||||||||||||
Loans 30-89 Days Past Due: | ||||||||||||||||
Multi-family | $ | 2,679 | $ | 1,131 | $ | 1,548 | 136.87 | % | ||||||||
Commercial real estate | 97 | 2,545 | (2,448 | ) | (96.19 | ) | ||||||||||
One-to-four family | — | — | — | — | ||||||||||||
Acquisition, development, and construction | — | — | — | — | ||||||||||||
Other loans (1) | 52 | 44 | 8 | 18.18 | ||||||||||||
Total loans 30-89 days past due | $ | 2,828 | $ | 3,720 | $ | 892 | 23.98 | |||||||||
|
|
|
|
|
|
|
| Change from |
| |||||||
(dollars in thousands) |
| March 31, |
|
| December 31, |
|
| Amount |
|
| Percent |
| ||||
Loans 30-89 Days Past Due: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Multi-family |
| $ | 961 |
|
| $ | 4,091 |
|
| $ | (3,130 | ) |
|
| -77 | % |
Commercial real estate |
|
| 19,371 |
|
|
| 9,989 |
|
|
| 9,382 |
|
|
| 94 | % |
One-to-four family |
|
| — |
|
|
| 1,575 |
|
|
| (1,575 | ) |
|
| -100 | % |
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Other loans (1) |
|
| 13 |
|
|
| 3 |
|
|
| 10 |
|
|
| 333 | % |
Total loans 30-89 days past due |
| $ | 20,345 |
|
| $ | 15,658 |
|
| $ | 4,687 |
|
|
| 30 | % |
54
(1) Does not include any past due taxi medallion-related loans at March 31, 2021 and December 31, 2020.
Fair values for all multi-family buildings, CRE properties, and land are determined based on the appraised value. If an appraisal is more than one year old and the loan is classified as either
While we strive to originate loans that will perform fully, adverse economic and market conditions, among other factors, can adversely impact a borrower’s ability to repay.
Based upon all relevant and available information as of the end of the current third quarter, management believes that the allowance for losses on loans was appropriate at that date.
At March 31, 2020, our2021, the Company's three largestnon-performingloans NPLs were one CRE loan with a balance of $9.8 million, one C&I loan with a balance of $3.4$8.2 million and atwo multi-family loanloans with a balancebalances of $2.4$6.8 million and $1.8 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 for
Loans modified as TDRs are placed on2020,$21.4$10.0 million.
At March 31, 2020,2021, loans on which concessions were made with respect to rate reductions and/or extensions of maturity dates totaled $25.5$32.1 million; loans in connection with which forbearance agreements were reached totaled $4.2 million$146,000 at that date.
Based on the number of loans performing in accordance with their revised terms, our success rates for restructured multi-familyCRE loans,67%50% and 84%60%, respectively, at March 31, 2020.
Analysis of Troubled Debt Restructurings
The following table sets forth the changes in our TDRs over the three months ended March 31, 2020:
(in thousands) | Accruing | Non-Accrual | Total | |||||||||
Balance at December 31, 2019 | $ | 1,254 | $ | 39,245 | $ | 40,499 | ||||||
New TDRs | — | 1,559 | 1,559 | |||||||||
Charge-offs | — | (9,644 | ) | (9,644 | ) | |||||||
Loan payoffs, including dispositions and principal pay-downs | (389 | ) | (2,396 | ) | (2,785 | ) | ||||||
Balance at March 31, 2020 | $ | 865 | $ | 28,764 | $ | 29,629 | ||||||
(in thousands) |
| Accruing |
|
| Non-Accrual |
|
| Total |
| |||
Balance at December 31, 2020 |
| $ | 14,967 |
|
| $ | 19,318 |
|
| $ | 34,285 |
|
New TDRs |
|
| - |
|
|
| 7,514 |
|
|
| 7,514 |
|
Charge-offs |
|
| - |
|
|
| (4,311 | ) |
|
| (4,311 | ) |
Loan payoffs, including dispositions and principal |
|
| (73 | ) |
|
| (5,217 | ) |
|
| (5,290 | ) |
Balance at March 31, 2021 |
| $ | 14,894 |
|
| $ | 17,304 |
|
| $ | 32,198 |
|
On a limited basis, we may provide additional credit to a borrower after a loan has been placed on2020,2021, 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
Except for the 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.
55
Loan Deferrals
Under U.S. GAAP, banks are required to assess modifications to a loan’s terms for potential classification as a TDR. A loan to a borrower experiencing financial difficulty is classified as a TDR when a lender grants a concession that it would otherwise not consider, such as a payment deferral or interest concession. In order to encourage banks to work with impacted borrowers, the CARES Act and bank regulators have provided relief from TDR accounting. The main benefits of TDR relief include a capital benefit in the form of reduced risk-weighted assets, as TDRs are more heavily risk-weighted for capital purposes; aging of the loans is frozen, i.e., they will continue to be reported in the same delinquency bucket they were in at the time of modification; and the loans are generally not reported as
Under the CARES Act, the Company made the election to deem that loan modifications do not result in TDRs if they are (1) related to the novel coronavirus diseaseNational EmergencyCOVID-19 national emergency declaration or (B) December 31, 2020. Additionally, other short-term modifications made on a good faith basis
During the second quarter of 2020, the Company has implemented various loan modification programs with some of its borrowers, mainlyin accordance with the CARES Act and interagency regulatory guidance. These modifications were primarily full payment deferrals for asix-monthperiod. The table below detailsan initial six month period, with the numberability to extend again at the end of modificationsthe deferral period, at the Bank’s discretion. Most of these deferrals were entered into during April and May, and were therefore, they were eligible to come off of their deferral period beginning in the fourth quarter of 2020, and the modifications as a percentageremaining were eligible to come off their deferral during the first quarter of 2021. Accordingly, at March 31, 2021, 100% of the $6.1 billion of loans on deferral had returned to payment status.
In addition, approximately $2.5 billion or 6% of total loans within that loan categoryhave been modified and are currently paying interest-only and escrow ("principal deferrals"). The majority of these principal deferrals, $2.1 billion or 84%, are scheduled to resume principal payments during the second quarter of 2021. The remaining $400.0 million are scheduled to resume principal payments by year-end.
The following tables reflect, as of April 27, 2020.
Total Deferred | Total Portfolio | Deferred as a% of Total Portfolio | ||||||||||
(in millions) | ||||||||||||
Multi-family | $ | 3,002.0 | $ | 31,189.3 | 9.6 | % | ||||||
CRE | 1,826.3 | 6,903.7 | 26.5 | % | ||||||||
Total | $ | 4,828.3 | $ | 38,093.0 | 12.7 | % |
Principal Deferrals as of March 31, 2021 |
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Amount in |
|
| Outstanding |
|
| Deferred as |
|
| Weighted- |
| ||||
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Multi-family |
| $ | 1,715 |
|
| $ | 32,142 |
|
|
| 5.3 | % |
|
| 54.8 | % |
CRE: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Office |
| $ | 389 |
|
| $ | 3,235 |
|
|
| 12.0 | % |
|
| 51.7 | % |
Retail |
|
| 203 |
|
|
| 1,804 |
|
|
| 11.3 | % |
|
| 61.5 | % |
Mixed use |
|
| 132 |
|
|
| 665 |
|
|
| 19.9 | % |
|
| 52.6 | % |
Condo/ Co-op |
|
| 59 |
|
|
| 262 |
|
|
| 22.6 | % |
|
| 46.6 | % |
Other |
|
| 17 |
|
|
| 1,061 |
|
|
| 1.6 | % |
|
| 61.9 | % |
Sub-total CRE |
| $ | 800 |
|
| $ | 7,027 |
|
|
| 11.4 | % |
|
| 54.2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Multi-Family and CRE |
|
| 2,515 |
|
|
| 39,169 |
|
|
| 6.4 | % |
|
| 54.6 | % |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other |
|
| 20 |
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ | 2,535 |
|
|
|
|
|
|
|
|
|
|
Additionally, the allowance for credit losses on accrued interest receivable on loans, including loans in the deferral program, was $997,891, as of March 31, 2021.
56
Asset Quality Analysis
The following table presents information regarding our consolidated allowance for loanlease losses,leases, our20202021 and December 31, 2019.
(dollars in thousands) | At or For the Three Months Ended March 31, 2020 | At or For the Year Ended December 31, 2019 | ||||||
Allowance for Loan and Lease Losses: | ||||||||
Balance at beginning of period | $ | 147,638 | $ | 159,820 | ||||
CECL day 1 transition adjustment | 1,911 | — | ||||||
Provision for credit losses | 22,891 | 7,105 | ||||||
Charge-offs: | ||||||||
Multi-family | — | (659 | ) | |||||
Commercial real estate | — | — | ||||||
One-to-four family residential | — | (954 | ) | |||||
Acquisition, development, and construction | — | |||||||
Other loans | (10,385 | ) | (18,694 | ) | ||||
Total charge-offs | (10,385 | ) | (20,307 | ) | ||||
Recoveries: | ||||||||
Multi-family | — | — | ||||||
Commercial real estate | — | — | ||||||
One-to-four family residential | — | — | ||||||
Acquisition, development, and construction | 11 | 61 | ||||||
Other loans | 178 | 959 | ||||||
Total recoveries | 189 | 1,020 | ||||||
Net charge-offs | (10,196 | ) | (19,287 | ) | ||||
Balance at end of period | $ | 162,244 | $ | 147,638 | ||||
Non-Performing Assets: | ||||||||
Non-accrual mortgage loans: | ||||||||
Multi-family | $ | 4,242 | $ | 5,407 | ||||
Commercial real estate | 16,101 | 14,830 | ||||||
One-to-four family residential | 1,721 | 1,730 | ||||||
Acquisition, development, and construction | — | — | ||||||
Total non-accrual mortgage loans | 22,064 | 21,967 | ||||||
Other non-accrual loans | 27,218 | 39,276 | ||||||
Total non-performing loans | $ | 49,282 | $ | 61,243 | ||||
Repossessed assets (1) | 9,526 | 12,268 | ||||||
Total non-performing assets | $ | 58,808 | $ | 73,511 | ||||
Asset Quality Measures: | ||||||||
Non-performing loans to total loans | 0.12 | % | 0.15 | % | ||||
Non-performing assets to total assets | 0.11 | 0.14 | ||||||
Allowance for loan and lease losses to non-performing loans | 329.22 | 241.07 | ||||||
Allowance for loan and lease losses to total loans | 0.38 | 0.35 | ||||||
Net charge-offs during the period to average loans outstanding during the period | 0.02 | 0.05 | ||||||
Loans 30-89 Days Past Due: | ||||||||
Multi-family | $ | 2,679 | $ | 1,131 | ||||
Commercial real estate | 97 | 2,545 | ||||||
One-to-four family residential | — | — | ||||||
Acquisition, development, and construction | — | — | ||||||
Other loans | 52 | 44 | ||||||
Total loans 30-89 days past due | $ | 2,828 | $ | 3,720 | ||||
(dollars in thousands) |
| At or For the |
|
| At or For the |
|
| ||
Allowance for Credit Losses on Loan and Leases: |
|
|
|
|
|
|
| ||
Balance at beginning of period |
| $ | 194,043 |
|
| $ | 147,638 |
|
|
CECL day 1 transition adjustment |
|
| — |
|
|
| 1,911 |
|
|
Adjusted allowance for credit losses at January 1 |
|
| 194,043 |
|
|
| 149,549 |
|
|
Provision for credit losses |
|
| 3,198 |
|
|
| 63,279 |
|
|
Charge-offs: |
|
|
|
|
|
|
| ||
Multi-family |
|
| (658 | ) |
|
| — |
|
|
Commercial real estate |
|
| — |
|
|
| (1,870 | ) |
|
One-to-four family residential |
|
| — |
|
|
| (2 | ) |
|
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
|
Other loans |
|
| (3,666 | ) |
|
| (20,306 | ) |
|
Total charge-offs |
|
| (4,324 | ) |
|
| (22,178 | ) |
|
Recoveries: |
|
|
|
|
|
|
| ||
Multi-family |
|
| — |
|
|
| 755 |
|
|
Commercial real estate |
|
| — |
|
|
| 354 |
|
|
One-to-four family residential |
|
| 18 |
|
|
| — |
|
|
Acquisition, development, and construction |
|
| 2 |
|
|
| 63 |
|
|
Other loans |
|
| 4,821 |
|
|
| 2,221 |
|
|
Total recoveries |
|
| 4,841 |
|
|
| 3,393 |
|
|
Net recoveries (charge-offs) |
|
| 517 |
|
|
| (18,785 | ) |
|
Balance at end of period |
| $ | 197,758 |
|
| $ | 194,043 |
|
|
Non-Performing Assets: |
|
|
|
|
|
|
| ||
Non-accrual mortgage loans: |
|
|
|
|
|
|
| ||
Multi-family |
| $ | 9,888 |
|
| $ | 4,068 |
|
|
Commercial real estate |
|
| 11,573 |
|
|
| 12,142 |
|
|
One-to-four family residential |
|
| 1,466 |
|
|
| 1,696 |
|
|
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
|
Total non-accrual mortgage loans |
|
| 22,927 |
|
|
| 17,906 |
|
|
Other non-accrual loans |
|
| 10,251 |
|
|
| 19,879 |
|
|
Total non-performing loans |
| $ | 33,178 |
|
| $ | 37,785 |
|
|
Repossessed assets (1) |
|
| 8,153 |
|
|
| 8,318 |
|
|
Total non-performing assets |
| $ | 41,331 |
|
| $ | 46,103 |
|
|
Asset Quality Measures: |
|
|
|
|
|
|
| ||
Non-performing loans to total loans |
|
| 0.08 |
| % |
| 0.09 |
| % |
Non-performing assets to total assets |
|
| 0.07 |
|
|
| 0.08 |
|
|
Allowance for credit losses to non-performing loans |
|
| 596.05 |
|
|
| 513.55 |
|
|
Allowance for credit losses to total loans |
|
| 0.46 |
|
|
| 0.45 |
|
|
Net charge-offs during the period to average loans |
|
| 0.00 |
|
|
| 0.04 |
|
|
Loans 30-89 Days Past Due: |
|
|
|
|
|
|
| ||
Multi-family |
| $ | 961 |
|
| $ | 4,091 |
|
|
Commercial real estate |
|
| 19,371 |
|
|
| 9,989 |
|
|
One-to-four family residential |
|
| — |
|
|
| 1,575 |
|
|
Acquisition, development, and construction |
|
| — |
|
|
| — |
|
|
Other loans |
|
| 13 |
|
|
| 3 |
|
|
Total loans 30-89 days past due |
| $ | 20,345 |
|
| $ | 15,658 |
|
|
(1) Includes $4.8 million and $6.5 million of repossessed taxi medallions at March 31, 2021 and December 31, 2020, respectively.
57
Geographical Analysis of
The following table presents a geographical analysis of our2020:
(in thousands) | ||||
New York | $ | 42,373 | ||
New Jersey | 6,006 | |||
All other states | 903 | |||
Total non-performing loans | $ | 49,282 | ||
(in thousands) | |||||
New York | $ | 30,350 | |||
New Jersey | 2,139 | ||||
All other states | 689 | ||||
Total non-performing loans | $ | 33,178 |
Securities
At March 31, 2020,2021, total securities were $5.5 billion down $398.0increased $348.8 million or 27%24% annualized on a linked-quarter basis to $6.2 billion, compared to $5.9$5.8 billion at December 31, 2019.2020. The purchase of securities has increased due to higher long-term interest rates and a steeper yield curve during the quarter. At March 31, 2020,the end of the current first quarter, total securities represented 10.1%10.7% of total assets compared to 11.0%10.4% at December 31, 2019. At March 31, 2020, 30%the fourth quarter of the securities portfolio was tied to floating rates, 29% of which is currently at floating rates, mainly one and three month LIBOR and prime.
Federal Home Loan Bank Stock
As a member of the20202021 and December 31, 2019,2020, the Bank held$663.9$699.0 million and $647.6$714.0 million, respectively.
Dividends from the$9.7$8.5 million and $4.0$9.7 million, respectively, in the three months ended March 31, 20202021 and 2019.
Bank-Owned Life Insurance
BOLI is recorded at the total cash surrender value of the policies in the Consolidated Statements of Condition, and the income generated by the increase in the cash surrender value of the policies is recorded in$7.4$1.6 million to $1.2 billion at March 31, 2020 compared to $1.1 billion at2021 from December 31, 2019.
Goodwill
We record goodwill in our Consolidated Statements of Condition in connection with certain of our business combinations. Goodwill, which is tested at least annually for impairment, refers to the difference between the purchase price and the fair value of an acquired company’s assets, net of the liabilities assumed. Goodwill totaled $2.4 billion at both March 31, 20202021 and December 31, 2019.2020. For more information about the Company’s goodwill, see the discussion of “Critical Accounting Policies” earlier in this report.
Sources of Funds
The Parent Company (i.e., the Company on an unconsolidated basis) has three primary funding sources for the payment of dividends, share repurchases, and other corporate uses: dividends paid to the Company by the Bank; capital raised through the issuance of stock; and funding raised through the issuance of debt instruments.
On a consolidated basis, our funding primarily stems from a combination of the following sources: 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 $2.3$2.4 billion in the three months ended March 31, 2020,2021, up $658.5$56.7 million from the $1.7$2.3 billion recorded in the year-earlier three months. Cash flows from the repayment and sales of securities totaled $798.1$495.3 million and $589.0$798.1 million, respectively, in the corresponding periods, while purchases of securities totaled $985.6 million and $483.8 million, and $655.4 million, respectively.
58
Deposits
Our ability to retain and attract deposits depends on numerous factors, including customer satisfaction, the rates of interest we pay, the types of products we offer, and the attractiveness of their terms. From time to time, we have chosen not to compete actively for deposits, depending on our access to deposits through acquisitions, the availability of lower-cost funding sources, the impact of competition on pricing, and the need to fund our loan demand.
At March 31, 2020, our2021, total deposits totaled $32.0were $34.2 billion, up $315.6 million or 4% annualized$1.8 billion compared to the level at December 31, 2019.2020. At the end of the current first quarter, total deposits represented 58.9%59.3% of total assets, while CDs represented 44.2%28.1% of our total deposits.
Included in the March 31, 20202021 balance of deposits were business institutional deposits of $1.2$1.4 billion and municipal deposits of $951.2$859.8 million, as compared to $1.1$1.3 billion and $990.2 million,$1.0 billion, respectively, at December 31, 2019.2020. Brokered deposits rose $46.2 million during the first three monthsremained stable at $5.3 billion, including brokered interest bearing checking of the year to $5.2$1.3 billion reflecting a $144.6 million decrease inat March 31, 2021 and December 31, 2020, brokered money market accounts to $1.3of $3.1 billion and a $165.8 million increase in brokered CDs to $2.4 billion. In addition, at March 31, 2020, we had $1.52021 and $3.0 billion of brokered interest bearing checking accounts, an increase of $356.6 million fromat December 31, 2019.2020, and brokered CDs of $989 million at March 31, 2021, similar to the balance at December 31, 2020. The extent to which we accept brokered deposits depends on various factors, including the availability and pricing of such wholesale funding sources, and the availability and pricing of other sources of funds.
Borrowed Funds
Borrowed funds consist primarily of wholesale borrowings (i.e.,debentures.debentures and subordinated notes. As of March 31, 2020, the balance of2021, borrowed funds increased $375.2declined $324.8 million fromyear-end2019or 8% annualized to $14.9$15.8 billion representing 27.5%compared to December 31, 2020, and represented 27.4% of total assets at that date. The majority of the increasedecrease was relatedmainly due to a greater leveldecline in wholesale borrowings, consisting primarily of wholesale borrowings. Wholesale borrowings rose $375.0 million from theyear-end2019 amountFHLB-NY advances, which declined to $14.3 billion.FHLB-NYadvances increased $375.0 million since December 31, 2019,billion compared to $14.0$14.6 billion while the balance ofat year-end 2020. Also included in wholesale borrowings are repurchase agreements wasof $800.0 million, at March 31, 2020, unchanged from the balance at at December 31, 2019.
Subordinated Notes
On November 6, 2018, the Company issued $300 million aggregate principal amount of its 5.90%2020,2021, the balance of subordinated notes was $295.2$295.8 million, which excludes certain costs related to their issuance.
Junior Subordinated Debentures
Junior subordinated debentures totaled $360.0$360.4 million at March 31, 2020,2021, comparable to the balance at December 31, 2019.
Risk Definitions
The following section outlines the definitions of interest rate risk, market risk, and liquidity risk, and how the Company manages market and interest rate risk:
Interest Rate Risk
Market Risk –
59
Liquidity Risk –
Management of Market and Interest Rate Risk
We manage our assets and liabilities to reduce our exposure to changes in market interest rates. The asset and liability management process has three primary objectives: to evaluate the interest rate risk inherent in certain balance sheet accounts; to determine the appropriate level of risk, given our business strategy, risk appetite, operating environment, capital and liquidity requirements, and performance objectives; and to manage that risk in a manner consistent with guidelines approved by the Boards of Directors of the Company and the Bank.
Market and Interest Rate Risk
As a financial institution, we are focused on reducing our exposure to interest rate volatility. Changes in interest rates pose one of the greatest challengechallenges 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 of Directors and management monitor interest rate sensitivity on a regular or as needed basis so that adjustments to the asset and liability mix can be made when deemed appropriate.
The actual duration of
We managedmanage our interest rate risk by taking the following actions: (1) We continuedcontinue to emphasize the origination and retention of intermediate-term assets, primarily in the form of multi-family and CRE loans; (2) We continued the origination ofcontinue to originate certain floating rate C&I loans that feature floating interest rates; (3) We replacedloans; depending on funding needs, replace maturing wholesale borrowings with longer term borrowings, including some with callable features;borrowings; and (4) We entered into anas needed, execute interest rate swap with a notional amount of $2.0 billion to hedge certain real estate loans.
LIBOR Transition Process
On July 27, 2017, the U.K. Financial Conduct Authority (FCA), which regulates LIBOR, announced that it will no longer persuade or compelrequest banks to submit rates for the calculation of LIBOR after 2021. On November 30, 2020 the ICE Benchmark Administration (“IBA”) announced they will extend the publication of most US Dollar LIBOR (“USD LIBOR”) through June 30, 2023. The FRB established the Alternative Reference Rate Committee (“ARRC”), comprised of a group of private market participants and other members, representing banks and financial sector regulators, to identify a set of alternative reference rates for potential use as benchmarks. The ARRC has recommended the Secured Overnight Financing Rate or “SOFR” as the preferred alternative rate to U.S. dollar LIBOR.
The Bank has established aAccountingFinancial Officer and consists of personnel from various departments throughout the Bank including lending, loan administration, credit risk management, finance/treasury, including interest rate risk and liquidity management, information technology, and operations. The Company has LIBOR-based contracts that extend beyond 2021June 30, 2023 included in loans and leases, securities, wholesale borrowings, derivative financial instruments and long-term debt. The
While the ARRC has recommended SOFR as the replacement for LIBOR, there is acknowledgment that the development of a credit sensitive element could be a complement to SOFR. At this time, it is unclear as to the likelihood and timing of this occurring, but such a development could have an impact on our transition efforts.
60
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 March 31, 2020,2021, our11.25%6.17%, compared to a negative 12.31%4.94% at December 31, 2019.2020. The change in ouran increasea decrease in mortgage and other loans expected prepayments on loans coupled with the addition of the previously mentioned interest rate swap,to mature or reprice within one year, partially offset by an increase in CDs maturing within one year.
The table on the following page sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at March 31, 20202021 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 March 31, 20202021 on the basis of contractual maturities, anticipated prepayments, and scheduled rate adjustments within a three-month period and subsequent selected time intervals. For residential mortgage-related securities, prepayment rates are forecasted at a weighted average CPR of 24.70%19.55% per annum; for multi-family and CRE loans, prepayment rates are forecasted at weighted average CPRs of 19.55%16.65% and 12.48%11.03% per annum, respectively. Borrowed funds were not assumed to prepay.
61
Savings, interest bearing checking and money market accounts were assumed to decay based on a comprehensive statistical analysis that incorporated our historical deposit experience. Based on the results of this analysis, savings accounts were assumed to decay at a rate of 74%75% for the first five years and 26%25% for years six through ten. Interest-bearing checking accounts were assumed to decay at a rate of 90%82% for the first five years and 10%18% 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 92% for the first five years and 8% for years six through ten.
At March 31, 2020 | ||||||||||||||||||||||||||||
(dollars in thousands) | Three Months or Less | Four to Twelve Months | More Than One Year to Three Years | More Than Three Years to Five Years | More Than Five Years to 10 Years | More Than 10 Years | Total | |||||||||||||||||||||
INTEREST-EARNING ASSETS: | ||||||||||||||||||||||||||||
Mortgage and other loans (1) | $ | 6,184,609 | $ | 8,927,093 | $ | 16,383,653 | $ | 8,949,833 | $ | 1,797,289 | $ | — | $ | 42,242,477 | ||||||||||||||
Mortgage-related securities (2)(3) | 526,947 | 509,978 | 917,980 | 386,723 | 613,026 | 452,888 | 3,407,542 | |||||||||||||||||||||
Other securities (2) | 1,743,481 | 524,784 | 90,834 | 31,919 | 170,555 | 150,000 | 2,711,573 | |||||||||||||||||||||
Interest-earning cash and cash equivalents | 786,229 | — | — | — | — | — | 786,229 | |||||||||||||||||||||
Total interest-earning assets | 9,241,266 | 9,961,855 | 17,392,467 | 9,368,475 | 2,580,870 | 602,888 | 49,147,821 | |||||||||||||||||||||
INTEREST-BEARING LIABILITIES: | ||||||||||||||||||||||||||||
Interest-bearing checking and money market accounts | 5,842,765 | 951,972 | 1,605,642 | 820,202 | 960,671 | — | 10,181,252 | |||||||||||||||||||||
Savings accounts | 1,117,187 | 1,314,752 | 738,994 | 513,688 | 1,271,049 | — | 4,955,670 | |||||||||||||||||||||
Certificates of deposit | 5,894,292 | 7,772,063 | 284,911 | 190,711 | 235 | — | 14,142,212 | |||||||||||||||||||||
Borrowed funds | 1,413,926 | 1,000,000 | 3,547,661 | 550,000 | 8,280,000 | 141,240 | 14,932,827 | |||||||||||||||||||||
Total interest-bearing liabilities | 14,268,170 | 11,038,787 | 6,177,208 | 2,074,601 | 10,511,955 | 141,240 | 44,211,961 | |||||||||||||||||||||
Interest rate sensitivity gap per period (4) | $ | (5,026,904 | ) | $ | (1,076,932 | ) | $ | 11,215,259 | $ | 7,293,874 | $ | (7,931,085 | ) | $ | 461,648 | $ | 4,935,860 | |||||||||||
Cumulative interest rate sensitivity gap | $ | (5,026,904 | ) | $ | (6,103,836 | ) | $ | 5,111,423 | $ | 12,405,297 | $ | 4,474,212 | $ | 4,935,860 | ||||||||||||||
Cumulative interest rate sensitivity gap as a percentage of total assets | (9.26 | )% | (11.25 | )% | 9.42 | % | 22.86 | % | 8.25 | % | 9.10 | % | ||||||||||||||||
Cumulative net interest-earning assets as a percentage of net interest-bearing liabilities | (11.37 | )% | (13.81 | )% | 11.56 | % | 28.06 | % | 10.12 | % | 11.16 | % | ||||||||||||||||
|
| At March 31, 2021 |
| |||||||||||||||||||||||||
(dollars in thousands) |
| Three |
|
| Four to |
|
| More Than |
|
| More Than |
|
| More Than |
|
| More Than |
|
| Total |
| |||||||
INTEREST-EARNING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Mortgage and other loans (1) |
| $ | 7,348,923 |
|
| $ | 6,081,362 |
|
| $ | 16,199,114 |
|
| $ | 9,812,504 |
|
| $ | 3,591,390 |
|
| $ | 58,668 |
|
| $ | 43,091,961 |
|
Mortgage-related |
|
| 324,112 |
|
|
| 362,730 |
|
|
| 954,212 |
|
|
| 549,658 |
|
|
| 636,032 |
|
|
| 368,844 |
|
|
| 3,195,588 |
|
Other securities (2) |
|
| 1,818,468 |
|
|
| 244,041 |
|
|
| 53,706 |
|
|
| 111,682 |
|
|
| 1,453,404 |
|
|
| - |
|
|
| 3,681,301 |
|
Interest-earning cash |
|
| 2,583,685 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,583,685 |
|
Total interest-earning assets |
|
| 12,075,188 |
|
|
| 6,688,133 |
|
|
| 17,207,032 |
|
|
| 10,473,844 |
|
|
| 5,680,826 |
|
|
| 427,512 |
|
|
| 52,552,535 |
|
INTEREST-BEARING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest-bearing checking and |
|
| 7,603,739 |
|
|
| 889,659 |
|
|
| 1,612,087 |
|
|
| 920,018 |
|
|
| 1,639,499 |
|
|
| - |
|
|
| 12,665,002 |
|
Savings accounts |
|
| 1,856,322 |
|
|
| 2,120,788 |
|
|
| 736,531 |
|
|
| 551,807 |
|
|
| 1,778,154 |
|
|
| - |
|
|
| 7,043,602 |
|
Certificates of deposit |
|
| 4,760,698 |
|
|
| 3,900,261 |
|
|
| 765,777 |
|
|
| 187,280 |
|
|
| 282 |
|
|
| - |
|
|
| 9,614,298 |
|
Borrowed funds |
|
| 513,926 |
|
|
| 672,661 |
|
|
| 5,350,000 |
|
|
| 800,000 |
|
|
| 8,280,000 |
|
|
| 142,200 |
|
|
| 15,758,787 |
|
Total interest-bearing |
|
| 14,734,685 |
|
|
| 7,583,369 |
|
|
| 8,464,395 |
|
|
| 2,459,105 |
|
|
| 11,697,935 |
|
|
| 142,200 |
|
|
| 45,081,689 |
|
Interest rate sensitivity gap |
| $ | (2,659,497 | ) |
| $ | (895,236 | ) |
| $ | 8,742,637 |
|
| $ | 8,014,739 |
|
| $ | (6,017,109 | ) |
| $ | 285,312 |
|
| $ | 7,470,846 |
|
Cumulative interest rate |
| $ | (2,659,497 | ) |
| $ | (3,554,733 | ) |
| $ | 5,187,904 |
|
| $ | 13,202,643 |
|
| $ | 7,185,534 |
|
| $ | 7,470,846 |
|
|
|
| |
Cumulative interest rate |
|
| -4.61 | % |
|
| -6.17 | % |
|
| 9.00 | % |
|
| 22.90 | % |
|
| 12.46 | % |
|
| 12.96 | % |
|
|
| |
Cumulative net interest- |
|
| 81.95 | % |
|
| 84.07 | % |
|
| 116.85 | % |
|
| 139.72 | % |
|
| 115.99 | % |
|
| 116.57 | % |
|
|
|
(1) For the purpose of the gap analysis, loans held for sale, non-performing loans and the allowances for loan losses have been excluded.
(2) Mortgage-related and other securities, including FHLB stock, are shown at their respective carrying amounts.
(3) Expected amount based, in part, on historical experience.
(4) The interest rate sensitivity gap per period represents the difference between interest-earning assets and interest-bearing liabilities.
Prepayment and deposit decay rates can have a significant impact on our estimated gap. While we believe our assumptions to be reasonable, there can be no assurance that the assumed prepayment and decay rates will approximate actual future loan and securities prepayments and deposit withdrawal activity.
To validate our prepayment assumptions for our multi-family and CRE loan portfolios, we perform a monthlyquarterly analysis, during which we review our historical prepayment rates and compare them to our projected prepayment rates. We continually review the actual prepayment rates to ensure that our projections are as accurate as possible, since prepayments on these types of loans are not as closely correlated to changes in interest rates as prepayments on
62
As of March 31, 2020,2021, the impact of a 100 bp decline in market interest rates for our loans would have increased our projectedhad very little impact on prepayment speeds due to the current low interest rates for multi-family and CRE loans by a constant prepayment rate of 7.11% per annum. Conversely, thecurrent coupons being floored at base rates. The impact of a 100 bp increase in market interest rates would have decreased our projected prepayment rates for multi-family and CRE loans by a constant prepayment rate of 7.56%3.2% per annum.
Certain shortcomings are inherent in the method of analysis presented in the preceding Interest Rate Sensitivity Analysis. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of the market, while interest rates on other types may lag behind changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset. Furthermore, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate from those assumed in calculating the table. Also, the ability of some borrowers to repay their adjustable-rate loans may be adversely impacted by an increase in market interest rates.
Interest rate sensitivity is also monitored through the use of a model that generates estimates of the change in our Economic ValeValue of Equity (“EVE”) over a range of interest rate scenarios. EVE is defined as the net present value of expected cash flows from assets, liabilities, and
Based on the information and assumptions in effect at March 31, 2020,2021, the following table reflects the estimated percentage change in our EVE, assuming the changes in interest rates noted:
Change in Interest Rates (in basis points) (1) | Estimated Economic Value of Equity | |||
+100 | -4.34% | |||
+200 | -13.08% |
(1) The impact of a 100 bp and a 200 bp reduction in interest rates is not presented in view of the current level of the federal funds rate and other short-term interest rates.
The net changes in EVE presented in the preceding table are within the parameters approved by the Boards of Directors of the Company and the Bank.
As with the Interest Rate Sensitivity Analysis, certain shortcomings are inherent in the methodology used in the preceding interest rate risk measurements. Modeling changes in EVE requires that certain assumptions be made which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the EVE Analysis presented above assumes that the composition of our interest rate sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured, and also assumes that a particular change in interest rates is reflected uniformly across the yield curve, regardless of the duration to maturity or repricing of specific assets and liabilities. Furthermore, the model does not take into account the benefit of any strategic actions we may take to further reduce our exposure to interest rate risk. Accordingly, while the EVE Analysis provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on our net interest income, and may very well differ from actual results.
We also utilize an internal net interest income simulation to manage our sensitivity to interest rate risk. The 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.
63
Based on the information and assumptions in effect at March 31, 2020,2021, the following table reflects the estimated percentage change in future net interest income for the next twelve months, assuming the changes in interest rates noted:
Change in Interest Rates (in basis points) (1)(2) | Estimated Future Net Interest Income | |||
+100 | -1.27% | |||
+200 | -3.13% |
(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 of a 100 bp and a 200 bp reduction in interest rates is not presented in view of the current level of the federal funds rate and other short-term interest rates.
Future changes in our mix of assets and liabilities may result in greater changes to our gap, NPV, and/or net interest income simulation.
In the event that our NPVEVE 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:
Where temporary changes in market conditions or volume levels result in significant increases in risk, strategies may involve reducing open positions or employing synthetic hedging techniques to more immediately reduce risk exposure. Where variance from policy tolerances is triggered by more fundamental imbalances in the risk profiles of core loan and deposit products, a remedial strategy may involve restoring balance through natural hedges to the extent possible before employing synthetic hedging techniques. Other strategies might include:
In connection with our net interest income simulation modeling, we also evaluate the impact of changes in the slope of the yield curve. At March 31, 2020,2021, our analysis indicated that an immediate inversion of the yield curve would be expected to result in a 9.79%6.98% decrease in net interest income; conversely, an immediate steepening of the yield curve would be expected to result in a 2.72%0.35% increase in net interest income. It should be noted that the yield curve changes in these scenarios were updated, given the changing market rate environment, which resulted in an increase in the income sensitivity.
Liquidity
We manage our liquidity to ensure that 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.
64
We monitor our liquidity daily to ensure that sufficient funds are available to meet our financial obligations. Our most liquid assets are cash and cash equivalents, which totaled $1.3$2.7 billion and $741.9 million,$1.9 billion, respectively, at March 31, 20202021 and December 31, 2019.2020. As in the past, our portfolios of loans and securities provided liquidity in the first three months of the year, with cash flows from the repayment and sale of loans totaling $2.3$2.4 billion and cash flows from the repayment and sale of securities totaling $798.1$495.3 million.
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 access to the Bank’s approved lines of credit with various counterparties, including the2020,2021, our available borrowing capacity with the$7.7$7.6 billion. In addition, the BankCompany had $5.5$6.2 billion of$4.0$5.0 billion was unencumbered.
Furthermore, the Bank has agreementsan agreement with thetheir liquidity if need be. In connection with their agreements,the agreement, the Bank has pledged certain loans and securities to collateralize any funds theythat may borrow.be borrowed. At March 31, 2020,2021, the maximum amount the Bank could borrow from the$1.1$1.2 billion. There were no borrowings against either of these lines of creditoutstanding at that date.
Our primary investing activity is loan production. In the first three months of 2020,2021, the volume of loans originated for investment was $2.7$2.5 billion. During this time, the net cash used in investing activities totaled $104.3$681.2 million. Our operating activities provided net cash
CDs due to mature in one year or less as of March 31, 20202021 totaled $13.7$8.7 billion, representing 96.6%95% 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 the Bank and must provide for its own liquidity. In addition to operating expenses and any share repurchases, the Parent Company is responsible for paying 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.
The Parent Company’s ability to pay dividends may also depend, in part, upon dividends it receives from the Bank. The ability of the Community Bank to pay dividends and other capital distributions to the Parent Company is generally limited by New York State Banking Law and regulations, and by certain regulations of the FDIC. In addition, the Superintendent of the New York State Department of Financial Services (the “Superintendent”), the FDIC, 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 three months ended March 31, 2020,2021, the Bank paid dividends totaling $95.0 million to the Parent Company, leaving $148.3$277.4 million they could dividend to the Parent Company without regulatory approval at that date. Additional sources of liquidity available to the Parent Company at March 31, 20202021 included $156.5$144.7 million in cash and cash equivalents. If the Bank was 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.
Capital Position
On March 17, 2017, we issued 515,000 shares of preferred stock. The offering generated capital of $502.8 million, net of underwriting and other issuance costs, for general corporate purposes, with the bulk of the proceeds being distributed to the Community Bank.
65
On October 24, 2018, the Company announced that it had received regulatory approval to repurchase its common stock. Accordingly, the Board of Directors approved a $300 million common share repurchase program. The repurchase program was funded through the issuance of a like amount of subordinated notes. As of March 31, 2020,2021, the Company has repurchased a total of 26.528.9 million shares at an average price of $9.70$9.63 or an aggregate purchase price of $256.8$278.1 million, leaving $43.1$16.9 million remaining under the current authorization.
Stockholders’ equity, common stockholders’ equity, and tangible common stockholders’ equity include AOCL, which decreased $47.7$96.6 million from the balance at the end of last year and decreased $23.6$41.6 million from the$80.6$122.1 million at March 31, 2020.2021. The$12.7$108.7 million change in the net unrealized gain (loss) on$36.4$7.6 million decreasechange in the net unrealized loss on cash flow hedges, net of tax, to $35.5$25.5 million.
Regulatory Capital
The Bank is subject to regulation, examination, and supervision by the NYSDFS and the FDIC (the “Regulators”). The Bank is also governed by numerous federal and state laws and regulations, including the FDIC Improvement Act of 1991, which established five categories of capital adequacy ranging from “well capitalized” to “critically undercapitalized.” Such classifications are used by the responseFDIC to theCOVID-19pandemic, the Federal Banking Agencies announced an interim final rule (“2020 CECL IFR”) that provides banking organizations, as an alternativedetermine various matters, including prompt corrective action and each institution’s FDIC deposit insurance premium assessments. Capital amounts and classifications are also subject to the 2018 CECL Transition Election, an optional five-year transition periodRegulators’ qualitative judgments about the components of capital and risk weightings, among other factors.
The quantitative measures established to phaseensure 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 impact of CECL on regulatory capital (the “2020 CECL Transition Election”)regulations). The 2020 CECL IFR became effective as of March 31, 2020 although the comment period does not end until May 15, 2020.
Regulatory Capital Analysis (the Company)
Risk-Based Capital | ||||||||||||||||||||||||||||||||
At March 31, 2020 | Common Equity Tier 1 | Tier 1 | Total | Leverage Capital | ||||||||||||||||||||||||||||
(dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||
Total capital | $ | 3,804,839 | 9.81 | % | $ | 4,307,678 | 11.10 | % | $ | 5,106,554 | 13.16 | % | $ | 4,307,678 | 8.47 | % | ||||||||||||||||
Minimum for capital adequacy purposes | 1,745,825 | 4.50 | 2,327,766 | 6.00 | 3,103,689 | 8.00 | 2,034,058 | 4.00 | ||||||||||||||||||||||||
Excess | $ | 2,059,014 | 5.31 | % | $ | 1,979,912 | 5.10 | % | $ | 2,002,865 | 5.16 | % | $ | 2,273,620 | 4.47 | % | ||||||||||||||||
|
| Risk-Based Capital |
|
|
|
|
|
|
|
| |||||||||||||||||||||||
At March 31, 2021 |
| Common Equity |
|
| Tier 1 |
|
| Total |
|
| Leverage Capital |
|
| ||||||||||||||||||||
(dollars in thousands) |
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| ||||||||
Total capital |
| $ | 4,014,898 |
|
|
| 9.84 |
| % | $ | 4,517,738 |
|
|
| 11.07 |
| % | $ | 5,345,417 |
|
|
| 13.09 |
| % | $ | 4,517,738 |
|
|
| 8.41 |
| % |
Minimum for capital adequacy |
|
| 1,836,935 |
|
|
| 4.50 |
|
|
| 2,449,247 |
|
|
| 6.00 |
|
|
| 3,265,662 |
|
|
| 8.00 |
|
|
| 2,150,017 |
|
|
| 4.00 |
|
|
Excess |
| $ | 2,177,963 |
|
|
| 5.34 |
| % | $ | 2,068,491 |
|
|
| 5.07 |
| % | $ | 2,079,755 |
|
|
| 5.09 |
| % | $ | 2,367,721 |
|
|
| 4.41 |
| % |
Regulatory Capital Analysis (New York Community Bank)
|
| Risk-Based Capital |
|
|
|
|
|
|
|
| |||||||||||||||||||||||
At March 31, 2021 |
| Common Equity |
|
| Tier 1 |
|
| Total |
|
| Leverage Capital |
|
| ||||||||||||||||||||
(dollars in thousands) |
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| ||||||||
Total capital |
| $ | 5,024,758 |
|
|
| 12.31 |
| % | $ | 5,024,758 |
|
|
| 12.31 |
| % | $ | 5,209,088 |
|
|
| 12.77 |
| % | $ | 5,024,758 |
|
|
| 9.35 |
| % |
Minimum for capital adequacy |
|
| 1,836,181 |
|
|
| 4.50 |
|
|
| 2,448,241 |
|
|
| 6.00 |
|
|
| 3,264,321 |
|
|
| 8.00 |
|
|
| 2,149,340 |
|
|
| 4.00 |
|
|
Excess |
| $ | 3,188,577 |
|
|
| 7.81 |
| % | $ | 2,576,517 |
|
|
| 6.31 |
| % | $ | 1,944,767 |
|
|
| 4.77 |
| % | $ | 2,875,418 |
|
|
| 5.35 |
| % |
66
At March 31, 2020,2021, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by 516 bp509 bps and the fully-phased in capital conservation buffer by 266 bp.
Risk-Based Capital | ||||||||||||||||||||||||||||||||
At March 31, 2020 | Common Equity Tier 1 | Tier 1 | Total | Leverage Capital | ||||||||||||||||||||||||||||
(dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||
Total capital | $ | 4,802,347 | 12.38 | % | $ | 4,802,347 | 12.38 | % | $ | 4,958,834 | 12.79 | % | $ | 4,802,347 | 9.45 | % | ||||||||||||||||
Minimum for capital adequacy purposes | 1,745,065 | 4.50 | 2,326,754 | 6.00 | 3,102,339 | 8.00 | 2,033,380 | 4.00 | ||||||||||||||||||||||||
Excess | $ | 3,057,282 | 7.88 | % | $ | 2,475,593 | 6.38 | % | $ | 1,856,495 | 4.79 | % | $ | 2,768,967 | 5.45 | % | ||||||||||||||||
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%; 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 March 31, 2020
Net income of $100.3 million, up 3% compared to the $97.6 million reported for the three months ended March 31, 2019. Results include a provision2021 was $145.6 million, up 45% compared to $100.3 million for credit losses of $20.6 million due to the application of CECL.three months ended March 31, 2020. Net income available to common shareholders for the three months ended March 31, 20202021 totaled $137.4 million, up 49% compared to $92.1 million also up 3% compared to the $89.4 million reported infor the three months ended March 31, 2019.2020. On a per share basis, the Company reported diluted EPSearnings per common share of $0.29 for the current first quarter were $0.20,of 2021, up 5%45% compared to the $0.19 per diluted EPS$0.20 reported for theyear-agoquarter.
Net Interest Income
Net interest income is our primary source of income. Its level is a function of the average balance of our interest-earning assets, the average balance of our interest-bearing liabilities, and the spread between the yield on such assets and the cost of such liabilities. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by various external factors, including the local economy, competition for loans and deposits, the monetary policy of the FOMC, and market interest rates.
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, as well as securities. 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 interest rate spread and net interest margin.
It should be noted that the level of prepayment income on loans recorded in any given period depends on the volume of loans that refinance or prepay during that time. Such activity is largely dependent on such external factors as current market conditions, including real estate values, and the perceived or actual direction of market interest rates. In addition, while a decline in market interest rates may trigger an increase in refinancing and, therefore, prepayment income, so too may an increase in market interest rates. It is not unusual for borrowers to lock in lower interest rates when they expect, or see, that market interest rates are rising rather than risk refinancing later at a still higher interest rate.
Year-Over-Year Comparison
Net interest income for the three months ended March 31, 2021 increased $73.2 million or 30% to $317.7 million compared to the three months ended March 31, 2020. This improvement was primarily attributable tothe result of a significant decline in the Company's funding costs, which resulted in a substantial decrease in the Company’s cost of funds, leading to a lower level of interest expense. The decrease in funding costs is a result of the FOMC lowering its federal funds target rate three times during 2019 and lowering it again, during the month of March, to near zero. This was slightly offset by lower yields on our loan portfolio anda decline in the securities portfolio.
Details of the declineincrease in net interest income follow:
67
Net Interest expense totaled $196.6 millionMargin
The Company's NIM improved during the current first quarter down $11.6 millioninline with the growth in net interest income. For the three months ended March 31, 2021, the NIM increased 47 bps on a year-over-year basis and one bp on a linked-quarter basis, and $8.3 million on a year-over-year basis. This was largely due to a decline in our cost of deposits, and2.48%.
For the three months ended March 31, 2021, adjusted NIM improved 41 bps to a lesser extent, our borrowing costs.
The following table summarizes the contribution of loan and securities prepayment income on the Company’s interest income and net interest margin inNIM for the periods noted:
For the Three Months Ended | March 31, 2020 compared to | |||||||||||||||||||
March 31, | Dec. 31, | March 31, | Dec. 31, | March 31, | ||||||||||||||||
2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Total Interest Income | $ | 441,042 | $ | 450,683 | $ | 446,174 | -2 | % | -1 | % | ||||||||||
Prepayment Income: | ||||||||||||||||||||
Loans | $ | 10,189 | $ | 15,422 | $ | 9,341 | -34 | % | 9 | % | ||||||||||
Securities | 348 | 2,431 | 227 | -86 | % | 53 | % | |||||||||||||
Total prepayment income | $ | 10,537 | $ | 17,853 | $ | 9,568 | -41 | % | 10 | % | ||||||||||
GAAP Net Interest Margin | 2.01 | % | 2.04 | % | 2.03 | % | -3 | bp | -2 | bp | ||||||||||
Less: | ||||||||||||||||||||
Prepayment income from loans | 9 | bp | 12 | bp | 8 | bp | -3 | bp | 1 | bp | ||||||||||
Prepayment income from securities | — | 2 | — | -2 | bp | 0 | bp | |||||||||||||
Total prepayment income contribution to and subordinated debt impact on net interest margin | 9 | bp | 14 | bp | 8 | bp | -5 | bp | 1 | bp | ||||||||||
Adjusted Net Interest Margin (non-GAAP) | 1.92 | % | 1.90 | % | 1.95 | % | 2 | bp | -3 | bp |
|
| For the Three Months Ended |
|
|
|
|
| ||||||
|
| March 31, |
|
| March 31, |
|
|
|
|
| |||
|
| 2021 |
|
| 2020 |
|
| Change (%) |
|
| |||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
| |||
Total Interest Income |
| $ | 423,108 |
|
| $ | 441,042 |
|
|
| -4 | % |
|
Prepayment Income: |
|
|
|
|
|
|
|
|
|
| |||
Loans |
| $ | 18,749 |
|
| $ | 10,189 |
|
|
| 84 | % |
|
Securities |
|
| 921 |
|
|
| 348 |
|
|
| 165 | % |
|
Total prepayment income |
| $ | 19,670 |
|
| $ | 10,537 |
|
|
| 87 | % |
|
GAAP Net Interest Margin |
|
| 2.48 | % |
|
| 2.01 | % |
|
| 47 |
| bp |
Less: |
|
|
|
|
|
|
|
|
|
| |||
Prepayment income from loans |
|
| 15 |
| bp |
| 9 |
| bp |
| 6 |
| bp |
Prepayment income from securities |
|
| - |
|
|
| - |
|
|
| - |
| bp |
Total prepayment income contribution to net interest margin |
|
| 15 |
| bp |
| 9 |
| bp |
| 6 |
| bp |
Adjusted Net Interest Margin (non-GAAP) |
|
| 2.33 | % |
|
| 1.92 | % |
|
| 41 |
| bp |
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
1. Adjusted net interest margin gives investors a better understanding of the effect of prepayment income on our net interest margin. Prepayment income in any given period depends on the volume of loans that refinance or prepay, or securities that prepay, during that period. Such activity is largely dependent on external factors such as current market conditions, including real estate values, and the perceived or actual direction of market interest rates.
2. Adjusted net interest margin is among the measures considered by current and prospective investors, both independent of, and in comparison with, our peers.
Adjusted net interest margin should not be considered in isolation or as a substitute for net interest margin, which is calculated in accordance with GAAP. Moreover, the manner in which we calculate this
The following table sets forth certain information regarding our average balance sheet for the quarters indicated,three-month periods, including the average yields on our interest-earning assets and the average costs of our interest-bearing liabilities. Average yields are calculated by dividing the interest income produced by the average balance of interest-earning assets. Average costs are calculated by dividing the interest expense produced by the average balance of interest-bearing liabilities. The average balances for the quarters are derived from average balances that are calculated daily. The average yields and costs include fees, as well as premiums and discounts (including
68
Net Interest Income Analysis
For the Three Months Ended | ||||||||||||||||||||||||||||||||||||
March 31, 2020 | December 31, 2019 | March 31, 2019 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/ Cost | Average Balance | Interest | Average Yield/Cost | ||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
Mortgage and other loans, net | $ | 41,511,176 | $ | 391,911 | 3.78 | % | $ | 40,670,220 | $ | 393,660 | 3.87 | % | $ | 39,890,669 | $ | 379,790 | 3.81 | % | ||||||||||||||||||
Securities | 6,347,320 | 47,276 | 2.98 | 6,409,279 | 54,434 | 3.39 | 6,263,933 | 61,037 | 3.91 | |||||||||||||||||||||||||||
Interest-earning cash and cash equivalents | 662,899 | 1,855 | 1.13 | 611,176 | 2,589 | 1.68 | 892,187 | 5,347 | 2.43 | |||||||||||||||||||||||||||
Total interest-earning assets | 48,521,395 | 441,042 | 3.64 | 47,690,675 | 450,683 | 3.78 | 47,046,789 | 446,174 | 3.80 | |||||||||||||||||||||||||||
Non-interest- earning assets | 4,887,109 | 4,787,016 | 4,570,768 | |||||||||||||||||||||||||||||||||
Total assets | $ | 53,408,504 | $ | 52,477,691 | $ | 51,617,557 | ||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity: | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits: | �� | |||||||||||||||||||||||||||||||||||
Interest-bearing checking and money market accounts | $ | 10,070,100 | $ | 28,564 | 1.14 | % | $ | 9,857,399 | $ | 33,951 | 1.37 | % | $ | 11,478,820 | $ | 50,159 | 1.77 | % | ||||||||||||||||||
Savings accounts | 4,833,600 | 8,934 | 0.74 | 4,800,951 | 9,435 | 0.78 | 4,669,824 | 8,083 | 0.70 | |||||||||||||||||||||||||||
Certificates of deposit | 14,120,484 | 79,555 | 2.27 | 14,200,266 | 84,874 | 2.37 | 12,298,274 | 67,775 | 2.23 | |||||||||||||||||||||||||||
Total interest-bearing deposits | 29,024,184 | 117,053 | 1.62 | 28,858,616 | 128,260 | 1.76 | 28,446,918 | 126,017 | 1.80 | |||||||||||||||||||||||||||
Borrowed funds | 14,439,309 | 79,522 | 2.21 | 13,645,755 | 79,953 | 2.33 | 13,491,860 | 78,832 | 2.37 | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 43,463,493 | 196,575 | 1.82 | 42,504,371 | 208,213 | 1.94 | 41,938,778 | 204,849 | 1.98 | |||||||||||||||||||||||||||
Non-interest- bearing deposits | 2,569,331 | 2,683,164 | 2,477,420 | |||||||||||||||||||||||||||||||||
Other liabilities | 684,808 | 599,780 | 594,077 | |||||||||||||||||||||||||||||||||
Total liabilities | 46,717,632 | 45,787,315 | 45,010,275 | |||||||||||||||||||||||||||||||||
Stockholders’ equity | 6,690,872 | 6,690,376 | 6,607,282 | |||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 53,408,504 | $ | 52,477,691 | $ | 51,617,557 | ||||||||||||||||||||||||||||||
Net interest income/interest rate spread | $ | 244,467 | 1.82 | % | $ | 242,470 | 1.84 | % | $ | 241,325 | 1.82 | % | ||||||||||||||||||||||||
Net interest margin | 2.01 | % | 2.04 | % | 2.03 | % | ||||||||||||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities | 1.12x | 1.12x | 1.12x | |||||||||||||||||||||||||||||||||
|
| For the Three Months Ended |
| ||||||||||||||||||||||
|
| March 31, 2021 |
|
|
| March 31, 2020 |
| ||||||||||||||||||
|
| Average |
|
| Interest |
|
| Average |
|
|
| Average |
|
| Interest |
|
| Average |
| ||||||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Mortgage and other loans, net (1) |
| $ | 42,735,708 |
|
| $ | 383,430 |
|
|
| 3.59 | % |
|
| $ | 41,511,176 |
|
| $ | 391,911 |
|
|
| 3.78 | % |
Securities (2)(3) |
|
| 6,516,568 |
|
|
| 38,430 |
|
|
| 2.36 | % |
|
|
| 6,347,320 |
|
|
| 47,276 |
|
|
| 2.98 |
|
Interest-earning cash and cash |
|
| 1,835,268 |
|
|
| 1,248 |
|
|
| 0.28 | % |
|
|
| 662,899 |
|
|
| 1,855 |
|
|
| 1.13 |
|
Total interest-earning assets |
|
| 51,087,544 |
|
| $ | 423,108 |
|
|
| 3.32 | % |
|
|
| 48,521,395 |
|
|
| 441,042 |
|
|
| 3.64 |
|
Non-interest-earning assets |
|
| 5,218,148 |
|
|
|
|
|
|
|
|
|
| 4,887,109 |
|
|
|
|
|
|
| ||||
Total assets |
| $ | 56,305,692 |
|
|
|
|
|
|
|
|
| $ | 53,408,504 |
|
|
|
|
|
|
| ||||
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest-bearing deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest-bearing checking and |
| $ | 12,626,151 |
|
| $ | 8,652 |
|
|
| 0.28 | % |
|
| $ | 10,070,100 |
|
| $ | 28,564 |
|
|
| 1.14 | % |
Savings accounts |
|
| 6,713,051 |
|
|
| 6,255 |
|
|
| 0.38 | % |
|
|
| 4,833,600 |
|
|
| 8,934 |
|
|
| 0.74 |
|
Certificates of deposit |
|
| 9,983,363 |
|
|
| 18,471 |
|
|
| 0.75 | % |
|
|
| 14,120,484 |
|
|
| 79,555 |
|
|
| 2.27 |
|
Total interest-bearing deposits |
|
| 29,322,565 |
|
|
| 33,378 |
|
|
| 0.46 | % |
|
|
| 29,024,184 |
|
|
| 117,053 |
|
|
| 1.62 |
|
Borrowed funds |
|
| 15,994,741 |
|
|
| 72,071 |
|
|
| 1.82 | % |
|
|
| 14,439,309 |
|
|
| 79,522 |
|
|
| 2.21 |
|
Total interest-bearing liabilities |
|
| 45,317,306 |
|
|
| 105,449 |
|
|
| 0.94 | % |
|
|
| 43,463,493 |
|
|
| 196,575 |
|
|
| 1.82 |
|
Non-interest-bearing deposits |
|
| 3,242,803 |
|
|
|
|
|
|
|
|
|
| 2,569,331 |
|
|
|
|
|
|
| ||||
Other liabilities |
|
| 872,164 |
|
|
|
|
|
|
|
|
|
| 684,808 |
|
|
|
|
|
|
| ||||
Total liabilities |
|
| 49,432,273 |
|
|
|
|
|
|
|
|
|
| 46,717,632 |
|
|
|
|
|
|
| ||||
Stockholders’ equity |
|
| 6,873,419 |
|
|
|
|
|
|
|
|
|
| 6,690,872 |
|
|
|
|
|
|
| ||||
Total liabilities and stockholders’ |
| $ | 56,305,692 |
|
|
|
|
|
|
|
|
| $ | 53,408,504 |
|
|
|
|
|
|
| ||||
Net interest income/interest rate |
|
|
|
|
|
|
|
| 2.38 | % |
|
|
|
|
| $ | 244,467 |
|
|
| 1.82 | % | |||
Net interest margin |
|
|
|
| $ | 317,659 |
|
|
| 2.48 | % |
|
|
|
|
|
|
|
|
| 2.01 | % | |||
Ratio of interest-earning assets to |
|
|
|
|
|
|
| 1.13x |
|
|
|
|
|
|
|
|
| 1.12x |
|
(1) Amounts are net of net deferred loan origination costs/(fees) and the allowances for loan losses and include loans held for sale and non-performing loans.
(2) Amounts are at amortized cost.
(3) Includes FHLB stock.
Provision for (Recovery of) Credit Losses
For the first quarter of 2020,three months ended March 31, 2021, the Company reportedrecorded a provision for credit losses of $20.6$3.6 million compared to a provision$20.6 million for credit losses of $1.7 million in the previous quarter and a recovery for credit losses of $1.2 million in theyear-agoquarter.three months ended March 31, 2020. The increase in the provision for credit losses during the current first quarteryear-over-year improvement reflects the implementation of the CECL methodology. This methodology reflects the impact of a deteriorationsignificant improvement in forecasted, future economic conditions due tobased on theCOVID-19 pandemic.
For additional information about our provisions for and recoveries of loan losses, see the discussion of the allowances for loan losses under “Critical Accounting Policies” and the discussion of “Asset Quality” that appear earlier in this report.
Non-Interest
We generate
For the first three months ended March 31, 2021, non-interest income totaled $14.4 million, down 14.8% compared to the three months ended March 31, 2020,non-interesttotaled $16.9 million, down modestly compared toas the previous quarter and down 32% compared to theyear-agoquarter. IncludedCompany waived certain retail banking fees in theyear-agoquarter’s results were approximately $7.0 million net gain on securities compared to2020 as a net gain on securitiesresult of $534,000 duringCOVID-19. Additionally, the current first quarter andincludes a net loss on securities of $30,000$483,000 compared to net gains on securities of $534,000 in the fourth quarter of last year.
69
The following table summarizes our
|
| For the Three Months Ended |
| ||||||
(in thousands) |
| March 31, |
|
|
| March 31, |
| ||
Fee income |
| $ | 5,539 |
|
|
| $ | 7,018 |
|
BOLI income |
|
| 6,890 |
|
|
|
| 7,389 |
|
Net (loss) gain on securities |
|
| (483 | ) |
|
|
| 534 |
|
Other income: |
|
|
|
|
|
|
| ||
Third-party investment product sales |
|
| 1,135 |
|
|
|
| 1,277 |
|
Other |
|
| 1,326 |
|
|
|
| 681 |
|
Total other income |
|
| 2,461 |
|
|
|
| 1,958 |
|
Total non-interest income |
| $ | 14,407 |
|
|
| $ | 16,899 |
|
Non-Interest
For the Three Months Ended | ||||||||||||
(in thousands) | March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||||
Fee income | $ | 7,018 | $ | 7,002 | $ | 7,228 | ||||||
BOLI income | 7,389 | 8,118 | 6,975 | |||||||||
Net gain (loss) on securities | 534 | (30 | ) | 6,987 | ||||||||
Other income: | ||||||||||||
Third-party investment product sales | 1,277 | 1,225 | 2,896 | |||||||||
Other | 681 | 1,147 | 699 | |||||||||
Total other income | 1,958 | 2,372 | 3,595 | |||||||||
Total non-interest income | $ | 16,899 | $ | 17,462 | $ | 24,785 | ||||||
Total non-interest
Income Tax Expense
For theyear-agoquarter three months ended March 31, 2021, the Company recorded income tax expense of $50.5 million, largely driven by higher pre-tax income and down 2% annualized compared to the previous quarter.reflects an effective tax rate of 25.75%. In the current firstyear-ago quarter,non-interestincluded a $4.4of $14.9 million, benefit related to a lease termination. In the first quarterreflecting an effective tax rate of 2019,non-interestexpense included $9.0 million of certain expenses related to severance and branch rationalization costs.
70
ITEM
Quantitative and qualitative disclosures about the Company’s market risk were presented on pages 7174 through 7578 of our 20192020 Annual Report on Form28, 2020.26, 2021. 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
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are the controls and other procedures that are designed to ensure that information required to be disclosed in the reports that the Company 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”) 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 Rule13a-15(b) 13a-15(e),
(b) Changes in Internal Control over Financial Reporting
There have not been any changes in the Company’s internal controlscontrol over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2020fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal controlscontrol over financial reporting.
71
PART II – OTHER INFORMATION
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” in the Company’s Annual Report on Form2019,2020, as such factors could materially affect the Company’s business, financial condition, or future results of operations.
The following additional risk factor supplements the risk factors disclosedset forth in Part I “Item 1A. Risk Factors” inour 2020 Form 10-K are updated by the Company’s Annual Report on Form10-K
Failure to complete our proposed merger with Flagstar could negatively impact our business, financial results, and stock price.
If for any reason the year ended December 31, 2019.
Our ability to complete the proposed merger with Flagstar is subject to the receipt of approval from various regulatory agencies.
Prior to the transaction contemplated in the merger agreement being consummated, the Company and Flagstar must obtain various approvals, including approvals of the New York State Department of Financial Services, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System. The terms and conditions of the approvals that are granted may impose conditions, limitations, obligations or costs, or place restrictions on the conduct of the combined company's business or require changes to the terms of the transaction completed by the merger agreement. Although the Company and Flagstar do not currently expect that any such conditions or changes would be imposed, there can be no assurance that the regulations will not impose any such conditions, obligations or restrictions, and that such conditions, limitations, obligations or restrictions will not have the effect if delaying or preventing completion of any of the transactions contemplated by the merger agreement, imposing additional material costs on or materially limiting the revenues of the combined company following the merger or otherwise reduce the anticipated benefits of the merger if the merger were consummated successfully within the United States. Inexpected timeframe, any of which might have an adverse effect on the combined company following the merger.
We face risks and uncertainties related to our market area,proposed merger with Flagstar.
Uncertainty about the governoreffect of New York has issuedthe merger on personnel and customers may have an orderadverse effect on us. These uncertainties may impair our ability to attract, retain, and motivate key personnel until the merger is consummated and for a period of time thereafter, and could cause customers and others that deal with us to seek to change their existing business relationships with us. Employee retention may be particularly challenging during the pendency of the merger, as employees may experience uncertainty about their roles with the surviving company following the merger.
The Company and Flagstar have operated and, until the completion of the merger, will continue to operate independently. The ultimate success of the merger, including anticipated benefits and cost savings, among other things, requires residentswill depend, in part, on our and Flagstar's ability to staysuccessfully combine and integrate our and Flagstar's businesses in a manner that facilitates growth opportunities and realizes anticipated cost savings. It is possible that the integration process could result in the loss of key employees, the loss of customers, the disruption of either company's ongoing business, unexpected integration issues, higher than expected integration costs, and an integration process that takes longer than originally anticipated. Also, if the combined companies experience difficulties or delays with the integration process, the anticipated benefits of the merger may not be realized fully, or at all.
The merger agreement between the Company and Flagstar may be terminated in accordance with its terms.
The merger agreement is subject to a number of conditions which need to be fulfilled in order to consummate the merger. These conditions include the approval of shareholders of both companies, the receipt of all required regulatory approvals, the absence of any order, injunction, or other legal restraint, subject to certain exceptions, the accuracy of representations and warranties under the merger agreement, our and Flagstar's performance of our and their homesrespective obligations under the merger agreement in all material aspects, and permits them to leave only to conduct certain essential activities or to travel to workeach of our and close allnon-essentialbusinessesFlagstar's receipt of a tax opinion to the general public. Thesestay-at-homeorder and travel restrictions – and similar orders imposed acrosseffect that the United Statesmerger will be treated as a "reorganization" within the
72
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. The conditions to restrict the spreadclosing ofCOVID-19– have resulted in significant business and operational disruptions, including business closures, supply chain disruptions, and mass layoffs and furloughs. Moreover, the rapid pace at which these issues are developing could overwhelm our ability to deal with themmerger may not be fulfilled in a timely manner. The Company’s results of operationsmanner or at all, and accordingly, the merger may be materially impacteddelayed or may not be completed.
We and Flagstar may opt to terminate the merger agreement under certain circumstances. Among other situations, if businesses remain closed for an extended periodthe merger is not completed by April 25, 2022, either we or Flagstar may choose not to proceed with the merger. We and Flagstar can also mutually decide to terminate the merger agreement at any time. If the merger agreement is terminated, under certain limited circumstances, Flagstar may be required to pay a $90 million termination fee to us.
Stockholder litigation could prevent or delay the closing of timethe proposed merger or unemployment remains at elevated levels for an extended periodotherwise negatively impact our business and operations.
Lawsuits may be filed against us, Flagstar, or the directors and officers of time.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Shares Repurchased Pursuant to the Company’s Stock-Based Incentive Plans
Participants in the Company’s stock-based incentive plans may have shares of common stock withheld to fulfill the income tax obligations that arise in connection with the vesting of their stock awards. Shares that are withheld for this purpose are repurchased pursuant to the terms of the applicable stock-based incentive plan, rather than pursuant to the share repurchase program authorized by the Board of Directors, described below.
Shares Repurchased Pursuant to the Board of Directors’ Share Repurchase Authorization
On October 23, 2018, the Board of Directors authorized the repurchase of up to $300 million of the Company’s common stock. Under said authorization, shares may be repurchased on the open market or in privately negotiated transactions.
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.
The Company repurchased $37.2 million or 3.3allocated 1.3 million shares of its common stock under its recently authorized share repurchase program. Included in the above, the Company allocated 724,343 shares or $8.2$15.5 million toward the repurchase of shares tied to its stock-based incentive plans.
(dollars in thousands, except per share data) | ||||||||||||
First Quarter 2020 | Total Shares of Common Stock Repurchased | Average Price Paid per Common Share | Total Allocation | |||||||||
January 1 – January 31 | 2,276,097 | $ | 11.86 | $ | 26,994 | |||||||
February 1 – February 29 | 317 | 11.19 | 3 | |||||||||
March 1 – March 31 | 1,030,769 | 9.86 | 10,162 | |||||||||
Total shares repurchased | 3,307,183 | 11.24 | $ | 37,159 | ||||||||
(dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
| |||
First Quarter 2021 |
| Total Shares |
|
| Average Price |
|
| Total |
| |||
January 1 – January 31 |
|
| 653,767 |
|
| $ | 11.13 |
|
| $ | 7,276,427 |
|
February 1 – February 28 |
|
| 318 |
|
|
| 10.81 |
|
|
| 3,438 |
|
March 1 – March 31 |
|
| 689,281 |
|
|
| 11.95 |
|
|
| 8,234,953 |
|
Total shares repurchased |
|
| 1,343,366 |
|
|
| 11.55 |
|
| $ | 15,514,818 |
|
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Not applicable.
73
Item 6. Exhibits
Exhibit No. | ||||
2.1 | ||||
3.1 | Amended and Restated Certificate of Incorporation. | |||
3.2 | (3) | |||
3.3 | (4) | |||
3.4 | (5) | |||
3.5 | (6) | |||
4.1 | (7) | |||
4.2 | (8) | |||
4.3 | (8) | |||
4.4 | (8) | |||
4.5 | Registrant will furnish, upon request, copies of all instruments defining the rights of holders of long-term debt instruments of the registrant and its consolidated subsidiaries. | |||
10.1 | Thomas Cangemi. ** (1) | |||
31.1 | ||||
31.2 | ||||
32.0 | ||||
101.INS | XBRL Instance Document – the instance document does not appear in the 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 | The cover page of New York Community Bancorp, Inc.’s Quarterly Report on Form |
* Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request.
** Management plan or compensation plan arrangement.
(1) Incorporated by reference to Exhibits to the Company's Form 8-K filed with the Securities and Exchange Commission on April 27, 2021 (File No. 1-31565).
(2) Incorporated by reference to Exhibits filed with the Company’s Form 10-Q for the quarterly period ended March 31, 2001 (File No. 0-22278).
(3) Incorporated by reference to Exhibits filed with the Company’s Form 10-K for the year ended December 31, 2003 (File No. 1-31565).
(4) 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).
74
(5) Incorporated by reference to Exhibits of the Company’s Registration Statement on Form 8-A (File No. 333-210919), as filed with the Securities and Exchange Commission on March 16, 2017.
(6) Incorporated by reference to Exhibits filed with the Company’s Form 10-K for the year ended December 31, 2016 (File No. 1-31565).
(7) 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).
(8) 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).
75
NEW YORK COMMUNITY BANCORP, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
New York Community Bancorp, Inc. | ||||||
(Registrant) | ||||||
DATE: May | BY: | |||||
/s/ Thomas R. Cangemi | ||||||
Thomas R. Cangemi Chairman, President, and Chief Executive Officer | ||||||
DATE: May 7, 2021 | BY: | /s/ John J. Pinto | ||||
John J. Pinto Senior Executive Vice President and Chief Financial Officer |
76