NYCB - Earnings call transcript Q4 2021 | Flagstar Financial, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

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 Fourth Quarter and Full Year 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 meanings of the Private Securities Litigation Reform Act of 1995. make to we rules. Safe statements forward-looking are the subject Harbor Such risks may review Safe presentation release about and forward-looking for uncertainties language information Please disclaimer press Harbor the us. affect in today’s more and which and turn With Mr. over like to it that, now I would to Cangemi. Tom?

Thomas Cangemi

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

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

communities billion of to financial Before week. and our loans, lending small we responsible to agreement and proceed of results, other combined and income to I’d its and with expansion over color, businesses practices. this moderate collaboration pledge and announcement $XX Community was a announced support We discussion like five members. the of low to our of York years families of refer the people earlier developed commitment New and pledge in community our investments the in agreement with we communities made Flagstar NCRC The multifamily you the continuation to provide

far-reaching and nine to we this to day. the away and new leadership that with communities will dialogue team initiation NCRC company. provide hand-in-hand the footprint the and company. locally, those We working that and every Tol, ANHD a their by all organizations Sandro agreement ANHD. their his would impressed the everyone across and like and guidance CEO greater broader both Jesse their Van very opportunities for wealth our While this and racial and the during bridge each thank on with of This country for for process at pending gap agreement with for We of economic spent communities member work XX and came nearly I months across and do significant believe they is

this closing integral remaining in paving that to way receiving as optimistic cautiously to merger agreement practical XXXX. assist the early the are We necessary the us as approvals will regulatory in

like up results. we would a in to to last share, XXXX announced of a XX% I of Now the over this fourth to $X.XX operating compared Earlier diluted fourth $X.XX share year. the quarter morning, turn EPS quarter our

year, $X.XX, For of the earnings EPS to XX% $X.XX diluted year we’ve full XXXX. since share in XXXX. EPS full the diluted is operating $X.XX per were operating The highest up diluted reported the compared

we to ever strong off net the stockholders company. have operating This of public $XXX for year the common was a income achieved a as us. solid was highest a company, While available million very it capping now is for quarter

Aside interest net asset operating fourth interest stellar in loans. from our lower delinquent growth, double-digit highlighted results quality, a in loan margin, share, and record continued earnings included stable quarter income net a and expenses by growth per improvement substantial

year full interest net growth digit results were improvement and Our in margin highlighted high-single a increase interest a the net number, loan income. XX% in double-digit by

basis. year-over-year excellent a discipline or expense as operating $X rose X% remained million our expenses Additionally, on

uptick third of growth the $X.X quarter grew during the XXXX. quarter and for Most now was lending or The and billion X% compared linked the to part details on $X.X increased up $XX.X both growth. first significant This majority by $X.X strongest the the as specialty of finance activity billion compared portfolio, and highlight to of occurred the billion this expectations. main increased multifamily property this to a loans and the loans on by the our the X% prompted Total was borrowers in transactions growth was performance. which This of a service in with basis. Growth of our to $XX.X and portfolio in existing interest rates, end, or strongly. quarter $X.X of at of the quarter, Turning last the quarter fourth of for borrowers. meet new quarter the year year. needs billion off the driven the year proven Starting rebounded were loan growth outlook since of ability billion the ahead company’s higher to billion

up During billion, loans year-over-year to a total XX% the or while billion year. Of specialty the last $X.X continues fourth billion $X.X finance now total structured rate obligations. in to million XX% as commitments, floating quarter commitments as improve, are $X.X or and on the economy basis increased are $XXX billion, XX% $X.X compared

given billion. commitments, draw will very that unused supply chain a segment from XX% the fourth to XX% up lines, for strong Originations pipeline up billion, to $X.X as loan $X.X we the amount the issues third exceeded due refinances refis quarter. Of portfolios our Additionally, of compared for Total were believe XX% anticipated were quarter of fourth very the XX% down property on their other borrowers the XXXX existing quarter growth of portfolio. the Originations as quarter’s also and well. originations during fourth strong the originations, by quarter out the prior transactions, were were unused ease, of year. setting banks’

quarter up is portfolio first $X.X of end well this year-end, Of pipeline bodes XXXX. robust and the or Switching heading the at for the that $XX.X side. X% over growth. $X.X quarter Additionally, money. billion, compared to billion at year new first originations billion Deposits anticipated totaled to XX% deposit XXXX is to amount, of which

deposits, additional XX% $X.X continue or year on year a significant our initiative. Banking $XXX deposits basis billion $XX.X $X.X billion, deposits of or ago. We to representing $X.X a XX% while XX% dropped $X Core end increased deposits CDs billion, million progress billion growing as our year-over-year Loan-related compared of from a billion or XX% compared in our total to to XX% of several and fronts borrowers make Service XXXX. to deposit increasing increased including on to deposits strategy, core level with the bringing

Banking a year-over-year was $X basis as In loan-related at which or ended operating addition, XX% deposits related on million accounts, deposits, XX% year overall the increased Loan-related Service and by a deposits. represents which $XXX of billion. the business include deposits growth driven

deposit the and support a card of and Difficulty] Winning to as digital fee Banking several year. programs. in had of active and contracts These prepaid U.S. Act support pipeline related in programs Island [Technical and partners the Service beyond. a EIP we contracts in opportunities side, Banking also Service our technology successful in of in developed an XXXX a significant We’ve and income as CARES sizable On Rhode and Treasury Jersey first clients. New

a interest the for X% we costs statement. increasing on lower income year XX% next funding net throughout year-over-year Moving basis, income to increased our quarter full as from Fourth XXXX. benefited

a XX% rose full Additionally, fourth quarter excluding for year. merger-related the year-over-year net XX% and pre-provision basis expenses, revenue on

In third to terms our quarter year. fourth it of for X.XX% margin, the for full the X.XX% unchanged the quarter, and compared was

income, prepayment XX X.XX% quarter the year points fourth full Excluding year. linked unchanged for the margin basis periods however, for full was up both a basis and quarter on

of front, and fourth to Operating third the fourth On both we quarter. pleased very year year our are compared discipline. expense quarter ago the with continued declined the expenses the quarter for the expense

million, ratio full year. $XXX and X%. in For expenses the This full about totaled efficiency million current XX% the resulted of our the only both or up an operating year, $X for mere quarter

virtually to New The units, to continue while rents City flows translating York Before see general, further, the we on demand continues segment you lows, strong I’d business. with for has into in across encouraging market market our it pre-pandemic board and signs as York rental very estate the City rest remained borrowers head leasing that update the and to into increased the I remains very residential levels, back the in supply. we expiring spring non-luxury Manhattan as is robust. Outside to XXXX strong cash market are pertains Manhattan market of in place New be in with rent-regulated of many XXXX. like residential outpacing rebounded concessions for rents and real were off its put and coming residential, the

rank assets. year, the reported our net positive in As X for million. million asset industry. of full trends continue recovery $XX And assets are best we the Non-performing to or a basis points among $X for quality, of total were the our and credit

More one relationship the to or past a days XX decreased last on $XXX improved million, due discussed $XXX trends delinquency XX% million returned XX as our at we’ve dramatically. to Loans linked importantly, status. quarter quarter basis current

basis. XX, principal-only In of or quarter loan addition, on XXXX, down million $XXX deferrals XX% million, as linked a $XXX December to declined

on earnings enhanced reinstating In the which reposition deferrals. uncertainties company as quality, partner the full Board consideration year-end, ourselves the strong program, repurchase results of in XXXX shareholders based pro meeting, our common will and yield be X.X%. this February we shareholders. on returning annualized more record have the capital X. of flexibility Flagstar our dividend capital XX translates dividend profile had levels reinstated share suspended payment The for as an Directors the have the position, dividend paid an on of credit into positive on on February Board outbreak. due Based the Board yesterday’s common regarding Based yesterday’s been of and to to with to outlook a the to at we price, to took and repurchase shares. Also, zero in company’s As $X.XX declared of closing the capital program, COVID-XX forma our

work, moment to dedication of our diligence thank last unmatched. like year whose would a Finally, and I employees hard to was all take

customers, and would Our company. commitment our not strong have been without their to shareholders results possible our

to be be may of we employees best this the to please later you organization. please the remaining, would we the free any today for Operator, continue don’t, a happy With We’ll us questions. do you open success week. of to but that, during to time or answer our get to very Our within questions if ongoing to have. key contributor line feel call all the

Operator

your Poonawala We’ll Bank is session. conducting Instructions] the Please America. with you. of [Operator of first Our be from line question-and-answer Ebrahim come a questions. Thank proceed with now question

Thomas Cangemi

Good morning, Ebrahim.

Ebrahim Poonawala

morning, How Good Tom. you? are

Thomas Cangemi

Doing well.

Ebrahim Poonawala

think you it the feel you the Just first I on say XXXX. closing so I good about timing the heard – of question deal, in

you can Like few recent Or – next window announce within that approval you we agreement narrow if other Fed optimistic? get the that what that around too weeks? deals see wondering seen happening is Just weeks. approval in could we’ve banks down it achieved, the given is

Thomas Cangemi

obviously, this getting very spending We time lot I the done. the clear appreciate are. that And mean, approval a we’re community of I we on about way company. major the the pretty our pledge milestone Obviously, a process. pave That were was we think will agreement for question. where specific for

deal confident get very we’ll the closed. that We’re

as wish clear. pretty was you far it’s I bit in timing, of the I detail think the regulators. Ebrahim, more can it I give that, the As hands but

Ebrahim Poonawala

March. as Like multiple us I Fed do in about rate the And Tom, margin around expected guess, balance we And we next with over us year then, think to how sensitivity NYCB backdrop? sensitivity early if Flagstar does Understood. hikes that rate the also maybe sheet hike get standalone two? remind or remind what this create as

Thomas Cangemi

Great. the million plus continuation big Flagstar, I’ll that off I’ll top line question a question, revenue quarter. defer to the have of know, the that margin derivative as – answer this the as picture company That expires. you we that adds we to is John. Ebrahim, sizable absent comes $XX But just see start expansion. about

expansion performed we ways. this in ex-Flagstar. continue short-term obviously, the margin NYCB we’ve see So And for to both

in comfortable John? as guidance the to as our on position financial. rate So far to we’re John with I’m increases the and going defer like. very

John Pinto

Yes.

books increases the that middle swaps Tom in primarily But of that the the interest is rate course, has do expansion Fed of roll-off of rate see we our in standalone margin in we anticipating, have budgeting. as given forecasting quarter telegraphed first the are mentioned, the our and February. on We

in substantially expansion is We Flagstar, quarter X look basis with asset expect an perspective. consolidated that And be to about on from when sensitive. then at points a you the basis first Flagstar

right. transaction it’s that sensitivity, loan bank liability-sensitive dramatically books the on home once a on basis, deposit nature is closed. the on a well initiatives Service try on hope moderate as goal interest but standalone will on that That’s So Flagstar our the side, risk the reliance as our as quickly pretty we our does moderate the the limit to own and rate to Banking

Thomas Cangemi

base. company. the as that That we funding. we expectation operating year-over-year tied with it’s the on service as our as the been I significant shift provide to our customers. we customer a a I can the many believe Ebrahim, possible point and direction We that compensating and at around push XX% culturally lending. we how to just technology that to increase lend change activity loan for want just has that’s to operating received the add accounts balance look on We’ve

CEO, fruit. remember, If you talked first when my the as about have low-lying we call I

Our team, getting in that focused on Board, lending culture has relationship our our place. entire

know done pleased sizable was a very a year side. company the our these relationship funding the on are And the stand-alone job acquisition we’re deposits. the bringing So in accounts, historically, year’s at culture bank. a This the results, change we’ve you about increase, by on the if focus basis, these the tremendous in first company growth are XXXX in of deposits. operating It’s on

Ebrahim Poonawala

And the think fast book know just sensitivity a as through Service, hedge that two Service we what’s it mentioned hires I mentioned few in last made about then John, those full Banking XQ? the come billion And quarter of you as I channel? XQ. impact you loan as that deposits get thinking a in that basis How points off, the the over rate X impact the And grow? year-end year. think $X can Banking big follow-ups. can a about you deposits. What’s

Thomas Cangemi

we’re is change super excited excited Service, I’m throw on And because be answer that back mean, John. the a balance Service to to what over that. a order. we’re believe margin and also have look, with what do I embrace very the of to combined when benefit company combine going Mortgage which the so concerns. basis, I I’m going a going much business On significant doing truly advantage of about Service going taking the MAS, that Flagstar. we’re fact as is as the of we’re which not is I’ll a BAS. need to to Banking They the as with The will don’t we sheet we They they’re Mortgage liquidity. Flagstar. a liquidity just

bank. very perspective. public, also But anticipate we’ll getting items pipeline that funding initiatives. some banks of drive and So in urban not well they see There very that could but the on of to collectively, are public, for fact will they you towards we income lead have the they’re strong we cost for we some get stable as low big absent can’t speak approved become fee Flagstar, are some companies wins be they benefit the because possibility that this pretty significant of funds of with that aware some the That past the are unique also focus we’re threshold, the world these a let officially smaller cards a not that as coupled that smaller that. technology billion banking as the – going $XX that

the fruitful that was sheet excess much than were the very we very for our billion – So because short by to of term. be more horizon further activity amount orchestrated working last $X that that harbor the been basis, for an average fund our XXXX government, just of well. but contracts believe alternative On have in we’re would we year, on our balance has sheet, which looking an liquidity as balance to out numbers the solution

We the with, that Banking Now be partners to technology also our going to initiatives use an with of we’re out some tie this want fintech a working as of our business. in build ongoing Service. is to

as we John, deposits ratchet January you So on anticipate Mortgage we business. build opportunity. business not and Service, people some again, more we’re side. be X, when you looking the that margin if And was I’m hired and this as a touch at sure on sizable the people of hiring a number zero out have could now said, significant. margin? as XXXX, the we as But we

margin. repeat on maybe – to wants the can to John So John question you the maybe

Ebrahim Poonawala

roll-off, is say, Yes. into hike, expand XQ second points. impact June And March I look get margin one, a you the we basis and the know quarter? expect let’s from the hedge X closed, still rate as to we if secondly, full not mentioned deal in you do quarter the John, XX, Fed until the

Thomas Cangemi

CFO, know give the but clear. is talk We’ve always and will out guidance, John very clear. I to Look, be here, be I know the could specifically Ebrahim. dated very on John culture I you want never this,

guidance. short-dated the out gave we So

positioned that than quarter. will strong gave a give roll comfortable to on But very and than much I were Thank very basis. previous beyond with that. tell in a that you, profitability out we we They a stand-alone to But good for has We’re significant company earnings well try the we’re John first anticipating. Absent it’s very we’re years. guidance about Flagstar, better when you power we’re Flagstar, in get this confident a today QX.

Ebrahim Poonawala

All right. Thanks my for questions. taking

Operator

you. Thank

next line KBW. Our with come the McGratty with from Please questions. proceed of Christopher your questions

Thomas Cangemi

Chris. morning, Good

Christopher McGratty

from I’m morning. deal, changed the slide referenced the was Obviously, at and year. bit looking from changing. deck good have which morning, accretion announced rate you market the last the is this XX% a Hey, mortgage and expectations

change if any at to So give I’m Thanks. and Flagstar if you outlook that little provide if for also the gain outlook. there’s could I’m on bit can the quarter intermediate XX%? interested And wondering margins color, of some a you first were soft. term sale

John Pinto

John. is we announcement. the we that that with it hand Lee. laid environment. stronger this – rate on forecasted but were no we the in when than at then we’ll believe both time probably we’re deal and the from Chris, doubt be at When deal. institutions was that the earnings over depending we XXXX deal And I’ll There’s of I’ll XXXX comfortable in to at originally see same, the will economics that announced the XX%, look very out the start

from jump both in you that accretion the anything, put bit Lee, want So organization. out. earnings if banking? organizations, mortgage Flagstar given right to is from contribution on little but a I would especially say we’re probably And very higher the comfortable the we capital with the percentages now

Lee Smith

around the margins. And question Yes. was I think

fourth the margins the I factors were And so say So fill to you capacity. there on quarter, had rate would and were came people trying that What rising environment, thanks, play. and into some forces in competitive then John.

execution that couple from some of deals so But our saturated. their margin went And on such expecting. a We lifted a after had and margins. non-owner with adjustment to on didn’t quite on there had We we was that pricing FHFA impact. or occupied we suspended also an were RMBS-related loans. the get point of loans impact caps view, market market And then the were the

on into you gain better forward QX, or sale in QX. saw than will similar believe that look we slightly As we be what revenues

Christopher McGratty

just one. those technical you rate was on then added a the maybe borrowings The And borrowings, in what quarter, the John? new

John Pinto

Yes.

So we mixture put short-term in quarter. we approximately We on and were overnight a borrowings of a rate. borrowings fourth the the did at were some weekly three did borrowings longer-term that X.XX%, years XXX% or – – we have at then

Christopher McGratty

Great. Thank you.

Operator

you. Thank

come of Steve next line B. Riley. with with from proceed your Our questions Moss the questions. Please

Thomas Cangemi

Good Steve. morning,

Steve Moss

Curious, here. Maybe loan upbeat morning. here. following And Good growth thinking expectations, on just how wondering a sound pretty Tom. you just you’re about loan XXXX growth about

Thomas Cangemi

Great tell QX. in fourth that quarter yes, question. and you active will I busy. continues are people I The our we’re it was an quarter upbeat. really mean, very

So which money, look at new if $X new an period. It’s pipeline. you of the pipeline, of $X.X billion, its of active billion, XX% almost money north

significant higher on We’re rates. the of seeing activity anticipation

in are that significant We’re transactions was market. hearing many That’s – that a see change that we pre-pandemic. didn’t even going property the

a are that very So good is the sign. property fact occurring, transactions

the Manhattan, how side. We the back come done much bit significantly. pure little talked haven’t has a on CRE about market You really

multifamily been it strong. But as focus our pipeline has property well a is seeing is very and transactions, like market as more lot the specialty our So finance. feels

very, as year, QX the little bit significant shape of this a here environment Typically, shorter an it’s given then ramp growth as The out back kind lenders the for X%. has rate are typical have the like strong. and it’s strong single spreads But end, QX year good advantage will XXXX versus we slowdown five portfolio far bit normally shape in we we start for just anticipated very of for a kind which not the curve, of towards GSEs a we moving to for duration we over is coming of a us. in I’m the strong. year, and the given very of the paper, XXX upper gate more given which QX the mean, of I down up. come of around the us, have pipeline, target As even seems between digits the XXX have the though kind is little is very, in been curve. it like The we

Steve Moss

Okay. higher you maybe And here a next That’s giving pro delayed. with up combination terms given bit the on since the been on just levels. assumptions question. of following I buyback forma was helpful. then I the Flagstar, my in hear it’s little capital

of do any thoughts sheet Just are curious kind you here? may balance in you are around of if there combine changes other restructuring as things terms or

Thomas Cangemi

opportunity. activity. very going we’re the repurchase Look, excited just We planning a function That’s talked about about reactivating forward. the of capital

announced If position, you have we made the profile indicated, as John up. more higher pro they based forma capital look on had The since their capital transaction, more we corporate built money. the capital earnings at

I of we’re forma just on XX% think basis, a on pro CETX. south

would not So basis, pretty ratio accustomed big stand-alone a that’s typically a to. on that

and we give we So as capital a reallocate how of that’s capital. going lot to make us maneuverability choices

obviously, buyback, back shareholders. the on a marketplace of vision a to our function and the combined capital really was we reactivating So allocate basis as

there’s very dividend the We adjustment this indicated, strong the capital that generate on as to have towards of is company no will same earnings combined Mr. time, Pinto continue. basis. profile going a a lot At a

you think capital about the when of to announced going company out basis. deal, this combined of a come on if So lot talked a there’s we excess about we what

Steve Moss

Okay.

Thomas Cangemi

to Mortgage When could as look have Service together, companies become. come it flexibility of lot we a going just a on large the depending side, And the at back to restructuring go we’re actually opportunistically. how

of the combined I give flexibility of that and that’s number their away on can from other dive of we us dependencies to marketplace could get harbor a that think we some clientele a lot material into be can were balance in the utilize it our liquidity look historically. fundings typically at sheet that as excess the

think we position Mortgage and company more stable as us Service. but very gives combined have So material do options funding now, could a roll the combine. of it They funding basis, a as I lots on be out a for can we as we

Steve Moss

the for then side, And Lee. question on just Great. maybe Flagstar Okay.

as Just as a on we the sale where volume versus kind of I there’s think about highest of lending. of of your just is mix purchase and healthy gain curious to pretty amount and direct kind refi know margin.

Just kind of color around some of the market dynamics there.

Lee Smith

at look Yes. in but if opposite and I all. in purchase. latest forecasting one-third refi, Fannie, was two-thirds one-third they’re No refi, trillion problem $X mean forecast, to XXXX. two-thirds you MBA the at flipping it Freddie and XXXX, was is the the It a being market purchase, composition

start think, this is inflation their while And market, And could to again, could point, in a Fed been lead on and immediate the to big mortgage in XXXX. very I clear. has XXXX. XX% $X that impact This it’s is some affordability. a variable interest strong, priority, look, which at reduction rate the very trillion additional hikes still

system. there still So excess in capacity the is

all given We leverage you will channels, our direct diversified mortgage business, lending. originate mentioned continue to we in six

us the direct in We’re technology investing to purchase originate more channel. to business in lending enable

We’ve semi to of a being broad you’ve of balance coming a said, built the footprint. the to have offerings, optionality the execution cost XX% then program, rely sale RMBS to going of program. back structure having benefit sheet, sheet, bigger NYCB, then by a us We’re Tom variable balance what to as are And on bank, well our variable as product afforded our capital the costs benefits variable. got the with or merging broader and a additional XX% we all

good think we’re counteract how that. I about is and sort going So we pretty to the got we’ve albeit inflation feel at to react – all looking of XXXX, Fed

Steve Moss

right. Thank color. much. Appreciate all the you very All

Operator

Thank you.

questions of question. UBS. line from Vandervliet with Brock with Please next come your Our the proceed

Thomas Cangemi

Brock. morning, Good

Brock Vandervliet

good Thank you. Hey, morning.

pretty sales mentioned You dropped cost that the gain $X expenses out under in noticed here. on Is offsetting expenses semi I to million, some or just would side, Flagstar we on variable heavy variable. there pressure the expect mortgage QX? base come

Lee Smith

you mortgage Brock, are side, about Yes, on talking specifically? the

Brock Vandervliet

Yes. Yes, typically, yes.

Lee Smith

Yes.

say. I’d what Here’s

adjusting with our the our then that it up costs or we leverages XX% as to third-party model and in necessary. And flexible got this volume capacity on relates existing proactive XX% scale vendors. scale, staff be of we’ve capacity As mortgage We or to down variable will built We’ve side, going semi-variable. beauty to quickly platform cross-trained as that and the revenues you to And where would are. right, historically to our depending in don’t helps spring a ability though volumes to too want manage What proven react lot. we’ve I cost is QX, buying you is into of and on say you season.

February at it’s $X to trillion so if purchase. to sort how things see do market in of pivoting still March here, is And we and into a to going see want that there, looking play I bump April out and because as we’re mentioned earlier,

we’ve to watch that, manage and happening place, variable costs revenues. what’s want but will in same to accordingly cost got the we and depending So structure on at time, this we

Sandro DiNello

mortgage close. this I thing a that of of the see would expense. could The as is stable chart And our I come we jump Sandro. of you sale if is And in on expenses that lock the percentage quarter-over-quarter. relatively this, shows can deck there date, on it’s when based has you gain a Page in here remind closings is on XX

the of Lee bit And very, range in to there. that, are imbalance little it look as going from But the closings. very X% to of a at when said, be X.XX% there’s an you sometimes perspective, that’s a been has expenses XX-month typically, historically. So overall, stable

expense to so levels. that kind And of will we manage

Brock Vandervliet

beat I seeing transaction QX power seeing we’re but don’t I’m to well, mortgage it’s trends these merger I assumptions mean expenses we’re earnings with into... it. into – just struggling Got on the probably – in the diminished guess the – the this up Flagstar And in I given accretion because sector. across

Thomas Cangemi

tremendous Brock, follow XXXX we point. deal, had our forecast, assumed press on up XX% joint and we that year. let a down when our when on XXXX the me release model I announced we with remember came together they

that you rate, If the solid. is guidance out we’re comfortable that into there very run forecast our

Brock Vandervliet

Okay. All right.

Sandro DiNello

you I are the add mortgage while disappointment equity numbers some of I overall in on strong. business. results, level was despite the mean, at Yes. overall with right? if revenue QX, look certainly results for would the mortgage Flagstar strong, that, the miss Return didn’t on earnings there’s We

We’re as not company. we’re – sometimes a mortgage viewed

are like we on we’ve in We in QX, when to the our and equity. not. in I had bank strong times revenue you And We’re back that that in what robust, in to mortgage you returns more extremely the were XXXX, was between and is we would a and we returns and really when that mortgage if mortgage look double where XXXX had ask the market challenging, QX. the was still peers. you business still And look have produced saw returns

should one you as what I you with. view current Flagstar, so in than the that So, business don’t think mortgage would be less Flagstar’s causes satisfied returns situation to the be

as We’re top company. a completely continue range midsized going be company’s stand-alone with the at to bank is a confident that the to end performance

Brock Vandervliet

color the guys. Appreciate

Thomas Cangemi

back retail product I at that loans I would think to this April, XX of out I back our look balance when to in growth upon locations build to significant business. potential on utilize for some as original have our minimis through on looking that this rising will expand in believe Sandro’s sheet transaction plus growth. growth merger the also growth, XXX when was commentary our will obviously, together rate we a these our we these performed we origination obviously, we as know going higher-yielding forecast, think and add integration locations mean, well. on get And in to about de environment, you we here type each other as balance start we we the portfolio process, the mix sheet we

Brock Vandervliet

you. Thank Okay.

Operator

Thank you.

questions Our next come Rochester Compass questions. line from with David your Please proceed with the Point. of

David Rochester

guys. morning Good

in is this the target Just a up expecting million bit for that two, it Lee. sounds could the and more lower? on per actually a just that are pickup your given seasonality And of quick you given guide and a at you outlook $XXX do guys in knowledge part quarter tell gain add know to to million on XQ. a you kind hit normalized question sale sale in mortgage maybe Sandro we’ve rates business your just similar, or this and point? something on quarter bit little something of Or your gain thinking coming for mentioned that better, of you thought have had like million XQ? might a $XXX I you a whatnot, $XX in maybe it too little Are and then end is in of

Sandro DiNello

Lee can like. believe $XXX is if and to he than that, it’s that you to if we that So there’s let if that previous in that’s the parts going business. other we what’s things the other love on really call, Certainly, target. I of less then for that in to as in then response said but are And would it, mortgage, million get compensating add start, million, to when that see the annualize where me that’s $XXX the

with our our We’re very very indicated are level. banking strong business. Like of growth Tom growing confident about the at a commitments NYCB,

very Our is pipeline very, robust.

think mortgage going been position, that company. last that mortgage two that all XXX maintaining of level strong, are the else the as we’ve continue percentage revenues being a said credit as reported regardless we earnings quality everything of Flagstar the in of previously us with on put on our whether in control to XXX forward, of given been over we’re I going look while per we of this we or that Because high previously. we building over a the extremely average years quarter quietly has to have, gain overall allow sale expenses as So, is the

profitable can quarter a we’re very gas where positioned very, be QX, was pressured. we where in So, like still now

David Rochester

of And and Okay. how thinking in there? you’re maybe terms then about XQ pickup a

Lee Smith

it’s Yes, Yes. Lee.

me... Let

Sandro DiNello

Yes, little give like about a XQ. can We Tom said, won’t go feeling to XQ. we you

Lee Smith

of I was that. to going agree I No, Yes. piggyback comments, with Sandro’s just

said, more annualized structure. of I put the got can $XXX we we an $XXX right, target as million, if think the cost But $XXX a we variable to it you million, to target it’s really out, that down get can but million. we’ve break

And so manage side there, the cost if it isn’t will we appropriately.

where as it earnings, that to this and has think had we’ve then we bank is us mortgage produce mortgage on our whatever to Sandro’s point, diversified with outsized. always going Flagstar built are enabled is strong when I hot, returns

going I inflation the come be New lot be power what react Bank. of franchise when together Fed don’t with from even rate the right and with there’s transaction. Community to is more now, that want I a do to We’re macroeconomic just we together can This going York view to to look interest going And is point diversified on think into to this any that. in successful again, QX, a environment. of because

we’re So, similar gain of being guiding sale view. or QX slightly a from just QX than better on point to

David Rochester

you’ve the Great. Tom, talked Appreciate on year expenses at And this your on view And the expenses in what’s know point? XQ occasionally past. full guys. about then, I outlook the color,

thoughts to any have like. base what look just you could stand-alone If on that basis, expense as a

Thomas Cangemi

we million $XXX larger be I the would But a the of a much usually is quarter, for $XXX quarter probably on guide. guide the probably the than on say probably mean around the high basis, the stand-alone first $XXX can is to a is any be again, for expenses million XXXX, close conservative. company. we’ll $XXX down good stand-alone to our given QX, million Sure, basis, year, to the in for see, for move tie in Flagstar, year. very But kind we’re a QX taxes this then we going as in FICA you expected came we for and we’re because million guide and range, which payroll will expenses. point Dave. better Obviously, a year. and hopeful year of year I for uptick coming that I in don’t significant out

David Rochester

that of was give what I if you’re portfolio, securities know And basis, stabilizing buying a you’re rates. can an fin, just I and multifamily the spec maybe you’re seeing securities. where Perfect. growing sort curious update maybe as loan but then here. not you on yield just you’re new in then on of sort thing reinvestment

Thomas Cangemi

on give color dry the all. powder years. John I’ll not will I securities you for some been really security Yes. side. to we’ve Pinto at loan the side, keeping the tell been We’ve then buying on defer that any I’ll

you, gyration potentially will environment. our customers. the in reluctant been the to of So conditions. on we’ve But curve market tell woke take current opportunity there given think an yield depending I lot the on really, duration quarter, the be fourth I risk would of a up

spreads so as nicely that it’s as high XXX model range. point very to had But been three held holding on well. to basis and point very as down basis in the XXX rates So as and XXX-ish have five eight, a been low year in spread core our we’ve has

tie the you David, of business the That’s obviously, about every agency So when portfolio we the when choice is at been like just a model curve watch we end portfolio loan, and of agency the the up coupon. interesting, lender. What’s our think the you it curve, as looks treasury day. back of of cost versus a dynamics look given has been loan an that struggling

So, winning continues. of lot good a we’ve that business, been

talk been anticipated I are very of more are the are holding market, in right that significant. A place environment. into XXXX. the spreads brokers robust we growth is So to probably up year transaction going about of in this property from lot talked transacting that’s previous the stuff has now. a We than there anticipation Post-COVID, nicely. that transactions very the

some great opportunities. We’re seeing

to markets. Our other leveraging very been their at look customers have proactive, operating expense base

the are we’re following our best opportunistic markets, of York them. They’re saturated. customers of to work choosing we’re New kind at with and So, looking market that other outside

So some good it’s see good transactions. to

about cash the flow talked rates spreads are cap stable nicely. very holding on we a are perspective, As relatively and up

a real some seeing about multifamily hesitant ambitious growth. very little We’ve on bit the we’re good been So, commercial estate.

when customer business. a our we CRE finance But lot from of seen base. current haven’t whole We time, time to

in tremendous we I model. commitment talked billion. years a specialty $X totality, we the demand. few started the side, and business comments, zero know we my ago under great we’re about just been have On from opening business outstanding That a pent-up think in it’s

being on I Flagstar, really there that But ultimately, and time. as maybe with those our we side deposit syndicate merge and we’re credit think over winning putting division, and opportunity But we’re the we and potentially own specialty. on a about there’s deals we take we the leader relationships. there. deals buyer together should hope a collectively, to shop with excited deal some funding controlling of the be But

of specialty a think I XX%. year had

went the quarter into fourth I think at we XX%.

jump there. bulk So a that’s the been a big bump

that’s big demand to I lot of be has with going us think in do chain, it to a for supply pent-up on the XXXX.

well outstanding out can been growth for down money that’s a yet. that’s within drawn there’s lot bode that also of there, additional So hasn’t That specialty.

there. mostly that. type from environment, we’ll in Again, the rate instruments excited about benefit and rate spreads So rising floating a

think I reprices entire of the rising it’s XX% portfolio XX%, with that rates. around

is traditional So somewhat been now model. differently the a bank than positioned historically it’s thrift as

with hope in we that be neutrality we which mix as So, environment. the we sensitivity, would rising more get rate asset towards the see nice Flagstar, a

David Rochester

right. All

guys. Thanks Sounds good.

Thomas Cangemi

we’ll to the on quiet to to are security when side. back we’ve are. probably start they very security David, And what just the getting closer yields on that, I been X%, go just they side, wake mean, up, but

David Rochester

Okay. Thanks. Great.

Operator

Thank you.

with line of questions. Securities. with Our Peter the Winter from Wedbush your come next questions proceed Please

Thomas Cangemi

Pete. morning, Good

Peter Winter

always about Tom. story is credit wanted ask for you Morning, quality, great I to a guys. which obviously

with principal happens decline deferral the Act few what next loans. nice deferrals months? another CARES curious exhausted like just $XXX in remaining with million in of the had getting I’m You the the

Thomas Cangemi

apartments in non-luxury question. market. Act gate, on We market. this were at a right for within of the CARES had When we gave because non-luxury great we deferrals. looked six need Pete, to We customers came don’t COVID-XX, Many change exiting looked no it, $X.X the very the and months generous. program, CARES at we full there’s billion. People weren’t said, program, our back their quarter deferral we about out

close obviously, percentage to should CARES a side commentary, it’s So, opening we the Of positive that, very of Is XX%. come my where about runs When we what’s that’s been of a probably that about went stand for to seeing you in of we Manhattan. XX% know we’re we during Manhattan I have in today July, through experience talked John? journey because I’d out. up. very now right, COVID. Act customers. CARES through the deferrals our Act say the other is the right working interesting And think zero, lease in is of What remaining. close

the At year. CARES you as of that, strong July, very going mean Manhattan, a that maybe Relief there utilizing envision overall does loans bank. program. happen June Act when to the far pandemic, zero quality the on deferral this outside of or have for the the same July I of been on it come what what’s think So it’s asset about time, recovery will as

we have $XX Now, the NPAs. with day, probably have $XX stuff to the of more bank, a we’re we based at maybe than reserves end think is billion pretty of which for good on $XXX adequate deal and going million we And CECL. of million

were very quarter pleased food we’re we confident. the quality. little out. customer asset So, with with had itself snap they very Like the last We and worked a

We’re in very our collateral. confident

are lender. a low We leverage

market tested the stabilized of in our type good and know, cells. confident have five the positioning. businesses, you collateral an or believe marketplace we’re our LTVs flow As to call the typically in-place there given we’ll historically than lender. Most it, are me, event we strong boroughs. the cover rent in very lower non-luxury cash – and came out were that very very QX, And that our is we a we we hiccup, And in

common. relationship see, you that became As can

about that, my opening where And in quality. portfolio This that’s rationale strong. coming the are remarks discussion part bullish COVID-XX. very of we’re of out my points on part of very asset So, we on is is

Peter Winter

question. it Got update in the in maybe Flagstar as figure, you on benefit growth and with a potential it. merger an really just does about the kick just real of with you well? follow-up That’s you’re or deposit how thinking helpful. And then close strategic when Can terms the partner just give

Thomas Cangemi

So let specific. be me just

exactly explicit lot to going daily doing a be not working what on we’re we’re we’re project. with today, doing things We’re at a

things happening. of lot interesting We have a

fee saw banks be to there. has That’s sure I on via currency. a have consortium We view USDF be that you markets USDF interesting As founding to recently, the I’m five the digital happen coin, member very formed lead going saw officially. the or believe members. we now been stable you are

industry. a solution the operating opportunity more audit, at So, our we out continue up making come we daily multiple to believe add work with on We’ve that, happened with that that very this function, working both are with It’s group banks compliance, tested ever is as fiat time powerful sure at same an been currency. did just team members. first on data our efforts big legal, we multiple and in banking We good a between spending regulators to time. It’s ongoing to well. the entire occasions It’s That’s it’s transactions. working live deal interoperability plus. the very

move as step Although towards in business inoperability That’s the banks. uses. and directly the it’s not same a to amongst figure solving other banks material did transaction, amongst with burn from test on each but we a big deal time, the we USDF. principal for At

public We what specifically business our to be. used case been haven’t

as make of as side, efficient borrowers. do with use initiatives, on of of blockchain label That’s secondary long-term our our just at is agency way private opportunity provenance plans. on you as with number look mentioned, we’re our blockchain of a Putting through believe Technologies. all to part bill mortgage. our potentially side. activity. We to the a things to on many We That’s simplistic customers, pace market to can deal the payments have via more relationship they one Figure of that a the there’s going be very they working logical. rental an lot on. Lee It’s but This that We a where side, transaction financial not a the indicated, is on it’s believe, to

my a set have you Pete. we most that KYC, a to know that’s is – a we’ve going very and is by I new it’s made accomplish specifically an yet. technology up regulatory business we our others, numbers progress the use figure strong view we’re and the a important technology talking ongoing with I’m initiatives. This think bank case long want secrecy the standpoint here. ideas, we focus evolving. I bank digitization. utilize of case haven’t give and to important ensure, the focus there, tremendous the aspect that collaboration to It’s guidance or We And that here, specific not what it’s others to can customers. most process, became CEO business go when we to bank. we figures plan also out a a on but that the day talked We use tell was strategic come way not best just to digitize with it’s way, about you, on in every has This I

been a true great lot spending of time our They’ve with we’re as partner partnership. on far So as a Fiserv.

good for is We out we’re use funding doing same my We’re to bringing the banking also that another going another at of side. them. in relationships digitalization. the amount rolling catalyst business with At direct consumer a company time, some case believe tremendous for the of be

as So Figure tie Technologies into well. that could

a we talk and very lot positive specific But strong, the level be it’s So not you fluid. to of to energy live going we actually about. things talked until that’s about I will tell is have to something –

Peter Winter

that Thanks it. Got for Tom. color

Thomas Cangemi

Sure.

Operator

Thank you.

with Our next with of your Breese question is come Stephens. line from Matthew Please questions. the proceed

Matthew Breese

Good morning.

Thomas Cangemi

Matt. morning, Good

John Pinto

Hey, morning.

Matthew Breese

area? an guess CRA deal, this other the process. better I mentioned agreement on are paves a on for front? I was pressure And with NCRC understand approval issue regulatory that way the roadblocks we you Or Was any that to community the of? the be there aware want Flagstar there in the there I pledge better comment. the should – Hey

Thomas Cangemi

be to of prices historical upon specific, force this would, arrangement. for to that global this. but be is multifamily very we question nature you into we importance no deals finalization, hit is lending a arms going took lending Flagstar. the the will I on this of multifamily it very given from business we the to community this price unusual expand us open Sandro and major tend also transactions group We model after took It without get large tell we for to with and of markets a to will day This clear while signed agreement. to No, running, large getting I deal. a ground about embark want for not the I the back are

over work a So ANHD the a we’ve portfolio multifamily and the lender lot great lender. player years be with of responsible done largest to have we here because

as our is the agreement personally, something our with us with was going joint is hours we So far because together. no important forward. community It of effort opposition. understanding this groups work without about community. as as significant far I a approvals getting coming on importance this There was as opposition and spent needs This that Sandro we the our is of

a you that I of it was I tell I mortgage but truly process, will to to to Flagstar’s fluid up believe, to communities that have we utilize think very believe we exciting exciting And is an into America. take to in time. as don’t want good industry to pave origination go with the the the solutions ultimately, Sandro come a call. we have some got what’s closing. this he’s about way at actually good other initiatives can standard work a having bank towards finish is powerful pledge ultimately And think very truly this And line. to I transactions we to it with agency get the that our that need. we look we moving Sandro, seek this the better and can I that process to banks this we on really And will do for where for believe power arrangement truly

an had M&A extended of time we As somewhat period. know, has all

it we’re buying into our together to and with together is in than regulators, closed. Flagstar side-by-side get can’t and what more an as order it that is out partner the that, come other with much we on deal really came given any So to a executive and work and July, our excited than we’ll we other work get

Matthew Breese

Understood.

John Pinto

an And to CRA, rating. just Yes. Flagstar answer just comment had regarding your outstanding specific CRA

getting CRE agreement nature done no certainly approval of important is regulatory of an an is there process. So issue, part the but this

Matthew Breese

Okay.

ever requiring standard Freddie, In Texas discuss Fed several I’ve you one, Department process the if Can institutions State a other kind Veterans the process. do approval other of Vermont. state on FDIC for Ginnie know say. deal, that these those deal Affairs, necessary the Fannie, deal and including The other they State having I just the approvals just there of are a how come compare for and to of filings, approval And institutions? the don’t approvals? of the the regulatory across

Thomas Cangemi

on Lee, we with want maybe expand to the have tools think – those on retained Lee are as I believe can we I maybe do where you backside? those

Lee Smith

No, Tom. absolutely, Yes.

with to and New the but that’s reason take just that to issues. transaction all moment Community we to mortgage over good. Fannie, need They’re standing. York no there’s all side, entity, Freddie, Ginnie, There it they’re the They’re USDA, moment, because move is approval, issue. why Flagstar’s Flagstar’s acquiring the the name and in we’re relates at On isn’t is is reason those going the having as And NYCB the an NYCB we’re regulatory the good name step entity. weighing Bank. licenses VA, in acquiring FHA, those they’re because are on obviously the this all at to in And

Matthew Breese

Okay.

others? those have clear, same be more like to stamp So of are the rubber does not kind as rigor sounds the and

Lee Smith

needed right, mean team mostly that work the lot say stamp. just of lot seen. but was I sees Yes. we And that’s it’s not a rubber of that Pretty, to questions answer. work I beyond a would a there there’s

probably a but a rubber the than it’s as regulatory onerous as stamp little So not bit approvals. more

Matthew Breese

encouraging last there over partnership. you time, these front more well. place? kind Okay. signs more transactions If you a to any depository that? this both just benefits have Figure one customer-to-customer the take as you institutions And Are the could this so, to would on the And bank’s to then Understood. deposit month, bank of across market bank for digital seen fee did and of The outline technology? then income and any Earlier as date, from I these there’s me, going back transaction. within assume,

Thomas Cangemi

Yes.

as consortium part business amount So fee tied as a the activity. public that it’s testing. a we the develop of bank income generate be – would business haven’t and it’s hopefully, part that public plan beta case not of Again, the to put having, that’s as yet we plan a use yet. the it, in out we that’s of of our clearly, substantial a we’ll business deposits But

You platform that did position going each could burn within that we in have then consortium to as collectively other’s sure They how on that’s banks have of doing they and with place. type well. that inoperability. make to technical the mentioned other awareness Operability, joint the continue maintain same all are

we’ve I done our the this lot of We substantial more looking yes, banks takes a real transactions feel one. So on is to a behind energy be joining on out believe that’s banking disseminated other blockchain be here. So its as be currency. towards housed with case and is move believe their the provenance for through more value testing business We intend ultimately, banks the there’ll in the own depending system. through on amount But knowing not time, each bank going system, consortium, do will a That the activity KYC this and we have more we that to at as currently system, customers forward going the they right? where I back of to go the solution use what of as model. we’re USDF. same how the which fiat part business dealing KYC, in look it’s And own will to enthusiasm at

by you for done So has substantial but of it’s a is being apologize that I be excitement. know, regulatory law a specific, with we right. build-out technology lot to have evolving of This not amount that. as

Matthew Breese

all Thank had. Understood. I it. I That’s you. appreciate

Operator

Thank you.

question. your Please from line with the is question come Marinac with Chris next Janney. proceed of Our

Chris Marinac

once Hi, integrate get approval? update you quickly announcement? you interim thanks. office on that of all can just Good Sandro morning. Tom, narrowed since us the time the could this time because how back sort Has just you of at or

Thomas Cangemi

companies, we great a each get do a for of. been now, and point, know have on have it’s years on working Lee we’ve Sandro, Chris, together we – and Now, to lot separate it’s I’m call to but the because glad fully

number spending is are and key, that one have company done properly. So and important bank we’re not aligned teams this cultures leadership, amazing most is is culture, I’m But to job. opportunity his putting culture same believe to closet. of under And because working the that’s the my culture an a culture that together. aspect the is of is priority for of be we going of the right? ensure my their Sandro the job Sandro. Flagstar. with we’re doing of nature is is with the I a phenomenal culture Unfortunately, the independently one a together think job understand He’s time teams aligned. yet, deal I lots is these At ambassador our ensure really time, to to

long-term time, we’re it quarter at as by working year, we’re of work optimistic. So the hard first But very not soon – we’ve where done in NYCB manage control. on quarter, our designed focus leadership we’re doesn’t to go integration go practically last the was Flagstar real at We the that’s we But not and get now leadership stream. data our at and culture. doesn’t But the as can. to third in and this deal same

consultants to and to products well cross very as up That’s because integration. aspect gap the mortgage geared and large that important We’re that that this we is ensure a we can be cultural sure the people for a we’re working bridge culture. in concern initiatives with are most and there, make to have help going the third-party sell aligned

know don’t banks. I of the Sandro to if to some but that, the add color So maybe focus that’s wants

Sandro DiNello

Yes.

to First, let me say legal that for ready with day legal we’re one. day one, respect

able company final go for a ready and operate comes to closing approval as quickly we’ll be with the us, quickly. pretty pretty regulatory combined be to once So the

get conversion, day lot as time. to terms for until taking takes in you legal get quite obviously, Now ready can’t that of of advantage and complete integration of suggested, you one. And that, a you

approval. necessarily the narrows I conversion get at look of that don’t regulatory length the the you it think to of of systems takes time when the So time a because

for offices. say being plans say, branch let’s into will new Community products marketing I York Bank as the relates However, with, to or bringing ready New it

approval. sure ability better little be think takes to time But frame terms a regulatory with right. the I not us running. the that a give the And narrowing Tom I’m line that it in because of culture, day between related place conversion, the complete for and of respect amount totally then one to and does prepared narrowing to absolutely ground the bit of is great hit there’s legal integration time

will the better events therefore, together, that We’re our be program because diversity, success the than to the have. relative equity been And companies, them know more really And performance realize are, whenever two New have York bringing results embraced that’s and maybe trying those people company about people people a different the the Flagstar, but into important the we each to Community it they people and your and company, will you at they Bank allow other. more fantastic. that then through bring of our we’re getting inclusion we care to way has company can better

Chris Marinac

both that’s background, really thanks for Great. And Thanks helpful. that for morning. information you all this the

Thomas Cangemi

You’re welcome.

Operator

any There the you. to Thank call for no time. over at comments. like to management would closing turn back this I further are questions

Thomas Cangemi

this when for forward the in the to Thank first our April end again and of we XXXX. at chatting performance the you for again us NYCB. will your time join to taking for with morning quarter of you look We discuss interest

Operator

does you. today’s your conclude appreciate This Thank teleconference. We participation.

You your may disconnect day. rest of Enjoy time. this lines at your the

Flagstar Financial (FLG) 26 Jan 222021 Q4 Earnings call transcript