New York Community Bancorp, Inc. Reports Second Quarter 2021 Diluted EPS Of $0.30 Up 43% And $0.33 On A Non-GAAP Basis, Up 57% Year-Over-Year As The NIM Continues To Improve, Lower Operating Expenses, Solid Credit Trends, And Good Loan Growth

HICKSVILLE, N.Y., July 28, 2021 /PRNewswire/ --

New York Community Bancorp, Inc. (NYSE: NYCB) (the "Company") today reported net income for the three months ended June 30, 2021 of $152 million, up 45% compared to the $105 million we reported for the three months ended June 30, 2020.  Net income available to common shareholders for the second quarter of 2021 totaled $144 million, up 48% versus the $97 million we reported for the second quarter of 2020. 

Excluding merger-related expenses and other non-recurring items, net income available to common shareholders on a non-GAAP basis was $156 million for the second quarter of 2021, up 61% compared to the second quarter of 2020. 

On a per share basis, diluted earnings per share were $0.30, up 43% compared to the $0.21 during the second quarter of 2020.  Excluding merger-related expenses and other non-recurring items, diluted earnings per share on a non-GAAP basis were $0.33 during the second quarter of 2021, up 57% compared to the $0.21 we reported during the second quarter of 2020.

For the six months ended June 30, 2021, net income totaled $297 million compared to $205 million for the six months ended June 30, 2020, up 45%.  Net income available for common shareholders for the six months ended June 30, 2021 totaled $281 million compared to $189 million for the six months ended June 30, 2020, up 49%. 

On a non-GAAP basis, excluding merger-related expenses and other non-recurring items, net income available for common shareholders for the six months ended June 30, 2021 totaled $293 million, up 55% compared to the $189 million we reported for the six months ended June 30, 2020. 

On a per share basis, diluted earnings per share for the six months ended June 30, 2021 were $0.60, up 50% compared to $0.40 for the six months ended June 30, 2020.  Excluding merger-related expenses and other non-recurring items, diluted earnings per share on a non-GAAP basis were $0.62 for the six months ended June 30, 2021, up 55% compared to $0.40 for the six months ended June 30, 2020.

Commenting on the Company's performance, Chairman, President, and Chief Executive Officer, Thomas R. Cangemi stated: "I am very pleased to report another strong quarterly performance highlighted by continued net interest margin expansion, lower operating expenses, good loan growth, solid credit quality trends, and most importantly, a significant year-over-year increase in earnings per share. In fact, this is the Company's best quarterly operating performance in over 15 years.

"Our diluted non-GAAP EPS were $0.33, up 57% compared to the year-ago quarter.  The substantial improvement was the result of a number of metrics.  Our net interest margin continued to expand during the second quarter.  Excluding the impact from prepayments and excess liquidity, the net interest margin increased to 2.38%, up five basis points compared to the previous quarter and ahead of expectations.

"Operating expenses, excluding $10 million in merger-related expenses, were $129 million, down compared to the previous quarter and our efficiency ratio declined to 37%.

"During the quarter, we continued our deposit relationship with our technology partner to bring in additional low cost deposits related to the federal stimulus programs.  These deposits increased to over $3 billion during the quarter before declining to $1.1 billion, where we expect them to stabilize.  In addition, our efforts to bring in deposits from our borrowers is beginning to bear fruit.  Loan-related deposits increased $388 million or 22% on an annualized basis to $3.9 billion compared to December 31, 2020.

"On the lending side, total loans held for investment increased 4% annualized compared to March 31, 2021, led by growth in all the portfolios, except for commercial real estate.

"Our asset quality metrics remained stable as non-performing assets declined 2% and the majority of deferred loans paying interest-only and escrow returned to full-payment status.  In fact, total deferrals, full-payment and interest-only, have declined 86% to $1 billion from $7.4 billion last June.

Regarding our pending strategic merger with Flagstar, "As we move closer toward finalizing the transaction, both sides continue to work diligently on the integration planning process.  Significant progress has been made to date and a number of key decisions have been made which will benefit the combined organization, including selection of the technology platform and systems we will use and the products and services we will offer our combined customer base.  In addition, subject to the completion of the planned merger, we have named our Senior Executive Leadership Team, reporting directly to me and who will support our strategic priorities going forward."

DIVIDEND DECLARATION

The Board of Directors declared a quarterly cash dividend of $0.17 per share on the Company's common stock. Based on a closing price of $11.00 as of July 27, 2021, this represents an annualized dividend yield of 6.2%. The dividend is payable on August 17, 2021 to common shareholders of record as of August 7, 2021.

MERGER WITH FLAGSTAR BANCORP, INC.

On April 26, 2021, the Company announced that it had entered into a definitive merger agreement under which it would acquire Flagstar Bancorp, Inc. ("Flagstar") in a 100% stock transaction.  Under terms of the agreement, Flagstar shareholders will receive 4.0151 shares of New York Community common stock for each Flagstar share they own.  Following completion of the transaction, New York Community shareholders are expected to own 68% of the combined company, while Flagstar shareholders are expected to own 32% of the combined company.  Both Companies will hold their Special Meeting of Shareholders on Wednesday, August 4, 2021, virtually.

The new company will have over $87 billion in total assets, operate nearly 400 traditional branches in nine states, and 87 retail home lending offices across a 28-state footprint.  It will have its headquarters in Hicksville, N.Y. with regional headquarters in Troy, Michigan, including Flagstar's mortgage operations.  The transaction is expected to close in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including receipt of the requisite regulatory approvals and approval by the shareholders of each company.

BALANCE SHEET SUMMARY

At June 30, 2021, total assets were $57.5 billion, up $1.2 billion or 4% on an annualized basis compared to December 31, 2020, and were relatively unchanged compared to the $57.7 billion at March 31, 2021.  Compared to the first quarter of 2021, our growth was driven by modest growth in the loan portfolio, which was offset by a decline in the level of cash and cash equivalents.  Deposit growth on a period-end basis was flat, however, on an average basis, deposits increased 7% or $2.3 billion compared to the average at March 31, 2021.  During most of the quarter, the Company had excess levels of liquidity as average cash balances increased $1.6 billion or 86% to $3.4 billion compared to the previous quarter.

Total loans and leases held for investment rose $449 million or 4% annualized to $43.6 billion compared to March 31, 2021.  This quarter's growth was driven by growth in the multi-family portfolio, the specialty finance portfolio, and to a lesser extent, the commercial and industrial ("C&I") loan portfolio.  This was offset by a modest decline in the commercial real estate ("CRE") portfolio.

During the second quarter, the Company transferred $94 million of Paycheck Protection Program ("PPP") loans which were designated as held for sale to held for investment.  This accounted for about half of the increase in this loan category.

Excluding the transfer, total loans held for investment increased $355 million or 3% annualized on a linked-quarter basis.

At June 30, 2021, total deposits of $34.2 billion were relatively unchanged compared to the first quarter of 2021.  Certificates of deposit ("CDs") continued to decline while core deposits increased.  Average deposits during the second quarter rose $2.3 billion or 7% to $34.8 billion, with all of the growth occurring in non-interest bearing deposits.  This was largely the result of our ongoing deposit relationship with our technology partner.

Total borrowed funds decreased $300 million to $15.5 billion compared to March 31, 2021.

Loans

At June 30, 2021, the multi-family portfolio increased $345 million to $32.6 billion, compared to March 31, 2021, up 4% annualized.  On a year-over-year basis, multi-family loans increased $945 million or 3%.

The specialty finance portfolio increased $59 million to $3.3 billion compared to March 31, 2021, up 7% annualized.  On a year-to-date basis, specialty finance loans and leases are up $195 million or 13% annualized.  Compared to the second quarter of 2020, the specialty finance portfolio has grown $334 million or 11%.

The CRE portfolio declined both year-to-date and compared to the previous quarter.  CRE loans declined $23 million or 1% annualized compared to December 31, 2020 and $215 million or 12% annualized compared to March 31, 2021.

The weighted average life of the multi-family portfolio for the current second quarter was 2.4 years compared to 2.4 years in the previous quarter, while for the CRE portfolio, it was 2.3 years compared to 2.4 years for the previous quarter.

Originations

For the three months ended June 30, 2021, loans and leases originated for investment totaled $3.1 billion, up 21% compared to the prior quarter, exceeding the second quarter pipeline by $1.4 billion.  The linked-quarter growth was driven by a 42% increase in multi-family originations, which rose to $2.1 billion and a 12% increase in specialty finance loans and leases to $606 million.

For the six months ended June 30, 2021, loans and leases originated for investment totaled $5.6 billion, down 7% compared to the first six months of 2020.  Specialty finance loans and leases declined 31% to $1.1 billion, while multi-family originations declined 7% to $3.5 billion.

Pipeline

The current pipeline stands at $1.4 billion with 73% of this amount representing new money.  The current pipeline includes $884 million of multi-family loans, $105 million of CRE loans, $377 million in specialty finance loans and leases, and $32 million in C&I loans.

Asset Quality

Loan Deferral Update
As of June 30, 2021, deferred loans paying interest-only and escrow totaled $1.0 billion, down $1.5 billion or 60% compared to $2.5 billion at March 31, 2021.

Non-Performing Assets
Non-performing assets ("NPAs") at June 30, 2021 were relatively unchanged.  NPAs totaled $40 million down 2% compared to $41 million at March 31, 2021.  This represents seven basis points of total assets, unchanged compared to the previous quarter.  Total non-performing loans ("NPLs") at June 30, 2021 declined 3% to $32 million or seven basis points of total loans compared to the previous quarter or eight basis points of total loans.

As of June 30, 2021, our remaining taxi medallion-related exposure was $20 million compared to $21 million in the previous quarter.

Allowance for Loan and Lease Losses
At June 30, 2021, the allowance for credit losses ("ACL") totaled $202 million, up $8 million compared to December 31, 2020 and up $4 million compared to March 31, 2021.  As of June 30, 2021, the ACL represented 641.41% of total non-performing loans and 0.46% of total loans.

Deposits

At June 30, 2021, total deposits of $34.2 billion were flat on a linked-quarter basis but up $2.4 billion or 8% on a year-over-year basis.  The Company continues to focus on reducing its reliance on CDs and growing core deposits.  Accordingly, CDs declined $3.1 billion or 26% to $8.9 billion from the year-ago levels and $665 million or 28% annualized on a linked-quarter basis.  CDs as a percentage of total deposits have declined from 38% in the year-ago quarter to 26% during the second quarter, while overall deposits have increased.

Non-interest bearing accounts increased $1.6 billion or 55% on a year-over-year basis, but were down modestly on a linked-quarter basis.  This category includes deposits from our relationship with our technology partner, which increased to over $3 billion during the quarter, before settling at $1.1 billion.

In addition to growth in non-interest bearing accounts, all other core deposit categories increased both on a linked-quarter and year-over-year basis due to our recent initiatives.  These initiatives include gathering more deposits from our borrowers.  Included in total deposits at June 30, 2021, are $3.9 billion of deposits from our borrowers, up $388 million or 22% on an annualized basis since the beginning of the year, when we began to refocus on this source of funding.

CAPITAL POSITION

The Company's capital position remains strong at both the holding company level and at the Bank level, as all of our regulatory capital ratios continue to exceed regulatory minimums to be classified as "Well Capitalized," the highest regulatory classification.

The table below depicts the Company's and the Bank's regulatory capital ratios at those respective periods.

EARNINGS SUMMARY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021

Net Interest Income

Net interest income for the three months ended June 30, 2021 increased $65 million or 24% on a year-over-year basis.  This increase was primarily driven by a 36% or $57 million decline in interest expense and an $8 million or 2% rise in interest income.  Interest income for the three months ended June 30, 2021 totaled $431 million compared to $423 million for the three months ended June 30, 2020, while interest expense totaled $100 million during the current second quarter compared to $157 million during the year-ago second quarter.

The improvement in the Company's interest expense continues to be driven by lowering deposit costs as interest expense on deposits for the three months ended June 30, 2021 was $28 million compared to $83 million for the three months ended June 30, 2020, down $55 million or 66%.

Prepayment income for the three months ended June 30, 2021 totaled $27 million, up 145% or $16 million compared to the three months ended June 30, 2020.  Excluding the impact from prepayment income, net interest income on a non-GAAP basis would have been $304 million, up $50 million or 20% compared to the year-ago quarter.

Net interest income for the six months ended June 30, 2021 was $649 million, up $139 million or 27% compared to the six months ended June 30, 2020.  As with our three month results, our six month results were driven by significantly lower interest expense.  Interest expense for the six months ended June 30, 2021 declined $149 million or 42% compared to the six months ended June 30, 2020.

Prepayment income for the six months ended June 30, 2021 was $47 million, up $25 million or 114% compared to the six months ended June 30, 2020.  Excluding the impact from prepayment income, net interest income on a non-GAAP basis was $602 million, up $114 million or 23%.

Net Interest Margin

During the three months ended June 30, 2021, our net interest margin ("NIM") continued to expand.  During the current second quarter, the Company's NIM was 2.50%, up two basis points on a linked-quarter basis and up 32 basis points compared to the year-ago quarter.  Prepayment income contributed 20 basis points to this quarter's NIM compared to 15 basis points in the previous quarter and nine basis points in the year-ago quarter.  Additionally, during the current second quarter, the excess liquidity from our deposit relationship with our technology partner negatively impacted the NIM by eight basis points.  Excluding the impact from prepayment income and the excess liquidity, the NIM on a non-GAAP basis would have been 2.38%, up five basis points on a linked-quarter basis and up 29 basis points on a year-over-year basis.

The Company's average cost of deposits continued to decline during the current second quarter, declining eight basis points to 0.38% on a linked-quarter basis and 78 basis points on a year-over-year basis.

For the six months ended June 30, 2021, the NIM increased 39 basis points to 2.49% compared to the six months ended June 30, 2020.  Prepayment income contributed 18 basis points to the first-half NIM, while excess liquidity related to the previously mentioned technology partner deposits reduced the NIM by four basis points.  Excluding these items, the NIM on a non-GAAP basis would have been 2.35% for the first six months of 2021, up 35 basis points compared to the first half of 2020.

Provision for Credit Losses

For the three months ended June 30, 2021, the Company recorded a recovery of credit losses of $4 million compared to a provision of $18 million in the year-ago quarter and a provision of $4 million in the previous quarter.  For the three months ended June 30, 2021, the Company recorded net recoveries of $6 million compared to net charge-offs of $4 million in the year-ago quarter and a net recovery of $1 million in the previous quarter of 2021.

For the six months ended June 30, 2021, the Company's provision for credit losses was zero compared to $38 million for the first six months of 2020.  During the first half of 2021, the Company recorded net recoveries of $7 million compared to net charge-offs of $14 million or 0.03% of average loans during the first half of 2020.

Pre-Provision Net Revenue ("PPNR") ⁽¹⁾

The tables below detail the Company's PPNR for the periods noted.

For the three months ended June 30, 2021, PPNR increased 32% to $208 million on a year-over-year basis compared to the three months ended June 30, 2020 and up 4% compared to the three months ended March 31, 2021.  The current second quarter includes $10 million in merger-related expenses.  Excluding these expenses, PPNR would have increased 38% to $218 million on a year-over-year basis and 9% on a linked-quarter basis.

For the six months ended June 30, 2021, PPNR totaled $408 million, up 39% compared to the six months ended June 30, 2020.  Excluding the previously mentioned merger-related expenses of $10 million, PPNR for the first half of 2021 would have been $418 million, up 43% compared to the first half of 2020.

Non-Interest Income

For the three months ended June 30, 2021, total non-interest income was $16 million, up slightly from both the year-ago and previous quarters.  For the six months ended June 30, 2021, total non-interest income was $30 million compared to $32 million for the six months ended June 30, 2020.  The year-ago six month period included $1 million net gain on securities compared to no such gain during the first half of 2021.

Non-Interest Expense

For the three months ended June 30, 2021, non-interest expenses totaled $139 million, up $7 million or 5% on a linked-quarter basis and up $16 million or 13% on a year-over-year basis.  Included in the current second quarter results are $10 million in merger-related expenses related to our upcoming strategic merger with Flagstar Bancorp, Inc.  Excluding this expense, total non-interest expenses on a non-GAAP basis would have been $129 million, down $3 million or 2% compared to the previous quarter and up $6 million or 5% compared to the year-ago quarter.  The linked-quarter decrease was driven mainly by a $4 million decline in compensation and benefits expense.  Our efficiency ratio was 37%, compared to 40% in the previous quarter and compared to 44% in the year-ago quarter. 

For the six months ended June 30, 2021, total non-interest expenses were $271 million, up $22 million or 9% compared to the six months ended June 30, 2020.  Excluding the merger-related expenses of $10 million, total non-interest expenses on a non-GAAP basis would have been $261 million, up $12 million or 5% compared to the six months ended June 30, 2020.  The year-over-year increase was primarily due to a $4 million increase in occupancy and equipment expense.  The efficiency ratio was 38% compared to 46% in the year-ago period. 

Income Taxes

For the three months ended June 30, 2021, the Company recorded income tax expense of $60 million, largely due to higher pre-tax income and a higher effective tax rate.  The effective tax rate increased to 28.38% compared to 25.75% in the previous quarter and 24.80% in the year-ago quarter.  This was primarily due to the non-deductibility of merger-related expenses and an increase in the New York State tax rate.  For the six months ended June 30, 2021, the Company reported income tax expense of $111 million.  This was also due to higher pre-tax income and a higher effective tax rate.  The effective tax rate for the six months ended June 30, 2021 was 27.11% compared to 19.45% compared to the six months ended June 30, 2020.

About New York Community Bancorp, Inc.

Based in Hicksville, NY, New York Community Bancorp, Inc. is a leading producer of multi-family loans on non-luxury, rent-regulated apartment buildings in New York City, and the parent of New York Community Bank. At June 30, 2021, the Company reported assets of $57.5 billion, loans of $43.6 billion, deposits of $34.2 billion, and stockholders' equity of $6.9 billion.

Reflecting our growth through a series of acquisitions, the Company operates 237 branches through eight local divisions, each with a history of service and strength: Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, Roosevelt Savings Bank, and Atlantic Bank in New York; Garden State Community Bank in New Jersey; Ohio Savings Bank in Ohio; and AmTrust Bank in Florida and Arizona.

Post-Earnings Release Conference Call

The Company will host a conference call on Wednesday, July 28, 2021, at 8:30 a.m. (Eastern Time) to discuss its second quarter 2021 performance. The conference call may be accessed by dialing (877) 407-8293 (for domestic calls) or (201) 689-8349 (for international calls) and asking for "New York Community Bancorp" or "NYCB." A replay will be available approximately three hours following completion of the call through 11:59 p.m. on August 1, 2021 and may be accessed by calling (877) 660-6853 (domestic) or (201) 612-7415 (international) and providing the following conference ID: 13720785. In addition, the conference call will be webcast at ir.myNYCB.com, and archived through 5:00 p.m. on August 25, 2021.

Cautionary Statements Regarding Forward-Looking Information

This earnings release and the associated conference call 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 quality, capital levels, and acquisitions, among other matters; our estimates of future costs and benefits of the actions we may take; our assessments of probable losses on loans; our assessments of interest rate and other market risks; and our ability to achieve our financial and other strategic goals.

Forward–looking statements are typically identified by such words as "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "should," and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. Additionally, forward–looking statements speak only as of the date they are made; the Company does not assume any duty, and does not undertake, to update our forward–looking statements. Furthermore, because forward–looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in our statements, and our future performance could differ materially from our historical results.

Our forward–looking statements are subject to the following principal risks and uncertainties: the effect of the COVID-19 pandemic, including the length of time that the pandemic continues, the potential imposition of future shelter in place orders or additional restrictions on travel in the future, the effect of the pandemic on the general economy and on the businesses of our borrowers and their ability to make payments on their obligation, the remedial actions and stimulus measures adopted by federal, state, and local governments; the inability of employees to work due to illness, quarantine, or government mandates; general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of our loan or investment portfolios; changes in competitive pressures among financial institutions or from non–financial institutions; changes in legislation, regulations, and policies; the impact of recently adopted accounting pronouncements; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the Company and Flagstar to terminate the definitive merger agreement among the Company, 615 Corp., and Flagstar; the outcome of any legal proceedings that may be instituted against the Company or Flagstar; the possibility that the proposed transaction with Flagstar will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated; the ability of the Company and Flagstar to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of either or both of the Company and Flagstar to the proposed transaction; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where the Company and Flagstar do business; certain restrictions during the pendency of the proposed transaction that may impact the of the Company' and Flagstar' ability to pursue certain business opportunities or strategic transactions; the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; the possibility that the Company and Flagstar may be unable to achieve expected synergies and operating efficiencies in the proposed transaction within the expected timeframes or at all and to successfully integrate Flagstar's operations and those of the Company; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; the Company's and Flagstar's success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by The Company's issuance of additional shares of its capital stock in connection with the proposed transaction; and a variety of other matters which, by their nature, are subject to significant uncertainties and/or are beyond our control.

More information regarding some of these factors is provided in the Risk Factors section of our Form 10–K for the year ended December 31, 2020 and in other SEC reports we file. Our forward–looking statements may also be subject to other risks and uncertainties, including those we may discuss in this news release, on our conference call, during investor presentations, or in our SEC filings, which are accessible on our website and at the SEC's website, www.sec.gov.

Important Information and Where You Can Find It

This press release may be deemed to be solicitation material in respect of the proposed transaction by the Company and Flagstar. In connection with the proposed transaction, the Company will file with the SEC a registration statement on Form S-4 to register the shares of the Company's capital stock to be issued in connection with the proposed transaction. The registration statement will include a prospectus of the Company and a joint proxy statement of the Company and Flagstar, which will be sent to the stockholders of the Company and shareholders of Flagstar seeking certain approvals related to the proposed transaction.

INVESTORS AND SECURITY HOLDERS OF NEW YORK COMMUNITY AND FLAGSTAR AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NEW YORK COMMUNITY, FLAGSTAR AND THE PROPOSED TRANSACTION.  Investors and security holders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus, as well as other relevant documents filed with the SEC containing information about New York Community and Flagstar, without charge, at the SEC's website (http://www.sec.gov). Copies of documents filed with the SEC by New York Community can also be obtained, without charge, by directing a request to Investor Relations, New York Community Bancorp, Inc., 615 Merrick Avenue, Westbury, New York 11590 or by telephone (516-683-4420). Copies of documents filed with the SEC by Flagstar can also be obtained, without charge, by directing requests to Investor Relations, Flagstar Bancorp, Inc., 5151 Corporate Drive, Troy, Michigan 48098 or by telephone: (248-312-5741).

Participants in the Solicitation of Proxies in Connection with Proposed Transaction

The Company, Flagstar, and certain of their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC.  Information regarding the Company's NYCB's directors and executive officers is available in its definitive proxy statement for its 2021 annual stockholders meeting, which was filed with the SEC on April 16, 2021, and certain of its Current Reports on Form 8-K.  Information regarding Flagstar's directors and executive officers is available in its definitive proxy statement for its 2021 annual stockholders meeting, which was filed with the SEC on April 15, 2021, and certain of its Current Reports on Form 8-K. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

- Financial Statements and Highlights Follow -

NEW YORK COMMUNITY BANCORP, INC.
RECONCILIATIONS OF CERTAIN GAAP AND NON-GAAP FINANCIAL MEASURES
(unaudited)

While stockholders' equity, total assets, and book value per share are financial measures that are recorded in accordance with U.S. generally accepted accounting principles ("GAAP"), tangible stockholders' equity, tangible assets, and tangible book value per share are not. Nevertheless, it is management's belief that these non-GAAP measures should be disclosed in our earnings releases and other investor communications for the following reasons:

1. Tangible stockholders' equity is an important indication of the Company's ability to grow organically and through business combinations, as well as its ability to pay dividends and to engage in various capital management strategies.
2. Returns on average tangible assets and average tangible stockholders' equity are among the profitability measures considered by current and prospective investors, both independent of, and in comparison with, the Company's peers.
3. Tangible book value per share and the ratio of tangible stockholders' equity to tangible assets are among the capital measures considered by current and prospective investors, both independent of, and in comparison with, its peers. 

Tangible stockholders' equity, tangible assets, and the related non-GAAP profitability and capital measures should not be considered in isolation or as a substitute for stockholders' equity, total assets, or any other profitability or capital measure calculated in accordance with GAAP. Moreover, the manner in which we calculate these non-GAAP measures may differ from that of other companies reporting non-GAAP measures with similar names. The following table presents reconciliations of our common stockholders' equity and tangible common stockholders' equity, our total assets and tangible assets, and the related GAAP and non-GAAP profitability and capital measures at or for the periods indicated:

While diluted earnings per common share, net income, net income available to common shareholders, and total non-interest income are financial measures that are recorded in accordance with GAAP, financial measures that adjust these GAAP measures to exclude expenses to our pending merger with Flagstar and the revaluation of deferred taxes related to New York State tax rate change are not. Nevertheless, it is management's belief that these non-GAAP measures should be disclosed in our earnings release and other investor communications because they are not considered part of recurring operations and are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.

While net income is a financial measure that is calculated in accordance with GAAP, PPNR and PPNR excluding merger-related expenses are non-GAAP financial measures. Nevertheless, it is management's belief that these non-GAAP measures should be disclosed in our earnings releases and other investor communications because management believes these measures are relevant to understanding the performance of the Company attributable to elements other than the provision for credit losses and the ability of the Company to generate earnings sufficient to cover estimated credit losses, particularly in view of the volatility of the provision for credit losses resulting from the implementation of CECL and the economic impact of the COVID-19 pandemic. These measures also provide a meaningful basis for comparison to other financial institutions since it is commonly employed and is a measure frequently cited by investors and analysts. The following table reconciles the non-GAAP financial measures of PPNR and PPNR excluding merger-related expenses to the comparable GAAP financial measures of net income for the stated periods:

While our net interest margin, including the contribution of prepayment income is recorded in accordance with GAAP, adjusted net interest margin, which excludes the contribution of prepayment income is not. Nevertheless, management uses this non-GAAP measure in its analysis of our performance, and believes that this non-GAAP measure should be disclosed in our earnings releases and other investor communications for the following reasons:

1. Adjusted net interest margin gives investors a better understanding of the effect of prepayment income and other items on our net interest margin. Prepayment income in any given period depends on the volume of loans that refinance or prepay, or securities that prepay, during that period. Such activity is largely dependent on external factors such as current market conditions, including real estate values, and the perceived or actual direction of market interest rates.
   
   
2. Adjusted net interest margin is among the measures considered by current and prospective investors, both independent of, and in comparison with, our peers.

SOURCE New York Community Bancorp, Inc.