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What changed in FLAGSTAR BANK, NATIONAL ASSOCIATION's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FLAGSTAR BANK, NATIONAL ASSOCIATION's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+526 added−418 removedSource: 10-K (2024-03-14) vs 10-K (2023-03-01)

Top changes in FLAGSTAR BANK, NATIONAL ASSOCIATION's 2023 10-K

526 paragraphs added · 418 removed · 264 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

63 edited+32 added−18 removed151 unchanged
Biggest changeOur ability to make any capital distributions to our stockholders, including dividends and share repurchases, is subject to the oversight of the Federal Reserve and contingent upon their non-objection to such planned distributions which typically considers our capital adequacy, comprehensiveness and effectiveness of capital planning and the prudence of the proposed capital action. 19 Acquisition of the Holding Company Federal Restrictions Under the Federal Change in Bank Control Act (“CIBCA”), a notice must be submitted to the FRB if any person (including a company), or group acting in concert, seeks to acquire 10 percent or more of the Company’s shares of outstanding common stock, unless the FRB has found that the acquisition will not result in a change in control of the Company.
Biggest changeAcquisition of the Holding Company Federal Restrictions Under the Federal Change in Bank Control Act (“CIBCA”), a notice must be submitted to the FRB if any person (including a company), or group acting in concert, seeks to acquire 10 percent or more of the Company’s shares of outstanding common stock, unless the FRB has found that the acquisition will not result in a change in control of the Company.
The rules adopted by the SEC 22 under the Sarbanes-Oxley Act have several requirements, including having those Officers certify that they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal controls over financial reporting; that they have made certain disclosures to our auditors and the Audit Committee of the Board of Directors about our internal control over financial reporting; and they have included information in our quarterly and annual reports about their evaluation and whether there have been changes in our internal control over financial reporting or in other factors that could materially affect internal control over financial reporting.
The rules adopted by the SEC under the Sarbanes-Oxley Act have several requirements, including having those Officers certify that they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal controls over financial reporting; that they have made certain disclosures to our auditors and the Audit Committee of the Board of Directors about our internal control over financial reporting; and they have included information in our quarterly and annual reports about their evaluation and whether there have been changes in our internal control over financial reporting or in other factors that could materially affect internal control over financial reporting.
Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences. Data Privacy Federal and state law contains extensive consumer privacy protection provisions.
Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences. 22 Data Privacy Federal and state law contains extensive consumer privacy protection provisions.
Our specialty finance loans and leases are generally made to large corporate obligors that participate in stable industries nationwide and our warehouse loans are made to mortgage lenders across the country. 9 Competition for Deposits We compete for deposits and customers by placing an emphasis on convenience and service and, from time to time, by offering specific products at competitive rates.
Our specialty finance loans and leases are generally made to large corporate obligors that participate in stable industries nationwide and our warehouse loans are made to mortgage lenders across the country. Competition for Deposits We compete for deposits and customers by placing an emphasis on convenience and service and, from time to time, by offering specific products at competitive rates.
If a concentration is present, management must employ heightened risk management practices that address key 17 elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of CRE lending.
If a concentration is present, management must employ heightened risk management practices that address key elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of CRE lending.
Performance is tested in three areas: (1) lending, to 20 evaluate the institution’s record of making loans in its assessment areas; (2) investment, to evaluate the institution’s record of investing in community development projects, affordable housing, and programs benefiting low- or moderate-income individuals and businesses; and (3) service, to evaluate the institution’s delivery of services through its branches, ATMs and other offices.
Performance is tested in three areas: (1) lending, to evaluate the institution’s record of making loans in its assessment areas; (2) investment, to evaluate the institution’s record of investing in community development projects, affordable housing, and programs benefiting low- or moderate-income individuals and businesses; and (3) service, to evaluate the institution’s delivery of services through its branches, ATMs and other offices.
The standards also must be consistent with accompanying FDIC Guidelines, which include loan-to-value limitations for the different types of real estate loans. Institutions are also permitted to make a limited amount of loans that do not conform to the proposed loan-to-value limitations as long as such exceptions are reviewed and justified appropriately.
The standards also must be consistent with accompanying FDIC Guidelines, which include loan-to-value limitations for the different types of real estate loans. Institutions are also permitted to make a limited amount of loans that do not conform to the proposed loan-to-value limitations as long as such exceptions are reviewed and justified 17 appropriately.
The Company's Community Pledge Agreement was developed with NCRC and its members in conjunction with the Company's merger with Flagstar Bancorp, Inc. The agreement includes $22 billion in community lending and affordable housing commitments and $6 billion of residential mortgage originations to underserved and LMI borrowers, and in LMI and majority-minority neighborhoods over a five-year period.
The Company's Community Pledge Agreement was developed with NCRC and its members in conjunction with the Company's merger with Flagstar Bancorp, Inc. The agreement includes $22.0 billion in community lending and affordable housing commitments and $6.0 billion of residential mortgage originations to underserved and LMI borrowers, and in LMI and majority-minority neighborhoods over a five-year period.
The CFPB has exclusive examination and primary enforcement authority with respect to compliance with federal consumer financial protection laws and regulations by institutions under its supervision and is authorized, individually or jointly with the federal banking agencies, to conduct investigations to determine whether any person is, or has, engaged in conduct that violates such laws or regulations.
The CFPB has exclusive examination and primary enforcement authority with respect to compliance with federal consumer financial protection laws and regulations by institutions under its supervision and is authorized, individually or jointly 24 with the federal banking agencies, to conduct investigations to determine whether any person is, or has, engaged in conduct that violates such laws or regulations.
The effect of government policies on the earnings of the Company and the Bank cannot be predicted. Environmental Issues We encounter certain environmental risks in our lending activities and other operations. The existence of hazardous materials may make it unattractive for a lender to foreclose on the properties securing its loans.
The effect of government policies on the earnings of the Company and the Bank cannot be predicted. 12 Environmental Issues We encounter certain environmental risks in our lending activities and other operations. The existence of hazardous materials may make it unattractive for a lender to foreclose on the properties securing its loans.
Our programs are designed to address these legal and regulatory requirements and to assist in managing risk associated with money laundering and terrorist financing. 21 Office of Foreign Assets Control Regulation The United States has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals, and others.
Our programs are designed to address these legal and regulatory requirements and to assist in managing risk associated with money laundering and terrorist financing. Office of Foreign Assets Control Regulation The United States has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals, and others.
If the OCC determines for safety and soundness reasons that a bank should calculate its investment limits more frequently than required by the OCC's Investment Securities regulations, the OCC may provide written notice to the bank directing the bank to calculate its investment limitations at a more frequent interval, and the bank must thereafter calculate its investment limits at that interval until further notice from the OCC.
If the OCC determines for safety and soundness reasons that a bank should calculate its investment limits more frequently than required by the OCC's Investment Securities regulations, the OCC may provide written notice to the bank 18 directing the bank to calculate its investment limitations at a more frequent interval, and the bank must thereafter calculate its investment limits at that interval until further notice from the OCC.
See the discussion of "Income Taxes" in Note 2, "Summary of Significant Accounting Policies." 13 Regulation and Supervision The following is a brief summary of certain statutes and regulations that significantly affect the Company and its subsidiaries. A number of other statutes and regulations may affect the Company and the Bank but are not discussed in the following paragraphs.
See the discussion of "Income Taxes" in Note 2 - Summary of Significant Accounting Policies Regulation and Supervision The following is a brief summary of certain statutes and regulations that significantly affect the Company and its subsidiaries. A number of other statutes and regulations may affect the Company and the Bank but are not discussed in the following paragraphs.
We may also be subject 23 to supervision and examination by applicable state regulatory authorities in the jurisdictions in which we may offer consumer financial products or services. Consumer Financial Protection Bureau The Bank is subject to oversight by the CFPB within the Federal Reserve System.
We may also be subject to supervision and examination by applicable state regulatory authorities in the jurisdictions in which we may offer consumer financial products or services. Consumer Financial Protection Bureau The Bank is subject to oversight by the CFPB within the Federal Reserve System.
Most aspects of the rule apply only to banking organizations that are not subject to the “advanced approaches” in the capital rule, which are generally firms with less than $250 billion in total consolidated assets and less than $10 billion in total foreign exposure.
Most aspects of the rule apply only to banking organizations that are not subject to the “advanced approaches” in the capital rule, which are generally firms with less than $250.0 billion in total consolidated assets and less than $10.0 billion in total foreign exposure.
As of December 31, 2022, our efforts have been focused on the following eleven employee resource groups which we intend to expand across our recently combined Company: African American, Asian-Indian, Environmental, Hispanic/Latino, Interfaith, LGBTQ, Military Veterans, Native American, People with Disabilities, Women and Young Professionals.
As of December 31, 2023, our efforts have been focused on the following eleven employee resource groups which we intend to expand across our recently combined Company: African American, Asian-Indian, Environmental, Hispanic/Latino, Interfaith, LGBTQ, Military Veterans, Native American, People with Disabilities, Women and Young Professionals.
The Parent Company owns special business trusts that were formed for the purpose of issuing capital and common securities and investing the proceeds thereof in the junior subordinated debentures issued by the Company. 12 See Note 12, “Borrowed Funds,” in Item 8, “Financial Statements and Supplementary Data,” for a further discussion of the Company’s special business trusts.
The Parent Company owns special business trusts that were formed for the purpose of issuing capital and common securities and investing the proceeds thereof in the junior subordinated debentures issued by the Company. See Note 12 - Borrowed Funds, in Item 8, “Financial Statements and Supplementary Data,” for a further discussion of the Company’s special business trusts.
New York Community Bancorp, Inc. has market-leading positions in several national businesses, including multi-family lending, mortgage originations and servicing, and warehouse lending. The Company is the second-largest multi-family portfolio lender in the country and the leading multi-family portfolio lender in the New York City market area, where it specializes in rent-regulated, non-luxury apartment buildings.
New York Community Bancorp, Inc. has market-leading positions in several national businesses, including multi-family lending, mortgage originations and servicing, and warehouse lending. The Company is the 2nd largest multi-family portfolio lender in the country and the leading multi-family portfolio lender in the New York City market area, where it specializes in rent-regulated, non-luxury apartment buildings.
Our policies and practices reflect our commitment to diversity and inclusion in the workplace. A diverse workforce is critical to our long-term success.
Our policies and practices reflect our commitment to diversity and inclusion in the workplace. 13 A diverse workforce is critical to our long-term success.
Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that could have a material effect on the Consolidated Financial Statements. For additional information, see the Capital section of the MD&A and Note 21 -Capital. Holding Company Limitations on Capital Distributions.
Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that could have a material effect on the Consolidated Financial Statements. For additional information, see the Capital section of the MD&A and Note 17 -Capital. Holding Company Limitations on Capital Distributions.
Additionally, the Company is the 2nd largest mortgage warehouse lender nationally based on total commitments. Online Information about the Company and the Bank We serve our customers through our website: www.myNYCB.com.
Additionally, the Company is the 2nd largest mortgage warehouse lender nationally based on total commitments. Online Information about the Company and the Bank We serve our customers through our website: www.flagstar.com.
Our ability to attract and retain deposits is not only a function of short-term interest rates and industry consolidation, but also the competitiveness of the rates being offered by other financial institutions within our marketplace, including credit unions, on-line banks, and brokerage firms.
Our ability to attract and retain deposits is not only a function of short-term interest rates and industry consolidation, but also the competitiveness of the rates being offered by other financial institutions within our marketplace, including credit unions, online banks, and brokerage firms.
This enforcement authority includes, among other things, the ability to assess civil money penalties, to issue cease and desist orders, and to remove directors and officers. In general, these enforcement actions may be initiated in response to violations of laws and regulations and unsafe or unsound practices.
The enforcement authority of these regulatory agencies includes, among other things, the ability to assess civil money penalties, to issue cease and desist orders, and to remove directors and officers. In general, these enforcement actions may be initiated in response to violations of laws and regulations and unsafe or unsound practices.
NYCB will also provide $542 million in loans to small businesses with less than $1 million in revenues and in LMI and majority-minority communities; $16.5 million in philanthropic support to nonprofit organizations that meet the needs of LMI and majority-minority communities and individuals; greater access to banking products and services; and the continuation of NYCB's responsible multi-family lending practices.
The Company will also provide $542 million in loans to small businesses with less than $1 million in revenues and in LMI and majority-minority communities; $16.5 million in philanthropic support to nonprofit organizations that meet the needs of LMI and majority-minority communities and individuals; greater access to banking products and services; and the continuation of the Company's responsible multi-family lending practices.
The final rule includes a grandfathering provision, which will provide banking organizations with the option to maintain their current capital treatment for ADC loans originated on or after January 1, 2015, and before April 1, 2020.
The final rule includes a grandfathering provision, which provides banking organizations with the option to maintain their current capital treatment for ADC loans originated on or after January 1, 2015, and before April 1, 2020.
These processes assist us in mitigating environmental risk by enabling us to identify and address potential issues, including by avoiding taking ownership or control of contaminated properties. Subsidiary A ctivities We conduct business primarily through our wholly-owned bank subsidiary, Flagstar Bank, N.A. The Bank has formed, or acquired through merger transactions, 33 active subsidiary corporations.
These processes assist us in mitigating environmental risk by enabling us to identify and address potential issues, including by avoiding taking ownership or control of contaminated properties. Subsidiary Activities We conduct business primarily through our wholly-owned bank subsidiary, Flagstar Bank, N.A. The Bank has formed, or acquired through merger transactions, 39 active subsidiaries.
The Parent Company also has one non-banking subsidiary that was established in connection with the acquisition of Atlantic Bank of New York and two non-banking subsidiaries that were acquired in connection with the Flagstar acquisition. Human Capital Management At December 31, 2022, our workforce included 7,497 employees.
The Parent Company also has one non-banking subsidiary that was established in connection with the acquisition of Atlantic Bank of New York and two non-banking insurance subsidiaries that were acquired in connection with the Flagstar acquisition. Human Capital Management At December 31, 2023, our workforce included 8,766 employees.
The rule also aligns the frequency of the calculation of the stress capital buffer requirement with the frequency of the supervisory stress test (that is, both would occur every other year for banking organizations subject to Category IV standards).
The rule also aligns the frequency of the calculation of the stress capital buffer requirement with the frequency of the supervisory stress test (with both occurring every other year for banking organizations subject to Category IV standards).
Our Market Flagstar Bank, N.A. operates 395 branches across nine states, including strong footholds in the Northeast and Midwest and has exposure to high growth markets in the Southeast and on the West Coast. Flagstar Mortgage operates nationally through a wholesale network of approximately 3,000 third-party mortgage originators.
Our Market Flagstar Bank, N.A. operates 420 branches including strong footholds in the Northeast and Midwest and exposure to high growth markets in the Southeast and West Coast. Flagstar Mortgage operates nationally through a wholesale network of approximately 3,000 third-party mortgage originators.
Flagstar Mortgage is the 8th largest bank originator of residential mortgages for the 12-months ended December 31, 2022, while we are the industry’s 6th largest sub-servicer of mortgage loans nationwide, servicing 1.4 million accounts with $346 billion in unpaid principal balances as of December 31, 2022.
Flagstar Mortgage is the 7th largest bank originator of residential mortgages for the 12-months ended December 31, 2023, while we are the industry’s 5th largest sub-servicer of mortgage loans nationwide, servicing 1.4 million accounts with $382.2 billion in unpaid principal balances as of December 31, 2023.
In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties which, for 2022, range from $6,323 per day for minor violations of federal consumer financial laws (including the CFPB’s own rules) to $31,616 per day for reckless violations and $1,264,622 per day for knowing violations.
In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties which, for 2023, range from $6,813 per day for minor violations of federal consumer financial laws (including the CFPB’s own rules) to $34,065 per day for reckless violations and $1,362,567 per day for knowing violations.
The market for the loans we produce varies, depending on the type of loan. For example, the vast majority of our multi-family loans are collateralized by rental apartment buildings in New York City, while the majority of the properties collateralizing our CRE and ADC loans are located in the Northeast and Midwest.
For example, the vast majority of our multi-family loans are collateralized by rental apartment buildings in New York City, while the majority of the properties collateralizing our CRE and ADC loans are located in the Northeast and Midwest.
Additionally, we are subject to Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive, or abusive acts or practices (“UDAAP”) in connection with any consumer financial product or service In addition, the Bank and its subsidiaries are subject to certain state laws and regulations designed to protect consumers.
Additionally, we are subject to Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive, or abusive acts or practices (“UDAAP”) in connection with any consumer financial product or service.
For additional information, see the Capital section of the MD&A and Note 21 - Capital. As of December 31, 2022, each of the Bank’s capital ratios exceeded those required for an institution to be considered “well capitalized” under these regulations. Stress Testing Stress Testing for Category IV U.S.
For additional information, see the Capital section of the MD&A and Note 17 - Capital. As of December 31, 2023, each of the Bank’s capital ratios exceeded those required for an institution to be considered “well capitalized” under these regulations.
Investment Activities National bank investment activities are governed by the National Bank Act and OCC regulations which, consistent with safe and sound banking practices, prescribe standards under which national banks may purchase, sell, deal in, underwrite, and hold securities.
In 2023, dividends of $580 million were paid by the Bank to the Parent Company. Investment Activities National bank investment activities are governed by the National Bank Act and OCC regulations which, consistent with safe and sound banking practices, prescribe standards under which national banks may purchase, sell, deal in, underwrite, and hold securities.
The five capital tiers are described in more detail below. Under the prompt corrective action regulations, an institution that fails to remain “well capitalized” becomes subject to a series of restrictions that increase in severity as its capital condition weakens.
For such purposes, the law establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. The five capital tiers are described in more detail below. Under the prompt corrective action regulations, an institution that fails to remain “well capitalized” becomes subject to a series of restrictions that increase in severity as its capital condition weakens.
Therefore, banking organizations subject to Category IV standards are not required to calculate forward-looking projections of capital under scenarios provided by the Board.
The rule removes the company-run stress test requirement for banking organizations subject to Category IV standards. Therefore, banking organizations subject to Category IV standards are not required to calculate forward-looking projections of capital under scenarios provided by the Board.
Global Systemically Important Banks and their depository institution subsidiaries), and the least stringent prudential standards apply under Category IV (defined as U.S. banking organizations with $100 billion or more but less than $250 billion in total assets and have less than $75 billion in cross-jurisdictional activity, weighted short-term wholesale funding, nonbank assets, or off-balance sheet exposure). 16 In January 2021, the Board finalized a rule to update capital planning requirements for large banks to be consistent with the tailoring rule.
Global Systemically Important Banks and their depository institution subsidiaries), and the least stringent prudential standards apply under Category IV (defined as U.S. banking organizations with $100.0 billion or more but less than $250.0 billion in total assets and have less than $75.0 billion in cross-jurisdictional activity, weighted short-term wholesale funding, nonbank assets, or off-balance sheet exposure).
From a lending perspective, we compete with many institutions including commercial banks, national mortgage lenders, local savings banks, financial technology companies, credit unions and commercial lenders offering mortgage loans and other consumer loans. 10 In servicing, we compete primarily against non-bank servicers.
Some of these customers are larger and have more capital and liquidity than the Company. From a lending perspective, we compete with many institutions including commercial banks, national mortgage lenders, local savings banks, financial technology companies, credit unions and commercial lenders offering mortgage loans and other consumer loans. In servicing, we compete primarily against non-bank servicers.
The GLBA and FDIC regulations also impose certain quantitative and qualitative restrictions on such activities and on a bank’s dealings with a subsidiary that engages in specified activities. 18 Enforcement The FDIC has extensive enforcement authority over insured banks, including the Bank.
The GLBA and FDIC regulations also impose certain quantitative and qualitative restrictions on such activities and on a bank’s dealings with a subsidiary that engages in specified activities.
Community Pledge Agreement with the National Community Reinvestment Coalition On January 24, 2022, the Company and the National Community Reinvestment Coalition ("NCRC") announced the Company's commitment to provide $28 billion in loans, investments, and other financial support to communities and people of color, low- and moderate-income ("LMI") families and communities, and small businesses.
Most of the final rule’s requirements will become effective beginning on January 1, 2026 and the remaining requirements, including the final rule’s data reporting requirements, will become effective on January 1, 2027. 21 Community Pledge Agreement with the National Community Reinvestment Coalition On January 24, 2022, the Company and the National Community Reinvestment Coalition ("NCRC") announced the Company's commitment to provide $28.0 billion in loans, investments, and other financial support to communities and people of color, low- and moderate-income ("LMI") families and communities, and small businesses.
In addition to checking and savings accounts, retirement accounts, and CDs for both businesses and consumers, we offer a suite of cash management products to address the needs of small and mid-size businesses and professional associations.
We also offer certain money market accounts, certificates of deposit and checking accounts through a dedicated website: www.myBankingDirect.com. 11 In addition to checking and savings accounts, retirement accounts, and CDs for both businesses and consumers, we offer a suite of cash management products to address the needs of small and mid-size businesses and professional associations.
The Dodd-Frank Wall Street Reform and Consumer Protection Act Enacted in July 2010, the DFA significantly changed the bank regulatory structure and will continue to affect, into the immediate future, the lending and investment activities and general operations of depository institutions and their holding companies.
Any change to laws and regulations, whether by the Regulatory Agencies or Congress, could have a materially adverse impact on our operations. 14 The Dodd-Frank Wall Street Reform and Consumer Protection Act Enacted in July 2010, the DFA significantly changed the bank regulatory structure and will continue to affect, into the immediate future, the lending and investment activities and general operations of depository institutions and their holding companies.
ITEM 1. B USINESS General New York Community Bancorp, Inc., (on a stand-alone basis, the “Parent Company” or, collectively with its subsidiaries, the “Company”) is the bank holding company for Flagstar Bank, N.A. (hereinafter referred to as the “Bank”).
Item 1. Business General New York Community Bancorp, Inc., (on a stand-alone basis, the “Parent Company” or, collectively with its subsidiaries, the “Company”) is the bank holding company for Flagstar Bank, N.A. (hereinafter referred to as the “Bank”). The Company went public in 1993 and has grown organically and through a series of accretive mergers and acquisitions.
In addition to our 395 branches, we have 524 ATM locations that operate 24 hours a day. Our customers also have 24-hour access to their accounts through our mobile banking app, online through our website, www.myNYCB.com , or through our bank-by-phone service. We also offer certain money market accounts, certificates of deposit and checking accounts through a dedicated website: www.myBankingDirect.com.
In addition to our 420 branches , we have 385 ATM locations that operate 24 hours a day . Our customers also have 24-hour access to their accounts through our mobile banking app, online through our website, www.flagstar.com , or through our bank-by-phone service.
Federal Home Loan Bank System The Bank is a member of the FHLB-NY. As a member of the FHLB-NY, the Bank is required to acquire and hold shares of FHLB-NY capital stock. At December 31, 2022 the Bank held $762 million of FHLB-NY stock and, as a result of the Flagstar acquisition, $329 million of FHLB-Indianapolis shares.
Federal Home Loan Bank System The Bank is a member of the FHLB-NY and FHLB-Indianapolis. As a member of the FHLB-NY, the Bank is required to acquire and hold shares of FHLB-NY capital stock.
Consumer Protection Regulations The activities of the Company’s banking subsidiary, including its lending and deposit gathering activities, is subject to a variety of consumer laws and regulations designed to protect consumers.
The Company is subject to the information and proxy solicitation requirements, insider trading restrictions, and other requirements under the Exchange Act. Consumer Protection Regulations The activities of the Company’s banking subsidiary, including its lending and deposit gathering activities, is subject to a variety of consumer laws and regulations designed to protect consumers.
Internal controls and ongoing monitoring processes capture and address heightened risks that threaten the Company’s ability to achieve our goals and objectives, including the recognition of safety and soundness concerns and consumer protection. Additionally, ERM monitors key risk indicators against the established risk warning levels and limits, as well as elevated risks identified by the Chief Risk Officer.
Internal controls and ongoing monitoring processes capture and address heightened risks that threaten the Company’s ability to achieve our goals and objectives, including the recognition of safety and soundness concerns and consumer protection.
As a result of our acquisition of Flagstar, we are required to seek regulatory approval from the OCC for the payment of any dividend to the Parent Company through at least the period ending November 1, 2024, which could restrict our ability to pay the common stock dividend.
As a result of our acquisition of Flagstar, we are required to seek regulatory approval from the OCC for the payment of any dividend to the Parent Company through at least the period ending November 1, 2024, which could restrict our ability to pay the common stock dividend. 20 Transactions with Affiliates Under current federal law, transactions between depository institutions and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act and the FRB’s Regulation W promulgated thereunder.
The FDICIA also provides for enhanced supervision authority over undercapitalized institutions, including authority for the appointment of a conservator or receiver for the institution. 15 As a result of the Basel III rules, new definitions of the relevant measures for the five capital categories took effect on January 1, 2015.
As a result of the Basel III rules, new definitions of the relevant measures for the five capital categories took effect on January 1, 2015.
Such restrictions may include a prohibition on capital distributions, restrictions on asset growth, or restrictions on the ability to receive regulatory approval of applications.
Such restrictions may include a prohibition on capital distributions, restrictions on asset growth, or restrictions on the ability to receive regulatory approval of applications. The FDICIA also provides for enhanced supervision authority over undercapitalized institutions, including authority for the appointment of a conservator or receiver for the institution.
The CFPB also may institute a civil action against an entity in violation of federal consumer financial law in order to impose a civil penalty or an injunction. The CFPB has examination and enforcement authority over all banks with more than $10 billion in assets, as well as certain of their affiliates.
The CFPB also may institute a civil action against an entity in violation of federal consumer financial law in order to impose a civil penalty or an injunction.
Prompt Corrective Regulatory Action The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires, among other things, that federal bank regulatory authorities take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For such purposes, the law establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.
Specifically, the rule simplifies the capital treatment for certain mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions, and minority interests. 15 Prompt Corrective Regulatory Action The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires, among other things, that federal bank regulatory authorities take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements.
Lenders are required annually to submit audited financial statements to Fannie Mae, FHA and VA. Each of these regulatory entities has its 24 own financial requirements. We are also subject to examination by Fannie Mae, FHA and VA to assure compliance with the applicable regulations, policies and procedures.
We are also subject to examination by Fannie Mae, FHA and VA to assure compliance with the applicable regulations, policies and procedures.
While it will take several years for its full impact to be known, the legislation generally limits a landlord’s ability to increase rents on rent-regulated apartments and makes it more difficult to convert rent regulated apartments to market rent apartments. 14 Capital Requirements In 2013, the FRB and the FDIC approved revisions to their capital adequacy guidelines and prompt corrective action rules to implement the revised standards of the Basel Committee on Banking Supervision, commonly called Basel III, and to address relevant provisions of the DFA.
Capital Requirements In 2013, the FRB and the FDIC approved revisions to their capital adequacy guidelines and prompt corrective action rules to implement the revised standards of the Basel Committee on Banking Supervision, commonly called Basel III, and to address relevant provisions of the DFA.
Federal Securities Law The Company’s common stock and certain other securities listed on the cover page of this report are registered with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is subject to the information and proxy solicitation requirements, insider trading restrictions, and other requirements under the Exchange Act.
At December 31, 2023 the Bank held $861 million of FHLB-NY stock and $329 million of FHLB-Indianapolis shares. 23 Federal Securities Law The Company’s common stock and certain other securities listed on the cover page of this report are registered with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Board's capital planning requirements for large banks help ensure they plan for and determine their capital needs under a range of different scenarios. The rule removes the company-run stress test requirement for banking organizations subject to Category IV standards.
In January 2021, the Board finalized a rule to update capital planning requirements for large banks to be consistent with the tailoring rule. The Board's capital planning requirements for large banks help ensure they plan for and determine their capital needs under a range of different scenarios.
Michigan A REIT organized for the purposes of investing in mortgage loans REIT #2, Inc. Michigan A REIT organized for the purposes of investing in commercial real estate loans NYB Realty Holding Company, LLC owns interests in 10 additional active entities organized as indirect wholly-owned subsidiaries to own interests in various real estate properties.
Of these, 26 are direct subsidiaries of the Bank and 13 are subsidiaries of Bank-owned entities. The Parent Company also has four direct subsidiaries (including Flagstar Bank, N.A). NYB Realty Holding Company, LLC, a subsidiary of the Bank, owns interests in 10 additional active entities organized as indirect wholly-owned subsidiaries to own interests in various real estate properties.
Department of Housing and Urban Development (“HUD”), the Federal Housing Administration, the Veterans’ Administration (“VA”) and Fannie Mae with respect to originating, processing, selling and servicing mortgage loans. Those rules and regulations, among other things, prohibit discrimination and establish underwriting guidelines, which include provisions for inspections and appraisals, require credit reports on prospective borrowers, and fix maximum loan amounts.
Those rules and regulations, among other things, prohibit discrimination and establish underwriting guidelines, which include provisions for inspections and appraisals, require credit reports on prospective borrowers, and fix maximum loan amounts. Lenders are required annually to submit audited financial statements to Fannie Mae, FHA and VA. Each of these regulatory entities has its own financial requirements.
Management does not know of any practice, condition, or violation that would lead to termination of the deposit insurance for the Bank. Holding Company Regulations Federal Regulation. The Company is currently subject to examination, regulation, and periodic reporting under the BHCA, as administered by the FRB. Acquisition, Activities and Change in Control .
Management does not know of any practice, condition, or violation that would lead to termination of the deposit insurance for the Bank.
The CRA also requires that all institutions make public disclosure of their CRA ratings.
The CRA also requires that all institutions make public disclosure of their CRA ratings. On October 24, 2023, the OCC, the FDIC and the Federal Reserve issued a final rule amending the agencies’ CRA regulations.
The rule simplifies and clarifies a number of the more complex aspects of the existing capital rule. Specifically, the rule simplifies the capital treatment for certain mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions, and minority interests.
The rule simplifies and clarifies a number of the more complex aspects of the existing capital rule.
Recent Events Declaration of Dividend on Common Shares On January 24, 2023, our Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.17 per share. The dividend was payable on February 16, 2023 to common stockholders of record as of February 6, 2023.
Additionally, ERM monitors key risk indicators against the established risk warning levels and limits, as well as elevated risks identified by the Chief Risk Officer. 25 Recent Events Declaration of Dividend on Common Shares On January 30, 2024, our Board of Directors declared a quarterly cash dividend on the Company’s common stock $0.05 per share, which represented a reduction from the prior quarterly cash dividend of $0.17 per share.
Removed
The Company went public in 1993 and has grown organically and through a series of accretive mergers and acquisitions, culminating in its recent acquisition of Flagstar Bancorp, Inc. (“Flagstar” or “Flagstar Bancorp”), which closed on December 1, 2022.
Added
In addition, the Bank has 134 private banking teams located in over 10 cities in the metropolitan New York City region and on the West Coast, which serve the needs of high-net worth individuals and their businesses. The market for the loans we produce varies, depending on the type of loan.
Removed
Some of these customers are larger and have more capital and liquidity than the Company. While we continue to originate ADC and C&I loans for investment, such loans represent a small portion of our loan portfolio as compared to multi-family, CRE loans, and specialty finance loans.
Added
While it will take several years for its full impact to be known, the legislation generally limits a landlord’s ability to increase rents on rent-regulated apartments and makes it more difficult to convert rent regulated apartments to market rent apartments.
Removed
Of these, 21 are direct subsidiaries of the Bank and 12 are subsidiaries of Bank-owned entities. The 21 direct subsidiaries of the Bank are: Name Jurisdiction of Organization Purpose 100 Duffy Realty, LLC New York Owns a building containing back-office and a branch. Beta Investments, Inc. Delaware Holding company for Omega Commercial Mortgage Corp. and Long Island Commercial Capital Corp.
Added
Enhanced Stress Testing and Prudential Standards As a result of the Signature transaction, our total assets exceeded $100 billion and therefore we became classified as a Category IV banking organization under the rules issued by the federal banking agencies that tailor the application of enhanced prudential standards to large bank holding companies and the capital and liquidity rules to large bank holding companies and depository institutions under the Dodd-Frank Act and the Economic Growth, Regulatory Relief, and Consumer Protection Act.
Removed
BSR 1400 Corp. New York Organized to own interests in real estate. Ferry Development Holding Company Delaware Formed to hold and manage investment portfolios for the Company. NYCB Specialty Finance Company, LLC Delaware Originates asset-based, equipment financing, and dealer-floor plan loans. 11 NYB Realty Holding Company, LLC New York Holding company for subsidiaries owning an interest in real estate.
Added
As a Category IV banking organization, we are subject to enhanced liquidity risk management requirements which include 16 reporting, liquidity stress testing, a liquidity buffer and resolution planning, subject to the applicable transition periods. If we were to meet or exceed certain other thresholds for asset size, we would become subject to additional requirements.
Removed
NYCB Insurance Agency, Inc. New York Sells non-deposit investment products. Pacific Urban Renewal, Inc. New Jersey Owns a branch building. Synergy Capital Investments, Inc. New Jersey Formed to hold and manage investment portfolios for the Company. NYCB Mortgage Company, LLC Delaware Holding company for Walnut Realty Holding Company, LLC.
Added
As a Category IV banking organization, we are subject to risk committee and risk management requirements, as well as capital planning, liquidity risk management, liquidity buffer and liquidity stress testing requirements. Stress Testing for Category IV U.S.
Removed
Woodhaven Investments, LLC Delaware Holding company for Ironbound Investment Company, LLC. and 1400 Corp. Flagstar REO, LLC Delaware Formed to hold real estate from foreclosed loans Flagstar Mortgage Securities, LLC Delaware Formed to hold mortgage loans sold into private securitizations Flagstar Real Estate Holdings, Inc. Michigan Holding company for REIT investment in MSRs REIT Holding Co #1, Inc.
Added
Enforcement The OCC has authority to bring an enforcement action against the Bank for unsafe or unsound banking practices, which could include limiting the Bank’s ability to conduct otherwise permissible activities, or imposing corrective capital or managerial requirements on the bank. In addition, the Parent Company is subject to the enforcement authority of the Federal Reserve.
Removed
Michigan Holding company for REIT investments in mortgage loans REIT Holding Co #2, Inc.
Added
On November 16, 2023, the FDIC published in the Federal Register its final rule that imposes special assessments to recover the loss to the Deposit Insurance Fund arising from the protection of uninsured depositors in connection with the systemic risk determination announced on March 12, 2023, following the closures of Silicon Valley Bank and Signature Bank.
Removed
Michigan Holding company for REIT investment in commercial real estate loans Propshop Mortgage, LLC Delaware Joint venture mortgage company developing specialized mortgage technology Flagstar Investment, LLC Michigan Formed to invest in low income housing investments Flagstar Opportunities, LLC Michigan Formed to invest in low income housing investments Grass Lake Insurance Agency, Inc.
Added
The assessment base for the special assessments is equal to an insured depository institution’s estimated uninsured deposits, reported as of December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits from the insured depository institution, or for insured depository institutions that are part of a holding company with one or more subsidiary insured depository institutions, at the banking organization level.
Removed
Michigan Licensed insurance agency FSB-Optimum Investment Fund I LLC Michigan Formed to invest in businesses with New Markets Tax Credits The 12 subsidiaries of Bank-owned entities are: Name Jurisdiction of Organization Purpose 1400 Corp. New York Holding company for Roslyn Real Estate Asset Corp. Ironbound Investment Company, LLC. Florida Organized for the purpose of investing in mortgage-related assets.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTreasury rate was 3.88 percent at December 31, 2022, and averaged 2.95 percent during 2022, 151 basis points higher than average rates experienced during 2021. The sustained higher rates experienced throughout 2022 negatively impacted the mortgage market including our loan origination volume and refinancing activity.
Biggest changeAn increase in interest rates and/or a decrease in our mortgage production volume could have a materially adverse effect on our operating results. The 10-year U.S. Treasury rate was 3.97 percent at December 31, 2023 , and averaged 2.96 percent during 2023, 101 basis points higher than average rates experienced during 2022 .
We have no obligation to pay dividends accrued for a dividend period after the dividend payment date for that period if our Board of Directors (or any duly authorized committee thereof) has not declared a dividend before the related dividend payment date, whether or not dividends on the Series A Preferred Stock or any other series of our preferred stock or our common stock are declared for any future dividend period.
For our Series A Preferred Stock, we have no obligation to pay dividends accrued for a dividend period after the dividend payment date for that period if our Board of Directors (or any duly authorized committee thereof) has not declared a dividend before the related dividend payment date, whether or not dividends on the Series A Preferred Stock or any other series of our preferred stock or our common stock are declared for any future dividend period.
The terms of our outstanding trust preferred capital debt securities prohibit us from (1) declaring or paying any dividends or distributions on our capital stock, including our common stock; or (2) purchasing, acquiring, or making a liquidation payment on such stock, under the following circumstances: (a) if an event of default has occurred and is continuing under the applicable indenture; (b) if we are in default with respect to a payment under the guarantee of the related trust preferred securities; or (c) if we have given notice of our election to defer interest payments but the related deferral period has not yet commenced, or a deferral period is continuing.
The terms of our outstanding trust preferred capital debt securities prohibit us from (1) declaring or paying any dividends or distributions on our capital stock, including our common stock; or (2) purchasing, acquiring, or making a liquidation payment on such stock, under the following circumstances: (a) if an event of default has occurred and is continuing under the applicable indenture; (b) if we are in default with respect to a payment under the guarantee of the related trust preferred securities; or (c) if we have given notice of our election to defer interest payments but the related deferral period has not yet 32 commenced, or a deferral period is continuing.
If our BSA policies, procedures and systems are deemed to be deficient, or the BSA policies, procedures and systems of the financial institutions that we acquire in the future are deficient, we would be subject to reputational risk and potential liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans, which would negatively impact our business, financial condition and results of operations.
If our BSA policies, procedures and systems are deemed to be deficient, or the BSA policies, procedures and systems of the financial institutions that we acquire in the future are deficient, we would be subject to reputational risk and potential liability, including fines and regulatory actions such as restrictions on our ability to pay 34 dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans, which would negatively impact our business, financial condition and results of operations.
Failure to comply (or to ensure that our agents and third-party service providers comply) with laws, regulations, or policies, including our failure to obtain any necessary state or local licenses, could result in enforcement actions or sanctions by regulatory agencies, civil money penalties, and/or reputational damage, which could have a material adverse effect on our business, financial 30 condition, or results of operations.
Failure to comply (or to ensure that our agents and third-party service providers comply) with laws, regulations, or policies, including our failure to obtain any necessary state or local licenses, could result in enforcement actions or sanctions by regulatory agencies, civil money penalties, and/or reputational damage, which could have a material adverse effect on our business, financial condition, or results of operations.
Our ability to deliver products and services to 36 our customers, to adequately process and account for our customers’ transactions, or otherwise conduct our business could be adversely impacted by any disruption in the services provided by these third parties; their failure to handle current or higher volumes of usage; or any difficulties we may encounter in communicating with them.
Our ability to deliver products and services to our customers, to adequately process and account for our customers’ transactions, or otherwise conduct our business could be adversely impacted by any disruption in the services provided by these third parties; their failure to handle current or higher volumes of usage; or any difficulties we may encounter in communicating with them.
Additionally, state attorneys general have indicated that they intend to take a more active role in enforcing consumer protection laws, including through use of Dodd-Frank Act provisions that authorize state attorneys general to enforce certain provisions of federal consumer financial laws and obtain civil money penalties and other relief available to the CFPB.
Additionally, state attorneys general have indicated that they intend to take a more active role in enforcing consumer protection laws, including through use of Dodd-Frank Act provisions that authorize state attorneys general to enforce certain provisions of federal consumer financial laws and obtain civil money 35 penalties and other relief available to the CFPB.
Any inability to grow our multi-family and CRE loan portfolios, could negatively impact our ability to grow our earnings per share. The inability to engage in merger transactions, or to realize the anticipated benefits of acquisitions in which we might engage, could adversely affect our ability to compete with other financial institutions and weaken our financial performance.
Any inability to grow our multi-family and CRE loan portfolios, could negatively impact our ability to grow our earnings per share. 38 The inability to engage in merger transactions, or to realize the anticipated benefits of acquisitions in which we might engage, could adversely affect our ability to compete with other financial institutions and weaken our financial performance.
The ongoing administrative 38 burden and the system requirements associated with complying with these rules or potential changes to these rules could impact our mortgage volume and increase costs. These arrangements with third-party mortgage originators and the fees payable by us to such third parties could also be subject to future regulatory scrutiny and restrictions.
The ongoing administrative burden and the system requirements associated with complying with these rules or potential changes to these rules could impact our mortgage volume and increase costs. These arrangements with third-party mortgage originators and the fees payable by us to such third parties could also be subject to future regulatory scrutiny and restrictions.
Holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds available for such payments under applicable law and regulatory guidance, and although we have historically declared cash dividends on our common stock, we are not required to do so.
The holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds available for such payments under applicable law and regulatory guidance, and, although we have historically declared cash dividends on our common stock, we are not required to do so.
We maintain disclosure controls and procedures to ensure we will timely and sufficiently notify our investors of material cybersecurity risks and incidents, including the associated financial, legal, or reputational consequence of such an event, as well as reviewing and updating any prior disclosures relating to the risk or event.
We maintain disclosure controls and procedures to ensure we will timely and sufficiently 40 notify our investors of material cybersecurity risks and incidents, including the associated financial, legal, or reputational consequence of such an event, as well as reviewing and updating any prior disclosures relating to the risk or event.
The cyclical nature of our industry could lead to periods of growth in the mortgage and real estate markets followed by periods of declines and losses in such markets. Seasonal trends have historically reflected the general patterns of residential and commercial real estate sales, which typically peak in the spring and summer seasons.
The cyclical nature of our industry could lead to periods of growth in the mortgage and real estate markets followed by periods of declines 36 and losses in such markets. Seasonal trends have historically reflected the general patterns of residential and commercial real estate sales, which typically peak in the spring and summer seasons.
We may not be able to fully achieve the strategic objectives and operating efficiencies that we anticipate in our merger and acquisition activities. Inherent uncertainties exist in integrating the operations of an acquired business. We may lose our customers or the customers of acquired entities as a result of the acquisition.
We may not be able to fully achieve the strategic objectives and operating efficiencies that we anticipate in our merger and acquisition activities. Inherent uncertainties exist in integrating the operations of an acquired business. We may lose our customers or the customers of acquired entities as a result of the acquisitions.
The rule requires certain disclosures to be provided to consumers in connection with applying for and closing on a mortgage loan. The rule also mandates the use of specific disclosure forms, timing of communicating information to borrowers, and certain record keeping requirements.
The rule requires certain disclosures to be provided to consumers in connection with applying for and closing on a mortgage loan. The rule also mandates the use of specific disclosure forms, timing of 42 communicating information to borrowers, and certain record keeping requirements.
These types of loans generally expose a lender to greater risk of non-payment and loss than one-to-four family residential mortgage loans because 27 repayment of the loans often depends on the successful operation of the properties and the sale of such properties securing the loans.
These types of loans generally expose a lender to greater risk of non-payment and loss than one-to-four family residential mortgage loans because repayment of the loans often depends on the successful operation of the properties and the sale of such properties securing the loans.
Furthermore, even if our assumptions are accurate predictors of future 35 performance, the models they are based on may prove to be inadequate or inaccurate because of other flaws in their design or implementation.
Furthermore, even if our assumptions are accurate predictors of future performance, the models they are based on may prove to be inadequate or inaccurate because of other flaws in their design or implementation.
In addition, growth in our loan portfolio may require us to increase the allowance for credit losses on such loans by making additional provisions, which would reduce our net income.
In addition, 29 growth in our loan portfolio may require us to increase the allowance for credit losses on such loans by making additional provisions, which would reduce our net income.
We are subject to the comprehensive, consolidated supervision and regulation set forth by the FRB. Such regulation includes, among other matters, the level of leverage and risk-based capital ratios we are required to maintain.
We are subject to the comprehensive, consolidated supervision and regulation set forth by the FRB and the OCC. Such regulation includes, among other matters, the level of leverage and risk-based capital ratios we are required to maintain.
In addition, changes in the nature or extent of the guarantees 33 provided by Fannie Mae and Freddie Mac or the insurance provided by the FHA could also have broad adverse market implications.
In addition, changes in the nature or extent of the guarantees provided by Fannie Mae and Freddie Mac or the insurance provided by the FHA could also have broad adverse market implications.
While we have established information security policies and procedures, including an Incident Response Plan, to prevent or limit the impact of systems failures and interruptions, we may not be able to anticipate all possible security breaches that could affect our systems or information and there can be no assurance that such events will not occur or will be adequately prevented or mitigated if they do.
While we have established information security policies, procedures and controls, including an Incident Response Plan, to prevent or limit the impact of systems failures and interruptions, we may not be able to anticipate all possible security breaches that could affect our systems or information and there can be no assurance that such events will not occur or will be adequately prevented or mitigated by our policies, procedures and controls if they do.
Additionally, the master servicer directs the oversight of custodial deposits associated with serviced loans and, to the extent allowable, could choose to transfer the oversight of the Bank's custodial deposits to another depository 37 institution.
Additionally, the master servicer directs the oversight of custodial deposits associated with serviced loans and, to the extent allowable, could choose to transfer the oversight of the Bank's custodial deposits to another depository institution.
These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including with respect to the imposition of restrictions on the operation of a bank or a bank holding company, the imposition of significant fines, the ability to delay or deny merger or other regulatory applications, the classification of assets by a bank, and the adequacy of a bank’s allowance for loan losses, among other matters.
These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including with respect to the imposition of restrictions on the operation of a bank or a bank holding company, the imposition of significant fines, the ability to delay or deny merger or other regulatory applications, the payment of dividends, the classification of assets by a bank, and the adequacy of a bank’s allowance for loan losses, among other matters.
Any financial liability or reputational damage could have a materially adverse effect on our business, which could have a materially adverse effect on our financial condition and results of operations. Claims asserted against us can be highly complicated and slow to develop, making the outcome of such proceedings difficult to predict or estimate early in the process.
Any financial liability or reputational damage could have a materially adverse effect on our business and, in turn, on our financial condition and results of operations. Claims asserted against us can be highly complicated and slow to develop, making the outcome of such proceedings difficult to predict or estimate early in the process.
In addition, such requirements could also compel us to issue additional securities, thus diluting the value of our common stock. In addition, failure to meet established capital requirements could result in the FRB placing limitations or conditions on our activities and further restricting the commencement of new activities.
In addition, such requirements could also compel us to issue additional securities, thus diluting the value of our common stock. In addition, failure to meet established capital requirements could result in the FRB and/or OCC placing limitations or 33 conditions on our activities and further restricting the commencement of new activities.
If the non-payment of dividends on Series A Preferred Stock for any dividend period would cause the Company to fail to comply with any applicable law or regulation, or any agreement we may enter into with our regulators from time to time, then we would not be able to declare or pay a dividend for such dividend period.
If the non-payment of dividends on Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock for any dividend period would cause the Company to fail to comply with any applicable law or regulation, or any agreement we may enter into with our regulators from time to time, then we would not be able to declare or pay a dividend for such dividend period.
At December 31, 2022, we had relationships with 12 owners of MSRs, excluding ourselves, for which we act as subservicer for the mortgage loans they own. Due to the limited number of relationships, discontinuation of existing agreements with those third parties or adverse changes in contractual terms could have a significant negative impact to our mortgage servicing revenue.
At December 31, 2023, we had relationships with 10 owners of MSRs, excluding ourselves, for which we act as subservicer for the mortgage loans they own. Due to the limited number of relationships, discontinuation of existing agreements with those third parties or adverse changes in contractual terms could have a significant negative impact to our mortgage servicing revenue.
Additionally, under the FRB’s capital rules, dividends on the Series A Preferred Stock may only be paid out of our net income, retained earnings, or surplus related to other additional tier 1 capital instruments.
Additionally, under the FRB’s capital rules, dividends on the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock may only be paid out of our net income, retained earnings, or surplus related to other additional tier 1 capital instruments.
Limitations on our ability to grow our loan portfolios could adversely affect our ability to generate interest income, as well our financial condition and results of operations, perhaps materially. Our portfolios of multi-family and CRE loans represent the largest portion of our asset mix (68 percent of total loans held for investment as of December 31, 2022).
Limitations on our ability to grow our loan portfolios could adversely affect our ability to generate interest income, as well our financial condition and results of operations, perhaps materially. Our portfolios of multi-family and CRE loans represent the largest portion of our asset mix (56 percent of total loans held for investment as of December 31, 2023).
Our ability to engage in future mergers and acquisitions would depend on our ability to identify suitable merger partners and acquisition opportunities, our ability to finance and complete negotiated transactions at acceptable prices and on acceptable terms, and our ability to obtain the necessary stockholder and regulatory approvals.
Our ability to engage in future mergers and acquisitions depends on our ability to identify suitable merger partners and acquisition opportunities, our ability to finance and complete negotiated transactions at acceptable prices and on acceptable terms, and our ability to obtain the necessary stockholder and regulatory approvals.
Additional risks that are not currently known to us, or that we currently believe to be immaterial, also may have a material effect on our financial condition and results of operations. This report is qualified in its entirety by those risk factors.
Additional risks that are not currently known to us, or that we currently believe to be immaterial, also may have a material effect on our financial condition and results of operations. This Annual Report on Form 10-K is qualified in its entirety by those risk factors.
Our leadership position in these markets has been instrumental to our production of solid earnings and our consistent record of exceptional asset quality. We monitor the ratio of our multi-family, CRE, and ADC loans (as defined in the CRE Guidance) to our total risk-based capital to ensure that we are in compliance with regulatory guidance.
Our leadership position in these markets has been instrumental to our production of solid earnings and our consistent record of exceptional asset quality. We monitor the ratio of our multi-family, CRE, and ADC loans (as defined in the CRE Guidance) to our total risk-based capital for compliance with regulatory guidance.
As a result of our acquisition of Flagstar, we are required to seek regulatory approval from the OCC for the payment of any dividend to the Parent Company through at least the period ending November 1, 2024, which could restrict our ability to pay the common stock dividend.
As a result of our acquisitions of Flagstar and Signature, we are required to seek regulatory approval from the OCC for the payment of any dividend to the Parent Company through at least the period ending November 1, 2024, which could restrict our ability to pay the common stock dividend.
At any given time, we are involved with a number of legal and regulatory examinations as a part of the routine reviews conducted by regulators and other parties, which may involve consumer protection, employment, tort, and numerous other laws and regulations.
At any given time, we are involved with a number of legal and regulatory examinations as a part of reviews conducted by regulators and other parties, which may involve banking, securities, consumer protection, employment, tort, and numerous other laws and regulations.
As a result of our acquisition of Flagstar, we are required to seek regulatory approval from the OCC for the payment of any dividend to the Bancorp through at least the period ending November 1, 2024.
As a result of our acquisitions of Flagstar and Signature, we are required to seek regulatory approval from the OCC for the payment of any dividend to the Bancorp through at least the period ending November 1, 2024.
If our Board of Directors (or any duly authorized committee of the Board) does not authorize and declare a dividend on the Series A Preferred Stock for any dividend period, holders of the depositary shares will not be entitled to receive any dividend for that dividend period, and the unpaid dividend will cease to accrue and be payable.
If our Board of Directors (or any duly authorized committee of the Board) does not authorize and declare a dividend on (a) the Series A Preferred Stock for any dividend period, holders of the depository shares will not be entitled to receive any dividend for that dividend period, and the unpaid dividend will cease to accrue and be payable, or (b) Series B Preferred Stock and Series C Preferred Stock, the holders thereof will not be entitled to receive any dividend for that dividend period.
Some of the laws and regulations to which we are subject may provide a private right of action that a consumer or class of consumers may pursue to enforce these laws and regulations. We have been, and may be in the future, subject to stockholder class and derivative actions, which could seek significant damages or other relief.
Some of the laws and regulations to which we are subject may provide a private right of action that a consumer or class of consumers may pursue to enforce these laws and regulations. We are currently subject to stockholder class and derivative actions which seek significant damages and other relief, and may be subject to similar actions in the future.
Primary among these are (1) interest rate risk, which arises from movements in interest rates; (2) credit risk, which arises from an obligor’s failure to meet the terms of any contract with a bank or to otherwise perform as agreed; (3) risks related to our financial statements; (4) liquidity risk, which arises from a bank’s inability to meet its obligations when they come due without incurring unacceptable losses; (5) legal/compliance risk, which arises from violations of, or non-conformance with, laws, rules, regulations, prescribed practices, or ethical standards; (6) market risk, which arises from changes in the value of portfolios of financial instruments; (7) strategic risk, which is the risk of loss arising from the execution of our strategic initiatives and business strategies, including our acquisition and integration of other companies we acquire, as well as inadequate or failed internal processes, people, and systems; (8) operational risk, which arises from problems with service or product delivery; and (9) reputational risk, which arises from negative public opinion resulting in a significant decline in stockholder value.
Primary among these are (1) interest rate risk, which arises from movements in interest rates; (2) credit risk, which arises from an obligor’s failure to meet the terms of any contract with a bank or to otherwise perform as agreed; (3) risks related to our financial statements; (4) liquidity and dividend risk, which arises from a bank’s inability to meet its obligations when they come due without incurring unacceptable losses, and related risks regarding our ability to pay dividends; (5) legal/compliance risk, which arises from violations of, or non-conformance with, laws, rules, regulations, prescribed practices, or ethical standards; (6) financial and market risk, which arises from changes in the value of portfolios of financial instruments, as well as other matters that may dilute the value of our securities; (7) strategic risk, which is the risk of loss arising from the execution of our strategic initiatives and business strategies, including our acquisition and integration of other companies we acquire; (8) operational risk, which arises from problems with service or product delivery; and (9) reputational risk, which arises from negative public opinion resulting in a significant decline in stockholder value.
The withdrawal of more deposits than we anticipate could have an adverse impact on our profitability as this source of funding, if not replaced by similar deposit funding, would need to be replaced with wholesale funding, the sale of interest-earning assets, or a combination of the two.
The withdrawal of more deposits than we anticipate could have an adverse impact on our profitability as this source of funding, if not replaced by similar deposit funding, would need to be 31 replaced with more expensive wholesale funding, the sale of interest-earning assets, other sources of funding, or a combination of them all.
For further information, see Note 15 - Contingencies and Commitments. We may be required to pay interest on certain mortgage escrow accounts in accordance with certain state laws despite the Federal preemption under the National Bank Act.
For further information, see Note 19 - Commitments and Contingencies and Item 3 - Legal Proceedings. We may be required to pay interest on certain mortgage escrow accounts in accordance with certain state laws despite the Federal preemption under the National Bank Act.
Our results of operations could be materially affected by further changes in bank regulation, or by our ability to comply with certain existing laws, rules, and regulations governing our industry.
Our results of operations could be materially affected by the imposition of restrictions on our operations by bank regulators, further changes in bank regulation, or by our ability to comply with certain existing laws, rules, and regulations governing our industry.
In addition, breaches of security may occur through intentional or unintentional acts by those having authorized or unauthorized access to our confidential or other information, or that of our customers, clients, or counterparties.
In addition, breaches of security have in the past and may in the future occur through intentional or unintentional acts by those having authorized or unauthorized access to our confidential or other information, or that of our customers, clients, or counterparties.
If the Ninth Circuit’s holding is more broadly adopted by other Federal Circuits, including those covering states that currently have enacted, or in the future may enact, statutes 39 requiring the payment of interest on escrow balances or if we would be required to retroactively credit interest on escrow funds, the Company’s earnings could be adversely affected.
If the Ninth Circuit’s holding is more broadly adopted by other Federal Circuits, including those covering states that currently have enacted, or in the future may enact, statutes requiring the payment of interest on escrow balances or if we would be required to retroactively credit interest on escrow funds, the Company’s earnings could be adversely affected. 43 We could be exposed to fraud risks that affect our operations and reputation.
ITEM 1A. RI SK FACTORS There are various risks and uncertainties that are inherent to our business.
Item 1A. Risk Factors There are various risks and uncertainties that are inherent to our business.
We may take tax return filing positions for which the final determination of tax is uncertain, and our net income and earnings per share could be reduced if a federal, state, or local authority were to assess additional taxes that have not been provided for in our consolidated financial statements. 31 In addition, there can be no assurance that we will achieve our anticipated effective tax rate.
We may take tax return filing positions for which the final determination of tax is uncertain, and our net income and earnings per share could be reduced if a federal, state, or local authority were to assess additional taxes that have not been provided for in our consolidated financial statements.
Although we take protective measures and endeavor to modify them as circumstances warrant, the security of our computer systems, software, and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code and cyber-attacks that could have an impact on information security.
Although we, and entities we have acquired, take and have taken protective measures and endeavor to modify them as circumstances warrant, the security of our computer systems, software, and networks, as well as the security of the computer systems, software, and networks of certain of our service providers, have been, and may in the future be, vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code and cyber-attacks that have had and could have an impact on information security.
Our systems and those of our third-party service providers and customers are under constant threat, and it is possible that we or they could experience a significant event in the future that could adversely affect our business or operations.
Our systems and those of our third-party service providers and customers are regularly the subject of attempted attacks that are increasingly sophisticated, and it is possible that we or they could experience a significant event in the future that could adversely affect our business or operations.
This could affect our growth, profitability, and financial condition, including our liquidity. If we were to defer payments on our trust preferred capital debt securities or were in default under the related indentures, we would be prohibited from paying dividends or distributions on our common stock.
If we were to defer payments on our trust preferred capital debt securities or were in default under the related indentures, we would be prohibited from paying dividends or distributions on our common stock.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. 28 Impairment in the carrying value of goodwill and other intangible assets could negatively impact our financial condition and results of operations. At December 31, 2022, goodwill and other intangible assets totaled $2.7 billion.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. Impairment in the carrying value of other intangible assets could negatively impact our financial condition and results of operations. At December 31, 2023, other intangible assets, primarily core deposit intangibles, totaled $625 million.
Dividends on the Series A Preferred Stock are discretionary and noncumulative.
Dividends on our Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock are discretionary and noncumulative.
This could cause us significant reputational damage or result in our experiencing significant losses. While we diligently assess applicable regulatory and legislative developments affecting our business, laws and regulations relating to cybersecurity have been frequently changing, imposing new requirements on us.
While we diligently assess applicable regulatory and legislative developments affecting our business, laws and regulations relating to cybersecurity have been frequently changing, imposing new requirements on us.
Unanticipated changes in tax laws or related regulatory or judicial guidance, or an audit assessment that denies previously recognized tax benefits, could result in our recording tax expenses that materially reduce our net income.
In addition, there can be no assurance that we will achieve our anticipated effective tax rate. Unanticipated changes in tax laws or related regulatory or judicial guidance, or an audit assessment that denies previously recognized tax benefits, could result in our recording tax expenses that materially reduce our net income.
In addition, large-scale withdrawals of brokered or institutional deposits could require us to pay significantly higher interest rates on our retail deposits or on other wholesale funding sources, which would have an adverse impact on our net interest income and net income.
As of December 31, 2023, approximately 35.9 percent of our total deposits of $81.5 billion were not FDIC-insured. In addition, large-scale withdrawals of brokered or institutional deposits could require us to pay significantly higher interest rates on our retail deposits or on other wholesale funding sources, which would have an adverse impact on our net interest income and net income.
Noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations could result in material financial loss. The BSA and the USA Patriot Act contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities.
The BSA and the USA Patriot Act contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities.
A downgrade of the credit ratings of the Company and the Bank could also adversely affect our access to liquidity and capital, and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us or to purchase our securities.
They could adversely affect our access to liquidity and capital, and could significantly increase our cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to us or to purchase our securities. This could affect our growth, profitability, and financial condition, including our liquidity.
In addition to being affected by interest rates, the secondary mortgage markets are also subject to investor demand for residential mortgage loans and investor yield requirements for these loans. These conditions may fluctuate or worsen in the future.
The sustained higher rates experienced throughout 2023 negatively impacted the mortgage market including our loan origination volume and refinancing activity. In addition to being affected by interest rates, the secondary mortgage markets are also subject to investor demand for residential mortgage loans and investor yield requirements for these loans. These conditions may fluctuate or worsen in the future.
Any of these actions may harm our reputation or negatively affect our servicing business and, as a result, our profitability. The pipeline represents the UPB for loans the Agencies identified as potentially needing to be repurchased, and the estimated probable loss associated with these loans is included in our representation and warranty reserve.
The pipeline represents the UPB for loans the Agencies identified as potentially needing to be repurchased, and the estimated probable loss associated with these loans is included in our representation and warranty reserve.
In addition, without notice to, or consent from, the holders of our common stock, we may issue additional series of trust preferred capital debt securities with similar terms, or enter into other financing agreements, that limit our ability to pay dividends on our common stock. 29 Dividends on the Series A Preferred Stock are discretionary and noncumulative, and may not be paid if such payment will result in our failure to comply with all applicable laws and regulations.
In addition, without notice to, or consent from, the holders of our common stock, we may issue additional series of trust preferred capital debt securities with similar terms, or enter into other financing agreements, that limit our ability to pay dividends on our common stock.
At December 31, 2022, $38.1 billion or 55 percent of our total loans and leases, held for investment portfolio consisted of multi-family loans and $8.5 billion or 12 percent consisted of CRE loans.
At December 31, 2023, $37.3 billion or 44.0 percent of our total loans and leases, held for investment portfolio consisted of multi-family loans and $10.5 billion or 12.4 percent consisted of CRE loans.
If the Bank is unable to pay dividends to the Parent Company, we might not be able to service our debt, pay our obligations, or pay dividends on our common stock. Reduction or elimination of our quarterly cash dividend could have an adverse impact on the market price of our common stock.
If the Bank is unable to pay dividends to the Parent Company, we might not be able to service our debt, pay our obligations, or pay dividends on our common stock.
We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions. The CRA requires the Federal Reserve to assess our performance in meeting the credit needs of the communities we serve, including low- and moderate-income neighborhoods.
We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
Furthermore, our ability to attract and retain personnel with the skills and knowledge to support our business may require that we offer additional compensation and benefits that would reduce our earnings. Many aspects of our operations are dependent upon the soundness of other financial intermediaries and thus could expose us to systemic risk.
Furthermore, our ability to attract and retain personnel with the skills and knowledge to support our business may require that we offer additional compensation and benefits that would reduce our earnings.
Goodwill and our other intangible assets are reviewed for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable.
We review our other intangible assets for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. A significant decline in deposits may necessitate taking additional charges in the future related to the impairment of other intangible assets.
In particular, our ability to compete effectively in new markets would be dependent on our ability to understand those markets and their competitive dynamics, and our ability to retain certain key employees from the acquired institution who know those markets better than we do. 34 We may be exposed to challenges in combining the operations of acquired or merged businesses, including our recent Flagstar acquisition, into our operations, which may prevent us from achieving the expected benefits from our merger and acquisition activities.
In particular, our ability to compete effectively in new markets would be dependent on our ability to understand those markets and their competitive dynamics, and our ability to retain certain key employees from the acquired institution who know those markets better than we do.
We also may be subject to litigation and financial losses that either are not insured against or not fully covered through any insurance we maintain. We believe that the impact of any previously identified cyber incidents will not have a material financial impact and we have cyber insurance in place.
We are currently subject to litigation regarding cyber incidents, and we also may be subject to future litigation and financial losses that either are not insured against or not fully covered through any insurance we maintain or any third-party indemnification or insurance.
The residential real estate mortgage lending business is sensitive to changes in interest rates, especially long-term interest rates. Lower interest rates generally increase the volume of mortgage originations, while higher interest rates generally cause that volume to decrease. Therefore, our mortgage performance is typically correlated to fluctuations in interest rates, primarily the 10-year U.S. Treasury rate.
Rising mortgage rates and adverse changes in mortgage market conditions could reduce mortgage revenue. The residential real estate mortgage lending business is sensitive to changes in interest rates, especially long-term interest rates. Lower interest rates generally increase the volume of mortgage originations, while higher interest rates generally cause that volume to decrease.
Moreover, higher inflation could lead to fluctuations in the value of our assets and liabilities and off-balance sheet exposures, and could result in lower equity market valuations of financial services companies. 26 Changes to and replacement of the LIBOR Benchmark Interest Rate may adversely affect our business, financial condition, and results of operations.
Moreover, higher inflation could lead to fluctuations in the value of our assets and liabilities and off-balance sheet exposures, and could result in lower equity market valuations of financial services companies. Credit Risk Our allowance for credit losses might not be sufficient to cover our actual losses, which would adversely impact our financial condition and results of operations.
Strategic Risks Extensive competition for loans and deposits could adversely affect our ability to expand our business, as well as our financial condition and results of operations. Because our profitability stems from our ability to attract deposits and originate loans, our continued ability to compete for depositors and borrowers is critical to our success.
Because our profitability stems from our ability to attract deposits and originate loans, our continued ability to compete for depositors and borrowers is critical to our success.
If we become subject to such investigation, the required response could result in substantial costs and a diversion of the attention and resources of our management. Market Risks A decline in economic conditions could adversely affect the value of the loans we originate and the securities in which we invest.
Financial and Market Risks A decline in economic conditions could adversely affect the value of the loans we originate and the securities in which we invest.
Historically, mortgage origination volume and 32 sales for the Bank and for other financial institutions have risen and fallen in response to these and other factors. An increase in interest rates and/or a decrease in our mortgage production volume could have a materially adverse effect on our operating results. The 10-year U.S.
Therefore, our mortgage performance is typically correlated to fluctuations in interest rates, primarily the 10-year U.S. Treasury rate. Historically, mortgage origination volume and sales for the Bank and for other financial institutions have risen and fallen in response to these and other factors.
Furthermore, economic or market turmoil could occur in the near or long term. This could negatively affect our business, our financial condition, and our results of operations, as well as our ability to maintain or increase the level of cash dividends we currently pay to our stockholders.
This could negatively affect our business, our financial condition, and our results of operations, as well as our ability to maintain the level of cash dividends we currently pay to our stockholders. 30 Financial Statements Risk Our accounting estimates and risk management processes rely on analytical and forecasting models.
When mortgage loans are sold by us, we make customary representations and warranties to purchasers, guarantors and insurers, including the Agencies, about the mortgage loans and the manner in which they were originated. Whole loan sale agreements may require us to repurchase or substitute mortgage loans, or indemnify buyers against losses, in the event we breach these representations or warranties.
When selling mortgage loans, we provide customary representations and warranties to purchasers, guarantors and insurers, including the Agencies, regarding loan originations. Agreements may require repurchasing, substituting mortgage loans, or indemnify buyers against losses, in the event we breach these representations or warranties. We may also face litigation and associated costs.
If one or more of such events were to occur, the confidential and other information processed and stored in, and transmitted through, our computer systems and networks could potentially be jeopardized, or could otherwise cause interruptions or malfunctions in our operations or the operations of our customers, clients, or counterparties.
Certain previously identified cyber incidents have resulted, and future such events could result, in the breach of confidential and other information processed and stored in our computer systems and networks. These events could cause interruptions or malfunctions in our operations or the operations of our customers, clients, or counterparties.
Any reduction or elimination of our common stock dividend in the future could adversely affect the market price of our common stock. Operational Risks Our stress testing processes rely on analytical and forecasting models that may prove to be inadequate or inaccurate, which could adversely affect the effectiveness of our strategic planning and our ability to pursue certain corporate goals.
Adjustments to this gain may be recorded based on additional information received after the acquisition date that affect the measurement of the assets acquired and liabilities assumed and any decrease in the amount of bargain purchase gain we have recorded could also adversely impact our financial condition, results of operations and future prospects. 39 Operational Risks Our stress testing processes rely on analytical and forecasting models that may prove to be inadequate or inaccurate, which could adversely affect the effectiveness of our strategic planning and our ability to pursue certain corporate goals.
Any failure, breach, or interruption in service involving our systems or those of our service providers could damage our reputation, cause losses, increase our expenses, and result in a loss of customers, an increase in regulatory scrutiny, heightened cyber risk, or expose us to civil litigation and possibly financial liability, any of which could adversely impact our financial condition, results of operations, and the market price of our stock.
These incidents have resulted in, and could result in, additional expenses, exposure to civil litigation, increased regulatory scrutiny, losses, and a loss of customers, any of which could adversely impact our financial condition, results of operations, and the market price of our stock.
If the Federal Reserve determines that we need to improve our performance or are in substantial non-compliance with CRA requirements, various adverse regulatory consequences may ensue. In addition, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The CFPB, the U.S.
The CRA requires the Federal Reserve and OCC to assess our performance in meeting the credit needs of the communities we serve, including low- and moderate-income neighborhoods. If the Federal Reserve or OCC determines that we need to improve our performance or are in substantial non-compliance with CRA requirements, various adverse regulatory consequences may ensue.
The amount of any impairment charge could be significant and could have a material adverse impact on our financial condition and results of operations. Liquidity Risks Failure to maintain an adequate level of liquidity could result in an inability to fulfill our financial obligations and also could subject us to material reputational and compliance risk.
Control weaknesses or failures could result in financial losses, reputational harm, loss of investor confidence, regulatory actions, and limitations on our business activities. Liquidity and Dividend Risks Failure to maintain an adequate level of liquidity could result in an inability to fulfill our financial obligations and also could subject us to material reputational and compliance risk.
If repurchase and indemnity demands increase and such demands are valid claims, our liquidity, results of operations and financial condition may also be adversely affected.
With respect to loans that are originated through our broker or correspondent channels, the remedies against originating brokers or correspondents may be limited, posing financial risk. If repurchase and indemnity demands increase, our liquidity, results of operations and financial condition may also be adversely affected.
In addition, we routinely transmit and receive personal, confidential, and proprietary information by e-mail and other electronic means.
We believe that the impact of any previously identified cyber incidents, including those subject to ongoing investigation and remediation, will not have a material financial impact. In addition, we routinely transmit and receive personal, confidential, and proprietary information by e-mail and other electronic means.
Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.
In addition, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The CFPB, the U.S. Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.
Financial Statements Risk Our accounting estimates and risk management processes rely on analytical and forecasting models.
Financial Statements Risks • Our accounting estimates and risk management processes rely on analytical and forecasting models. • Impairment in the carrying value of other intangible assets could negatively impact our financial condition. • We may fail to maintain effective internal controls, which could impact the accuracy and timeliness of financial reporting.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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The Company and its President and Chief Executive Officer and Senior Executive Vice President and Chief Financial Officer have been named as defendants in a shareholder class action captioned Lemm, Jr. v.
Added
New York Community Bancorp, Inc., et al. , Case No. 1:24-cv-00903, filed on February 6, 2024 in the United States District Court for the Eastern District of New York.
Added
This action, which seeks unspecified compensatory damages to be proven at trial, alleges violations of the federal securities laws, including Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5, with respect to disclosures concerning the Company’s business, operations and prospects, particularly regarding the impact of the Flagstar and Signature transactions and the Bank’s commercial real estate loan portfolio and related matters, that were made in the Company’s public SEC filings and press releases during the period beginning on March 1, 2023 and ending on January 30, 2024.
Added
The Company intends to vigorously defend this action and any related actions. The Company and its President and Chief Executive Officer and Senior Executive Vice President and Chief Financial Officer have also been named as defendants in a second shareholder class action captioned Miskey v.
Added
New York Community Bancorp, Inc., et al. , Case No. 1:24-cv-01118, filed on February 13, 2024 in the United States District Court for the Eastern District of New York.
Added
This action also seeks unspecified compensatory damages to be proven at trial and alleges violations of the federal securities laws, including Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5, with respect to disclosures concerning the Company’s business, operations and prospects, particularly regarding the impact of the Flagstar and Signature transactions and the Bank’s commercial real estate loan portfolio and related matters, that were made in the Company’s public SEC filings and press releases during the period beginning on March 1, 2023 and ending on February 5, 2024.
Added
The Company intends to vigorously defend this action and any related actions. The Company’s President and Chief Executive Officer and Senior Executive Vice President and Chief Financial Officer, as well as all of the Company’s current directors, have also been named as defendants in a shareholder derivative action captioned Hauser v.
Added
Cangemi, et al., Case No. 1:24-cv-01207, filed on February 15, 2024 in the United States District Court for the Eastern District of New York.
Added
This action, which also names the Company as a nominal defendant and seeks unspecified compensatory damages and certain corporate governance and internal procedures reforms, alleges claims of breach of fiduciary duty, gross mismanagement, waste of corporate assets, unjust enrichment, aiding and abetting with respect to the director defendants, and violations of Sections 10(b) and 21D of the Exchange Act with respect to the officer defendants.
Added
The allegations in the complaint relate to disclosures concerning the Company’s business, operations and prospects, particularly regarding the impact of the Flagstar and Signature transactions and the Bank’s commercial real estate loan portfolio and related matters, that were made in the Company’s public SEC filings and press releases during the period beginning on March 1, 2023 and ending on January 31, 2024, as well as the defendants’ management of the Company during such period.
Added
The Company intends to vigorously defend this action and any related actions. 46 The outcome of the pending litigation described above is uncertain.
Added
There can be no assurance (i) that we will not incur material losses due to damages, penalties, costs and/or expenses as a result of such litigation, (ii) that the reserves we have established will be sufficient to cover such losses, or (iii) that such losses will not materially exceed such reserves and have a material impact on our financial condition or results of operations.
Added
The Company may incur significant legal expenses in defending the litigation described above during the pendency of these matters, and in connection with any other potential cases, including expenses for the potential reimbursement of legal fees of officers and directors under indemnification obligations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the year December 31, 2022, the Company repurchased $24 million or 2.3 million shares of its common stock: (dollars in millions, except per share data) Period Total Shares of Common Stock Repurchased Average Price Paid per Common Share Total Allocation Total Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs First Quarter 2022 901,934 $ 12.93 $ 11 — Second Quarter 2022 809,996 8.88 7 791,101 Third Quarter 2022 107,022 9.16 1 80,609 Fourth Quarter 2022 October 1-31, 2022 236 8.54 — — November 1-30, 2022 2,173 9.90 — — December 1-31, 2022 515,574 8.72 5 — Total Fourth Quarter 2022 517,983 8.72 5 — 2022 Total 2,336,935 10.42 $ 24 871,710 ITEM 6.
Biggest changeDuring the year December 31, 2023 , the Company repurchased $12 million or 1 million shares of its common stock: (dollars in millions, except share data) Period Total Shares of Common Stock Repurchased Average Price Paid per Common Share Total Allocation Total Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs First Quarter 2023 976,454 $ 9.33 $ 9 0 Second Quarter 2023 190,177 10.36 2 0 Third Quarter 2023 33,956 12.50 0 0 Fourth Quarter 2023 October 1 - 31, 2023 1,525 10.29 0 — November 1 - 30, 2023 4,897 9.34 — — December 1 - 31, 2023 50,526 9.92 1 — Total Fourth Quarter 2023 56,948 $ 16.57 1 — 2023 Total 1,257,535 $ 9.59 $ 12 — Item 6.
The S&P Mid-Cap 400 Index was chosen as the broad market index in connection with the Company’s trading activity on the NYSE; the S&P U.S. BMI Banks Index currently is comprised of 302 bank and thrift institutions, including the Company. S&P Global Market Intelligence provided us with the data for both indices.
The S&P Mid-Cap 400 Index was chosen as the broad market index in connection with the Company’s trading activity on the NYSE; the S&P U.S. BMI Banks Index currently is comprised of 258 bank and thrift institutions, including the Company. S&P Global Market Intelligence provided us with the data for both indices.
Stock Performance Graph The following graph compares the cumulative total return on the Company’s stock in the five years ended December 31, 2022 with the cumulative total returns on a broad market index (the S&P Mid-Cap 400 Index) and a peer group index (the S&P U.S. BMI Banks Index) during the same time.
Stock Performance Graph The following graph compares the cumulative total return on the Company’s stock in the five years ended December 31, 2023 with the cumulative total returns on a broad market index (the S&P Mid-Cap 400 Index) and a peer group index (the S&P U.S. BMI Banks Index) during the same time.
The cumulative total returns are based on the assumption that $100.00 was invested in each of the three investments on December 31, 2017 and that all dividends paid since that date were reinvested.
The cumulative total returns are based on the assumption that $100.00 was invested in each of the three investments on December 31, 2018 and that all dividends paid since that date were reinvested.
As of December 31, 2022, the Company has approximately $9 million remaining under this repurchase authorization. 43 Shares that are repurchased pursuant to the Board of Directors’ authorization, and those that are repurchased pursuant to the Company’s stock-based incentive plans, are held in our Treasury account and may be used for various corporate purposes, including, but not limited to, merger transactions and the vesting of restricted stock awards.
As of December 31, 2023 , the Company has approximately $9 million remaining under this repurchase authorization. 49 Shares that are repurchased pursuant to the Board of Directors’ authorization, and those that are repurchased pursuant to the Company’s stock-based incentive plans, are held in our Treasury account and may be used for various corporate purposes, including, but not limited to, merger transactions and the vesting of restricted stock awards.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCK HOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES The common stock of New York Community Bancorp, Inc. trades on the New York Stock Exchange (the “NYSE”) under the symbol “NYCB.” At December 31, 2022, the number of outstanding shares was 681,217,334 and the number of registered owners was approximately 11,746.
Item 5. Market For the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases The common stock of New York Community Bancorp, Inc. trades on the New York Stock Exchange (the “NYSE”) under the symbol “NYCB.” At December 31, 2023, the number of outstanding shares was 722,066,370 and the number of registered owners was approximately 11,746.
BMI Banks Index $ 100.00 $ 83.54 $ 114.74 $ 100.10 $ 136.10 $ 112.89 Share Repurchases Shares Repurchased Pursuant to the Company’s Stock-Based Incentive Plans Participants in the Company’s stock-based incentive plans may have shares of common stock withheld to fulfill the income tax obligations that arise in connection with their recent event exercise of stock options and the vesting of their stock awards.
BMI Banks Index $ 100.00 $ 137.36 $ 119.83 $ 162.92 $ 135.13 $ 147.41 Share Repurchases Shares Repurchased Pursuant to the Company’s Stock-Based Incentive Plans Participants in the Company’s stock-based incentive plans may have shares of common stock withheld to fulfill the income tax obligations that arise in connection with the vesting of their stock awards.
Such returns are based on historical results and are not intended to suggest future performance. 42 Comparison of 5-Year Cumulative Total Return Among New York Community Bancorp, Inc., S&P Mid-Cap 400 Index, and S&P U.S.
Such returns are based on historical results and are not intended to suggest future performance. 48 CUMULATIVE TOTAL STOCKHOLDER RETURN COMPARED WITH PERFORMANCE OF SELECTED INDICES DECEMBER 31, 2018 THROUGH DECEMBER 31, 2023 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.
Removed
BMI Banks Index* r ASSUMES $100 INVESTED ON DECEMBER 31, 2017 AND DIVIDEND REINVESTED 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 New York Community Bancorp, Inc. $ 100.00 $ 76.76 $ 103.92 $ 97.88 $ 120.07 $ 90.61 S&P Mid-Cap 400 Index $ 100.00 $ 88.92 $ 112.21 $ 127.54 $ 159.12 $ 138.34 S&P U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAsset Quality Analysis The following table presents information regarding our asset quality measures: At or for the Years Ended December 31, 2022 2021 2020 Non-performing loans to total loans 0.20 % 0.07 % 0.09 Non-performing assets to total assets 0.17 0.07 0.08 Allowance for losses on loans to non-performing loans 278.87 611.79 513.55 Allowance for losses on loans to total loans 0.57 0.44 0.45 63 The following table presents information on the Company's net charge-offs as compared to average loans outstanding: For the Year Ended December 31, (dollars in millions) 2022 2021 2020 Multi-family Net charge-offs (recoveries) during the period $ 1 $ 1 $ (1 ) Average amount outstanding $ 36,292 $ 32,424 $ 31,322 Net charge-offs (recoveries) as a percentage of average loans 0.00 % 0.00 % 0.00 % Commercial real estate Net charge-offs (recoveries) during the period $ - $ 2 $ 2 Average amount outstanding $ 6,964 $ 5,489 $ 6,009 Net charge-offs (recoveries) as a percentage of average loans 0.00 % 0.04 % 0.03 % One-to-Four Family first mortgage Net charge-offs (recoveries) during the period $ - $ 1 $ - Average amount outstanding $ 516 $ 191 $ 314 Net charge-offs (recoveries) as a percentage of average loans 0.00 % 0.52 % 0.00 % Acquisition, Development and Construction Net charge-offs (recoveries) during the period $ - $ - $ - Average amount outstanding $ 203 $ 152 $ 116 Net charge-offs (recoveries) as a percentage of average loans 0.00 % 0.00 % 0.00 % Other Loans Net charge-offs (recoveries) during the period $ (5 ) $ (6 ) $ 18 Average amount outstanding $ 5,401 $ 4,944 $ 4,267 Net charge-offs (recoveries) as a percentage of average loans -0.09 % -0.12 % 0.42 % Total loans Net charge-offs (recoveries) during the period $ (4 ) $ (2 ) $ 19 Average amount outstanding $ 49,376 $ 43,200 $ 42,028 Net charge-offs (recoveries) as a percentage of average loans -0.01 % 0.00 % 0.04 % The following table sets forth the allocation of the consolidated allowance for losses on loans, at each year-end: 2022 2021 2020 (dollars in millions) Amount Percent of Loans in Each Category to Total Loans Held for Investment Amount Percent of Loans in Each Category to Total Loans Held for Investment Amount Percent of Loans in Each Category to Total Loans Held for Investment Multi-family loans $ 178 55.26 % $ 159 75.71 % $ 150 75 % Commercial real estate loans 46 12.36 17 14.65 24 15.96 One-to-four family first mortgage loans 46 8.44 1 0.35 1 0.55 Acquisition, development, and construction loans 20 2.79 2 0.46 1 0.21 Other loans 103 21.05 20 8.83 18 8.00 Total loans $ 393 100.00 % $ 199 100.00 % $ 194 100.00 % Each of the preceding allocations was based upon an estimate of various factors, as discussed in “Critical Accounting Estimates”, and a different allocation methodology may be deemed to be more appropriate in the future.
Biggest changeCharge-offs For the year ended December 31, 2023, our gross charge-offs were $223 million and net charge-offs were $208 million, com pared to gross charge-offs of $7 million and net recoveries of $4 million over the same period in 2022. 66 The following table presents information on the Company's net charge-offs: For the Years Ended December 31, 2023 2022 (in millions) Charge-offs: Multi-family $ 119 $ 1 Commercial real estate 56 4 One-to-four family residential 4 — Commercial and industrial 30 — Other 14 2 Total charge-offs $ 223 $ 7 Recoveries: Commercial real estate — (4) One-to-four family residential — — Commercial and industrial (11) (7) Other (4) — Total recoveries $ (15) $ (11) Net charge-offs (recoveries) $ 208 $ (4) 67 The following table presents information on the Company's net charge-offs as compared to average loans held for investment outstanding: For the Years Ended December 31, (in millions) 2023 2022 2021 Multi-family Net charge-offs during the period $ 119 $ 1 $ 1 Average amount outstanding $ 37,839 $ 36,292 $ 32,424 Net charge-offs as a percentage of average loans 0.31 % 0.00 % 0.00 % Commercial real estate Net charge-offs during the period $ 56 $ — $ 2 Average amount outstanding $ 9,905 $ 6,964 $ 5,489 Net charge-offs as a percentage of average loans 0.57 % 0.00 % 0.04 % One-to-Four Family first mortgage Net charge-offs during the period $ 4 $ — $ 1 Average amount outstanding $ 5,907 $ 516 $ 191 Net charge-offs as a percentage of average loans 0.06 % 0.00 % 0.52 % Acquisition, Development and Construction Net charge-offs during the period $ — $ — $ — Average amount outstanding $ 2,530 $ 203 $ 152 Net charge-offs as a percentage of average loans 0.00 % 0.00 % 0.00 % Commercial and Industrial Loans Net charge-offs during the period $ 19 $ (7) $ — Average amount outstanding $ 21,460 $ — $ — Net charge-offs as a percentage of average loans 0.09 % 0.00 % 0.00 % Other Loans Net charge-offs (recoveries) during the period $ 10 $ (5) $ (6) Average amount outstanding $ 2,552 $ 5,401 $ 4,944 Net charge-offs (recoveries) as a percentage of average loans 0.38 % (0.09) % (0.12) % Total loans Net charge-offs (recoveries) during the period $ 208 $ (4) $ (2) Average amount outstanding $ 80,193 $ 49,376 $ 43,200 Net charge-offs (recoveries) as a percentage of average loans 0.26 % (0.01) % 0.00 % Lending Authority We maintain credit limits in compliance with regulatory requirements.
It is our policy to require an appraisal and an environmental assessment of properties classified as OREO before foreclosure, and to re-appraise the properties on an as-needed basis, and not less than annually, until they are sold. We dispose of such properties as quickly and prudently as possible, given current market conditions and the property’s condition.
It is our policy to require an appraisal and an 63 environmental assessment of properties classified as OREO before foreclosure, and to re-appraise the properties on an as-needed basis, and not less than annually, until they are sold. We dispose of such properties as quickly and prudently as possible, given current market conditions and the property’s condition.
In addition, the origination of CRE loans typically requires a security interest in the fixtures, equipment, and other personal property of the borrower and/or an assignment of the rents and/or leases. In addition, our CRE loans may contain an interest-only period which typically does not exceed three years; however, these loans are underwritten on a fully amortizing basis.
In addition, the origination of CRE loans typically requires a security interest in the fixtures, equipment, and other personal property of the borrower and/or an assignment of the rents and/or leases. In addition, certain of our CRE loans may contain an interest-only period which typically does not exceed three years; however, these loans are underwritten on a fully amortizing basis.
(2) Amounts are at amortized cost. (3) Includes FHLB stock and FRB stock. The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities affected our interest income and interest expense during the periods indicated.
(2) Amounts are at amortized cost. (3) Includes FHLB stock and FRB stock. 53 The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities affected our interest income and interest expense during the periods indicated.
While a percentage of our multi-family loans are ten-year fixed rate credits, the vast majority of our multi-family loans feature a term of ten or twelve years, with a fixed rate of interest for the first five or seven years of the loan, and an alternative rate of interest in years six through ten or eight through twelve.
While a percentage of our multi-family loans are ten-year fixed rate credits, the vast majority of our multi-family loans feature a term of ten or twelve years, with a fixed rate of interest for the first five or seven years of the loan, and an alternative 58 rate of interest in years six through ten or eight through twelve.
Properties and other assets that are acquired through foreclosure are classified as repossessed assets, and are recorded at fair value at the date of acquisition, less the estimated cost of selling the property. Subsequent declines in 60 the fair value of the assets are charged to earnings and are included in non-interest expense.
Properties and other assets that are acquired through foreclosure are classified as repossessed assets, and are recorded at fair value at the date of acquisition, less the estimated cost of selling the property. Subsequent declines in the fair value of the assets are charged to earnings and are included in non-interest expense.
If a loan extends past the fifth or seventh year and the borrower selects the fixed-rate option, the prepayment penalties typically reset 52 to a range of five points to one point over years six through ten or eight through twelve.
If a loan extends past the fifth or seventh year and the borrower selects the fixed-rate option, the prepayment penalties typically reset to a range of five points to one point over years six through ten or eight through twelve.
The rate charged in the first five or seven years is generally based on intermediate-term interest rates plus a spread. During the remaining years, the loan resets to an annually adjustable rate that is indexed to CME Term SOFR , plus a spread.
The rate charged in the first five or seven years is generally based on intermediate-term interest rates plus a spread. During the remaining years, the loan resets to an annually adjustable rate that is indexed to CME Term SOFR or Prime, plus a spread.
The specialty finance loans and leases we fund fall into three categories: asset-based lending, dealer floor-plan lending, and equipment loan and lease financing. Each of these credits is secured with a perfected first security interest in, or outright ownership of, the underlying collateral, and structured as senior debt or as a non-cancelable lease.
The specialty finance loans and leases we fund fall into three categories: asset-based lending, dealer floor-plan lending, and equipment loan and le ase financing. Each of these credits is secured with a perfected first security interest in, or outright ownership of, the underlying collateral, and structured as senior debt or as a non-cancelable lease.
Our success as a multi-family lender partly reflects the solid relationships we have developed with the market’s leading mortgage brokers, who are familiar with our lending practices, our underwriting standards, and our long-standing practice of basing our loans on the cash flows produced by the properties.
Our success as a multi-family lender partly reflects the solid relationships we have developed with the market’s leading mortgage brokers and generational direct relationships, who are familiar with our lending practices, our underwriting standards, and our long-standing practice of basing our loans on the cash flows produced by the properties.
Fair values for all multi-family buildings, CRE properties, and land are determined based on the appraised value. If an appraisal is more than one year old and the loan is classified as either non-performing or as an accruing TDR, then an updated appraisal is required to determine fair value.
Fair values for all multi-family buildings, CRE properties, and land are determined based on the appraised value. If an appraisal is more than one year old and the loan is classified as either non-performing or as an accruing TDM, then an updated appraisal is required to determine fair value.
Included in this portfolio is $3.5 billion in warehouse loans that allow mortgage lenders to fund the closing of residential mortgage loans. The non-warehouse C&I loans we produce are primarily made to small and mid-size businesses and finance companies.
Included in this portfolio is $5.1 billion in warehouse loans that allow mortgage lenders to fund the closing of residential mortgage loans. The non-warehouse C&I loans we produce are primarily made to small and mid-size businesses and finance companies.
We typically hold certain mortgage loans in LHFI that do not qualify for sale to the Agencies and that have an acceptable yield and risk profile. The LTV requirements on our residential first mortgage loans vary depending on occupancy, property type, loan amount, and FICO scores. Loans with LTVs exceeding 80 percent are required to obtain mortgage insurance.
We typically hold certain mortgage loans in LHFI that do not qualify for sale to the Agencies and that have an acceptable yield and risk profile. The LTV requirements on our residential first mortgage loans vary depending on occupancy, property type, loan amount, and FICO scores. Loans with LTVs exceedi ng 80 percent are required to obtain mortgage insurance.
When a loan is placed on non-accrual status, we cease the accrual of interest owed, and previously accrued interest is reversed and charged against interest income. At December 31, 2022 and 2021, all of our non-performing loans were non-accrual loans.
When a loan is placed on non-accrual status, we cease the accrual of interest owed, and previously accrued interest is reversed and charged against interest income. At December 31, 2023 and December 31, 2022, all of our non-performing loans were non-accrual loans.
In addition to requiring a minimum DSCR of 120 percent on multi-family buildings, we obtain a security interest in the personal property located on the premises, and an assignment of rents and leases.
In addition to requiring a minimum DSCR of 120 percent on multi-family buildings at origination, we obtain a security interest in the personal property located on the premises, and an assignment of rents and leases.
Typically, such letters of credit require the presentation of documents that describe the commercial transaction, and provide evidence of shipment and the transfer of title. The fees we collect in connection with the issuance of letters of credit are included in “Fee income” in the Consolidated Statements of Income and Comprehensive Income.
Such letters of credit typically require the presentation of documents that describe the commercial transaction, and provide evidence of shipment and the transfer of title. Fees collected in connection with the issuance of letters of credit are included in “Fee income” in the Consolidated Statements of Income and Comprehensive Income.
It is our policy to order updated appraisals for all non-performing loans 90 days or more past due, irrespective of loan type, that are collateralized by multi-family buildings, CRE properties, or land, if the most recent appraisal on file for the property is more than one year old.
It is our policy to order updated appraisals for all non-performing loans 90 days or more past due that are collateralized by multi-family buildings, CRE properties, or land, if the most recent appraisal on file for the property is more than one year old.
The following table summarizes the weighted average yields of debt securities for the maturities indicated at December 31, 2022: Mortgage- Related Securities U.S.
The following table summarizes the weighted average yields of debt securities for the maturities indicated at December 31, 2023: Mortgage- Related Securities U.S.
Included in the year-end amount were mortgage-related securities of $4.8 billion and other debt securities of $4.3 billion. At the prior year-end, available-for-sale securities were $5.8 billion, and had an estimated weighted average life of 6.9 years. Mortgage-related securities accounted for $2.8 billion of the year-end balance, with other debt securities accounting for the remaining $3.0 billion.
Included in the quarter-end amount were mortgage-related securities of $6.6 billion and other debt securities of $2.6 billion. At the prior year-end, available-for-sale securities were $9.1 billion, and had an estimated weighted average life of six years. Mortgage-related securities accounted for $4.8 billion of the year-end balance, with other debt securities accounting for the remaining $4.3 billion.
Contractual Obligations and Off-Balance Sheet Commitments In the normal course of business, we enter into a variety of contractual obligations in order to manage our assets and liabilities, fund loan growth, operate our branch network, and address our capital needs.
Contractual Obligations In the normal course of business, we enter into a variety of contractual obligations in order to manage our assets and liabilities, fund loan growth, operate our branch network, and address our capital needs.
These loans are underwritten and priced in an effort to ensure credit quality and loan profitability. Our debt-to-income ratio on HELOANs and HELOCs is capped at 43 percent and 45 percent, respectively. We currently limit the maximum CLTV to 89.99 percent and FICO scores to a minimum of 700.
Our home equity portfolio includes HELOANs, second mortgage loans, and HELOCs. These loans are underwritten and priced in an effort to ensure credit quality and loan profitability. Our debt-to-income ratio on HELOANs and HELOCs is capped at 43 percent and 45 percent, respectively. We currently limit the maximum CLTV to 89.99 percent and FICO scores to a minimum of 700.
When applicable, as a condition to closing an ADC loan, it is our practice to require that properties meet pre-sale or pre-lease requirements prior to funding. C&I Loans At December 31, 2022 C&I loans totaled $12.3 billion or 18 percent of total loans held-for-investment.
When applicable, as a condition to closing an ADC loan, it is our practice to require that properties meet pre-sale or pre-lease requirements prior to funding. C&I Loans At December 31, 2023 C&I loans totaled $25.3 billion or 30 percent of total loans held-for-investment.
The letters of credit we issue consist of performance stand-by, financial stand-by, and commercial letters of credit. Financial stand-by letters of credit primarily are issued for the benefit of other financial institutions, municipalities, or landlords on behalf of certain of our current borrowers, and obligate us to guarantee payment of a specified financial obligation.
Financial stand-by letters of credit primarily are issued for the benefit of other financial institutions, municipalities, or landlords on behalf of certain of our current borrowers, and obligate us to guarantee payment of a specified financial obligation. Performance stand-by letters of credit are primarily issued for the benefit of local municipalities on behalf of certain of our borrowers.
Second mortgage loans and HELOANs are fixed rate loans and are available with terms up to 20 years. HELOC loans are primarily variable-rate loans that contain a 10-year interest only draw period followed by a 20-year amortizing period. As of December 31, 2022, loans in this portfolio had an average current FICO score of 752.
Se cond mortgage loans and HELOANs are fixed rate loans and are available with terms up to 20 years. HELOC loans are primarily variable-rate loans that contain a 10-year interest only draw period followed by a 20-year amortizing period. As of December 31, 2023, loans in this portfolio had an average current FICO score of 751.
As of December 31, 2022, loans in our indirect portfolio had an average current FICO score of 750. Point of sale loans consist of unsecured consumer installment loans originated primarily for home improvement purposes through a third-party financial technology company who also provides us a level of credit loss protection.
As of December 31, 2023, loans in our indirect portfolio had an average current FICO score of 743. Point of sale loans consist of unsecured consumer installment loans originated primarily for home improvement purposes throug h a third-party financial technology company who also provides us a level of credit loss protection.
We have elected the fair value option for nearly all of this portfolio. We estimate the fair value of mortgage loans based on quoted market prices for securities backed by similar types of loans, where available, or by discounting estimated cash flows using observable inputs inclusive of interest rates, prepayment speeds and loss assumptions for similar collateral.
We estimate the fair value of mortgage loans based on quoted market prices for securities backed by similar types of loans, where available, or by discounting estimated cash flows using observable inputs inclusive of interest rates, prepayment speeds and loss assumptions for similar collateral.
(2) Includes corporate bonds, capital trust notes, foreign notes, and asset-backed securities. Federal Reserve and Federal Home Loan Bank Stock At December 31, 2022, the Company had $762 million and $329 million of FHLB-NY stock, at cost and FHLB-Indianapolis stock, at cost, respectively. At December 31, 2021, the Company had $734 million of FHLB-NY stock, at cost.
(2) Includes corporate bonds, capital trust notes, foreign notes, and asset-backed securities. Federal Reserve and Federal Home Loan Bank Stock At December 31, 2023 the Company had $861 million and $329 million of FHLB-NY stock, at cost, and FHLB-Indianapolis stock, at cost, respectively.
Our floating-rate loans may or may not feature a floor rate of interest. The decision to require a floor on C&I loans depends on the level of competition we face for such loans from other institutions, the direction of market interest rates, and the profitability of our relationship with the borrower.
The decision to require a floor on C&I loans depends on the level of competition we face for such loans from other institutions, the direction of market interest rates, and the profitability of our relationship with the borrower.
As of December 31, 2022, non-government guaranteed loans in this portfolio had an average current FICO score of 743 and an average LTV of 58 percent. 56 Substantially all LGG are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs. Nonperforming repurchased loans in this portfolio earn interest at a rate based upon the 10-year U.S.
As of December 31, 2023, non-government guaranteed loans in this portfolio had an average current FICO scor e of 741 and an average LTV of 53. Substantially all LGG are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs. Nonperforming repurchased loans in this portfolio earn interest at a rate based upon the 10-year U.S.
Government and GSE Obligations State, County, and Municipal Other Debt Securities (2) Available-for-Sale Debt Securities: (1) Due within one year 4.46 % 3.12 % 4.89 % 4.29 % Due from one to five years 3.27 3.14 — 5.58 Due from five to ten years 3.05 1.53 3.72 5.09 Due after ten years 3.61 1.88 4.07 5.35 Total debt securities available for sale 3.58 2.42 3.91 5.32 (1) The weighted average yields are calculated by multiplying each carrying value by its yield and dividing the sum of these results by the total carrying values and are not presented on a tax-equivalent basis.
Government and GSE Obligations State, County, and Municipal Other Debt Securities (2) Available-for-Sale Debt Securities: (1) Due within one year — % 4.65 % — % — % Due from one to five years 3.33 5.42 — 5.53 Due from five to ten years 2.73 1.61 3.16 5.05 Due after ten years 4.18 — — 5.74 Total debt securities available for sale 4.09 2.27 3.16 5.56 (1) The weighted average yields are calculated by multiplying each carrying value by its yield and dividing the sum of these results by the total carrying values and are not presented on a tax-equivalent basis.
Sources of Funds The Parent Company has four primary funding sources for the payment of dividends, share repurchases, and other corporate uses: dividends paid to the Parent Company by the Bank; capital raised through the issuance of securities; funding raised through the issuance of debt instruments; and repayments of, and income from, investment securities.
The Parent Company has three primary funding sources for the payment of dividends, share repurchases, and other corporate uses: dividends paid to the Parent Company by the Bank; capital raised through the issuance of equity; and funding raised through the issuance of debt instruments.
Reflecting an increase in the cash surrender value of the underlying policies, and $373 million acquired in the Flagstar acquisition our investment in BOLI rose $377 million year-over-year to $1.6 billion at December 31, 2022. Goodwill We record goodwill in our consolidated statements of condition in connection with certain of our business combinations.
Reflecting an increase in the cash surrender value of the underlying policies, our investment in BOLI at December 31, 2023 rose $19 million to $1.6 billion compared to December 31, 2022. 69 Goodwill We record goodwill in our consolidated statements of condition in connection with certain of our business combinations.
To further minimize the risk involved in specialty finance lending and leasing, we re-underwrite each transaction. In addition, we retain outside counsel to conduct a further review of the underlying documentation. Other C&I loans generally represent loans to commercial businesses which meet certain desired client characteristics and credit standards.
In addition, we retain outside counsel to conduct a further review of the underlying documentation. Other C&I loans generally represent loans to commercial businesses which meet certain desired client characteristics and credit standards.
It is not unusual for borrowers to lock in lower interest rates when they expect, or see, that market interest rates are rising rather than risk refinancing later at a still higher interest rate.
It is not unusual for borrowers to lock in lower interest rates when they expect, or see, that market interest rates are rising rather than risk refinancing later at a still higher interest rate. The impact of prepayments on the current quarter and year was minimal.
The Company had no Federal Reserve Bank stock, at December 31, 2021. 65 Bank-Owned Life Insurance BOLI is recorded at the total cash surrender value of the policies in the Consolidated Statements of Condition, and the income generated by the increase in the cash surrender value of the policies is recorded in “Non-interest income” in the Consolidated Statements of Income and Comprehensive Income.
Bank-Owned Life Insurance BOLI is recorded at the total cash surrender value of the policies in the Consolidated Statements of Condition, and the income generated by the increase in the cash surrender value of the policies is recorded in “Non-interest income” in the Consolidated Statements of Income and Comprehensive Income.
For the year ended December 31, 2022, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.
For the year ended December 31, 2023, we did not engage in any off-balance sheet transactions that we expect to have a material effect on our financial condition, results of operations or cash flows. At December 31, 2023, we had no commitments to purchase securities.
We primarily underwrite our multi-family loans based on the current cash flows produced by the collateral property, with a reliance on the “income” approach to appraising the properties, rather than the “sales” approach.
The process of producing such loans is generally four to six weeks in duration. We primarily underwrite our multi-family loans based on the current cash flows produced by the collateral property, with a reliance on the “income” approach to appraising the properties, rather than the “sales” approach.
A broad range of C&I loans, both collateralized and unsecured, are made available to businesses for working capital (including inventory and accounts receivable), business expansion, the purchase of machinery and equipment, 55 and other general corporate needs.
A broad range of C&I loans, both collateralized and unsecured, are made available to businesses for working capital (including inventory and accounts receivable), business expansion, the purchase of machinery and equipment, and other general corporate needs. In determining the term and structure of C&I loans, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment.
Exceptions to these levels are made to strong borrowers on a case by case basis, with the approval of the Board Credit Committee of the Board. Relationships less than the aforementioned limits are approved by the joint authority of credit officers and lending officers.
Exceptions to these levels are made to borrowers on a case by case basis, with the approval of the Board Credit Committee of the Board. Relationships less than the aforementioned limits including those discussed throughout the loans held for investment section of this document, are approved by the joint authority of credit officers and lending officers.
Liquidity, Contractual Obligations and Off-Balance Sheet Commitments, and Capital Position Liquidity We manage our liquidity to ensure that our cash flows are sufficient to support our operations, and to compensate for any temporary mismatches between sources and uses of funds caused by variable loan and deposit demand.
Bank Liquidity We manage our liquidity to ensure that our cash flows are sufficient to support our operations, and to compensate for any temporary mismatches between sources and uses of funds caused by variable loan and deposit demand. We monitor our liquidity daily to ensure that sufficient funds are available to meet our financial obligations.
Because prepayment penalties are recorded as interest income, they are reflected in the average yields on our loans and interest-earning assets, our net interest rate spread and net interest margin, and the level of net interest income we record. No assumptions are involved in the recognition of prepayment income, as such income is recorded when the cash is received.
Because prepayment penalties assessed to the borrower are recorded as interest income, they are reflected in the average yields on our loans and interest-earning assets, our net interest rate spread and net interest margin, and the level of net interest income we record.
The Company maintains an investment in FHLB-NY stock and, as a result of the Flagstar acquisition, FHLB-Indianapolis stock, partly in conjunction with its membership in the FHLB and partly related to its access to the FHLB funding it utilizes. In addition, at December 31, 2022, the Company had $176 million of Federal Reserve Bank stock, at cost.
The Company maintains an investment in FHLB-NY stock and, as a result of the Flagstar acquisition, FHLB-Indianapolis stock, partly in conjunction with its membership in the FHLB and partly related to its access to the FHLB funding it utilizes.
Our decision to compete for deposits also depends on numerous factors, including, among others, our access to deposits through acquisitions, the availability of lower-cost funding sources, the impact of competition on pricing, and the need to fund our loan demand. The Parent Company is a separate legal entity from the Bank and must provide for its own liquidity.
Our decision to compete for deposits also depends on numerous factors, including, among others, our access to deposits through acquisitions, the availability of lower-cost funding sources, the impact of competition on pricing, and the need to fund our loan demand.
Since prepayment income is recorded as interest income, an increase or decrease in its level will also be reflected in the average yields (as applicable) on our loans, securities, and interest-earning assets, and therefore in our net interest income, our net interest rate spread, and our net interest margin. 46 It should be noted that the level of prepayment income on loans recorded in any given period depends on the volume of loans that refinance or prepay during that time.
Since prepayment income is recorded as interest income, an increase or decrease in its level will also be reflected in the average yields (as applicable) on our loans, securities, and interest-earning assets, and therefore in our net interest income, our net interest rate spread, and our net interest margin.
RESULTS OF OPERATIONS: 2022 AS COMPARED TO 2021 Net Interest Income Net interest income is our primary source of income. Its level is a function of the average balance of our interest-earning assets, the average balance of our interest-bearing liabilities, and the spread between the yield on such assets and the cost of such liabilities.
Its level is a function of the average balance of our interest-earning assets, the average balance of our interest-bearing liabilities, and the spread between the yield on such assets and the cost of such liabilities.
At December 31, 2022, specialty finance loans and leases totaled $4.4 billion or 7 percent of total loans held for investment, up $912 million or 26 percent compared to December 31, 2021.
Specialty Finance At December 31, 2023, specialty finance loans and leases totaled $5.2 billion or 6 percent of total loans held for investment, up $769 million or 17 percent compared to December 31, 2022.
The average yields and costs include fees, as well as premiums and discounts (including mark-to-market adjustments from acquisitions), that are considered adjustments to such average yields and costs. 47 Net Interest Income Analysis For the Years Ended December 31, 2022 2021 2020 Average Average Average Average Yield/ Average Yield/ Average Yield/ (dollars in millions) Balance Interest Cost Balance Interest Cost Balance Interest Cost ASSETS: Interest-earning assets: Mortgage and other loans and leases, net (1) $ 49,376 $ 1,848 3.74 % $ 43,200 $ 1,525 3.53 % $ 42,028 $ 1,542 3.67 % Securities (2)(3) 7,448 200 2.69 6,625 156 2.35 5,965 163 2.73 Reverse repurchase agreements 460 15 3.24 430 4 1.05 20 — 0.32 Interest-earning cash and cash equivalents 1,988 29 1.47 2,016 4 0.17 1,088 3 0.27 Total interest-earning assets 59,272 2,092 3.53 52,271 1,689 3.23 49,101 1,708 3.48 Non-interest-earning assets 5,130 5,275 5,008 Total assets $ 64,402 $ 57,546 $ 54,109 LIABILITIES AND STOCKHOLDERS’ EQUITY: Interest-bearing deposits: Interest-bearing checking and money market accounts $ 17,910 $ 226 1.26 % $ 12,829 $ 31 0.24 % $ 10,965 $ 57 0.52 % Savings accounts 9,336 60 0.64 7,612 28 0.36 5,520 32 0.57 Certificates of deposit 8,772 97 1.11 9,094 55 0.60 12,412 217 1.75 Total interest-bearing deposits 36,018 383 1.06 29,535 114 0.38 28,897 306 1.06 Short term borrowed funds 2,408 56 2.32 2,343 8 0.34 2,319 16 0.70 Other borrowed funds 12,982 257 1.99 13,366 278 2.08 12,514 286 2.28 Total Borrowed funds 15,390 313 2.04 15,709 286 1.82 14,833 302 2.03 Total interest-bearing liabilities 51,408 696 1.35 45,244 400 0.88 43,730 608 1.39 Non-interest-bearing deposits 5,124 4,578 2,957 Other liabilities 787 790 714 Total liabilities 57,319 50,612 47,401 Stockholders’ equity 7,083 6,934 6,708 Total liabilities and stockholders’ equity $ 64,402 $ 57,546 $ 54,109 Net interest income/interest rate spread $ 1,396 2.17 % $ 1,289 2.35 % $ 1,100 2.09 % Net interest margin 2.35 % 2.47 % 2.24 % Ratio of interest-earning assets to interest-bearing liabilities 1.15x 1.16x 1.12x (1) Amounts are net of net deferred loan origination costs/(fees) and the allowances for loan losses and include loans held for sale non-performing loans.
For the Years Ended December 31, 2023 2022 2021 (dollars in millions) Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost ASSETS: Interest-earning assets: Mortgage and other loans and leases , net (1) $ 81,855 $ 4,509 5.51 % $ 49,376 $ 1,848 3.74 % $ 43,200 $ 1,525 3.53 % Securities (2) (3) 10,611 444 4.18 % 7,448 200 2.69 % 6,625 156 2.35 % Reverse repurchase agreements 388 22 5.77 % 460 15 3.24 % 430 4 1.05 % Interest-earning cash and cash equivalents 10,025 516 5.14 % 1,988 29 1.47 % 2,016 4 0.17 % Total interest-earning assets $ 102,879 $ 5,491 5.34 % $ 59,272 $ 2,092 3.53 % $ 52,271 $ 1,689 3.23 % Non-interest-earning assets 7,616 5,130 5,275 Total assets $ 110,495 $ 64,402 $ 57,546 LIABILITIES AND STOCKHOLDERS' EQUITY: Interest-bearing deposits: Interest-bearing checking and money market accounts $ 29,286 $ 943 3.22 % $ 17,910 $ 226 1.26 % $ 12,829 $ 31 0.24 % Savings accounts 9,941 169 1.70 % 9,336 60 0.64 % 7,612 28 0.36 % Certificates of deposit 17,097 646 3.78 % 8,772 97 1.11 % 9,094 55 0.60 % Total interest-bearing deposits $ 56,324 $ 1,758 3.12 % $ 36,018 $ 383 1.06 % $ 29,535 $ 114 0.38 % Short term borrowed funds 7,263 305 4.20 % 2,408 56 2.32 % 2,343 8 0.34 % Other borrowed funds 10,671 351 3.29 % 12,982 257 1.99 % 13,366 278 2.08 % Total borrowed funds $ 17,934 $ 656 3.66 % $ 15,390 $ 313 2.04 % $ 15,709 $ 286 1.82 % Total interest-bearing liabilities $ 74,258 $ 2,414 3.25 % $ 51,408 $ 696 1.35 % $ 45,244 $ 400 0.88 % Non-interest-bearing deposits 21,583 5,124 4,578 Other liabilities 4,073 787 790 Total liabilities $ 99,914 $ 57,319 $ 50,612 Stockholders’ equity 10,581 7,083 6,934 Total liabilities and stockholders’ equity $ 110,495 $ 64,402 $ 57,546 Net interest income/interest rate spread $ 3,077 2.09 % $ 1,396 2.17 % $ 1,289 2.35 % Net interest margin 2.99 % 2.35 % 2.47 % Ratio of interest-earning assets to interest-bearing liabilities 1.39 x 1.15 x 1.16 x (1) Amounts are net of net deferred loan origination costs/(fees) and includes loans held for sale and non-performing loans.
Because ADC loans are generally considered to have a higher degree of credit risk, especially during a downturn in the credit cycle, borrowers are required to provide a guarantee of repayment and completion. In the twelve months ended December 31, 2022 and 2021, we did not recover any losses against guarantees.
Because ADC loans are generally considered to have a higher degree of credit risk, especially during a downturn in the credit cycle, borrowers are required to provide a guarantee of repayment and completion.
Non-Interest Income We generate non-interest income through a variety of sources, including—among others—fee income (in the form of retail deposit fees and charges on loans); income from our investment in BOLI; net return on our MSR asset; gains on sales of securities; and “other” sources, including the revenues produced through the sale of third-party investment products and loan subservicing. 49 For the twelve months ended December 31, 2022, non-interest income totaled $247 million, which includes a bargain purchase gain of $159 million related to the Flagstar acquisition.
Non-Interest Income We generate non-interest income through a variety of sources, including—among others—fee income (in the form of retail deposit fees and charges on loans); net return on our MSR asset; net gain on loan sales and securitizations, net loan administration income (including loan subservicing income); income from our investment in BOLI; and “other” sources, including the revenues produced through the sale of third-party investment products.
FHLB-NY and FHLB-Indianapolis advances accounted for $20.3 billion of the year-end 2022 balance, as compared to $15.1 billion at the prior year-end. Pursuant to blanket collateral agreements with the Bank, our FHLB-NY, FHLB-Indianapolis advances and overnight advances are secured by pledges of certain eligible collateral in the form of loans and securities.
Pursuant to blanket collateral agreements with the Bank, our FHLB-NY, FHLB-Indianapolis advances and overnight advances are secured by pledges of certain eligible collateral in the form of loans and securities.
The terms of more than half of our CRE loans are similar to the terms of our multi-family credits which primarily feature a fixed rate of interest for the first five years of the loan that is generally based on intermediate-term interest rates plus a spread.
The terms of more than half of our CRE loans primarily feature a fixed rate of interest for the first five years of the loan that is generally based on intermediate-term interest rates plus a spread. In addition to customary fixed rate terms, we now also offer floating rates advances indexed to CME Term SOFR.
In general, buildings that are subject to rent regulation have tended to be stable, with occupancy levels remaining more or less constant over time. Because the rents are typically below market and the buildings securing our loans are generally maintained in good condition, they have been more likely to retain their tenants in adverse economic times.
Because the rents are typically below market and the buildings securing our loans are generally maintained in good condition, they have been more likely to retain their tenants in adverse economic times.
To further manage our credit risk, our lending policies limit the amount of credit granted to any one borrower, and typically require minimum DSCRs of 120 percent for multi-family loans and 130 percent for CRE loans.
Buildings with a preponderance of such rent-regulated apartments are less likely to experience vacancies in times of economic adversity. To further manage our credit risk, our lending policies limit the amount of credit granted to any one borrower, and typically require minimum DSCRs of 120 percent for multi-family loans and 130 percent for CRE loans.
Deposits Our ability to retain and attract deposits depends on numerous factors, including customer satisfaction, the rates of interest we pay, the types of products we offer, and the attractiveness of their terms.
Deposits Our ability to retain and attract deposits depends on numerous factors, including customer satisfaction, the rates of interest we pay, the types of products we offer, and the attractiveness of their terms. The vast majority of our deposits are retail in nature (i.e., they are deposits we have gathered through our branches or through business combinations).
Appraisals are ordered annually until such time as the loan becomes performing and is returned to accrual status. It is not our policy to obtain updated appraisals for performing loans.
Appraisals are ordered annually until such time as the loan becomes performing and is returned to accrual status. It is not our policy to obtain updated appraisals for performing loans. However, appraisals may be ordered for performing loans when a borrower requests an increase in the loan amount, a modification in loan terms, or an extension of a maturing loan.
These loans include various types of conforming and non-conforming fixed and adjustable rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties.
As of December 31, 2023, the repurchase liability on LGG loans was $456 million. As of December 31, 2022 one-to-four family loans totaled $5.8 billion. These loans include various types of conforming and non-conforming fixed and adjustable rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties.
The following table sets forth the changes in non-performing loans over the twelve months ended December 31, 2022: (in millions) Balance at December 31, 2021 $ 33 New non-accrual 39 Non-accrual acquired from acquisition 104 Charge-offs (1 ) Transferred to repossessed assets — Loan payoffs, including dispositions and principal pay-downs (32 ) Restored to performing status (2 ) Balance at December 31, 2022 $ 141 Total non-accrual mortgage loans increased $98 million to $125 million, while other non-accrual loans increased $10 million to $16 million compared to $6 million at December 31, 2021.
The following table sets forth the changes in non-accrual loans for the year ended December 31, 2023: (in millions) Balance at December 31, 2022 $ 141 New non-accrual, including acquired from acquisition 466 Charge-offs (97) Transferred to repossessed assets (3) Loan payoffs, including dispositions and principal pay-downs (36) Restored to performing status (43) Balance at December 31, 2023 $ 428 At December 31, 2023 total non-accrual mortgage loans increased $238 million to $363 million, while commercial and industrial loans increased $40 million to $43 million and other non-accrual loans increased $9 million to $22 million compared to December 31, 2022.
Prepayment income contributed eight basis points to the full-year net interest margin compared to 15 basis points during full-year 2021. The following table sets forth certain information regarding our average balance sheet for the years indicated, including the average yields on our interest-earning assets and the average costs of our interest-bearing liabilities.
Net Interest Margin The following table sets forth certain information regarding our average balance sheet for the periods indicated, including the average yields on our interest-earning assets and the average costs of our interest-bearing liabilities. Average yields are calculated by dividing the interest income produced by the average balance of interest-earning assets.
Brokered deposits accounted for $5.1 billion of our deposits at the end of this December, compared to $5.7 billion at December 31, 2021. Brokered money market accounts represented $2.8 billion of total brokered deposits at December 31, 2022 and $2.9 billion at December 31, 2021; brokered interest-bearing checking accounts represented $1.0 billion and $1.6 billion, respectively, at the corresponding dates.
Brokered money market accounts represented $1.3 billion of total brokered deposits at December 31, 2023 and $2.8 billion at December 31, 2022; brokered interest-bearing checking accounts represented $1.6 billion and $1.0 billion, respectively. At December 31, 2023, we had $6.6 billion of brokered CDs , compared to $1.3 billion at December 31, 2022.
Loan proceeds are disbursed periodically in increments as construction progresses, and as warranted by inspection reports provided to us by our own lending officers and/or consulting engineers. 61 To minimize the risk involved in specialty finance lending and leasing, each of our credits is secured with a perfected first security interest or outright ownership in the underlying collateral, and structured as senior debt or as a non-cancellable lease.
To minimize the risk involved in specialty finance lending and leasing, each of our credits is secured with a perfected first security interest or outright ownership in the underlying collateral, and structured as senior debt or as a non-cancellable lease. To further minimize the risk involved in specialty finance lending and leasing, we re-underwrite each transaction.
At December 31, 2022 and December 31, 2021, all of our securities were designated as “Available-for-Sale”. At December 31, 2022, 15 percent of our portfolio are floating rate securities. At December 31, 2022, available-for-sale securities had an estimated weighted average life of 6 years.
At December 31, 2023 and December 31, 2022, all of our securities were designated as “Available-for-Sale”. At December 31, 2023, 12 percent of our portfolio are floating rate securities.
At December 31, 2022, $22.2 billion or 58 percent of the Company’s total multi-family loan portfolio is secured by properties in New York State and, therefore, are subject to the new rent regulation laws.
At December 31, 2023, $21.1 billion or 57 percent of the Company’s total multi-family loan portfolio is secured by properties in New York State, of which $18.3 billion are subject to rent regulation laws. Of the $18.3 billion properties subject to rent regulation, approximately 38 percent are currently in an interest only period.
With respect to commercial construction loans, we typically lend up to 65 percent of the estimated as-completed market value of the property. Credit risk is also managed through the loan disbursement process.
With respect to commercial construction loans, we typically lend up to 65 percent of the estimated as-completed market value of the property. Credit risk is also managed through the loan disbursement process. Loan proceeds are disbursed periodically in increments as construction progresses, and as warranted by inspection reports provided to us by our own lending officers and/or consulting engineers.
The approval of a loan also depends on the borrower’s credit history, profitability, and expertise in property management, and generally requires a minimum DSCR of 130 percent and a maximum LTV of 65 percent.
We originate CRE loans in adherence with underwriting standards, and require that such loans qualify on the basis of the property’s current income stream and DSCR. The approval of a loan primarily depends on the borrower’s credit history, profitability, and expertise in property management, and generally requires a minimum DSCR of 130 percent and a maximum LTV of 65 percent.
In addition to operating expenses and any share repurchases, the Parent Company is responsible for paying any dividends declared to our stockholders.
At December 31, 2023 the Parent Company held cash and cash equivalents of $158 million. In addition to operating expenses, the Parent Company is responsible for paying any dividends declared to our common and preferred stockholders.
The cost of our deposits and borrowed funds is largely based on short-term rates of interest, the level of which is partially impacted by the actions of the FOMC. The FOMC reduces, maintains, or increases the target federal funds rate (the rate at which banks borrow funds overnight from one another) as it deems necessary.
The cost of our deposits and borrowed funds is largely based on short-term rates of interest, the level of which is partially impacted by the actions of the FOMC.
At December 31, 2022, the largest concentration of CRE loans were secured by properties in the metro New York City area, refer to the Geographical Analysis table included above for additional details.
The CRE loans we produce are secured by income-producing properties such as office buildings, retail centers, mixed-use buildings, and multi-tenanted light industrial properties. At December 31, 2023, the largest concentration of CRE loans were secured by properties in the metro New York City area. Refer to the Geographical Analysis table included below for additional details.
If a loan extends past the fifth or seventh year and the borrower selects the fixed rate option, the prepayment penalties typically reset to a range of five points to one point over years six through ten or eight through twelve. 54 The repayment of loans secured by commercial real estate is often dependent on the successful operation and management of the underlying properties.
Depending on the remaining term of the loan at the time of prepayment, the penalties normally range from five percentage points to one percentage point of the then-current loan balance. 60 If a loan extends past the fifth or seventh year and the borrower selects the fixed rate option, the prepayment penalties typically reset to a range of five points to one point over years six through ten or eight through twelve.
In addition, we exclude any short-term property tax exemptions and abatement benefits the property owners receive when we underwrite our multi-family loans. 53 The following table presents a geographical analysis of the multi-family loans in our held-for-investment loan portfolio: At December 31, 2022 Multi-Family Loans (dollars in millions) Amount Percent of Total New York City: Manhattan $ 7,330 19.23 % Brooklyn 6,385 16.75 Bronx 3,715 9.74 Queens 2,889 7.58 Staten Island 126 0.33 Total New York City $ 20,445 53.63 % New Jersey 5,107 13.39 Long Island 574 1.51 Total Metro New York $ 26,126 68.53 % Other New York State 1,157 3.02 Pennsylvania 3,760 9.86 Florida 1,690 4.43 Ohio 1,006 2.64 Arizona 442 1.16 All other states 3,949 10.36 Total $ 38,130 100.00 % Commercial Real Estate At December 31, 2022, CRE loans represented $8.5 billion, or 12 percent, of total loans held for investment, reflecting a year-over-year increase of $1.8 billion compared to December 31, 2021 primarily driven by the Flagstar acquisition.
In addition, we generally exclude any short-term property tax exemptions and abatement benefits the property owners receive when we underwrite our multi-family loans. 59 The following table presents a geographical analysis of the multi-family loans in our held-for-investment loan portfolio: At December 31, 2023 Multi-Family Loans (in millions) Amount Percent of Total New York City: Manhattan $ 6,893 18 % Brooklyn 5,840 16 % Bronx 3,619 10 % Queens 2,831 8 % Staten Island 133 — % Total New York City $ 19,316 52 % New Jersey 5,064 14 % Long Island 509 1 % Total Metro New York $ 24,889 67 % Other New York State 1,233 3 % Pennsylvania 3,682 10 % Florida 1,681 5 % Ohio 1,085 3 % Arizona 434 1 % All other states 4,261 11 % Total $ 37,265 100 % Commercial Real Estate At December 31, 2023, CRE loans represented $10.5 billion, or 12 percent, of total loans held for investment, reflecting a $2.0 billion increase when compared to $8.5 billion at December 31, 2022.
The fixed-rate option also requires the payment of an amount equal to one percentage point of the then-outstanding loan balance. In either case, the minimum rate at repricing is equivalent to the rate in the initial five- or seven-year term. Prepayment penalties apply to certain of our CRE loans, as they do our multi-family credits.
In either case, the minimum rate at repricing is equivalent to the rate in the initial five- or seven-year term. Prepayment penalties apply to certain of our CRE loans.
In addition to customary fixed rate terms, we now also offer floating rates advances indexed to CME Term SOFR. These products are generally offered in combination with interest rate cap or swaps that provide borrowers with additional optionality to manage their interest rate risk.
These products are generally offered in combination with interest rate cap or swaps that provide borrowers with additional optionality to manage their interest rate risk. Following the initial fixed rate period, the loan resets to an adjustable interest rate that is indexed to CME Term SOFR or Prime, plus a spread.
In addition to underwriting multi-family loans on the basis of the buildings’ income and condition, we consider the borrowers’ credit history, profitability, and building management expertise. Borrowers are required to present evidence of their ability to repay the loan from the buildings’ current rent rolls, their financial statements, and related documents.
Borrowers are required to present evidence of their ability to repay the loan from the buildings’ current rent rolls, their financial statements, and related documents.
Subordinated Notes At December 31, 2022, the balance of subordinated notes was $432 million, including $135 million assumed from the Flagstar acquisition, net of purchase accounting adjustments. See Note 12, “Borrowed Funds,” in Item 8, “Financial Statements and Supplementary Data” for a further discussion of our wholesale borrowings, our junior subordinated debentures and subordinated debt.
See Note 12 - Borrowed Funds,” in Item 8, “Financial Statements and Supplementary Data” for a further discussion of our wholesale borrowings, our junior subordinated debentures and subordinated debt.
We have $3.5 billion outstanding warehouse loans to other mortgage lenders and have relationships in place to lend up to $11.6 billion at our discretion. The interest rates on our C&I loans can be fixed or floating, with floating-rate loans being tied SOFR, prime or some other market index, plus an applicable spread.
The interest rates on our C&I loans can be fixed or floating, with floating-rate loans being tied to SOFR, prime or some other market index, plus an applicable spread. Our floating-rate loans may or may not feature a floor rate of interest.
Each extension, advance, or draw-down on the line is fully collateralized by residential mortgage loans and is paid off when the lender sells the loan to an outside investor or, in some instances, to the Bank. Underlying mortgage loans are predominantly originated using the Agencies' underwriting standards. The guideline for debt to tangible net worth is 15 to 1.
We offer warehouse lines of credit to other mortgage lenders which allow the lender to fund the closing of residential mortgage loans. Each extension, advance, or draw-down on the line is fully collateralized by residential mortgage loans and is paid off when the lender sells the loan to an outside investor or, in some instances, to the Bank.
Non-Interest Income Analysis The following table summarizes our sources of non-interest income: For the Years Ended December 31, (in millions) 2022 2021 2020 Fee income $ 27 $ 23 $ 22 BOLI income 32 29 32 Net (loss) gain on securities (2 ) — 1 Net return on mortgage servicing rights 6 — — Net gain on loan sales 5 — — Loan administration income 3 — — Bargain purchase gain 159 — — Other income: Third-party investment product sales 6 5 4 Other 11 4 2 Total other income 17 9 6 Total non-interest income $ 247 $ 61 $ 61 Non-Interest Expense For the twelve months ended December 31, 2022, total non-interest expenses were $684 million, up $143 million or 26 percent compared to the twelve months ended December 31, 2021.
The following table summarizes our non-interest income for the respective periods: For the Years Ended December 31, (in millions) 2023 2022 2021 Bargain purchase gain $ 2,131 $ 159 $ — Fee income 172 27 23 Net return on mortgage servicing rights 103 6 — Net gain on loan sales and securitizations 89 5 — Other 68 17 9 Bank-owned life insurance 43 32 29 Net loan administration income 82 3 — Net loss on securities (1) (2) — Total non-interest income $ 2,687 $ 247 $ 61 Non-interest income increased $2.4 billion for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to the bargain purchase gain of $2.1 billion related to the Signature Transaction.
The following table presents a geographical analysis of the CRE loans in our held-for-investment loan portfolio: At December 31, 2022 Commercial Real Estate Loans (dollars in millions) Amount Percent of Total New York $ 5,081 59.59 % Michigan 1,039 12.19 New Jersey 560 6.57 Pennsylvania 328 3.85 Florida 255 2.99 Ohio 149 1.75 Arizona 73 0.86 All other states 1,041 12.20 Total $ 8,526 100.00 % Acquisition, Development, and Construction Loans At December 31, 2022, our ADC loans represented $2.0 billion or 3 percent, of total loans held for investment, reflecting a year-over-year increase of $1.8 billion compared to December 31, 2021 primarily driven by the Flagstar acquisition.
The following table presents a geographical analysis of the CRE loans in our held-for-investment loan portfolio: At December 31, 2023 Commercial Real Estate Loans (in millions) Amount Percent of Total New York $ 5,319 51 % Michigan 1,000 10 % New Jersey 580 5 % Florida 457 4 % Texas 105 1 % Pennsylvania 374 4 % Ohio 132 1 % All other states 2,503 24 % Total $ 10,470 100 % Acquisition, Development, and Construction Loans At December 31, 2023, our ADC loans represented $2.9 billion, or 3 percent, of total loans held for investment, reflecting an increase of $916 million compared to December 31, 2022.
The following table indicates the amount of time deposits, by account, that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity: December 31, (in millions) 2022 Portion of U.S. time deposits in excess of insurance limit $ 3,749 Time deposits otherwise uninsured with a maturity of: 3 months or less $ 969 Over 3 months through 6 months 604 Over 6 months through 12 months 1,269 Over 12 months 907 Total time deposits otherwise uninsured $ 3,749 Our uninsured deposits, on an unconsolidated basis, are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), and were approximately $19.6 billion and $10.1 billion at December 31, 2022 and 2021, respectively.
The following table indicates the amount of time deposits, by account, that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity: (in millions) December 31, 2023 December 31, 2022 Portion of U.S. time deposits in excess of insurance limit $ 7,893 $ 3,749 Time deposits otherwise uninsured with a maturity of: 3 months or less 1,675 969 Over 3 months through 6 months 1,623 604 Over 6 months through 12 months 2,325 1,269 Over 12 months 2,271 907 Total time deposits otherwise uninsured $ 7,894 $ 3,749 Borrowed Funds The majority of our borrowed funds are wholesale borrowings (FHLB-NY and FHLB-Indianapolis advances), Bank Term Funding Program of the FRB of New York and, to a lesser extent, junior subordinated debentures and subordinated notes.
The Board Credit Committee has authority to direct changes in lending practices as they deem necessary or appropriate in order to address individual or aggregate risks and credit exposures in accordance with the Bank’s strategic objectives and risk appetites.
The Board Credit Committee has authority to direct changes in lending practices as they deem necessary or appropriate in order to address individual or aggregate risks, including regulatory considerations, and credit exposures in accordance with the Bank’s strategic objectives and risk appetites. 68 At December 31, 2023 and December 31, 2022, the largest mortgage loan in our portfolio wa s a $329 million multi-family loan, which is collateralized by properties located in Brooklyn, New York.
Average yields are calculated by dividing the interest income produced by the average balance of interest-earning assets. Average costs are calculated by dividing the interest expense produced by the average balance of interest-bearing liabilities. The average balances for the year are derived from average balances that are calculated daily.
Average costs are calculated by dividing the interest expense produced by the average balance of interest-bearing liabilities. The average balances for the periods are derived from average balances that are calculated daily. The average yields and costs include fees, as well as premiums and discounts (including mark-to-market adjustments from acquisitions), that are considered adjustments to such average yields and costs.

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