NYCB pledges $28B for minority, low-income programs pending Flagstar merger

New York Community Bancorp Inc., whose merger with a Michigan thrift remains stalled by regulators, has pledged $28 billion in loans and other programs to benefit minority and low-and-moderate income families and businesses.

The five-year Community Pledge Agreement hinges on the closing of the merger with Flagstar Bancorp Inc., said the statement by Hicksville-based NYCB.

In an earnings conference call Wednesday, NYCB chairman and chief executive Thomas Cangemi said the program should break the regulatory logjam.

"We're pretty clear that this will pave the way for the approval process," he said in a transcript from data-provider Koyfin. "We're very confident that we'll get the deal closed. As far as the timing, it's in the hands of the regulators."

It was unclear what level of funding would go to programs on Long Island. Calls to NYCB executive vice president Salvatore J. DiMartino were not immediately returned.

The $2.6 billion stock deal to acquire Flagstar that was announced in April comes as the Biden administration is putting bank mergers under a regulatory microscope.

In July, Biden signed an executive order that "encourages" the Federal Reserve and the Federal Deposit Insurance Corporation — two agencies that must sign off on the NYCB-Flagstar combination — to "provide more robust scrutiny of mergers."

In August, NYCB and Flagstar said they had received shareholder approval and they expected the deal to close in the fourth quarter of 2021.

In an October earnings call, however, Cangemi said that he could not address specifics about the regulatory approval, but "we clearly are working towards our common goal of getting this transaction closed as soon as possible."

The merger would expand the scale of the two thrifts, giving them more than $87 billion in assets and about 400 branches, as they move toward becoming a full-service commercial bank.

The NYCB Community Pledge Agreement was created in cooperation with the National Community Reinvestment Coalition, a Washington-based not-for-profit.

The agreement includes $22 billion in community lending and affordable housing commitments and $6 billion of residential mortgage originations for underserved and low-to-moderate income borrowers, according to NYCB.

NYCB operates 236 branches under eight divisions: 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.

Its largest division is Roslyn Savings Bank with 41 locations in Nassau and Suffolk counties.

Flagstar operates 158 branches in Michigan, Indiana, California, Wisconsin and Ohio.

On Wednesday, NYCB posted net income for the quarter ended Dec. 31 of $150 million. Net income was down 21% from the prior year's quarter, which were boosted by a $55 million tax benefit.

The quarter's diluted earnings per share of 30 cents missed analysts' consensus estimates by a penny, according to data provided by Koyfin.

Shares of NYCB shed 1.5% to close Wednesday at $12.01, while Flagstar lost 1.8% to close at $46.54.

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.