Loan and Credit Risk - As of December 31, 2024, the company's total loans and leases held for investment included 8.7 billion (12.7%) in commercial real estate loans[163]. - The commercial real estate loan portfolio included 75.9 billion were not FDIC-insured as of December 31, 2024[173]. - The company is subject to comprehensive supervision and regulation by the FRB and OCC, which includes maintaining minimum capital requirements[180]. - Failure to meet capital requirements could result in limitations on the company's activities, including the ability to pay dividends and conduct business expansions[180]. - The company is classified as a Category IV banking organization, subject to enhanced liquidity risk management requirements[183]. - Non-compliance with the Bank Secrecy Act could result in significant civil monetary penalties and reputational damage[184]. - The company must comply with various consumer protection laws, including the Community Reinvestment Act, to avoid regulatory sanctions[190]. - Regulatory changes could impose additional capital or liquidity requirements, adversely affecting the company's operations and financial condition[180]. - The company is subject to regulatory capital requirements that may change, potentially leading to more stringent capital or liquidity requirements[198]. - The company faces risks related to credit loss provisions that may need to be adjusted based on regulatory reviews, potentially affecting financial results[162]. Dividend and Capital Management - The company is currently paying quarterly cash dividends at $0.01 per share, with potential regulatory changes posing risks to future dividend payments[175]. - The inability to receive dividends from the subsidiary bank could impact the company's ability to maintain or increase cash dividends to stockholders[176]. - Series B Preferred Stock dividends are payable at a rate of 13% per annum, payable quarterly and in arrears[178]. - Non-payment of dividends on Series A and Series B Preferred Stock could limit the company's ability to declare or pay dividends in the future[178]. - The company may need to raise additional capital in the future, which could dilute existing shareholders' ownership[200]. Operational and Strategic Risks - The company is undergoing significant changes in its Board of Directors and executive leadership, with multiple resignations and new appointments, which may create uncertainties for its business[213][214]. - The Board of Directors approved a new 2025-2027 Strategic Plan focused on transforming the Company into a top-tier regional bank, creating a customer-centric culture, and establishing effective risk management[215]. - The Company is pursuing a plan to diversify its loan portfolio by reducing its commercial real estate concentration, which may take considerable time and management attention[219]. - There are risks associated with the diversification process, including potential disruptions to business operations, loss of key employees, and failure to achieve anticipated benefits[220]. - The Company faces operational risks from reliance on third-party providers for key business functions, which could adversely impact service delivery and financial performance[209]. - The Company may experience challenges in integrating operations from recent acquisitions, which could hinder expected benefits[202]. Cybersecurity and Technology Risks - Cybersecurity risks have heightened, with potential breaches leading to increased expenses and reputational damage[205]. - The Company is exposed to cybersecurity risks and must maintain disclosure controls to notify investors of material incidents, which could have financial, legal, or reputational consequences[208]. - Compliance with evolving cybersecurity regulations may impose additional operational burdens and costs on the company[206]. - The Company could be adversely affected by extraordinary events beyond its control, such as natural disasters or geopolitical instabilities, impacting its financial condition and operations[225]. - The Company may face challenges in keeping pace with technological changes, which could impact its competitiveness in the market[210]. - The company's stress testing processes rely on potentially inadequate models, which could lead to unexpected losses[204]. Environmental, Social, and Governance (ESG) Risks - Increasing scrutiny on environmental, social, and governance (ESG) practices may lead to higher operational costs for the company[227]. - Failure to comply with ESG regulations could negatively impact the company's reputation and stock price[227]. - New government regulations may introduce more stringent ESG oversight and reporting requirements[227]. - Concerns over climate change may lead to changes in investor, consumer, and business behavior, affecting the company's operations[227]. - The company may face cost increases and asset value reductions due to climate change-related impacts[227]. - Creditworthiness of some customers may decline due to climate change considerations[227]. - Investors may choose not to invest in the company's securities based on climate change-related factors[227]. - The company's risk management efforts may not fully mitigate the impacts of new laws and regulations[227].
Flagstar Financial, lnc.(FLG) - 2024 Q4 - Annual Report