NYCB - Earnings call transcript Q2 2022 | Flagstar Financial, Inc.

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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 Second 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. They are joined on the line by Sandro DiNello, President and CEO of Flagstar Bancorp; and Lee Smith, President of Flagstar Mortgage.

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

Thomas Cangemi

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

feel First, however, we stand good Both completing Flagstar. committed about I'd with currently. to to we like the transaction our as very merger are soon fully on where sides as comment and possible,

a past worked companies We're XX us was today when it regulatory approvals both to are get first we announced. benefits quickly the were all excited strong the months, to the once have position received. together of Over diligently about close as deal the deal to

book to tangible per asset-sensitive sensitivity. funding funded as and shifts wholesale on rate the earnings from our becoming borrowings significantly away accretion, our relying share us both significantly profile interest with and being to overall more It addition improved and merger In Flagstar value deposit well.

model, to In addition, bank it financial capital our strong business transform and plan to provides product model more our and generation. both commercial driving geographic performance accelerates a dynamic diversification and

record a trends interest exceeded record are interest deposit loan in growth, quarter. higher higher and These a operating rates stellar. almost strong performance year-over-year second asset quality operating of results, despite As By We market growth, net stable for resulted income, growth. volatility. originations Company's quarter while our record results expenses, measure, net during solid EPS another remains second extremely margin near-record and recorded and pleased the we with quarter any the expectations

EPS ahead and reported the up compared of analyst $X.XX XXXX quarter $X.XX X% share operating the a XXXX, second diluted to well of $X.XX of the For of we for quarter consensus. a share, second

to details now the Turning our quarterly of performance.

primary operating performance this the was of our growth. highlights One deposit quarter's of

second the driven Banking-as-a-Service loan-related initiative continues the The grew growth deposits. consecutive by For quarter, be approximately by billion. in to $X deposits

interest discussed deemphasize of year, the deposits $X results launching positive. top result these increased on to borrowings, Longer early the Federal term, are our executing will and or As XX%. I quite At have early gathering XX%, billion $XX my this increase initiatives up net strategy increased deposit XX% if funding while traditional top, last and other almost wholesale advances The Bank not billion Loan Home Since for to one focus success declined previously, time, strategies, need $XX up margin. to on $XX.X core bank's less or billion is primarily borrowings higher or billion, total billion, the our in to same $XX deposits wholesale have sources. $X.X billion.

the year. During billion increased six through of billion first $X.X current $X.X the the deposits months total and quarter,

is rose $X.X scratch of totaled or was from to billion business contributor billion started a zero with year-to-date. Banking-as-a-Service in deposits $X.X this XXXX, XX% year business significant virtually quarter which Our growth. Banking-as-a-Service at the the basis Banking-as-a-Service quarter XX, biggest June deposits. this deposits linked we last on progress billion and considering $X.X first

mortgage the of municipalities totaling and banking companies billion. largely payments and deposits government traditional eventually Banking-as-a-Service, $X.X servicing primarily into Cadence for U.S. $X.X serving Banking-as-a-Service debit and accounts BAS, fintech-related Our and related card program which Mortgage-as-a-Service, for prepaid $XXX consisting Treasury's totaling deposits totaling escrow categories; encompasses million; billion; three on P&I

under $XXX the loan our having billion, basis. garnering rose second just to in up XX% success quarter customers. on linked-quarter loan-related We million annualized great from a during deposits also deposits are $X.X Total

For six focusing $XXX these have on million year, quarter source surpassing in last deposits this XXXX, $X.X deposit of we XX%. grown million, we're the increased generated All far up the $XXX months last of year. first since about the loan-related totaled, of first for deposits billion, all

Moving lending. now to

$X.X a lending. of we also strong loan second had fourth We quarter in to very growth during quarter the growth last billion, in only was generated quarter the Loan the $X.X of record year. billion

weighted the June make weighted sooner higher portfolio, represents of where this refinancing This billion during X.XX% loans heightened loans of loan share and is along It now weighted we $X.X by driven an note to up to on the and/or interest $X $X.X competition XX% of previous an the the was June average while and million rates many with amount, average the Multi-family was as to up portfolio of forcing come quarter that quarter's loans specialty to X.XX% a move remaining the date billion, billion quarter $X.X compared market approximately of an as borrowers their gains coupon X.XX%. annualized coupon finance important with multifamily we $XX.X basis XXXX, CRE that $X.X while coupon portfolio linked come $XXX the growth multifamily between to XX, have quarter, CRE refinance with repricing on activity or multi-family represents average at our up At maturity or continue totaled billion. to XX%. basis abates contractual on billion an property table rather later. market than billion,

year. the June utilization very The a during $X.X current as portfolio XX, or compared rates. to growth to as billion March floating rate XX% us billion $X.X of of second as had record billion, the up rising and set the $X a good billion the up looks Finance are was interest finance and XX. commitments Specialty commitments originated specialty other XX% originations at head will driver the up for structured XX% quarter, $X.X record to the these second had new environment. last in pipeline of June significant into Despite in originations, obligations, compared the compared total to have a benefit quarter due segment and amount, higher Of which to At primarily rate XX% higher previous Loan we've quarter quarter. rates, a we quarter our third we continue

XX% Second refinancing related billion other quarter were more last current pipeline financing originations quarter's banks' our $X.X billion, far Of the originations, portfolio, own prior by and quarter's quarter's the from transactions. to $X.X exceeded than XX% double property portfolio, XX% were from pipeline.

par $X.X current new or third amount, the pipeline last As the into for is billion the Of of billion this at of quarter. money to the the on quarter pipeline heading XX% year $X.X the a pipeline, robust bank. was

Moving quality. now to asset

and last stellar were credit basis rank the best among $XX quarter and industry. continue X Our to asset to in trends Non-performing assets totaled and the compared quality million NYCB as $XX remains compared XX% at assets and quarter last a points quarter. level, the from to basis very also delinquencies manageable of total $XXX XX declined loan deferrals decreasing Early-stage million. to points prior are principal only million

recoveries million we charge-offs In quarter. addition, net $X had of this compared $X to quarter last from net million of

estate next moving update City topic, the like environment. York on to Before an the on to real provide I'd New

medium reached gradually. have above New prices is lower York second Brooklyn, due rents the in for homebuyers the record commercial the real which new Brooklyn, Medium This the while also five closer highs inventory City rates, the new renters. in for second rent improving and three healthy Northwest is estate high rents to which new becoming month, across been borrower real Manhattan a at Manhattan residential highs. are straight to over Retail highs. continuing remains and with mortgage months. Queens, past Manhattan for straight higher in residential Queens, month of Queens, of borrowers In are has estate to rents pushed especially $X,XXX marking proximity make have is and the $X,XXX to the

in space side, the These year-over-year Board in costs. long some leases leasing X.X% with XX% approved rate decade and Guideline marked will fourth showed largest one-year Class a offset leases the the up of of Office increases activity basis. quarter. signs a increases year-over-year the operating for rent hikes demand stabilized X.X% for to a for two-year A life on and go of of way almost in the On X% increases beginning Rent's

to now income the statement. Moving

quarter $XXX net $XX million interest X% million, basis. totaled up income year-over-year Second or on a

net on non-GAAP income from $XX interest XX% basis to a the year-over-year Excluding or prepayment on million basis. income, a million increased impact $XXX

Our pre-provision net revenue strong. also very was

million Second $XXX quarter, million a PPNR XX% basis. year-over-year $XX increased on or to

XX% PPNR expenses, merger-related million year-over-year. from impact grew $XX to $XXX or the million Excluding

basis the Moving combat The inflation. raising points next NIM times NIM. was NIM quarter rates up X.XX%, the At the second the improved X to several aggressively to during interest sequentially. Fed despite

points basis from impact than X.XX%, NIM expectations. basis the on slightly linked-quarter the X prepayment better and income, a up was Excluding

are basis. the is comfortable liability-sensitive, forma we are we NIM significantly Given that Flagstar asset-sensitive very pro on and a with

remain front, $X expense second invest Company's million our merger check for continuing to which Noninterest the the $XXX the in include businesses of expenses. quarter, expenses people. hiring and On were more various day expenses noninterest despite million in

totaled Excluding unchanged from the year-over-year $XXX quarter only up this, and modestly a million, operating expenses basis. previous on

year down Additionally, the of both prior approximately peer below well compared At at this in to XX%. ratio ago our the came it's and level, XX.XX%, efficiency average quarter.

will The on this all work, you the common to meeting, all see, of strength of to dedication declared have. organization on This dividend the patience shareholders achieve Company into during of by At price, August closing the of Directors As part the dividend shares. August we a strong Board quarter. throughout With this made XX we will paid the $X.XX of current broad-based the them any graduate our X.X%. happy performance employees, yesterday's had our an questions to for annualized that, and is you yield be Based date. can a dividend stock may hard quarter. as answer and record common translates we on possible helping yesterday's be as

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

Operator

conducting is Certainly, [Operator from coming question Ebrahim of we will today question-and-answer America. session. a Instructions] first Poonawala Our Bank now from be

live. line now is Your

Ebrahim Poonawala

So I guess, a a PPNR from loan quarter standpoint. growth strong

afternoon. about mix? based and funding where pro forma think had you on hikes going over all betas net deposit the if think with we us do probably see the taken beyond If there. can just think margins, the the quarters, given Give we've few mentioned next about start deposit we I one the maybe rate of and to NYCB stand-alone, interest you've we the how just get margin improve a sense costs you we'll this comfort actions

Thomas Cangemi

about saying, to excited Ebrahim, a close fact So that engagement with our we're off we're coming the let me getting super Flagstone. marriage start by to

expectation Mr. of look at liability-sensitive that with our of that institution, being the to said, rates So That a changes of pro given some John? outlook where hopefully, closer have and on the impact think closing transaction, we're as Pinto details the we institution of merging the we through very get and the I'll an asset-sensitive we company. about positive margin. how most forma interest go recent would

John Pinto

Yes.

we one quarter look does we and as institution Flagstar when margin begun an his happy the it benefits continued deal fourth were that the second margin, the balance the the in our at of many into remarks, liability-sensitive them So combining as Tom since our provide with asset-sensitive XXXX. very And is mentioned really of quarter of has opening sheet. expansion

quarter this, we come out closed would and Flagstar net fees and illustrate would looked X, at what prepayment to excluding order if to we the third estimated we July the be deal look assumed the margin interest like in on X.XX%. that approximately So

point impacts the is basis overall XX as in points. the it a basis to second rate assumes margin is the as today on increase that September, primarily Flagstar be reported a we doesn't we be is purchase the stand-alone any point third we It as balance XX increase that see at later entails and floating basis to but increase quarter. what what XX point benefit When a the would beneficial, about be XX that'd basis loan And currently side. on XX from include which will consensus. the expect reduction believe would, quarter. the material ex-prepay sheet, which be that given what won't basis, accounting of look in point So we is in basis This the

Ebrahim Poonawala

Got it.

few So just a John. follow-ups,

basis XX deal think if I compression, in one, as NIM was So I there closed XXX, got of X. point July stand-alone the

NIM if there So that I is of expansion XXX that's and was I to there just right XXX does range. think level the one-off kind sure right? assume something we why or saw XXX want do Is Flagstar slide going make in off? on And the guidance I the any standalone? to margin not in to margin June, expect

Thomas Cangemi

saying that to is basis includes John what combined pro the the think is that Flagstar on up of I assets NYCB. anticipated margin a is merging go into

John Pinto

investor swap. you the come are range. if put out they to of they of midpoint XXX, put look their to at look right. presentation these that you XXX put at numbers And that up that the with if But remember, that got Flagstar did The to on a you range out, also presentation using

be we impact forward. as that get When will removed balance what that mark-to-market and had that swap well. will have the that we sheet was has the in two quarters that going companies asset-sensitive So would to Flagstar the December so back put together,

the think, I difference. really, that's So

Ebrahim Poonawala

just around very board sides it on with deal. deal, And the one Tom, the sounds like question, much both obviously, it. Got separate still

us extent XX -- we terms application the can update close terms in timeline? an process deal is are the give OCC realistic of to Just where of in an and October you how in

Thomas Cangemi

we're both where So after we made Fed, right feel made application the closing we from in OCC. teams are moving within were on April to application, waiting filed the filed the hopefully that and their believe that we the confident. We hear in date, period. OCC and announcement. announcement I we our pretty back about and mid-May, focused good both We very we're very our and to the

contract forward to pushing and the deadline we're get October an done. have closing We

it's daily of within specificity frame. process hands We're Nothing as far happen long say as the working It's engagement. are the the I been the basis. as a that around teams to more concerned, than a As average. And the on forward very far that everyone's can other looking regulators. time will in hopefully,

Operator

Steven from from JPMorgan. coming is Alexopoulos question next Our

Your is line live. now

Steven Alexopoulos

If and your start once to wanted you point these But assume just banks do Fed especially for we theoretical banks to the deal color what together, question a NIM the I funds expect with off closed XX rate, for helpful. two you maybe in Ebrahim to came increase John. every two gave these together basis are was do?

John Pinto

be basis, what longer expect to neutral liability-sensitive consolidated today. slightly would is no a we On we as as of that asset-sensitive. be, course, will we are We'll

of depends rate margin. an market the time. expect increases on forward at would we to going So increase the the But that and, conditions course,

Thomas Cangemi

and would I is to sheet Steven, point on going at in interest just the forward to this perspective. it a look Yes, given we're that Fed add the pivot be going that ability combined to rates positioning best very unique position our balance on company

we money. when So, part Flagstar, with environment, our if started were you this liabilities In this of we out liabilities, about merging example, for think the of substantially inventory. slightly are process to probably

mechanism the use basis. flexibility liabilities opportunity tremendous have proper the and bank on we for funding long-term that wholesale will better So, of a on call to position the we combined exiting

gathering bank repositioning have now know, great liabilities ourselves very this, more us marketplace right give public opportunities. line. fund sheet The you on to been balance we're a about focusing commercial better if opportunity, I've we As will

So, when to returns at we on carefully position highly we we will together, going feel ourselves come balance can sheet we shareholder best and the confident look forward. focusing that generate how very

Steven Alexopoulos

bit to That's together, come slightly when you right? of what a sensitive, time, that's case day Tom, But going the banks make sheet basically very basically mix, sensitive. but remix as the be asset it's we you're plan and is not So, maybe one. the you more to balance saying, think the over being should neutral to yourself asset

Thomas Cangemi

market us consequences a ago fund sensitive. want mutual condition. that we'll That flexibility to going taking has now repositioning. think out call money. institution we're with of asset the there to restructure. we'll the to I without gives significantly of capital in this value out-of-the-money how substantial, is statement And and/or this it, changed I par year one, base flexibility to make day we're the I to get means to position lot clear: liability on think, to of focusing because liability very a figure the That closer the

is this gives more where to forward. think sheet about going options us So the balance

the I mostly clear, floating rate. they're of as Mr. far As lines very was think Pinto business,

there's negative because lot positioning of So their that in not involved it's be of floating a marks really rate type and loans. would mostly investments

have the market, environment. current and the we at some the our from in focus and rate there position funding time, in the to So, a bank good the look classes on benefit flexibility which we're rising going put on At verticals to is side. asset obviously a same

want obviously, on them focus like here has deposit cultural we that That we in funding take that is commercial the done forward to loan, to the The and there. If run, will Now bank we've time, going a done job. combined the a the the bank some loan-related the get on change That's The passion for NYCB, is deposits. when tremendous a based don't but basis. a Company make great we be more the be long at on balances, we're making focus is balances. loan. not to we positive give focus going progress

Steven Alexopoulos

helpful. question. And final That's then

deposits, stand-alone understand -- are So about I'm to or look you can liability-sensitive the how if at trying we profile talk not. changing these Banking-as-a-Service your

bucket? pay quarter? changing So can the you just the rate What you replacing profile? And in funds market Banking-as-a-Service for you basically You particularly deposits are wholesale the expensive those about with your saw in strong growth, those the right? are these the quarter. cost fintech bucket in of Or talk liability-sensitive fintech deposits, did deposits

Thomas Cangemi

lot a here. of three unique functions of There's combination really a it's Steven, here. Well, attributes

top servicing, origination, We five we're number confident mortgage we the business on Banking-as-a-Service Flagstar, you So that the substantial the six country, building number a feel basis. They liabilities on combined highly think together, originators given need of a have for in in structure. that certain be their out they're about could merge a of when if one in side. lack

a viability. to a have lot bring desire of We

is is So, the what it's It zero. market. you and market. Banking-as-a-Service clearly, the close it's relationship, have type mortgage of if to custodial is And it

customer, work advances. loan relationship, out lending you If going and it's work you the to than respect you a with in you home cheaper be relationships don't, have to reasonable funding could bank

tremendous Island a have the liabilities. more and does it, So government bank yes, kicked on you focus and When other in a position those forward, Health., believe Pennsylvania, loan it's which, but we Commonwealth out the than advances the Department, hasn't it Commonwealth zero. side, cost, home going to benefit wholesale-type funding. but Department attractive again, company, time, Treasury really cost contracts Rhode currently potential have That's that for going one New These these this to Labor, of we of in the that in we're contracts roll work, in substantial currently. less U.S. of Rhode won were over the Department when pipeline significant of Virginia, as the getting from all of benefit a we zero-cost kick Department for are is wins of deposits Island are of catalyst our funding that's for And will that's the be Jersey. bank. few which

very don't in. over to XX of sizable to But time these kick onboard. myself next get be -- piece months, Now and to this as the far business. we as want believe our on giving this a of when will takes XX guidance you It's ahead I

addition, we in also In share fees.

being bank on corporate been their proactive it the digital services, We're provided accounts relationships. zero-cost get we there and area bank addition So bank/fintech banking just liability direct float. a in have a to to brand and it's we get tremendous on very sharing call my within -- of marketplace, tremendous the our also not client The opportunity and for their but on also the we side, that only a to out neo type can benefit deposit having now fees relationships. a a focus

most we're we're importantly, So that some results. into area, working fabulous but headwinds seeing particular

but good very Now short-term the deal over to proactive time. players the some nontraditional smaller through bank there's an market Mr. are has on this Banking-as-a-Service the pie a its has loan building And very wholesale each size for need on home structure, to a traditional base. a the out interest diversified own can and rates. taking compete of and as we alternative that believe feel specific this against We we're this of focus deposit details, ramp-up advance for been than Company funding bank a model. is Pinto our funding the get business to solution

cost to talk the as side those far So of types funding liabilities. John, of about maybe you if want as

John Pinto

government Banking-as-a-Service small the effective minus excluding you're Tom spread or about, tied to transactions, piece the a way. Mortgage-as-a-Service funds Yes, spread, that the plus primarily certainly either when talked at they're a usually looking Fed or

are tied bank as rates. source potentially inefficiencies So, a still than to effective there's But the more given funding loan short-term mentioned, they the market. Tom interest home that in

specifically they normally effective Fed tied funds. So to

Thomas Cangemi

with Yes, the think, the interesting these liquidity that off opportunities at look work very Steven, actual And excess banking as the coming products work I and in one plus this also side, minus. of selling on marketplace. with we we of they're clients is their attribute that or of is

to the bank. which in up all for accounts, So very build those out, money nicely are comes is and operating going

just So, very been for we're relationship commercial as it's well. months. very, but only six relationship, BIS And the bank at past looking not the as positive that's a

Operator

Christopher next coming Janney Scott. is from Marinac Your question Montgomery from

Your line is now live.

Christopher Marinac

forward? then also about mention John and access and in they liquidity their from can to going mentioned And Tom, ratio June? Flagstar, talk liquidity drop liquidity to March maybe you

John Pinto

cash the From holding by what just that bringing borrowings now better historically, at deposits as doing, to -- perspective, even increase. especially we down a securities balances pay bank loan books in the liquidity we're look and liquidity sheet spot been continue we've some liquidity than we've on-balance a we've when so you in home unencumbered to been on and been continues or of

the that with have. comfortable levels So, we're liquidity very we

ensure be extra conservative to sheet we Banking-as-a-Service just we related in fully to to can we customers as these cash them see that the keeping duration we're little bring on surprises. have the any and don't balance understand a You

some So unencumbered continue sheet, and which that's bring pay and why heightened to will our cash you're we borrowings. balance down as in continue deposits seeing wholesale securities on

and we enhances we confident go we only So -- from stand very liquidity more potential feel bring where that. forward to the side, in as it's deposits now

Thomas Cangemi

Chris, would I short-term is We've that advantageous commentary in John's to to given environment, the work. add now, invested sidelines waiting right on very So been we've putting to which conservative the be liquidity spread on been cash this to the bank.

very So there. cautious we've been

So even excess. we're forward short-term we if make can looking on as with spread we excess treasuries, have liquidity, a that

Christopher Marinac

Okay. on of Great. what lot less of then about a optionality at come as with together are and the where should Flagstar, That's And think helpful. do kind you you more XXX because a we they it bit have ratios will on? about

John Pinto

Absolutely. Absolutely. Yes. agree. Yes. I

Thomas Cangemi

closer. getting We're

basis. balance So hopefully, sheet clearly, a line. of we'll this the on the to look hopefully, choices combined we to finish And opportunistic get at when the be is going very

Christopher Marinac

staying Great. And high them one then QX? on for quick one visibility Any prepayments. to

Thomas Cangemi

was some commentary the We've the than quarter. quarter about of get I the that. We continuation in backyard. elevated levels. had mean see first the second our mortgage I better market

close So table of to threes, markets they're opportunity. of customers here, is the really off to that There very activity. pent-up lot come X% refi now. bullish about There's low need we're to a given coming

July, have that good levels we accelerate see going good some We So already. we're I in visibility believe We're right prepayment seeing through activity. will now. --

they continues go positive would to much feel higher I from we rates continue a can here say higher trend, but still track So at here. if it

decision the coupons are need loans those the Now in we the goes obviously, of sidelines. out a if way, a it they years, coming to due may next But amount two wait have other all of I money. on make and the decent

had have want environment, And they very forward. what that this pay be standards is than being the half turn the underwriting our believe key. second The the would half get our the modification explosive have the feel year, we expectations what coupon for that we're and/or fact for the do it growth to to still selective the up of we'd at the viable growth. conservative meet on focusing to to We we'll So just that coupon. was first that front-loaded. the above going if growth more this rest we like year, on for high think either year, turning year I was single-digit is in frontloaded. year, And the significantly loan rest We'll This refi. it Last growth here of you seems say, net is was well about and of least some goal our growth. of us backloaded. moderate

of for margin If can that and confident going forward. on growth single-digit carefully low we'll we're very also meaningful goals So, meet mid-three low our three, the objectives focusing that low turn high turning coupon. coupon very are to and net we loan number, that the we fours, upper that's fives,

Operator

Steve Moss B. Riley was from Next is Securities. coming from question

now live. is line Your

Steve Moss

looked late here, to deposits relationship announced that's quarter. the you was primarily going if in for quarter? Maybe due back-end like that back to your the Banking-as-a-Service weighted circle it the that Curious

Thomas Cangemi

global without making the just -- billion. names. exchange believe about company It's I it. with about relationship $X particular It's that under a part stablecoin that's of

other out So it in the technology prepared rest my companies is I did on the break side. remarks. tech

the that So requirements on that liquidity expectations. that's the cash exchange. I $X.X tech side banks amount, six that is one their billion we're think focusing on And of it on of for billion, service we're relationship. where was And $X.X

Steve Moss

them months. about, guys next think, term? your $X.X a fund billion-or-so due if curious six Okay. Curious, are basis, in thoughts That's the you could or liability what potables to And on how on that of have in here, side going terms helpful. come stand-alone I the that you're -- then near come due

Thomas Cangemi

liability look, the pro two that's the exit the I that of commentary lots the consolidation consequence forma about without and so flexibility. base gives and into at of table to Optionality I here goes par either look us balance Yes, money of something together of businesses to these any flexibility flat the coming upon sheet. in or base think asset is on the discussed this the

they're So short-term? been what paying we've it either and doing been refinancing off. We've the in all

you we're at from focus know our wholesale months six billion if for prepared the dependency is bank. $X bank our system. remarks, home reducing of a loan the That down first So and the

having we're we initiatives significant look an amount flexible clearly, that we on go-forward guidance basis, lot QX and growth, that advances give we and to position they which the be beyond. to also in a now see both of balance the have work into portable a depository look get as will, deposit will to in but side growth, a a hard deposit still as going we other sheet bringing put related, opportunity. at of we with if Clearly, as us. be back at as catalyst believe So well on at doing that to on could relationships that we deal and right We're continue loan not position BAS working new a

Steve Moss

out Okay. terms And side what to in the the And to this then of more trying curious dynamic one at portfolio the with quarter liability figure CDs, the like what in rate? duration? reprice just on is question what maybe is bucket average

John Pinto

Right.

of we'll you pieces. different a look if take -- couple look at in we'll So

third if quarter, about maturing So the look rate. basis a CDs and that's billion, our it's you XX point at in $X.X

the So second had in of retention quarter good a CDs. with we've really quarter our

years, look give take. X%, X.XX%; at So, is of X%; two about CD rates nine months XX around you months, when it's or our current

than our in will far X% in but that, be third, it think be second a course, September seen brought so higher When It'll the quarter little, in that and at raise given there. happens look what wholesale million we've actually the on the money of the quarter and you maturing the under in $XXX thoughts you quarter. don't are so side, only what September. It's this we up potables borrowing we of are the about mentioned So, and in X.XX%. late dramatically that's borrowings

Operator

Bank. is next Von Gizycki from question Your from coming Bernard Deutsche

Your live. line is now

Bernard Von Gizycki

is on So my loan first growth. question

rebound in specialty any there? remarks, You then if you growing talk CRE, just prepared was growth competition to finance hasn't some And could first, gain environment wondering, In color you quarter. the there I you just to the solid been abates. and for noted time. and on portfolio, had during share loan seeing what as competitive notice your then it on continue you're multifamily market the the

anything keeping there? you be Just might cautious

Thomas Cangemi

standards picture, underwriting big continuing to So holding I'd our of shop. say conservative very on We're we're services. focused

also York And with marketplace. same City customers some also York successful. outside of very York the our forward our deals and So book, on very that a flow good about they and away we're at feel hard the into basis. And them, leave if that's the and cash loan sense, and that's the make with in as our of full culture of very portfolio businesses working our and are philosophy. move that. New that moving New bring LTVs, the with we flagship we're depository in as City, We underwrite building the been And And business New their they'll very going part we're working relationships. we hand is tied from comfortable time, are out don't to

are office. a So that's it bank had we the and CRE, on obviously, been criteria. on And the on, today, the call historically, selective moving success has the about a focusing retail you underwriting higher, When we'll bank. strong think being very coupon always marketplace pure focus CRE, for

utilization job So really that. and But now. have time in good been a a have activity that of customer financing portfolio, relationships focus very lot very, a of has would prepared not in done And you a I past we being that the remarks, for the year. we've issues. time, focused beginning I getting of was don't my end single-digit we With XX seems slow the at us. as being And said, multifamily niche for the general the there shift 'XX, said, That of With Company uncertainty surge economy, on we the of given half well And on the our and of interest that a consider feel continued of a into confident like the specialty we that high It On in of interesting we'll last very was marketplace. first for supply story. specialty that, that XXXX. growth target that net as bit 'XX. been had the chain we a to changed back years business couple our both front-loaded whole We've on it. activity say of back-loaded non-luxury COVID given From that a had rates loan years growth diversified on over the months we'll has see growth finance, multifamily meet being to story. quite finance. had think strong

bit that margin. get to will is comes to option there value this being think creative target into type But are phenomenal and the reprice draw The good rate loan get sooner to net specialty that nice the are for floating a we're moving to high importantly, XX% because we're for can four, their an of very and and within same that second really And a and is I credits year, a down, And this they're that book of five them probably portfolio, with. activity well draw focusing due. little been we low and finance, returns don't coming growth is grow coupons flat that scenario, year. committed that underwritten move three and year. on table that of these we're very more I for six so that we but the think on with a actively So on low been of Company the loans of news a has single-digit managed the the high even bucket perspective. a that's the the I on envision coupon that months, half And lot add had due comfortable focus They'll explosive it's on there they coupon, downs. that

Bernard Von Gizycki

more for I Great. just question. Flagstar. Okay. This If could, is one

year? much half? I'm this and get by any of these if half of you know first finish believe second gain million in So in built there XQ. how to just was be a sales. I the the I that's XQ had on on gain on and on of sale in if kind wanted year an update done in Any quarters XXXX? you're guidance was this expectations expected few the into or I $XX wondering, loan flat for just guiding they'll EBO And the ago, I know deck, the

Thomas Cangemi

Yes, I'll let Lee take one. that

Lee Smith

sure. Yes,

tell million had the I the would neutral. we of we second forward, be is, gain. move in quarter, -- EBO So you under $X approximately EBO gains just relatively What as to are going

going sale rate all a get and to with environment, bit on but them the isn't gain. meaningful you a securitize gain can't might that's difference rising because You little quarter's to a it at -- to the make similar

that And some are by offset so those are again were securitizing that being in underwater. it instances those

the them portfolio. And decision just in so balance in to we've on made sheet the certain instances keep

forward. net-net, on So relates a going to it going you're big see EBO to gain as impact sale from the not

Operator

Next question today Stephens. is from Matthew Breese coming from

Your line live. now is

Matthew Breese

the York is stand-alone the what Curious, New quarter? NIM third Community outlook for

Thomas Cangemi

to Do John want that? gave you it. take

John Pinto

NIM ex prepaid down XX.

Matthew Breese

XX. Down

you Okay. York rate provide then period? Community whole? the a the end the was of New for period-end And that could what was the deposits spot of as at deposits within What cost

John Pinto

At the end of June XX?

Matthew Breese

Yes.

John Pinto

points. deposits interest-bearing basis get for XX Total I'll you. that

Matthew Breese

market, and some quality have given the the if keep you of do should partnership the be the talk they just of any relationships of? just relationships, in some could to other And how that that the of you stablecoin others disruption we do Okay. those Outside you with of stable? Circle, have of dynamics stablecoin aware

Thomas Cangemi

It's to their recall, we positioning, have banks where that their requirements dollar XX% one none if indicated, as to cash. short-term cash. treasury. requirements. combined currency. cash a positioning believe cash them XX% I We the of just we're one those we confident needs obviously a hold of for It's their exchange other they to basis liquidity you of provider to is there than for -- every a six one you've banking global of invest liquidity fiat not -- in need cash of that one invested other comingled. very have allocation focused So that the And of on and -- we're are believe were banks that in services clearly a be six mentioned. in provide a as percentage for We're I

So the stablecoins. more to of be USDC happens obviously one stable,

initiatives of a potential we're on really clearly, comes to our working in very So, when account we're it with comfortable it's number respect relationship, cash to our have that with we there. future. partnership in and the corporate the that partners just positioning, But

Matthew Breese

Got it. Great.

can few moving Okay. the From for for check temperature Flagstar to just obtaining corporate structure the deal a pieces, get of deal. one a one standpoint, me switch? within of a which The national been FSA. Flagstar last on charter OCC charter seeking an bank is regulatory and have approval is speak has you I'm national approved that this versus if the curious them, any and milestones any at bank critical if point reached to a including

Thomas Cangemi

are. it to I'm saying, Sandro. just going Obviously, to we -- we very defer feel believe start me let confident we by where

indicated, the that our end coming Sandro. to things are and I'll help As Sandro? but mid-May. to in over push We're we filed application of progressing, July

Sandro DiNello

as Tom you, I status. get Yes. said, Thank have process. anything relative the through need. to the approvals we the to Tom. that working And don't add we Yes. We're we'll regulatory remain confident

Flagstar, provision. And when bill that the considering to of a passed with available couple included charter relates National national to been parallel that we've that do ago to to it it since years Congress piece of this became moving option it, the sensible As just in Bank application. a it's us

as for organization So, and were if we're combined National target a not as to going we would have gone there's just Bank easy would makes there -- in just think forward, more sense And way as of lot don't gone about have the piece thrift-like Bank get It's our the used an you that there, well. organization we there. for it. National the as read anything because into be to we independent, we

National don't So into There's no it. of because the with piece of that. anything read associated again, Bank application the complication

Operator

Your next question McGratty KBW. is coming from from Chris

live. now is line Your

Chris McGratty

was of quarter, clarifying you XX said cost sure June to make I you also couple questions basis also it -- points heard was entire the spot the XX cost? a is deposit John, that for Maybe, right. The

John Pinto

was that average, not spot. No, the right, the

Sorry Correct. about that.

Chris McGratty

have you do the No, spot.

John Pinto

No, I don't have me. that with

Thomas Cangemi

that. get with don’t John you Follow-up, follow-up

Chris McGratty

quarter, for then sorry, like for that? the expectation may do you typically the expenses have Yes. great. you That's I And missed provide, did

John Pinto

XXX, were two think we guidance in by the We in the with beat very quarter comfortable the and that where original in bit XXX we quarter, range. it first be little we'll quarters, Yes. consistent first No, there. we're a our second

Chris McGratty

last Okay. And then one.

Given speak you economy, the think losses can the for slowdown just there? market's some given normalized that what expectations in spec the you some of is book to that cyclicality in a were of sort fin

Thomas Cangemi

delinquency a XX-day So in just haven't had in we I nine general, mean, years.

there. are sense do pretty we're bank for for funding, with unique then us. sourcing a confident on we So, We It going come doesn't buy-up credit great through underwriting shop focused a model side. forward. the but the makes and credit on we're is It business a what in our job

in We have years. not nine had a XX-day delinquency

talk we a so, any in? And can on about don't John real envision perspective, that there, would kick CECL specifically maybe losses but how

John Pinto

strong. collateral perspective, the been historically, I CECL it's comes a it low mean, and so has currently, is The where well. so the strong from on just Even performance seen. as very losses we've so Yes. out, given -- modeling just what

So, extremely the ratings low. portfolio risk are on that

years. it's over So, credit portfolio last built that very very, the we've a almost -- just high XX it's

Thomas Cangemi

secured. senior super Yes,

good manage to And some curve, benefits environment side Looking this for the a yield low interest the on there. we end short level, it past see of elevated rate environment. the we rate in obviously, on interest decade repricing should forward the the

Operator

question-and-answer any reached back management over I'd comments. our or further like to the session. floor you. turn We for of the closing Thank end to

Thomas Cangemi

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

Operator

you. That does today's conclude Thank teleconference.

participation this day. your We have you today. wonderful thank time, and your may at for You disconnect a lines

Flagstar Financial (FLG) 27 Jul 222022 Q2 Earnings call transcript