Earnings call transcript Q4 2022

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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. We apologize for the long wait time for the call, but we were having technical issues with our vendor. Today's discussion of the company's 2022 results will be led by President and CEO, Thomas Cangemi, along with the company's Chief Financial Officer, John Pinto; and Lee Smith, President of Mortgage.

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

Mr. turn to the like Cangemi. would to over I Now call

Thomas Cangemi

Good on Thank thank the for the Sal. with mortgage and you, morning, we're outlook along you performance, the acquisition, our joining Flagstar. everyone, morning, business for This going Flagstar operating new and decision restructure us four today. to to our focus topics: the

for in X. watershed Community, largest York our Flagstar, a our of to-date, was which on culminating acquisition XXXX year closed acquisition December New

many heard the transaction for one-on-one announced. a this have is me you was already As some on we've say in and when these the meeting, you've outlined and seen acquisition calls transformational first times us, benefits of

XX% of model loans transaction diversified as underway, dynamic XX% a loans commercial is into the before year-end, sheet, announcement. banking at represented which with balance a to was The compared merger evident commercial more total

Flagstar of the of which Legacy brings new both number to new are company, a lending-related businesses C&I businesses.

to are All they rates. interest floating tied businesses, of typically higher-margin these are and

is of basis number XXX currently great of that business These business. XXX nationwide. mortgage in the XX% include commitments we another Finance business, rank this country spreads two Building in builders we business, in is businesses based new a top do marketplace These recognized $XX.X outstanding. approaching nationally the with particular points where where on billion warehouse

and operation generate have. has Flagstar wholesale NYCB In underwritten fee These verticals. addition, significant loans did significant income are not conservatively legacy focusing on that also banking several a

allocate to to plan these more businesses. we capital forward, Going higher-margin

mortgage deposit cost Flagstar commercial side. is amount lower a deposits and a businesses, retail escrow The large contributes the significantly base, balances. on also related including funding including true of to Legacy traditional same balances

a within both more will position share have we aid of companies respective Additionally, markets, very the market which in grow. acquiring deposits core strong as each

Flagstar's as the deposits are evident increased in benefits to non-interest-bearing already of to total announcement. results, to deposits, X% quarter XX% fourth base deposit of The the merger prior compared

important benefit rate Another to our is sensitivity. interest

interest to to changes sensitivity the improved rate due Our acquisition. materially has

Flagstar balanced position, As flexibility On you legacy new New York market has and changes. liability-sensitive, sensitivity will our a basis, Community company sensitivity recall, interest will was rate historically we have asset-sensitive. rate more to a legacy have been combined managing the more significantly while will in

the classes, able nature be with our mix, going to the lower forward. company margin of paired asset new enjoy new will stronger funding a cost Given

actions dampened platform. earlier over mortgage year the aim we and higher activity has today our substantial also This refinancing Fed aggressive rapid As in shift disclosed The past optimize rates. resulted increase significantly cycled business, mortgage purchase our for and mortgage to monetary activity. policy in

remain to XXXX last proactive mortgage compared by expected originations year to expected decline was with volume in throughout to to business, rightsizing year-over-year mortgage market in XXXX. trillion challenged Flagstar the legacy its is XX% dropping $X.X XXXX, after While annual XX%

of in Mortgage is approximately offices. company's a retail represents of the home XXXX. of where in headcount better retail to swiftly to closed, channel our business, late reflect after at our to XX% a strategic To XX% compared FTEs to shift reduction pre-restructuring. a origination less expected decline high shortly Therefore, lies, made the only we resulting will XXX in the number employees last FTEs reduction and distributed defined occurred strength than demand transaction lending footprint decision week. to which the total branch restructure Headcount line model the X,XXX a

business. still decisions most difficult necessary viability are to the mortgage ensure our among However, success in profitability These make mortgage environment us becomes allowing the one to to in team our and mortgage in down-cycle, during interest actions the the business we of Despite has long-term rate are upside of top senior the to These leadership the players participate event current more actions, they these expected the are improve business. in the the while remain favorable.

originator the leading sub-servicer lender. second are the bank We the largest and largest mortgages, a warehouse sixth for

to six channels In correspondent continue lend to addition, we committed business. broker the and all in remain

the full another performance. now diluted $X.XX XXXX, our significant stockholders, we On the common XXXX. to Turning policy XXXX year million the fully a shift for year company. non-GAAP to compared million $XXX to operating Net income XXXX. basis, unchanged XXXX we relatively of Fed to as record available compared still Despite XXXX reported year, was in for last $XXX $X.XX full for year totaled in for adjusted, reported EPS

we broke that net a and time, XXXX Our that income in record. XXXX, record was in at

organic results, or with month financials combined New $XX.X coming growth organically. the billion extremely loans well of by growth virtually to strong loans legacy all Multi-family to XX% performed $X.X our were of increased Community compared impacted in related billion Specialty While growth billion, quarter deposits. year with about banking the one as in organic York up includes and XXXX, finance government growth our a This or service loans billion to the during XX% $X fourth rose same million to was $X.X $XXX At time, XX%. business. billion. deposit the during $X.X

interest compared margin quarter to points prior basis the six net to quarter. improved X.XX% fourth Our

guidance. than prepayment is from X.XX%, up our quarter quarter, impact the was original Excluding nine margin to compared the fourth points which basis previous income, better the

reflect NPAs us loans Our to organizations. basis NPLs while and assets total strong points, credit legacy to both were remain on in of equaled the solid, credit quality points, basis best total XX among culture continuing -- the industry. the XX remains metric rank

in in serve event our are metrics standards business economy. sheet conservative the well is that a balance us served over us various one downturn These cycles. have underwriting high-quality well positive proof of This a should the

the market, while primary market, our remains despite niche City our performance market median moderation butter very healthy, trends luxury the rent estate weaker residential regulation York to the strong. New bread some in remains and due in non-luxury real rent effective rental for As in

Manhattan to November X,XXX, monthly up -- three months was XX.X% nearly following the pre-pandemic and straight year-over-year in and month-over-month above up median up rents decline XX% of rose levels.

tourism basis average On to demand. asking was in consumer front, $XX.XX resurgence per retail uptick rate XXXX due X.X% X.X% rents first the fourth of while the and office and Manhattan foot, quarter a XX.X% the a $XXX the quarter rents square Manhattan the third office square increase or asking fourth to decreased since recorded to quarter-over-quarter quarter foot, in direct the availability from XX travel points. up per

Directors of dividend declared to quarterly of very ratios shareholders per our year-end, record as cash Board February on based reflects our payable night's common yield of remain closing Also, share week, on on of the last approximately $X.XX is common X%. February last XX Accordingly, a X, capital company's stock. dividend strong. dividend a The of prices

to is and what new expect XXXX. This forward the you year from company can Looking into throughout XXXX. the

region. legacy worked bank to in organization. New has mostly First, The one divisional concept have we're across City the but the NYCB, we're metro for York brand well combined going

position are Now with brand branches with states, presence that that us nine in the will to are XXX the in regional confident businesses, country along a national in we largest unified one we thrive. a banks of several

one new culture. brand, will one have one will We A be bank, brand Flagstar.

publicly late externally While new will and purpose in conversion, logo, associated remain, use brand, logo out the to We brand is will stance look systems name Flagstar to until the be during quarter which XXXX, of the change. and and name occur the XXXX. scheduled first the operational plan feel, will roll what it not but officially fully

have X%, quarter quarter the loan levels of NIM to on growth the NIM current including expect of less impact going prepayments, an a X.XX of which guidance, to for to first fourth expand we As expected forward. given are X.XX, range average outlook, from to

quarter First billion, rate of and full billion asset $X.X non-interest of range on of $XX a to expenses mortgage approximately and gain full $X.X million; to merger-related amortization; expense excluding tax loans year year $XX XX.X%. million of sale intangible

Finally, so support commitment been sincere possible hard our like been and would borrowers patience, remarkable. shout to the our to send both of and all. banks, of out none My a I far thanks Their to at customers what their several has past them without have over accomplished employees have truly work. would for big all we years

have. would may that, With questions we be happy answer to any you

please We will very if within do call our us to of get free the all feel remaining. to you later time don't, today. we best But to

Operator, questions. for please the open line

Operator

Thank you.

question. session. Poonawala now come with first of Please question-and-answer proceed will Instructions] the with of America. Bank be [Operator a question your Ebrahim line has We from Our conducting

Thomas Cangemi

Ebrahim. morning, Good

Ebrahim Poonawala

quarter heard I deal. Good Congrats guess, conversion the closing of Hi. a systems I first until longer if not correctly, bit mentioned think XXXX, I the usual. than morning. maybe first sounds question, Tom, on you you

why are reasons move, to to there conversion? do take systems if any it's that wondering Just going the long

secondly, the And terms resets we deal, like? expense the looks you once have what of savings you the and tied cost us the from maybe remind all base franchise savings think to it in just think conversion, the where as about expense post

Thomas Cangemi

All right.

the way, That morning. we latter do unfortunate, question with for for was that. we the us. And the by for this wrong Let's apologize delay start but apologize

business, to for we related level, about exclusive forward. I rate guidance run out transaction, the the overall of expense $X.X we cost estimated benefits, million to the of $XXX together announced continue XXXX. talked mortgage in When synergies. these about put companies through we billion going should mind, Bear gave have We billion $X.X first specifically. merger

the So we looked at when out called combined operation. that we

Obviously, as into assuming going that. we restructuring That So taking we're speak. is we're mortgage place XXXX.

substantial that, of in quarter full-blown addition going conversion, ongoing systems. also have we back first the most actual system have of in and a planned. likely a This XXXX, continuation conversion is to synergies to benefit, the So XXXX, which we of throughout the all also

the We confident I'll on lot So it, a of frame, that time combined And substantial upgrade very be feel a it's largest getting be our going conversion. be appropriate that's will to systems to this right going conversion. part but basis undertaking of, for that call a the bank. is we're

taking we're have process, very make seriously. this sure obviously, that time we to want So appropriate integrate. to We the

substantial of side other the NYCB gone be a currently changing a lot we're lot expect to that the making that, date. systems; on best become So XXXX we're would regional of into choices been work where customer. what's on is And in to system don't space of as decision technology not done XXXX has But I of earlier any the a we as that for is quarter so has first to bank clearly, far have. ourselves upgrade targeting. first the amount than quarter into more

upgrade. So it into all goes that

at And we're same So the we're mentioned the time. super remarks, opportunity, a to quarter as going it's into to bit but little excited going prepared well. first my also be about time, take rebranding I the of in

that feel So going back that reasonable. cost that, feel to company has I we highly the institutions. been very But integrated range is historically, an structure, the confident

time to a some going revenue the I At that additional, range are given a to other. diverse. is each great a have build-out basis. of rate We basis. same think And time, combined very on on that's are a an We we'll map spent getting we range that our that restructuring has opportunities a mortgage be centers reasonable institution call, lot going cost combined drive know to run And building road here. in of we're

$X.X about in range, that. to the gave billion come the the I we'll feel of $X.X Hopefully, pretty we So think that confident billion. range towards but we front-end you,

Ebrahim Poonawala

get the a I towards that's like guess, savings you're the think and making, but investing the systems in some steady next it state? sense, all investments it to fair given year, Like all is franchise? might I you assume then also you're conversion makes

Thomas Cangemi

of That's of color XXXX -- give more in that. do guidance, We some will on John, result statement, if you add as you that a lot want Ebrahim. conversion the system have to didn't the well significant cost. the overlap as fair but out to a benefits technology, Maybe

John Pinto

right. I that's Yeah, think

is next the And You'll then see $XXX more, savings, QX part going mentioned, over through. of will as that in XXXX. in there'll the once million as some conversion of come that we're come of months couple be the Tom process just systems of done those through

forward, we to I in of you're can sense So of right, think XXXX. a makes going kind lot state XXXX steady a where Ebrahim, as least and see at that

Thomas Cangemi

there tools conversion. towards bank. the as back just the Ebrahim, model. concept really We transformational transaction go So, are banking that a to And to technology to of model, combined NewCo. that of the going of This lot a along. that all banking implement commercial a said the we with We're for commercial part is moving are

a maybe regional why model are the thrift us. banks what's historical banking out very the commercial pushing That's is that confident model; This we quarter date NYCB feel tools to and makes technology for with the two, of that's not sense with consistent or size. that our unique we a going are diversion

Ebrahim Poonawala

helpful. And just question. a That's Understood. separate on

think You the think expect benefit from a the interest do first then, liability guide. And be on where NIM sensitive for rate gave do world plays higher the in How margin rates the we quarter cut, cuts? NIM scenarios about to and two Thanks. out? net from still balance rates get the just you sheet NIM if -- you do the longer, how stay benefiting

Thomas Cangemi

going cut. census this November But going for forward picture, into have QX. defer But in through looking positioning, probably short the the to par adjustment to at likely we're we're Yes. we're pause two probably the coming probably where that, most today is really start an probably hikes curve, on and more I'll a X%-ish towards -- curve. that going conversation, the is term to playing in situation the forward the John. liability first assuming much I'm stand we X%, big maybe reality and That's

easily. capacity the X% plus minus very to have We or move

now, to putting sitting sales together, right sheet any So, here of quickly. assets, just we the the have liability just slightly ability and balance very restructuring, probably without any sensitive pivot without by we're

more sensitivity the the on color you if want towards some John, market rates. to add maybe, So

John Pinto

to towards base it depending And said, manage been significantly not liability-sensitive historically, Tom market as what the we're NYCB a us as on Yes. just that opportunity to highlight gives has able now conditions. just neutral-asset to be

liability slightly now. So, sensitive

We much really XXXX in really guide. are and hikes year margin in doesn't the forecasting an what's impacting have end is the March, the That February which impact cut at the two of of the XXXX. in rate

Ebrahim Poonawala

interest the of you should mentioned be the Tom, Fed we clarity the there's And rates? expecting on restructuring like, any meaningful restructuring balance of sheet, once path

Thomas Cangemi

reality I Look, company year-end. think together put is the at the that, we

opportunity mortgage We expensive of have an into is some look assets at in And that, a for that can now. structure right the rate we to opportunity liquidity. particular, liquidity

So X%, anymore, increases. if cash close we assuming two go zero securities, more rate around short-term we're not going approaching into to it's or at --

flexibility So we here. have

we open, it through, those asset were have when pull that We through given classes. But higher-margin we transaction, the some back capital to the that really believe eventually, Flagstar is businesses. reality securitization into acquired assets resi markets liquidity the to the lots of can goes opportunity other deploy of portfolios the and

We're very respect in cautious pricing. being to

the to the in multi-family a And very closer business, of you We're a now. yields. refinance mandatory a averaging next of have they're market repricing. And lot billion is regarding interesting over active. and a the our if us have seeing environment. have purchase make still We a $X opportunity not is higher seeing think Xs years, and about decision, that not X market few in We're that right front lot to rate much seeing we they but is we of about activity, are repricing,

the I interest just Assuming be option, holds do this our have Fed rate think will into a go which for higher nothing. customers to will a longer, to different

opportunities bank best diversification. time, our to vertical in into we This a the rate now we a marketplace to risk, yielding asset And in. class. position opportunity. can floating spend going forward. a the as half go at has capital At very the a that our we're company. that a the great going feel very which to margins higher-yielding manage through we're move we'll very an because interest capital maximize focused product, that higher but well-diverse We're margin we for the about which a year is right is have new same margin better to make ensure be very confident endorsing we portfolio much that opportunity But those attractive with to on loans businesses of product, be sulfur is which off is the redeploy Starting carefully. seeing So into product, stronger sure rate

Ebrahim Poonawala

Got it. my taking questions. Thanks for

Operator

you. Thank

Please next questions from question. Fitzgibbon your line with of Sandler. Mark proceed the come Our with Piper

Thomas Cangemi

Mark. morning Good

Mark Fitzgibbon

Hey about first fee Tommy, guys, you I wonder and know it's could us say, income good morning congrats. quarter. bumpiness, think help if think fee I combined in, given mortgage us the total help volatile capabilities? about the but income company's

Thomas Cangemi

particular the moving to the in markets we here look, parts a have of capital activity. company, new lot So that's

benefits it's hedge merger, I derivative that going a capital But of that of customer not have the part loan that's that put markets think the on to anticipated our products. to now synthetic merger. in, at that's as -- it's going the we to base their we of be positions for to think again, look options division modeled synergies not

be bank. I the think that's to a to going great benefit

our that, we're to creative long And put on synthetic could addition into income. those In duration which not be to we any multifamily without of also going as offer fee products. well similar drives to customers for paper position,

same business at the to that Lee a always we're interesting opportunity refer going the start want he's I and points. if very that's because does time, reality to probably mortgage obviously Smith, starting running to But low is At up. pick business, to mortgage the be

than So we're this, hoping it worse low. doesn't but at we're the get much starting

sourcing color Lee some maybe fee and income production. So mortgage add between Lee? on Smith could

Lee Smith

Thanks, Tom. And provided we the Yeah. this guidance. in

gain we're on million then asset XX%. to sale on and $XX -- QX return MSR to the loan for is $XX million. X% between guiding the guiding And we're be So net

think the of top at be end we'll range. I that

$XX fee our given on admin origination from side. the we've million, the two view on $XX combine then a you got servicing side, business. numbers, And point of significant if mortgage income sub-servicing in obviously loan income million we're the So those range

Now get out interest point income view, we're we the servicing GAAP don't in from net from of a benefit point P&L, reason the of the the business do interest you though as a the so from a to quite have. should which be sub-servicing really relates see see break we GAAP to pay that. when offset significant going given view, we fee you Even up accounting and that escrows, on line, it income

Thomas Cangemi

Yeah.

moves So it also Lee's with because. the towards on say, this income to Fed year, pause way, will that of assuming just fee higher to that there add good other is generate being a said, commentary, the end and

Now the of that liability manage as that lower cost becomes servicing much portfolio. we

Mark Fitzgibbon

then, And timing Tommy, great. with rebranding? cost Okay, share could and us the you with associated

Thomas Cangemi

we're we've So setting that the throw it's already spend really the not past work feel is which going going We cost lot the been to done number of be to A place. Flagstar. new ongoing. years a there, a now ton NewCo, comfortable very on out taken has over two of

towards of And going one obviously, there'll cohesive be start the said, one some and culture, efforts the XXXX maybe one new all dollar signage obviously, towards that to itself, with will in up branding been as the we As more and spent locations. into It's mission, the the on marketplace. our future, the marketing stand we in. position than vision, for back now all outlay name, our will rate. going dollars setting far right end XXXX, has money the as I'd XXX brand our XXXX be, where come say run to where brand, XXXX But of

Mark Fitzgibbon

on loan-to-deposit level there that of wouldn't Is was And Thank the I exceed? ratio. for at had a you'd last sort which you. question cap you

Thomas Cangemi

see That's forward. the looking a funding to over we've a is say, that, been at sheet, in you part as to done Mark, we're of There's can shift deposit fund the right? We're would business. balance lot our passion, growth. solutions our be more big going going I alternative years, significant So few past our picture how DNA

gather mortgage-as-a-service We We We government-as-a-service nature on from us that are get the want focused billion unique balance embedded after mortgage go believe various historically. could deposits. organization, to away this focusing very the on as put sheet in $XX differently businesses, take more at and a very funding are clientele trying business our the non-traditional it than a was dependency funding. really of to to position and

relationship. We of, the were very started we going culture successful going mandatory initiative a That's you to we're lend when if a few to deposit have need money, back forward. we be going the to years

be and stability bring better nature doing less of and and funded more we're light So that, all -- on fund avenues have our wholesale, passion our mix here we’re better -- mix. traditional funded cost of looking to in we be better, is we're can doing at is much a funding a funding and so to in

you you it's we'll if about If with, wholesale call deposits, book that for liabilities, of think true core the replace game our multiple. magnitude changer it, of a

less on on here on be over goal And our multiple passion. that's the time. and So dependent is mortgage, to focus less expansion dependent wholesale

going overnight. business we're our I And where happen model. model banking this of a to I That's within the that commercial DNA. vision to change CEO, our It's trying took traditional day. is of dynamic not towards culturally going, every model and It's long-term the thrift making as over we're that when said

Mark Fitzgibbon

Thank you.

Operator

Thank you.

question with Our from Dave the Compass your has line of proceed Rochester with Point. next question. Please come

Thomas Cangemi

Good morning.

Dave Rochester

good deal. and on Hey, guys the congrats morning,

Thomas Cangemi

to but here. very Been a we're David, long pleased be time,

Dave Rochester

absolutely. Yes, it. see Glad to Yes.

the So quarter had say the you're have, the cliff guys quarter you of billion advances potable includes the for the beyond? result this on guide so all not those that or that in point? is at and of to repricing of it a or like margin that $X fair really Just this expecting you repricing XQ next advances

John Pinto

Yes.

at you borrowings lot XXXX. we I a do of in due look coming If -- have mean,

the quarter XXXX. in that just billion when due you And -- in have first of amount, at $X So look that we probably coming under XXXX

Thomas Cangemi

Yes. In guide. the

John Pinto

million in $XXX Yes. The in cost the range. the range, of million -- $XXX is in guidance. the guide that's that's And that

spread on out what bit lockout but significant. There are a lift are. the there, of a potable books, dates mentioned, as be on but there'll their So they're nothing you

we had the in and issue have quarter to expect don't of we fourth the the that that, third XXXX. cliff So

Dave Rochester

Yes.

Thomas Cangemi

just go and to assets some to would start sheet we the have say, depending and assets XXXX, we've we’re to John's see to depending look point, an rates want I renewability, to into have opportunity that flexibility at on our we really going to balance where hold. what acquired Dave, normalize here

been of the believe has restructuring at proceeds think what maybe We marketplace. marketplace us when reduction a more at a There no We becomes opportunistic looked on about, the always year-end. our restructure, debt the the we'll as look we marketplace. table, -- into reshipping priced for or to debt that's maybe makes sense in

optionality same clearly, at of likely having back most But be to may important, take some the have some like to right perhaps the a money debt, expensive time is some at cheaper very is relatively with coming. short-term we the short going pause pay the money on down especially, this, some now. obviously, And keep be to because end continues opportunity the to curve steep funding,

So have on that table. the optionality we

Dave Rochester

Yeah. reducing debt. Well, your on the point to

number point new you just earlier opportunity guys a and at this areas how you that to? point once you size that go could the could that about deal, prior close have other you the deposit working know customer close? previously if calls. any then deposits now hit if you been about you I warehouse was on can wondering of is the talked you after in on that, big deposit side, just that the the you size deal initiatives obviously and opportunities on Just I that you talked have post But could

Thomas Cangemi

$XX embedded of said I business the just confident the transaction; alone escrow announced envisioned Lee is business, the opportunity. when I nature billion I regarding, the we mortgage Smith's felt highly with of a the that service in well some tremendous business, a as facility for to size opportunity our we loans offer that now. our the respect of clients type as others, given that it's we warehouse always credit

in in this the balance bringing us billion, as two Our a shot number managing gives sheet warehouse $XX real funding in good bank. the for at country, being opportunities business at really

going improve commonly with very NYCB being further mortgage make take to we said, that that's banking have still That improvements when the to opportunity combine have interesting the we start business. to technology to Flagstar a

it. business, deposits given mortgage to of a attached our could more lot positioning, the have think magnitude I the

here Maybe, build Lee, to the if opportunity what mortgage is this really you want that up. from day saw the some on we color could side. to easily we But that one add

lines as deposit as some legacy that areas government In we that make after with building a the as addition ensure doing opportunities, NYCB to the going customers we're well up, of other deposits. service, to which loans includes technology

So maybe, Lee, gathering lending mortgage if the -- deposit side. you on opportunity some want the to color the add on

Lee Smith

Yeah.

point, $X.X we have, Tom's months of has deposits. billion a deposits XX to of at mean service today, I mentioned least mortgage he's couple as think I now. for book. NYCB our billion about sub-servicing and escrow And escrow and a from of servicing

sub-servicing but to they escrow of people more that servicing the bring for, other we're can deposits from attached deposits we deposits other that so in or those And the institutions. that have sub-servicing we're the with loans not just

from to correspondents, brokers. and that about dealing TPOs, the And had we're go opportunity X,XXX to And then we an deposits technology, raise haven't Flagstar, base. at Community remember, New given with there's TPO our the point, has York Tom's Bank core

By take York their as business think that's previously. having to them do which banking haven't a big Bank opportunity, well, warehouse Community this that we that we customers and with New our done allows I technology technology can and to also

in, escrow core and deposits can the well a as So as I more result think bring technology. of as we enhanced go deposits

Thomas Cangemi

point opportunity the we utilize clients. Not are when a their on we guarantee, indicated, provider the the but you the some Yeah. have opportunities to get a in table, should they all credit really marketplace. that primary where are And drive more of major clearly, have And like of money to these for opportunity. I you have the you relationship typically deposit facility, the the more a of credit we shot at

to long thinking a NYCB. to transition. boots a on we addition here a that on really Flagstar made being ground in is that, opportunity, have has ground The And XXXX market ground been history the boots growth basis, focused the here when C&I have of not goal on boots business combined a about given C&I, initiative legacy In C&I on on side. type mid-XXXXs, that stand-alone the in basis to shot with on the since at the have this comes companies. we've it -- deposit mid-market we on the catapulting

So, Flagstar commentary, being I lot driven. have, to be integrated is done in verticals like all that's into we deposit going C&I indicated activity at of opening here our that's NYCB our being a

And to balance value be As metrics to facilities, going our company. growth. of deposit on DNA improve to we is to focusing we're focus sheet core on deposit start the this lending growth going the

Dave Rochester

Sounds one. good. Maybe last one quick

Just upgrading some you're to are the comment upgrading? of your on bigger you're be going systems that systems, back what that

Thomas Cangemi

I just -- going we're platform into with complex would Fiserv. a

architect. a DNA a have hybrid as the with be relationship could of a core. that, have interesting very opportunity on That our We have something we best But a unique, also Salesforce development to business relationship -- a have version opportunity. platform very We'll they with powerful company.

I that's unique entire throughout had that haven't organization. we at that the think very here utilize can NYC we

have Encino. bank advanced, use front-end process, with don't the system more line in even end very model. example, They their loan front on For is Encino, the we regional

regional ramping So, ourselves opportunities here technology up a it to comes there's are utilization. that to player significantly when

an the same given opportunity side, Flagstar, time, services the capability. commercial we've really upstart function, treasury the At on to also the treasury

very we it's Our that us. services, been successful have with current -- commercial Fiserv which for relationship is

to customers the that was five what deposit core lending relationship the deposit commercial services changed technology that solidify ago really platform, And offering. for side. an not We've base ability our has where on been years the growing our our

folks a that think, Flagstar, that's the to utilize So, going big I to for be, over technology. win

other here, I But items regarding can't a away did customer a really traditional model to commercial there's it of that enhance when thrift like regional of of stack. probably collectively, moving to the Flagstar. there's XX names here. throw I But moving a model of more tech out lot we, Dave, a said, I from experience going to the the there. that's of a parts the disclose. lot And moving couple parts new So, there's comes

Dave Rochester

sounds Yes, it. Thanks guys. good. Appreciate

Thomas Cangemi

Sure.

Operator

Thank you.

with proceed Preston the your from questions. Brody Our with line Please of next questions UBS. come

Brody Preston

everyone. good Hey, morning

Thomas Cangemi

Good morning.

Brody Preston

for wanted if -- mortgage us missed up commentary. I you you the it, the but Tom, the work and a of I'm run of rate follow And XXXX? kind operating then are sorry expenses I what's savings kind Hey could when in timing for first restructure the year? what just to cost to of did good the tell the expense quarter of from those on separately,

Thomas Cangemi

channel, obviously, the late the year because the quarter we But and highest mortgage embarked first line, that taxes January. going be like. quarter highest So, with and quarter the the upon repositioning of always restructuring to of in the payroll is that it's

FTEs, see is in from X,XXX. through before you'll around back number benefit was XXX taking significant, QX. So, opening going the of at end in as we're that towards ton the where a that The commentary, our I XXXX, indicated high,

when of it significant a a business. comes it's downsizing So line to

sheet opportunity, shared out embedded That being I'll unused an said, took mortgages. At there to there the look of reduction. revenue So, is you also And that well, a services revenue because account it, on benefit into tied call offset cost balance we so at same taking side. went we to as into, you're right? have the the time,

we combined So, indicated combining. all-in, own the stand-alone. number -- $XXX that on the that well as is that also the number cost back in we at basis $XXX structure million synergies we But million. a on, And on focus time, announced a have is, our of of when is have about same to deal, just company's the

the a job we looked done and they've tough so that was cutting and this is make the always XXXX any very business been managed Lee year, challenging He's the managing wanted we phenomenal cutting to business business. Smith well. years has over cutting X.X quarter But business a the fourth past money. the of not at end losing day, sure at the and at a

I So losing we're focus in where we a not the balanced mortgage, mortgage money to we to and as current a position that we're make want call the be where mortgage we stream. where but to multiple our think of the at with a was stage position in be our about optionality that environment. of important we explaining a stage at lot the game, money the on not this tied on multiples is That's is change, to market set And revenue solely going run the the have concept tied think we in rate. to

a opportunity regional bank a side. our on embedded traditionally nature bank commercial transition commercial have a mortgage, true multiple we thrift structure the Having an mortgage, of at of as model like the lot from as consistent having we great this multiple with size, a of unique on the banks funding and in to a look to more

there, we is the we multiple puzzle think marketplace. So this We clearly, focus to of of conditions right the after closing, in pieces the get we and promptly given want acted expansion. on the the one

to So at $X.X cost both structure, the adjustments of to there's a here on of think mortgage starts we a discernible in us hope a that to you But when be end for the lot mortgage it's parts expense. comes number guidance that $X.X at that's low structure clearly, and look it see to starting But billion, like guide. moving billion we have and February. because to achievable cost revenue

Maybe, some you as journey, commend which mortgage and add is if to the of want to -- commentary effort, for well. hard and work your we effort the on this Lee, this want

Lee Smith

then We're going the branches significant running is And I mean it the it's as There there's quarter, Tom. because noise that certain we Yeah. to exit still going be closing we're to we're pipeline leases. in payments the Thanks, a off be some paying severance. as first down. to restructuring. relates

we of it charge. cost think alluded as a will When But benefits April noise given what as going to to be will But February, that, in Tom first of clean view. soon said start point executed We isolate and quarter we've to, I going seeing a that X. will we're from a this restructuring as Thursday. from as there's done as last the be result having very restructuring on that be

Brody Preston

it. Got

follow-up Tom, one on the maybe And expenses. Okay. just

guess, we percent should $XXX the million happening the of I quarter, XXXX? the versus XXXX until oriented Just conversion what given isn't first think about more being

Thomas Cangemi

of lifetime. say I'd done we've lot our But a transactions half. Brody, again, in

we to And -- there's hard. business basis. This opportunity as We are have an at when have we at know we the on indicated, the the far deal. We hit do look a looked running integration. transactions. stand-alone here ex-mortgage when is typical as ground announced we to going we Like what I

looked cost run we taken a a indicated, We But is lean. in it. XXXX. billion confident lot cost out mortgages almost billion Lee that and about million total changed, $X.X rate has think this I tacked at that We on was $X.X is probably in of feel we like ex-mortgage. we're as $XXX where This structure, to very

and -- I has had think close this nine probably now. years probably is that to maybe probably the headcount eight, Flagstar lowest

a capitalize. I by investment very can really here. we're has in good of on lot side technology been benefit Flag, So to A we think made the so in position mortgage

think The on servicing platform servicing is There's as a position opportunity deposit substantial. both side, great cross-selling the a some to as product efforts. loan on HELOC about well gathering

So revenue in and business. magnitude drive efforts. type appropriate of we're at significant at a time have you an But It's difficult have at these the resurgence when the we opportunity decision stage this there's in the business opportunity of in of mortgage our restructuring here good with a the this that really spot. types FTE, a to to game make if presence, of

Brody Preston

over it. just to Got then And maybe the... switching

Thomas Cangemi

point. was Just one goal other The here not bleed. to

every want was hemorrhage the together. And changing on to where looked business our environment. going and the to when balance it revenue and sheet, opportunity quarterly selectively, to point portfolio back And FTEs used versus stream. we're through utilization. very at interest we model, challenged to to sheet the come we want traditional was don't a getting we servicing you not a go year, mortgage quarter we build a gain-on-sale banking Lee where versus challenge We as as balance really had rate comes balance red repositioning the You last sheet are

barbell a interest on market rates. have we So strategy depending overtime

Brody Preston

then And real the it. just Got to if switch base deposit maybe I quick. could

couple today, the call the You on curve a mentioned Tom. forward of times

deposit of So near-term how the do are the just see secondarily, your I kind given of thinking going cost pauses? And of wanted beta deposits then is you curve your perspective? your where then in or of the to end as the structuring ask, you back maturity kind interest-bearing and continues to forward head early from to hike a about year down, deposits Fed starting

Thomas Cangemi

question that our John Pinto, I'll to CFO, defer John?

John Pinto

brokered the looking as banking a balance sheet – a of to types, of since mortgage – betas, that's the our high the It's our So high two deposit really rate at beta. remained as business, yes, deposits cycle. the hike service, if broken into is and we look at you're service different If beta of out right? the either some tied beginning

Flagstar, course, started stable at then have been much you And tick much, retail, to more legacy if look the and piece of the from more They NYCB lower legacy both than they that. betas, up.

the I think have just have last of quarters. over couple seen everyone other about like seen, banks

little well. in flexibility of as is, well. talking where the borrowing have was Tom about you lot the it what when a gets think base bit But that I a monitor curve as at earlier, look we'll So we do

look where Or sensitive. how liability deposits to and liability too slightly that shrinkage those side. we're either at as are ready they're either move as asset positionings, funded, move, on able for we both borrowings be our without with we'll to right, So difficulty well much to funded needed the of we sensitive, could asset ensure some if to sensitivity

deposit think what both business. in the banking the have we do and mentioned, I kind I normal I And retail we a in as service to split So our opportunity between base, think is have like of there. what's

Thomas Cangemi

on if hiding about you're rate from on to I reiterate you X% to excess follow environment, just years that. liquidity. I paid a ago, the think a X.X say, don't let's we'll higher much made zero commentary now go just getting zero that up probably very Tom, from clear people to, is This

the that's marketplace. So

is want the That expensive right paid. a very financial in now. money this now and is So to phenomena people get right business services

not we going reality neutral. is company we're to to to now sensitive, closer this XX%, be have going The is XX% be that liability

unique rate to a position having to as Flagstar we're want not this at up. to I funding of think type to We at changer business of up of and a rates And advantage ourselves be the to better assets a NYCB, we're to down that's some have going that business rates model. of vulnerable mix. the game floating and the the going we us as take going verticals, combined look and that's for

So really super that's we're the excited that merger of benefit I think today. the about

have conditions And lot without I sensitive banks And the a we time, any that. tap any put together said, I think appropriate X%, the want we that of liability market liquidity we at repositioning assuming we warrant think, to we around and like or X% put we're if assets. liquidity

DNA to bank funding differently going much going deposits is and after lot our than good focus new think we that is getting But of a five-star sheet model. we're the this them go very great go the a the clients are traditional having on thrift to here. them is opportunity. and to institution think can optionality that after fund And the I great with bigger I balance Flagstar that So clients service calling

Brody Preston

you it. very Got everyone. much Thank

Operator

Thank you.

Our with with next questions come question. proceed Morgan Stanley. Manan from line Please your Gosalia the of

Thomas Cangemi

morning. Good

Manan Gosalia

morning. Good Hi.

government little that more Can for bit talk a are growth especially those opportunity there, from billion You you as noted service contribution lower-cost entities. given deposits? a $X the banking about the product

Thomas Cangemi

very been the very California that program That inflation there. stimulus provider that good benefit driven tech the into So was that This card along We bank balance providers, business. that we've partnered the line really for for program a was fourth particular another network in dissipate, as an out done up. alternative with and bank the solution solid rolled job with been partner, funding a on money a but quarter of sheet. will off a was partnering our has fintech business the the company were this we large

does card side. mention treasury made for also we've anything been provider the mind, in going that forward Treasury we cause that the network the on are US Bear money and

business. to the have opportunity we to build So continue the

lot As cards state unemployment business. a well the money that as for other municipals under the level network we process at of the funds

really is going that business So well.

happening of you it's hard in We come in. XXXX. what tell predict onboarding that they have will bunch to I a quarter

actual and the so technology come but to banking. they because the them count we really with don't this municipal in, interesting is able providers, ramp up we work bankers opportunity also into of things, deposit our to core about model we're what's they're the only So fairly get our that do not And side large.

companies, relations respect a these been of in technology and country past some it and years, X.X doing top meaningful deposit the for over in to in the it's it's successful relationship, up institutions and top go payroll the we've we all give but pure some an This state, for resulted opportunity. does take a So the operating been something process. deposit the activity RFP the time either And very state, and is onboard. that to

want give becomes it don't I on, to they do on. of any, So But we'll can it come call come aggressive when meaningful. vision much how

about balance cost the was $X average So, and zero. was California for of that example, billion

programs ready up ready other they're that the on cause government, at some have that's issue make by coming we depending the what actually is funding. [ph] to how US if could when program a are ramp on We company will would be they be endorsed to year, on Treasury, decision in quickly then their the that and this go depending

large the during successful. it's interesting able a we good to with pandemic been and were pillars cards to one stimulus some business mortgage payments continue program. of and leverage were an side, balances for It line very and of It's it's out banking time So service started along off It's we considerable hold three as provider period that that. and our and balance a a we on the a of of of nice the back sheet for we business. tech, carved out very

Manan Gosalia

Got you it. And us can banking within portfolio? of a the service as remind the just seasonality

Thomas Cangemi

large And back manage my coming deposit Mortgage the in always do one But customers opportunity. but we focused The on and number side, up the be we it there's obviously with, and think payments a when commentary, payments mean, to have you you payments the go I as our history be servicing the tax that as payments. tremendous warehouse P&I something well is payments. payments the previous for both Lee opportunity drive to really in the going have P&I business, there's down indicated to the long business obviously have that's the When on goes really we there's out, that. further I think, coming on side that and depending side. that Smith's And the Like -- could tax escrow on managing tax on through. that's I components. AmTrust municipalities the we under three can to very seasonal mortgages

few billion Flagstar. I we think with of So, a pre-consolidation dollars have

indicated, we $X think As at I it was billion.

go $X around But to we're client So opportunity I after it. current probably the that. there, respect just with billion It's very rates. a interest to base a $XX now. we volatile cost There's see as billion by

But an -- start to on have as things accustomed been funding the has bank that have versus opportunity wholesale normalize side, we interest mechanism a to rate different traditional funding to. non-traditional the

of So another source opportunity.

that I have And feel clients better going the we that I to with, And job a we're with, be client. banking what ones really credit that on will feel the go could after. a that's do we credit

be well. we that As sheet given and we operating balance size helpful, could technology true our activity, the and as indicated, our offerings

Manan Gosalia

Great. Thank you.

Operator

Thank you.

Please Steven of questions. with line your with the from proceed come questions next Alexopoulos Our JPMorgan.

Steven Alexopoulos

morning, everyone. Good Hey,

Thomas Cangemi

Steven, how are you?

Steven Alexopoulos

Tom? I are NIM. you, on How start to Good. wanted

ended in talk guidance. above on XXXX XQ you Here spot the XXXX XQ you would maybe Tom, that consistent through be year, what XXXX the I release? where that? a appreciate would the I with mean Can that guidance. margin But, basis, So does you think say you expect

Thomas Cangemi

But have John. a one of a into current X.XX. discussion been QX, I'll into front and going NIM low month it details. historical Was up on in go we give broad indicating that kind of for the we've X.XX, quarter the basis at our John Flagstar fourth look-back the will and we're

John Pinto

X.XX.

Thomas Cangemi

of same the are for rating have a amount floating different we indices. rolling into of that you guide at rate footing significant if have lot a option customers our are their assets, think QX So about benefit period. to X.XX, that X.XX the we At to time, verticals more priced

went multifamily we example, $X.X that billion So, plus QX, X.XX… had about loans for for of to X.XX, in sell

John Pinto

X.XX.

Thomas Cangemi

side, as really off a coupon, when derivatives our as offering floating more, to repricing higher-yielding instrument, well going allow into it unique the asset Coming to adding the think to forward focus to have opportunity rate funding much solution repricing. lot of as of customers the and side, a you comes a When we rate X% -- long so traditional about that's utilize and do their an marketplace, a more the terms. to we choices call, more fixed a to alternative finance have on absent term assets benefit the the

So synthetically Flagstar we've to out their markets larger are to capital some transactions to the doing that proactive that players larger multi-family been activity on balance for want offers we customers structure running sheet. the our of

really really interesting that we verticals into an businesses. have do are the So businesses capital choices high-yielding of to series drive on

indicated about that. to pressure. a still liability X% forward a have where X% That position you Obviously, that's but these move going where curve But deal being X%, we're assets. the we we very depending on ultimately, think to have want year-end, while, to some I for the of And pause going close more that couple can with we hikes. has said, we quickly to is sensitivity neutrality a so books the funding a rate as at obviously,

think, in in year. the we’re and going mid-Xs margins Xs already low the back we're to the in We're starting of point. to I higher So, the going have my start

hallmark in classes which different building Steven, of more And legacy our business have focus lot with we're going it's really C&I more businesses, out XXXX. will support, margin the business we'll a have new So margin. which into asset given a to company, that choices, going a we addition as for to drive the

Steven Alexopoulos

first be hold to NIM quarter Do the have you quarter through think the XQ the Yes. where full new this hold right, we year? range rest can going company, in -- first you quarter for next you in the quarter? the of think can beyond Do the the you because is

Thomas Cangemi

me we a it's get to to going on guidance typically but give the point margin, three-month try. QX We give forward to a outlook give margin. not -- a good on You're

the challenged, a I have unique sheet, balance We're challenged, have think the asset a have funding that here unique different different classes. positioning, we on as all we are still opportunity side. we is banks

starting strategy. then lot going be with over standalone the successful to moving increase knowing game excess liquidity, in NYCB in to then contend that strategy, into the an but hit That's in of to for all a And benefits If of probably year, March, the the the it'll higher and half past another tomorrow with repricing, margin true that's core going But average for not we increase a some and will funding banks wholesale we're on multiple. the liabilities we've NYCB. a to side deposits, very liability have our much an these including which to and respect strong with stabilize. year it's done margin two love changer we're we a wholesale overnight solid could of compared be years. That's our work a

Steven Alexopoulos

If I could follow-up--?

Thomas Cangemi

want color? John, to maybe you add any

John Pinto

see end had service mentioned And that We item deposits, and kick other we see we really off we is The the right? government non-interest-bearing we start accounts. of the the would at we're in that really seeing first program then -- on that to the roll quarter, down as it earlier only as and a to of now XXXX. expected have utilization that those start funds

in item So, see that that's when we first lose we'll forward. lot beneficial the that that benefit for a -- go just quarter we that's another of

Thomas Cangemi

crisis. propensity prepayment XXXX, at level we prepayment. would lowest income yield business year actual of because the going the the activity of the to I high higher to when class financial We the internally, much compared back we opportunity and even ended that look side, XXXX, the add, on of a year asset the is had this at fee Yes, on multifamily

get but prepayment But anticipated. you We very than it $XX Literally, -- XXXX, multiple we in the strong another to a go what back, it if had you And you up back was year million. total significantly go had record lower about We if where about that we earnings, activity, number $XXX were if liability think you is. had sensitive. million was we year. ended in is

So, XXXX. it was today and we're substantially over portfolio it back larger is is $XXX than the by probably off in million than

go forecast internally, drive we have right this our is in estimate structure really now. transaction in opportunity tremendous to very and is But even year, on asset that a stable fee crafts the There margin. cognizant conservative Because activity. from purchase don't There's that embedded activity out a there's get though we coupon So, the full coupon very react. of to no X% be how very market no class the will the prepay. large of asset to

doing once expected borrowing We more based to become start now, lot. rates the base. change a Right whole think that not on customers will are

that we're core having So, with particular larger kind sheet they we're asset nice reprice, class. of yields. on as a lower balance And getting benefit a

Steven Alexopoulos

X% XXXX, at which because for growth you're so look that What's you of loan make Got guidance, the I comparing around Flagstar the that the could if to? XXXX. if year I base year average full also it. sense the full ask, Tom, for have doesn't

Thomas Cangemi

we're down we because to year, equity on selling changed. loan Like pulling now. in until buying Last classes. very I That's happening indicated, in today. activity was lot multifamily. It's are had the marketplace XX% comfortable conservative customers and early Look, not growth not that right have net conditions the year. the driven have on A asset and of we're market going

the making to I market we very class model given to But going So larger we're loan economics growth. a on best be sure you're the we think focused that get conservative going for condition. have a have asset

right as Steven, to And now short-term. know, finance you it's expensive

say, you where the at, against we get off economically. in credit life That five-year that's need look average is let's a multifamily financing market, the XXX when line. a we're X% to our average to So And life, holding three-year paid around number treasury.

businesses. of that's I for at think the we as lines the economics look us right

loan So growth, when think that's I reasonable. think you X% about net

very If but customers most of unique in sitting changes, rate going really what And to funding side on. kind out trying a on given it's it that come always are with their changing to reasonable. changes, We figure environment, interest it's estimate. early are a be conservative it the and out needs think I

If different change these if could Warehouse dramatically reason we're down. some go in environment. for dramatically, a rate rates

of double So billion at the this back very warehouse end year, have $XX.X billion outstanding, $X we number quickly. about book that that has could

businesses. other So we spreads at with very some opportunity high the of of lines an along have

So we really are be and conservative. we being want conservative, to

relatively or were you So business. the the on standalone XX% portfolio a us challenge take year the the they of And side, flat was Flagstar's investment resi year in mortgage for down slightly a if held big out for for basis. given

Steven Alexopoulos

it. Got

Okay.

So year XXXX over average X% you're full assuming loan? just to clarify,

Thomas Cangemi

It's an early guide.

Steven Alexopoulos

my taking Thanks Okay. for questions.

Thomas Cangemi

sure. Sure,

Operator

you. Thank

line is proceed question your from McGratty questions. with of Please next with the KBW. Chris Our coming

Chris McGratty

Hey, expense, good sure Hey, looks Is amortization it, on million help annualize was good $X consensus, about guide the morning. The clear or which pretty make is would call It there. I'm little morning, good like right $XX $XX just amortization it for million. $XX expense about year? need The million, the John, your that everybody. the to a to expenses. midpoint to of million.

John Pinto

for at look only for on impacts the not securities you it in have also environment, purchase the did accounting When but is. change loans interest adjustments CDI. rate this it Yes, and

be to environment. given deal, changed much the rate when a definitely I this it's but think we number we expected originally, at CDI interest announced lower

you a So yes, $X that amortizations intangible million is look run month million, XXXX. -- at all good that when for rate that $X a

Thomas Cangemi

Yes.

the to $X.X CDI. excludes billion, amortization. that That's $X.X of On amortization billion exclusive of

Chris McGratty

yes, -- that makes offset they like looks No It other. each sense.

should as the might -- accretion yield or think contributor? any that guide, John, about considered the how in of what's margin a be accretion, income accretable we terms In the

John Pinto

Yes.

offset have trust the sub-debt coming the preferreds. So CDs, from way the in partially benefits that's from think accretion to about we it the is security from loan and side, and and

That say, we'll average on would perspective I from probably $XX the looking you're per range, an see. So million month. accretion in probably

portfolio, to rate The especially marked hard securities risk at look not rate perspective. guidance from pretty if on about an par, are is part some that Flagstar portfolios, the the even at pieces getting really and par loan when floating exact you close of interest the

of Some discounts. rate much the more deeper fixed has items

So on those. that speeds in to depends start it come really the on

come to those conservative speed So payoffs to those come of to But the because discounts go forward. you've be which some in we're trying as pretty as swings see could you in back that you discounts us. big recapture some as got to will

Thomas Cangemi

of accounting in discount you of that Yeah. offsetting have premium will assuming the be band Again, the that in and are on, hat put gone the possibility just short-term, and funnel. higher to accretion -- most my XXXX, CDs that

John Pinto

is in than yeah, little the it's yes. the -- a definitely bit security Yeah, CD mark loan shorter mark, the

Chris McGratty

$XX million included that's margin in the a flow the month guidance, will correct? and through

John Pinto

right. That's

Chris McGratty

base? Okay. sure And then want Steve's just guess digit, billion. is question, at think Is were to -- about $XX up. using? plus should The mid-single a that about buttoned held-for-sale? sheet, average that guide what And balance we I'm looking just for I where totally minus billion $X your held-for-sale question I'm make about back the is I that's to loans or come off one, a to that you're

John Pinto

loan The mid-single the -- for growth?

Chris McGratty

Yeah.

Thomas Cangemi

That's correct.

John Pinto

based of loan XX/XX. balance the spot yeah, -- at it's No off

the XX/XX, call back spot-to-spot. -- question doing to XX/XX a to the so it, as XX compared X% XXXX we're to previous get So XXXX XX/XX the,

Thomas Cangemi

some the As on so on have loans the far Lee since as we can business, Lee maybe Lee? Smith the the business, held-for-sale, got on color call.

Lee Smith

now. $X Yeah. years Obviously, that $X.X where billion you No, expect in mortgage we're we code and can for the activities last XX that $X toughest think look one of to in I billion, billion the when that so mentioned, you at throughout markets us XXXX. be zip

billion that of sale. for think is a XXXX to $X.X $X remainder available for the estimate I good for billion

Chris McGratty

you. great. Okay, Thank

Operator

you. Thank

Peter from your of proceed Please line the come questions next D.A. questions. Our Winter with Davidson. with

Thomas Cangemi

Peter. morning, Good

Peter Winter

Tom. morning, buybacks? priorities thoughts forward share on and you going the Good just maybe on an some give capital Can Thanks. update

Thomas Cangemi

first I'll start out priority. with the

we and historically, confident we're capital. been -- Markets Our respect in dividend have current and That's Obviously, the priority had changed, to substantial accounting rate. continue deal at an to year-end. we a had event at a very that will with there.

traded under an value that did to going side, have some capital impact. so the the we benefit of forward accretion book earnings So the

stack how dividend paying the to to that where obviously, defer is sits. base. to going combined I'll shareholder to John rate going the currently current specifically priority said, my being back That we're And get But our going for back. capital on we're continue to

John Pinto

the And multifaceted shareholders has course. with payback had ago, it's capital -- plan when of repurchases, historically, from company dividends years to and a stock

the use the is is for capital, and the as of Tom first, second dividend said, So growth.

have two a we excess we the those road things, at dictate. absolutely after that any would capital conditions So look potential as buyback down market

Peter Winter

OpEx $X.X a the update more from credit an you quick, office? just then on little Thanks. billion Okay. exposure, give can a just just bit real And on perspective color on

John Pinto

on as delinquency that have really been strong CRE Payments credit We've have through. has throughout and both XX come real office loan even and went concerns that expected. buckets, we portfolio we Well, deferred no from into buckets Yeah. process unbelievably of seen the no a been transition the XX-day perspective. out really, or the to have would

So little kick occupancy we've see up really to bit started of as a there well.

that has performance pandemic. in been out expected originally coming the of the So better portfolio we than

Thomas Cangemi

relationship, as some multifamily low I a very sponsorship, with the would very strong a to relationship, tied LTV, long-term comments, well. investment lending John's comfortable to of add the just

up a on estate -- picked NYCB $X of We than there's on of amount from stand-alone. total, office, So well John, lot little is the folks a less is real it billion. $X billion, the total there Flagstar lot material history some maybe as about commercial

John Pinto

billion. office total is yes, So, $X.X

Thomas Cangemi

deal And And history, down low. John seen It's $X.X as LTV event that in the is goes credit negative some as as we're sit very, again, seeing with think well have overall well it to billion. I maybe indicated, back any as to a of speeds. the and relatively that We we're very trends protected we the not and negative any haven't has value. sponsorship, solid. situation a deterioration. trends been

Peter Winter

loans those or for up up they can just coverage service refinance, ratios LTVs debt when refinance? for maybe come And you when updated come

Thomas Cangemi

We’ll tell you.

off CRE. have we think had That's about not in that's I -- -- coming $X.XX we total billion up

John Pinto

It’s of -- not off just

Thomas Cangemi

And $X that another is that XXXX about the And kind XXX next at coupon, year in and X% to closer then probably now. change of billion. is coupon

So we a ton have don't of money.

next coming coupon. book two CRE Let’s over next year, a it's think years due. X% say, I the it's And the XX% of

you But the It's average So, think on have rate I'm when look potential at again, you, sure we up if we you pretty have average them. an low that on LTV, John. a not LTV. repricing

John Pinto

XX%

Thomas Cangemi

Yes. LTV. XX% average

John Pinto

office. On

Thomas Cangemi

we haven't again, On confident we at office. any feel that, all And I seen pretty think deterioration.

[ph] As all a XX John are bucket, XX-day zero. indicated, buckets the

John Pinto

Zero.

Thomas Cangemi

got maybe pretty good feel the ultimately, that event had the I some during gave sheet, pandemic, about even and other the and gave having them the we're we about thinking issues, -- customers some a and to them release current environment. balance of we we we them handful given side. But that in

And that there very on end, in owned was any unique but maneuverability look asset the owned, will event be them love assets there's and of that we by City from would keys comfortable exiting to at New the our on the well taking bank, call assets class, the investors, we're if on comfortable necessary. be York are plenty investors we'll as, these

haven't in to have But sponsorship. and we strong problem, the so right, have that far. low we leverage, had have do, We we event

them expectation. have if that's stay strong. So, to hopefully, the some if sponsors in equity they And going, the kick more they keep

Peter Winter

the been in willing to click needed. equity, they've And if

Thomas Cangemi

have book. balance we the focused -- conversation that's huge but yet, conservative handful very we portfolio sponsorship customers had seen But underwriting, do at over classes these type comfortable had past, in on haven't months, in very comfortable this six our total large look families how business. the to what nine coveted they’re and transactions are relationship their by we We We've we're asset that we're to past that have and are have, we don't families These sheet. relevant on keeping their that a couple very the historically are a of loans checks. had

Peter Winter

this Tom. deal. on Congratulations Got it. Thanks, closing

Thomas Cangemi

looking super we're but journey, Peter. you, to the a we're It's been excited. future, Thank

Operator

Thank you.

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

Thomas Cangemi

Good morning Matt.

Matthew Breese

morning. Good

And a I if pretty loaded. to it's it's sense give a the fourth of first of this for not, front-end that is cadence clarify, us million sense accretable just yield just quarter want in quarter there? of $XX some cadence could -- yields the XXXX? Usually, year, quarter XXXX. assuming the Just you the accretable for get of -- first the to the I'm of month for

John Pinto

it be XXXX. That's would no the I I Yes, for loaded, mean what doubt, assume that's front-end can but average.

different and will there. which payoffs, some XXXX, deep You XXXX. here when to will expect can't dramatically no, than have be have, I like in some have in and I do it have runoff start you said, benefit. spikes really discounts you But some that you in don't CD will

Matthew Breese

the estate deposits? And yields on just components, the core then incremental And real you Okay. and on NIM commercial can at on give us interest-bearing today? coming spot year-end what rate then are multifamily

Thomas Cangemi

go I'll to the yield.

like we're And structure long-term we're the have bps as financing, group for and really Matt, down bank We're looking trying Commercial something does the a which probably if markets five-year, a not around another our long-term capital well that. with customer I customer. financing. deal. at change as we on the we're synthetically, for sit economics the do doing above the to pushing traditional really indicated, at, pushing So, is to we're five-year towards XX XXX-ish X%

been choices customers very third option. lot. option a They option, option, that option is SOFR We SOFR gave So, which an a lot SOFR the a has was we're more them indicated of our them XXX off I a rising. and doing a expensive giving which whole have of is aren't and

attractive not we're as half into for six as coupon. was which perspective, but an it's probably customers of and it multifamily sheet risk So, the seeing rate balance interest on months a much but opt like it's choice, side that higher management we prefer our ago, that alternative,

But take about I two market in at the side, all coupon you billion doing on structure, of I what's on in a tenure, in think look yields lot we as over if are that I it's we on reluctant assuming sitting to right the not marketplace -- a are $XXX they go have whole another indicated general, seven-year the $X about people and five-year commercial think the multibit repricing. XXXX, do that around next just years, the around $X.X now. X%, million billion, and $XXX about but multi-side, and sidelines into

just optionality property So, circumstances, the we're getting seen transactions. you've a the repricing them benefit and making very rare in in choice of from of

a -- higher for less activity. So, because balance longer could there's we we're probably have

activity. indicated there's comments, our As prepayment very for little my economic forecast internal in in previous

on earnings. the had our in year. to I back record years going to think we had was year still $XXX years probably prepaid million one high had last about of back of of worst strong million it previous $XX XXXX. a We a -- going We

we a it's if to we're be marketplace benign. the the economic assuming opportunity for changes. So, that relatively here have great But going

be So, going the quarter we way -- even our said first forward guide, meaningful we on any rate to impactful current environment. this not going in are prepayments in

Matthew Breese

Great. I deposits then year-end that. spot quarter And end? appreciate on at rate on the interest-bearing

John Pinto

At $XXX year-end, rate the is deposits on spot Yes. interest-bearing million.

Thomas Cangemi

point. one just Matt,

about talk for to of great I spread lines SOFR repricing XXX to mean want some business. the That of number I close is a business. So, have other we builder finance of off indices.

in involved of fees types those have We businesses.

because a that have yielding that very warehouse in very point the spread. we substantial We're spread clearly, that's business look with a XXX-basis great We business, know a well. very that the at opportunity attractive business. We as comfortable business,

are are XXXX to nicely to think to margin, they which over have in change C&I Those together other we part very on is are be beyond. behind we that to putting good and rate, that we have basis. fees, incremental grow going a very the near not accustomed spreads very legacy the Flagstar of what And typically coming combined we're That have is a high. deployment structure we're businesses here. their that They're have capital the going them, benefits and they floating they opportunity very, game

thing. that So does not we're at one one bank just

opportunities, very cautious talk have deploy we a given the story best be many, to allocation many new environment capital to rate ensure different and So with we're about the build have we as Flagstar. capital to verticals to going we

Matthew Breese

comes pace it's a as appreciate give spent, the that. as-a-service touch I also in for deposits, Could did and the all winds to roll deposits? to of the a it it to I the of considered attrition Understood, just expected And sounds that end year, it off the of then or is on it you government off -- that sense this something is a No. Tom. us on like lumps, grow near zero year-over-year? balancing is down. it as-a-service residual government in holds towards want residual can

Thomas Cangemi

and would to I'm of We've be how So work to going analysis on a on regression modeling this start. done doing in lot I'm expectation to John. active around refer going and sheet, an in more they stimulus which experience actually have with that and the model we expect held payments on we well how it, we the model. balance our than and conservatively is

the conservatively. would better Probably we it a stimulus provided So been expected. we from expected, longer It's benefit came that be for opportunity fourth than the will for. but California in have large that model than there it holding we had quarter

tail. ramping will the consistent details can get go have program, into same matters there time, in and same programs the and although a to we be XXXX, have to with At will type on other not that tail unemployment Jersey up some point large the John relationship a of with Ultimately, we down ones that a others.

and react. and it's average a us, in it, big It's importantly, to be trends. for some net John, If the ready QX. very We to for to been low, which there's is win and And once some picked cases. up bank liabilities the it fees about as California, you running the of timing if happened really more government good it Matt. business most as a involved. benefit the up cost a substantial we're of up. are will want But just But gets zero talk with those New of again, QX, quick recently gets in geared it It

John Pinto

it. Yes, we've impact with tried economic the saw stimulus the to we payments. to been pretty modeling close It's model

sit draw that. of the slow quickly. and pretty a So there deposits like after but around, is have a tail that the then go bulk will you to

then that quarter number there. of But first will think really still average material the be going deposits it's a then. the we start -- yes, nice have have from by don't to I the at as a it will end of year, down I assume come balance of So would will to

Matthew Breese

from they'll are give taken? timing sense be costs And Understood. when restructuring? And one-time you for the Okay. remaining deal the what then the the mortgage then a could us and throughout year

Thomas Cangemi

we into mortgage -- guesstimatess John left. Well, let the on get restructure some Lee will what think and about we going we're Lee? have to talk

Lee Smith

Yes, sure.

leases $XX some So that the that earlier, cost is that we need to be And actioned, with the out million million. as restructuring just mentioned are we of. severance. predominantly estimate there get we've But to to I $XX

associated to exit. a of There's also So with we that there's that. costs couple some contracts are going

We're and the that restructuring isolate we will that quarter. take to going a charge, in that as first

off we a yet the not closed are addition, days. probably that That's those need In XX that to lot we're of estimating closed offices are those we've loans work pipeline, what down.

run though I seeing of So restructuring why earlier even the that take result the have to mentioned that's through to clean expect there in I runoff start end that charge, will starting us February, beginning savings onetime a And of a pipeline noise X. and you're the April us as going the March. of real rate cost is

Thomas Cangemi

severance And and the some then of to consulting couple on comes consolidation just primarily we'll the the see two through it companies. in to work next when the some get quarters merger-related charges, of

then that see XXXX And you'll coming well there'll date. when So get QX charges in quarters. when to conversion the get of we we the to as be some

Matthew Breese

Got it.

Okay. just levels, me equity for tangible Last capital at X.X%. overall is one common

capital all Thank That's Should is you. equity contemplating we or any I to be risk-based ratios? total raise Your these sub-debt common raise sub-XX%. ratio had. bolster

Thomas Cangemi

Matt. Thanks, Yeah.

where I ratios loss legacy we're perspective, the portfolios. capital and two balance the given nature sheets, with a given comfortable two of ratios really sheets and think spot common equity content to capital charge-off X%. be in for a the credit X Tier good are given bank are, balance provisioning the just over a ratio That's the limited us in those a where the risk and from

of can at fund going capital And use right So it's course, dividends, something And is course, on forward, believe look the we capital conditions. to initiatives growth. manage. then other to, best now primarily to continue going of we're market of we depending the then,

Operator

you. Thank

come of question. Janney. your Our Christopher with line the with next proceed from Please Marinac questions

Christopher Marinac

Tom Hey John, had I on and capital. a the question as similar Matt

likely million from is there considered $XXX a may quarter-to-quarter? bit dip or where the to little the is grow it balance is So here, as scenario a sheet

John Pinto

I will grow. think it

Thomas Cangemi

is little I grow. Yeah. I mean, depends goal to a mean, the it bit.

assets put of the but look we companies content multi-family, a including at they're of both there's though XXX% things together even portion One in large warehouse, low risk-weighted we have they mortgage them, assets. the really when is loss

ratios in through So we are do time ensure over is capital to have to But that the our we our that we capital perspective. work capital goal from have target. want a to them be where

no that's So doubt the plan.

John Pinto

our planning well increase And, as to obviously, we're capital strong position. earnings growth

Christopher Marinac

question… Last

Thomas Cangemi

on adjustment interest the Just traded given to capital clear, we've changes off in for be accretion the rates.

you're a benefit far John as liabilities. marks the and a So -- as getting assets on as indicated, the lot

an have So impact. that does

You back get that over time.

nice growth well. you'll share think as per see So some we earnings

Christopher Marinac

last couple just thinking as to have can banking have the then now? And a out government an those a a Fed with just cut rates do to Do reprices it. you quarters how service and you question, has time. from service over Got absolute John, of as before lower

John Pinto

if there what to government are, as bearing be. non-interest they're specific the costs are a Well, those deposits or service as would exactly primarily really

on a the and to environment. see in you a cut, start some to to rates, service products. On we of savings some deposits lot banking there. before to -- see for spreads us little the have cuts, have Fed big this as But sooner those times see to can a later, drops a paying probably in those see see narrow or to bit you have you're I change we significant probably big especially what think start But to pivot

Christopher Marinac

moves? two-thirds those And maybe service sold three-quarters banking Is by right? about a as the are or Fed Okay. that of

Thomas Cangemi

range. I mean, there a Yes,

are beta, then that XXX% range. are Some XX% in some

side banking-as-a-service a what's of the change. the range on tied to So it's

Christopher Marinac

all my Got Great. questions. it. for Thanks taking

Thomas Cangemi

Sure.

Operator

you. Thank

questions the line Poonawala America. proceed of question. next Bank from with of Our with your Please Ebrahim come

Thomas Cangemi

back. you’re Ebrahim,

Ebrahim Poonawala

sorry. I know back. it's feel I’m Yes, long a I call. been

Just one Tom. question,

times you Like, franchise, combined ROTCE, look this we year? systems any expansion think environment. bank if a bank, perspective, of what conversion a beyond I mentioned around multiple where from sense us as the multiple being think becoming should you of you ROE next sense stock. you earning for the Give a what be is an think franchise have the in steady-state commercial

Thomas Cangemi

I to obviously take about excited to block effort putting rebranding companies mean, tackle together, year. is these be that's a this going We're going super Look, the and place.

that's our assist customer base. really are some great to to going technology We transitioning

historically, on commercial we're should just company towards funding be going a the to earning we banking, move teens. the of XX% be, is work over TCE, you past As we've and got under to couple lot the years, And in high side. the

high on is over X.XX%-ish well take perspective changed return sheet has but assets traditional the the time. on think, I It's And, multiple that, reality was the a reality going X.XX%, teens dramatically. here, north balance of X%, to in some work the

the very different interest that you think rates. of lender businesses fixed-rate If had have, that to we're the than historical be to vulnerabilities about will that verticals priced, going lines rising

we want balanced. So to be better

structure same we're get right. the At our to cost time, going

We'll going after funding We and have different a back deposit a do work rate going to environment. to to tackle block to mix. we look of funding. with, able better a XXXX in year and advantage go We're at XXXX be hopefully as the take

one basis, will larger, move the having that stream. feel very multiple. a of be bank is total less a to a as percentage better on income number mortgage because we that on core competency priority, funding of If much positioning strongly We change concentration will that our

we is on a transformation bank. dependency be So have give multiple. to wholesale less we on blended the the will Multiple key, to expansion at mortgage, believe to better And want that look dependency we less finance. going us as commercial a

to same tackle, the place. businesses. proving to the the capital marketplace first all conversion quarter road that allocating and It's have different the At verticals, the in time, We and the parts have of XXXX. will we're block take better in map of to margin time system we have be businesses done but to out that to we're rolling lines be the going going

total point, now. And have the at on we're company, a accordingly. different loan you a we'll something that's as very at by when loan and return now detail capital choice basis, And looking allocate

had choice our We combined limited historically, a where when choices have had on basis, business we we model.

model. So a we're we launching time as of the super brand. have great been a lot story excited out think has This long new And to excited We a tell. about about the we're a and business planning. new awaiting, Flagstar

Ebrahim Poonawala

Got it. Thank you.

Sal DiMartino

Thank the management for I over any for you. now session. comments. That to to the like back hand call is closing have our all time question-and-answer we would

Thomas Cangemi

morning again time the for and for interest join this us taking in your to Thank you NYCB.

unique particular you a financial organization all. We be exciting that one business, multifaceted longer line will reliant no any very a on are of services Thank with creating future.

Operator

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

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

Flagstar Financial (FLG) 31 Jan 232022 Q4 Earnings call transcript