This summary highlights selected information contained elsewhere in this proxy statement. This summary does not contain all the information you should consider, and you should read the entire proxy statement carefully before voting. For more complete information regarding the 2024 performance of Flagstar Financial, Inc. (the “Company”), please review our 2024 Annual Report on Form 10-K, which accompanies this proxy statement and can be found here: ir.flagstar.com/files/doc_financials/2024/ar/12-31-2024-10-K-Final.pdf.
VOTING MATTERS:
| PROPOSAL | RECOMMENDATIONOF THE BOARD: | |
| Proposal 1 The election of three directors to three-year terms. | | FOR ALL |
| Proposal 2 Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2025. | | FOR |
| Proposal 3 Approval, on a non-binding advisory basis, of the Company’s Named Executive Officer compensation. | | FOR |
HIGHLIGHTS:
COMPANY PROFILE:
Flagstar Financial, Inc. (formerly known as New York Community Bancorp, Inc.) is the parent company of Flagstar Bank, N.A., one of the largest regional banks in the country. The Company is headquartered in Hicksville, New York. In October 2024, the Company amended its Amended and Restated Certificate of Incorporation and its Amended and Restated Bylaws to change its corporate name to Flagstar Financial, Inc., which became effective on October 25, 2024. Along with the name change, the Company’s stock trading ticker symbol was changed to “FLG” effective at the open of business on October 28, 2024.
At the 2024 Annual Meeting of Shareholders, the Shareholders approved an additional amendment to the Amended and Restated Certificate of Incorporation to affect a reverse stock split of the Company’s Common Stock. The one-for-three reverse stock split became effective at 5:01 p.m. ET on July 11, 2024, and the Company’s common stock began trading on the New York Stock Exchange (“NYSE”) on a reverse split-adjusted basis as of the market open on July 12, 2024.
At December 31, 2024, the Company had $100.2 billion of assets, $69.2 billion of loans, deposits of $75.9 billion, and total stockholders’ equity of $8.2 billion. At year-end 2024, Flagstar Bank, N.A. operated over 420 branch locations across a ten-state footprint, including a significant presence in the Northeast and the Midwest, and locations in high growth markets in the Southeast and the West Coast. In addition, the Company has approximately 80 private banking teams located in 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.
EQUITY CAPITAL RAISE
On March 11, 2024, the Company announced the completion of a capital raise transaction (the “March 2024 capital raise”) resulting in individual investments aggregating to approximately $1.05 billion in the Company by (i) affiliates of funds managed by Liberty 77 Capital L.P. (the “Liberty Investors”), (ii) affiliates of funds managed by Hudson Bay Capital Management, LP (the “Hudson Bay Investors”), (iii) affiliates of funds managed by Reverence Capital Partners, L.P. (the “Reverence Investors”) and (iv) other investors.
The March 2024 capital raise and other changes adopted by the Company, including turnover within and reduction in the size of the Board of Directors (the “2024 Board Turnover”) and changes to the management team (including the CEO), allowed the Company to better focus on executing its strategy from a position of strength and repositioning itself as a regional bank. These changes allowed the Company to enhance its capital position, proactively manage its liquidity profile, enhance its focus on credit risk management, continue to reduce its concentrations in commercial real estate, continue to build upon regulatory and compliance focus, and continue to strengthen its management team. The new leadership team, with the support of the reconstituted Board, will continue to take actions that they deem advisable to execute upon and realize the opportunities provided by the March 2024 capital raise to improve earnings, profitability and drive enhanced value for shareholders.
In connection with the March 2024 capital raise, on or shortly after March 11, 2024, Thomas Cangemi, James Carpenter, Leslie Dunn, Lawrence Rosano Jr, Ronald Rosenfeld, Lawrence Savarese, David Treadwell and Robert Wann resigned as directors of the Board. Additionally, in February 2024, Toan C. Huynh and Hanif (Wally) Dahya resigned as directors of the Board. Four directors who were serving on the Board as of December 31, 2023, continued to serve on the Board: Alessandro P. DiNello, Marshall Lux, Peter Schoels, and Jennifer R. Whip. Additionally, in connection with the March 2024 capital raise, on or shortly after March 11, 2024, five new directors were appointed to the Board: Former Treasury Secretary Steven T. Mnuchin, Joseph M. Otting, Milton Berlinski, Allen C. Puwalski and Alan Frank. Peter Schoels resigned as a director effective October 25, 2024, and the Liberty Investors exercised their right to appoint a second director, which resulted in Brian R. Callanan’s appointment to the Board effective December 16, 2024.
2024 PERFORMANCE:
For the year ended 2024, the Company reported a net loss of $1,118 million compared to a net loss of $79 million for the year ended 2023. Net loss attributable to common stockholders for the year ended 2024 was $1,153 million or $3.49 per diluted share compared to a net loss attributable to common stockholders of $112 million or $0.49 per diluted share for the year ended 2023.
Both full-year 2024 and 2023 results included the impact of certain actions the Company took throughout 2024 and for 2023, including for 2023 those that were related mainly to the Signature transaction.
| • | On March 11, 2024, the Company completed a $1.05 billion capital raise. |
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| • | Our CET1 capital ratio improved 280 basis points to 11.83% as a result of the March capital raise and the sale of several non-core businesses, placing the Company in the top quartile among our peers. |
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| • | The Company ended the year with ample liquidity of $29.9 billion, representing 186% coverage on uninsured deposits. |
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| • | The total Allowance for Credit Losses “(ACL”) increased to $1.2 billion at December 31, 2024, or 1.76% of total HFI loans compared to $992 million at December 31, 2023 or 1.17% of total HFI loans. |
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| • | During 2024, the Company started to execute on its strategy to reduce its multi-family and commercial real estate loan (“CRE”) concentration. Multi-family loans decreased $3.2 billion or 9% compared to year-end 2023, while CRE loans declined $1.8 billion or 17%. |
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| • | Wholesale borrowings declined nearly $7 billion or 34% compared to December 31, 2023. |
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| • | Retail deposits increased $7.3 billion or 25% on a year-over-year basis, while Private Bank-related deposits rose $2.4 billion or 15% since first-quarter 2024. |
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EXECUTIVE COMPENSATION HIGHLIGHTS
| • | 2024 was a transitional year for the Company as a new senior leadership team worked toward the execution of the Company’s turnaround strategy. A critical step toward implementation of the strategy was the near total turnover of the Board with the addition of directors that have the experience necessary to provide a new direction for the Company. The new Compensation Committee implemented a compensation program that was designed to attract and retain key personnel and to ensure the alignment of key executives with the long-term interests of shareholders. |
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| • | Consistent with his employment offer term sheet, Mr. Otting’s base salary was set at $1,250,000. Base salary levels for Mr. Otting’s direct reports at the senior executive vice president level were set at $700,000 and two continuing senior executives accepted a reduction in base pay to conform to the new structure. |
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| • | The Company utilized long-term, equity-based compensation as an essential element of the management restructuring plan with key hires awarded significant stock option grants tied to extended vesting schedules. Messrs. Otting, Gifford, Nguyen and Raffetto received stock option grants in the form of inducement awards when they joined the Company and Messrs. Davis and Smith received stock option grants in lieu of participation in a program similar to the Company’s former performance share-based incentive program. |
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| • | In recognition of the unique business imperatives faced by the Company in 2024, the Compensation Committee adopted a Company-wide incentive plan that focused on the attainment of specific operational goals including (i) improving regulatory compliance and risk management controls; (ii) bolstering management talent; (iii) achieving milestones along the path toward creating a diversified, high performing regional bank; and (iv) taking essential steps toward improving the Company’s capital and liquidity position, enhancing the quality of the Company’s financial reporting structure and achieving expense reductions. The Company made awards to Messrs. Otting, Davis, Nguyen, Raffetto and Smith at target and to Mr. Gifford, who transitioned from his Chief Financial Officer role in late 2024, at 67 percent of target. |
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GOVERNANCE HIGHLIGHTS
We are committed to maintaining the highest standards of corporate governance. Strong corporate governance practices will help us achieve our performance goals and maintain the trust and confidence of our shareholders and other constituents. In connection with the March 2024 capital raise, we made substantial changes to the Board to improve our corporate governance framework. Highlights of our current governance standards and policies framework include:
| • | Our Board of Directors is comprised of individuals possessing a well-rounded variety of skills, knowledge, experience and perspectives and who bring diverse and specialized experience and perspectives on our business. |
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| • | As part of the 2024 Board Turnover, our Board welcomed six new members to the Board. |
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| • | The Board is committed to enhancing the Company’s corporate governance practices and recognizes that sound corporate governance practices are necessary to build the trust and confidence of shareholders and other stakeholders. |
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| • | 78% of our Board members satisfy NYSE independence standards (“Independent Directors”), and each of the Compensation, Audit, and Nominating and Corporate Governance Committees is comprised wholly of Independent Directors. |
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| • | Our Lead Independent Director has significant governance responsibilities. |
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| • | Our Bylaws provide for “proxy access,” allowing eligible shareholders to include their own nominees for director in the Company’s proxy materials. |
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| • | Our Board Risk Assessment Committee, which meets the requirements for U.S. Bank Holding Companies under the Dodd-Frank Act’s Enhanced Prudential Standards, meets at least on a quarterly basis and oversees a robust and exacting enterprise risk management program. |
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COMMUNITY SUPPORT:
Service to our customers and the community is an important part of the Company’s and Bank’s culture. We support the communities we serve through lending, investments, services, and charitable giving, including the Flagstar Foundation, with the following notable highlights:
| • | Bank employees in 2024 volunteered more than 8,500 hours of service to over 400 community organizations; |
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| • | In 2024, the Bank and the Flagstar Foundation contributed over $10.1 million through grants, sponsorships, and community grass-roots initiatives; |
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| • | The Bank donated to over 450 charitable organizations and employees volunteered at more than 2,000 community events during 2024. |
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| • | The Flagstar Foundation awarded more than $3.4 million in grants during 2024 to 200 community organizations in Michigan, Indiana, Ohio, Florida, Arizona, New York, New Jersey, Wisconsin and California, aiding citizens in their communities through supporting charitable causes in workplace readiness, arts and culture, financial capability, tax preparation services, and disaster relief funds; |
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| • | Between the Flagstar Gift, Flagstar New York and Flagstar Power-Up programs, the Bank provided $2.8 million in down payment assistance in 2024; and |
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| • | The Bank made an aggregate total of 17 Community Development Loans for $96.5 million in 2024. |
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