New York Community Bancorp, Inc. (NYSE:NYCB) Q4 2022 Earnings Call Transcript

Thomas Cangemi: Look, I mean, this is obviously going to be a block and tackle year. We’re super excited about putting these companies together, the rebranding effort that’s going to take place. We are transitioning to some great technology that’s going to really assist our customer base. As you move towards commercial banking, we’ve got to work a lot on the funding side. And the company is going to be, historically, over the past couple of years, and we’re earning just under 50% TCE, we should be in the high teens. And, I think, the reality in the high teens on a traditional multiple perspective was return on assets well north of 1%, 1.10%, 1.20%-ish over time. It’s going to take some work here, but the reality is that, the balance sheet has changed dramatically.

If you think about the lines of businesses that we’re going to have, the verticals that will be priced, very different than historical fixed-rate lender that had vulnerabilities to rising interest rates. So we want to be better balanced. At the same time, we’re going to get our cost structure right. We have work to do with, going back to 2023 as a block and tackle year and we look at 2024 in hopefully a different rate environment. We’ll be able to take advantage of a better funding mix. We’re going to go after the deposit funding. If we move that positioning to having better funding as a core competency of our number one priority, that will change multiple. We feel very strongly that mortgage on a percentage basis, because the bank is much larger, will be less of a concentration on total income stream.

So we want to have less dependency on mortgage, less dependency on the wholesale finance. And we believe that will give us a better blended multiple. Multiple expansion is going to be key, as we look at the transformation to a commercial bank. We have all the parts in place. It’s going to take time to block and tackle, but we have the road map and the system conversion will be done in the first quarter of 2024. At the same time, we’re going to be rolling out the verticals, proving to the marketplace that we’re allocating capital to different lines of businesses that have better margin businesses. And now at the point, as a company, we’re looking at loan by loan detail on a total return basis, and we’ll allocate capital accordingly. And that’s something very different when you have choice now.

We have choice on a combined basis, where historically, we had limited choices when we had our business model. So we’re excited about the business model. We think we have a great story to tell. This has been a long time and awaiting, a lot of planning. And we’re super excited about launching out the new Flagstar as a new brand.

Ebrahim Poonawala: Got it. Thank you.

Sal DiMartino: Thank you. That is all the time we have for our question-and-answer session. I would now like to hand the call back over to management for any closing comments.

Thomas Cangemi: Thank you again for taking the time to join us this morning and for your interest in NYCB. We are creating a unique multifaceted financial services organization that will no longer be reliant on any one particular line of business, with a very exciting future. Thank you all.

Operator: Thank you. This does conclude today’s teleconference. We do appreciate your participation. You may disconnect your lines at this time, and enjoy the rest of your day.