NYCB - Earnings call transcript Q3 2021 | Flagstar Financial, Inc.

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Sal DiMartino

Good morning, everyone. This is Sal DiMartino. Thank you for joining the management team of New York Community for today's conference call. Today's discussion of the company's third quarter 2021 results will be led by Chairman, President and CEO, Thomas Cangemi; joined by Chief Operating Officer, Robert Wann; and the company's Chief Financial Officer, John Pinto.

Before the discussion begins, I'd like to remind you that certain comments made today by the management team of New York Community may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. may subject we Harbor the statements rules. forward-looking make to are Safe Such forward-looking Harbor about and press review disclaimer Please the Safe which affect investor for uncertainties release presentation language more and information risks may us. and today's in to would now over it like that, to turn With I Mr. Cangemi.

Thomas Cangemi

for quarter Sal. XXXX Good you everyone, to today and to you, us discuss performance. Thank thank morning joining our third

Smith, line Robert of are John, on of Lee Sandro Flagstar; President to also and addition the In Mortgage. CEO DiNello, and and President Flagstar joining

As have today may also already you third seen, quarter as very Flagstar results were reported well, which strong.

into you third quarter with launching pending results, provide update discussion brief Flagstar. to our on like Before of a merger a I our with would

customers work Both closely forward commercial multiple are are approved retail At will together, banking regional consummating close early an the planned as regulatory know, approval. on our as quarter. you of to and significant significant a time In received lines the and continue across As merger can fourth soon franchise this obtain all business to well in regulatory now footprint. approval banking it We interim, creating overwhelmingly August. merger banks appears not that both top-tier be sides merger the during and looking a the as line to planning in estimate both comprehensive sets and the shareholders we closing with and the integration across point, offerings in providing progress size we anticipated XXXX front. making scale to of as

XXXX compared this $X.XX share third Earlier of to a last our quarter share, to now morning, per we XX% results. of announced quarter year. the up earnings Moving diluted third

non-GAAP expenses totaling year-over-year. up XX% basis, a a EPS merger-related on $X.XX $X Excluding share was diluted million,

reported higher but non-GAAP months company, XXXX. up net -- margin growth, are basis, increased EPS XXXX. pre-provision last a share solid the since For the a of diluted a revenue, these $X.XX share, segment year. months same for by we loan expansion, the and modest, highlighted we compared an basis annualized the period quarter to of to Total to another share, stable quarter. first the multi-family X for the year-over-year strong XXXX, of solid months for a reported continued the This Both compared expenses first X On up voted have growth operating credit previous quality. XX% XX% X of $X.XX we best EPS first reported X% on of was $X.XX the compared deposit was metrics

Turning now of performance. to our the details

Our year pre-provision ago million revenues $XXX the XX% to rose compared to quarter. net

and to in PPNR to strong the last down basis Excluding merger-related In added compared XX was points primarily but $XXX third X.XX%, quarter. totaled the income previous decline million decline basis up points net quarter second the interest of The at million the year. rose points a last margin The quarter XX% linked to came year-over-year of basis. basis X quarter expenses, compared year, totaled on a for added margin. $XX points levels and quarter's to Prepayment the very during quarter XX in margin. from due to prepayment XX income prepayments million contrast, $XX third the basis to the

prior XX X to margin points the basis year. Excluding increased basis the a basis compared the to impact from points prepayments, non-GAAP and sequentially on X.XX%

to on deposits. Moving now

reflects Total a end of Banking growth our in progress of higher-cost make deposits decreasing front, initiative launched CDs. the several both year. increasing on quarter. was significant deposits from wins deposits percentage gathering our continue early million are in business, as both Service level at We the to quarter, or X% in previous which borrowers. we $XXX compared as grew of had commercial core third a totaled of annualized Service deposits launched deposit the in this the Banking to the success while since the the all We've continued earlier this noninterest-bearing $X.X This year which and accounts. billion

Island. Rhode the company and we bank relationship In relationship proposals just disclosed pending New number banking will addition relationships Labor we have for requests the the first and with for To our services benefit have reloadable of encouraged to be the technology our previously state service partner, costs responding supporting actively initiative are the by in the for the have These by reloadable is been and card early solutions. of Department of awarded Jersey we and/or success banking of spined the are benefit pipeline. the our states from we agreement to for date,

In the loan-related of up addition and the $XXX a it since $XXX as million Service to in quarter, million deposit billion the the was during real multi-family totaled borrowers. driven beginning These deposits also year the increase our estate of deposits at quarter. the by Banking end third growth, and commercial from $X.X

On the expense expenses well be to contained. operating our front, continue

expenses and of $X last year. totaled to third unchanged both the expenses compared $XXX the quarter million, operating million, merger-related Excluding of previous quarter

ratio XX% of as efficiency remains Our strong well.

previous good in the modest held the $XXX $XXX the had million portfolio basis. growth, investment segments. year-over-year overall On to basis, a multi-family multi-family while side, growth the loan quarter, Despite or we year-over-year partially loans lending increased total loans multi-family declines increased have by compared loans $XXX On million a on quarter, million. nearly previous million X% annualized total for the the compared $XXX segment. The other offset risen to increased in

It into level robust. than a originate more highest year. the heading reminder, we always stands have second traditionally our the much of the year in billion, And is at the $X.X as pipeline we pipeline. currently end Our of

solid Nonperforming points quarter assets, the for of best the industry. to declined $XX quality, and As the quarter. while at credit million we represents basis charge-offs X remain continue no levels compared rank credit the total in to metrics our in our assets among second and had

X% of deferrals total deferrals the to to $XXX the full are Additionally, the billion billion zero. down last while previous quarter to $X.X deferrals year, compared declined payment at compared year. remain last $X.X million third or in third principal XX% Compared to quarter, of quarter

quarter, related practically mixed-use the of to XX past X increased borrower and million, properties. to and was XX which days of all multi-family $XXX due loans to During consists several

delinquencies of the are bucket. All in XX-day the

weighted to any We modification losses and of Act and the of secured. are with the LTV on loans bar, XX%, expect do CARES bank relationship. this average have Therefore, is program. advantage incur the has our working he loan original not taken well The we

few the X on year. Four doing economy. Before of York since New moving this comment early on, city’s moments I'd the like to City have a been borrowers to well take very

reopened, businesses and operate Now Manhattan as is has the allowed reopening to restaurants month gains momentum. and XXX% open are coming back tourism capacity, increased. reopened at Schools have and last

The to Manhattan has estate while to the rent-regulated on market, multi-family the very residential of normalization. Manhattan back normal, has fully definitely market proven rebounded to strongly be market non-luxury, path stable. is not While real our segment the

lending Figure the during leading into focused announced companies entered Lastly, one systems with we payment technology. quarter, on fintech our the Technologies, blockchain via and and a the of investment partnership

year. our support earlier very be to are will it any this With happy questions excited this initiatives, that, will about We I answer as may we strategic believe and partnership have. outlined you

free time to to for But please remaining. later today call feel the best line during very all week. Operator, the the the all you don't, within do open get of please if we us to or will questions. We

Operator

[Operator Instructions].

first Ebrahim America. Poonawala is coming Our question from of of Bank

Ebrahim Poonawala

first just on credit. guess I

this the some tied like, you increase, you months? last anticipate to that deferrals expect expect off NPA mentioned obviously, customers pike what losses flow-wise? assessment few us cash as give the don't we roll things any these So over of stand and coming And of was where should of these down of some sense did take, actual you more the but

Thomas Cangemi

of we particular that end by don’t will something have barely year, of confident so we very like having obviously, the a feel comfortable loans. we this, the very the borrower level have this we that of confident be of the really long-stated working a the cluster current. of of closely LTV with and co-infrastructure. any Ebrahim, We're LTV feel status on that We anticipate in are original obviously, we but on history he

feel confident We we're on don't that because a paid in position we highly here. historically, good again, get anticipate we all So our loans.

So all. this not at is we anticipated that something

closely very working the end are we feel that he our we customer, confident highly current be with year. However, and of by will the

all would property. Manhattan-based overall far is As to categorize be specific, -- it as this and just I

in the rent-regulated I borrowers, X the is my very when and about talked definitely back very, the comments marketplace. upfront think particular, in coming about you in borrowers and So believe about Manhattan multi-family, non-luxury strongly, we

tremendous there's -- demand seeing supply situation we're where the demand clearly, enough a housing So not and there's and on supply side. for

them feel highly blended them is highly these the as but of feel pandemic. since confident into they're are which significantly the of we and some mixed were are So coming some when re-up rentals, just high use, to market, during pure building, they his has leases, he confident

Ebrahim Poonawala

Understood.

of think to core that. was I bps bps I your NIM, couple quarter, we you the on just guidance adjusted I guess of Okay. last a about moving And When middle in margin. the the for said think X think X to

side decent And during how to some of you talk also, banker as margin go leverage? think much expansion about cost Just the quarter. on to made us the there hirings terms more pretty deposit is in funding you

Just the next if And year few think a about just around ex-Flagstar can give how year? next you do like or us, look could quarters, so? over think you framework big bucket that mix that can the as next get noninterest-bearing we what organically

Thomas Cangemi

at effective We're that's with that. close cultural Ebrahim, seeing of in when this on and loans, on core So changed operating good accounts success company customers, focusing January our division getting it's significantly a working working. we're deposits, gathering shift It's gathering line we here on obviously, focusing X. these Flagstar, and working, our is deposit ex- the

actively we won my remarks, In And resources business quarter, pushing throughout are seeing indicated, growing as I we'd that, addition it's Banking have we very that. very the and the we and that year, a a product been are results some as Service throughout here, but behind nicely. as line to the in prepared of

close today. as we're $X think I to billion of

the growing very building. it's is and pipeline nicely, So

about think think money, you type stable bearing. that very noninterest and cost, traditionally I of zero when So it's

business. our want a on dependent What book less that's funding. company a basis, core better we So we of looked to and think a base standalone when obviously, do, is on funding wholesale solid build be I at

of we more than the liabilities the So to as these that nontraditional our utilize line think as well sheet side gather Banking balance and commercial both business. out such wholesale a stable Service the fund business mechanism as more as a building initiatives, on are is key to

as use growth and deposit pretty as year it's now we're give you have far So they about going that. significant put I'm not need when NYCB liquidity of Flagstar right that amount given obviously, for the a excited tremendous together, don't funds. they next to because of because

We very basis. in on will be combination funding respect to base total powerful a blended on a

is opportunity. that's that the we're operating the for throughout on So cultural and now, very basis, shift our on we're accounts that to a we year, the continuing standalone excited that when we deposits strategy the loans, right secured mandating focus But results about a and good and us. we're close priority the seeing on

Ebrahim Poonawala

margin, Sure. Tom? And for the outlook

Thomas Cangemi

I think CD basis a probably in points. where on to are point like XX XX our basis, now Again, getting we're costs

risk, to say going we of points last a to going we expansion, with expansion. as you're year see but that couple margin Flagstar, of margin continued reposition CD So I would with ourselves combined basis with on per you're in combination into what going probably quarter for the saw not and rate ex interest the side. next of quarter, be much line Flagstar

that go clearly, continue lower, funds smaller. So we're cost confident will of the albeit to

to believe as the an growth. So be of quarter However, steepen a we're this sitting lot we're to and for opportunity should not yield lot cash, assets, we deploy have of and quarter starts curve the liquidity, on we right? highest a buying here,

that $X of billion assets in We in very significant a pipeline amount the the that pipeline strong to we of a have, have to are we pipeline. have addition close a

loan So fourth well. the growth, help net for margin the I quarter as quarter growth would the which being highest of should envision the year

Operator

Our is of UBS. from Vandervliet next coming question Brock

Brock Vandervliet

those loan that to comments follow growth. comments on So on just -- up

the Just the with comfort mid-single-digit level quarter, your guide. talk about fourth

I expecting fourth quarter pickup. think were all we

more? bit you that kind frame just little If could a of out

Thomas Cangemi

are the strongest as can So the It's you numbers one good news pipeline, year. of public. the pipelines the had is strongest through -- we the the see,

that's now of for have approval. right up loans were We amping a in lot that process

we where which here, the November We're growth, we is about in feel to then favorable. we into So good are going pretty respect the see momentum. and

have will a net quarter. loan growth So growth -- we

disappointment commitments So cliche, was when that the because is of business, what are a business we billion $X impact are have when about the of portfolio and somewhat specialty think and -- line. but that supply a sounds chain, in I that -- our the think drawing book that that the AA-type like customers right? does it finance probably on are down are credits, not of drawn an down extra single, being all these not you

So clearly, there with sitting we're great opportunity.

specialty supply is finance chain the the book. However, impact having on

So been on average. has growing specialty book typically, finance XX% the around

in to we put think close inception. since I our it CAGR XX% is

terrible is that we since pick So we business, the the in fourth the this and into That's the some the quarter. we started release environment. had We think there not is which that's the chain probably up, on worst go XX% assuming supply as could -- is unknown. a growth, given net year

a So opportunity add on in the we starts have commercial supply ease that, the borrowing up a optimistic little commercial side, pretty if will growth the both multi-family strong you bit, be and absent the to If that will chain. chain supply feel stronger. changes here, on plus then very growth we also

Brock Vandervliet

it. Got

just And Lee. for Okay. question a

very was he sale strong Flagstar on looked the quarter. on mentioned You gain call. this

down If be and guide break you wish would much any could that that just provide, was to EBO you helpful? QX how of

Lee Smith

deals very $XXX And first to QX due results. part in higher-margin saw the model. locks mortgage issuer on percentage earnings we EBO. of $XXX quarter, more in a Yes, diversified and we're pleased X% million This mortgage to $XX executed was million, we is of at us X channel. retail which behind sure. about that quarter think versus million, Lee. retail in came is of and a the $XXX And our the the in guided was originations our million RMBS to We we overall QX in QX with RMBS Chase. Well, made large And second-largest all, strong I as

under to quarter-over-quarter X.XX% We million X.XX%. closed of a volume costs actually loan costs from and expense also declined kept Mortgage as $X percentage control. mortgage declined

optionality So our we and us good feel about and control with. with we the model discipline affords cost good flexibility execute a together

And seasonality, main the a seeing reversal agency are QX $XXX tapering reasons rates us. forecasts, the Looking to million gain slight provisions discussions into and MBA and sale. of QX, yields a QX in and million negative we're Fed increased PSPA mortgage secondary decline we're of $XXX compression slight bond that the on volume guiding and in to to the for FHFA we spreads. versus seen certain primary then The was have in just normal

executing the X into X XXXX. Given on the we're versus X that were were step on in then a QX, QX and executed void, GSEs QX planning and an we bank leaving. able aggregator, we to And planning we're we're on deals the on in RMBS in

forecast further saying to look $X 'XX. that's over be $X.X agency 'XX, trillion going 'XX, the MBA market in market $X it's the time is we forward trillion healthy. and are into market in trillion, Any a As

I mentioned, on in we'll leverage pockets that As and mortgage deals our of utilize RMBS find planning continue opportunities. diversified QX, X we're and program, model to

execution us the balance program gives us MSR and the sheet, flexibility that optionality. have gives RMBS We AFS, HFI which and

point us a Finally, more growth of across which the and branches a portfolio the I've our and NYCB program, with the customers. from it result mentioned, of view; XXX opportunities channels deposit holding bigger of products, the balance RMBS benefit MSRs, sales the sheet supporting merger, as all us HFI gives as across

predictable more all consistent using that and levers before, we're earnings mortgage we discussed trying said I've just I've the our disposal. to at that have generate As

Operator

next from Point. Our question is of coming Dave Compass Rochester

David Rochester

banks that already a of nicely on was out I the that number of quarter was impressive. positives trend noticed lot a also up You up for there. the highlighted the warehouse pretty that’s in Flagstar to

the the on any here be your just prior if the them could X running And a close remind to day just warehouse out you've ground you accounts top us know larger I close comments let done lines available. the really be deal would of post to on hit that of lot could front? great. So to that reached everything the front on know to

And just I that So great? pool about is would you size if you you that side, that just targeted know that? can opportunity then talk the on there, deposit really be of haven't deposit maybe what

Thomas Cangemi

Smith and/or directed question to Lee Yes? is Sandro. That

Sandro DiNello

me let -- is Yes, this Sandro.

Let me and to relationships market that been market been and one, that. you continue as shrinks, number the more was expand that mortgage doing told executing itself in fashion would share take in we've Yes, take to we've successful the we we it. that so our just and

to then credit within opportunities relationships just sharing we're with One And warehouse where overall of terms drawn or larger the more ex taking amounts disciplined doing the we're side, our ways conservative levels, syndications with basis. on size banks. both Flagstar in with again, merger, customers limits, the of we because what then as that terms rather levels loan as positions bigger market on very and as concentration well doing I organizations, them shrinks, relationships our is individual the within while more we've merger staying taking on comfortable with lines, best the said, lose them. of outstanding still portfolio and in of of is expanding than still concentration other as our the conservative an about always the upcoming anticipated we're And which leading around and the positions staying do we're bigger think do as itself been disciplined

perspective warehouse we've optimistic and paid as that, of opportunities, very doing it it long X as for years the and X, well taking here able of advantage business just And strong, strength focused the what about fairly of last the time being has a doing that for we really a been very result from for on to getting growing service do. we've kind with the a we're business, it's what going So held forward. continue

Thomas Cangemi

Lee, you given Maybe, portfolio, talk the to initiatives want potential the to combination? deposit tied business about the Flagstar

Lee Smith

Yes.

have subservicing balance that custodial other the just lot institutions. that. our of a it of as business, or tied custodial to And relates to servicing we excess deposits with had size given we the So sheet, put there's deposits

Given the balance to given sheet. bigger back custodial to the deposits bring merger, we're those have going we're able

going funding And an view. us having that's I advantage and relationships sheet. given balance warehouse deposits so the be the with funds, then to think smaller with just than of go from we sheet, able in MSR we've a with a point borrowers, been opportunity bring to bigger gives And the balance it to have more

we to going So big a advantage combination balance having sheet. another that $XX this is be think and billion of

Sandro DiNello

Yes.

reference meaningful, really tell customers a made that to to warehouse are know to customers. relatively position some escrow customers the relationships from them. on you how warehouse show we've with opportunity deposits is, will our never merger, is, take me been in to to and We that but I me just interest in do But it's to but have telling customers much, significant. that's if because warehouse helpful? that Just we difficult be do not deposit what because regular do. expand But we seek that's it's but think something the in deposits we I escrow hard that our do post need it's for for that we We it's don't to estimate warehouse it's significant needed

David Rochester

X side there's I multi-family X-year seen I you and refinance to coming And it know expectation banks Tom, will I back going the jumps just then, the you've appreciate of that. to your that things. an when borrowers keep the Yes. higher. got on historically, for

that expect of to of you brokers moving you that if heard sign as would in any amongst that that start concern talk from kind seeing your borrowers? of that seeing start what at the to point? We other from do any heard guys, like see in that, to this we've And not, have higher you need you the well. X-year and banks from market Are we

Thomas Cangemi

end clearly actually towards and Dave, it's of agency the We're portfolio, moved seeing a makes great because up a favorable. it is the business which gravitated point. that. portfolio is curve. to is more The versus This great for in change higher. the This also the go X the considerably our years has back decision shape

more rate competitive So say getting the with think I more a higher there. be conviction we And I you're that are would at side, opportunity on level. to

to the does very transactions for back curve, take this as the next is is end favorable is of the a the property value I financing alternative relatively on focused have place going get some So does We good in favorable. business. people to the curve asset. impact the borrowers, that If respect will the an as and usually think X tapering in well see which occurring very our of it be short

various, not call that following. it, see seasoned new we'll also players, into operations exiting, expanding We we're but demographics their

of part be to going also that's our growth. So

So long-dated that out the have better into hopefully rate we're Manhattan we'll and to to and foot significant, this These the about see X-year-type a traditional they're about will as more this going this to very out customers is seems the here. are stuff a assets. coming not decisions. short-dated assets, coming it to is X-, significant think on more seeing start bode And of traffic bullish we when opportunity that and are rise make place pandemic and

very So we're optimistic there.

Operator

is question of from Morgan next Our Zerbe Ken coming Stanley.

Kenneth Zerbe

this looking pushed just quarter, towards of bit to color regulators the like the getting for are seems deal or any asking terms talk pushed what bit? little a just or can behind out about, In just kind why be just you first for getting of little a

Thomas Cangemi

be had in very regulators. very clear, for We're We're approval. a it's my with position our would it's in it's just clear. about merger. very I waiting remarks, optimistic that I the opening

hand. in it's the regulatory However,

as soon common getting working transaction are towards possible. closed this our clearly as we of So goal

what discuss can't do our specifically we regulators. Ken, we know, you As with

regulatory in obviously, hands process. of the So it’s

Kenneth Zerbe

ask guess, I'd my I question... nonetheless. thought second Understood. I

Thomas Cangemi

imagine, is We but as question, can you the it is. appreciate what it

Kenneth Zerbe

Yes. No, I understand.

But back back... in at Obviously, you that get point? New this you're Just really like low going that very coming borrower obviously, large LTVs. the is he Because can a provide color, Manhattan. I little more problems to market having just York well secured. why is

Thomas Cangemi

relationship, very an that dialogue, current relief he we of in confident we're be and end could be that that fact the and you type typically are as we give past through X the generous And depth by of specific. did level to these many was I'll the properties, caution have the Act. CARES worse that from we very were yes, he pandemic, leverage We few is result of expected. not very was Ken, And him back, have pandemic day XX customers we now. and which we balance really could ultimately, of obviously, Act with the sell will That was an know, at position you ongoing paying the year. very a one look sheet. you when end So, have relief. probably abundance And take and loans that in CARES up needs to order relief. out this a that bolstered he the we notes decision And the And don't the a at release low He leased go was his provided than feel that the of customers He took days. short comfortable lower highly given all made. the that realize

customers did it had phase back started money no of they the pay, bank not advantage months of the It's back that So way. X by to the And want our the is so what again, it came is. put unfortunate didn't did, of he paying, offered. during the first Many of and literally, they what take end. the in

take I X for that are CARES much were pandemic. few the good leased and think you to leases. in not Act and of leases on. be are And news they back the renewal, is the is where did the he's of not higher who when going the coming they're early at they long-dated that the -- than we these middle them market where These look advantage of customers So when out

So that position we're in good confident here. highly we'll a be

Operator

Our McGratty next coming KBW. Chris of is question from

Chris McGratty

for particularly to deposit expectations with guess maybe you've Service. follow a not think banks interested on to see of that that? some will the growth missed I as and specific view noninterest-bearing but in Banking continue want a kind much move in this, grow, the noninterest-bearing seen, thoughts money, the growth in rates noninterest-bearing market the deposits to there's the I you I in that most up cite your as that up I to parked but given

Thomas Cangemi

and the in driven Yes, who that so the business. preloaded It's of that is coming very on. we’re including knows type It's off focused are is ones Chris This are some coming what's the of there, sticky. this new the deposit -- these card of future. payments stimulus out are

They technology interesting are are these So provided. programs.

play bank your when out a So you there the deal win does that to into technology have need perspective behind them a in on tying the space with system.

that. we So are providing

country. business, looking the for the areas throughout it's and the that putting We are our local the also just in own country proposals throughout not at

So very some expanding are insurers. clear, challenger be have substantial but technology the focusing to want FDIC not wins result us companies spent active we've access funding, initiatives, space I banks that in effort also that technology a they're new some having are that banks, we're on on with Service as very probably to which will in that. here on Banking some But people in and real and brought

you I insured We the partner challenger be our can bank billion some on be smaller players a capped to situations. them. when sheet out of will to we able use that the required to side, marketplace those have are believe fee deposits will players and for balance at to with provide be that enjoy opportunity that with the these are -- reasons lot of $XX deal And

zero So now but on XX we to going to a for with only not it's the a are been billion, $X going clearly focused on it's I'm significant that. months. about it, at where give bank. We number be started potential think

many record. the that's pretty bullish in good And about. so So that track pipeline we have we're a opportunities

Now every partners very we reaching request before. not every when not you're We've structured term. -- out they the done had we to comfortable and we'll planning that you're escrow a we're to and them. -- call out longer-term had proposal, use not are work one, going some going event, to this perspective, focusing we're large deposits that, Flagstar marketplace it, the a liquidity mortgage -- And low-cost for structure and on but out are in going just, we of turn addition win there to in but some and this had structuring position, major the want basis, conduit out to business, We challenger position we've need players players taking partnership. cheap with to term also house more tremendous a a with done than as willing way us a in this a opportunity we're perspective on as with to business cost short-term they the where to

strategy focusing the as classify how the pay And the to So there, of a by that's dynamic as thinking balance dividends is as way, better we this the change company. for out bank. it, This as -- all we're going sheet Service technology well we funding they'll think to the Banking that's the the us. and about we is on continue of drive that into kind we kind a initiatives of

Chris McGratty

know seems Could you by follow couple markets the Just rate overall term of talked end think move advantage up But announced, sheet I of a longer you up about development pro the be when funding out if sensitivity the the help about we Flagstar a markets, was better I on. pricing And on just deal given positioned. be the kind to like of into next balance a how in year we thinking with hikes us when should the there's it comes and in rates. forma? margin 'XX, want

Thomas Cangemi

Pinto. asset-sensitive take adjustable good off. picture When hand well. that pipeline big are blend for the rate very reliability-sensitive start then I'll and a position let and mostly with picture. That's that Flagstar, big an So they're mostly me the most NYCB They're Mr. over it you I'll we're to that, or part. we managed very in a just combination Big picture is fixed.

So these balance stand-alone come very on dive some highly when we we basis I'll transaction. has stand. into part together, where rate go the interest -- sheet of risk. feel of that's merits the the said, a on position Pinto a We just Mr. details confident different the companies have being and of With

John Pinto

and our in that the noninterest-bearing $XX on the NII But that you liability as has have begun change continue side basis, reliance Yes. wholesale and of been as can bit But because a and be I that's with funding, That's continue potential Tom wholesale mean, deposits the on little side, on goal to core standalone can we and moderate. down we billion to it been of a take limit on deposits. pay to the to sensitive. right? know, when mentioned, moderating bring borrowings we

NII at nature continue that the be liability-sensitive that us structure rate our to to sheet. amount big with turns where So and to the more will limit of closed generator sensitivity asset until balance positive And loans the stand-alone we're Flagstar. perspective given a the Flagstar floating of of for

Thomas Cangemi

X.X%, expensive would considered it's another X%. at 'XX, go about Yes, And [$XXX pretty full I have say, when cost coming position, about point, $X of in I wholesale if a to to at this That's out that's quarter, year add would you from environment. John's go about $X a fourth it's billion the you in mean XXXX just you very just out I think the, environment. is That's million] [X.XX]. the about expensive we still due billion. this

billion. quarter, due off really to that that we the close paid advantage lower blended, We to take to the We probably coming get or probably be with opportunity much a know enough restructure changes reposition here of revalue, what's not on environment. but cash. and away an opportunity believe have to take rate ahead, in So the year there will some $X.X in will

you at to is we you clearly about 'XX 'XX business the have to opportunity advantage. liability and off with the Flagstar, cost [X.XX]. a on zero When the holistic book and look will think our money entire So that basis pay think combination about the

value we're So be opportunity. there's about excited there. real We going to that think

a clearly, opportunity. put a until on haven't number we no We it's the yet, great think transaction. will it we But close

Chris McGratty

The can waiting you're which And then a just just follow-up. regulator regulator approval, you X specify now?

Thomas Cangemi

not FDIC just our go The we It's of way Fed. process to then have structure. regulatory -- approvals yet. so And state, we're is, structure and state our received the our FDIC the would that, after it's it

Operator

Alexopoulos Steven of question Our is coming JPMorgan. next from

Steven Alexopoulos

house relationship? in regarding So in concentrations a loan $XXX and And past dues first, other you do how relationship, of have size single that range? the what's relationships limit the to terms many million the

Thomas Cangemi

had that locations, So we individually. significant we relationships very sizable always owners house limit collateralized -- have don't to wealthy disclose have do all we but have the property

but of So not disclose a going our business to my as limit, do not relationships. have -- doing And we I'm model. we've been have house that large part we do

confident for we reason year year. will not more the I the adequate this current. I'm that that say think building going by about mandate have again, in side, the we with of good to relationships. collateral some from clearly, large it our deposit And on we at deal feel growth long-term to end back very customer to a going we're end the specific to these news seeing the that it be as deposits in the importantly, X the position of be we current But start we're

now the and of the it. number a X X feel business borrowers families expanding Steven, clearly we reasons, throughout model, our relationship lending. and we're borrowers well you with significant as for So outside know we good pretty as very with -- about But comfortable of deal the

Steven Alexopoulos

Okay.

prepayment margin, decline refinance the moving regarding was on rates so slow? just Tom, helpful. further fees that the expect That's to the see activity you penalty to bit? in sizable Okay. quarter, do attributable in the up And a

Thomas Cangemi

Steven, a make does Again, difference. rate

I hearing obviously, double-digit return, that has real the it's transactions. X.X% bought there's math they are sidelines slowed there -- coupon as like a if their is decisions. on make seems been There in curve, rates compelling. And looking relatively with We're a between And the with They've will still pickup react. So customers down was think enjoying low many here. steepness considerably, that it the with things a the pandemic liquidity, math cap are to buy holding X.X%. a right, about players assets. up does many to The significant

of X Manhattan I I very will I a significant there. Manhattan. a the stronger clear, market a the really at that's assuming movement day, positive rebound, be think So frontier We're is end think that last the recovery. looking at borrowers, the has ripe you're for the seeing

as We that's there are refi. seeing are you given out as pipeline purchased think well I our conviction, customers the deals tell are as -- here, there tapering rates moves if the potentially I that with will a rethink in and But and are to generate prepayment table going only theory about growth. their probably to come would sooner, that make rates opportunities be also as loan higher, that but the well customers will income, potential which not

Steven Alexopoulos

Tom, quarter-over-quarter? a going are a finally, in then and color And today? securities quite view, the securities decline yields off from the And bit new give could spot the where just was in loans you in on rate quarter,

Thomas Cangemi

John, a really we that been haven't securities while. buying right? So for was any

John Pinto

second the remember, the prepayment to that's we're right. has when securities we Loan fees in well. as Yes, balance our the the drop portfolio higher-yielding quarter, securities slightly and -- coming as look lowered over kind -- continue of you if in of you quarter-over-quarter well. Home just then you've had on some the quarter-over-quarter, significant seen rate also And its Bank just off. that's The And

on that's it environment. trying purchases some of much, we'll until for right? there, and So that's work, in of in ready to you avoid not on but interest generating this why time to hopefully, in we dictate. securities money anywhere still extra look actual are sitting what's line We're it's cash a market When here to near down conditions that some at those be put prepays, security the the duration putting And course, as top as being miss. little ex rate seeing pressure to loans; we're limit

Thomas Cangemi

If addition the looking and the portfolio, be a we We X business waiting put entire going at these be put a risk with put right have game. not of a we're together right We that, also move It's on and we ample it's is Right have the now. think opportunities, cost to in to the of significant now, see earn end, an lot easily going can decision were it's opportunity would we'll a to position back money to market, zero duration by in that probably right now. the we design. cash some money view don't look but and in can -- work. there holistic We're believe And we Flagstar at put into models we to which reshuffling. the patient.

significant today we'll of not interest until see we then that. are take exhaust a So advantage going liquidity movement truly to the of and we rates,

Steven Alexopoulos

loans? yield spot new And the Okay. on

John Pinto

it X.XX% to will a good so QX. of less X.X% challenge now, tell is than you, quarter was movement. It's X%, fourth a I north in that's of like QX and

curve So for I yield indicated. we nicely moved us, that like has fact very the the like

what they they rate. to customers as it's for the to us do closer at a role, come contemplating because which are want think I higher their now good is

to and decision that's -- the also portfolio. that seems impact to it going versus agency So go

So about steepen go spokes discuss the our any to portfolio customers like and to shorter this we a tend think to duration the time and advantage, to lenders.

Operator

Steve question Securities. Riley next from is of Our coming B. Moss

Stephen Moss

obviously, Maybe here. provision here? about but down, just we eventual going following expect pretty just of curious, how credit think coming and on forward that up Modifications to reserve you expense have CECL kind we the cure,

Thomas Cangemi

And probably million short going a by down substantially time we conversation picture you highly that and be our Congress turn left done to obviously, order, January, come that, this reserve assuming reserved a the with should adjustment that to will bucket with roll-off big with to substantial Act, be reports is in noticeable comes CECL see in manageable back or And ahead, stuff the this a to the dollars the in XXX-some-odd Act, Big given on to CARES very given to that's probably Pinto. we we guess of Act March providing think components the marketplace the believe the by John side. together. but a And under quarters see will loans, relief go of respect full I'll put and a time CECL when CARES you're picture, the exhausted. some talk April reduction. lot we're next I in I'll going I Yes, CARES when

John Pinto

well. Yes. be But to and depending upon of in CECL our you as loan quarter, results our growth expect that saw right as this small now, range, we with benefit course,

have we better, provide economic don't for environment Moody's to forecast But substantial anything if loan based getting the the that, out. see growth, do the in So quarter. the improving It's changing. substantially quarter-over-quarter been CECL, we on have that on in come besides of course, you that

else. recovery seeing provisions today not see we're small on down give that We portfolio in just the would So drive anything coming any we're don't we that loan growth. If see depending that that larger us road. anything anything the anything, would in pause

Stephen Moss

came better fourth forward Kind it And going thoughts expected. in little expenses in expenses bit just terms then helpful. That's of you Okay. guys for than here? of here, the quarter a for on

John Pinto

Yes.

the any in quarter. real don't to expect fourth $XXX quarter. We're this comfortable now. for will We expenses pickup the be fourth million very range third think quarter right the in I flat

Thomas Cangemi

That's ex merger-related, obviously.

John Pinto

Ex-merger-related. Correct.

Operator

Our next from Stephens. question is of coming Matthew Breese

Matthew Breese

Just going front. back to approval regulatory the

New factor And how need York level? is State in does regulated the but you assume Flagstar at by bank here? approval, I'd who First, that

Thomas Cangemi

the Their and with applications NYCB. OCC

and -- we after the we need would we close. FDIC So state Fed then that get and would happens, we and

Matthew Breese

it. Got

really not a factor? it So is

Thomas Cangemi

Correct.

Matthew Breese

in, like Okay. or you of little hearing that anticipate I the And reading from I being event? in you hone just this 'XX think or someone down don't the to remember a first release? quarter, then first you timing close bit, if but a do said half

Thomas Cangemi

as in XXXX. this Other soon clear. going very than is anticipating regulators. It's can hands the process, in can't and our I application closing Obviously the I as we was of specific. Matt, that, get through we're

Matthew Breese

Understood. Okay. And...

Thomas Cangemi

being And apologize hands expand upon able not to in the our but regulators. it's of for I that,

Matthew Breese

economics securities transactions? income as sponsorship, progresses? that this out you some the providing I about partnerships couple has private Cagney a and statement them, suggested these Completely impacts talk What you balance a for of Fed There's hoping of could data partnership What the Figure. are also points was bit you quarter. there. you're did and and little with the transaction understand. for credit the sheet are Mr. in settlement this

Thomas Cangemi

over It is with with co-collaboration in we resources. as a a very the working company the Figure with agreement We're We're the combined invested interesting engineers publicly disclosed. very Figure. excited about

So We continue opportunity to beta tremendous we're both combining our resources. we there's as believe test. a

the them on that was So we process KYC at time, the to very needs transaction on develop did the with test of there out clearing deal the AML blockchain a to same of the through with small being solutions; beta regulatory the cognizant it banking solution and the continues banking changing world.

you mortgage when potential picture, big you banking, ultimately lot believe mortgage NYCB side, at if and us blockchain. lending be opportunities there's on the will deposit the opportunities. and there'll on about dealing we someone the opportunities, innovative tremendous and on that with together, balance believe Mike who's on liquidity we ultimately, and focused be fee sheet opportunities So our Flagstar as opportunity think the and lending think we income of a put looking And working with business

end on when blockchain in we're to with So It's exploring the create both more the a it do end. could front a probably and really business efficiencies. that comes we seamless and to think really way lot the of that, mortgage back lending,

auto to metrics now, and initiative. testing. going be could launch beta because Right exciting So publicly we is we to beta something these it's not we're testing beta any to this an And Matt, not give are going until business and speak out -- it's testing times.

amount still what's find system, working It's do focus banking banking the towards I'll figure with is on and dynamic. we clearly, out call mean how be with I regulatory think think this to KYC AML I we're that all there solutions. we're innovative And out And beta to them. treasury, it's So in space. with get in the world been it, of massive but very liquidity I deck, to out trying to on mode. a the and we're going you're all testing hands the exciting. trying familiar

again, it's blockchain to exciting. think through the I close solution. And private,

with a happening. Stay we're tuned, be to and lot partnering them. excited So there's

Matthew Breese

Great.

what Okay. last Flagstar Community and City? just of the New more But real significant going double-digit commercial a then more already. curious get In the York York you've feel the And it on to estate that maybe is have to generate business. touched level. growth Is loan Is combined kind growth. able to strategy I New Strategy, expand discussed entity type there we're to you X warehouse for it just... see multi-family me. to being And nationwide past, that to and I'm like

Thomas Cangemi

the We're point. the it. So Flagstar we When has we field, when it's The right? lend on great NYCB feel that way. cultural ultimately, highly -- a change, going transaction field to have about closes, they're in be does in any the people lenders. not excited confident people meaningful direct

business we So with have an indirect NYCB.

direct Collectively, table the markets bringing You with business substantial have robust. to very the Flagstar. out are opportunities in that we're

growing. New the direct job Florida, Ohio, don't we land, on Midwest, a York, they're great doing

think focusing going to opportunity the have C&I right we So field, we with people in do the can we a up same in growth run time, are combination people. precision At but to will really some to with hire with there's don't indirect on we collectively our put direct combined we And to strategy. deposit branches. products the as to growth this have and think out opportunities. together, work entity roll great as a Direct we an

the we're So our products. we do on And products to have and day beginning. legal putting where Flagstar X, we them that's business them the in -- the will all turn more opportunity our of after customers tremendously lending and taking have branches

a about. that as wide So excited to the enterprise that's we're we array commercial products, a transition with of truly opportunity banking all

we're feel #X warehouse entity not a X, we consumer-related. businesses And obviously, And we in with consumer-focused in on they're exciting mortgage do number number confident sheet, between a much a lot stand-alone the are origination, a highly dominant and because, top servicing, fact that there. basis. lending these balance a it's more So a mortgage player in player X bigger could

strong to we'll think growth very good a we addition there some in have C&I So presence.

Operator

is Our Capital from Duong next question of Steven coming RBC Markets.

Steven Duong

Tom, basis around started points through Flagstar touching Flagstar white mortgage side all I pretty maybe you of guess papers, we achieving savings they're way XXX bring get much if When through on the the we Figure. it And -- on Flagstar when have literally process. points is is And to go of their with realize? out guess, origination back on looks partnership like every like basis just another from the for that the on I there, cost securitization. basis guys this you So of to size on you on possible roughly part to doing gain XX like it add is sale, could that of you XXX up much how from actually XXX points

Thomas Cangemi

These I'm label on to country materially. RMBS, will transactions. I this be and be on you the back chain. transactions done costs Smith. in to to they've through transactions I they're going or in significant label just going X over think, year a the through think top be in then fixed job private the me private the the has great long-term there are QX. done deals that's are to these sizable done to as tell are And indicated, and let I think X But future. at done If we has Smith Mike Flagstar being RMBS they what Lee continue So So or X deals the in turn right? the will I market, chain, reduced that's agency, ultimately, that space, But not this be happen going Lee to that mortgage have QX, in relevant X do, right?

So chain. that when in buy types the But opportunity. business. meantime, very comfortable we a these managers on the the And it, opportunity solution are the long-term back and agency we'll the player, to assets end opportunity I as I there non-agency it of where that's portfolio wouldn't call but comes the grow large, underestimate think front there's transacting an that end,

the So give picture as to putting Lee, want but to, big well just maybe some some to numbers Obviously, if opportunity. you there. theory without color maybe

Lee Smith

absolutely. No, it can't a question, Steven. numbers Look, because to any relationship good for And you put new it's Yes. NYCB.

haven't deal. We closed that

and as out we working can to quantify trying opportunity. start do, As the soon more on these figure and we

end mortgage. talking blockchain you you're As blockchain, an the ecosystem, know, is to with particularly if

number just realize And ecosystem so you're you those of that the quoted, that need going a benefits. numbers players big start to within to of to some

as at RMBS, to if to, biggest the in RMBS, QX, relates alluded player some just Tom discrete As it specifically advantages. very look we're and you second there's

due that the is think the you if blockchain loan you RMBS is a working. you're to diligence way trustless an single if So comfortable have every transaction in ledger, don't the with blockchain

due there’s a instantaneous. So savings from diligence payment immediate and point of obviously is transfer view,

immediate And it. stages think early it's it's much an stages. at view, looking so point of that's I -- RMBS Tom an that exploratory from we're And very and as opportunity. But be said, how in the opportunity, the and but more the would

Steven Duong

appreciate And of front? Lee. a kind see opportunity leading see on this experience, an overall I cost do to first mover? And as shift like your industry you just do that, being I from the this guys an you eventually maybe blockchain guess

Lee Smith

that quicker his technology looking are New then the out And a good Community solutions on there's at. same doing think one looking companies get There's enables blockchain the if that, out technologies to side. all of them. constantly are of things I fintechs look, mean, we're lot improve And of Tom mortgage number know a Banking do experience. and I And is team efficient, more This there. customer a that's the I Possibly. the and there and York ways thing. that at

plugged opportunity. prove take And it of runners it we an and advantage think something of. front industry be we're should and is can one I to that the ultimately So in the

Steven Duong

then And last that. just one one I me. for appreciate

CDs now can CDs, get low the just are right basically say, guess over running like how like how on current on into, think -- moving you accounts? do rates they to? CDs And Just your the off. the savings I

Thomas Cangemi

point margins, by rates to now at zero. and we've of the think Reserve are that's we're enjoyed the where expanding probably I I since shift mean, policy Yes, close years obviously, where right, case. a of Fed the multiple

the So think due billion is where at coming I now in the basis the we're mid-XX $XX.X next still point points.

some lender, which and and going I strategy -- of ultimately, we're that But level believe shift but some and is shift it the the to culture as and the culture at savings rank in right And So think let's just team after that's the a I we all commercial the working. top memberships. all that's have, call to the noninterest-bearing, cultural think accounts, go customer I the strategy of that's are enforcing to the -- shift at which the flat file, here. way -- it's down into Board

together margin So do. model NYCB thrift towards they significantly moving traditional the commercial well, as I as a we the culturally. bring model, deposit more versus it's it's those field the these drive to out time, unique very about is first, I businesses culture of have think C&I lending lenders that same fixed At the which floating second. driven the view after think combination that's think of will that ultimately, rate, opportunities, go opportunity the And historical rate be when in blended by that should what lending you of direct and Flagstar, go

think in we're growing phenomenal super it. cultural do that we're done to because and going right the with excited that's I team shift DiNello's he's through a job it now, Sandro

combine about we once opportunity. together excited it doing that we're So we're and

Operator

from Our question Montgomery next Janney Christopher coming Scott. of Marinac is

Christopher Marinac

is or talk nonqualified much the could here? another the about closes? Lee And that source more exists merger How as market? Tom, you of revenue or Sandro opportunity

Thomas Cangemi

want you one? do Sandro, handle to -- that would I

Sandro DiNello

there, in supports levers the our jump comments, history to this advantage and the is lot to And channels mentioned our we business take whatever opportunity a can delivery opportunity tell that will I there I'm answer key, If going is his mortgage got there. of know think, an it. of certainly to don't out but I that, is different we've the pull as to you on say. and will we Lee I Well, what

there, not how because an what we an the if it. opportunity don't know be. on full are know there So opportunity to market much speculate know I'm be I to with there will don't I But seize might the of that is answer. going conditions going I confidence

Thomas Cangemi

Yes.

done We're And to tends growth do high-quality more able of to in a with the which Maybe, in feature. much the So I'll loans whether to is very as back balance there which in. just being sheet change an prime-type on rates when if will that start for addressable chime to point, have also add the very that? portfolio, contribution going by products on sheet, and assuming be -- to you can then loans portfolio another way. assets it I'm we sheet just we other case well. you higher, to will We've loans my other add more balance and will lending, and missed, the Flagstar's balance Sandro balance are Lee, utilize I comfortable material a different to a just rates customers Lee, residential to color get But perspective to the that And we want point successfully. slope putting before and the more back real on we of to will it distribution, sure portfolio. our in then on want curve gravitate on rate focus to type sheet potential

Lee Smith

we think take there I opportunity, say going advantage if covered of it. I is that. was No, to can of Yes. you an most

a have balance sheet. We

We have the program. RMBS

different it's we or we So distributed ways them different on mentioned, Tom TPOs, lending. disbursing the channels, sales force methods execute holding retail, and And have that we these as whether across then of direct them. multiple can loans either have

sales up pretty is an channels of the teams and that number given we it if that so sales quickly can something And we ramp is opportunity, have.

Thomas Cangemi

finer And point that this on just comment. a put

product cost likely channels teams of more We have that and is very strong origination country in the higher where exist. the areas to

is as through you few access grown we ago. what did out Advisors to years Opes very, the We a done, very of So securitizations acquisition see -- markets our principally and very, strong. those from has the we've can

strong, we the Historically, the loans as have times we've the advantage here has take opportunity say, at be but quarters just I that there'll which our we there, that books where more recent as securitization those as would in talking of opportunity in Flagstar times, be independent portfolio on about we'll to I'm at interesting the it. again, well, is it. market extent, that put so not case, route. So consideration. been gone But and might private

a looks today. post-merger, sheet than much the You is like just it's get Flagstar balance much bigger different because to much, into be dynamic it different and going

Christopher Marinac

as is look the the just was approval Tom, in post you closing, and announced? stock at as when a opportunities of merger final you question. repurchase regulatory sort it back April good thought still When And

Thomas Cangemi

Well, actually we down look, obviously, are the our pro putting company very together Flagstar's pleased with sat when forma internal and outperformed company. we results. They've and the talked forecast about

on The So money, on basis tangible overall because more we're a to profile, on attractive additional perspective, that. of reduction to company common be for combined is earnings our the payout very equity going value ratio is a going of and book earn given there’s transaction. a creation lot substantial to the a probably dividend in which going have

tools. management have on capital more we'll flexibility So

not standalone once we market the will the when to power, be As together the in and generation itself; people, earnings its will capital. the same enjoy the I time, at we the capital different this is company systems, for business capital They And buybacks. profile about we when we all it to midst capital also talking basis. the dividend, consider attractive invest repurchases of have a a options. in comes indicated going of the if capital quarters, on a has has its benefit clearly, and previous that, put the significant But creating opportunities transaction. in on very consider company clearly, paying But we're the strong

think, business And XX% the was been as we ultimately, what their as it a the Collectively, pretty into in you than I materially. original XXXX very modeled. pay a reduction payout severe. know XXXX. down obviously, goes expected the has presentation -- I to have better half, that's We be in of much the And a And from about that ratio mortgage modeled we will deal, blended large said, dividend. going performance

-- earnings So significant generates it still generation. capital and accretion with significant

we're about that pleased and So we're very in where the today, they are future. looking enjoying forward opportunity to

Operator

to for time, closing additional turn to or comments. floor this management over like the any back At I'd

Thomas Cangemi

time us the our the we again at to morning XXXX, will full look this taking interest chatting you January forward period. with you XX, your We and when in again to of end fourth Thank and performance for discuss for XXXX this December join NYCB. year quarter for

Operator

York in interest your Bancorp. thank and New Ladies Community participation you for gentlemen, and

your this day. the of webcast, rest enjoy or You log the your at lines off time may and disconnect

Flagstar Financial (FLG) 27 Oct 212021 Q3 Earnings call transcript