New York munity Bancorp(NYCB) - 2023 Q4 - Annual Report

GLOSSARY AND ABBREVIATIONS Glossary of Abbreviations and Acronyms This section lists abbreviations and acronyms used in the report, including financial statements, for reader comprehension - The glossary serves as a tool for readers to understand abbreviations and acronyms used in the report, including financial statements[13] Glossary of Key Financial Terms This section defines key financial and operational terms relevant to the Company's business, such as Bargain Purchase Gain, Basis Point, and Net Interest Margin - Key terms defined include 'Bargain Purchase Gain' (excess of acquired assets' fair value over liabilities and consideration), 'Basis Point' (0.01 percent change), 'Book Value Per Common Share' (equity per share), 'Brokered Deposits' (funds from deposit brokers), 'Charge-Off' (loan balance written off against ACL), 'Commercial Real Estate Loan' (mortgage on income-producing or owner-occupied commercial property), 'Cost of Funds' (interest expense to average interest-bearing liabilities ratio), 'CRE Concentration Ratio' (multi-family, non-owner occupied CRE, and ADC loans to total risk-based capital), 'Debt Service Coverage Ratio' (borrower's cash flow to annual debt payments), 'Derivative' (financial instrument whose value is derived from an underlying rate/price/index), 'Efficiency Ratio' (operating expenses to net interest and non-interest income), 'Goodwill' (difference between purchase price and fair value of acquired net assets), 'GSE Obligations' (GSE mortgage-related securities and debentures), 'Interest Rate Sensitivity' (likelihood of interest changes due to market rate fluctuations), 'Interest Rate Spread' (yield on interest-earning assets minus cost of interest-bearing liabilities), 'Loan-to-Value Ratio' (loan balance to appraised property value), 'Multi-Family Loan' (mortgage on rental/co-op building with >4 units), 'Net Interest Income' (interest income minus interest expense), 'Net Interest Margin' (net interest income to average interest-earning assets), 'Non-Accrual Loan' (90+ days past due or impaired, interest accrual ceased), 'Non-Performing Loans and Assets' (non-accrual loans, 90+ days past due accruing interest, OREO, repossessed assets), 'OREO and Other Repossessed Assets' (company-owned real estate/assets acquired via foreclosure/default), 'Rent-Regulated Apartments' (NYC apartments with restricted rents), 'Troubled Debt Modification' (modified loan terms due to borrower financial difficulties), 'Wholesale Borrowings' (FHLB advances, repurchase agreements, federal funds purchased), and 'Yield' (interest income to average interest-earning assets ratio)[15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][30][31][32][33][34][35][36][37][38][39][40][41] CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING LANGUAGE Overview of Forward-Looking Statements and Associated Risks This section discusses forward-looking statements, which are subject to uncertainties and various factors that could cause actual results to differ materially - Forward-looking statements are based on assumptions and describe future plans, strategies, and expectations, but actual results may differ materially due to inherent uncertainties and numerous factors beyond the Company's control[43][44][45] - Significant risk factors include general economic conditions, changes in interest rates, real estate values, regulatory focus on commercial real estate, competitive pressures, M&A integration challenges, and the more stringent regulatory framework for Category IV banking organizations[46] - Other risks encompass the ability to pay future dividends, retain key personnel, attract customers, manage liquidity, control non-interest expense, generate income from acquired operations, and address increased working capital requirements[49][52] PART I ITEM 1. Business NYCB is a bank holding company operating through Flagstar Bank, N.A., with market-leading positions in multi-family lending and mortgage services, subject to extensive regulations - New York Community Bancorp, Inc. (NYCB) is the bank holding company for Flagstar Bank, N.A., having grown through acquisitions including Flagstar Bancorp (December 2022) and Signature Bridge Bank (March 2023)[54] - NYCB holds market-leading positions as the 2nd largest multi-family portfolio lender nationally (and leading in NYC), 7th largest bank originator of residential mortgages, 5th largest sub-servicer of mortgage loans ($382.2 billion in UPB), and 2nd largest mortgage warehouse lender nationally[55] - The Company operates 420 branches across multiple states and a national wholesale network of ~3,000 third-party mortgage originators, with a significant focus on rent-regulated, non-luxury apartment buildings in New York City[58][59] General Company Overview NYCB is the bank holding company for Flagstar Bank, N.A., formed through organic growth and strategic mergers and acquisitions - New York Community Bancorp, Inc. (NYCB) is the bank holding company for Flagstar Bank, N.A., formed through organic growth and a series of mergers and acquisitions, including the 2022 acquisition of Flagstar Bancorp and the merger of New York Community Bank into Flagstar Bank, N.A.[54] - The Company is the 2nd largest multi-family portfolio lender in the country, the leading multi-family portfolio lender in the New York City market specializing in rent-regulated buildings, the 7th largest bank originator of residential mortgages, the 5th largest sub-servicer of mortgage loans nationwide ($382.2 billion in UPB as of December 31, 2023), and the 2nd largest mortgage warehouse lender nationally[55] Online Information about the Company and the Bank The Company provides customer services and investor information through its website, including 24-hour account access and SEC filings - The Company provides customer services and investment community information through its website, www.flagstar.com, including 24-hour account access, product details, and SEC filings (10-K, 10-Q, 8-K) on its Investor Relations portion at www.ir.myNYCB.com[56](index=56&type=chunk)[57] Our Market Flagstar Bank operates 420 branches in key regions and a national wholesale mortgage network, with multi-family loans concentrated in New York City - Flagstar Bank, N.A. operates 420 branches with strong presence in the Northeast and Midwest, and exposure to high-growth markets in the Southeast and West Coast[58] - Flagstar Mortgage operates nationally through a wholesale network of approximately 3,000 third-party mortgage originators[58] - The majority of multi-family loans are collateralized by rental apartment buildings in New York City, while CRE and ADC loans are primarily in the Northeast and Midwest[59] Competition for Deposits The Company competes for deposits through convenience, service, and competitive rates, influenced by market interest rates and industry consolidation - The Company competes for deposits by emphasizing convenience, service, and competitive rates through its 420 branches, 385 ATMs, mobile banking, online services (www.flagstar.com, www.myBankingDirect.com), and a suite of cash management products for businesses[60][61] - Competition is influenced by short-term interest rates, industry consolidation, rates from other financial institutions (credit unions, online banks, brokerage firms), and FinTech companies[62] - Internal factors like deposit acquisitions, loan/securities cash flows, and wholesale fund availability also impact deposit competition, driven by liquidity needs for loan production[63] Competition for Commercial and Consumer Loans and Servicing Lending success depends on local economic health and competition from diverse financial institutions, while servicing focuses on quality and risk infrastructure - Lending success is tied to local economic health, impacting loan demand, collateral value, and borrower repayment ability[64] - For multi-family loans in NYC, competition is based on service and expertise, facing money center, regional, local banks, insurance companies, and other lenders[65] - Specialty finance loans (asset-based, equipment, dealer floor plan) compete with capital markets and larger financial institutions, with competition driven by economic conditions and interest rates[67] - In servicing, the Company primarily competes with non-bank servicers, focusing on quality servicing, robust risk/compliance infrastructure, and recapture services[69] Monetary Policy The Company's operations are significantly affected by federal fiscal and monetary policies, particularly those of the Federal Reserve Board - The Company is affected by federal fiscal and monetary policies, particularly those of the Federal Reserve Board (FRB), which influences the money supply, bank loans, investments, deposits, and interest rates through open market operations, discount rate changes, and reserve requirements[70] Environmental Issues The Company mitigates environmental risks in lending by requiring environmental assessments and insurance for various property types - The Company mitigates environmental risks in lending by requiring environmental insurance or site assessments for CRE, ADC, and out-of-state multi-family loans, and conducts updated analyses before foreclosure[71] - For bank properties, Phase 1 Environmental Property Assessments are performed for large acquisitions, and in-house/expert evaluations for smaller ones, to identify and address risks like asbestos, storage tanks, radon, and mold[72] Subsidiary Activities The Company primarily operates through Flagstar Bank, N.A., which has numerous direct and indirect subsidiaries, alongside other parent company subsidiaries - The Company primarily operates through Flagstar Bank, N.A., which has 39 active subsidiaries (26 direct, 13 indirect)[73] - The Parent Company also has four direct subsidiaries, including Flagstar Bank, N.A., special business trusts for capital issuance, and two non-banking insurance subsidiaries[74] Human Capital Management The Company focuses on attracting and retaining a diverse workforce through competitive compensation, comprehensive benefits, and inclusive policies - As of December 31, 2023, the Company had 8,766 employees, none represented by a collective bargaining agreement, and maintains good employee relations[75] - The Company focuses on attracting and retaining talent through competitive pay, a broad range of benefits (401(k) with match, healthcare, insurance, PTO), and an equity award program[76] - NYCB is committed to a diverse and inclusive workforce, with approximately two-thirds female and nearly half from diverse ethnic backgrounds, supported by policies, training, and eleven Employee Resource Groups[77][78][79] Federal, State, and Local Taxation The Company is subject to various income taxes, with further details provided in the Summary of Significant Accounting Policies - The Company is subject to federal, state, and local income taxes, with further discussion provided in Note 2 - Summary of Significant Accounting Policies[81] Regulation and Supervision The Company and its Bank subsidiary are subject to extensive federal and state regulations, including capital requirements and consumer protection laws, which can significantly impact operations - The Bank is a national banking association regulated by the OCC, FDIC, and CFPB, primarily for the protection of depositors and the DIF, not shareholders[82] - As a bank holding company, NYCB is regulated by the Federal Reserve and SEC, with any changes to laws or regulations potentially having a materially adverse impact[83] - The Company is subject to the Dodd-Frank Act, which significantly changed bank regulatory structure, and the New York Housing Stability and Tenant Protection Act of 2019, which impacts rent-regulated apartments and could affect multi-family loan collateral values[84][85] Capital Requirements The Company and Bank are subject to Basel III capital rules, requiring minimum ratios and a capital conservation buffer, with higher risk weights for certain assets - The Company and Bank are subject to Basel III capital rules, requiring minimum ratios: Common Equity Tier 1 (4.5%), Tier 1 (6%), Total Capital (8%), and Tier 1 Leverage (4%)[87] - Basel III also established a 2.5% capital conservation buffer, increasing effective minimums to 7.0% (CET1), 8.5% (Tier 1), and 10.5% (Total Capital), with limitations on dividends and share repurchases if capital falls below these levels[89] - The rules assign higher risk weights to certain assets (e.g., 150% for 90+ days past due exposures, certain CRE facilities) and revise capital definitions, including the inclusion of AOCI in Tier 1 capital[88] Prompt Corrective Regulatory Action FDICIA mandates prompt corrective action for institutions not meeting minimum capital, establishing five tiers and triggering mandatory regulatory responses - FDICIA mandates 'prompt corrective action' for institutions not meeting minimum capital, establishing five tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized[91] - To be 'well capitalized,' an institution needs a total risk-based capital ratio of ≥10%, Tier 1 risk-based capital ratio of ≥8%, CET1 risk-based capital ratio of ≥6.5%, and Tier 1 leverage ratio of ≥5%, without being subject to a regulatory order[92] - Failure to meet minimum capital can trigger mandatory regulatory actions, including dividend limitations, asset growth restrictions, and potentially the appointment of a conservator or receiver[95][96][97] Enhanced Stress Testing and Prudential Standards As a Category IV banking organization, the Company is subject to enhanced liquidity risk management and resolution planning requirements - Due to the Signature transaction, the Company's total assets exceeded $100 billion, classifying it as a Category IV banking organization[98] - As a Category IV organization, NYCB is subject to enhanced liquidity risk management requirements, including reporting, liquidity stress testing, a liquidity buffer, and resolution planning, but is exempt from company-run stress tests[98][99][101] - The frequency of stress capital buffer requirements is aligned with supervisory stress tests, occurring every other year for Category IV institutions, with an option to participate annually for an updated buffer[102] Real Estate Lending Standards FDIC regulations require institutions to establish internal real estate lending standards and heightened risk management for CRE concentrations - FDIC regulations require institutions to establish internal real estate lending standards consistent with safe and sound practices, including loan-to-value limitations and guidelines for exceptions[106][107] - Joint guidance on 'Concentrations in Commercial Real Estate Lending' defines a concentration if construction/land development loans are ≥100% of risk-based capital, or multi-family/non-owner occupied CRE/construction loans are ≥300% of risk-based capital[108] - If a concentration exists, heightened risk management practices are required, including board oversight, portfolio management, underwriting standards, market analysis, stress testing, and increased capital levels[108] Dividend Limitations The Parent Company's ability to pay dividends is dependent on Flagstar Bank, N.A.'s dividends, which require regulatory approval - The Parent Company's ability to pay dividends depends on surplus or net profits, and is funded primarily by dividends from Flagstar Bank, N.A.[110][186] - The Bank requires OCC approval for dividends exceeding its net profits for the current year plus retained net profits for the preceding two years, and specifically requires approval through at least November 1, 2024, due to the Flagstar acquisition[111][185][186] Bank Dividends Paid to Parent Company | Year | Amount (millions) | | :--- | :--- | | 2023 | $580 | Insurance of Deposit Accounts Deposits at Flagstar Bank, N.A. are FDIC-insured, with risk-based assessments and a special assessment to cover recent bank failures - Deposits at Flagstar Bank, N.A. are insured up to $250,000 per account owner by the FDIC's Deposit Insurance Fund (DIF)[115] - FDIC assessments are risk-based, ranging from 1.5 to 40 basis points of the institution's assessment base (average total assets minus average tangible equity)[116] - A special assessment was imposed to recover losses from Silicon Valley Bank and Signature Bank failures, with an annual rate of ~13.4 basis points over eight quarters, starting Q1 2024, and an expected increase due to a revised loss estimate[118][119] Holding Company Regulations The Company is regulated by the FRB under the BHCA, requiring compliance with rules, reports, and examinations, and subject to oversight for capital distributions - The Company is regulated by the FRB under the BHCA, requiring compliance with rules, reports, and examinations[120][123] - FRB approval is generally needed for acquiring >5% of another bank's voting shares, and the GLBA restricts acquisitions by companies not permissible for bank/financial holding companies[121][122] - Capital distributions (dividends, share repurchases) are subject to Federal Reserve oversight and non-objection, considering capital adequacy and planning[124] Community Reinvestment Act The CRA requires financial institutions to meet community credit needs, with new regulations encouraging expanded access and a metrics-based evaluation - The CRA requires financial institutions to meet the credit needs of their entire community, including low- and moderate-income neighborhoods, with performance rated in lending, investment, and service[129] - A final rule amending CRA regulations was issued in October 2023, encouraging expanded access to credit, adapting to mobile/online banking, and implementing a new metrics-based evaluation approach, effective January 2026/2027[130] - In January 2022, the Company committed $28.0 billion in loans, investments, and financial support to underserved communities and LMI families through a Community Pledge Agreement with the NCRC[131] Bank Secrecy and Anti-Money Laundering The Bank is subject to BSA and USA PATRIOT Act, requiring risk-based internal controls to prevent money laundering and terrorist financing - The Bank is subject to the BSA and USA PATRIOT Act, requiring risk-based internal controls to prevent money laundering and terrorist financing, including record-keeping, suspicious activity reporting, and customer identification[132] - The Company has an enterprise-wide anti-money laundering program with policies, procedures, and controls to identify, monitor, manage, and mitigate risks, and comply with OFAC economic sanctions[133] Data Privacy Federal and state laws impose extensive consumer privacy protections, requiring disclosure, opt-out options, and robust information security programs - Federal and state laws, including GLBA, CCPA, and GDPR, impose extensive consumer privacy protections, requiring disclosure of practices, opt-out options, and comprehensive information security programs[135][136] - Non-compliance can lead to fines, litigation, regulatory enforcement, and reputational damage, requiring changes to systems, business practices, or privacy policies[136] Cybersecurity The CISA aims to improve cybersecurity through information sharing and authorizes companies to monitor systems and implement defensive measures - The CISA aims to improve cybersecurity through information sharing between the U.S. government and private sector, authorizing companies to monitor systems and implement defensive measures[137] Consumer Financial Protection Bureau The CFPB has broad rulemaking and enforcement authority over consumer financial products, prohibiting unfair practices and imposing significant penalties for violations - The CFPB, established under the Dodd-Frank Act, has broad rulemaking and enforcement authority over consumer financial products and services, prohibiting unfair, deceptive, or abusive acts or practices (UDAAP)[145] - The CFPB can issue cease-and-desist orders, impose civil penalties (ranging from $6,813 to $1,362,567 per day for violations), and state attorneys general can also bring civil actions under CFPA authority[147][148][149] Enterprise Risk Management The Company's Boards oversee the ERM program, which identifies, measures, monitors, mitigates, and reports risk, aligning with strategic and capital plans - The Company's Boards of Directors oversee the Enterprise Risk Management (ERM) program, which identifies, measures, monitors, mitigates, and reports risk[151] - ERM is responsible for setting the Company's Risk Appetite Policy, aligning it with budget, strategic, and capital plans, and monitoring key risk indicators against established warning levels and limits[152] Recent Events Recent events include significant dividend reductions, a substantial equity capital raise, and changes in executive leadership and board composition - On January 30, 2024, the Board declared a quarterly cash dividend of $0.05 per share, reduced from $0.17, and further reduced it to $0.01 per share on March 7, 2024[153] - On March 11, 2024, investors injected approximately $1.05 billion in equity through common stock, Series B and C Preferred Stock, and warrants for Series D NVCE Stock[155] - In connection with the capital raise, Joseph Otting was appointed President and CEO (effective April 1, 2024), Alessandro DiNello became Non-Executive Chairman, the Board was reduced to ten members, and four new directors were appointed[158] - The Company plans to seek stockholder approval for at least a 1-3 reverse stock split and to increase authorized common stock to at least 1,700,000,000 shares (or 566,670,000 post-split)[159][160] ITEM 1A. Risk Factors This section outlines material risks, including interest rate, credit, financial, liquidity, legal, strategic, operational, and reputational factors, that could adversely impact the Company's financial condition - The Company's business is exposed to various inherent risks, including interest rate, credit, financial statements, liquidity and dividend, legal/compliance, financial and market, strategic, operational, and reputational risks[161] - Failure to effectively identify, monitor, and mitigate these risks could lead to increased regulatory risk and a material adverse impact on financial condition and results of operations[162] Interest Rate Risks Changes in interest rates can significantly reduce net interest income and asset values, impacting financial condition and earnings - Changes in interest rates can reduce net interest income and negatively impact the value of loans, securities, and other assets, affecting cash flows, financial condition, results of operations, and capital[163][171] - If interest rates on interest-bearing liabilities rise faster than on interest-earning assets, or vice versa, net interest income and earnings could decrease[171] - Interest rate changes also affect loan origination, deposit attraction/retention, fair values of financial assets/liabilities, average lives of portfolios, and prepayment penalty income, with an inverted or flat yield curve potentially contracting net interest margin[171] Credit Risk The Company faces significant credit risk from potential ACL insufficiency, concentrations in multi-family and CRE loans, and New York State rent regulation changes - The allowance for credit losses (ACL) might be insufficient to cover actual losses, adversely impacting financial condition and results of operations, especially with the CECL model potentially increasing ACL volatility[164][172][173] - Concentration in multi-family loans ($37.3 billion, 44.0% of total loans) and CRE loans ($10.5 billion, 12.4%) exposes the Company to increased lending risks and potential losses, as repayment often depends on property operations and sales[165][175] - Changes in New York State rent regulation (e.g., Housing Stability and Tenant Protection Act of 2019) could adversely impact the value of collateral securing multi-family loans, affecting financial condition and results[165][177] - Economic weakness in the New York City metropolitan region, where most collateral is located, could negatively affect borrower repayment ability, collateral values, and lead to increased loan delinquencies and losses[178] Financial Statements Risk Inaccurate accounting estimates, impairment of intangible assets, and ineffective internal controls pose significant risks to financial reporting and condition - Accounting estimates and risk management rely on analytical and forecasting models, which may be inadequate or inaccurate due to flawed assumptions or design, especially during market stress, potentially leading to increased losses or insufficient allowances[164][179] - Impairment in the carrying value of other intangible assets, primarily core deposit intangibles ($625 million at Dec 31, 2023), could negatively impact financial condition and results of operations, particularly if deposits decline significantly[164][180] - Failure to maintain effective internal controls, as evidenced by identified material weaknesses (e.g., in loan review processes), could impair accurate and timely financial reporting, lead to fraud, reputational harm, and regulatory actions[164][181] Liquidity and Dividend Risks Failure to maintain adequate liquidity, deposit outflows, and dividend reductions pose significant risks to the Company's financial stability and stock value - Failure to maintain adequate liquidity could prevent the Company from fulfilling financial obligations, leading to reputational and compliance risks, as primary liquidity sources (deposits, wholesale borrowings, loan/securities repayments) are influenced by external factors[164][182] - Deposit outflows, especially from uninsured deposits (35.9% of total deposits at Dec 31, 2023), could necessitate more expensive wholesale funding or asset sales, increasing costs and reducing net interest income[183] - Reduction or elimination of quarterly cash dividends, as recently occurred (from $0.17 to $0.01 per share), could adversely impact the market price of common stock, especially given regulatory approval requirements for subsidiary bank dividends[165][185][186] - Deferring payments on trust preferred capital debt securities or defaulting on related indentures would prohibit dividend payments on common stock[165][187] - Dividends on Series A, B, and C Preferred Stock are discretionary and noncumulative, and may not be paid if it causes non-compliance with laws or regulations, or if the Board does not declare them[165][189] Legal/Compliance Risks Non-compliance with capital requirements, stringent regulations, BSA/AML, consumer protection laws, and data privacy/cybersecurity poses significant legal and financial risks - Inability to meet minimum capital requirements could restrict business expansion, dividend payments, or lead to FDIC deposit insurance termination, impacting financial condition and stock value[167][191][192] - As a Category IV banking organization, stringent regulations (reporting, stress testing, liquidity risk management) apply, and non-compliance could result in regulatory risks, restrictions, and significant expenses[168][194] - Noncompliance with BSA, anti-money laundering statutes, and OFAC regulations could lead to material financial loss, reputational damage, fines, and regulatory actions, including restrictions on business activities and acquisitions[168][195][196][197] - The enterprise risk management framework may not effectively mitigate all risks, especially unknown or unanticipated ones, potentially leading to future losses and increased FDIC insurance premiums[168][198] - Failure to comply with numerous consumer protection laws (CRA, fair lending, UDAAP) could result in sanctions, damages, civil money penalties, and restrictions on mergers/acquisitions or business expansion[168][200] - Heightened legislative and regulatory focus on data privacy (GLBA, CCPA, GDPR) and cybersecurity risks can lead to increased scrutiny, compliance costs, fines, litigation, and reputational damage[168][202] Financial and Market Risks Declining economic conditions, rising mortgage rates, dependence on Agencies, and future stock issuances pose significant financial and market risks - Declines in economic conditions, real estate values, or increased borrower financial stress could negatively affect loan repayments, collateral values, and demand for products, potentially increasing loan losses and reducing earnings/capital[168][203] - Rising mortgage rates and adverse changes in mortgage market conditions (e.g., 10-year U.S. Treasury rate increase in 2023) could reduce mortgage origination volume, refinancing activity, and mortgage revenue, impacting operating results[168][204] - High dependence on Agencies (Fannie Mae, Freddie Mac, Ginnie Mae) to buy mortgage loans means changes in their programs, eligibility criteria, or roles could adversely affect the Company's business and financial condition[168][207][208] - Future sales or issuances of common stock or other securities (including warrants from the March 2024 capital raise) may dilute existing holders' ownership, decrease per-share book value, and adversely affect market price[168][209][211][212] Strategic Risks Intense competition, limitations on loan portfolio growth, and challenges in M&A integration pose significant strategic risks to the Company's performance - Extensive competition for loans and deposits, influenced by new entrants, increased focus on multi-family/CRE lending by competitors, and the Company's ability to offer competitive products/services, could adversely affect business expansion and financial condition[169][213] - Limitations on growing multi-family and CRE loan portfolios (56% of total loans held for investment at Dec 31, 2023) could negatively impact the ability to generate interest income and earnings per share[169][214] - Inability to engage in or realize anticipated benefits from mergers and acquisitions (including Flagstar and Signature integrations) could adversely affect competitiveness, financial performance, deposit funding costs, and loan demand fulfillment[169][215][216] - The success of the Signature transaction depends on uncertain factors, including the accuracy of fair value estimates for acquired assets and the recorded bargain purchase gain, which could materially affect financial condition and results[169][217] Operational Risks Reliance on models, cybersecurity breaches, third-party dependencies, and personnel retention challenges present significant operational risks - Reliance on analytical and forecasting models for stress testing may be inadequate or inaccurate, impacting strategic planning and corporate goals, and potentially leading to regulatory sanctions if capital/liquidity requirements are breached[170][218] - Cybersecurity breaches (experienced by the Company, acquired entities, and service providers) could result in additional expenses, litigation, regulatory scrutiny, losses, and customer loss, despite protective measures[170][219][220][221][222] - Reliance on third parties for key business functions (e.g., data processing, mortgage originators) exposes the Company to operational risks from service disruptions, performance failures, security breaches, and increased regulatory oversight[170][223][231][232][233] - Inability to attract and retain key personnel, especially skilled leaders, could adversely impact operations due to specialized knowledge and difficulty in finding qualified replacements[170][225] - The transition to a new CEO (Joseph M. Otting, effective April 1, 2024) is critical, and failure to manage it successfully could adversely affect operations and financial conditions[170][226] - The Company may be terminated as a servicer or subservicer, or incur costs/liabilities, if servicing obligations are not met, including those related to mortgage loan foreclosure actions, impacting mortgage servicing revenue[170][228] - The Company faces significant fraud risks (internal/external, unauthorized transactions, misrepresentations in client information) that could lead to financial loss, litigation, and reputational damage, despite implemented controls[170][236] Reputational Risk Damage to the Company's reputation from various sources, including misconduct, litigation, and ESG concerns, could significantly harm its business and growth - Damage to the Company's reputation from sources like employee misconduct, litigation, regulatory outcomes, service failures, compliance issues, unethical behavior, or unintended disclosure of confidential information could significantly harm its business, competitive position, and growth prospects[170][237] - Increasing scrutiny and evolving expectations from stakeholders regarding Environmental, Social, and Governance (ESG) practices may impose additional costs, expose the Company to new risks, and negatively impact its reputation and stock price[170][238] ITEM 1B. Unresolved Staff Comments This section states that there are no unresolved staff comments from the SEC - There are no unresolved staff comments[239] ITEM 1C. Cybersecurity This section details the Company's cybersecurity risk management and governance framework, including its Board-approved Information/Cybersecurity Program (ICP) and CISO oversight - The Company utilizes a formalized Information/Cybersecurity Program (ICP), approved annually by the Board, to protect confidential information and prevent operational disruptions, aligning with industry best practices and regulatory guidelines[241] - The ICP includes policies for control testing, third-party oversight, and employee training (including phishing campaigns) to ensure awareness and mitigate risks[242] - The ICP is integrated into the Enterprise Risk Management (ERM) Program, which ensures consistent risk identification, documentation, measurement, management, and mitigation, with a formal Incident Response Plan (Plan) in place[243][244] - The Board's Risk Assessment and Technology Committees provide direction and oversight, with the Chief Information Security Officer (CISO) responsible for program administration and management, reporting directly to the Chief Risk Officer[246][247][248] ITEM 2. Properties The Company owns its headquarters and some branch/back-office buildings, while leasing others across multiple states, with current facilities deemed adequate - The Company owns its headquarters, some branch offices, and back-office buildings in New York, Ohio, Florida, and Michigan[249] - Additional branch and back-office locations are utilized under various lease and license agreements in those states, plus New Jersey, Arizona, California, Indiana, and Wisconsin[249] - Management assesses its facilities as adequate for current and immediate future needs[249] ITEM 3. Legal Proceedings The Company is involved in various legal actions, including shareholder class and derivative lawsuits alleging federal securities law violations and breach of fiduciary duty - The Company is involved in various legal actions arising in the ordinary course of business, which management believes are immaterial in aggregate to financial condition and results of operations[250] - Three shareholder class and derivative actions were filed in February 2024, naming the Company, its CEO, CFO, and directors as defendants, alleging violations of federal securities laws and breach of fiduciary duty[251][252][253] - These lawsuits relate to disclosures concerning the impact of the Flagstar and Signature transactions and the Bank's commercial real estate loan portfolio[251][252][253] - The outcome of this litigation is uncertain, with no assurance that material losses, penalties, or significant legal expenses will not be incurred, potentially exceeding established reserves[254] ITEM 4. Mine Safety Disclosures This section states that there are no mine safety disclosures to report - There are no mine safety disclosures[255] PART II ITEM 5. Market For the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases This section provides an overview of the Company's common stock market, including trading information, outstanding shares, a stock performance graph, and share repurchase activities - New York Community Bancorp, Inc. common stock trades on the NYSE under the symbol 'NYCB'[258] Common Stock Outstanding and Registered Owners (as of December 31, 2023) | Metric | Value | | :--- | :--- | | Shares Outstanding | 722,066,370 | | Registered Owners | ~11,746 | Cumulative Total Stockholder Return (December 31, 2018 - December 31, 2023) | Index | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | 12/31/2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | New York Community Bancorp, Inc. | $100.00 | $135.38 | $127.51 | $156.41 | $118.03 | $149.75 | | S&P Mid-Cap 400 Index | $100.00 | $126.20 | $143.44 | $178.95 | $155.58 | $181.15 | | S&P U.S. BMI Banks Index | $100.00 | $137.36 | $119.83 | $162.92 | $135.13 | $147.41 | - The Company repurchased 1,257,535 shares of common stock for $12 million in 2023, with approximately $9 million remaining under the Board's $300 million repurchase authorization[265][267] ITEM 6. Reserved This item is reserved and contains no information ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the Company's financial condition and results for 2023, highlighting a net loss due to goodwill impairment, increased credit loss allowance, and bolstered liquidity - The net loss for 2023 was primarily driven by a $2.4 billion goodwill impairment in Q4, partially offset by a $2.1 billion bargain gain from the Signature Transaction[270] - The Company significantly increased its allowance for credit losses to $992 million (from $393 million in 2022) to address weakness in the office sector, potential repricing risk in the multi-family portfolio, and increases in classified assets, aligning with Category IV bank peers[270][380] - On-balance sheet liquidity was bolstered in preparation for enhanced prudential standards applicable to banks with over $100 billion in total assets[270] Key Financial Highlights (Year Ended December 31) | Metric | 2023 (millions) | 2022 (millions) | Change (millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $114,100 | $90,100 | $23,900 | 26.5% | | Total Deposits | $81,500 | $58,700 | $22,800 | 38.8% | | Net (Loss) Income | $(79) | $650 | $(729) | -112.2% | | Diluted (Loss) Earnings Per Share | $(0.16) | $1.26 | $(1.42) | -112.7% | | Goodwill Impairment | $2,400 | $0 | $2,400 | N/A | | Bargain Gain (Signature Transaction) | $2,100 | $0 | $2,100 | N/A | | Provision for Loan Losses | $552 | N/A | N/A | N/A | | Allowance for Credit Losses | $992 | N/A | N/A | N/A | Executive Summary The Company reported a net loss in 2023 due to goodwill impairment, offset by a bargain gain, while significantly increasing its allowance for credit losses and bolstering liquidity Key Financial Data (Year Ended December 31) | Metric | 2023 (millions) | 2022 (millions) | | :--- | :--- | | Total Assets | $114,100 | $90,100 | | Total Deposits | $81,500 | $58,700 | | Net (Loss) Income | $(79) | $650 | | Net (Loss) Income Available to Common Stockholders | $(112) | $617 | | Diluted (Loss) Earnings Per Share | $(0.16) | $1.26 | - The increase in total assets and deposits was primarily due to the March 20, 2023, Signature Transaction[268] - The 2023 net loss reflects a $2.4 billion goodwill impairment, partially offset by a $2.1 billion bargain gain from the Signature Transaction[270] - The Company recorded a $552 million provision for loan losses in Q4 2023, increasing the allowance for credit losses to $992 million, to address weaknesses in the office sector, multi-family repricing risk, and classified assets[270] Loan Portfolio Overview The loan portfolio saw significant growth in C&I and Commercial loans due to acquisitions, while multi-family loans slightly decreased, reflecting diversification Loan Portfolio Composition (as of December 31) | Loan Type | 2023 (billions) | 2022 (billions) | Change (billions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | C&I Loans | $25.3 | $12.3 | $13.0 | 105.7% | | Multi-Family Loans | $37.3 | $38.1 | $(0.8) | -2.1% | | Commercial Loans (CRE & ADC) | $13.4 | $10.5 | $2.9 | 27.6% | | One-to-Four Family Residential | $6.1 | $5.8 | $0.3 | 5.2% | | Other Loans | $2.7 | $2.3 | $0.4 | 17.4% | | Loans Held-for-Sale | $1.2 | $1.1 | $0.1 | 9.1% | - The increase in C&I loans and Commercial loans (CRE & ADC) was largely due to the Signature Transaction and organic growth[271][273] - Multi-family loans decreased slightly, and their proportion of total loans held for investment reduced from 55% in 2022 to 44% in 2023, reflecting a diversification strategy[272] Deposit Base Overview The Company's deposit base significantly expanded due to the Signature Transaction, leading to a substantial increase in total and uninsured deposits, alongside robust liquidity Deposit Base (as of December 31) | Metric | 2023 (billions) | 2022 (billions) | Change (billions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Deposits | $81.5 | $58.7 | $22.8 | 38.8% | | Uninsured Deposits | $29.3 | $16.4 | $12.9 | 78.7% | | Uninsured Deposits as % of Total | 35.9% | N/A | N/A | N/A | | Total Liquidity | $27.9 | N/A | N/A | N/A | - The significant increase in total deposits and uninsured deposits was primarily driven by the Signature Transaction[276][277] - Total liquidity, comprising cash, unpledged securities, and FHLB/FRB borrowing capacity, stood at $27.9 billion at December 31, 2023[277] Net Interest Income Overview Net interest income substantially increased year-over-year, primarily driven by the Flagstar acquisition and Signature Transaction Net Interest Income (Year Ended December 31) | Metric | 2023 (millions) | 2022 (millions) | Change (millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $3,100 | $1,400 | $1,700 | 120% | - The substantial year-over-year increase in net interest income was primarily a result of the Flagstar acquisition (late 2022) and the Signature Transaction (late March 2023)[278] Net Interest Margin Overview Net interest margin increased by 64 basis points, primarily due to a larger balance sheet with higher-yielding loans from recent acquisitions and rising interest rates Net Interest Margin (Year Ended December 31) | Metric | 2023 | 2022 | Change (bps) | | :--- | :--- | :--- | :--- | | Net Interest Margin | 2.99% | 2.35% | 64 | - The 64 basis point increase in net interest margin was primarily due to a larger balance sheet with higher-yielding loans, driven by the Flagstar acquisition and Signature Transaction, along with the impact of higher interest rates[279] Asset Quality Overview Asset quality metrics deteriorated, with increases in non-performing assets and loans, primarily driven by multi-family and commercial real estate loans Asset Quality Ratios (as of December 31) | Metric | 2023 | 2022 | Change (bps) | | :--- | :--- | :--- | :--- | | NPA to Total Assets | 0.39% | 0.17% | 22 | | NPL to Total Loans | 0.51% | 0.20% | 31 | - The increase in Non-Performing Loans (NPLs) was primarily driven by a $125 million increase in multi-family loans and a $108 million increase in commercial real estate loans[280] Recent Events Recent events include a declared quarterly cash dividend and the appointment of an Executive Chairman - On January 30, 2024, the Board declared a quarterly cash dividend of $0.05 per common share, payable February 28, 2024[281] - Alessandro (Sandro) DiNello was appointed Executive Chairman, effective February 7, 2024, serving as the most senior executive officer[282] Results of Operations Net interest income, the primary income source, is influenced by asset/liability balances, yield/cost spread, and external factors, with prepayment income significantly impacting yields - Net interest income is the primary income source, influenced by average balances of interest-earning assets and interest-bearing liabilities, the spread between their yields and costs, and external factors like the economy, competition, and FOMC monetary policy[283] - Prepayment income from multi-family and CRE loans significantly impacts yields and net interest income, with its level dependent on market conditions and interest rate movements[285][286] Net Interest Income Net interest income increased significantly due to the Flagstar acquisition and Signature Transaction, driving higher interest income from loans and increased interest expense on deposits Net Interest Income (Year Ended December 31) | Metric | 2023 (millions) | 2022 (millions) | Change (millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $3,100 | $1,400 | $1,700 | 120% | - The 120% year-over-year increase in net interest income was primarily driven by the Flagstar acquisition (late 2022) and the Signature Transaction (late March 2023)[287] - Interest income on mortgages and other loans increased $2.7 billion due to a 65.8% increase in average loan balances ($81.9 billion) and a 177 basis point rise in average loan yield (5.5%), driven by acquired loans and higher interest rates[288] - Interest expense on average interest-bearing deposits increased $1.4 billion due to a 206 basis point rise in average cost (3.12%) and 56.4% growth in average balances ($56.3 billion), reflecting acquisitions and rising rates[288] Net Interest Margin Net interest margin increased by 64 basis points, driven by a larger balance sheet with higher-yielding loans from acquisitions and rising interest rates Net Interest Margin and Components (Year Ended December 31) | Metric | 2023 | 2022 | Change (bps) | | :--- | :--- | :--- | :--- | | Net Interest Margin | 2.99% | 2.35% | 64 | | Average Yield on Interest-Earning Assets | 5.34% | 3.53% | 181 | | Average Cost of Interest-Bearing Liabilities | 3.25% | 1.35% | 190 | - The 64 basis point increase in net interest margin was primarily driven by a larger balance sheet with higher-yielding loans from the Flagstar acquisition and Signature Transaction, coupled with higher interest rates[295] - Average interest-earning assets increased by $43.6 billion (74%) to $102.9 billion, with average loan balances rising $32.5 billion (66%) and average loan yield increasing 177 basis points to 5.51%[295][296] - Average interest-bearing liabilities increased by $22.9 billion (44%) to $74.3 billion, with the average cost rising to 3.25% from 1.35%[297] Provision for Credit Losses The provision for credit losses significantly increased in 2023, reflecting initial provisions for acquired loans, increased ACL, and net loan charge-offs Provision for Credit Losses (Year Ended December 31) | Metric | 2023 (millions) | 2022 (millions) | Change (millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $833 | $133 | $700 | 526.3% | | Total Net Loan Charge-offs | $208 | $(4) (recoveries) | $212 | N/A | - The 2023 provision primarily reflects a $132 million initial provision for acquired loans from the Signature Transaction and a net $483 million increase in ACL and unfunded commitment reserves[298] - The increase in reserves was driven by actions to address weakness in the office sector, potential repricing risk in the multi-family portfolio, and conditions leading to increases in classified assets[298] - Total net loan charge-offs amounted to $208 million in 2023, including $112 million for a co-operative loan, $40 million for a CRE loan, and $30 million for commercial loans[299] Non-Interest Income Non-interest income surged by $2.4 billion, primarily driven by a significant bargain purchase gain from the Signature Transaction and increased fee-based income from acquisitions Non-Interest Income (Year Ended December 31) | Category | 2023 (millions) | 2022 (millions) | Change (millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Bargain Purchase Gain | $2,131 | $159 | $1,972 | 1240.3% | | Fee Income | $172 | $27 | $145 | 537.0% | | Net Return on Mortgage Servicing Rights | $103 | $6 | $97 | 1616.7% | | Net Gain on Loan Sales and Securitizations | $89 | $5 | $84 | 1680.0% | | Net Loan Administration Income | $82 | $3 | $79 | 2633.3% | | Total Non-Interest Income | $2,687 | $247 | $2,440 | 987.9% | - Non-interest income increased by $2.4 billion, primarily due to a $2.1 billion bargain purchase gain from the Signature Transaction[302] - Excluding bargain purchase gains, non-interest income increased from $88 million in 2022 to $556 million in 2023, driven by a full year of Flagstar activity and the Signature Transaction[302] - Net gains on loan sales, net return on mortgage servicing rights, and net loan administration income totaled $274 million in 2023, up from $14 million in 2022, reflecting the impact of acquisitions[302] Non-Interest Expense Non-interest expense increased significantly, primarily due to a substantial goodwill impairment charge and higher merger-related and operating expenses from acquisitions Non-Interest Expense (Year Ended December 31) | Category | 2023 (millions) | 2022 (millions) | Change (millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Goodwill Impairment | $2,426 | $0 | $2,426 | N/A | | Merger-Related and Restructuring Expenses | $330 | $75 | $255 | 340.0% | | Total Non-Interest Expense | $4,981 | $684 | $4,297 | 628.2% | - Non-interest expense increased by $4.3 billion, primarily due to a $2.4 billion goodwill impairment charge in Q4 2023[303] - Merger-related expenses increased by $223 million due to the Signature Transaction and ongoing integration costs[303] - Total operating expenses increased by approximately $1.5 billion, driven by a full year of Flagstar activity and the Signature Transaction, including a $49 million FDIC special assessment[304] Income Tax Expense Income tax expense for 2023 was significantly lower than 2022, primarily influenced by the non-taxable bargain purchase gain from the Signature Transaction Income Tax Expense (Year Ended December 31) | Metric | 2023 (millions) | 2022 (millions) | Change (millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Provision for Income Taxes | $29 | $176 | $(147) | -83.5% | - Income tax expense for 2023 was significantly impacted by the bargain purchase gain arising from the Signature Transaction[305] Results of Operations: 2022 as Compared to 2021 This section directs readers to the Company's previously filed Annual Report for a comparison of 2022 to 2021 results - The comparison of 2022 to 2021 results can be found in the Company's previously filed Annual Report on Form 10-K for the year ended December 31, 2022[306] Signature Transaction - Certain Financial Information The Company omitted certain financial information on the Signature Transaction, citing relief due to the acquisition of a troubled financial institution with federal assistance - The Company omitted certain financial information on the Signature Transaction required by Rule 3-05 and Article 11 of Regulation S-X, citing relief under SAB 1:K due to the acquisition of a troubled financial institution with unavailable/irrelevant historical financial statements and significant federal assistance[306] Financial Condition Total assets, loans, and deposits significantly increased in 2023, primarily driven by the Signature Transaction, with all securities designated as Available-for-Sale - The increase in total assets, loans, and deposits was primarily driven by the Signature Transaction, which closed on March 20, 2023[307][308][310] - The Company acquired approximately $11.7 billion of loans, $33.5 billion of deposits, and $2.1 billion of other liabilities (net of PAA) from the Signature Transaction[307] - All of the Company's securities were designated as 'Available-for-Sale' at December 31, 2023 and 2022[309] Balance Sheet Summary (as of December 31) | Metric | 2023 (billions) | 2022 (billions) | Change (billions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $114.1 | $90.1 | $23.9 | 26.5% | | Total Loans and Leases Held for Investment | $84.6 | $69.0 | $15.6 | 22.6% | | Securities Portfolio | $9.2 | $9.1 | $0.1 | 1.1% | | Total Deposits | $81.5 | $58.7 | $22.8 | 38.8% | | Wholesale Borrowings | $20.3 | $20.3 | $0.0 | 0.0% | Loans Held-for-Investment The Company's loan portfolio held for investment increased to $84.6 billion, with multi-family loans decreasing proportionally while CRE and C&I loans grew, partly due to acquisitions Loans and Leases Held for Investment (as of December 31) | Loan Type | 2023 (millions) | % of Total | 2022 (millions) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Multi-family | $37,265 | 44.0% | $38,130 | 55.3% | | Commercial real estate | $10,470 | 12.4% | $8,526 | 12.4% | | One-to-four family first mortgage | $6,061 | 7.2% | $5,821 | 8.4% | | Acquisition, development, and construction | $2,912 | 3.4% | $1,996 | 2.8% | | Commercial and industrial | $25,254 | 29.9% | $12,276 | 17.8% | | Other loans | $2,657 | 3.1% | $2,252 | 3.3% | | Total | $84,619 | 100.0% | $69,001 | 100.0% | - Multi-family loans decreased slightly to $37.3 billion, representing 44% of total loans held for investment, down from 55% in 2022, reflecting a diversification strategy[317] - Commercial real estate (CRE) loans increased by $2.0 billion to $10.5 billion, with approximately $1.9 billion acquired in the Signature Transaction[332][334] - Office properties constitute $3.4 billion of the CRE portfolio[334] - C&I loans totaled $25.3 billion, including $5.1 billion in warehouse loans for mortgage lenders, and specialty finance loans and leases increased by 17% to $5.2 billion[343](index=343&type=c