Borrowed Funds

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Borrowed Funds

NOTE 12: BORROWED FUNDS

The following table summarizes the Company’s borrowed funds at December 31, 2022 and 2021:

	December 31,
(in millions)	2022		2021
Wholesale borrowings:
FHLB advances	$	20,325	$	15,105
Repurchase agreements		—		800
Total wholesale borrowings	$	20,325	$	15,905
Junior subordinated debentures		575		361
Subordinated notes		432		296
Total borrowed funds	$	21,332	$	16,562

Accrued interest on borrowed funds is included in “Other liabilities” in the Consolidated Statements of Condition and amounted to $37 million and $18 million, respectively, at December 31, 2022 and 2021.

FHLB Advances

The contractual maturities and the next call dates of FHLB advances outstanding at December 31, 2022 were as follows:

	Contractual Maturity						Earlier of Contractual Maturity or Next Call Date
(dollars in millions) Year		Amount		Weighted Average Interest Rate (1)				Amount		Weighted Average Interest Rate (1)
2023	$		10,325		3.51	%	$		15,325		3.26	%
2024			1,600		1.36				3,100		2.42
2025			—		—				250		3.50
2026			—		—				—		—
2027			2,650		3.77				1,250		3.87
2028			400		4.11				400		4.11
2029			200		1.61				—		—
2030			—		—				—		—
2031			—		—				—		—
2032			5,150		2.80				—		—
Total FHLB advances	$		20,325		3.19		$		20,325		3.19

(1)Does not included the effect interest rate swap agreements.

FHLB advances include both straight fixed-rate advances and advances under the FHLB convertible advance program, which gives the FHLB the option of either calling the advance after an initial lock-out period of up to five years and quarterly thereafter until maturity, or a one-time call at the initial call date.

At December 31, 2022 and 2021, respectively, the Bank had unused lines of available credit with the FHLB-NY of up to $11.3 billion and $8.4 billion. The Company had $2.8 billion of overnight advances at December 31, 2022, and no overnight advances at December 31, 2021. During the twelve months ended December 31, 2022, the average balance of overnight advances amounted to $318 million, with a weighted average interest rate of 3.48 percent. During the twelve months ended December 31, 2021, the average balances of overnight advances amounted to $6 million, with weighted average interest rates of 0.36 percent.

Total FHLB advances generated interest expense of $251 million, $233 million, and $246 million, in the years ended December 31, 2022, 2021, and 2020, respectively.

Repurchase Agreements

The Company had no outstanding repurchase agreements as of December 31, 2022. As of December 31, 2021, the company had $800 million of outstanding repurchase agreements.

The Company had no short-term repurchase agreements outstanding at December 31, 2022 or 2021.

At December 31, 2021, the accrued interest on repurchase agreements amounted to $2 million. The interest expense on repurchase agreements was $14 million for the year ended December 31, 2022, and $18 million for each of the years ended December 31, 2021 and 2020.

Federal Funds Purchased

There were no federal funds purchased outstanding at December 31, 2022 or 2021.

In 2022 and 2021, respectively, the average balances of federal funds purchased were $466 million and $81 million, with weighted average interest rates of 1.65 percent and 0.09 percent. The interest expense produced by federal funds purchased was $8 million, $0 million and $1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Junior Subordinated Debentures

At December 31, 2022 and 2021, the Company had $608 million and $361 million, respectively, of outstanding junior subordinated deferrable interest debentures (“junior subordinated debentures”) held by statutory business trusts (the “Trusts”) that issued guaranteed capital securities.

The Trusts are accounted for as unconsolidated subsidiaries, in accordance with GAAP. The proceeds of each issuance were invested in a series of junior subordinated debentures of the Company and the underlying assets of each statutory business trust are the relevant debentures. The Company has fully and unconditionally guaranteed the obligations under each trust’s capital securities to the extent set forth in a guarantee by the Company to each trust. The Trusts’ capital securities are each subject to mandatory redemption, in whole or in part, upon repayment of the debentures at their stated maturity or earlier redemption.

The following table presents contractual terms of the junior subordinated debentures outstanding at December 31, 2022:

Issuer	Interest Rate of Capital Securities and Debentures				Junior Subordinated Debentures Amount Outstanding			Capital Securities Amount Outstanding		Date of Original Issue	Stated Maturity
					(dollars in millions)
New York Community Capital Trust V (BONUSES Units) (1)		6.00	%	$		147	$		141	Nov. 4, 2002	Nov. 1, 2051
New York Community Capital Trust X (2)	6.37					124			120	Dec. 14, 2006	Dec. 15, 2036
PennFed Capital Trust III (2)	8.02					31			30	June 2, 2003	June 15, 2033
New York Community Capital Trust XI (2)	6.38					59			58	April 16, 2007	June 30, 2037
Flagstar Statutory Trust II (2)	7.97					26			25	Dec. 26, 2002	Dec. 26, 2032
Flagstar Statutory Trust III (2)	7.33					26			25	Feb. 19, 2003	April 7, 2033
Flagstar Statutory Trust IV (2)	7.98					26			25	Mar. 19, 2003	Mar 19, 2033
Flagstar Statutory Trust V (2)	6.08					26			25	Dec 29, 2004	Jan. 7, 2035
Flagstar Statutory Trust VI (2)	6.08					26			25	Mar. 30, 2005	April 7, 2035
Flagstar Statutory Trust VII (2)	6.52					51			50	Mar. 29, 2005	June 15, 2035
Flagstar Statutory Trust VIII (2)	5.58					25			24	Sept. 22, 2005	Oct. 7, 2035
Flagstar Statutory Trust IX (2)	6.22					25			24	June 28, 2007	Sept. 15, 2037
Flagstar Statutory Trust X (2)	7.27					16			16	Aug. 31, 2007	Sept 15, 2037
Total junior subordinated debentures				$		608	$		588

(1)Callable subject to certain conditions as described in the prospectus filed with the SEC on November 4, 2002.

(2)Callable at any time.

The Bifurcated Option Note Unit SecuritiESSM (“BONUSES units”) included in the preceding table were issued by the Company on November 4, 2002 at a public offering price of $50.00 per share. Each of the 5,500,000 BONUSES units offered consisted of a capital security issued by New York Community Capital Trust V, a trust formed by the Company, and a warrant to purchase 2.4953 shares of the common stock of the Company (for a total of approximately 13.7 million common shares) at an effective exercise price of $20.04 per share. Each capital security has a maturity of 49 years, with a coupon, or distribution rate, of 6.00 percent on the $50.00 per share liquidation amount. The warrants and capital securities were non-callable for five years from the date of issuance and were not called by the Company when the five-year period passed on November 4, 2007.

The gross proceeds of the BONUSES units totaled $275 million and were allocated between the capital security and the warrant comprising such units in proportion to their relative values at the time of issuance. The value assigned to the warrants, $92.4 million, was recorded as a component of additional “paid-in capital” in the Company’s Consolidated Statements of Condition. The value assigned to the capital security component was $182.6 million. The $92.4 million difference between the assigned value and the stated liquidation amount of the capital securities was treated as an original issue discount, and is being amortized to interest expense over the 49-year life of the capital securities on a level-yield basis. At December 31, 2022, this discount totaled $64 million.

The other remaining trust preferred securities noted in the preceding table were formed for the purpose of issuing Company Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trusts Holding Solely Junior Subordinated Debentures (collectively, the “Capital Securities”). Dividends on the Capital Securities are payable either quarterly or semi-annually and are deferrable, at the Company’s option, for up to five years. As of December 31, 2022, all dividends were current.

Interest expense on junior subordinated debentures was $22 million, $18 million, and $19 million, respectively, for the years ended December 31, 2022, 2021, and 2020.

Subordinated Notes

At December 31, 2022 and 2021, the Company had a total of $432 million and $296 million subordinated notes outstanding; respectively, of fixed-to-floating rate subordinated notes outstanding:

Date of Original Issue	Stated Maturity	Interest Rate			Original Issue Amount
	(dollars in millions)
November 6, 2018	November 6, 2028 (1)		5.900	%	$	300
October 28, 2020	November 1, 2030 (2)		4.125	%		150

(1)From and including the date of original issuance to, but excluding November 6, 2023, the Notes will bear interest at an initial rate of 5.90 percent per annum payable semi-annually. Unless redeemed, from and including November 6, 2023 to but excluding the maturity date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR rate plus 278 basis point payable quarterly.

(2)From and including the date of original issuance, the Notes will bear interest at a fixed rate of 4.125 percent through October 31, 2025, and a variable rate tied to SOFR thereafter until maturity. The Company has the option to redeem all or a part of the Notes beginning on November 1, 2025, and on any subsequent interest payment date.

The interest expense on subordinated notes amounted to $19 million for the year ended December 31, 2022 and $18 million for the years ended December 31, 2021, and 2020.