NYCB - Earnings call transcript Q1 2022 | 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 first quarter 2022 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 we begin our discussion, 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. make to we rules. safe statements forward-looking are the subject harbor Such about uncertainties review safe investor release information and forward-looking presentation risks language more Please disclaimer press harbor the us. may which affect in today's for the and and

like Now call over turn to with to the Cangemi. Mr. that, I'd

Thomas Cangemi

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

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

agreement mutually In October morning, company combined addition by to we conjunction amended announced our under to operate to bank to will merger charter. extension, earnings XXXX. XX, release that provide national this NYCB extend the that and agreed months banks with agreement the merger our a In approximately six both Flagstar the

to the the and product generation. of diversification. when year performance benefits ago. our many and including sustainable State bank financial geographical appropriate this New to truly both our and model recently agreement, an is provides consummate transform benefits, a York the Fed are we by plan same regulatory business multifaceted will transformational commercial from that Reserve Despite organization. new capital the The two the the It deal today this, remained accelerates the of believe DFS extension, Although to the necessary as did and much come required merger sides the announced to we deal approvals Under very charter OCC. the approval revised for strong, we Charter appreciative Bank one merger great a our organizations received we National also

balance our overall interest funded. that improves The sheet deposit a dramatically forma is two pro it rate positioning. funding combination sensitive and significantly asset will sheets create and balance of our Additionally, profile

regulatory approvals sides position XX close are past once months, both into a received. closely have to get the to very us deal the worked Over together

X% We have value in been have and place. integration accretion We forecast meets the the assumed to share to accretion, plan announced and revenue we our tangible despite is in team any initially been know major double-digit assumptions. Both envision together on still we mortgage metrics or one, revenue financial confident very deal. are has savings worked detailed now are year, appointed. importantly, determined ready we business. in the rates not Having expected double opportunities. All modeled X% book there in be enhancement leadership what still our interest deal And day to the of cost while synergies, we while all the have a earnings we past sides systems per my feel And change multiple over go. when that

More financial importantly, any still buybacks as numbers. such accretion repositioning and engineering we not are sheet our balance assuming in

to quarter results. now first our Turning

For of XX% the the per diluted first XXXX. quarter to up for a compared $X.XX of $X.XX first share reported XXXX, share earnings a quarter share, of we

net loans, results are after operating deposits well lower reporting share as We asset and this exceptional expansion as with in margin growth earnings income, pleased quarter our continued extremely per quality. continued and expenses,

of a appointed deposit has I details last significant quarter. to in growth to performance. off been the shift now quarterly the on with reported bringing cultural to deposits. CEO would January was I like our our Since there approach start Turning of year, the exceptional in for we Xst

lessen as our we wholesale the on deposits funding embarked design sources commercial initiatives are our and to such banking XXXX, increase on of that a in During less borrowings. reliance alternative number traditional space

increased so have XX% billion. core increased and $X to XXXX, deposits deposits total today, $X.X year-end billion or have since $XX billion, billion, to result, a As $XX

$XXX started quarter fourth rose add staff, deposits total to traction, we our the big a More was driven we gain year. the BAS Banking area. months to so significant last as we launch deposits BAS-related three totaling $X.X as initiatives won far; were recently, from Total our Last selected year, we quarter, a $XXX several billion first as Service this a Mortgage mandates government million. current scratch Service of to deposits business. as business March million; should of program. tied deposits Service were for Services by BAS-related and Fiscal growth Banking the in this under card the for year. of to ago. financial Treasury's fintech continue later we a is $X compared relationship us, benefits deposits XX, deposits the $X.X a fall business win billion and XX as from This this see for new This partnerships, begin agent During categories: in prepaid since by nearly increase at debit billion BAS Bureau our XXXX, the US materializing

$XXX the $XXX We also billion, focusing to $X.X of loan-related early Total sequentially. This all of deposits up for source to of we continue first to million all, growth the deposits in All in loan-related rose million borrowers. million last incremental last deposits XX% of $XXX during significant year, funding on year-end of we've compares since make progress from garnering quarter XXXX. since XX% year. began gotten our over

bank our year, this mybankingdirect.com. direct we earlier addition, In channel, re-launched

in out early it positive. very receptivity been While just March, was has rolled

active type opportunities including pipeline initiatives, benefit should companies. of that fintech deposit-gathering an of We our on have focusing those additional BAS

one competition of result $X.X This end XX% annualized loans Once The was fourth continues was during $X activity largely the down demand of in portfolio which of in to of of billion $X compared have to $X.X Loan majority billion linked-quarter growth Now XX, rate compared finance $XX.X quarter the property that had higher quarter compared to at the as the previous and first quarter the interest would category specialty At during growth, to XXXX, the after refinancing quarter first the billion portfolio, rates, Of a XXXX billion by outlook XX% moving from in quarter. less relatively during $X for up GSEs. portfolio up to other billion obligations. been the year, of loan be to to up the the annualized on payoff. year-end. March the increased continues call the the quarter. the multi-family again, or transactions total $X.X million $XX.X unchanged. structured in multi-family was specialty X% floating driven amount, prior billion, increased growth and total finance to billion specialty commitments, last loan grew basis. by the portfolio X% finance banks as on billion, $XXX higher are both Otherwise,

as recent increased times rates multi-family lending quarter, treasury during also we've With to in rate increase rates, continue past the for do so the our we'll increase. loans market and several

CRE Our is X.XX% end to at higher XXX basis to very in year. contractual come date XXX pricing points on the date current to depending the type the the years. of range, about multi-family on that is is maturity we of or have than their multi-family That option It X.X% last credit. two important loans note of repricing that approximately billion up and $X over next

pace $X the a or billion, last to first still to continue growing Despite have within compared we strong into originations quarter. the have and XX% were year. the in first first continued rates, their So originations Total to quarter pipeline. strong timeframe. billion, borrowers Loan up of quarter originations increase that act $X.X

quarter's transactions. exceeded the due XX% pipeline portfolio, were First Of are were quarter other $X.X XX% billion first originations refinances and the our by property to refinances quarter's XX%. some portfolio previous or in originations, XX% banks

$X.X heading to billion pipeline XX%. the strong pipeline, the quarter XX% XXXX pipeline the into of this loans quarter, speaking money last in the of bank. up a as Now compared the new the billion Of a to amount, second represent of $X.X

to on quality. now asset Moving

points and of remains on exceptional while charged XX, of assets the million in rank to or a asset quarter. during $XX $X the trends XX credit industry. quality total Our as assets mere we million continue totaled and March best off Nonperforming the them basis

improve December declining to or Our to due $XX past XXXX. million XX with XX continue to delinquency XX, ended million loans XX% $XX trends

$XXX to to previous principal-only deferrals. compared million have payment quarter, the full Lastly, and declined zero continue we deferrals loan to XX%

pre-pandemic Before new records. in agreements and remained highest real rate prices Manhattan's estate at The the The expire the facing first proceeding, levels was reached has X% signings and significantly. currently improved an to market. New below consecutive York exceeded high. rent month. and levels, in as price I'd rental market is median approach fourth although record, low the March and City the time, new residential lease on for inventory demand rent strong York provide update market level like median vacancy the estate concessions New In rental XX-year City a Brooklyn, real discounts for while on

the to on income Moving statement.

basis. year-over-year a on X% was income interest net quarter First

net year-over-year impact to million. the X% basis Excluding $XXX on rose from income prepayment, a interest

quarter first In revenue addition, expenses, a million. year-over-year pre-provision on increased basis excluding X% to merger-related $XXX

interest net the margin. to Turning

the for quarter first margin X.XX%. Our was

from impact income, in the NIM a basis X.XX%, was line first our up Excluding prepayment points expectations. quarter with and basis on linked-quarter X the

discipline. On the expense expense our to be pleased continue with side, we

operating million, on up or Excluding first $XXX expenses X% million, $X of $X were merger-related the for expenses million a quarter basis. year-over-year

remained ratio below efficiency XX%. Our

an of was For XX meeting, common dividend closing yesterday's the of May this will shares. on as annualized yield dividend May XX.XX%. X%. a translates year, $X.XX the Based yesterday's of At be quarter Directors to dividend the common of to share paid Board price, per shareholders on it record first The X. on of declared

the would us With to like would answer another work I employees helping all for be exceptional our their to to that, Lastly, may we hard achieve in thank have. quarter. happy you questions of

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

Operator

Thank you.

We will Thank Instructions] now [Operator a question-and-answer you. session. be conducting

question America. with first Ebrahim Bank is ahead. Poonawala of Please Our from go

Thomas Cangemi

Good morning, Ebrahim

Ebrahim Poonawala

pushed Tom. in in first of the morning, timing terms margin the guess, of deal just getting light question Good out. I outlook

back could there. And extension be should maybe more tied points XXXX. quarter does date? to questions Is like went hike in still mean or expected close? with clarity additional XXXX, closes XXX, XXX deal your at or a basis I One, quarter, second maybe core given this around looked about margins the went over that Fed that for that, there what XXXX chance points saw, two and XX secondly, quarter fourth any to XQ we the margin in fourth thinking in year-over-year second down So the quarter? when the the basis

that's NYB the sense to a because going us concern to what around a of give be margin light actions. in happened Just Fed

Thomas Cangemi

Ebrahim, the and will we than of we'll when me price They asset just are us probably move. I'd let sensitive funded cited sensitive. big you or view coming today are picture say, liability together. point liability So out less that

merger the have, consented a asset Flagstar significant XXXX. rate intense a position opinion, the positive we So my very we year. very take This in into bank this will that going with when rising environment in

us together so very balance appreciative positioning, sensitive being sheet for And we're tried with coming being and liability slightly asset of sensors. the unique

So on to Mr. well refer environment. said, on collectively, going to we'll mortgage. for XXXX, when position we short-term come I'm That that being John? rate to rising going the together, Pinto the guidance

John Pinto

Yes.

second expect For QX. to we to the quarter, be interest flat net margin ex-prepays the

We We quarter. as we the couple hedge the rolling benefit of have a last have call, our February. talked rolled of that full in off off we've on in on the things going --

be fourth So second some rates, and for then happens what what quarter. we'll pressure the see There depending flat And to market. on the interest happens have in with will we on third the we have some -- quarter.

Ebrahim Poonawala

in as And flat part second margin assuming you of guidance? John, do Fed the what the to for are quarter

John Pinto

XX-XX. XX in and XX in June. May

Ebrahim Poonawala

quarter? of Tom, that or timing the process, a likelihood it there helpful. closes around deal? it any be That's later on the the And the approval the out the in second year, Is into by deal OCC default will in push is thoughts

Thomas Cangemi

that release So regulatory feel dive an press really this timeframe. are timeframe, that data process. we're out specifically, that out will put but with we we XX based can't into in on that we timeframe reasonable were very and we clear morning We the in we're a meet October comfortable that's there, and hopeful our we where

Ebrahim Poonawala

last We last just on love don't for didn't maybe And think offset. totally one can And question, anything seen expense Gain it. in you gain that revenue reset any is from quarters? the Flagstar. hear, do the side surprising hit couple goes the see on here? one, on offsets Would that that lower. think Got to sale for you where first I Lee. expense there do of that we've quarter over sale

Lee Smith

Yes. Thanks question. for that

market moment. capacity yes, a obviously So $X.X market. at given margins last they're from the forecasting $X.X the trillion system a pressure the year, trillion and are We've now, under excess gone in right

it's We on capacity, remove margin, going margins. working it's I to were quarter-over-quarter. So piece say, points would fourth we million million A pressure gone, QX. in you on people What was of quarter, that but basis $X big look had our when put benefit to down at gain until XX in and we are sale the $XX of that the EBOs. had

XX points for the And So had that basis when you system. that's reduction of the and EBOs. that of was basis XX basis look exit quarter-over-quarter, because was capacity to then and X volatility excess points waiting just XX and at about mix points basis points you competitiveness,

are remember, or XX% In a semi terms of from variable our XX% of point cost what we've view, mortgage done variable. to costs of

one a rightsized further our off We've at of replaced our that the employees March waves, So put since and \ our have mortgage lay a attrited or operations the employees that's that And total that XX/XX end perspective, XXX total one of then flexibility, have had additional for mortgage employees end since XX April. unfortunately, infrastructure, actions. we haven't reduction we've two XXX in XX% To staff. we to we at of of a in and have but XX% XX/XX. into reduction taken

of quarter. forward that what it dollar it from And the $X.X us will terms $X.X think will then second $X savings. in save of QX point has view, In a we about about from be million million, impact onwards, in million going

Ebrahim Poonawala

Thanks for questions. my it. taking Got

Operator

you. Thank

KBW. your with question. Please is question with proceed from Chris next McGratty Our

Chris McGratty

are your doing? how Tom,

Thomas Cangemi

Great.

Chris McGratty

Hey, good morning.

a on Thanks. on a moves? being the Service rates speak paid Banking that expectations you to are your Just the as Can betas for and question currently the deposits. those Fed as

Thomas Cangemi

there dealing and in place dealing to and starts We've programs, the should typical more focus rolling zero will initiative, cost very new with kick general. agencies out to as to particular, they're to our just the opportunities, looks this initiatives type deposit with partnerships, for on it going in how programs deal the float we fintech with zero card-like government I'm in of of is and there. successful relationship and going as benefit been take That that come with relationship. treasury distribute various department get government our the

minus towards at the as the on far typically I from LIBOR as go very some piece partnerships, And either plus of other a relationship. you mean it fortunate spread. As they less win deposits, is LIBOR the quarter can varies. then tied depending Mortgage a We look or Service in of were type business. zero unique spread to to the a very fintech

we're at that. a we onboarding, us, and same and opportunistic. been on reserve of -- partnerships for. new successful staff building a exchanges to to as that of think that one continue we with deal hold time, we we're on are I focus has very We fiat-based six it's significant At This the stablecoin venture for of one have look the few amount accounts of is we initiative a that the working stablecoin. ours as around That banks

onboard, there's operations, as partnership they're these Banking a true for a of have challenger a of institutions lot actually not For Service banking but institutions. insured that fintech

for deposits of from our working coupled are we they bank as since our been the types push And a that Service Banking but our and share is the here a future, loan successful as fair the it's goal getting last provider of with provider very that, the the significant initiatives, for do year. on side So vary. those is towards strategy and customers

Chris McGratty

Great. more. And I add one if could

Xx CETX to shake is? with will Can where your tangible that's either what think of is kind if binder out remarks, which what we you thought. remind us binder believe Thanks. in accretion book said you you one I and be or help the going prepared your

Thomas Cangemi

we'll say, Tier probably back to with perspective, X hovering on [indiscernible] I'd the closing, close probably transaction Flagstar a XX%. hire capital

think look can and I So maybe add color. some more John

John Pinto

to be X Tier equity common anticipated we our Originally, ratio Yeah. XX.X%.

just higher. tangible will So book, growth in the slightly that be given

XX% be our probably is under now just it'll right estimate. So

Chris McGratty

John. Thanks,

John Pinto

it. got you Hope

Operator

Thank you.

Alexopoulos next with proceed from your Our question comes question. Steven with Please JPMorgan.

Steven Alexopoulos

the give FDIC more NYS roadblock the in approval. morning, you on Hey, Can approved? a color getting this deal said, to you decision And VSS the received bank route the go of good you charter? national everyone. Was

Thomas Cangemi

going go. National comment will we the not in I I'm the charter agency. you the that way Banking truly platform any on to where that in Well, with we're to the heading tell bank believe future that and is the OCC

going approval, I'm very comment VSS we're of not on clearly, other So any and much regulatory appreciative there. discussions to

Steven Alexopoulos

the Okay. to But go decision charter? into you national what the to -- switch can

Thomas Cangemi

I just did.

through on it through we this that and the this commercial on It's do we feel commentary, national a and inclined went journey we can we now national a and sensitive went confident will the a process, process. business Charter. for through that As more mortgage the model focused question banking platform year be is the I -- platform OCC an appreciate process, very a as banking be but to approval

Steven Alexopoulos

be charter there this Okay. or of previous? oversight cost additional Tom, any type will with versus

Thomas Cangemi

I probably to similar structure in respecting very would it's say, costs. going general, be to in the

think mortgage and and of I municipal efficiencies may the be overall, it nature, deposits around but would business, be and on of things savings and nature the licensing states that that immaterial. of things some complexities banking there

Steven Alexopoulos

Okay.

been In Fed and terms of them? Are OCC process you has just ongoing? the now, that with starting now that process

Thomas Cangemi

has since Steve, year. had assume last you application May that would of Fed our the

in is that, now, disclosed, We And timeframe approval the So adequate which short get to these they're confident a October months. gave window is are the on achieve we're very approvals which the from two where process. that's six familiar relatively to with we process. based quarters

Steven Alexopoulos

a since the been XX progress so And at CEO. look if months' in your you've then lot company of finally, made community, I has Okay. time

off, I'm the does couldn't deal that the lot side. sense why sale extend. know And not your through results, NYCB to have for can moment, mortgage you sense And extend least on the business. why at the XQ get market, merger extended own? on a Thanks. on here you the margins made to if talking decision is We fan did agreement. give you funding accomplished a changing you this walk of the Like you make the right but suggesting What look called not should here it you you agreement? can have so a you gain us at shareholders at -- much. the about compressing so banking You're

Thomas Cangemi

So so here When we original 'XX. Steven, the waver mortgage going it and of, knowledge front both I, the not from again, opportunity. discussion. opportunity Sandro that to at look be in with in down modeled We was we're 'XX less than We an had would to business deal our XX%. at we this looked dramatically put full

is around work we build very we're great So so into expected. diversified well about right traditional I footprint, now their on we line know strongly This said, what revenue full-service a would enhancements institution say, and franchise transforming a company we and the in much transaction. the bank right and national the verticals, forecast, opportunities a a is on companies commercial of thrift a from surprise. putting these model With that to We've what done catalyst. deposit-rich the believe company not together what based being our changing that's this feel we the

commercial very well-structured substantial But the remarks, transaction. on importantly, a We're in said anticipated with confident banking well XX% own sheet, to the the As from sheet, of along a if of we're has We you of bank. They've transitioning comfortable moved the know becoming merits opening transaction. And business. we mortgage way they're which the at at commercial business. of mortgage more It's set balance is drop. done history my the more assets. I what financial their well look a full-service Flagstar their very balance

very a decade to accelerate we're take thought a the a into new much-accelerated take out to tap the path. leadership way at So, to of which well into a in a transformation to combine traditional would model, transform NYCB

shareholder opportunity is to value this truly So, commercial of the unique the metrics a diversified that balance that really we around financial is confident with well a significant sheet change company banking or feel vision model. toward

Steven Alexopoulos

Thanks color. that Great. for

Thomas Cangemi

Sure.

Operator

you. Thank

proceed question. with Rochester next comes from Our question your Please Compass. with David

David Rochester

you're with still good deal. Hey you comments double-digit about that, been still see that what baking on with deal about if are that? morning, just can you've mentioned accretion revenue And Tom, warehouse XX% the previously? then the EPS in-line made, that you're you and size mortgage you you Are guys. you talk for accretion the assuming talking for into you in-line book

Thomas Cangemi

to guidance for me 'XX have Dave, number just I'm not accretive guidance Flagstar the XX%. it's of guidance, that's 'XX. now don't public. deal. see So with double-digit a Correct, lot the there's When we be 'XX We going put was clear, give deal let together, what we and and right a not 'XX,

tangible is the a when than more is value We accretion So, on don't spot public book approximately. a at side you believe guidance. our this double-digit look numbers accretive basis, have We X% to deal. on the doubled

confident that 'XX value any buybacks, including double-digit reliability we 'XX very giving companies without very good not can financial these any and together engineering, a guidance. any but out well-structured have without create we're EPS shareholder that transactions So, shuffling, combined, accretion, and we're without putting

David Rochester

growth. just Maybe deposit the going to Okay.

the of growth you're coming deposit this this come more of Can solid on that in? if size it customers point, can the in that those you've pipeline at bringing at year, got deposits still the I to later in? you're that. the quarter this a just sheet you sounds customers seeing to maybe then maybe and those And just are like as you coming contributed balance that onboarded Banking you know customers haven't that size quarter, had You yet this those has Service amount, maybe

Thomas Cangemi

since a hard work were very here how side, is we was we're of much street Board years a is obviously, which what's look, around, ours, ago. we we're we started on the our way XX% down passion of X.X customers. loan when great at line. change very the That's And I on mandate. mandate. being cautious had the doing that It's well. It's cautious can moving very very a from cultural the take here, to a our been successful. all So up giving level the our been lot specificity about to and deposit we That strategy initiative and work, And cautious it's

So nicely where people, that's we That's to forward. very [ph] onboard great for us. onboarding middleware to moving business the the how do going on in efficiently. side, we especially the get continue VA And some

all is up and a very team opportunities. geared Our we have online pipeline, unique that's

I -- the provider I could significant mentioned stablecoin That's we same one but number have one of the six -- nicely. the the It's As At time, one a that think approved, company. for initiatives. fiat-based small the of mentioned, very grow now, we're now of banks largest a win of in world.

that opportunities of quarter. platform. $XXX it of brought as to is, see would going that But we goal. billion talented accordingly, part going We've good billion there's think we very can tap relationship continued our we you, to to truly up on -- and some a billion we bank the capacity every good under ran That's that we're be such growth for $XX some $X feel have really we're deposit we in in bought news we are bring someone lot a I of And So, that price say, size going going on we every digital talent out banks in as as to emphasize liquidity their there And versus we be a fees. and very competitive. of the to need be creative urban we a could you're book. technology the smaller the quarter. that I'm not tell our side. is There

So more relationships on on into these side we're other businesses. fee the side. believe lending lines we that the Hopefully, importantly, on focusing funding Eventually, opportunities. and, of more will tie

we're for We could to platform, focusing of over a alternative have be the digital team So, bank challenger little solution technology And is going unique strategy it we with strong My have our Banking be new will gather Direct. a Banking roll as customers. this that the digital out that and a mentioned business. on. bank, for a hires My under bit but about solution an of and long-term we're hopefully, us full-service that lot to a a are working underserved Direct

It's the those We So, it's bank. about deposits. they're a those are success very three successful. side. fee-related focus on last zero had transactions been deals some specific and won and of over to deals both start cost great of will time. We government year, the And types the kick-in

tremendous a get provider benefit have other we're what have mortgage where side is lot warehouse. model, the liquidity. being buy a mortgage stuff on a the you Now of as to significant business does going wholesale when collectively. They into relationships Flagstar that not for substantial They been looking for

Banking partner. Service the be and as in come will a We

product there as a mortgage. there's great a think Banking I Service opportunity for as a So real

service So, a mortgage as initiative.

that billion the right billion can run of into about $X all number We think the have as that around going $X expand Maybe they go now, there? Flagstar color balance for increase. because but that of after Sandro, add give dramatically. color purposes. Sandro desire number significantly sheet on consummation book can They some lack you a don't We opportunity to that some deal. standalone, there's can want

Sandro DiNello

Tom. still are And you in less balances. sheet than lower bit they're the they balances substantial, saw numbers, you. quarter, first a well available the lower we sale to flat balance as warehouse a little due ago. sure, the shrunk Thank as for while quarter the in were Yeah, our card Yeah, as principally

additional very, an our significant be I we're as brought customers so, of not warehouse as the MSR opportunity has our that's And And partners. dollars relative pursuing to very think in those opportunities that the it's that Tom through can reference. billions in well deposits

we've And able Flagstar, So significant. changing market. of very been to think a one at to reasons I why, adjust that's it's the

rising If years, look in that you to work seeing non-origination two beginning our mortgage When both is falling it rates at you are reported really is And interest it's beginning we've thrive. guidance, rising, rate and earnings. see that now and the that in is work record market. and what business are interest rates showing we business building does we last our our the model been were low that thrived to

in the As you closing And that at a March, out hedges to particularly all-time earnings in our fashion with the MSR saw X.XX performed in continued outstanding increase always to guiding as our December. to in north our in valuation has the March, we year X.XX and has eased which almost maybe to increase. expanding And a we're and average, an our X.XX, in high. high new had QX, close X.XX higher had much throughout return of in margin saw QX deck, nice investment, a year

an And as we So, commercial so, I for we're have delinquent elevated MSR the guiding you don't -- loans. hope on any to return year.

we're pretty keeping and be where we about confident quality, and the them are. So, expenses in the an they range will on currently credit keeping eye

see years quarter something the year we QX really is be year, velocity our and while actions be the for modest rightsized mortgage will was that the difficult, in a very Fed's benefit increased we So, have strong, despite environment in the for highest full it did on to play the mid-March. like and out of results that transitional I'm and of optimistic really will the gain mortgage the quite until sale the XX quarter given rates expectations

value opportunity sheet we powerful already a organizations of you has together, efficiently for to with these couple opportunities priced deposits, balance that things we So, the together Tom suggested I think as the balance really sheet two a for put liquidity it's really, bring growth. shareholder think these times, and all of when

Thomas Cangemi

in elongated David, you on interest zero deposits long, Fed an beta unless risk, your one tightening with have add rates opinion, rise will tell thing to deposit our you period pricing that, to is I of transactional believe cycle. I at going aggressive I is in zero all would comment so side

deposits liabilities. so have would extent, are demand I the customers. as a to we'll ultimately, when or that high tied think tied all they're becomes to with call just Fed lesser more can in XX, general, maybe what to tied far But the to savings call value beta mode, in a high tightening you in So, going XX risk our say short-term of liabilities type it general. things I say XXX, becomes to zero is we And exception LIBOR it risk

of my because going more all for industry this risk slightly just is prepared going So, we phenomenon, we're that. not that sensitive, to be, they're beta in be I and think we assume liability environment, to a an opinion,

David Rochester

you sense. that the this can advances. expectation, to I I your Yes, if have year? What's more. there. of make as one back just know know got curve cash you current kind what Maybe some to sneak in you've I given

off. can cash? pay You that of Do off think pay you of deposit with growth in some you can all it

Thomas Cangemi

big be stuff that view general to back So, me initiatives. We're a in event rolling but that put you to specific, give more us, liability we're gathering the to let deposit initiative. in is picture in a a

shuffled So, ourselves to our opportunity to we'll XXXX. more flexibility. of really we're and into position, importantly, liability going be with tremendous right-size have when have merge a XXXX And lots the we Flagstar,

my us. of the to put in we're and back do we broad to back, great if what that's at things position. But things So, back going a coming us have we're it view with cash, to put

more you add some color maybe, to can So, that. John,

John Pinto

Yes.

quarter, a So, at rate of mentioned, our short-term are rate us. possible when to interest Tom back But an scenarios, look as perspective, depending interest since with that increasing of we'll put what are on it in assume these is rates from these risk quarterly all just anyway. happens borrowings interest handful this you us we get about getting potable

replace little the perspective, better an you'd be from interest you'd bit individual you be coupons if than And on coming are rate are potable coming same perspective. earnings a off. an where deposits with from risk perspective, the are in high that even because the it on beta coming So, lower

continue it the of a could with things less in So, is get put off short-term we to just that pay the a them on these deposits funding. reliance benefit the back And see could and wholesale be as goal us. to

Thomas Cangemi

That's right.

David Rochester

Okay. Thanks guys. Appreciate All right. it.

Operator

you. Thank

with Our your with Please next UBS. Brocker question is question. from proceed Vandervliet

Sandro DiNello

Good morning, Brock.

Brock Vandervliet

Good morning. San. morning, Good

with $X.X up that's at related. Non-interest-bearing of I I team. -- is mortgage billion. Just year-over-year deposit assume following XX% pretty down on about Flagstar some growth the muted. look your to

what's going there? just on talk you If could about

Sandro DiNello

business. Yes. It's this related totally is mortgage Totally the -- to Sandro.

mentioned deposits so we've deposits I earlier, sheet declining, go and with lower. So for of as and as forth those the balance left servicing-related some

of need sheet. size the So size that's or we that the the managing the balance for of sheet balance the funding

So it's historically. all they planned. The moving all in are retail deposits, have consumer deposits, commercial deposits right as the direction

fits for balance So ability the in best manage wholesale way this sheet. deposits is the to our just that a

Lee Smith

just payoffs. that you've rise deposits. as higher jump payoffs Lee. and deposits escrow escrow and it's see lower you when environment I If a deposits. it all And can are the in, escrow reduction have more in rates a Sandro, there's Obviously, lower rate is got you Yes,

escrow it's So related, all Brock. deposit

Brock Vandervliet

that of back seeing margin bit current this -- the shifting this gross could the horse or sale margin? be production little the to And in a the in beat on you trough, is are more, to Okay. gain your terms what

Sandro DiNello

everybody his Yes. adjusting because know is remarks to It's Lee hard in as earlier, said capacity.

we ago, going years and Some where kind our on the make takes But hit, careful being you We're on too at it. companies were a if for sale. much very gain are right? guidance, guidance not very, Not we're it to two look COVID while. so before of

as bit. quite when numbers bit, model put you'll on you that even side. I how because we still as the of year the model, work then earnings the put quite a that the is and exactly with together, your this all and earnings with transaction guidance, is projected mortgage a into numbers when And the again, very So good, earnings think different what the the was composition said darn earlier, ago that's intended is Flagstar to see banking up lower consistent I said, Flagstar and although pretty Tom a are down servicing of

Brock Vandervliet

Okay. Thanks for question. the

Sandro DiNello

Thanks, Brock.

Operator

Thank you.

Our Steve question. proceed question from with B. Riley Securities. is your Please next with Moss

Sandro DiNello

Good morning.

Steve Moss

on just Good partnership. up your stablecoin hear the Tom. morning. following you comments, I on Maybe

kind should think just And what not going CDs bearing? be they to indexed, be of curious, are And what reprice? dollar scheduled guys many could I going value priced? to as be to also scheduled or quantify interchangeable you those how -- to CDs Just are deposits of to are we think those about

Thomas Cangemi

sort the They're tied of effective usually Fed currencies. to type. I'll yes, spread or some fiat the on -- target start funds, Fed stablecoin with funds, a either depending the minus

point they they floating CDs a second where maturing Fed at come that's a So CDs when we minus billion quarter, and about they're but in at you are XX against to look are rate due, funds, spread. the have in in $X.X rate. basis And then

you if runoff, it, have the yes, help we if gains can of think offset have kinds So that about on these CD deposits we some it.

Steve Moss

that on thinking what here. on Okay. expenses then Thank don't with are you is I you. That's think stand-alone came just updated still basis. guidance expenses for helpful. up And just a guys

Thomas Cangemi

Yeah. very we've to happy continue Really with the very, change. We're no management been how able expense that. and

So our second think is we're gave flat would we that comfortable quarter. to the be for we're quarter year, for what last with guidance. release, first the the And earnings I estimate guidance full

Steve Moss

you Thank Great. very Okay. much.

Thomas Cangemi

X.XX for the year.

Operator

Thank you.

with Please with Winter Securities. your next is Wedbush Peter proceed Our question. from question

Thomas Cangemi

Peter. morning, Good

Peter Winter

going January you're quarter, The single about Tom. loan loan guidance how morning, Good strong you morning. Good wondering upper and raised to thinking I'm in exceptionally just growth forward. digits. this was growth

Thomas Cangemi

were refinanced – smart of exciting A borrowers get it's to given elevated. fourth try moves capital. transactions period, transition So a and access of an quarter to lot their get property interesting was lot given activity, to

Rates of and continue a QX. lot dramatically So that QX are higher, saw Peter. in we in

to of five-year much that product. our we confident feel – think money. our you five-year in are And much the we're are you in customers XX-year a XXX, its going if spreads look curve, mostly at higher. have the still the going we're XXX the we to We're – not where of going shape be about market, all at market, really very in to the So retention is seven, between

I the It very high, for retention to month XX%. turn good a was company. think which of very quarter is was the last close the

will transition to more growth. that So

So single-digit for a I that, loan think it's growth we're net fair standalone at a on basis, excluding high Flagstar. story looking to say XXXX

a discussed we have a to QX. decision make remarks, the that So have my about what's strong that's in unique on And the I in the very as coupon to interesting prepared billion threes. XX is But next about think since probably had I $X months. in low going that, that's we

your we able as So this a here may in more fee bit some ensuring and conservative accelerate conservatism, LTVs activity. rates rate sooner. environment. And be to be that probably more a on prepayment the capital of there rising rise if hold customers you little and to, We'll course, is given our income economics opinion, matter, to my may get access going of realize more want on be resilient that cap

of were customer At volumes of could a it lot the very for property the acceleration transactions. So a same within XXXX base time, itself. strong there's lot

transactions If look at post The New a the you and seen lot marketplace, City haven't it's rich. we pandemic. happening the

to it in, it's kick QX, started So continuing. in and

the that the space. And are borrowers about the seeing by strong. the So we're way, bullish we're multi-family activity very all in very

Peter Winter

margin. the really If it. ask That's two could I I Got about helpful. guess questions.

off net just full swap margin then Just secondly, the the quarter? one, And the much rolling from the of John, benefit quarter terms how income for impact if the either to rates XX in the you for assuming? in and every the in increase is point impact of wondering I'm margin could second deposit quantify that you're interest betas the what basis or

John Pinto

Yeah.

first benefit four your from basis margin was this the on in we the -- rolling point, saw off the the points. For swap quarter

XX. $X rolled the that's on February So that billion swap off

There we So liability in to quarter. specific to on rate lot benefit guidance give basis we going that quarter a We're point sensitive. of tied are funds. deposits. are Fed the we not deposits the full We had this on are -- run and have A XX first the benefit the increases. rest then brought realize of to basis

through we new but we and manage that there forward, bring individual relationships. be impact we'll in go an as come will So deposits as

Peter Winter

could I then If maybe ...

Thomas Cangemi

I point. just want go to John's back to

opportunities. definitely sensitive big the cycle. on active years has rate we the less And four about fresh have than the tightening last within will this -- think have I we institution -- we're picture, were today liquidity liability three, centers ago that and

going a this have very changing benefit together, all the you that equal, into that being things that's take opportunity going interest put unique a environment to to forward. company margin you rate when So position

type on Flagstar nicely that's hold a the player think will this you about but At can lot the funding opportunity is the opportunities. when money. This they this. all about transactional time, low-cost of strength major very of the depository model, two really model the have regarding So so our be business a we same we relationship beautiful that that mortgage we when view companies together, putting of have

there's to entity going focus that's rate of really position able going from to So to we have combined funding. asset-sensitive rising be going think for liquidity be opportunity the will combined entity, the the and balance And being transition our an sheet a a wholesale environment. growth and into

Peter Winter

What -- what could basis, on a you goes the combined -- say the asset sensitivity to? just what

John Pinto

Yeah.

redid round, it the -- I as X% its last analysts X%. around think report analyst right in X% an level. on go yeah, first -- are of think put in around we I -- our NII. We We and between, that And so our

Thomas Cangemi

That NYCB has a brought right? standalone, modest very on deposit initiative

John Pinto

That's right.

Thomas Cangemi

franchise end up, think $X the on since XXXX, at lending XXXX, is an I you billion $X.X we've about core the billion, our of accomplished side. what deposit XXXX, If think

tremendous So change we're success mandate. making The deposits. here is we And culturally to that's goal solid how these do think business relationship and are the here. I

been deposits be to quarter, bring give that on business. we're going conduct and going not our a cultural So been every patient. on but how loan we've it's successful, how in much to guidance shift quarterly we We're

Peter Winter

Thanks Tom. it. Got

Thomas Cangemi

Sure.

Operator

you. Thank

with Our Breese next question proceed comes with Matthew question. from Inc. your Please Stephens,

Matthew Breese

morning guys. Good Hey.

Thomas Cangemi

Good morning, Matthew.

Matthew Breese

does deal, is the you or to standalone And charter change? switch contingent make or going charter the any the back change regardless of upon are curious your prior have Going say deal was close? discussion, to charter the remaining to the on I the FDIC

Thomas Cangemi

that approval. company's say a position whole FDIC as basis, direction going reality OCC to lot believe what the better is happen. I'm can this we're on have So combined a that's an is we charter The heading. We not served and that about

those we approval is out We've commentary reality shot, the October approval approval. OCC we may is And for on or could Fed this a which a a meet a dates. what happen now. Fed year that seeking can XX as that set far the process That's and plan. put feel happen, been we're As to an we date,

think we locations learned XXX that national the mortgage banking and we that banking for would country, offices serve believe as throughout retail we've went I a a and here, this have going XXX model commercial charter. is path that's platform So the the to along LOA under OCC

Matthew Breese

Okay.

often the most for is, them by York, thing in XXX% OCC. are concentrations, of Many other regulated over you come regulated. banks US you with The screen FDIC elevated if New and across but very, and that CRE institutions very are state are few

at I XXX and with were deal. Now year-end, think you at the

XXX, You're still than lower but of north XXX.

So of need do the chart changes you your ahead change? concentrations to lower CRE make any to this end on

Thomas Cangemi

XXX%. When is it's combined when LTV basis and want concentration. of guidance. to is regarding look well-structured under company flows, was was pro perceived housing which positioned the was you uniquely XXXX you give clear and will back average take XXXX, multi-family you at history, When forma put rent-regulated out this be it very a I fight cash we guidance XX% out and just me kind going overview, that our in general cooperatives, Let to

XXX%. take we're you risk If high multi-family that's position out not CRE, just as considered

as practices how very millions back and of a to with relatively housing, have we spent bank We model management and losses loss to zero business land as the had we regulated have XXXX strong a of they're think class. again, about sure flow look cash significant a become the cooperative the years unique LTVs a loan, have multi-family to and in making So business that we in CCAR decades predominantly a you when But up CRE. our over portfolio nickel the going around we we dollars asset XXXX mid-XX% we that on has never of ever have of risk hundreds company.

history. these positions for So unique very are

and CRE and multi-family forma. be look XXX take you all when at out being your So pro things when would where you equal called position that true about cooperatives, it's

tell we think manageable, regarding and I credit So a to story have interesting history. very it's

Matthew Breese

those rent other had envision rent-regulated from this the the health But Understood. particularly could just then curious lines, limitations core front. you on of increases on your thoughts I multi-family given environment, question borrowers, in energy along expenses, was, inflationary higher on RGB. the And the the

go we any minimum there's rent the to you As increases, year, do through problems allowed going if there's be there? think

Thomas Cangemi

Obviously, reality on ago, that's would and differently a I we have ago, that. we when if the that that the differently than lend at no flow those pressure tell some three the had maybe some there's we on the you four is But years revenue in rent we that and other law side, question cash the of years Matt, great look very Bronx changes inflation we -- you question. markets. markets, outpaced there. focused growth

portfolio. So management. with we around do, In stress particular, we've lot significant risk what Bronx do carved the we testing It a of was out detail.

feel in to these significant So of -- challenge customers. come Some history be less long duration we and have simple have more that to continues great but really stability I that And after right? inflation scenarios, feeling a cash-out of testing we have There a adverse are that to portfolios, our more largest is a the hold it's they players to very solid we're very be a do that very, -- for sooner. in math, and be we the a period stress accelerate to holdings. have confident will believe portfolio, table Bronx we refi, of low LTV, comfortable and borrowers, have generational

the in bring of be LTVs, low going LTV probably quicker relatively especially because just flow conservative And lot portfolio, I portfolio. the table to probably we're have cash think do more a we the of lot it's on to squeeze. of a a So going but rent-regulated balls potential to the

Matthew Breese

Understood.

Thomas Cangemi

management it's commentary that's definitely area, appreciate given lot great flows laws a and rent the it's the that different done And getting a a and around created. question. risk That's are around a work feel because environment, comfortable really spent We ago. the was It's time arms cash it. a a of good got the of in we say, question, something side. we -- control I on a great than that it on on We've And nuances changes decade about rent we've think how ton good it.

Matthew Breese

bit and I are. What's a the question they was are anticipated flip understanding a custodial other is, go beta what better little those thing are driving is from? is, of hoping the Page of just XX to their those? mortgage volatility The I just for the $X around Who their And book? billion. of What other side imbalances? had that on deck, Flagstar what's the get deposits

Thomas Cangemi

Go Yes. Sandro. Go Sandro. go ahead. Go ahead. ahead, Yes, ahead,

Sandro DiNello

available-for-sale And The and servicing portfolio, payoffs significant. with rates are servicing Yes. very has the are very, it. associated portfolio deposits the when portfolio the declining,

and rate so are month, during so And you're of very, payments key your much, a when and than payoffs you're the balances holding low. escrow higher the much course are in rising very environment, the

really those, so The and lower of phenomenon. prepayments carry deposits. of escrow portfolio available-for-sale same that related deposits at of But history So look to that the are LIBOR-ish. takes are data deposits pay the escrow carry originations very almost escrow we interest to then at cost. the lower, as ability our no time, deposits, on own the less level see because environment, it. subservicing we you there's Flagstar, And manage connected it's a gives we some all higher owner if you're kind the have that that's is no rate the the have well volatility of that MSR in that typically you'll you the -- is If And with -- because MSR, arrangement, if lower.

understand other. volatility, offset at you look can lot you not a better, they problematic begin a of as will. there's So history again, kind there if that to you of And it's Flagstar each and

Lee Smith

Sandro or hit entirely related head. book. on Yes, Page to at of subservicing deposits you're I'll on XX, just that the has and servicing our Think the the jump they're looking in, nail

that's organizations subserviced capacity get service, just to some could we needed and So X.X about got we we've and we as more or Tom's others. and Service, have. when deposit have which could service loans We that when sub to, balance additional an not of he some haven't which sheet we deposits. go to given we we fund where growth. point, And Mortgage own of talks the a together, of we deposit million for we bring those seek ample two the But chosen area to because the go that

Matthew Breese

Understood.

Okay. for That’s taking I questions. had. my Thanks all

Operator

you. Thank

is Janney. question from next with Christopher question Our Please your Marinac proceed with

Thomas Cangemi

Chris. Hi,

Christopher Marinac

Hi, good Hi, you Thank morning Tom. taking for question. thanks. the

stranger recessions. to no So you're

You've your career. the whatever, And seen next reserves or we if hypothetical one to relative really two strong in have that many charge-off your year are rate. it of or seems any

I'm just the it with got It talk through lot kind reserve kind curious the manage want will grow? you just So a of reserve you've how think Do you from of of that. leeway to here? and seems

Thomas Cangemi

Yes.

new around So the I'm complexities for regarding to defer Pinto going accounting to reserve. John the loan

one? And take on that so John, don't you why

John Pinto

well. no opportunity the are there, we Yes, there's growing but loan doubt portfolio some there's as that

losses to day life loan So loan estimate under you the up full put CECL life and the of do loan. potential the those of

some of So that will that. offset

on in in even growth forecast. the continued some been Recently, have going benefits what's We've given seen portfolio the right benefits. now. So of you'll the macroeconomic

an economy, growth some there's here. relatively today. when wouldn't macroeconomic say, provisions unless forward as that the go or that we'll looking where as they see and but to stay we metrics, So as you're portfolio of something indicators substantial with the a the I we declines our are are think with in are from ability increases long dramatic do we consistent in in those portfolio comfortable we very I are where offset where happens individual at macroeconomic

Thomas Cangemi

an in-place I flow cash the I has would a view think historically, of vendor. say, conservative very company

of this Our at close XX look run been years. XX focus the conservatism. if It's you out could has XX, historically, to statistics, And you years.

actual on based losses little experience. very have We

to that's I that's in So land ultimately, conservative. customers important anything, there for seven recession a five these a have just understand we'll how on money significantly the start we coupons they've recessionary think more we're be what and based not rise, confident funds years. less out low as over to be we're very rates heading may created take changing. and refinance, to And in into the environment, If and past if culturally, arise to to base value

is carry when given accelerant. an And to come table, for flow lower. net the the them it's they cash So is to the cash cost the be going flow

we're our flow look it's the where rate increases. as at in what's don't going an an is being in-place and outlook to future for incentive We a proper and lender. come hold here sooner conservative giving almost flow transactions, same cash the history follow line less to before to dollars, place, cap you're for that's At portfolio. we So table cash rates them a have the interest time, what

Christopher Marinac

you. thank you Thank well. it. And John as Tom. Appreciate Great,

Operator

Thank you.

Ebrahim next Our America. question Bank with is proceed with Poonawala from of Please your question.

Thomas Cangemi

Hey, Ebrahim, you’re back.

Ebrahim Poonawala

know Hey, we've thanks for gone in. over I squeezing me time.

it rate on mark you accretion quick Is what's mentioned, announced book versus for The driving maybe John. based deal? you just tangible interest very clearly the a value when that? Just question, the today

Thomas Cangemi

creation It's a transaction. on tangible the book value

John Pinto

Yes, the guidance the got estimate would has March be where XX. of Tom using mark -- we're of as an that gave

doubt, move we that So no but come So an number that expect change, out. around, right? -- what could does all-inclusive really things where is that's to

If by announced the our credit higher will mark. deal that, were portfolio. results beginning we the add and a be that where offset to then transaction, look that rate course, announced the CECL significantly Flagstar we on at when had mark the you at just of the now, the would allowance pretty look we compared at And when we

mark credit looking a a portfolio loans. the lower portfolio have on mark higher on So much at the and much when we'll you're rate

Thomas Cangemi

you valuation this an in I John. you would together obviously, negative perspective, accounting perspective, on think, when imagine, deal put that I goodwill, the

John Pinto

Yes, there's at levels. a bargain these purchase

Thomas Cangemi

Again, to at on change you this that, closing. closer look landscape But get a transaction, that the economically. given we the as XXXX past year, current tremendous Flagstar had obviously if

goes capital. into the that So

there. on a an transaction you more perspective, capital lot when the accounting we have reset So

Ebrahim Poonawala

up ahead, Go Got John. ahead. just follow go And it. want to --

John Pinto

just the It I dependent on final right. No, was doubt. to where going out, is marks say, go you're come ahead. no

Ebrahim Poonawala

approved? just question, fine. get deal through one I process dividend the And risk as final Okay. Any to know the the [indiscernible] to Tom. OCC you go

in to dividend have the going your You're excess terms capital, but would sustainability. hear love in of just to confidence

Thomas Cangemi

back to position return continue confident we comes our formas very and model the in this, We're significantly. covering payout dividend shareholders down value to ratio our when to our priorities maintaining upon based obviously, position. pro And the

that's our hold to that, believe our still the going maintaining we're assumption. dividend, And case. is to and to we So focus continue that

Operator

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

Thomas Cangemi

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

Operator

This concludes today's conference.

You lines time. at your for participation. Thank may this you your disconnect

Flagstar Financial (FLG) 27 Apr 222022 Q1 Earnings call transcript