Flagstar Bank, N.a. · NYSE:FLG
Flagstar Bank, N.a — New York Community Bancorp — Q4 2023 Earnings Presentation
42 slides from Flagstar Bank, N.a's earnings presentation, Jan 31, 2024
Slide 1: Fourth Quarter 2023 Investor Presentation
Fourth Quarter 2023 Investor Presentation Parent company of
Slide 2: Cautionary Statements Regarding Forward-Looking Information
24th Quarter 2023 Cautionary Statements Regarding Forward-Looking Information This presentation may include forward-looking statements by the Company and our authorized officers pertaining to such matters as our goals, intentions, and expectations regarding revenues, earnings, loan production, asset
Slide 3: 2023 Accomplishments
34th Quarter 2023 - Accelerated transformation to a dynamic, well-diversified full service commercial bank - Reported full-year results with net income available to common stockholders of $2.3 billion; $609 million, as adjusted - Significantly diversified the balance sheet – Commercial loans represe
Slide 4: Fourth Quarter 2023 Actions to Strengthen Risk Management
44th Quarter 2023 Performed Focused Review of Loan Portfolios; proactively took action on re- rating certain loans reflecting our conservative approach to managing credit quality1 Strengthened the Balance Sheet; increased allowance for credit losses to 1.17% of total loans held for investment, or 1.
Slide 5: NYCB Relative Position versus Peers
54th Quarter 2023 1.17% 1.26% ACL % of LHFI (as reported) ACL % of LHFI (as adjusted(2)) 1. Refer to page 38 for Peers 2. Refer to non-GAAP reconciliation on page 39 3. Calculation: (CET1 + AOCI – CF Hedge in AOCI) / RWA; Exclusion of AOCI adjusted for cash flow hedges on loan portfolio 4. Includes
Slide 6: Fourth Quarter 2023 Highlights
64th Quarter 2023 Solid balance sheet Operating performance • Total assets of $116.3 billion increased $5.1 billion compared to September 30, 2023, primarily due to higher cash balances as we increased our on-balance sheet liquidity. • Total loans of $84.6 billion increased $624 million, or 3% annua
Slide 7: Annual income comparison
74th Quarter 2023 Observations • Adjusted non-interest income(1) increased $468 million, or 532%, due to: • Fee income, up $145 million • Net return on mortgage servicing rights, up $97 million • Net gain on loan sales and securitizations, up $84 million • Net loan administration income is up $79 mi
Slide 8: Quarterly income comparison
84th Quarter 2023 Observations • Adjusted non-interest income(1) decreased $22 million, or 13%, due to: • Fee income, down $19 million, primarily due to lower commercial fees and retail banking fees • Net return on mortgage servicing rights is up $10 million • Net gain on loan sales and securitizati
Slide 9: Balance sheet highlights
94th Quarter 2023 $mm Observations Balance sheet highlights Incr (Decr)(1) Balance at December 31, 2023 Balance at September 30, 2023 $ % Cash, cash equivalents and due from banks $ 11,493 $ 6,929 $ 4,564 66 % Securities(2) 9,159 8,736 423 5 % Loans held-for-sale 1,182 1,926 (744) (39) % Loans and l
Slide 10: Deposits and loans
104th Quarter 2023 Deposits and loans • Highlights – Deposits generated through retail and commercial channels – Non-interest bearing deposits at 25% of total deposits. – FDIC custodial deposits at $247 million as of 12/31/2023, down $1.8 billion compared to $2.0 billion at 9/30/2023. Total Deposits
Slide 11: Deposits by segment and insured
114th Quarter 2023 Deposits by segment and insured Deposits by Segment Insured Deposits Community Banking 1.1% Custodial 8.7% Online Banking 7.5% Premier Banking 4.2% Private Client Group 27.8% Retail Banking 33.8% Wholesale 15.6% Other 1.3% Insured 63.7% Uninsured 32.7% Uninsured - Collateralized D
Slide 12: Deposit flow analysis
124th Quarter 2023 Deposit flow analysis $82,675 $81,365$1,401 $1,230 $639 9/30/2023 Escrows FDIC Custodial Wholesale Deposits Total Retail Banking Other 12/31/2023 Key Observations • -$2.8B Escrows: Primarily due to seasonal decline related to timing of escrow payments • -$1.8B FDIC Custodial Depos
Slide 13: Private banking deposit trends
134th Quarter 2023 Private banking deposit trends +$1.5B
Slide 14: Asset quality metrics
144th Quarter 2023 Asset quality metrics Ratio NYCB S&P US BMI Banks Index Peers At December 31, 2023 At September 30, 2023 At September 30, 2023 NCOs/Average Loans 0.22% 0.16% 0.30% Cumulative losses (a) 135 bp 2,477 bp 1,435 bp NPAs/Total Assets 0.38% 0.37% 0.42% NPLs/Total Loans 0.51% 0.49% 0.61%
Slide 15: ACL Evolution
154th Quarter 2023 ACL Evolution $619 $992 $47 $15 $321 9/30/23 Portfolio Changes Specific Reserve Changes Qualitative Factors Other 12/31/23 QoQ Highlights - Since 9/30/22, the ACL has increased $774 million and ACL coverage ratio has increased to 1.26% excluding loans with government guarantees an
Slide 16: Credit quality: Non-Performing Loans / Total Loans
164th Quarter 2023 (a) Non-performing loans and total loans exclude covered loans and non-covered purchased credit-impaired (“PCI”) loans. (b) Non-performing loans are defined as non-accrual loans and loans 90 days or more past due but still accruing interest. Our non-performing loans at 12/31/16, 1
Slide 17: Credit quality: Net Charge-Offs / Average Loans
174th Quarter 2023 Credit quality (a) The calculation of our net charge-offs to average loans excludes taxi medallion-related charge-offs of $59.6 million, $12.8 million, $10.2 million, $11.9 million, and $2 million, for 2017, 2018, 2019, 2020, 2021, and a $(6) million net recovery for 4Q22, respect
Slide 18: Credit quality versus peers
184th Quarter 2023 Credit quality 1. Refer to page 38 for list of peers 2. Source: Company disclosures, peers results as of 12/31/2023 Non-performing Loans (NPLs) as a percent of total loans held-for-investment (LHFI) favorable compared to industry peer(1) median reflecting disciplined client select
Slide 19: Regulatory capital
194th Quarter 2023 Regulatory capital Ratio NYCB Peers At December 31, 2023 At September 30, 2023 Total Risk-Based Capital 11.82% 13.51% Tier 1 Risk-Based Capital 9.67% 11.55% Common Equity Tier 1 9.10% 10.55% Tier 1 Leverage 7.78% 9.19% → • We remain well capitalized and well above the minimum thre
Slide 20: Capital comparison: Category IV Banks
204th Quarter 2023 Capital comparison Category IV Banks 1. Calculation: (CET1 + AOCI – CF Hedge in AOCI) / RWA; Exclusion of AOCI adjusted for cash flow hedges on loan portfolio 2. Peer group includes CFG, FCNC.A, FITB, HBAN, KEY, MTB, RF 3. Source: Company filings (SEC or regulatory) as of Septembe
Slide 21: Company overview
214th Quarter 2023 Community banking • Flagstar Bank, N.A. is a leading regional bank with a balanced, diversified lending platform Mortgage origination and servicing • 7th largest bank originator of residential mortgages ($15.1 billion year-to-date December 31, 2023)(1) • 5th largest sub-servicer o
Slide 22: Loan portfolio
224th Quarter 2023 Total HFI Loans: $84.6 billion Loan portfolio • Majority of portfolio is multi-family loans on non- luxury, rent-regulated buildings • Average Q4 2023 yield on loan portfolio: 5.72% • Since 1993 losses have aggregated 23 bp on MF and 33 bp on CRE * • $1.9B QoQ criticized increase
Slide 23: Multi-Family portfolio
234th Quarter 2023 Originations: $5,982 $8,711 $8,256 $8,387 $839 Net Charge- Offs (Recoveries): $1 $(1) $1 $1 $117 Multi-Family portfolio Multi-Family Loan Portfolio (in millions) $31,182 $32,261 $34,628 $38,130 $37,265 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 • Leading indirect multi-family, r
Slide 24: New York rent-regulated portfolio details
244th Quarter 2023 Key Observations - 49% of total multi-family portfolio is subject to some sort of rent regulations - We have $12.3 billion where rent regulated units are 50% or greater than the total - We have $5.1 billion, where 100% of the units are rent regulated – Of this amount, approximatel
Slide 25: New York rent-regulated portfolio characteristics
254th Quarter 2023 New York rent-regulated portfolio characteristics New York rent-regulated portfolio profile UPB by option/contractual maturity year ($MM) UPB by option/contractual maturity year ($MM) Total Rent-Regulated Portfolio: $18.3 billion Weighted Average DSCR(1): 1.58x Weighted Average LT
Slide 26: Commercial real estate & ADC
264th Quarter 2023 • Diversified property types which are primarily income- producing in the normal course of business • For additional information on Office, see page 27 • For additional information on Homebuilder see page 28 Commercial Real Estate and ADC ($bn) Commercial real estate & ADC Portfol
Slide 27: Office portfolio characteristics
274th Quarter 2023 Office portfolio characteristics Portfolio Profile Portfolio by location Manhattan 54% Queens; 7% PA; 5% NJ; 5% MI; 6% Nassau County-NY; 4% DC; 3% Suffolk County-NY; 3% Other; 13% UPB by contractual maturity year ($MM) $313 $237 $285 $246 $296 $370 $181 $1,440 2024 2025 2026 2027
Slide 28: Home builder finance
284th Quarter 2023 Home builder loan commitments(1) ($mm) ● National relationship-based lending platform launched in 1Q16 - Attractive asset class with good spreads (300 to 375 bps) - Meaningful cross-sell opportunities including warehouse loans, commercial deposits and purchase originations ● Flags
Slide 29: Commercial and industrial portfolio
294th Quarter 2023 Commercial & Industrial ($bn) Commercial and industrial portfolio Industry Breakdown UPB Equipment Finance $ 6.8 Warehouse 5.2 ABL and Dealer Floorplan 3.8 MSR 2.6 Financial & Insurance 2.4 Municipals 1.0 Other 3.5 Total C&I $ 25.3 Equipment Finance 27% Warehouse 21% ABL and Deale
Slide 30: Warehouse lending
304th Quarter 2023 Warehouse loan commitments ($bn) Warehouse lending Lenders ranked by commitments ($mm) Source: Inside Mortgage Finance Report published on December 2023 with balances as of 9/30/2023. ● National relationship-based lending platform ● Attractive asset class with good spreads and low
Slide 31: Appendix
Appendix
Slide 32: Securities and funding composition
324th Quarter 2023 Securities and funding composition • 2.90% cost of funds including non-interest bearing deposits • FHLB capacity driven by eligibility of multi-family, CRE and residential loans Total Funding: $102.6 billion • Entire portfolio is available for sale • Consists primarily of GSE-rela
Slide 33: Mortgage banking
334th Quarter 2023 Closings by mortgage type ($bn) Net gain on loan sales – revenue and margin Fallout-adjusted locks by channel ($bn) Closings by purpose ($bn) Mortgage banking $5 $20 $25 $26 $16 0.56% 0.76% 0.51% 0.59% 0.32% Gain on loan sale ($mm) Gain on sale margin (HFS) December 2022 1Q23 2Q23
Slide 34: Servicing portfolio
344th Quarter 2023 154 7 35 Servicing portfolio MSR portfolio characteristics (% UPB) MSR portfolio statistics Net return (loss) on mortgage servicing rights ($mm) By Vintage 2023 14% 2022 22% 2021 28% 2020 20% 2020 & prior 16% By Investor Freddie 25% Fannie 55% GNMA 19% Private 1% Measure ($mm) 06/
Slide 35: Balance sheet purchase accounting marks
354th Quarter 2023 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Loans and Leases (1) Beginning balance - unamortized fair value mark $ 903 $ 1,004 $ 1,118 $ 461 $ — Additions — — — 698 479 Less: accretion and other (2) 73 101 114 41 18 Ending Balance $ 830 $ 90
Slide 36: Full Year 2024 Guidance
36 Guidance(1) 1. See cautionary statements on page 2. Non-Interest Income • Up between 3% to 5% Non-interest Expense • $570 million to $620 million • Mortgage-related income of $220 million to $260 million Tax Rate • $2.3 billion to $2.4 billion, excluding merger-related expenses and intangible amo
Slide 37: Expense outlook 2024
374th Quarter 20231. See cautionary statements on page 2. $2,088 $2,353 $175 $70 $80 2023 Operating Expense Additional quarter Signature Bank Full year new Private Banking teams Category IV and annual compensation and benefits increases Cost saves Flagstar conversion 2024 Operating Expense -$60 Expe
Slide 38: Peer group and Category IV banks
384th Quarter 2023 Peer group and Category IV banks Peer Ticker Citizens Financial CFG Comerica CMA Fifth Third Bancorp FITB First Citizens Bancshares FCNC.A First Horizon Corporation FHN Huntington Bancshares Incorporated HBAN KeyCorp KEY M&T Bank Corporation MTB Regions Financial Corporation RF Sy
Slide 39: Adjusted net income and diluted EPS: twelve months
394th Quarter 2023 Adjusted net income and diluted earnings per share Twelve Months Ended December 31, 2023 Twelve Months Ended December 31, 2022 Net income - GAAP $ 2,374 $ 650 Merger-related and restructuring expenses, net of tax (1) 244 59 FDIC special assessment, net of tax 29 — Bargain purchase
Slide 40: Adjusted net income and diluted EPS: three months
404th Quarter 2023 Adjusted net income and diluted earnings per share Three Months Ended December 31, 2023 Three Months Ended September 30, 2023 Three Months Ended December 31, 2022 Net (loss) income - GAAP $ (252) $ 207 $ 172 Merger-related and restructuring expenses, net of tax (1) 46 67 48 FDIC s
Slide 41: Reconciliations of GAAP and non-GAAP measures
414th Quarter 2023 Reconciliations of GAAP and non-GAAP measures $mm Non-GAAP Ratio Reconciliations Three months ended December 31, 2023 Three months ended September 30, 2023 Three months ended December 31, 2022 Total Stockholders’ Equity $ 10,820 $ 10,993 $ 8,824 Less: Goodwill and other intangible
Slide 42: Investor Relations contact
424th Quarter 2023 Visit our website: ir.myNYCB.com E-mail requests to: ir@myNYCB.com Call Investor Relations at: (516) 683-4420 Write to: Investor Relations New York Community Bancorp, Inc. 102 Duffy Avenue Hicksville, NY 11801 For more information
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