NEW YORK COMMUNITY BANCORP INC
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
FLG$10.52-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0000910073-24-000131
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0000910073-24-000169
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 225 previous paragraphs and 205 current paragraphs.
74 unchanged; 62 reworded; 64 added; 86 removed; 3 previous and 5 current paragraphs rearranged.
Tables are not compared: 23 previous and 30 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (64)
Current report
Background
Current report
New York Community Bancorp, Inc. is a bank holding company (collectively with its subsidiaries the “Company”) whose principal operation is its subsidiary Flagstar Bank, N.A. (the “Bank”). The Company has experienced a number of events in the last 18 months that have significantly impacted its balance sheet, results of operations, credit losses, liquidity and funding, and regulatory capital. At the end of 2022, the Company acquired and merged with Flagstar Bancorp Inc. which increased assets by $26 billion and liabilities by $24 billion. In March 2023 the Company acquired $38 billion of assets and assumed $36 billion of liabilities from the FDIC related to the former Signature Bridge Bank. These transactions resulted in the Company exceeding $100 billion in total assets which results in being categorized as a Category IV institution for regulatory purposes, increasing requirements and expectations related to liquidity, risk management and governance. Beginning in late 2023, the Company’s loan portfolio began to experience stress, related principally to vacancy-driven declines in the office sector, and inflation and high interest rates in the multi-family sector, particularly for the sub-set of the Company’s loan portfolio comprised of majority rent-regulated collateral, a portion of which is impacted by a 2019 New York law change. Concerns about the impact of these portfolio stresses led to significant declines in the Company’s stock price and large customer deposit withdrawals in the first quarter of 2024. In response to these declines, the Company raised $1.05 billion in equity capital in March 2024 through the issuance of shares of the Company's common stock and preferred stock convertible to common stock, and raised liquidity through brokered deposits and wholesale funding. The result of these events and conditions has led to a significantly lower net interest margin and higher loan loss provisions in 2024. Subsequent to the March 2024 capital raise, the Company’s customer deposit base stabilized, grew substantially in the second quarter 2024 and has continued to increase subsequently.
Current report
To further simplify the Company’s operations, reduce operational risk, and begin transitioning to a more diversified regional bank, as well as enhance its regulatory capital ratios and liquidity, subsequent to the second quarter of 2024 the (i) Company completed the sale of its warehouse lending portfolio (approximately $6 billion in assets) and (ii) entered into a definitive agreement to sell its mortgage servicing, subservicing and third-party origination activities. These transactions will increase the Company’s common equity Tier 1 capital ratio by approximately 130 basis points in aggregate upon consummation, but will decrease interest income and fee income until the resulting capital has been redeployed by the Company in lending and investing activities. These decreases will be partially offset by decreases in expenses associated with the activities being sold.
Current report
Results of Operations
Current report
The Company reported a second quarter 2024 net loss of $323 million compared to a net loss of $327 million in the prior quarter. Net loss attributable to common stockholders for the second quarter 2024 was $333 million, or $1.14 per diluted share, compared to a net loss of $335 million, or $1.36 per diluted share, in the prior quarter. As adjusted for merger-related expenses, the net loss for the second quarter 2024 was $298 million and net loss attributable to common stockholders was $308 million or $1.05 per diluted share. The prior quarter net loss and diluted earnings per share included a reduction to the bargain purchase gain of $121 million arising from the Signature Transaction. As adjusted for this item and for merger-related expenses, the net loss for the prior quarter was $174 million and the net loss attributable to common stockholders was $182 million, or $0.74 per diluted share.
Current report
For the first six months of 2024, the Company reported a net loss of $650 million compared to net income of $2.4 billion for the first six months of 2023. Net loss attributable to common stockholders for the first six months of 2024 was $668 million, or $2.48 per diluted share, compared to net income of $2.4 billion, or $10.10 per diluted share for the first six months of 2023. Net loss and diluted earnings per share for the first six months of 2024 included a reduction to the bargain purchase gain of $121 million arising from the Signature Transaction. As adjusted for this item and for merger-related expenses, the net loss for the first six months of 2024 was $472 million and the net loss attributable to common stockholders was $490 million, or $1.82 per diluted share. Net income and diluted earnings per share for the first six months of 2023 included a bargain purchase gain of $2.1 billion arising from the Signature Transaction. As adjusted for this item and for merger-related expenses, net income for the first six months of 2023 was $407 million and net income available to common stockholders was $391 million, or $1.64 per diluted share.
Current report
(1)The change in interest income or expense due to both rate and volume has been allocated between the factors in proportion to the relationship of the absolute dollar amounts of the change in each.
Current report
(2)Includes the impact of nonaccrual loans.
Current report
The Company's net interest margin for the second quarter 2024 was 1.98 percent, down 30 basis points compared to the first quarter 2024. The 30 basis point reduction was mainly driven by an increase in the average cost of interest bearing liabilities, as well as an increase in borrowings to support a higher level of on-balance sheet liquidity associated with regulatory requirements. The increase in the cost of interest-bearing liabilities was driven by a full quarter of the change in funding mix following the deposit mix shift and increase in wholesale borrowings that occurred during the first quarter 2024. The first quarter 2024 decline in lower rate deposits and increase in certificates of deposits, along with the increase in borrowed funds, was primarily driven by customer withdrawals of uninsured deposits following the credit rating agency downgrades of our Company’s debt and deposit ratings by third-party credit rating agencies in February and March 2024. These elevated withdrawals resulted in the Company raising liquidity through brokered deposits and borrowings. Subsequent to the $1.05 billion capital investment in March 2024, our customer deposits stabilized and in the second quarter 2024, customer deposits grew approximately $3 billion. We expect to utilize liquidity from the second quarter 2024 deposit growth, continued deposit growth in the third quarter 2024, and asset sale transactions closing in the third quarter of 2024 to reduce short term and other borrowings.
Current report
A substantial portion of our loan portfolio have fixed rates through repricing dates which extend several years. Because most of these loans were originated when market rates were lower than present rates, they have a negative impact to our net interest margin. However, upon reaching repricing option dates, the resulting rate resets will increase our interest income if higher interest rates persist. See table under Loan Maturity and Repricing. Other factors affecting the amount of our net interest income for the second quarter 2024 include a $1.1 billion increase in nonaccrual loans and the associated reversal of previously accrued interest income on those loans.
Current report
For the first six months of 2024, net interest margin was 2.13 percent, down 81 basis points compared to the first six months of 2023. The decrease was primarily the result of the impact of the customer deposit withdrawals in the first quarter 2024 and the resulting shift in deposit mix to higher cost certificates of deposit and wholesale borrowings.
Current report
Other factors affecting net interest income for the first six months 2024 compared to the first six months 2023 include:
Current report
•A $1.7 billion increase in nonaccrual loans and the associated reversal of previously accrued interest income on those loans.
Current report
•An increase in the average loan yield primarily due to the impact of multi-family loans repricing to higher rates upon reaching the end of their initial fixed rate periods.
Current report
•A 45 basis point increase in the average yield on investment securities driven by lower rate securities maturing and being replaced with higher rate securities, consistent with the increase in market interest rates.
Current report
For the second quarter 2024, the provision for credit losses totaled $390 million compared to a $315 million provision for the first quarter 2024. The provision reflects an increase in charge-offs, principally relating to larger-balance office loans, and the continuing impact of market conditions on the multi-family portfolio as higher rates and inflationary impacts persist.
Current report
Net charge-offs totaled $349 million for the second quarter 2024 compared with $81 million for the first quarter 2024 primarily driven primarily by an increase in classified office loans and receipt of appraisals on those loans.
Current report
For the first six months of 2024, the provision for credit losses totaled $705 million compared to a $219 million provision for the first six months of 2023. The provision reflects substantial increases in the allowance for credit losses on loans and leases and charge-offs during the current period, principally related to risk rating downgrades on commercial real estate and multi-family loans with upcoming maturities or repricing for which the estimated property net operating income would not be sufficient to fully cover pro-forma debt service when applying current market rates and terms, as well as underlying collateral value declines principally in the office portfolio.
Current report
Net charge-offs totaled $430 million for the first six months of 2024, compared with a net recovery of $1 million for the first six months of 2023 primarily driven by an increase in classified loans in the commercial real estate and multi-family portfolios and underlying collateral value declines.
Current report
The bargain purchase gain reduction recorded in the first quarter represented the final measurement period adjustment related to the fair value of assets acquired and liabilities assumed in the Signature Transaction.
Current report
Loss on loan administration activities was $5 million for the second quarter 2024 compared to income of $16 million for the first quarter 2024 driven by a $9 million increase in interest paid on subservicing custodial deposits and a $10 million decrease in servicing income that was driven by the conclusion of our servicing agreement with the FDIC related to the Signature Transaction in March 2024. As a result of the Company’s third quarter 2024 agreement to sell its mortgage servicing, subservicing and third-party origination activities, substantially all income associate with servicing rights, gain on loan sales, and loan administration income will cease upon consummation of the transaction, which is expected in early fourth quarter 2024.
Current report
The decrease in loan administration fee income was a result of an $11 million increase in interest paid on subservicing custodial deposits, and the conclusion of the FDIC servicing agreement, lower net gain on loan sales and securitizations reflected the impact of higher rates driving substantially lower mortgage loan production volume.
Current report
Total operating expenses were $17 million higher in the second quarter 2024 than the first quarter 2024. Compensation and benefits expense decreased due to a reduction in employees and seasonal factors in the first quarter such as payroll taxes and, 401(k) matching. FDIC insurance expense increased during the period due to an increase in the amount of criticized and classified loans and other factors affecting the assessment rate.
Current report
Total operating expenses for the first six months of 2024 were up $352 million compared to the first six months of 2023. This increase was largely due to the Signature Transaction, including an increase in the number of employees, higher occupancy costs related to an increase in number of Company locations, and the higher regulatory costs described previously.
Current report
We expect our expenses will decrease approximately $100 million per quarter related to the sale of the mortgage servicing, subservicing and third-party origination activities upon consummation of those transactions.
Current report
For the second quarter 2024, the Company reported an income tax benefit of $101 million compared to a benefit of $54 million for the first quarter 2024. The benefit for the second quarter 2024 was driven by the higher book loss for the quarter, primarily attributable to the provision for credit losses. Certain non-deductible items impact the Company's effective tax rate, including FDIC insurance expense, and the bargain purchase gain adjustment.
Current report
For the first six months of 2024, the Company reported an income tax benefit of $155 million compared to an income tax expense of $80 million for the first six months of 2023. The effective tax rate for the first six months of 2024 was 19.25 percent compared to 3.21 percent in the first six months of 2023.
Current report
Loan Maturity and Repricing
Current report
The following table sets forth option loans by year of repricing and non-option loans by year of contractual maturity for our multi-family and commercial real estate portfolios within loans held for investment at June 30, 2024. Loans that have adjustable rates are shown as being due in the period during which their interest rates are next subject to change. Risks associated with loan repricing are discussed in the Credit Quality section.
Current report
(1)Excludes Specialty Finance commercial real estate loans and multi-family loans serviced-by-others totaling $544 million or 1% of the total balance.
Current report
The multi-family loan portfolio was $36.0 billion at June 30, 2024, down $1.3 billion compared to $37.3 billion at December 31, 2023, which is reflective of our continuing efforts to diversify our portfolio as borrowers without a deposit relationship seek more favorable loan terms with other lenders.
Current report
To mitigate our exposure to rent regulated properties, we are curtailing future originations of loans secured by rent-regulated properties and focusing originations and renewal retention on borrowers with whom we will have broader customer relationships beyond lending. Property values in this loan sector have decreased substantially since origination due to unfavorable market conditions. The appraised value used in our loan-to-value ratio is determined using an income approach to estimate the stabilized value of the collateral by applying a market driven capitalization rate to the stabilized cash flow of the property.
Current report
Our multi-family loan portfolio had$15.4 billion outstanding with an interest-only payment at June 30, 2024. The weighted average interest-only period remaining was 22 months as of June 30, 2024, with approximately 60 percent of these loans entering their amortization period by the end of 2025.
Current report
Certain of our commercial real estate loans may contain an interest-only period which typically does not exceed three years; however, these loans are underwritten on a fully amortizing basis, including calculation of the debt service coverage ratio. Whether a borrower qualifies for an interest-only period is based on the individual credit profile of the borrower, particularly the loan-to-value of the property.
Current report
The following table presents an analysis of the property types that collateralize the commercial real estate loans in our held-for-investment loan portfolio:
Current report
Commercial and Industrial
Current report
At June 30, 2024, one-to-four family loans represented $5.8 billion, inclusive of $860 million of loans with government guarantees, or 7.8 percent of total loans held for investment, compared to $6.1 billion at December 31, 2023. As of June 30, 2024, the repurchase liability on loans with government guarantees was $374 million. The repurchase obligations and related assets will transfer to the buyer of our mortgage activities upon consummation of that sale. As of June 30, 2024, non-government guaranteed loans in this portfolio had an average current FICO score of 742 and an average LTV of 51 percent.
Current report
Our home equity portfolio includes home equity loans, second mortgage loans and home equity line of credits. As of June 30, 2024, loans in this portfolio had an average current FICO score of 751.
Current report
During the second quarter 2024 we transferred all of our warehouse loans to held for sale. This balance was $6.4 billion at June 30, 2024. We completed the sale of the warehouse loan portfolio in the third quarter 2024.
Current report
In the second quarter 2024 the Company borrowed $4.0 billion from the FRB, secured by various loan and investment security collateral. This discount window advance matures in September 2024. Additionally the Company has $1.0 billion drawn under the Bank Term Funding Program which matures in December 2024. Available liquidity from customer deposit growth and the sale of warehouse lending portfolio will be used to repay these borrowings.
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Removed paragraphs (86)
Previous report
Net Income (Loss) | Net Income (Loss) Available to Common Stockholders
Previous report
New York Community Bancorp reported a first quarter 2024 net loss of $327 million compared to a net loss of $2.7 billion in the prior quarter and net income of $2.0 billion in the year ago quarter. The net loss available to common shareholders in the current quarter was $335 million, or $0.45 per diluted share, compared to $2.7 billion, or $3.76 per diluted share, in the prior quarter and net income of $2.0 billion, or $2.87 per diluted share, in the year ago quarter. The prior quarter net loss and diluted EPS included goodwill impairment of $2.4 billion. Net income for the three months ended March 31, 2023 included a bargain purchase gain of $2.0 billion arising from the Signature transaction.
Previous report
The Company's net interest margin for the three months ended March 31, 2024, was 2.28 percent, down 54 basis points compared to the three months ended December 31, 2023. The reduction is primarily driven by higher cost of funds with the average rate on borrowings costs increasing 85 basis points and the impact from a deposit mix shift from lower cost interest-bearing checking and MMA to higher cost certificates of deposits. The decline in lower rate deposits was primarily driven by withdrawals of uninsured deposits following the rating agency downgrades of our Company's credit ratings in February and March 2024. These elevated withdrawals of uninsured deposits resulted in us raising liquidity through the use of higher cost deposits and borrowings. Subsequent to announcing a $1.05 billion capital investment on March 6, 2024, our deposits stabilized and then remained around $75 billion for the remainder of the first quarter 2024, down from $81.5 billion at December 31, 2023.
Previous report
Net interest income for the three months ended March 31, 2024 was $624 million, down $116 million or 15.7 percent compared to the three months ended December 31, 2023 primarily due to the following:
Previous report
•Interest expense on borrowed funds increased $155 million or 94.5 percent to $319 million primarily driven by a $10.0 billion or 55.0 percent increase in the average balances as we took actions to proactively manage our liquidity needs along with an 85 basis point increase in rates as long-term lower cost borrowings matured.
Previous report
•Interest expense on average interest-bearing deposits increased $27 million to $570 million during the three months ended March 31, 2024, driven by a 23 basis point increase in the average cost of interest-bearing deposits due to the impact from a deposit mix shift from lower cost interest-bearing checking and MMA to higher cost certificates of deposits.
Previous report
•Interest income on loans and leases decreased $37 million primarily driven by a $1.5 billion, or 2% reduction in average loan balances led by lower consumer loans due to the sale of the marine and RV portfolio, as well as lower multi-family and warehouse loan balances.
Previous report
partially offset by:
Previous report
•Interest income on cash and cash equivalents increased $107 million driven by an increase in the average balance to $7.5 billion to proactively manage liquidity and a 24 basis point increase in the average yield to 5.52 percent.
Previous report
For the three months ended March 31, 2024, the net interest margin was 2.28 percent, down 32 basis points compared to the three months ended March 31, 2023. The year-over-year decrease was primarily the impact of higher interest rates on the cost of funds with the average cost of borrowed funds increasing 143 basis points and the average cost of interest-bearing deposits increasing 145 basis points, partially offset by higher earning asset yields which increased 71 basis points.
Previous report
For the three months ended March 31, 2024, net interest income totaled $624.0 million, up $69.0 million or 12.4 percent compared to $555 million for the three months ended March 31, 2023. The year-over-year increase was primarily the result of the following:
Previous report
•Interest income on securities increased $19 million, driven by a 44 basis point increase in the average yield to 4.30 percent from 3.86 percent. Additionally, there was a $726 million or 6.7 percent increase in the average securities balance to $11.6 billion. The yield on securities is improving over time as lower rate securities mature and are replaced with higher rate securities, consistent with the increase in interest rates.
Previous report
•Interest income on cash and cash equivalents increased $145 million reflecting higher cash balances as a result of actions to proactively manage liquidity needs along with a 56 basis point increase in the average yield to 5.52 percent.
Previous report
partially offset by:
Previous report
•Interest expense on average interest-bearing deposits increased $287 million to $570 million during the three months ended March 31, 2024. Average interest earning deposits grew $11.6 billion, or 24.3 percent, to $59.5 billion primarily due to a full quarter of the Signature Transaction. We also experienced a 145 basis point increase in the average cost of interest-bearing deposits primarily due to the impact from a deposit mix shift from lower cost interest-bearing checking and MMA to higher cost certificates of deposits.
Previous report
•Interest expense on borrowed funds increased $123 million or 62.8 percent to $319 million driven by a 143 basis point increase in rates in addition to a $3.4 billion or 22.2 percent increase in the average balance to $25.7 billion primarily reflecting actions to proactively manage liquidity needs in the first quarter of 2024.
Previous report
For the three months ended March 31, 2024, the provision for credit losses totaled $315 million compared to a $552 million provision for the three months ended December 31, 2023, and a $170 million provision for the three months ended March 31, 2023, which included a $132 million initial provision for credit losses for the loans acquired in the Signature Transaction. The increase reflects changes in market conditions and interest rates that are expected to affect portions of our portfolios that are subject to current market stresses.
Previous report
Net charge-offs totaled $81 million for the three months ended March 31, 2024, compared with $185 million for the three months ended December 31, 2023. Net charge-offs on a non-annualized basis represented 0.10% and 0.22% of average loans outstanding for the three months ended March 31, 2024, and for the three months ended December 31, 2023, respectively. First quarter net charge-offs were $104 million lower compared to the prior quarter. Commercial real estate charge-offs were $64 million during the first quarter 2024 compared to $42 in the fourth quarter 2023. Multifamily net charge-offs were $11 million in the first quarter 2024 compared to $5 in the fourth quarter 2023. The fourth quarter 2023 also included a $112 million charge-off of a co-operative loan.
Previous report
For the three months ended March 31, 2024, non-interest income totaled $9 million as compared to $127 million for the three months ended December 31, 2023. The first quarter includes a reduction in the bargain purchase gain of $121 million related to the final adjustment to the fair value of assets received and liabilities assumed, including the in-transit and other shared accounts of the Signature Transaction as compared to an $11 million reduction in the fourth quarter of 2023.
Previous report
The net return on mortgage servicing rights was $21 million or 7.6 percent for the three months ended March 31, 2024 compared to $33 million or 12.0 percent for the three months ended December 31, 2023 primarily driven by unfavorable hedge performance.
Previous report
First quarter 2024 non-interest income includes a gain on loan sales of $20 million compared to $16 million during the fourth quarter 2023. The current quarter included a net gain of $6 million related to the sale of a loan we moved to held-for-sale in the prior quarter and the sale of the RV/Marine portfolio, both of which closed during the current quarter.
Previous report
Loan administration income was relatively flat for the three months ended March 31, 2024, as compared to the three months ended December 31, 2023. FDIC servicing income declined $10 million from $20.2 million in the fourth quarter of 2023 to $10.4 million in the first quarter of 2024. This was offset by higher net subservice fee income driven by a lower volume of subserviced custodial deposit activity. Our servicing agreement with the FDIC ended in March 2024 and is no longer expected to generate loan administration income in future periods.
Previous report
Non-interest income decreased $2.1 billion for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to the bargain purchase gain of $2.0 billion related to the Signature Transaction. Excluding the bargain gain impacts, non-interest income increased $33 million For the three months ended March 31, 2024, compared to three months ended March 31, 2023.,The increase was driven by a full quarter of the Signature Transaction and higher loan administration fee income as a result of higher FDIC subservicing income.
Previous report
Excluding the bargain purchase gain adjustment of $121 million in the first quarter 2024 and $2.0 billion in the first quarter 2023 related to the Signature transaction, non-interest income increased $33 million compared to the first quarter 2023 primarily driven by $18 million higher other income, $9 million higher net loan administration income, and $7 million higher fee income. Net mortgage gain on sale margin decreased 28 basis points to 48 basis points compared to 76 basis points in the first quarter 2023.
Previous report
Total operating expenses for the three months ended March 31, 2024 were $621 million, up $14 million compared to $607 million for the fourth quarter 2023. The increase was primarily driven by higher compensation and benefits due to seasonal factors such as payroll taxes, 401(k) match resets and merit increases, coupled with lower incentive compensation in the fourth quarter 2023 driven by accrual reversals related to executive compensation as a result of Company performance. General and administrative costs were down $18 million primarily due to the FDIC special assessment recorded in the fourth quarter of 2023.
Previous report
Total operating expenses for the three months ended March 31, 2024 were up $229 million compared to the three months ended March 31, 2023 . This increase was largely attributable to the impact from the Signature transaction, which closed in late March of 2023 along with a $28.1 million increase in FDIC insurance expense driven by a higher asset base and assessment rate.
Previous report
For the three months ended March 31, 2024, the Company reported a benefit for income taxes of $54 million compared to a benefit for income taxes of $112 million for the three months ended December 31, 2023 and an income tax expense of $1 million for the three months ended March 31, 2023 . The benefit for the three months ended March 31, 2024 was driven by the higher book loss for the quarter, primarily attributable to the loan loss provision. The effective tax rate difference was due to current period changes in non-tax deductible expenses and the bargain gain, in proportion to the pre-tax loss. The effective tax rate for the three months ended March 31, 2024, was 14.3 percent compared to 4.0 percent for the three months ended December 31, 2023 and less than one percent for the three months ended March 31, 2023 .
Previous report
Wholesale borrowings at March 31, 2024 were $25.7 billion compared to $20.3 billion at December 31, 2023, reflecting actions to proactively manage the liquidity needs of the Company.
Previous report
The multi-family loan portfolio was $36.9 billion at March 31, 2024, down slightly compared to $37.3 billion at December 31, 2023 due to a combination of higher interest rates and our loan diversification strategy.
Previous report
Since their origination date, property values in this loan segment are down substantially due to unfavorable market conditions.
Previous report
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.
Previous report
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. The rate charged in the first five or seven years is generally based on intermediate-term interest rates plus a spread.
Previous report
During the remaining years, the loan resets to an annually adjustable rate that is indexed to CME Term SOFR or Prime, plus a spread. Alternately, the borrower may opt for a fixed rate that is tied to the five-year fixed advance rate of the FHLB-NY, plus a spread. The fixed-rate option also requires the payment of 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.
Previous report
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. We also consider a variety of other factors, including the physical condition of the underlying property; the net operating income of the mortgaged premises prior to debt service; the DSCR, which is the ratio of the property’s net operating income to its debt service; and the ratio of the loan amount to the appraised value (i.e., the LTV) of the property.
Previous report
CRE loans represented $212 million, or 4.5 percent, of the loans we originated in the first quarter 2024 as compared to $225 million, or 3.0 percent in the fourth quarter 2023.
Previous report
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 March 31, 2024, 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.
Previous report
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
Previous report
that is generally based on intermediate-term interest rates plus a spread. In addition to customary fixed rate terms, we now also
Previous report
offer floating rates advances indexed to CME Term SOFR. These products are generally offered in combination with interest
Previous report
rate cap or swaps that provide borrowers with additional optionality to manage their interest rate risk. Following the initial fixed
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Reworded paragraphs (62)
Previous wording
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. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by various external factors, including the local economy, competition for loans and deposits, the monetary policy of the FOMC, and market interest rates.
Current wording
Net interest income is our primary source of income. The amount of our net interest income is a function of the amount of interest-earning assets we hold, the manner in which we fund these assets, including interest-bearing liabilities, and the spread between the interest rates we earn on assets and the interest rates we pay on liabilities. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by various external factors, including the local economy, competition for loans and deposits, the monetary policy of the Federal Open Market Committee, and market interest rates.
Previous wording
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. While the target federal funds rate generally impacts the cost of our short-term borrowings and deposits, the yields on our held-for-investment loans and other interest-earning assets are not as sensitive to intermediate-term market interest rates.
Current wording
Our interest-bearing liabilities are comprised of customer deposits and funds we borrow. The average term of our fixed rate deposits is less than twelve months, therefore the cost of our deposits and most of our borrowed funds is largely based on short-term rates of interest, the level of which is partially impacted by the actions of the Federal Open Market Committee. The yields on our held-for-investment loans and investment securities are generally more sensitive to intermediate-term market interest rates.
Previous wording
(1)Amounts are net of net deferred loan origination costs/(fees) and includes loans held for sale and non-performing loans.
Current wording
(1)Amounts are net of net deferred loan origination costs/(fees) and includes loans held for sale and non-accrual loans.
Previous wording
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. Information is provided in each category with respect to (i) the changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) the changes attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate on each separate line.
Current wording
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. Information is provided in each category with respect to (i) the changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) the changes attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) the net change.
Previous wording
•Interest income on mortgages and other loans increased $326 million driven by a $13.3 billion or 18.9 percent increase in average loan balances to $84.1 billion. This is primarily driven by the current period including a full quarter of the Signature Transaction that closed on March 20, 2023. Additionally, we had a 76 basis point increase in the average loan yield to 5.68 percent in the current quarter due primarily to the impact of rising rates and the higher yield of our portfolio due to loans acquired in the Signature Transaction.
Current wording
•A $6.2 billion increase in average loan balances driven by the assets acquired in the Signature Transaction that closed on March 20, 2023.
Previous wording
Total assets decreased $1.2 billion to $112.9 billion as of March 31, 2024, compared to $114.1 billion at December 31, 2023.
Current wording
Total assets increased $5.0 billion to $119.1 billion as of June 30, 2024, compared to $114.1 billion at December 31, 2023, principally related to increasing on-balance sheet liquidity in cash and cash equivalents.
Previous wording
Total loans and leases held for investment were $82.3 billion at March 31, 2024 compared to $84.6 billion at December 31, 2023. The decrease was primarily driven by lower consumer loans due to the sale of the marine and RV portfolio and a slight net decrease in multi-family and commercial loans due to run-off and lower originations.
Current wording
Total loans and leases held for investment decreased $10.1 billion to $74.6 billion at June 30, 2024, compared to $84.6 billion at December 31, 2023. The decrease was primarily driven by the transfer of the warehouse loan portfolio from loans held for investment to loans held for sale and decreases in commercial real estate and multi-family loans as the Company decreases its concentration in these portfolios.
Previous wording
The securities portfolio totaled $9.4 billion at March 31, 2024, compared to $9.2 billion at December 31, 2023. Our securities portfolio is classified as available-for-sale with low credit risk U.S government agency bonds comprising over 90 percent of the total portfolio at March 31, 2024 and December 31, 2023. These instruments are recorded at fair value and unrealized gains and losses driven by changes in market interest rates are recorded in other comprehensive income. An allowance for credit loss is established for any credit-related impairments. At March 31, 2024 and December 31, 2023 the total allowance for credit losses on our securities portfolio was immaterial.
Current wording
The securities portfolio increased $1.4 billion to $10.5 billion at June 30, 2024, compared to $9.2 billion at December 31, 2023. Our securities portfolio is classified as available-for-sale with low credit risk U.S. government agency bonds comprising over 90 percent of the total portfolio at June 30, 2024 and December 31, 2023. These instruments are recorded at fair value and interest rate driven unrealized gains and losses are recorded in other comprehensive income.
Previous wording
From December 31, 2023 to March 7, 2024, we experienced $9.7 billion in core deposit runoff following the rating agency downgrades of our Company's credit ratings in February and March 2024. On March 6, 2024 we announced a $1.05 billion capital raise, after which, deposits stabilized and runoff was immaterial for the remainder of the first quarter 2024. We funded the deposit runoff, and increased our on balance sheet liquidity, primarily through $4.1 billion in brokered CD’s and $5.5 billion of wholesale borrowings.
Current wording
Total deposits decreased $2.5 billion, to $79.0 billion at June 30, 2024 compared to $81.5 billion at December 31, 2023. In February and March 2024, we experienced $9.7 billion customer deposit attrition following downgrades in our debt and deposit ratings by third-party credit rating agencies. On March 6, 2024 we announced a $1.05 billion capital raise, after which deposits stabilized for the remainder of the first quarter 2024. In response to the customer deposit attrition, we replaced the decline in deposits and increased our on-balance sheet liquidity, primarily through $4.1 billion in brokered certificates of deposit and $5.5 billion of wholesale borrowings. Subsequently in the second quarter 2024, targeted deposit gathering programs and customer engagement increased customer deposits $3 billion.
Previous wording
In addition to requiring a minimum DSCR of 125 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. Our multi-family loans generally represent no more than 75 percent of the lower of the appraised value or the sales price of the underlying property, and typically feature an amortization period of 30 years. In addition, our multi-family loans may contain an initial interest-only period which typically does not exceed two years; however, these loans are underwritten on a fully amortizing basis. Exceptions to these levels are made to borrowers on a case by case basis and approved by the joint authority of credit and lending officers and when necessary, the either the Management Credit Committee or the Credit Committee of the Board.
Current wording
Our multi-family loans may contain an initial interest-only period which typically does not exceed two years; however, these loans are underwritten on a fully amortizing basis, including calculation of the debt service coverage ratio. Whether a borrower qualifies for an interest-only period is based on the individual credit profile of the borrower, particularly the loan-to-value of the property.
Previous wording
The majority of our multi-family loans are secured by rental apartment buildings. At March 31, 2024, $20.6 billion or 56 percent of the Company’s total multi-family loan portfolio is secured by properties in New York State, many of which are subject to rent regulation laws, to varying degrees. The weighted average LTV of the New York State rent regulated multi-family portfolio using origination-date values was 59 percent as of March 31, 2024 as compared to 58 percent at December 31,
Current wording
The majority of our multi-family loans are secured by rental apartment buildings. At June 30, 2024, $20.4 billion or 57 percent of the Company’s total multi-family loan portfolio was secured by properties in New York State, many of which are subject to rent regulation laws to varying degrees. The New York Housing Stability and Tenant Protection Act of 2019 (the "Act") significantly limits the ability to increase rents on regulated apartments upon vacancy. These limitations may reduce a borrower’s ability to generate additional revenues on those units to offset higher operating expenses due to inflation and the current interest rate environment, which could result in lower net operating income and could impact a borrower’s ability to satisfy repayment obligations during the term of the loan. In addition, the level of income generated by the property may be insufficient to qualify for refinancing at maturity. The impact on current and future cash flows has adversely impacted the value of properties with a high concentration of rent regulated units which has increased charge-offs in 2024.
Previous wording
given the economic pressures facing the commercial real estate and multi-family markets. Although occupancy levels have historically tended to be stable due to below market rents, rent-regulated loans that are resetting are incurring debt service levels that, when combined with inflationary pressure on operating costs and limits on the ability to increase rental rates, will approach or exceed some properties’ net operating income and may require borrower support until elevated interest rates subside.
Current wording
given the economic pressures facing the commercial real estate and multi-family markets. Although occupancy levels have historically tended to be stable due to below market rents, rent-regulated loans that are repricing are incurring debt service levels that, when combined with inflationary pressure on operating costs and limits on the ability to increase rental rates, approach or exceed some properties’ net operating income and may require the borrower to support the loan from sources unrelated to the collateral until elevated interest rates subside.
Previous wording
At March 31, 2024, CRE loans represented $10.3 billion, or 12.5 percent, of total loans held for investment, reflecting a $147 million decrease when compared to $10.5 billion at December 31, 2023.
Current wording
At June 30, 2024, commercial real estate loans represented $10.0 billion, or 13.4 percent, of total loans held for investment, reflecting a $509 million decrease compared to $10.5 billion at December 31, 2023 primarily due to payoffs.
Previous wording
Approximately $3.1 billion of the CRE portfolio are office properties with an average balance of approximately $14 million and located primarily in the New York metro area. Occupancy levels for office space have declined substantially over the past three years which has an impact on borrowers net operating income and their ability to cover debt service. These unfavorable market conditions also lower the value of underlying collateral and have resulted in higher current LTVs in this loan segment as compared to those at their origination date.
Current wording
The commercial real estate loans we originate are secured by income-producing properties such as office buildings, retail centers, mixed-use buildings, and multi-tenanted light industrial properties. Occupancy levels for office space have declined substantially over the past three years which has had an impact on borrowers' net operating income and their ability to cover debt service. These unfavorable market conditions also lower the value of underlying collateral which has had a material impact on loan charge-offs in 2024.
Previous wording
The following table presents a geographical analysis of the CRE loans in our held-for-investment loan portfolio:
Current wording
The following table presents a geographical analysis of the commercial real estate loans in our held-for-investment loan portfolio:
Previous wording
The non-warehouse C&I loans we produce are primarily made to small and mid-size businesses and finance companies. Such loans are tailored to meet the specific needs of our borrowers, and include term loans, demand loans, revolving lines of credit, and, to a much lesser extent, loans that are partly guaranteed by the Small Business Administration.
Current wording
The commercial and industrial loans we produce are primarily made to small and mid-size businesses and finance companies. Such loans are tailored to meet the specific needs of our borrowers, and include term loans, demand loans, and revolving lines of credit.
Previous wording
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. C&I loans are typically secured by business assets and personal guarantees of the borrower, and include financial covenants to monitor the borrower’s financial stability.
Current wording
A broad range of commercial and industrial 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 commercial and industrial loans, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. Commercial and industrial loans are typically secured by business assets and personal guarantees of the borrower, and include financial covenants to monitor the borrower’s financial stability.
Previous wording
At March 31, 2024, other loans totaled $1.7 billion and consisted primarily of home equity lines of credit, point of sale consumer loans and other consumer loans, including overdraft loans.
Current wording
At June 30, 2024, other loans totaled $1.8 billion and consisted primarily of home equity lines of credit and other consumer loans, including overdraft loans.
Previous wording
Loans held-for-sale at March 31, 2024 totaled $1.0 billion, down from $1.2 billion at December 31, 2023. We classify loans as held for sale when we originate or purchase loans that we intend to sell. 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.
Current wording
Loans held for sale at June 30, 2024 totaled $7.8 billion, an increase of $6.7 billion compared to $1.2 billion at December 31, 2023. We classify loans as held for sale when we originate or purchase loans that we intend to sell and when we change our intent with regard to loans originated as held for investment. Our mortgage loans held for sale are carried at fair value. 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.
Previous wording
Total securities were $9.4 billion, or 8 percent, of total assets at March 31, 2024, compared to $9.2 billion, or 8 percent of total assets at December 31, 2023. At March 31, 2024 and December 31, 2023, all of our securities were designated as “Available-for-Sale”. At March 31, 2024, 16 percent of our portfolio are floating rate securities.
Current wording
Total securities were $10.5 billion, or 9 percent of total assets, at June 30, 2024, compared to $9.2 billion, or 8 percent of total assets, at December 31, 2023. At June 30, 2024 and December 31, 2023, all of our securities were designated as “Available-for-Sale”. At June 30, 2024, 20 percent of our portfolio are floating rate securities.
Previous wording
As of March 31, 2024, the net unrealized loss on securities available for sale, net of tax, was $651 million as compared to $581 million at December 31, 2023, reflecting the increased interest rate environment.
Current wording
As of June 30, 2024, the net unrealized loss on securities available for sale, net of tax, was $674 million, compared to $581 million at December 31, 2023, reflecting the higher interest rate environment.
Previous wording
At March 31, 2024, available-for-sale securities had an estimated weighted average life of six years. Included in the quarter-end amount were mortgage-related securities of $7.1 billion and other debt securities of $2.2 billion.
Current wording
At June 30, 2024, available-for-sale securities had an estimated weighted average lifeof six years. Included in the quarter-end amount were mortgage-related securities of $8.5 billion and other debt securities of $2.1 billion.
Previous wording
The majority of our borrowed funds consist of wholesale borrowings, including FHLB advances, the Bank Term Funding Program of the FRB of New York, repurchase agreements, and, to a lesser extent, junior subordinated debentures and subordinated notes. At March 31, 2024, total borrowed funds increased $5.5 billion to $26.7 billion compared to the balance at December 31, 2023 primarily driven by the decline in deposits and actions to proactively manage our liquidity needs.
Current wording
The majority of our borrowed funds consist of wholesale borrowings, including Federal Home Loan Bank ("FHLB") advances, Discount Window advances and draws under the Bank Term Funding Program from the Federal Reserve Bank of New York ("FRB"), repurchase agreements, and, to a lesser extent, junior subordinated debentures and subordinated notes. At June 30, 2024, total borrowed funds increased $7.6 billion to $28.9 billion compared to the balance at December 31, 2023.
Previous wording
Wholesale borrowings at March 31, 2024 were $25.7 billion compared to $20.3 billion at December 31, 2023.
Current wording
Wholesale borrowings at June 30, 2024 were $27.9 billion compared to $20.3 billion at December 31, 2023.
Previous wording
FHLB advances accounted for $22.8 billion and $19.3 billion at March 31, 2024 and December 31, 2023, respectively, secured by eligible collateral in the form of loans and securities, under blanket collateral agreements with the FHLB. At March 31, 2024 and December 31, 2023, $0.8 billion and $2.0 billion of our wholesale borrowings had callable features, respectively. Additionally, $1.0 billion was drawn on the Bank Term Funding Program, secured by eligible securities. The increase in FHLB advances at March 31, 2024 compared to December 31, 2023 was driven by actions taken in the first quarter to proactively manage our liquidity needs.
Current wording
FHLB advances increased to $22.8 billion at June 30, 2024 from $19.3 billion at December 31, 2023. FHLB advances are secured by eligible collateral in the form of loans and securities, under blanket collateral agreements with the FHLB. $750 million of our wholesale borrowings had callable features at June 30, 2024 and $2.0 billion had callable features at December 31, 2023. Additionally, $1.0 billion was drawn on the Bank Term Funding Program, secured by eligible securities. The increase in FHLB advances at June 30, 2024 compared to December 31, 2023 was driven by our actions to bolster on-balance sheet liquidity.
Previous wording
Repurchase agreements outstanding at March 31, 2024, were $2.0 billion and we did not have any of these agreements outstanding at December 31, 2023. These agreements primarily use GSE obligations as collateral and were entered into with either the FHLB or specific brokerage firms.
Current wording
Repurchase agreements outstanding at June 30, 2024 were $121 million. We did not have any repurchase agreements outstanding at December 31, 2023. These agreements primarily use government-sponsored enterprise ("GSE") obligations as collateral and were entered into with either the FHLB or specific brokerage firms.
Previous wording
At March 31, 2024, the Companyhad $1.0 billion of FHLB-NY stock, at cost and $329 million of FHLB-Indianapolis stock, at cost. At December 31, 2023, the Company had $861 millionof FHLB-NY stock, at costand $329 million of FHLB-Indianapolis stock, at cost. The Company maintains an investment in FHLB stock partly in conjunction with its membership in the FHLB and partly related to its access to the FHLB funding it utilizes. The increase in FHLB-NY stock was primarily related to increased borrowings in the first quarter of 2024. In addition, at March 31, 2024 and December 31, 2023, the Company had $203 million of Federal Reserve Bank stock, at cost.
Current wording
At June 30, 2024, the Companyhad $1.0 billion of FHLB-NY stock, at cost, and $329 million of FHLB-Indianapolis stock, at cost. At December 31, 2023, the Company had $861 millionof FHLB-NY stock, at cost, and $329 million of FHLB-Indianapolis stock, at cost. The Company maintains an investment in FHLB stock partly in conjunction with its membership in the FHLB and partly related to its access to the FHLB funding it utilizes. The increase in FHLB-NY stock was primarily related to increased borrowings in the first quarter of 2024. In addition, at June 30, 2024 and December 31, 2023, the Company had $218 million of Federal Reserve Bank stock, at cost.
Previous wording
The Company conducted a thorough review of its largest 350 real estate loans at the end of the first quarter of 2024. This review included both internal collateral valuation analysis, and obtaining third-party estimates of collateral values, given the potential reliance on the underlying assets as part of the Borrower’s ability to repay debt. The review also included analysis of the most currently available borrower financial information to evaluate the ability of the underlying collateral to generate sufficient cash flow as the primary source of repayment. The Company downgraded certain loans in the first quarter of 2024 as a result of this review. The downgrades were principally related to loans with upcoming maturities or repricing where the estimated property net operating income would not be sufficient to fully cover pro-forma debt service when applying current market rates and terms, and the underlying collateral values are estimated to have declined to at or below the loan carrying amount. These downgrades increased loans classified as substandard or worse by $2.3 billion. Downgrades to substandard or below reflect the potential a loss may occur if deficiencies in the primary source of repayment for these loans are unable to be corrected. Refer to Note 6 for additional details.
Current wording
Classified loans increased$3.3 billion in thesecond quarter of 2024 and $2.3 billion in the first quarter of 2024. These downgrades were principally related to loans with upcoming maturities or repricing where the estimated net operating income of the property would not be sufficient to fully cover pro-forma debt service when applying current market rates and terms, or the underlying collateral values are estimated to have declined to at or below the loan carrying amount. Classified loans reflect the potential that a loss may occur if deficiencies in the primary source of repayment are unable to be corrected and borrowers are unwilling or unable to otherwise support the loans. Refer to Note 6 in Item 1, "Financial Statements and Supplementary Data" for additional details.
Previous wording
A loan generally is classified as a “non-accrual” loan when it is 90 days or more past due or when it is deemed to be impaired because we no longer expect to collect all amounts due according to the contractual terms of the loan agreement. 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 March 31, 2024 and December 31, 2023, all of our non-performing loans were non-accrual loans. A loan is generally returned to accrual status when the loan is current and we have reasonable assurance that the loan will be fully collectible.
Current wording
A loan generally is classified as a “non-accrual” loan when it is 90 days or more past due or when it is deemed to be impaired because we no longer expect to collect all amounts due according to the contractual terms of the loan agreement. When a loan is in non-accrual, we cease recording interest income on the loan, previously accrued and uncollected interest is reversed against interest income, and any subsequent interest collected is recorded as a reduction in the loan carrying amount. A loan is returned to accrual status only when the loan is current and we have reasonable assurance that the loan will be fully collectible. At June 30, 2024, $1.1 billion of non-accrual loans were current based on their existing payment terms.
Previous wording
Non-performing loans are reviewed regularly by management and discussed on a monthly basis with the Board Credit Committee, and the Board of Directors of the Bank, as applicable. In accordance with our charge-off policy, collateral-dependent non-performing loans are written down to their current appraised values, less certain transaction costs. Workout specialists from our Loan Workout Unit actively pursue borrowers who are delinquent in repaying their loans in an effort to collect payment. In addition, outside counsel with experience in foreclosure proceedings are retained to institute such action with regard to such borrowers.
Current wording
In accordance with our charge-off policy, collateral-dependent loans are written down to their current appraised values, less certain transaction costs. Workout specialists from our Loan Workout Unit actively pursue borrowers who are delinquent in repaying their loans in an effort to collect payment. In addition, outside counsel with experience in foreclosure proceedings are retained to support these efforts. Charge-offs of$388 million were recorded on commercial real estate and multi-family loans during the six months ended June 30, 2024, primarily driven by appraisals received on those loans.
Previous wording
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. 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.
Current wording
It is our policy to order updated appraisals for non-accrual loans that are collateralized by multi-family buildings, commercial real estate properties, or land, if the most recent appraisal on file for the property is more than one year old. Appraisals are ordered at least 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 that are not showing signs of credit weakness. 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, or when we determine an updated appraisal is needed as a result of our ongoing credit analysis. We evaluate loans that were previously placed on non-accrual at least quarterly to determine if additional charge-offs may be needed.
Previous wording
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. 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.
Current wording
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. It is our policy to require an appraisal and an environmental assessment of properties classified as other real estate owned 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.
Previous wording
All asset quality information excludes LGG that are insured by U.S government agencies.
Current wording
All asset quality information excludes loans with government guarantees that are insured by U.S. government agencies.
Previous wording
The following table presents our non-performing loans held for investment by loan type and the changes in the respective balances:
Current wording
The following table presents our non-accrual loans held for investment by loan type and the changes in the respective balances:
Previous wording
(2)Includes home equity, consumer and other loans.
Current wording
(1)Includes home equity, consumer and other loans.
Previous wording
The following table sets forth the changes in non-accrual loans over the three months ended March 31, 2024:
Current wording
The following table sets forth the changes in non-accrual loans over the first six months of 2024:
Previous wording
The following table presents our loans, 30 to 89 days past due by loan type and the changes in the respective balances:
Current wording
The following table presents our loans 30 to 89 days past due by loan type and the changes in the respective balances. Over $700 million of the loans categorized as delinquent at June 30, 2024 had subsequently cured and were current as of July 31, 2024, principally in the multi-family category.
Previous wording
The following table sets forth the allocation of the consolidated allowance for losses on loans, at each period-end:
Current wording
The following table sets forth the allocation of the consolidated allowance for credit losses on loans and leases at each period-end:
Previous wording
At March 31, 2024, the allowance for credit losses on loans and leases was $1.2 billion compared to $992 million at December 31, 2023, up $223 million reflecting changes in market conditions over the quarter. In the first quarter we completed an in-depth review of our largest multi-family and commercial real estate loans, which in combination with our modeling, suggested credit losses as of March 31 had increased. We now expect market interest rates to be higher for a longer period of time which is expected to put additional pressure on the ability for some borrowers whose rates reset to current levels to cover debt service because, when combined with inflationary pressure on operating costs and limits on the ability to increase rental rates, debt service levels may approach or exceed some properties' net operating income, which increases the risk of loss. We also have continuing pressure in the office portfolio due to remote working and other factors leading to a decline in occupancy levels that reduces operating income and has led to declining property values.
Current wording
At June 30, 2024, the allowance for credit losses on loans and leases was $1.3 billion compared to $1.0 billion at December 31, 2023, up $276 million. Market interest rates remain persistently high which will put pressure on the ability for certain borrowers with interest rates resetting at current levels to cover debt service. When combined with inflationary pressure on operating costs and limits on the ability to increase rental rates, debt service levels may approach or exceed some properties' net operating income, which increases the risk of loss. We believe that higher interest rates for a longer period of time will have a more significant impact on our loans that will reprice during the next 18 months. Therefore, we have incorporated a higher probability of default related to those loans as they approach their scheduled repricing date in the measurement of our allowance for credit losses.
Previous wording
The allowance for credit losses on loans and leases to total loans held for investment ratio increased to 1.48 percent at March 31, 2024, compared to 1.17 percent at December 31, 2023. Excluding loans with government guarantees and warehouse loans, the allowance for credit losses was 1.59 percent at March 31, 2024, compared to 1.26 percent at December 31, 2023.
Current wording
The allowance for credit losses on loans and leases to total loans held for investment ratio increased to 1.70 percent at June 30, 2024, compared to 1.17 percent at December 31, 2023. Excluding loans with government guarantees and warehouse loans, the allowance for credit losses was 1.72 percent at June 30, 2024, compared to 1.26 percent at December 31, 2023.
Showing the first 40 of 62 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
(1)Amounts are net of net deferred loan origination costs/(fees) and includes loans held for sale and non-accrual loans.
Current report — wording carried from elsewhere
(2)Amounts are at amortized cost.
Current report — wording carried from elsewhere
(3)Includes FHLB stock and FRB stock.
Current report — wording carried from elsewhere
The Company conducted a thorough review of its largest 350 real estate loans at the end of the first quarter of 2024. This review continued in thesecond quarter of 2024 to cover approximately 75 percent of the unpaid principal balance of the commercial real estate and multi-family portfolio.
Current report — wording carried from elsewhere
The following table indicates the amount of custodial deposits by source:
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Total deposits decreased $6.7 billion, or 8 percent to $74.9 billion at March 31, 2024 compared to $81.5 billion at December 31, 2023. From December 31, 2023 to March 7, 2024, we experienced $9.7 billion in core deposit runoff following the rating agency downgrades of our Company's credit ratings in February and March 2024. On March 6, 2025 we announced a $1.05 billion capital raise, after which, deposits stabilized and runoff has been immaterial for the remainder of the first quarter 2024.
Previous report — wording carried elsewhere
On November 16, 2023, the FDIC published in the Federal Register its final rule that imposes special assessments to
Previous report — wording carried elsewhere
recover the loss to the Deposit Insurance Fund. The final rule calls for the FDIC to collect special assessments