DEFM14A 1 d125734ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant    ☒                            Filed by a Party other than the Registrant    ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of the transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing:
  (1)  

Amount previously paid:

 

     

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Form, Schedule or Registration Statement No.:

 

     

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Date Filed:

 

     

 

 

 


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To the Stockholders of New York Community Bancorp, Inc. and the Shareholders of Flagstar Bancorp, Inc.

MERGER AND SHARE ISSUANCE PROPOSED—YOUR VOTE IS VERY IMPORTANT

On behalf of the boards of directors of New York Community Bancorp, Inc. (“NYCB”) and Flagstar Bancorp, Inc. (“Flagstar”), we are pleased to enclose the accompanying joint proxy statement/prospectus relating to the acquisition of Flagstar by NYCB. We are requesting that you take certain actions as a holder of NYCB common stock (an “NYCB stockholder” or “stockholder”) or as a holder of Flagstar common stock (a “Flagstar shareholder” or “shareholder”).

On April 24, 2021, NYCB, 615 Corp., a direct, wholly owned subsidiary of NYCB (“Merger Sub”), and Flagstar entered into an Agreement and Plan of Merger (as amended from time to time, the “merger agreement”), pursuant to which NYCB will, upon the terms and subject to the conditions set forth in the merger agreement, acquire Flagstar in an all-stock transaction. The acquisition will create a high performing regional bank with national scale and strong footholds in the Northeast and Upper Midwest and exposure to high growth markets, with approximately $87 billion in assets and a network of nearly 400 branches and 87 loan production offices across a 28 state footprint.

Under the merger agreement, Merger Sub will merge with and into Flagstar, with Flagstar as the surviving entity (the “merger”), and as soon as reasonably practicable following the merger, Flagstar will merge with and into NYCB, with NYCB as the surviving entity (the “holdco merger”). At a date and time following the holdco merger as determined by NYCB, Flagstar Bank, FSB, a federally chartered stock savings bank and a wholly owned subsidiary of Flagstar, will merge with and into New York Community Bank, a New York State-chartered savings bank and a wholly owned subsidiary of NYCB (“NYCB Bank”), with NYCB Bank as the surviving bank (the “bank merger,” and together with the merger and the holdco merger, the “mergers”).

In the merger, Flagstar shareholders will receive 4.0151 shares of NYCB common stock for each share of Flagstar common stock they own. Based on the closing price of NYCB’s common stock on the New York Stock Exchange on April 23, 2021, the last trading day before the public announcement of the merger, the exchange ratio represented approximately $48.14 in value for each share of Flagstar common stock, representing merger consideration of approximately $2.6 billion on an aggregate basis.

NYCB stockholders will continue to own their existing shares of NYCB common stock. The value of the NYCB common stock at the time of completion of the merger could be greater than, less than or the same as the value of NYCB common stock on the date of the accompanying joint proxy statement/prospectus. We urge you to obtain current market quotations of NYCB common stock (trading symbol “NYCB”) and Flagstar common stock (trading symbol “FBC”).

We expect the merger and the holdco merger, taken together, will qualify as a reorganization for federal income tax purposes. Accordingly, Flagstar shareholders generally will not recognize any gain or loss for federal income tax purposes on the exchange of shares of Flagstar common stock for NYCB common stock or in the merger, except with respect to any cash received by such holders in lieu of fractional shares of NYCB common stock.

Based on the number of shares of Flagstar common stock outstanding as of June 18, 2021, NYCB expects to issue approximately 212.0 million shares of NYCB common stock to Flagstar shareholders in the aggregate in the merger. We estimate that NYCB shares of common stock to be issued to the Flagstar shareholders in the merger will represent approximately 31% of the common stock of NYCB following the completion of the merger and that the NYCB shares of common stock issued and outstanding immediately prior to the completion of the merger will represent approximately 69% of the common stock of NYCB following the completion of the merger.

NYCB and Flagstar will each hold a virtual special meeting of our respective stockholders and shareholders in connection with the merger. At our respective special meetings, in addition to other business, NYCB will ask its stockholders to approve the issuance of its common stock to holders of Flagstar common stock pursuant to the merger agreement, and Flagstar will ask its shareholders to approve the merger agreement. Information about these meetings and the mergers is contained in this document. We urge you to read this document carefully and in its entirety.


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The special meeting of Flagstar shareholders will be held virtually via the internet on August 4, 2021 at 9 a.m., Eastern Time. The special meeting of NYCB stockholders will be held virtually via the internet on August 4, 2021 at 10 a.m., Eastern Time.

Each of our boards of directors unanimously recommends that holders of common stock vote “FOR” each of the proposals to be considered at the respective meetings. We strongly support this combination of our companies and join our boards in their recommendations.

This joint proxy statement/prospectus provides you with detailed information about the merger agreement and the merger. It also contains information about NYCB and Flagstar and certain related matters. You are encouraged to read this joint proxy statement/prospectus carefully. In particular, you should read the “Risk Factors” section beginning on page 28 for a discussion of the risks you should consider in evaluating the proposed merger and how it will affect you. You can also obtain information about NYCB from documents that have been filed with the Securities and Exchange Commission that are attached as annexes to this joint proxy statement/prospectus and about Flagstar from documents that have been filed with the Securities and Exchange Commission that are incorporated into this joint proxy statement/prospectus by reference.

On behalf of the NYCB and Flagstar boards of directors, thank you for your prompt attention to this important matter.

Sincerely,

 

 

  

Thomas R. Cangemi

Chairman, President and Chief Executive Officer

New York Community Bancorp, Inc.

  

Alessandro P. DiNello

President, Chief Executive Officer

Flagstar Bancorp, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or determined if this document is accurate or complete. Any representation to the contrary is a criminal offense.

The securities to be issued in the merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either NYCB or Flagstar, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The accompanying joint proxy statement/prospectus is dated June 25, 2021, and is first being mailed to NYCB stockholders and Flagstar shareholders on or about June 28, 2021.


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ADDITIONAL INFORMATION

The accompanying joint proxy statement/prospectus includes (i) important business and financial information about NYCB that is included in documents filed with the U.S. Securities and Exchange Commission (the “SEC”) that have been attached as annexes to this joint proxy statement/prospectus and (ii) important business and financial information about Flagstar from other documents that are not included in or delivered with this document, which information is available to you without charge upon your written or oral request. Each of NYCB and Flagstar files annual, quarterly and current reports, proxy statements and other business and financial information with the SEC. This information is available to you without charge upon your written or oral request. To the extent not attached hereto, you can obtain the documents, including the documents regarding Flagstar incorporated by reference in this document, through the SEC website at http://www.sec.gov or by requesting them in writing, by email or by telephone at the appropriate address below. In addition, documents filed with the SEC by NYCB are available free of charge by accessing NYCB’s website at https://www.mynycb.com and documents filed with the SEC by Flagstar are available free of charge by accessing Flagstar’s website at http://investors.flagstar.com. Except for the documents regarding NYCB attached as annexes to this joint proxy statement/prospectus and the documents regarding Flagstar incorporated by reference in this document, the information contained on, or that may be accessed through, the respective websites of the SEC, NYCB and Flagstar is not incorporated by reference into, and is not a part of, this joint proxy statement/prospectus.

 

if you are an NYCB stockholder:
New York Community Bancorp, Inc.
615 Merrick Avenue

Westbury, New York 11590
Attn: Investor Relations
(516) 682-4420
ir@mynycb.com

   if you are a Flagstar shareholder:
Flagstar Bancorp, Inc.
5151 Corporate Drive
Troy, Michigan 48098
Attn: Investor Relations
(248) 312-5741
FBCInvestorRelations@flagstar.com

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five business days before the date of the applicable special meeting. This means that NYCB stockholders requesting documents must do so by July 28, 2021, in order to receive them before the NYCB special meeting, and Flagstar shareholders requesting documents must do so by July 28, 2021, in order to receive them before the Flagstar special meeting.

This joint proxy statement/prospectus attaches as annexes documents that NYCB previously filed with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as set forth below. Any statement contained in such a document shall be deemed to be modified or superseded for purposes of this joint proxy statement/prospectus to the extent that a statement contained in this joint proxy statement/prospectus or in an annex hereto consisting of a document filed with the SEC subsequent to such document modifies or replaces such statement.

Set forth below is a list of the documents previously filed with the SEC by NYCB under the Exchange Act that are attached as annexes to this joint proxy statement/prospectus.

NYCB

 

   

NYCB’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021;

 

   

NYCB’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 16, 2021;

 

   

NYCB’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, filed with the SEC on May 7, 2021; and

 

   

NYCB’s Current Reports on Form 8-K and Form 8-K/A, filed with the SEC on January 6, 2021, January 27, 2021 (only with respect to Item 8.01), March 26, 2021, March 31, 2021, April 26, 2021, April 26, 2021 (only with respect to Item 8.01), April 27, 2021 and May 27, 2021.

No one has been authorized to provide you with information that is different from that contained in this document. This document is dated June 25, 2021, and you should assume that the information in this document is accurate only as of such date. You should assume that the filings with the SEC attached as annexes to this document are accurate as of the date of such filing and that the information incorporated by reference into this document is accurate as of the date of such


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incorporated document. Neither the mailing of this document to NYCB stockholders or Flagstar shareholders, nor the issuance by NYCB of shares of NYCB common stock pursuant to the merger agreement, will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in, or incorporated by reference into, this document regarding Flagstar has been provided by Flagstar and information contained in, or attached to, this document regarding NYCB has been provided by NYCB.

See “Where You Can Find More Information” beginning on page 159 of the accompanying joint proxy statement/prospectus for further information.


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New York Community Bancorp, Inc.

615 Merrick Avenue

Westbury, New York 14203

NOTICE OF VIRTUAL SPECIAL MEETING OF STOCKHOLDERS

To NYCB Stockholders:

On April 24, 2021, New York Community Bancorp, Inc., a Delaware corporation (“NYCB”), 615 Corp., a direct, wholly owned subsidiary of NYCB (“Merger Sub”), and Flagstar Bancorp, Inc., a Michigan corporation (“Flagstar”), entered into an Agreement and Plan of Merger (as amended from time to time, the “merger agreement”). A copy of the merger agreement is attached as Annex A to the accompanying joint proxy statement/prospectus.

NOTICE IS HEREBY GIVEN that a special meeting of holders of NYCB common stock (“NYCB stockholders” or “stockholders”) will be held virtually via the internet on August 4, 2021 at 10 a.m., Eastern Time (the “NYCB special meeting”). We are pleased to notify you of, and invite you to, the NYCB special meeting.

At the NYCB special meeting, you will be asked to vote on the following matters:

 

   

a proposal to approve the issuance of NYCB common stock to holders of Flagstar common stock pursuant to the merger agreement (the “NYCB share issuance proposal”).

 

   

a proposal to adjourn the NYCB special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the NYCB share issuance proposal, or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to holders of NYCB common stock (the “NYCB adjournment proposal”).

Due to the continuing public health impact of the COVID-19 pandemic and to support the well-being of our stockholders and employees, we are holding the NYCB special meeting in a virtual meeting format exclusively by webcast. No physical meeting will be held. As more fully described in the “Questions & Answers” and “The NYCB Special Meeting” sections of the accompanying joint proxy statement/prospectus, you are entitled to participate in the NYCB special meeting if, as of the close of business on June 18, 2021, you held shares of NYCB common stock registered in your name (a “record holder”), or if you held shares through a broker, bank or other nominee (a “beneficial owner”). Both record holders and beneficial owners will be able to attend the NYCB special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/NYCB2021SM and following the instructions. Please have your 16-digit control number, which can be found on your notice, proxy card or voting instruction form, to access the meeting. See the “Questions & Answers” section of the accompanying joint proxy statement/prospectus for more information, including technical support information for the virtual NYCB special meeting.

The board of directors of NYCB has fixed the close of business on June 18, 2021 as the record date for the NYCB special meeting. Only holders of record of NYCB common stock as of the close of business on the record date for the NYCB special meeting are entitled to notice of the NYCB special meeting or any adjournment or postponement thereof. Only holders of record of NYCB common stock will be entitled to vote at the NYCB special meeting or any adjournment or postponement thereof.

Holders of NYCB common stock are not entitled to appraisal rights with respect to the proposed merger under Section 262 of the Delaware General Corporation Law.

The NYCB board of directors unanimously recommends that holders of NYCB common stock vote “FOR” the NYCB share issuance proposal and “FOR” the NYCB adjournment proposal.


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Your vote is important. We cannot complete the transactions contemplated by the merger agreement unless NYCB stockholders approve the NYCB share issuance proposal. The affirmative vote of a majority of the votes cast by the holders of NYCB common stock at the NYCB special meeting is required to approve the NYCB share issuance proposal.

Whether or not you plan to attend the NYCB special meeting, we urge you to please promptly complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope or authorize the individuals named on the accompanying proxy card to vote your shares by calling the toll-free telephone number or by using the internet as described in the instructions included with the accompanying proxy card. If your shares are held in the name of a broker, bank or other nominee, please follow the instructions on the voting instruction form furnished by such broker, bank or other nominee.

By Order of the Board of Directors

 

Thomas R. Cangemi

Chairman, President and Chief Executive Officer

New York Community Bancorp, Inc.

June 25, 2021


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Flagstar Bancorp, Inc.

5151 Corporate Drive

Troy, Michigan 48098

NOTICE OF VIRTUAL SPECIAL MEETING OF SHAREHOLDERS

To Flagstar Shareholders:

On April 24, 2021, Flagstar Bancorp, Inc., a Michigan corporation (“Flagstar”), New York Community Bancorp, Inc., a Delaware corporation (“NYCB”), and 615 Corp., a direct, wholly owned subsidiary of NYCB (“Merger Sub”), entered into an Agreement and Plan of Merger (the “merger agreement”). A copy of the merger agreement is attached as Annex A to the accompanying joint proxy statement/prospectus.

NOTICE IS HEREBY GIVEN that a special meeting of holders of Flagstar common stock (“Flagstar shareholders” or “shareholders”) will be held virtually via the internet on August 4, 2021 at 9 a.m., Eastern Time (the “Flagstar special meeting”). We are pleased to notify you of, and invite you to, the Flagstar special meeting.

At the Flagstar special meeting, Flagstar shareholders will be asked to vote on the following matters:

 

   

a proposal to approve the merger agreement (the “Flagstar merger proposal”).

 

   

a proposal to approve, on an advisory (non-binding) basis, the merger-related compensation payments that will or may be paid to the named executive officers of Flagstar in connection with the transactions contemplated by the merger agreement (the “Flagstar compensation proposal”).

 

   

a proposal to adjourn the Flagstar special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the Flagstar merger proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Flagstar shareholders (the “Flagstar adjournment proposal”).

In light of the ongoing developments related to the COVID-19 pandemic and to support the health and well-being of our shareholders, employees and community, the Flagstar special meeting will be held in a virtual-only format conducted via live webcast. As more fully described in the “Questions & Answers” and “The Flagstar Special Meeting” sections of the accompanying joint proxy statement/prospectus, you are entitled to participate in the Flagstar special meeting if, as of the close of business on June 18, 2021, you held shares of Flagstar common stock registered in your name (a “record holder”), or if you held shares through a bank, broker, trustee or other nominee, and have a valid legal proxy for the Flagstar special meeting (a “beneficial owner”). Both record holders and beneficial owners that have a valid proxy for the Flagstar special meeting will be able to attend the Flagstar special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/FBC2021SM and following the instructions. Please have your 16-digit control number, which can be found on your proxy card or notice, to access the meeting. See the “Questions & Answers” section of the accompanying joint proxy statement/prospectus for more information, including technical support information for the virtual Flagstar special meeting.

The board of directors of Flagstar has fixed the close of business on June 18, 2021 as the record date for the Flagstar special meeting. Only holders of record of Flagstar common stock as of the close of business on the record date for the Flagstar special meeting are entitled to notice of the Flagstar special meeting or any adjournment or postponement thereof. Only holders of record of Flagstar common stock or beneficial owners that have a valid legal proxy for the Flagstar special meeting will be entitled to vote at the Flagstar special meeting or any adjournment or postponement thereof.

Holders of Flagstar common stock are not entitled to dissenters’ rights with respect to the proposed merger under Section 762 of the Michigan Business Corporation Act (“MBCA”).

The Flagstar board of directors unanimously recommends that Flagstar shareholders vote “FOR” the Flagstar merger proposal, “FOR” the Flagstar compensation proposal and “FOR” the Flagstar adjournment proposal.

Your vote is important. We cannot complete the transactions contemplated by the merger agreement unless Flagstar shareholders approve the Flagstar merger proposal. The affirmative vote of a majority of the outstanding shares of Flagstar common stock entitled to vote on the Flagstar merger proposal is required to approve the Flagstar merger proposal.


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Whether or not you plan to attend the Flagstar special meeting, we urge you to please promptly complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope or authorize the individuals named on the accompanying proxy card to vote your shares by calling the toll-free telephone number or by using the internet as described in the instructions included with the accompanying proxy card. If your shares are held in the name of a bank, broker, trustee or other nominee, please follow the instructions on the voting instruction card furnished by such bank, broker, trustee or other nominee.

By Order of the Board of Directors

 

Alessandro P. DiNello

President, Chief Executive Officer

Flagstar Bancorp, Inc.

June 25, 2021


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS

     1  

SUMMARY

     14  

Information About the Companies

     14  

The Merger and the Merger Agreement

     15  

Merger Consideration

     15  

Treatment of Flagstar Equity Awards

     15  

ESPP Matters

     16  

U.S. Federal Income Tax Consequences of the Merger

     16  

NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors

     17  

Opinions of NYCB’s Financial Advisors

     17  

Interests of Certain NYCB Directors and Executive Officers in the Merger

     18  

Flagstar’s Reasons for the Merger; Recommendation of Flagstar’s Board of Directors

     18  

Opinions of Flagstar’s Financial Advisors

     18  

Interests of Certain Flagstar Directors and Executive Officers in the Merger

     19  

Governance of NYCB After the Merger

     21  

Regulatory Approvals

     21  

Expected Timing of the Merger

     22  

Conditions to Complete the Merger

     22  

Termination of the Merger Agreement

     22  

Termination Fee

     23  

Accounting Treatment

     23  

The Rights of Flagstar Shareholders Will Change as a Result of the Merger

     23  

Delisting and Deregistration of Flagstar Common Stock

     24  

The NYCB Special Meeting

     24  

The Flagstar Special Meeting

     24  

Appraisal or Dissenters’ Rights in the Merger

     25  

Litigation Relating to the Merger

     25  

Risk Factors

     25  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     26  

RISK FACTORS

     28  

Risks Relating to the Consummation of the Merger and NYCB Following the Merger

     28  

Risks Relating to NYCB’s Business

     34  

Risks Relating to Flagstar’s Business

     34  

THE NYCB SPECIAL MEETING

     35  

Date, Time and Place of the Meeting

     35  

Matters to Be Considered

     35  

Recommendation of NYCB’s Board of Directors

     35  

Record Date and Quorum

     35  

Broker Non-Votes

     35  

Vote Required; Treatment of Abstentions and Failure to Vote

     36  

Attending the Virtual Special Meeting

     36  

Proxies

     37  

Shares Held in Street Name

     37  

Revocability of Proxies

     37  

Delivery of Proxy Materials

     38  

Solicitation of Proxies

     38  

Other Matters to Come Before the NYCB Special Meeting

     38  

Assistance

     38  

NYCB PROPOSALS

     39  

Proposal 1: NYCB Share Issuance Proposal

     39  

Proposal 2: NYCB Adjournment Proposal

     39  

THE FLAGSTAR SPECIAL MEETING

     40  

Date, Time and Place of the Meeting

     40  

Matters to Be Considered

     40  

Recommendation of Flagstar’s Board of Directors

     40  

 

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Record Date and Quorum

     40  

Broker Non-Votes

     40  

Vote Required; Treatment of Abstentions and Failure to Vote

     41  

Attending the Virtual Special Meeting

     41  

Proxies

     42  

Shares Held in Street Name

     42  

Revocability of Proxies

     43  

Delivery of Proxy Materials

     43  

Solicitation of Proxies

     43  

Other Matters to Come Before the Flagstar Special Meeting

     44  

Assistance

     44  

FLAGSTAR PROPOSALS

     45  

Proposal 1: Flagstar Merger Proposal

     45  

Proposal 2: Flagstar Compensation Proposal

     45  

Proposal 3: Flagstar Adjournment Proposal

     45  

INFORMATION ABOUT THE COMPANIES

     47  

New York Community Bancorp, Inc.

     47  

Flagstar Bancorp, Inc.

     47  

Merger Sub

     47  

THE MERGER

     48  

Terms of the Merger

     48  

Background of the Merger

     48  

NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors

     53  

Opinions of NYCB’s Financial Advisors

     55  

Flagstar’s Reasons for the Merger; Recommendation of Flagstar’s Board of Directors

     75  

Opinions of Flagstar’s Financial Advisors

     77  

Certain Unaudited Prospective Financial Information

     94  

Interests of Certain NYCB Directors and Executive Officers in the Merger

     98  

Interests of Certain Flagstar Directors and Executive Officers in the Merger

     101  

Governance of NYCB After the Merger

     108  

Accounting Treatment

     108  

Regulatory Approvals

     109  

Stock Exchange Listings

     111  

Appraisal or Dissenters’ Rights in the Merger

     111  

Litigation Relating to the Merger

     111  

THE MERGER AGREEMENT

     113  

Explanatory Note Regarding the Merger Agreement

     113  

Structure of the Merger

     113  

Merger Consideration

     114  

Fractional Shares

     114  

Governing Documents

     114  

Treatment of Flagstar Equity Awards

     114  

Closing and Effective Time of the Merger

     115  

Exchange of Shares

     115  

Representations and Warranties

     116  

Covenants and Agreements

     118  

NYCB Governance

     124  

Meetings; Recommendation of NYCB’s and Flagstar’s Boards of Directors

     124  

Agreement Not to Solicit Other Offers

     126  

Conditions to Complete the Merger

     127  

Termination of the Merger Agreement

     127  

Effect of Termination

     128  

Termination Fee

     128  

Expenses and Fees

     129  

Amendment, Waiver and Extension of the Merger Agreement

     129  

Governing Law

     129  

Specific Performance

     130  

 

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     Page  

U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     131  

Tax Consequences of the Merger Generally

     132  

Cash Instead of a Fractional Share

     132  

Backup Withholding

     133  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     134  

DESCRIPTION OF NYCB CAPITAL STOCK

     143  

Authorized Capital Stock

     143  

Common Stock

     143  

Restrictions on Ownership

     145  

COMPARISON OF THE RIGHTS OF NYCB STOCKHOLDERS AND FLAGSTAR SHAREHOLDERS

     146  

LEGAL MATTERS

     156  

EXPERTS

     156  

DEADLINES FOR SUBMITTING STOCKHOLDER OR SHAREHOLDER PROPOSALS

     157  

NYCB

     157  

Flagstar

     157  

WHERE YOU CAN FIND MORE INFORMATION

     159  

Annex A—Agreement and Plan of Merger, dated as of April  24, 2021, by and among New York Community Bancorp, Inc., 615 Corp. and Flagstar Bancorp, Inc.

     A-1  

Annex B—Opinion of Piper Sandler & Co.

     B-1  

Annex C—Opinion of Goldman Sachs & Co. LLC

     C-1  

Annex D—Opinion of Morgan Stanley & Co. LLC

     D-1  

Annex E—Opinion of Jefferies LLC

     E-1  

Annex F—NYCB’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021

     F-1  

Annex G—NYCB’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 16, 2021

     G-1  

Annex H—NYCB’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, filed with the SEC on May 7, 2021

     H-1  

Annex I—NYCB’s Current Reports on Form 8-K and Form 8-K/A, filed with the SEC on January 6, 2021, January 27, 2021, March 26, 2021, March 31, 2021, April 26, 2021, April  26, 2021, April 27, 2021 and May 27, 2021

     I-1  

 

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QUESTIONS AND ANSWERS

The following are some questions that you may have about the merger, the NYCB special meeting or the Flagstar special meeting, and brief answers to those questions. We urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger, the NYCB special meeting or the Flagstar special meeting. Additional important information is also contained in the documents regarding NYCB attached as annexes to this joint proxy statement/prospectus and in the documents regarding Flagstar incorporated by reference into this joint proxy statement/prospectus.

In this joint proxy statement/prospectus, unless the context otherwise requires:

 

   

“Flagstar” refers to Flagstar Bancorp, Inc., a Michigan corporation;

 

   

“Flagstar articles of incorporation” refers to the second amended and restated articles of incorporation of Flagstar;

 

   

“Flagstar Bank” refers to Flagstar Bank, FSB, a federally chartered stock savings bank and a wholly owned subsidiary of Flagstar;

 

   

“Flagstar bylaws” refers to the sixth amended and restated bylaws of Flagstar;

 

   

“Flagstar common stock” refers to the common stock of Flagstar, par value $0.01 per share;

 

   

“Merger Sub” refers to 615 Corp., a Delaware corporation and a direct, wholly owned subsidiary of NYCB;

 

   

“NYCB” refers to New York Community Bancorp, Inc., a Delaware corporation;

 

   

“NYCB Bank” refers to New York Community Bank, a New York State-chartered savings bank and a wholly owned subsidiary of NYCB;

 

   

“NYCB bylaws” refers to the amended and restated bylaws of NYCB;

 

   

“NYCB certificate of incorporation” refers to the amended and restated certificate of incorporation of NYCB, as amended;

 

   

“NYCB common stock” refers to the common stock of NYCB, par value $0.01 per share;

 

   

“shareholders” or “Flagstar shareholders” refers to holders of shares of common stock of Flagstar; and

 

   

“stockholders” or “NYCB stockholders” refers to holders of shares of the common stock of NYCB, both prior to and following the completion of the merger.

 

Q:

Why am I receiving this joint proxy statement/prospectus?

 

A:

You are receiving this joint proxy statement/prospectus because NYCB, Merger Sub and Flagstar entered into an agreement and plan of merger (as amended from time to time, the “merger agreement”), pursuant to which, on the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Flagstar, with Flagstar as the surviving entity (the “merger”), and as soon as reasonably practicable following the merger, Flagstar will merge with and into NYCB, with NYCB as the surviving entity (the “holdco merger”). At a date and time following the holdco merger as determined by NYCB, Flagstar Bank will merge with and into NYCB Bank, with NYCB Bank as the surviving bank (the “bank merger,” and together with the merger and the holdco merger, the “mergers”). A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus. In this joint proxy statement/prospectus, we refer to the closing of the transactions contemplated by the merger agreement as the “closing,” the date on which the closing occurs as the “closing date” and the time at which the merger will occur as the “effective time.”

In order to complete the merger, among other things:

 

   

NYCB stockholders must approve the proposed issuance of NYCB common stock to holders of Flagstar common stock pursuant to the merger agreement in order to comply with applicable New York Stock Exchange (“NYSE”) listing rules (the “NYCB share issuance proposal” and such issuance the “NYCB share issuance”); and

 

   

Flagstar shareholders must approve the merger agreement (the “Flagstar merger proposal”).

NYCB is holding a virtual special meeting of NYCB stockholders (the “NYCB special meeting”) to obtain approval of the NYCB share issuance proposal. Holders of NYCB preferred stock are not entitled to and are not requested to vote at the NYCB special meeting.

 

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NYCB stockholders will also be asked to approve the proposal to adjourn the NYCB special meeting to solicit additional proxies (i) if there are insufficient votes at the time of the NYCB special meeting to approve the NYCB share issuance proposal or (ii) if adjournment is necessary or appropriate to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to NYCB stockholders (the “NYCB adjournment proposal”).

Flagstar is holding a virtual special meeting of Flagstar shareholders (the “Flagstar special meeting”) to obtain approval of the Flagstar merger proposal.

Flagstar shareholders will also be asked to approve, on an advisory (non-binding) basis, the merger-related compensation payments that will or may be paid to the named executive officers of Flagstar in connection with the transactions contemplated by the merger agreement (the “Flagstar compensation proposal”), and to approve the proposal to adjourn the Flagstar special meeting to solicit additional proxies (i) if there are insufficient votes at the time of the Flagstar special meeting, to approve the Flagstar merger proposal or (ii) if adjournment is necessary or appropriate, to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to holders of Flagstar common stock (the “Flagstar adjournment proposal”).

This document is also a prospectus that is being delivered to holders of Flagstar common stock because, pursuant to the merger agreement, NYCB is offering shares of NYCB common stock to Flagstar shareholders.

This joint proxy statement/prospectus contains important information about the merger and the other proposals being voted on at the NYCB and Flagstar special meetings. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares of common stock voted by proxy without attending your meeting. Your vote is important and we encourage you to submit your proxy as soon as possible.

 

Q:

What will happen in the merger?

 

A:

In the merger, Merger Sub will merge with and into Flagstar, with Flagstar as the surviving entity. In the holdco merger, which will occur as soon as reasonably practicable following the merger, Flagstar, as the surviving entity of the merger, will merge with and into NYCB, with NYCB as the surviving entity. In the bank merger, which will occur at a date and time following the holdco merger as determined by NYCB, Flagstar Bank will merge with and into NYCB Bank, with NYCB Bank as the surviving bank.

Each share of Flagstar common stock issued and outstanding immediately prior to the effective time, except for certain shares owned by NYCB or Flagstar (subject to certain exceptions described in the merger agreement), will be converted into the right to receive 4.0151 shares (the “exchange ratio”) of NYCB common stock (the “merger consideration”). After completion of the merger, (1) Flagstar will no longer be a public company, (2) Flagstar common stock will be delisted from the NYSE and will cease to be publicly traded, and (3) the Flagstar common stock will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). After completion of the holdco merger, Flagstar will cease to exist. Holders of NYCB common stock will continue to own their existing shares of NYCB common stock. See the information provided in the section entitled “The Merger Agreement—Structure of the Merger” beginning on page 113 and the merger agreement for more information about the merger.

 

Q:

When and where will each of the special meetings take place?

 

A:

The NYCB special meeting will be held virtually via the internet on August 4, 2021 at 10 a.m., Eastern Time.

The Flagstar special meeting will be held virtually via the internet on August 4, 2021 at 9 a.m., Eastern Time.

Even if you plan to attend your respective company’s special meeting virtually, NYCB and Flagstar recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the applicable special meeting.

 

Q:

What matters will be considered at each of the special meetings?

 

A:

At the NYCB special meeting, NYCB stockholders will be asked to consider and vote on the following proposals:

 

   

NYCB Proposal 1: The NYCB share issuance proposal; and

 

   

NYCB Proposal 2: The NYCB adjournment proposal.

At the Flagstar special meeting, Flagstar shareholders will be asked to consider and vote on the following proposals:

 

   

Flagstar Proposal 1: The Flagstar merger proposal;

 

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Flagstar Proposal 2: The Flagstar compensation proposal; and

 

   

Flagstar Proposal 3: The Flagstar adjournment proposal.

In order to complete the merger, among other things, NYCB stockholders must approve the NYCB share issuance proposal, and Flagstar shareholders must approve the Flagstar merger proposal. None of the approvals of the NYCB adjournment proposal, the Flagstar compensation proposal or the Flagstar adjournment proposal is a condition to the obligations of NYCB or Flagstar to complete the merger.

 

Q:

What will Flagstar shareholders receive in the merger?

 

A:

In the merger, Flagstar shareholders will receive 4.0151 shares of NYCB common stock for each share of Flagstar common stock held immediately prior to the completion of the merger. NYCB will not issue any fractional shares of NYCB common stock in the merger. Flagstar shareholders who would otherwise be entitled to a fractional share of NYCB common stock in the merger will instead receive an amount in cash (rounded to the nearest cent) determined by multiplying the average closing-sale prices per share of NYCB common stock on the NYSE for the consecutive period of five full trading days ending on the day preceding the closing date (the “NYCB closing share value”) by the fraction of a share (after taking into account all shares of Flagstar common stock held by such holder immediately prior to the completion of the merger and rounded to the nearest one-thousandth when expressed in decimal form) of NYCB common stock that such shareholder would otherwise be entitled to receive.

 

Q:

What will NYCB stockholders receive in the merger?

 

A:

In the merger, NYCB stockholders will not receive any consideration, and their shares of NYCB common stock will remain outstanding and will constitute shares of NYCB following the merger. Following the merger, shares of NYCB common stock will continue to be traded on the NYSE.

 

Q:

Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed?

 

A:

Yes. Although the number of shares of NYCB common stock that Flagstar shareholders will receive is fixed, the value of the merger consideration will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger based upon the market value for NYCB common stock. Any fluctuation in the market price of NYCB common stock will change the value of the shares of NYCB common stock that Flagstar shareholders will receive. Neither NYCB nor Flagstar is permitted to terminate the merger agreement as a result of any increase or decrease in the market price of NYCB common stock or Flagstar common stock.

 

Q:

How will the merger affect Flagstar equity awards?

 

A:

The merger agreement provides that, at the effective time, each outstanding time-based restricted stock award unit (a “Flagstar RSU”) under Flagstar’s 2016 Stock Award and Incentive Plan (the “Flagstar stock plan”), whether vested or unvested, will cease to represent a restricted stock unit denominated in shares of Flagstar common stock and will be converted into a time-based restricted stock unit denominated in shares of NYCB common stock (each, an “NYCB RSU”). The number of shares of NYCB common stock subject to each such NYCB RSU will be equal to the product of (i) the number of shares of Flagstar common stock subject to such Flagstar RSU immediately prior to the effective time (including any applicable dividend equivalents), multiplied by (ii) the exchange ratio.

The merger agreement also provides that, at the effective time, each outstanding performance share unit award (a “Flagstar PSU”) under the Flagstar stock plan for which the applicable performance period is complete, including awards granted prior to the date of the merger agreement under Flagstar’s Executive Long-Term Incentive Program and Flagstar PSUs granted in 2019, whether vested or unvested, will cease to represent a performance share unit denominated in shares of Flagstar common stock and will be converted into the right to receive the merger consideration in respect of the number of shares of Flagstar common stock subject to such Flagstar PSU immediately prior to the effective time based on actual performance through completion of the applicable performance period as determined by the compensation committee of the Flagstar board (the “Flagstar Compensation Committee”) in its reasonable judgment, less applicable tax withholding.

The merger agreement further provides that, at the effective time, each outstanding Flagstar PSU for which the applicable performance period is not complete will cease to represent a performance share unit denominated in shares of

 

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Flagstar common stock and will be converted into an NYCB RSU. The number of shares of NYCB common stock subject to each such NYCB RSU will be equal to the product of (A) the number of shares of Flagstar common stock subject to such Flagstar PSU immediately prior to the effective time (including any applicable dividend equivalents) based on (1) in the case of Flagstar PSUs granted in 2020, 150% of the target level of performance and (2) in the case of Flagstar PSUs granted in 2021 and thereafter, the target level of performance multiplied by (B) the exchange ratio.

Except as specifically provided above, each NYCB RSU will continue to be governed by the same terms and conditions (including employment vesting terms but excluding performance conditions, after giving effect to any “change in control” post-termination protections under the applicable Flagstar stock plan or award agreement; provided that such protections will be extended to apply until 18 months after the effective time) as were applicable to the applicable Flagstar RSU or Flagstar PSU immediately prior to the effective time.

The merger agreement provides that, at the effective time, each outstanding restricted stock award held by a Flagstar director (a “Flagstar restricted share”) under the Flagstar stock plan, whether vested or unvested, will accelerate in full and will be converted into, and become exchanged for, the merger consideration.

 

Q:

How will the merger affect the Flagstar 401(k) plan?

 

A.

It is expected that the Flagstar Financial, Inc. 401(k) Employee Savings Plan (the “Flagstar 401(k) plan”) will remain in effect through and after the closing date, and will be merged into a 401(k) plan sponsored by NYCB or one of its subsidiaries (the “NYCB 401(k) plan”) at a later date. However, the merger agreement provides that if requested by NYCB in writing delivered to Flagstar not less than 20 business days before the closing date, the board of directors of Flagstar (or the appropriate committee thereof) will adopt resolutions and take such corporate action as is necessary or appropriate to terminate the Flagstar 401(k) plan, effective as of the day prior to the closing date and contingent upon the occurrence of the effective time. If NYCB requests that the Flagstar 401(k) plan be terminated, (i) Flagstar will provide NYCB with evidence that such plan has been terminated (the form and substance of which will be subject to reasonable review and comment by NYCB) not later than two days immediately preceding the closing date and (ii) the employees of Flagstar and its subsidiaries who at the effective time become employees of NYCB or its subsidiaries (the “continuing employees”) will be eligible to participate, effective as of the effective time, in the NYCB 401(k) plan. NYCB and Flagstar will take any and all actions as may be required, including amendments to the Flagstar 401(k) plan and/or the NYCB 401(k) plan, to permit the continuing employees to make rollover contributions to the NYCB 401(k) plan of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Internal Revenue Code of 1986, as amended (the “Code”)) from the Flagstar 401(k) plan in the form of cash, notes (in the case of loans), NYCB common stock or a combination thereof in an amount equal to the full account balance distributed to such employee from the Flagstar 401(k) plan, and NYCB will endeavor through reasonably commercial efforts to ensure availability of in-kind and note rollovers.

 

Q:

How will the merger affect Flagstar’s employee stock purchase plan?

 

A:

The merger agreement provides that as soon as reasonably practicable following the date of the merger agreement and in any event prior to the effective time, Flagstar shall take all actions (including obtaining any necessary determinations and/or resolutions of the Flagstar board or Flagstar Compensation Committee and, if appropriate, amending the terms of the Flagstar 2017 Employee Stock Purchase Plan (the “ESPP”)) that may be necessary or required under the ESPP and applicable laws to ensure that (i) except for the three-month offering period under the ESPP that commenced on April 1, 2021 (the “Final Offering”), no offering period shall be authorized or commenced on or after the date of the merger agreement, (ii) the Final Offering shall end on a date no later than the business day immediately preceding the closing date (the earlier of the date the Final Offering ends and the business day immediately preceding the closing date, the “ESPP Termination Date”), (iii) each ESPP participant’s accumulated contributions under the ESPP shall be used to purchase shares of Flagstar common stock in accordance with the ESPP as of the end of the Final Offering, with any remaining contributions returned to the participant (without interest) as soon as administratively practicable thereafter, (iv) the applicable purchase price for shares of Flagstar common stock shall not be decreased below the levels set forth in the ESPP as of the date of the merger agreement and (v) the ESPP shall terminate in its entirety upon the ESPP Termination Date and no further rights shall be granted or exercised under the ESPP thereafter other than in accordance with the preceding clause (iii).

 

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Q:

How does the NYCB board of directors recommend that I vote at the NYCB special meeting?

 

A:

The NYCB board of directors unanimously recommends that you vote “FOR” the NYCB share issuance proposal and “FOR” the NYCB adjournment proposal.

In considering the recommendations of the NYCB board of directors, NYCB stockholders should be aware that NYCB directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of NYCB stockholders generally. For a more complete description of these interests, see the information provided in the section entitled “The Merger—Interests of Certain NYCB Directors and Executive Officers in the Merger” beginning on page 98.

 

Q:

How does the Flagstar board of directors recommend that I vote at the Flagstar special meeting?

 

A:

The Flagstar board of directors unanimously recommends that you vote “FOR” the Flagstar merger proposal, “FOR” the Flagstar compensation proposal and “FOR” the Flagstar adjournment proposal.

In considering the recommendations of the Flagstar board of directors, Flagstar shareholders should be aware that Flagstar directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of Flagstar shareholders generally. For a more complete description of these interests, see the information provided in the section entitled “The Merger—Interests of Certain Flagstar Directors and Executive Officers in the Merger” beginning on page 101.

 

Q:

Who is entitled to vote at the NYCB special meeting?

 

A:

The record date for the NYCB special meeting is June 18, 2021. All NYCB stockholders who held shares of NYCB common stock at the close of business on the record date for the NYCB special meeting are entitled to receive notice of, and to vote at, the NYCB special meeting.

Each holder of NYCB common stock is entitled to cast one vote on each matter properly brought before the NYCB special meeting for each share of NYCB common stock that such holder owned of record as of the record date. As of June 18, 2021, there were 465,060,525 outstanding shares of NYCB common stock.

Attendance at the special meeting is not required to vote. See below and the section entitled “The NYCB Special Meeting—Proxies” beginning on page 37 for instructions on how to vote your shares without attending the NYCB special meeting.

 

Q:

Who is entitled to vote at the Flagstar special meeting?

 

A:

The record date for the Flagstar special meeting is June 18, 2021. All Flagstar shareholders who held shares of record of Flagstar common stock at the close of business on the record date for the Flagstar special meeting are entitled to receive notice of, and to vote at, the Flagstar special meeting.

Each holder of Flagstar common stock is entitled to cast one vote on each matter properly brought before the Flagstar special meeting for each share of Flagstar common stock that such holder owned of record as of the record date. As of June 18, 2021, there were 52,791,585 outstanding shares of Flagstar common stock.

Attendance at the special meeting is not required to vote. See below and the section entitled “The Flagstar Special Meeting—Proxies” beginning on page 42 for instructions on how to vote your shares of Flagstar common stock without attending the Flagstar special meeting.

 

Q:

What constitutes a quorum for the NYCB special meeting?

 

A:

The presence at the NYCB special meeting, in attendance virtually or by proxy, of holders of a majority of the outstanding shares of NYCB common stock entitled to vote at the NYCB special meeting will constitute a quorum for the transaction of business at the NYCB special meeting (after subtracting any shares in excess of the “NYCB Limit” (as defined below) pursuant to the NYCB certificate of incorporation). Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

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Q:

What constitutes a quorum for the Flagstar special meeting?

 

A:

The presence at the Flagstar special meeting, in attendance virtually or by proxy, of the holders of a majority of the outstanding shares of Flagstar common stock entitled to vote at the Flagstar special meeting will constitute a quorum for the transaction of business at the Flagstar special meeting. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

Q:

What vote is required for the approval of each proposal at the NYCB special meeting?

 

A:

NYCB Proposal 1: NYCB share issuance proposal. Approval of the NYCB share issuance proposal requires the affirmative vote of a majority of votes cast by NYCB stockholders at the NYCB special meeting.

NYCB Proposal 2: NYCB adjournment proposal. Whether or not a quorum will be present at the meeting, approval of the NYCB adjournment proposal requires the affirmative vote of a majority of the votes cast by NYCB stockholders at the NYCB special meeting.

 

Q:

What vote is required for the approval of each proposal at the Flagstar special meeting?

 

A:

Flagstar Proposal 1: Flagstar merger proposal. Approval of the Flagstar merger proposal requires the affirmative vote of a majority of the outstanding shares of Flagstar common stock entitled to vote on the Flagstar merger proposal.

Flagstar Proposal 2: Flagstar compensation proposal. Approval of the Flagstar compensation proposal requires the affirmative vote of a majority of the votes cast by Flagstar shareholders.

Flagstar Proposal 3: Flagstar adjournment proposal. Whether or not a quorum will be present at the meeting, approval of the Flagstar adjournment proposal requires the affirmative vote of a majority of the votes cast by Flagstar shareholders.

 

Q:

Why am I being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, merger-related compensation arrangements for the Flagstar named executive officers (i.e., the Flagstar compensation proposal)?

 

A:

Under SEC rules, Flagstar is required to seek a non-binding, advisory vote with respect to the compensation that may be paid or become payable to Flagstar’s named executive officers that is based on or otherwise relates to the merger or “golden parachute” compensation.

 

Q:

What happens if Flagstar shareholders do not approve, by non-binding, advisory vote, merger-related compensation arrangements for Flagstar’s named executive officers (i.e., the Flagstar compensation proposal)?

 

A:

The vote on the proposal to approve the merger-related compensation arrangements for each of Flagstar’s named executive officers is separate and apart from the votes to approve the other proposals being presented at the Flagstar special meeting. Because the vote on the proposal to approve the merger-related executive compensation is advisory in nature only, it will not be binding upon Flagstar or NYCB before or following the merger. Accordingly, the merger-related compensation will be paid to Flagstar’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and other contractual arrangements even if Flagstar shareholders do not approve the proposal to approve the merger-related executive compensation.

 

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Q:

What if I hold shares in both NYCB and Flagstar?

 

A:

If you hold shares of both NYCB common stock and Flagstar common stock, you will receive separate packages of proxy materials. A vote cast as an NYCB stockholder will not count as a vote cast as a Flagstar shareholder, and a vote cast as a Flagstar shareholder will not count as a vote cast as an NYCB stockholder. Therefore, please submit separate proxies for your shares of NYCB common stock and your shares of Flagstar common stock.

 

Q:

How can I attend, vote and ask questions at the NYCB special meeting or the Flagstar special meeting?

 

A:

Record Holders. If you hold shares of the applicable company’s common stock directly in your name as the holder of record of NYCB or Flagstar common stock you are a “record holder” and your shares may be voted at the NYCB special meeting or the Flagstar special meeting by you, as applicable. If you choose to vote your shares virtually at the respective special meeting via the applicable special meeting website, you will need the 16-digit control number, as described below.

Beneficial Owners. If you hold shares in “street name” through a broker, bank, trustee or other nominee, you are a “beneficial owner” and your shares may be voted at the NYCB special meeting or the Flagstar special meeting, as applicable, by you as described below. If you choose to vote your shares virtually at the respective special meeting via the applicable special meeting website, you will need the 16-digit control number, as described below.

NYCB special meeting. If you are a record holder you will be able to attend the NYCB special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/NYCB2021SM and following the instructions. Please have your 16-digit control number, which can be found on your notice, proxy card or voting instruction card, to access the meeting. If you are a beneficial owner, you also will be able to attend the NYCB special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/NYCB2021SM and following the instructions. Please have your 16-digit control number, which can be found on your notice, proxy card or voting instruction card, to access the meeting. Please review this information prior to the NYCB special meeting to ensure you have access.

NYCB encourages its stockholders to visit the meeting website above in advance of the NYCB special meeting to familiarize themselves with the online access process. The virtual NYCB special meeting platform is fully supported across browsers and devices that are equipped with the most updated version of applicable software and plugins. Stockholders should verify their internet connection prior to the NYCB special meeting.

Stockholders encountering difficulty with the NYCB special meeting virtual platform during the login process or at any time during the meeting may utilize technical support. Technical support information is provided on the login page for all stockholders. If you have difficulty accessing the virtual NYCB special meeting during check-in or during the meeting, please contact technical support as indicated on the NYCB special meeting login page. Stockholders will have substantially the same opportunities to participate in the virtual NYCB special meeting as they would have at a physical, in-person meeting. Stockholders as of the record date will be able to attend, vote, examine the stockholder list, and submit questions during a portion of the meeting via the online platform.

Flagstar special meeting. If you are a record holder you will be able to attend the Flagstar special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/FBC2021SM and following the instructions. Please have your 16-digit control number, which can be found on your proxy card or notice previously received, to access the meeting. If you are a beneficial owner and have a valid proxy for the Flagstar special meeting, you also will be able to attend the Flagstar special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/FBC2021SM and following the instructions; however, in order to do so, you must obtain a valid legal proxy from your bank, broker, trustee or other nominee. Please have your 16-digit control number, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee, to access the meeting. Please review this information prior to the Flagstar special meeting to ensure you have access.

Flagstar encourages its shareholders to visit the meeting website above in advance of the Flagstar special meeting to familiarize themselves with the online access process. Shareholders should verify their internet connection prior to the Flagstar special meeting. If you have difficulty accessing the virtual Flagstar special meeting during check-in or during the meeting, please contact technical support as indicated on the Flagstar special meeting sign-in page. Shareholders will have substantially the same opportunities to participate in the virtual Flagstar special meeting as they would have at a physical, in-person meeting. Shareholders of record (or beneficial owner with a valid legal proxy) as of the record date will be able to attend, vote, examine the shareholder list, and submit questions during a portion of the meeting via the online platform.

 

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Even if you plan to attend the NYCB special meeting or the Flagstar special meeting virtually, as applicable, NYCB and Flagstar recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the respective special meeting.

Additional information on attending the virtual special meetings can be found under the section entitled “The NYCB Special Meeting—Attending the Virtual Special Meeting” on page 36 and under the section entitled “The Flagstar Special Meeting—Attending the Virtual Special Meeting” on page 41.

 

Q:

How can I vote my shares without attending my respective special meeting?

 

A:

Whether you hold your shares directly as the holder of record of NYCB or Flagstar or beneficially in “street name,” you may direct your vote by proxy without attending the NYCB special meeting or the Flagstar special meeting, as applicable.

If you are a record holder of NYCB common stock or Flagstar common stock, you can vote your shares by proxy over the internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. If you hold shares beneficially in “street name” as a beneficial owner of NYCB common stock or Flagstar common stock, you should follow the voting instructions provided by your bank, broker, trustee or other nominee.

Additional information on voting procedures can be found under the section entitled “The NYCB Special Meeting—Attending the Virtual Special Meeting” on page 36 and under the section entitled “The Flagstar Special Meeting—Attending the Virtual Special Meeting” on page 41.

 

Q:

Is there a limit on voting shares of NYCB common stock or Flagstar common stock?

 

A:

As provided in the NYCB certificate of incorporation, holders of NYCB common stock who beneficially own in excess of 10% of the outstanding shares of NYCB common stock (the “NYCB Limit”) are not entitled to any vote with respect to shares held in excess of the NYCB Limit. A person or entity is deemed to beneficially own shares owned by an affiliate of, as well as by, persons acting in concert with such person or entity. The NYCB certificate of incorporation authorizes the NYCB board of directors (i) to make all determinations necessary to implement and apply the NYCB Limit, including determining whether persons or entities are acting in concert, and (ii) to demand that any person who is reasonably believed to beneficially own stock in excess of the NYCB Limit supply information to the respective company to enable its board of directors to implement and apply the NYCB Limit. As of the date of this joint proxy statement/prospectus, based solely on information in reports filed with the SEC, one entity is known to NYCB to beneficially own 11.3% of the outstanding shares of NYCB common stock and no other person is known to NYCB to own in excess of the NYCB Limit.

There is no similar limit on voting shares of Flagstar common stock.

 

Q:

What do I need to do now?

 

A:

After carefully reading and considering the information contained in this document, please vote as soon as possible. If you hold shares of NYCB common stock or Flagstar common stock, please respond by completing, signing and dating the accompanying proxy card and returning it in the enclosed postage-paid envelope, or by submitting your proxy by telephone or through the internet, as soon as possible so that your shares may be represented at your meeting. Please note that if you are a beneficial owner with shares held in “street name,” you should follow the voting instructions provided by your bank, broker, trustee or other nominee.

 

Q:

If I am a beneficial owner with my shares held in “street name” by a bank, broker, trustee or other nominee, will my bank, broker, trustee or other nominee vote my shares for me?

 

A:

No. Your bank, broker, trustee or other nominee cannot vote your shares without instructions from you. You should instruct your bank, broker, trustee or other nominee how to vote your shares in accordance with the instructions provided to you. Please check the voting instruction form used by your bank, broker, trustee or other nominee.

 

Q:

What is a “broker non-vote”?

 

A:

Banks, brokers, trustees and other nominees who hold shares in street name for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions

 

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  from beneficial owners. However, banks, brokers, trustees and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine” without specific instructions from the beneficial owner.

A broker non-vote occurs when a bank, broker, trustee or other nominee is not permitted to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the bank, broker, trustee or other nominee with such instructions. Broker non-votes only count toward a quorum if at least one proposal is presented with respect to which the bank, broker, trustee or other nominee has discretionary authority. It is expected that all proposals to be voted on at each of the NYCB special meeting and the Flagstar special meeting will be “non-routine” matters, and, as such, broker non-votes, if any, will not be counted as present and entitled to vote for purposes of determining a quorum at the NYCB special meeting or the Flagstar special meeting. If your bank, broker, trustee or other nominee holds your shares of NYCB common stock or Flagstar common stock in “street name,” such entity will vote your shares of NYCB common stock or Flagstar common stock only if you provide instructions on how to vote by complying with the instructions provided to you by your bank, broker, trustee or other nominee with this joint proxy statement/prospectus.

If you are a beneficial owner of NYCB common stock and you do not instruct your broker, bank or other nominee on how to vote your shares of NYCB common stock:

 

   

NYCB share issuance proposal: Your broker, bank or other nominee may not vote your shares on the NYCB share issuance proposal, which broker non-votes, if any, will have no effect on the outcome of such proposal; and

 

   

NYCB adjournment proposal: Your broker, bank or other nominee may not vote your shares on the NYCB adjournment proposal, which broker non-votes, if any, will have no effect on the outcome of such proposal.

If you are a beneficial owner of Flagstar common stock and you do not instruct your bank, broker, trustee or other nominee on how to vote your shares of Flagstar common stock:

 

   

Flagstar merger proposal: Your bank, broker, trustee or other nominee may not vote your shares on the Flagstar merger proposal, which broker non-votes, if any, will have the same effect as a vote “AGAINST” such proposal;

 

   

Flagstar compensation proposal: Your bank, broker, trustee or other nominee may not vote your shares on the Flagstar compensation proposal, which broker non-votes, if any, will have no effect on the outcome of such proposal; and

 

   

Flagstar adjournment proposal: Your bank, broker, trustee or other nominee may not vote your shares on the Flagstar adjournment proposal, which broker non-votes, if any, will have no effect on the outcome of such proposal.

 

Q:

What if I abstain from voting?

 

A:

For purposes of the NYCB special meeting, an abstention occurs when an NYCB stockholder attends the NYCB special meeting and does not vote or returns a proxy with an “abstain” instruction.

 

   

NYCB share issuance proposal: According to guidance from the NYSE, an abstention with respect to the NYCB share issuance proposal is treated as a vote cast on the NYCB share issuance proposal. Accordingly, an abstention will have the same effect as a vote cast “AGAINST” the NYCB share issuance proposal.

 

   

NYCB adjournment proposal: An abstention with respect to the NYCB adjournment proposal will have no effect on the outcome of the NYCB adjournment proposal.

For purposes of the Flagstar special meeting, an abstention occurs when a Flagstar shareholder attends the Flagstar special meeting and does not vote or returns a proxy with an “abstain” instruction.

 

   

Flagstar merger proposal: An abstention with respect to the Flagstar merger proposal will have the same effect as a vote “AGAINST” the Flagstar merger proposal.

 

   

Flagstar compensation proposal: According to guidance from the NYSE, an abstention with respect to the Flagstar compensation proposal is treated as a vote cast on the Flagstar compensation proposal. Accordingly, an abstention will have the same effect as a vote cast “AGAINST” the Flagstar compensation proposal.

 

   

Flagstar adjournment proposal: An abstention with respect to the Flagstar adjournment proposal will have no effect on the outcome of the Flagstar adjournment proposal.

 

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Q:

Why is my vote important?

 

A:

If you do not vote, it will be more difficult for NYCB or Flagstar to obtain the necessary quorum to hold its special meeting. In addition, an abstention will have the same effect as a vote “AGAINST” the NYCB share issuance proposal; your failure to submit a proxy or vote virtually at the Flagstar special meeting, or failure to instruct your bank, broker, trustee or other nominee how to vote, or abstention will have the same effect as a vote “AGAINST” the Flagstar merger proposal; and an abstention will have the same effect as a vote “AGAINST” the Flagstar compensation proposal.

The NYCB board of directors and the Flagstar board of directors unanimously recommend that you vote “FOR” the NYCB share issuance proposal and “FOR” the Flagstar merger proposal and the Flagstar compensation proposal, respectively, and “FOR” the other proposal to be considered at the NYCB special meeting and the Flagstar special meeting, respectively.

 

Q:

What if I hold shares of Flagstar common stock in my plan account under the Flagstar 401(k) plan?

 

A:

If you hold shares of Flagstar common stock in your plan account under the Flagstar 401(k) Plan, you will receive voting instruction forms that reflect all shares of Flagstar common stock for which you may direct the voting under the terms of the applicable plan.

Under the terms of the Flagstar 401(k) plan, the Flagstar 401(k) plan trustee votes the shares of Flagstar common stock held by the plan only in accordance with instructions provided to the trustee on how to vote the shares by a participant with respect to the shares of Flagstar common stock held in such participant’s plan account. The Flagstar 401(k) plan trustee will vote your shares of Flagstar common stock in accordance with your instructions. In the event such written instructions direct the voting of fractional shares, the Flagstar 401(k) plan trustee will cumulate fractional share votes and vote all resulting whole share votes. Any remaining partial share votes will be disregarded. Any shares of Flagstar common stock held by the Flagstar 401(k) plan for which the trustee has not received written instructions will not be voted. The deadline for returning your voting instructions for shares held in your account in the Flagstar 401(k) plan is three days prior to the Flagstar special meeting date.

 

Q:

What will happen if I return my proxy card without indicating how to vote?

 

A:

If you sign and return your proxy card without indicating how to vote on any particular proposal, the shares of NYCB common stock represented by your proxy will be voted as recommended by the NYCB board of directors with respect to such proposal or proposals, as the case may be or the shares of Flagstar common stock represented by your proxy will be voted as recommended by the Flagstar board of directors with respect to such proposal or proposals as the case may be.

 

Q:

Can I change my vote after I have delivered my proxy or voting instruction card?

 

A:

If you directly hold shares of NYCB common stock or Flagstar common stock in your name as a record holder, you can change your vote at any time before your proxy is voted at your meeting. You can do this by:

 

   

submitting a written statement that you would like to revoke your proxy to the corporate secretary of NYCB or Flagstar, as applicable;

 

   

signing and returning a proxy card with a later date;

 

   

attending the special meeting virtually and voting by ballot at the special meeting; or

 

   

voting by telephone or the internet at a later time.

If you are a beneficial owner and your shares are held by a bank, broker, trustee or other nominee, you may change your vote by:

 

   

contacting your bank, broker, trustee or other nominee; or

 

   

attending the applicable special meeting virtually and voting your shares via the special meeting website if you have your 16-digit control number, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee, and, if you are a beneficial owner of Flagstar common stock, you have a valid legal proxy. Please contact your bank, broker, trustee or other nominee for further instructions.

 

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Q:

Will NYCB be required to submit the NYCB share issuance proposal to its stockholders even if the NYCB board of directors has withdrawn, modified or qualified its recommendation?

 

A:

Yes. Unless the merger agreement is terminated before the NYCB special meeting, NYCB is required to submit the NYCB share issuance proposal to its stockholders even if the NYCB board of directors has withdrawn, modified or qualified its recommendation.

 

Q:

Will Flagstar be required to submit the Flagstar merger proposal to its shareholders even if the Flagstar board of directors has withdrawn, modified or qualified its recommendation?

 

A:

Yes. Unless the merger agreement is terminated before the Flagstar special meeting, Flagstar is required to submit the Flagstar merger proposal to its shareholders even if the Flagstar board of directors has withdrawn, modified or qualified its recommendation.

 

Q:

Are holders of NYCB common stock entitled to appraisal rights?

 

A:

No. Holders of NYCB common stock are not entitled to appraisal rights under the Delaware General Corporation Law (the “DGCL”). For more information, see the section entitled “Comparison of the Rights of NYCB Stockholders and Flagstar Shareholders—Appraisal or Dissenters’ Rights” beginning on page 153.

 

Q:

Are holders of Flagstar common stock entitled to dissenters’ rights?

 

A:

No. The holders of Flagstar common stock are not entitled to dissenters’ rights under the Michigan Business Corporation Act (the “MBCA”). For more information, see the section entitled “Comparison of the Rights of NYCB Stockholders and Flagstar Shareholders—Appraisal or Dissenters’ Rights” beginning on page 153.

 

Q:

Are there any risks that I should consider in deciding whether to vote for the approval of the NYCB share issuance proposal, the approval of the Flagstar merger proposal, or the other proposals to be considered at the NYCB special meeting and the Flagstar special meeting, respectively?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 28. You also should read and carefully consider the risk factors of NYCB and Flagstar contained in the documents that are in the annex of this joint proxy statement/prospectus.

 

Q:

What are the U.S. federal income tax consequences of the merger and the holdco merger to holders of Flagstar common stock?

 

A:

The merger and the holdco merger have been structured to qualify as a reorganization for federal income tax purposes. Accordingly, holders of Flagstar common stock generally will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their Flagstar common stock for NYCB common stock in the merger, except for any gain or loss that may result from the receipt of cash instead of a fractional share of NYCB common stock. You should be aware that the tax consequences to you of the mergers may depend upon your own situation. In addition, you may be subject to state, local or foreign tax laws that are not discussed in this joint proxy statement/prospectus. You should therefore consult with your own tax advisor for a full understanding of the tax consequences to you of the mergers. For a more complete discussion of the U.S. federal income tax consequences of the mergers, see the section entitled “U.S. Federal Income Tax Consequences of the Merger” beginning on page 131.

 

Q:

When is the merger expected to be completed?

 

A:

The transaction is expected to close by the end of 2021, subject to the satisfaction of customary closing conditions, including the receipt of the requisite regulatory approvals (as defined in “The Merger—Regulatory Approvals”) and the requisite approval by the stockholders of NYCB and the shareholders of Flagstar. However, neither NYCB nor Flagstar can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion of the merger is subject to conditions and factors outside the control of both companies. Flagstar must first obtain the approval of Flagstar shareholders for the Flagstar merger proposal, and NYCB must first obtain approval of NYCB stockholders for the NYCB share issuance proposal. NYCB and Flagstar must also obtain the requisite

 

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  regulatory approvals and satisfy certain other closing conditions. NYCB and Flagstar expect the merger to be completed promptly once NYCB and Flagstar have obtained their respective stockholders’ and shareholders’ approvals noted above, have obtained the requisite regulatory approvals, and have satisfied certain other closing conditions.

 

Q:

What are the conditions to complete the merger?

 

A:

The obligations of NYCB and Flagstar to complete the merger are subject to the satisfaction or waiver of certain closing conditions contained in the merger agreement, including the receipt of the requisite regulatory approvals and the expiration of all statutory waiting periods without the imposition of any materially burdensome regulatory condition, the satisfaction of certain tax conditions (including the receipt of a tax opinion by Flagstar and, in certain circumstances, NYCB), approval by NYCB stockholders of the NYCB share issuance proposal and approval by Flagstar shareholders of the Flagstar merger proposal. For more information, see “The Merger Agreement—Conditions to Complete the Merger” beginning on page 127.

 

Q:

What happens if the merger is not completed?

 

A:

If the merger is not completed, the holders of Flagstar common stock will not receive any consideration for their shares of Flagstar common stock in connection with the merger. Instead, Flagstar will remain an independent public company, Flagstar common stock will continue to be listed and traded on the NYSE, and NYCB will not complete the issuance of shares of NYCB common stock pursuant to the merger agreement. In addition, if the merger agreement is terminated in certain circumstances, a termination fee of $90 million will be payable by either NYCB or Flagstar, as applicable. See “The Merger Agreement—Termination Fee” beginning on page 128 for a more detailed discussion of the circumstances under which a termination fee will be required to be paid.

 

Q:

What happens if I sell my shares after the applicable record date but before my company’s special meeting?

 

A:

Each of the NYCB and Flagstar record date is earlier than the date of the NYCB special meeting and the Flagstar special meeting, as applicable, and earlier than the date that the merger is expected to be completed. If you sell or otherwise transfer your shares of NYCB common stock or Flagstar common stock, as applicable, after the applicable record date but before the date of the applicable special meeting, you will retain your right to vote at such special meeting (provided that such shares remain outstanding on the date of such special meeting), but, with respect to Flagstar common stock, you will not have the right to receive the merger consideration to be received by Flagstar shareholders in connection with the merger. In order to receive the merger consideration, you must hold your shares of Flagstar common stock as of the completion of the merger.

 

Q:

Should I send in my stock certificates now?

 

A:

No. Please do not send in your stock certificates with your proxy. After the merger is completed, an exchange agent designated by NYCB and reasonably acceptable to Flagstar (the “exchange agent”) will send you instructions for exchanging Flagstar stock certificates for the consideration to be received in the merger. See “The Merger Agreement—Exchange of Shares” beginning on page 115.

 

Q:

What should I do if I receive more than one set of voting materials for the same special meeting?

 

A:

If you are a beneficial owner and hold shares of NYCB common stock or Flagstar common stock in “street name” and also are a record holder and hold shares directly in your name or otherwise or if you hold shares of NYCB common stock or Flagstar common stock in more than one brokerage account, you may receive more than one set of voting materials relating to the same special meeting.

Record Holders. For shares held directly, please complete, sign, date and return each proxy card (or cast your vote by telephone or internet as provided on each proxy card) or otherwise follow the voting instructions provided in this joint proxy statement/prospectus in order to ensure that all of your shares of NYCB common stock or Flagstar common stock are voted.

Beneficial Owners. For shares held in “street name” through a bank, broker, trustee or other nominee, you should follow the procedures provided by your bank, broker, trustee or other nominee in order to vote your shares.

 

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Q:

Who can help answer my questions?

 

A:

NYCB stockholders. If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this document or the enclosed proxy card or voting instruction card, you should contact NYCB’s proxy solicitor, Equiniti (US) Services LLC, by calling toll-free at 833-434-0274.

Flagstar shareholders. If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this document or the enclosed proxy card or voting instruction card, you should contact Flagstar’s proxy solicitor, Equiniti (US) Services LLC, by calling toll-free at 833-434-0274.

 

Q:

Where can I find more information about NYCB and Flagstar?

 

A:

You can find more information about NYCB and Flagstar from the various sources described under “Where You Can Find More Information” beginning on page 159.

 

Q:

What is householding and how does it affect me?

 

A:

The SEC permits companies to send a single set of proxy materials to any household at which two or more shareholders reside, unless contrary instructions have been received, but only if the applicable shareholders provide advance notice and follow certain procedures. In such cases, each shareholder continues to receive a separate notice of the meeting and proxy card. Certain brokerage firms may have instituted householding for beneficial owners of NYCB common stock and Flagstar common stock, as applicable, held through brokerage firms. If your family has multiple accounts holding NYCB common stock or Flagstar common stock, as applicable, you may have already received a householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this joint proxy statement/prospectus. The broker will arrange for delivery of a separate copy of this joint proxy statement/prospectus promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.

 

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SUMMARY

This summary highlights selected information in this joint proxy statement/prospectus and may not contain all of the information that is important to you. You should carefully read this entire joint proxy statement/prospectus, including the documents attached as annexes to this joint proxy statement/prospectus and the other documents we refer you to, for a more complete understanding of the matters being considered at the special meetings. In addition, we (i) include important business and financial information about NYCB in the annexes to this joint proxy statement/prospectus and (ii) incorporate by reference important business and financial information about Flagstar into this joint proxy statement/prospectus. You may obtain the information regarding Flagstar incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 159 of this joint proxy statement/prospectus.

Information About the Companies (page 47)

NYCB

NYCB is a Delaware corporation and the bank holding company for NYCB Bank. Formerly known as Queens County Savings Bank, NYCB Bank converted from a state-chartered mutual savings bank to the capital stock form of ownership on November 23, 1993, at which date NYCB completed its initial offering of common stock (par value: $0.01 per share) at a price of $25.00 per share ($0.93 per share on a split-adjusted basis, reflecting the impact of nine stock splits between 1994 and 2004). As of March 31, 2021, NYCB had consolidated total assets of $57.7 billion, deposits of $34.2 billion and stockholders’ equity of $6.8 billion. NYCB had 2,956 employees as of March 31, 2021.

Established in 1859, NYCB Bank is a New York State-chartered savings bank with 237 branches as of March 31, 2021 that currently operates through eight local divisions, each with a history of strength and service: 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. NYCB Bank is a leading producer of multi-family loans in New York City, with an emphasis on non-luxury residential apartment buildings with rent-regulated units that feature below-market rents. In addition to multifamily loans, which are NYCB Bank’s principal asset, NYCB Bank originates commercial real estate (“CRE”) loans (primarily in New York City), specialty finance loans and leases, and, to a much lesser extent, acquisition, development and construction (“ADC”) loans, and commercial and industrial (“C&I”) loans (typically made to small and mid-size business in Metro New York).

NYCB’s common stock is traded on the NYSE under the symbol “NYCB.” The principal executive offices of NYCB are located at 615 Merrick Avenue, Westbury, New York 11590, and its telephone number is (516) 683-4100.

Flagstar

Flagstar is a savings and loan holding company incorporated under the state laws of Michigan. Flagstar is the holding company for Flagstar Bank, a federally chartered stock savings bank founded in 1987. As of March 31, 2021, Flagstar had consolidated total assets of $29.4 billion, deposits of $19.4 billion and stockholders’ equity of $2.4 billion. Flagstar had 5,418 full-time equivalent employees as of March 31, 2021.

The principal business of Flagstar is to provide, primarily through its principal subsidiary Flagstar Bank, commercial and consumer banking services. As of March 31, 2021, Flagstar is the sixth largest bank mortgage originator in the nation and the sixth largest subservicer of mortgage loans nationwide. The relationship-based business model leverages Flagstar Bank’s full-service bank’s capabilities and national mortgage platform to create and build financial solutions for its customers. At March 31, 2021, Flagstar operated 158 full service banking branches that offer a full set of banking products to consumer, commercial and government customers. Its bank branch footprint spans Michigan, Indiana, California, Wisconsin and Ohio.

Flagstar originates mortgages through a network of brokers and correspondents in all 50 states and its own loan officers, which includes its direct lending team, from 87 retail locations and three call centers. Flagstar is also a leading national servicer of mortgage loans and provides complementary ancillary offerings including mortgage servicing rights (“MSR”) lending, servicing advance lending and MSR recapture services.


 

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Flagstar’s common stock is traded on the NYSE under the symbol “FBC.” The principal executive offices of Flagstar are located at 5151 Corporate Drive, Troy, Michigan 48098, and its telephone number is (248) 312-2000.

Merger Sub

Merger Sub, a direct, wholly owned subsidiary of NYCB, is a Delaware corporation that was incorporated for the sole purpose of effecting the merger. In the merger, Merger Sub will merge with and into Flagstar, with Flagstar surviving as a direct, wholly owned subsidiary of NYCB and the separate corporate existence of Merger Sub will cease.

Its principal executive office is located at c/o New York Community Bancorp, Inc., 615 Merrick Avenue, Westbury, New York 11590 and its telephone number is (516) 683-4100.

The Merger and the Merger Agreement (pages 48 and 113)

The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus. You are encouraged to read the merger agreement carefully and in its entirety, as it is the primary legal document that governs the merger.

Pursuant to the terms and subject to the conditions set forth in the merger agreement, at the effective time of the merger, Merger Sub will merge with and into Flagstar, with Flagstar as the surviving entity. As soon as reasonably practicable following the merger, the holdco merger will occur in which Flagstar will merge with and into NYCB, with NYCB as the surviving entity. The merger agreement further provides that at a date and time following the holdco merger as determined by NYCB, the bank merger will occur in which Flagstar Bank will merge with and into NYCB Bank, with NYCB Bank as the surviving bank. Following the merger, Flagstar common stock will be delisted from NYSE, deregistered under the Exchange Act and will cease to be publicly traded.

Merger Consideration (page 114)

Each share of Flagstar common stock issued and outstanding immediately prior to the effective time, except for certain shares owned by NYCB or Flagstar (subject to certain exceptions described in the merger agreement), will be converted into the right to receive 4.0151 shares of NYCB common stock. Flagstar shareholders who would otherwise be entitled to a fraction of a share of NYCB common stock in the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent) based on the NYCB closing share value.

NYCB common stock is listed on the NYSE under the symbol “NYCB,” and Flagstar common stock is listed on NYSE under the symbol “FBC.” The following table shows the closing-sale prices of NYCB common stock and Flagstar common stock as reported on the NYSE, on April 23, 2021, the last trading day before the public announcement of the merger agreement, and on June 24, 2021, the last practicable trading day before the date of this joint proxy statement/prospectus. This table also shows the implied value of the merger consideration to be issued in exchange for each share of Flagstar common stock, which was calculated by multiplying the closing price of NYCB common stock on those dates by the exchange ratio of 4.0151.

 

     NYCB
Common
Stock
     Flagstar
Common
Stock
     Implied Value
of One Share
of Flagstar
Common
Stock
 

April 23, 2021

   $ 11.99      $ 45.37      $ 48.14  

June 24, 2021

   $ 11.22      $ 43.15      $ 45.05  

For more information on the exchange ratio, see the section entitled “The Merger—Terms of the Merger” beginning on page 48 and “The Merger Agreement—Merger Consideration” beginning on page 114.

Treatment of Flagstar Equity Awards (page 114)

The merger agreement provides that, at the effective time, each outstanding Flagstar RSU under the Flagstar stock plan, whether vested or unvested, will cease to represent a restricted stock unit denominated in shares of Flagstar common stock and will be converted into an NYCB RSU. The number of shares of NYCB common stock subject to each such NYCB RSU


 

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will be equal to the product of (i) the number of shares of Flagstar common stock subject to such Flagstar RSU immediately prior to the effective time (including any applicable dividend equivalents), multiplied by (ii) the exchange ratio.

The merger agreement also provides that, at the effective time, each outstanding Flagstar PSU under the Flagstar stock plan for which the applicable performance period is complete, including awards granted prior to the date of the merger agreement under Flagstar’s Executive Long-Term Incentive Program and Flagstar PSUs granted in 2019, whether vested or unvested, will cease to represent a performance share unit denominated in shares of Flagstar common stock and will be converted into the right to receive the merger consideration in respect of the number of shares of Flagstar common stock subject to such Flagstar PSU immediately prior to the effective time based on actual performance through completion of the applicable performance period as determined by the Flagstar Compensation Committee in its reasonable judgment, less applicable tax withholding.

The merger agreement further provides that, at the effective time, each outstanding Flagstar PSU for which the applicable performance period is not complete will cease to represent a performance share unit denominated in shares of Flagstar common stock and will be converted into an NYCB RSU. The number of shares of NYCB common stock subject to each such NYCB RSU will be equal to the product of (A) the number of shares of Flagstar common stock subject to such Flagstar PSU immediately prior to the effective time (including any applicable dividend equivalents) based on (1) in the case of Flagstar PSUs granted in 2020, 150% of the target level of performance and (2) in the case of Flagstar PSUs granted in 2021 and thereafter, the target level of performance multiplied by (B) the exchange ratio.

Except as specifically provided above, each NYCB RSU will continue to be governed by the same terms and conditions (including employment vesting terms but excluding performance conditions, after giving effect to any “change in control” post-termination protections under the applicable Flagstar stock plan or award agreement; provided that such protections will be extended to apply until 18 months after the effective time) as were applicable to the applicable Flagstar RSU or Flagstar PSU immediately prior to the effective time.

The merger agreement provides that, at the effective time, each outstanding Flagstar restricted share under the Flagstar stock plan, whether vested or unvested, will accelerate in full and will be converted into, and become exchanged for, the merger consideration.

For more information see “The Merger Agreement—Treatment of Flagstar Equity Awards” beginning on page 114.

ESPP Matters (page 123)

The merger agreement provides that as soon as reasonably practicable following the date of the merger agreement and in any event prior to the effective time, Flagstar shall take all actions (including obtaining any necessary determinations and/or resolutions of the Flagstar board or Flagstar Compensation Committee and, if appropriate, amending the terms of the ESPP) that may be necessary or required under the ESPP and applicable laws to ensure that (i) except for the Final Offering, no offering period shall be authorized or commenced on or after the date of the merger agreement, (ii) the Final Offering shall end on a date no later than the business day immediately preceding the Closing Date, (iii) each ESPP participant’s accumulated contributions under the ESPP shall be used to purchase shares of Flagstar common stock in accordance with the ESPP as of the end of the Final Offering, with any remaining contributions returned to the participant (without interest) as soon as administratively practicable thereafter, (iv) the applicable purchase price for shares of Flagstar common stock shall not be decreased below the levels set forth in the ESPP as of the date of the merger agreement and (v) the ESPP shall terminate in its entirety upon the ESPP Termination Date and no further rights shall be granted or exercised under the ESPP thereafter other than in accordance with the preceding clause (iii).

For more information see “The Merger Agreement—Covenants and Agreements—ESPP Matters” beginning on page 123.

U.S. Federal Income Tax Consequences of the Merger (page 131)

The merger and the holdco merger, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Flagstar’s obligation to complete the merger is conditioned on the receipt by Flagstar of an opinion from its counsel to the effect that the merger and the holdco merger, taken together, will qualify as a reorganization within the meaning of Section 368(a) of the Code. Additionally, NYCB’s obligation to complete the merger is conditioned on either (i) the receipt of a similar opinion from its counsel or (ii) the merger and the holdco merger, taken together, not reasonably being expected to result in a Material Adverse Tax Consequence (as defined in the merger agreement) to NYCB.


 

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Accordingly, assuming the receipt and accuracy of the opinions described in the preceding sentences, a holder who receives solely shares of NYCB common stock (or receives NYCB common stock and cash solely in lieu of a fractional share) in exchange for shares of Flagstar common stock in the merger generally will not recognize any gain or loss upon the merger, except with respect to the cash received in lieu of a fractional share of NYCB common stock.

For more detailed information, please refer to “U.S. Federal Income Tax Consequences of the Merger” beginning on page 131.

The United States federal income tax consequences described above may not apply to all holders of Flagstar common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.

NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors (page 53)

The NYCB board of directors has determined that the merger agreement and the transactions contemplated by the merger agreement (including the mergers and the NYCB share issuance) are advisable and fair to and in the best interests of NYCB and its stockholders and has unanimously approved and adopted the merger agreement and the transactions contemplated by the merger agreement (including the mergers and the NYCB share issuance). The NYCB board of directors unanimously recommends that NYCB stockholders vote “FOR” the NYCB share issuance proposal and “FOR” the NYCB adjournment proposal. For a more detailed discussion of the NYCB board of directors’ recommendation, see “The Merger—NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors” beginning on page 53.

Opinions of NYCB’s Financial Advisors (page 55)

Opinion of Piper Sandler & Co. (page 55)

Piper Sandler & Co. (“Piper Sandler”) acted as financial advisor to NYCB’s board of directors in connection with the proposed merger and participated in certain of the negotiations leading to the execution of the merger agreement. At the April 24, 2021 meeting at which NYCB’s board of directors considered the merger and the merger agreement, Piper Sandler delivered to the board of directors its oral opinion, which was subsequently confirmed in writing on April 24, 2021, to the effect that, as of such date, the exchange ratio was fair to NYCB from a financial point of view. Piper Sandler’s opinion speaks only as of the date of the opinion. The full text of Piper Sandler’s opinion is attached as Annex B to this joint proxy statement. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Piper Sandler in rendering its opinion.

Piper Sandler’s opinion was for the information of, and was directed to, the NYCB board of directors (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion did not address the underlying business decision of NYCB to engage in the merger or enter into the Agreement, nor did Piper Sandler’s opinion constitute a recommendation to the NYCB board of directors in connection with the merger. Piper Sandler’s opinion does not constitute a recommendation to any holder of NYCB common stock or any shareholder of any other entity as to how to vote in connection with the merger or any other matter. Holders of NYCB common stock are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.

For more information, see “The Merger— Opinions of NYCB’s Financial Advisors—Opinion of Piper Sandler & Co.,” beginning on page 55 and Annex B.

Opinion of Goldman Sachs & Co. LLC (page 66)

At a meeting of the NYCB board of directors, Goldman Sachs & Co. LLC (“Goldman Sachs”) rendered to the NYCB board of directors its oral opinion, subsequently confirmed in Goldman Sachs’ written opinion dated as of April 24, 2021, to the effect that, as of the date of Goldman Sachs’ written opinion, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to NYCB.

The full text of the written opinion of Goldman Sachs, dated April 24, 2021, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this joint proxy statement/prospectus as Annex C. The summary of the Goldman Sachs


 

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opinion contained in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the NYCB board of directors in connection with its consideration of the proposed merger and the opinion does not constitute a recommendation as to how any holder of shares of NYCB common stock should vote with respect to the proposed merger or any other matter.

For more information, see “The Merger—Opinions of NYCB’s Financial Advisors—Opinion of Goldman Sachs  & Co. LLC,” beginning on page 66 and Annex C.

Interests of Certain NYCB Directors and Executive Officers in the Merger (page 98)

In considering the recommendation of NYCB’s board of directors with respect to the NYCB share issuance proposal and the NYCB adjournment proposal, NYCB’s stockholders should be aware that the directors and executive officers of NYCB have certain interests in the merger that may be different from, or in addition to, the interests of NYCB’s stockholders generally. These interests include, among others, the following:

 

   

Mr. Cangemi has entered into a letter agreement with NYCB which provides that following the effective time, Mr. Cangemi will continue to serve as the President and Chief Executive Officer of NYCB but will cease to serve as Chairman of the NYCB board, and provides for specified termination rights and benefits in connection with the merger;

 

   

pursuant to the terms of the merger agreement, NYCB will take all necessary action to cause the NYCB Employee Stock Ownership Plan, as amended and restated effective January 1, 2012 (the “ESOP”) to be terminated as of not later than the business day prior to the effective time. Subject to the terms of the ESOP and applicable law, upon termination of the ESOP, the accounts of all participants and beneficiaries in the ESOP immediately prior to the effective time will become fully vested as of the effective time of the termination of the ESOP;

 

   

pursuant to the terms of the merger agreement, NYCB will take all necessary action to cause the Supplemental Benefits Plan of NYCB Bank to be terminated at or immediately prior to the effective time and to pay each participant a lump sum cash amount equal to the benefit to which such participant is entitled pursuant to the terms of such plan; and

 

   

following the effective time, certain of NYCB’s directors and executive officers will continue to serve as directors or executive officers, as applicable, of NYCB and NYCB Bank.

NYCB’s board of directors was aware of these interests and considered them, among other matters, in making its recommendation that NYCB’s stockholders vote to approve the share issuance proposal. For more information, see “The Merger—Background of the Merger” beginning on page 48 and “The Merger—NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors” beginning on page 53. These interests are described in more detail below, and certain of them are quantified in the narrative and in the section entitled “The Merger—Interests of Certain NYCB Directors and Executive Officers in the Merger” beginning on page 98. The merger will not constitute a “change in control” for purposes of NYCB’s compensation arrangements.

Flagstar’s Reasons for the Merger; Recommendation of Flagstar’s Board of Directors (page 75)

After careful consideration, the Flagstar board of directors, by action by unanimous written consent dated as of April 24, 2021, unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, holdco merger and bank merger, are advisable and in the best interests of Flagstar and its shareholders, and (ii) adopted the merger agreement and the consummation of the transactions contemplated thereby, including the merger, holdco merger and bank merger. Accordingly, the Flagstar board unanimously recommends that the Flagstar common shareholders vote “FOR” the Flagstar merger proposal, “FOR” the Flagstar compensation proposal and “FOR” the Flagstar adjournment proposal. For a more detailed discussion of the Flagstar board of directors’ recommendation, see “The Merger—Flagstar’s Reasons for the Merger; Recommendation of Flagstar’s Board of Directors” beginning on page 75.

Opinions of Flagstar’s Financial Advisors (page 77)

Opinion of Morgan Stanley & Co. LLC (page 77)

Flagstar retained Morgan Stanley & Co. LLC (“Morgan Stanley”) to provide it with financial advisory services in connection with a possible merger with NYCB, and, if requested by Flagstar, a financial opinion with respect thereto. Flagstar selected


 

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Morgan Stanley to act as one of its financial advisors based on Morgan Stanley’s qualifications, expertise and reputation and its knowledge of the business and affairs of Flagstar. In connection with the merger, Morgan Stanley rendered to the Flagstar board of directors at its special meeting on April 24, 2021, its oral opinion, subsequently confirmed by delivery of a written opinion dated April 24, 2021, that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth therein, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to holders of shares of Flagstar common stock (other than shares owned by Flagstar or NYCB (in each case other than shares of Flagstar common stock (i) held in trust accounts, managed accounts, mutual funds and the like, or otherwise held in a fiduciary or agency capacity that are beneficially owned by third parties or (ii) held, directly or indirectly, by Flagstar or NYCB in respect of debts previously contracted) (collectively, “excluded shares”)).

The full text of the written opinion of Morgan Stanley, dated April 24, 2021, is attached as Annex D to this joint proxy statement/prospectus. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. Shareholders are urged to, and should, read the opinion carefully and in its entirety. Morgan Stanley’s opinion is directed to the Flagstar board of directors and addresses only the fairness, from a financial point of view, to holders of shares of Flagstar common stock (other than holders of the excluded shares) of the exchange ratio pursuant to the merger agreement as of the date of the opinion. Morgan Stanley’s opinion does not address any other aspect of the transactions contemplated by the merger agreement and does not constitute a recommendation to shareholders of Flagstar or stockholders of NYCB as to how to vote at any shareholders meetings held with respect to the merger or any other matter or whether to take any other action with respect to the merger. The summary of Morgan Stanley’s opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. In addition, the opinion does not in any manner address the price at which NYCB common stock will trade following the consummation of the merger or at any time.

For more information, see “The Merger—Opinions of Flagstar’s Financial Advisors—Opinion of Morgan Stanley & Co. LLC” beginning on page 77 and Annex D to this joint proxy statement/prospectus.

Opinion of Jefferies LLC (page 87)

At a meeting of the Flagstar board of directors held on April 24, 2021 to evaluate the merger, Jefferies LLC (“Jefferies”) rendered an oral opinion, confirmed by delivery of a written opinion dated April 24, 2021, to the Flagstar board of directors to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the exchange ratio provided for pursuant to the merger agreement was fair, from a financial point of view, to holders of Flagstar common stock (other than holders of the excluded shares).

Jefferies’ opinion was provided for the use and benefit of the Flagstar board of directors (in its capacity as such) in its evaluation of the exchange ratio from a financial point of view and did not address any other aspect of the merger or any other matter. Jefferies’ opinion did not address the relative merits of the merger or other transactions contemplated by the merger agreement as compared to any alternative transaction or opportunity that might be available to Flagstar, nor did it address the underlying business decision by Flagstar to engage in the merger. Jefferies’ opinion did not constitute a recommendation as to how the Flagstar board of directors, and does not constitute a recommendation as to how any securityholder, should vote or act with respect to the merger or any other matter.

For more information, see “The Merger—Opinions of Flagstar’s Financial Advisors—Opinion of Jefferies LLC” beginning on page 87 and Annex E to this joint proxy statement/prospectus.

Interests of Certain Flagstar Directors and Executive Officers in the Merger (page 101)

In considering the recommendation of Flagstar’s board of directors with respect to the merger, Flagstar’s shareholders should be aware that the directors and executive officers of Flagstar have certain interests in the merger that may be different from, or in addition to, the interests of Flagstar’s shareholders generally. These interests include, among others, the following:

 

   

Flagstar equity awards (with the exception of Flagstar restricted shares held by its non-employee directors (each, a “Flagstar director restricted share”) and Flagstar PSUs for which the applicable performance period is complete)


 

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will be converted into equity awards of NYCB based on the exchange ratio (with the number of shares underlying Flagstar PSUs granted in 2020 set at 150% of the target level and for Flagstar PSUs granted in 2021 and thereafter, set at the target level of performance). Except as specifically provided in the merger agreement, following the closing of the merger (the “closing” or the “effective time”), each converted Flagstar equity award will continue to be governed by the same terms and conditions as were applicable to such awards immediately prior to the effective time, provided that any “change in control” post-termination protections applicable to such awards will be extended to apply until 18 months after the effective time. See “The Merger Agreement—Treatment of Flagstar Equity Awards” beginning on page 114;

 

   

each Flagstar director restricted share will be converted based on the exchange ratio into the right to receive the merger consideration;

 

   

certain Flagstar executive officers (including two of its named executive officers) are party to change in control agreements with Flagstar (the “change in control agreements”) that provide for certain severance benefits if the executive officer’s employment is terminated by Flagstar without cause or if the executive officer resigns employment for good reason, in each case, during the period beginning three months prior to and ending 12 months after a change in control, which includes the closing of the merger;

 

   

Mr. DiNello has entered into a non-competition and non-solicitation agreement with Flagstar (the “restrictive covenants agreement”) which provides for a lump-sum payment to be made within ten days after the closing, subject to continued compliance with certain non-competition and non-solicitation of customers, suppliers and employees covenants;

 

   

three Flagstar executive officers (including two named executive officers) have entered into new employment agreements (including an offer letter) with NYCB, effective upon the closing, which provide for one-time retention bonus awards to certain individuals and in all cases, severance entitlements effective upon an involuntary termination of employment or resignation for good reason. See “The Merger—Interests of Certain Flagstar Directors and Executive Officers in the Merger—NYCB Employment Agreements” beginning on page 104 and “The Merger—Interests of Certain Flagstar Directors and Executive Officers in the Merger—NYCB Offer Letter” beginning on page 105;

 

   

pursuant to the terms of the merger agreement and the confidential disclosure schedules, during the period commencing at the effective time and ending on the later of the first anniversary of the effective time and December 31, 2022, any continuing employee of Flagstar, including each executive officer, whose employment is involuntarily terminated or, if applicable, terminated due to a resignation for good reason, will be entitled to receive severance benefits, as follows: (i) with respect to participants in the Flagstar severance plan, effective as of January 18, 2017, benefits set forth in the Flagstar severance plan and (ii) with respect to any continuing employee that is party to a change in control agreement that has not been replaced or superseded as of the effective time, the benefits set forth in such change in control agreement;

 

   

one of Flagstar’s named executive officers, Stephen Figliuolo, entered into a consulting agreement with NYCB effective as of closing, that provides for annual consulting fees for services to NYCB over the one-year period after the closing;

 

   

pursuant to the terms of the merger agreement and the confidential disclosure schedules, the Flagstar Compensation Committee may determine that payment of annual cash incentives to Flagstar employees, including its executive officers, with respect to 2021 shall be subject to accelerated vesting and payment upon a participant’s termination of employment without cause, for good reason or due to death or disability, in each case, after the closing of the merger, if such closing occurs prior to the date that 2021 annual cash bonuses are paid in the ordinary course;

 

   

pursuant to the terms of the merger agreement, Flagstar’s directors and executive officers are entitled to continued indemnification and insurance coverage. See “The Merger—Interests of Certain Flagstar Directors and Executive Officers in the Merger—Indemnification; Directors’ and Officers’ Insurance” beginning on page 106; and

 

   

at the effective time, certain of Flagstar’s directors and executive officers will continue to serve as directors or executive officers, as applicable, of NYCB and NYCB Bank, and certain of Flagstar’s directors will be invited to serve as members of an advisory board. See “The Merger—Interests of Certain Flagstar Directors and Executive Officers in the Merger—Membership of the Boards of Directors of NYCB and NYCB Bank” beginning on page 106.


 

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Flagstar’s board of directors was aware of these interests and considered them, among other matters, in making its recommendation that Flagstar’s shareholders vote to approve the merger proposal. For more information, see “The Merger—Background of the Merger” beginning on page 48 and “The Merger—Flagstar’s Reasons for the Merger; Recommendation of Flagstar’s Board of Directors” beginning on page 75. These interests are described in more detail below, and certain of them are quantified in the narrative and in the section entitled “The Merger—Interests of Certain Flagstar Directors and Executive Officers in the Merger” beginning on page 101.

Governance of NYCB After the Merger (page 108)

Prior to the effective time, the NYCB board of directors will take all actions necessary to adopt amendments to the NYCB bylaws set forth in Exhibit B to the merger agreement regarding governance matters (such amendment, the “NYCB bylaws amendment”). Effective as of the effective time of the holdco merger, and in accordance with the NYCB bylaws amendment, the number of directors that will comprise the full board of directors of each of NYCB and of NYCB Bank will each be 12, of which (i) eight will be directors of NYCB immediately prior to the effective time, which will include the Chief Executive Officer of NYCB immediately prior to the effective time, Robert Wann, a current director and Chief Operating Officer of NYCB, Hanif Dahya, a current director of NYCB who will serve as the Presiding Director, and such other directors as determined by NYCB and (ii) four will be directors of Flagstar immediately prior to the effective time (the “Flagstar designated directors”), which will include the Chief Executive Officer of Flagstar immediately prior to the effective time, who will serve as the Non-Executive Chairman of the NYCB board of directors and the NYCB Bank board of directors, David Treadwell, a current director of Flagstar who will serve as the chairman of the risk assessment committee of the NYCB board of directors, and such other directors of Flagstar immediately prior to the effective time as mutually agreed to by Flagstar and NYCB, who will be independent of NYCB in accordance with applicable stock exchange standards.

At the effective time, NYCB will invite all directors of Flagstar immediately prior to the effective time, other than the Flagstar designated directors, to become members of an advisory board of NYCB (the “advisory board”), and will cause all such individuals who accept such invitation to be elected or appointed for a two-year term as members of the advisory board. Such members of the advisory board will serve on the advisory board until the second anniversary of the closing date or until their respective earlier death or resignation, during which period such members will each receive quarterly compensation of $10,000 per quarter served.

Regulatory Approvals (page 109)

Subject to the terms of the merger agreement, NYCB and Flagstar have agreed to cooperate with each other and use reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings (and in the case of the applications, notices, petitions and filings in respect of the requisite regulatory approvals (as defined in “The Merger—Regulatory Approvals”), use their reasonable best efforts to make such filings within 40 days of the date of the merger agreement), to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties and governmental entities which are necessary or advisable to consummate the transactions contemplated by the merger agreement (including the mergers), and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such governmental entities. These approvals include, among others, the approval of (i) the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), (ii) the Federal Deposit Insurance Corporation (the “FDIC”), (iii) the New York State Department of Financial Services (“NYDFS”), (iv) Ginnie Mae, Fannie Mae, Freddie Mac, the Federal Housing Authority of the U.S. Department of Housing and Urban Development, the United States Department of Agriculture and the United States Department of Veterans Affairs (collectively, the “Mortgage Agencies”) with respect to mortgage banking and mortgage servicing activities of Flagstar and certain subsidiaries of Flagstar and (v) the Texas Department of Insurance and the Vermont Department of Financial Regulation with respect to the change of control of certain Flagstar subsidiaries that hold licenses to engage in certain insurance activities. The initial submission of regulatory applications to the Federal Reserve Board, FDIC and NYDFS occurred on May 19, 2021, and as of the date of the initial filing of this Registration Statement on Form S-4, the initial regulatory submissions with the Mortgage Agencies have been made.

Although neither NYCB nor Flagstar knows of any reason why it cannot obtain these regulatory approvals in a timely manner, NYCB and Flagstar cannot be certain when or if they will be obtained, or that the granting of these regulatory approvals will not involve the imposition of conditions on the completion of the merger, the holdco merger or the bank merger.


 

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Expected Timing of the Merger

The transaction is expected to close by the end of 2021, subject to the satisfaction of customary closing conditions, including the receipt of the requisite regulatory approvals and the requisite approval by the stockholders of NYCB and the shareholders of Flagstar. However, neither NYCB nor Flagstar can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion of the merger is subject to the satisfaction or waiver of conditions and factors outside the control of both companies. Flagstar must first obtain the approval of Flagstar shareholders for the Flagstar merger proposal, and NYCB must obtain approval of NYCB stockholders for the NYCB share issuance proposal. NYCB and Flagstar must also obtain the requisite regulatory approvals and satisfy certain other customary closing conditions. NYCB and Flagstar expect the merger to be completed promptly once NYCB and Flagstar have obtained their respective stockholders’ and shareholders’ approvals noted above, have obtained the requisite regulatory approvals, and have satisfied certain other closing conditions.

Conditions to Complete the Merger (page 127)

As more fully described in this joint proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include:

 

   

the requisite NYCB vote and the requisite Flagstar vote having been obtained. See “The Merger Agreement—Meetings; Recommendation of NYCB’s and Flagstar Boards of Directors” beginning on page 124 for additional information regarding the “requisite NYCB vote” and the “requisite Flagstar vote”;

 

   

the authorization for listing on the NYSE, subject to official notice of issuance, of the NYCB common stock to be issued in the merger;

 

   

all requisite regulatory approvals having been obtained and remaining in full force and effect, without the imposition of any materially burdensome regulatory condition. See “The Merger—Regulatory Approvals” beginning on page 109 for additional information regarding the “requisite regulatory approvals” and the “materially burdensome regulatory condition”;

 

   

the effectiveness of the registration statement of which this joint proxy statement/prospectus is a part, and the absence of any stop order (or proceedings for such purpose initiated or threatened and not withdrawn);

 

   

no order, injunction, decree or other legal restraint prohibiting the consummation of the merger, the holdco merger or the bank merger issued by any governmental entity being in effect, and no law, statute, rule or regulation having been enacted, promulgated or enforced by any governmental entity which prohibits or makes illegal the consummation of the merger, the holdco merger or the bank merger;

 

   

the accuracy of the representations and warranties of the other party contained in the merger agreement as of the date on which the merger agreement was entered into and as of the date on which the merger is completed, subject to the materiality standards provided in the merger agreement (and the receipt by each party of an officers’ certificate from the other party to such effect);

 

   

the performance by the other party in all material respects of all obligations, covenants and agreements required to be performed by it under the merger agreement at or prior to the date on which the merger is completed (and the receipt by each party of an officers’ certificate from the other party to such effect); and

 

   

(i) with respect to Flagstar’s obligation to complete the merger, the receipt by Flagstar of an opinion of legal counsel to the effect that on the basis of facts, representations and assumptions set forth or referred to in such opinion, the merger and the holdco merger, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and (ii) with respect to NYCB’s obligation to complete the merger, either (A) the receipt by NYCB by a similar opinion of its legal counsel or (B) the merger and the holdco merger, taken together, are not reasonably expected to result in Material Adverse Tax Consequences (as defined in the merger agreement) to NYCB.

Termination of the Merger Agreement (page 127)

The merger agreement can be terminated at any time prior to completion of the merger, whether before or after the receipt of the requisite Flagstar vote or the requisite NYCB vote, in the following circumstances:

 

   

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by either NYCB or Flagstar if any governmental entity that must grant a requisite regulatory approval has denied approval of the merger, the holdco merger or the bank merger and such denial has become final and nonappealable or any governmental entity of competent jurisdiction has issued a final and nonappealable order, injunction, decree or other legal restraint or prohibition permanently enjoining or otherwise prohibiting or making illegal the merger, the holdco merger or the bank merger, unless the failure to obtain a requisite regulatory approval is due to the failure of the party seeking to terminate the merger agreement to perform or observe its obligations, covenants and agreements under the merger agreement;

 

   

by either NYCB or Flagstar if the merger has not been completed on or before April 24, 2022 (the “termination date”), unless the failure of the merger to be completed by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe its obligations, covenants and agreements under the merger agreement;

 

   

by either NYCB or Flagstar (provided that the terminating party is not then in material breach of any representation, warranty, obligation, covenant or other agreement contained in the merger agreement) if there is a breach of any of the obligations, covenants or agreements or any of the representations or warranties (or any such representation or warranty ceases to be true) set forth in the merger agreement on the part of Flagstar, in the case of a termination by NYCB, or NYCB or Merger Sub, in the case of a termination by Flagstar, which either individually or in the aggregate would constitute, if occurring or continuing on the closing date, the failure of a closing condition of the terminating party and which is not cured within 45 days following written notice to the party committing such breach, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the termination date);

 

   

by Flagstar prior to such time that the requisite NYCB vote is obtained, if (i) NYCB or the NYCB board of directors has made a recommendation change or (ii) NYCB or the NYCB board of directors breaches in any material respect its obligations relating to non-solicitation of acquisition proposals or its obligations related to stockholder approval and the NYCB board recommendation, see “The Merger Agreement—Meetings; Recommendation of NYCB’s and Flagstar’s Boards of Directors” beginning on page 124 for additional information regarding the “recommendation change”; or

 

   

by NYCB prior to such time that the requisite Flagstar vote is obtained, if (i) Flagstar or the Flagstar board of directors has made a recommendation change or (ii) Flagstar or the Flagstar board of directors breaches in any material respect its obligations relating to non-solicitation of acquisition proposals or its obligations related to shareholder approval and the Flagstar board recommendation.

Neither NYCB nor Flagstar is permitted to terminate the merger agreement as a result of any increase or decrease in the market price of NYCB common stock or Flagstar common stock.

Termination Fee (page 128)

If the merger agreement is terminated under certain circumstances, including circumstances involving alternative acquisition proposals and changes in the recommendation of NYCB’s or Flagstar’s respective boards, NYCB or Flagstar may be required to pay a termination fee to the other equal to $90 million.

Accounting Treatment (page 108)

The merger will be accounted for as an acquisition of Flagstar by NYCB under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States (“GAAP”).

The Rights of Flagstar Shareholders Will Change as a Result of the Merger

The rights of Flagstar shareholders are governed by Michigan law and the Flagstar articles of incorporation and the Flagstar bylaws. In the merger, Flagstar shareholders will become NYCB stockholders, and their rights will be governed by Delaware law and the NYCB certificate of incorporation and the NYCB bylaws, as amended by the NYCB bylaws amendment attached to the merger agreement as Exhibit B. Flagstar shareholders will have different rights once they become NYCB stockholders due to differences between the Flagstar governing documents and Michigan law, on the one hand, and the NYCB governing documents and Delaware law, on the other hand. These differences are described in more detail under the section entitled “Comparison of the Rights of NYCB Stockholders and Flagstar Shareholders” beginning on page 146.


 

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Delisting and Deregistration of Flagstar Common Stock

Following the merger, Flagstar common stock will be delisted from NYSE and deregistered under the Exchange Act. Following the merger, shares of NYCB common stock will continue to be traded on the NYSE.

The NYCB Special Meeting (page 35)

The NYCB special meeting will be held virtually via the internet on August 4, 2021 at 10 a.m., Eastern Time. At the NYCB special meeting, NYCB stockholders will be asked to vote on the following matters:

 

   

the NYCB share issuance proposal; and

 

   

the NYCB adjournment proposal.

You may vote at the NYCB special meeting if you owned shares of NYCB common stock at the close of business on June 18, 2021. As of June 18, 2021, there were 465,060,525 shares of NYCB common stock outstanding, of which less than three-and-a-half percent (3.276%) were owned and entitled to be voted by NYCB directors and executive officers and their affiliates. We currently expect that NYCB’s current directors and current executive officers will vote their shares in favor of the NYCB share issuance proposal and the NYCB adjournment proposal, although none of them has entered into any agreements obligating them to do so.

The NYCB share issuance proposal and the NYCB adjournment proposal will each be approved if a majority of the votes cast at the NYCB special meeting are voted in favor of such proposal. If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the NYCB share issuance proposal, but it will have no effect on the NYCB adjournment proposal. If you fail to submit a proxy or vote at the NYCB special meeting or fail to instruct your broker, bank or other nominee how to vote with respect to the NYCB share issuance proposal or the NYCB adjournment proposal, you will not be deemed to have cast a vote with respect to the NYCB share issuance proposal or the NYCB adjournment proposal, as applicable, and it will have no effect on the applicable proposal.

The Flagstar Special Meeting (page 40)

The Flagstar special meeting will be held virtually via the internet on August 4, 2021 at 9 a.m., Eastern Time. At the Flagstar special meeting, Flagstar shareholders will be asked to vote on the following matters:

 

   

the Flagstar merger proposal;

 

   

the Flagstar compensation proposal; and

 

   

the Flagstar adjournment proposal.

You may vote at the Flagstar special meeting if you owned shares of record of Flagstar common stock at the close of business on June 18, 2021. As of June 18, 2021, there were 52,791,585 shares of Flagstar common stock outstanding, of which slightly more than two percent (2.072%) were owned and entitled to be voted by Flagstar directors and executive officers and their affiliates. We currently expect that Flagstar’s directors and executive officers will vote their shares in favor of the Flagstar merger proposal, although none of them has entered into any agreements obligating them to do so.

The Flagstar merger proposal will be approved if a majority of the outstanding shares of Flagstar common stock entitled to vote on the Flagstar merger proposal are voted in favor of such proposal. The Flagstar compensation proposal and the Flagstar adjournment proposal will be approved if a majority of the votes cast by Flagstar shareholders at the Flagstar special meeting are voted in favor of such proposal. If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Flagstar merger proposal and Flagstar compensation proposal, but it will have no effect on the Flagstar adjournment proposal. If you fail to submit a proxy or vote at the Flagstar special meeting via the Flagstar special meeting website or fail to instruct your bank, broker, trustee or other nominee how to vote with respect to the Flagstar merger proposal, it will have the same effect as a vote “AGAINST” the Flagstar merger proposal, but it will have no effect on the Flagstar compensation proposal or the Flagstar adjournment proposal.


 

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Appraisal or Dissenters’ Rights in the Merger (page 111)

NYCB stockholders are not entitled to appraisal rights under the DGCL and Flagstar shareholders are not entitled to dissenters’ rights under the MBCA. For more information, see “The Merger—Appraisal or Dissenters’ Rights in the Merger” beginning on page 111.

Litigation Relating to the Merger (Page 111)

On June 14, 2021, a complaint captioned Shiva Stein v. Flagstar Bancorp, Inc. et al., Case No. 1:21-cv-03347, was filed by a purported shareholder of Flagstar in the U.S. District Court for the Eastern District of New York. The complaint names Flagstar and the Flagstar board of directors as defendants. The complaint alleges, among other things, that the defendants caused a materially incomplete and misleading registration statement relating to the proposed merger to be filed with the SEC in violation of Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The complaint seeks, among other relief, an injunction preventing the closing of the merger unless and until the defendants disclose certain information that the plaintiff alleged as material information omitted from the registration statement or an award of damages, including attorneys’ and experts’ fees. NYCB and Flagstar believe the claims asserted in the lawsuit are without merit.

On June 18, 2021, a complaint captioned Alex Ciccotelli v. Flagstar Bancorp, Inc. et al., Case No. 1:21-cv-05406, was filed by a purported shareholder of Flagstar in the U.S. District Court for the Southern District of New York. The complaint names Flagstar, the Flagstar board of directors and NYCB as defendants. The complaint alleges, among other things, that the defendants caused a materially incomplete and misleading registration statement relating to the proposed merger to be filed with the SEC in violation of Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The complaint seeks, among other relief, an injunction preventing the closing of the merger unless and until the defendants disclose certain information that the plaintiff alleged as material information omitted from the registration statement, rescission of the merger agreement or any of its terms to the extent already implemented or awarding of rescissory damages or damages, including attorneys’ and experts’ fees. NYCB and Flagstar believe the claims asserted in the lawsuit are without merit.

On June 23, 2021, a complaint captioned Selwyn Karp v. New York Community Bancorp, Inc. et al., Case No. 21-5505, was filed by a purported shareholder of Flagstar in the U.S. District Court for the Southern District of New York. The complaint names Flagstar, NYCB and the NYCB board of directors as defendants. The complaint alleges, among other things, that the defendants caused a materially incomplete and misleading registration statement relating to the proposed merger to be filed with the SEC in violation of Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The complaint seeks, among other relief, an injunction preventing the closing of the merger unless and until the defendants disclose certain information that the plaintiff alleged as material information omitted from the registration statement or an award of damages, including attorneys’ and experts’ fees. NYCB and Flagstar believe the claims asserted in the lawsuit are without merit.

On June 23, 2021, a complaint captioned Luis Guitart v. Flagstar Bancorp, Inc. et al., Case No. 1:21-cv-03559, was filed by a purported shareholder of Flagstar in the U.S. District Court for the Eastern District of New York. The complaint names Flagstar and the Flagstar board of directors as defendants. The complaint alleges, among other things, that the defendants caused a materially incomplete and misleading registration statement relating to the proposed merger to be filed with the SEC in violation of Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The complaint seeks, among other relief, an injunction preventing the closing of the merger unless and until the defendants disclose certain information that the plaintiff alleged as material information omitted from the registration statement or an award of damages, including attorneys’ and experts’ fees. NYCB and Flagstar believe the claims asserted in the lawsuit are without merit.

Additional lawsuits arising out of the merger may be filed in the future. There can be no assurance that any of the defendants will be successful in the outcome of any pending or any potential future lawsuits. NYCB and Flagstar intend to defend vigorously against the pending lawsuits described above and any other future lawsuits challenging the merger.

Risk Factors (page 28)

In evaluating the merger agreement, the merger or the issuance of shares of NYCB common stock, you should carefully read this joint proxy statement/prospectus and give special consideration to the factors discussed in the section entitled “Risk Factors” beginning on page 28.


 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this joint proxy statement/prospectus (including in the documents attached as annexes to this joint proxy statement/prospectus) or incorporated by reference into this joint proxy statement/prospectus are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based on current expectations, estimates and projections about, among other things, NYCB’s and Flagstar’s businesses, beliefs of NYCB’s and Flagstar’s management and assumptions made by NYCB’s and Flagstar’s management. Any statement that does not describe historical or current facts is a forward-looking statement, including statements regarding the expected timing, completion and effects of the proposed transactions and NYCB’s and Flagstar’s expected financial results, prospects, targets, goals and outlook. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could,” or “may,” or by variations of such words or by similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“Future Factors”) which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

Future Factors include, among others:

 

   

the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement;

 

   

the outcome of any legal proceedings that may be instituted against NYCB or Flagstar;

 

   

the possibility that the proposed combination 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 NYCB and Flagstar to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction;

 

   

the risk that any announcements relating to the proposed combination could have adverse effects on the market price of the common stock of either or both parties to the combination;

 

   

the possibility that the anticipated benefits of the 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 NYCB and Flagstar do business;

 

   

certain restrictions during the pendency of the merger that may impact the parties’ ability to pursue certain business opportunities or strategic transactions;

 

   

the possibility that the 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;

 

   

potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction;

 

   

NYCB’s and Flagstar’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing;

 

   

the possibility that the parties 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 NYCB, and that such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected;

 

   

the dilution caused by NYCB’s issuance of additional shares of its capital stock in connection with the proposed transaction; and

 

   

other factors that may affect future results of NYCB and Flagstar.


 

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These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which NYCB, Flagstar or their respective subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other Future Factors.

For any forward-looking statements made in this joint proxy statement/prospectus (including in the documents attached as annexes to this joint proxy statement/prospectus) or in any documents incorporated by reference into this joint proxy statement/prospectus, NYCB and Flagstar claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus, the dates of the documents regarding NYCB attached to this joint proxy statement/prospectus or the dates of the documents regarding Flagstar incorporated by reference into this joint proxy statement/prospectus. Except as required by applicable law, neither NYCB nor Flagstar undertakes to update these forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made.

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the reports that NYCB and Flagstar have filed with the SEC as described under “Where You Can Find More Information” beginning on page 159.

We expressly qualify in their entirety all forward-looking statements attributable to either of us or any person acting on our behalf by the cautionary statements contained or referred to in this joint proxy statement/prospectus.


 

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RISK FACTORS

In addition to the other information contained in, attached to or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 26, Flagstar shareholders should carefully consider the following risk factors in deciding whether to vote for the approval of the Flagstar merger proposal, and NYCB stockholders should carefully consider the following risk factors in deciding whether to vote for the approval of the NYCB share issuance proposal.

Risks Relating to the Consummation of the Merger and NYCB Following the Merger

Because the market price of NYCB common stock may fluctuate, Flagstar shareholders cannot be certain of the market value of the merger consideration they will receive.

In the merger, each share of Flagstar common stock issued and outstanding immediately prior to the effective time, except for certain shares owned by NYCB or Flagstar (subject to certain exceptions), will be converted into 4.0151 shares of NYCB common stock. This exchange ratio is fixed and will not be adjusted for changes in the market price of either NYCB common stock or Flagstar common stock. Changes in the price of NYCB common stock between now and the time of the merger will affect the value that Flagstar shareholders will receive in the merger. Neither NYCB nor Flagstar is permitted to terminate the merger agreement as a result of any increase or decrease in the market price of NYCB common stock or Flagstar common stock.

Stock price changes may result from a variety of factors, including general market and economic conditions, changes in Flagstar’s and NYCB’s businesses, operations and prospects, the recent volatility in the prices of securities in global financial markets, including market prices of Flagstar, NYCB and other banking companies, the effects of the COVID-19 pandemic and regulatory considerations, many of which are beyond Flagstar’s and NYCB’s control. Therefore, at the time of the NYCB special meeting and the Flagstar special meeting, NYCB stockholders and Flagstar shareholders will not know the market value of the consideration that Flagstar shareholders will receive at the effective time. You should obtain current market quotations for shares of NYCB common stock and for shares of Flagstar common stock.

The market price of NYCB common stock after the merger may be affected by factors different from those currently affecting the market price of shares of Flagstar common stock or NYCB common stock.

In the merger, Flagstar shareholders will become NYCB stockholders. NYCB’s business differs from that of Flagstar. NYCB is a leading producer of multi-family loans in New York City, with an emphasis on non-luxury residential apartment buildings with rent-regulated units that feature below-market rents, while Flagstar is the sixth largest bank mortgage originator in the nation and the sixth largest subservicer of mortgage loans nationwide. Accordingly, the results of operations of NYCB and the market price of NYCB common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of NYCB and Flagstar. For a discussion of the businesses of NYCB and Flagstar and of certain factors to consider in connection with those businesses, see the documents regarding NYCB attached as annexes to this joint proxy statement/prospectus and the documents regarding Flagstar incorporated by reference into this joint proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 159.

The opinions delivered by Piper Sandler and Goldman Sachs to NYCB’s board of directors and the opinions delivered by Morgan Stanley and Jefferies to Flagstar’s board of directors, respectively, prior to the entry into the merger agreement will not reflect changes in circumstances that may have occurred since the dates of the opinions.

The respective oral opinions from Piper Sandler and Goldman Sachs, which are NYCB’s financial advisors, were rendered to NYCB’s board of directors, and the respective oral opinions from Morgan Stanley and Jefferies, which are Flagstar’s financial advisors, were rendered to Flagstar’s board of directors and subsequently confirmed by delivery of their respective written opinions dated April 24, 2021. Changes in the operations and prospects of NYCB or Flagstar, general market and economic conditions and other factors which may be beyond the control of NYCB and Flagstar, including the ongoing effects of the COVID-19 pandemic on such market and economic conditions, and the market prices of NYCB and Flagstar, may have altered the value of NYCB or Flagstar or the prices of shares of NYCB common stock and shares of Flagstar common stock as of the date of this joint proxy statement/prospectus, or may alter such values and prices by the time the merger is completed. The opinions do not speak as of the date of this joint proxy statement/prospectus or as of any other date subsequent to the dates of those opinions.

 

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Combining NYCB and Flagstar may be more difficult, costly or time-consuming than expected, and NYCB and Flagstar may fail to realize the anticipated benefits of the merger.

The success of the merger will depend, in part, on the ability to realize the anticipated cost savings from combining the businesses of NYCB and Flagstar. To realize the anticipated benefits and cost savings from the merger, NYCB and Flagstar must integrate and combine their businesses in a manner that permits those cost savings to be realized, without adversely affecting current revenues and future growth. If NYCB and Flagstar are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings of the merger could be less than anticipated, and integration may result in additional and unforeseen expenses.

An inability to realize the full extent of the anticipated benefits of the merger and the other transactions contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, levels of expenses and operating results of NYCB following the completion of the merger, which may adversely affect the value of the common stock of NYCB following the completion of the merger.

NYCB and Flagstar have operated and, until the completion of the merger, must continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on each of NYCB and Flagstar during this transition period and on NYCB for an undetermined period after completion of the merger.

Litigation related to the merger has been filed against Flagstar, the Flagstar board of directors, NYCB and the NYCB board of directors, and additional litigation may be filed against Flagstar, the Flagstar board of directors, NYCB and the NYCB board of directors in the future, which could prevent or delay the completion of the merger, result in the payment of damages or otherwise negatively impact the business and operations of NYCB and Flagstar.

Litigation related to the merger has been filed against Flagstar, the Flagstar board of directors, NYCB and the NYCB board of directors, and additional litigation may be filed against Flagstar, the Flagstar board of directors, NYCB and the NYCB board of directors in the future. The outcome of any litigation is uncertain. If any plaintiff were successful in obtaining an injunction prohibiting NYCB or Flagstar from completing the merger, the holdco merger, the bank merger or any of the other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the merger and could result in significant costs to NYCB and/or Flagstar, including costs in connection with the defense or settlement of any shareholder lawsuits filed in connection with the merger. Further, such lawsuits and the defense or settlement of any such lawsuits may have an adverse effect on the financial condition and results of operations of NYCB and Flagstar.

The COVID-19 pandemic may delay and adversely affect the completion of the merger.

The COVID-19 pandemic has created economic and financial disruptions that have adversely affected, and are likely to continue to adversely affect, the business, financial condition, liquidity, capital and results of operations of NYCB and Flagstar. If the effects of the COVID-19 pandemic cause a continued or extended decline in the economic environment and the financial results of NYCB or Flagstar, or the business operations of NYCB or Flagstar are further disrupted as a result of the COVID-19 pandemic, efforts to complete the merger and integrate the businesses of NYCB and Flagstar may also be delayed and adversely affected. Additional time may be required to obtain the requisite regulatory approvals, and the Federal Reserve Board, the FDIC, the NYDFS, certain mortgage agencies and/or other regulators may impose additional requirements on NYCB or Flagstar that must be satisfied prior to completion of the merger, which could delay and adversely affect the completion of the merger.

NYCB may be unable to retain NYCB and/or Flagstar personnel successfully after the merger is completed.

The success of the merger will depend in part on NYCB’s ability to retain the talents and dedication of key employees currently employed by NYCB and Flagstar. It is possible that these employees may decide not to remain with NYCB or Flagstar, as applicable, while the merger is pending or with NYCB after the merger is completed. If NYCB and Flagstar are unable to retain key employees, including management, who are critical to the successful integration and future operations of

 

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the companies, NYCB and Flagstar could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs. In addition, following the merger, if key employees terminate their employment, NYCB’s business activities may be adversely affected, and management’s attention may be diverted from successfully integrating NYCB and Flagstar to hiring suitable replacements, all of which may cause NYCB’s business to suffer. In addition, NYCB and Flagstar may not be able to locate or retain suitable replacements for any key employees who leave either company.

Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on NYCB following the merger.

Before the mergers may be completed, various approvals, consents and non-objections must be obtained from the Federal Reserve Board, the FDIC, the NYDFS, certain mortgage agencies, and, with respect to NYCB Bank’s establishment and operation of Flagstar Bank’s branches and other offices following the effective time of the bank merger, any state bank regulatory authority, and other regulatory authorities. In determining whether to grant these approvals, such regulatory authorities consider a variety of factors, including the regulatory standing of each party and the factors described under “The Merger—Regulatory Approvals” beginning on page 109. These approvals could be delayed or not obtained at all, including due to: an adverse development in either party’s regulatory standing or in any other factors considered by regulators when granting such approvals, including factors not known as of the date of this joint proxy statement/prospectus and factors that may arise in the future; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally. The Federal Reserve Board has stated that if material weaknesses are identified by examiners before a banking organization applies to engage in expansionary activity, the Federal Reserve Board will expect the banking organization to resolve all such weaknesses before applying for such expansionary activity. The Federal Reserve Board has also stated that if issues arise during the processing of an application for expansionary activity, it will expect the applicant banking organization to withdraw its application pending resolution of any supervisory concerns.

The approvals that are granted may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of NYCB’s business or require changes to the terms of the transactions contemplated by the merger agreement. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the merger agreement, imposing additional material costs on or materially limiting the revenues of NYCB following the merger or otherwise reduce the anticipated benefits of the merger if the merger were consummated successfully within the expected timeframe. In addition, there can be no assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the merger. Additionally, the completion of the merger is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the merger agreement.

In addition, despite the parties’ commitments to use their reasonable best efforts to comply with conditions imposed by regulators, under the terms of the merger agreement, NYCB will not be required, and Flagstar will not be permitted without NYCB’s prior written consent, to take actions or agree to conditions in connection with obtaining the foregoing permits, consents, approvals and authorizations of governmental entities that would reasonably be expected to have a material adverse effect on NYCB and its subsidiaries, taken as a whole, after giving effect to the merger. See “The Merger—Regulatory Approvals” beginning on page 109.

The unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus is preliminary and the actual purchase price as well as the actual financial condition and results of operations of NYCB after the merger may differ materially.

The unaudited pro forma condensed combined financial information in this joint proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what NYCB’s actual financial condition or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma condensed combined financial information reflects adjustments, which are based upon preliminary estimates, to record the Flagstar identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this document is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Flagstar as of the date of the completion of the merger. Accordingly, the actual purchase price may vary significantly from the purchase price used in preparing the unaudited pro forma

 

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condensed combined financial information in this document. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this document. For more information, see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 134.

Certain of NYCB’s directors and executive officers may have interests in the merger that may differ from the interests of NYCB stockholders.

NYCB stockholders should be aware that some of NYCB’s directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of NYCB stockholders. These interests and arrangements may create potential conflicts of interest. The NYCB board of directors was aware of these respective interests and considered these interests, among other matters, when making its decisions to approve the merger agreement, and in recommending that NYCB stockholders vote for the approval of the NYCB share issuance proposal. For a more complete description of these interests, please see “The Merger—Interests of Certain NYCB Directors and Executive Officers in the Merger” beginning on page 98.

Certain of Flagstar’s directors and executive officers may have interests in the merger that may differ from the interests of Flagstar shareholders.

Flagstar shareholders should be aware that some of Flagstar’s directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of Flagstar shareholders. These interests and arrangements may create potential conflicts of interest. The Flagstar board of directors was aware of these respective interests and considered these interests, among other matters, when making its decisions to approve the merger agreement, and in recommending that Flagstar shareholders vote to approve the merger agreement. For a more complete description of these interests, please see “The Merger—Interests of Certain Flagstar Directors and Executive Officers in the Merger” beginning on page 101.

The merger agreement may be terminated in accordance with its terms and the merger may not be completed.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. Those conditions include: (1) approval by Flagstar shareholders of the Flagstar merger proposal and the approval by NYCB’s stockholders of the NYCB share issuance proposal; (2) authorization for listing on the NYSE of the shares of NYCB common stock; (3) the receipt of the requisite regulatory approvals, including the approval of the Federal Reserve Board, the FDIC, the NYDFS, certain mortgage agencies, and, with respect to NYCB Bank’s establishment and operation of Flagstar Bank’s branches and other offices following the effective time of the bank merger, any state bank regulatory authority, and other regulatory authorities, and no such requisite regulatory approval will have resulted in the imposition of any materially burdensome regulatory condition (as defined in the merger agreement); (4) effectiveness of the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part and no proceedings for such purpose will have been initiated or threatened by the SEC and not withdrawn; and (5) the absence of any order, injunction, decree or other legal restraint prohibiting the consummation of the merger, the holdco merger or the bank merger issued by any governmental entity being in effect, and no law, statute, rule or regulation having been enacted, promulgated or enforced by any governmental entity which prohibits or makes illegal the consummation of the merger, the holdco merger or the bank merger. Each of Flagstar’s or NYCB’s obligation to complete the merger is also subject to certain additional customary conditions, including (a) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the merger agreement and (c) in the case of Flagstar’s obligation to complete the merger, receipt by Flagstar of an opinion from its counsel to the effect that the merger and the holdco merger, taken together, will qualify as a reorganization within the meaning of Section 368(a) of the Code and (d) in the case of NYCB’s obligation to complete the merger, either (i) the receipt of a similar opinion from its counsel, or (ii) the merger and holdco merger, taken together, reasonably being expected to result in a Material Adverse Tax Consequence (as defined in the merger agreement) to NYCB.

These conditions to the closing may not be fulfilled in a timely manner or at all, and, accordingly, the merger may not be completed. In addition, the parties can mutually decide to terminate the merger agreement at any time, before or after shareholder approval, as applicable, or NYCB or Flagstar may elect to terminate the merger agreement in certain other circumstances. See “The Merger Agreement—Termination of the Merger Agreement” beginning on page 127.

 

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Failure to complete the merger could negatively impact NYCB or Flagstar.

If the merger is not completed for any reason, including as a result of NYCB stockholders failing to approve the NYCB share issuance proposal or Flagstar shareholders failing to approve the Flagstar merger proposal, there may be various adverse consequences and NYCB and/or Flagstar may experience negative reactions from the financial markets and from their respective customers and employees. For example, NYCB’s or Flagstar’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of NYCB common stock or Flagstar common stock could decline to the extent that current market prices reflect a market assumption that the merger will be beneficial and will be completed. NYCB and/or Flagstar also could be subject to litigation related to any failure to complete the merger or to proceedings commenced against NYCB or Flagstar to perform their respective obligations under the merger agreement. If the merger agreement is terminated under certain circumstances, either NYCB or Flagstar may be required to pay a termination fee of $90 million to the other party.

Additionally, each of NYCB and Flagstar has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of preparing, filing, printing and mailing this joint proxy statement/prospectus, and all filing and other fees paid in connection with the merger. If the merger is not completed, NYCB and Flagstar would have to pay these expenses without realizing the expected benefits of the merger.

NYCB and Flagstar will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on NYCB and Flagstar. These uncertainties may impair NYCB’s or Flagstar’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with NYCB or Flagstar to seek to change existing business relationships with NYCB or Flagstar. In addition, subject to certain exceptions, Flagstar has agreed to operate its business in the ordinary course in all material respects and to refrain from taking certain actions that may adversely affect its business without NYCB’s consent, and Flagstar and NYCB have agreed to refrain from taking certain actions that may adversely affect their respective ability to consummate the merger on a timely basis without the other’s consent. These restrictions may prevent NYCB and/or Flagstar from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement—Covenants and Agreements” beginning on page 118 for a description of the restrictive covenants applicable to NYCB and Flagstar.

The merger agreement limits Flagstar’s and NYCB’s respective abilities to pursue alternatives to the merger and may discourage other companies from trying to acquire Flagstar or NYCB.

The merger agreement contains “no shop” covenants that restrict each of NYCB’s and Flagstar’s ability to, directly or indirectly, among other things, initiate, solicit, knowingly encourage or knowingly facilitate, inquiries or proposals with respect to, or, subject to certain exceptions generally related to the exercise of fiduciary duties by each respective board of directors, engage in any negotiations concerning, or provide any confidential or non-public information or data relating to, any alternative acquisition proposals. These provisions, which include a $90 million termination fee payable under certain circumstances, may discourage a potential third-party acquirer that might have an interest in acquiring all or a significant part of Flagstar or NYCB from considering or proposing that acquisition even if, in the case of a potential acquisition of Flagstar, it were prepared to pay consideration with a higher per share price to Flagstar shareholders than what is contemplated in the merger, or may result in a potential third-party acquirer proposing to pay a lower per share price to acquire Flagstar or NYCB than it might otherwise have proposed to pay. For more information, see “The Merger Agreement—Agreement Not to Solicit Other Offers; Termination of the Merger Agreement; Effect of Termination; Termination Fee” and “The Merger Agreement—Meetings; Recommendation of NYCB’s and Flagstar’s Boards of Directors” beginning on pages 126 and 124 respectively.

The shares of NYCB common stock to be received by Flagstar shareholders as a result of the merger will have different rights from the shares of Flagstar common stock.

In the merger, Flagstar shareholders will become NYCB stockholders and their rights as stockholders will be governed by Delaware law and the governing documents of NYCB following the merger. The rights associated with NYCB common stock are different from the rights associated with Flagstar common stock. See “Comparison of the Rights of NYCB Stockholders and Flagstar Shareholders” beginning on page 146 for a discussion of the different rights associated with NYCB common stock.

 

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NYCB and Flagstar are expected to incur significant costs related to the merger and integration.

NYCB and Flagstar have incurred and expect to incur significant, non-recurring costs in connection with negotiating the merger agreement and closing the merger. In addition, NYCB will incur integration costs following the completion of the merger as NYCB integrates the Flagstar business, including facilities and systems consolidation costs and employment-related costs. Anticipated pre-tax one-time expenses related to the merger are currently estimated to be approximately $220 million.

There can be no assurances that the expected benefits and efficiencies related to the integration of the businesses will be realized to offset these transaction and integration costs over time. NYCB and Flagstar may also incur additional costs to maintain employee morale and to retain key employees. NYCB and Flagstar will also incur significant legal, financial advisory, accounting, banking and consulting fees, fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the merger. Some of these costs are payable regardless of whether the merger is completed. See “The Merger Agreement—Expenses and Fees” beginning on page 129.

Each current NYCB stockholder or Flagstar shareholder will have a reduced ownership and voting interest in NYCB following the consummation of the merger than the holder’s ownership and voting interest in NYCB or Flagstar individually, as applicable, prior to the consummation of the merger and will exercise less influence over management.

NYCB stockholders and Flagstar shareholders currently have the right to vote in the election of the board of directors and on other matters affecting NYCB and Flagstar, respectively. When the merger is completed, each NYCB stockholder and each Flagstar shareholder will become an NYCB stockholder, with a percentage ownership of NYCB that is smaller than the holder’s percentage ownership of either NYCB or Flagstar individually, as applicable, prior to the consummation of the merger. Based on the number of shares of NYCB common stock and Flagstar common stock outstanding as of the close of business on the respective record dates, and based on the number of shares of NYCB common stock expected to be issued in the merger, the former Flagstar shareholders, as a group, are estimated to own approximately 31% of the outstanding shares of NYCB common stock immediately after the merger and current NYCB stockholders as a group are estimated to own approximately 69% of the outstanding shares of NYCB common stock immediately after the merger. Because of this, Flagstar shareholders may have less influence on the management and policies of NYCB than they now have on the management and policies of Flagstar, and NYCB stockholders may have less influence on the management and policies of NYCB when the merger is completed than they now have on the management and policies of NYCB.

Issuance of shares of NYCB common stock in connection with the merger may adversely affect the market price of NYCB common stock.

In connection with the payment of the merger consideration, NYCB expects to issue approximately 212.0 million shares of NYCB common stock to Flagstar shareholders. The issuance of these new shares of NYCB common stock may result in fluctuations in the market price of NYCB common stock, including a stock price decrease.

NYCB stockholders and Flagstar shareholders will not have appraisal or dissenters’ rights in the merger.

Appraisal rights or dissenters’ rights are statutory rights that, if applicable under law, enable shareholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction.

Under Section 262 of the DGCL, NYCB stockholders will not be entitled to appraisal rights in connection with the merger. If the merger is completed, NYCB stockholders will not receive any consideration, and their shares of NYCB common stock will remain outstanding and will constitute shares of NYCB following the completion of the merger. Accordingly, NYCB stockholders are not entitled to any appraisal rights in connection with the merger.

Under Section 762 of the MBCA, Flagstar shareholders will not be entitled to dissenters’ rights in connection with the merger if, on the record date of the Flagstar special meeting, shares of Flagstar’s common stock are listed on a national securities exchange, or Flagstar shareholders are not required to accept as consideration for their shares anything other than the shares of NYCB, cash paid in lieu of fractional shares or any combination of the two. Flagstar common stock is currently listed on the NYSE, a national securities exchange, and is expected to continue to be so listed on the record date for the

 

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Flagstar special meeting. In addition, Flagstar shareholders will receive shares of NYCB common stock as consideration in the merger, which shares are currently listed on the NYSE, a national securities exchange, and are expected to continue to be so listed at the effective time.

Accordingly, the holders of Flagstar common stock are not entitled to any dissenters’ rights in connection with the merger.

Shareholder or stockholder litigation could prevent or delay the completion of the merger or otherwise negatively impact the business and operations of NYCB and Flagstar.

NYCB stockholders and/or Flagstar shareholders may file lawsuits against NYCB, Flagstar and/or the directors and officers of either company in connection with the merger. One of the conditions to the closing is that no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint preventing the consummation of the merger, the holdco merger, the bank merger or any of the other transactions contemplated by the merger agreement be in effect. If any plaintiff were successful in obtaining an injunction prohibiting NYCB or Flagstar defendants from completing the merger, the holdco merger, the bank merger or any of the other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the merger and could result in significant costs to NYCB and/or Flagstar, including any cost associated with the indemnification of directors and officers of each company. NYCB and Flagstar may incur costs in connection with the defense or settlement of any shareholder lawsuits filed in connection with the merger. Such litigation could have an adverse effect on the financial condition and results of operations of NYCB and Flagstar and could prevent or delay the completion of the merger.

The COVID-19 pandemic’s impact on NYCB’s business and operations following the completion of the merger is uncertain.

The extent to which the COVID-19 pandemic will negatively affect the business, financial condition, liquidity, capital and results of operations of NYCB following the completion of the merger will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the COVID-19 pandemic, the direct and indirect impact of the COVID-19 pandemic on employees, clients, counterparties and service providers, as well as other market participants, and actions taken by governmental authorities and other third parties in response to the COVID-19 pandemic. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on NYCB’s business, and there is no guarantee that efforts by NYCB to address the adverse impacts of the COVID-19 pandemic will be effective.

Even after the COVID-19 pandemic has subsided, NYCB may continue to experience adverse impacts to its business as a result of the COVID-19 pandemic’s global economic impact, including reduced availability of credit, adverse impacts on liquidity and the negative financial effects from any recession or depression that may occur.

Risks Relating to NYCB’s Business

You should read and consider risk factors specific to NYCB’s business (including those related to the COVID-19 pandemic) that will also affect NYCB after the merger. These risks are described in the sections entitled “Risk Factors” in NYCB’s Annual Report on Form 10-K for the year ended December 31, 2020, NYCB’s Quarterly Reports on Form 10-Q for the fiscal quarter ended March 31, 2021 and in other documents that are attached as annexes to this joint proxy statement/prospectus.

Risks Relating to Flagstar’s Business

You should read and consider risk factors specific to Flagstar’s business (including those related to the COVID-19 pandemic) that will also affect NYCB following the completion of the merger. These risks are described in the sections entitled “Risk Factors” in Flagstar’s Annual Report on Form 10-K for the year ended December 31, 2020, Flagstar’s Quarterly Reports on Form 10-Q for the fiscal quarter ended March 31, 2021 and in other documents incorporated by reference into this joint proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page 159 of this joint proxy statement/prospectus for the location of information incorporated by reference into this joint proxy statement/prospectus.

 

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THE NYCB SPECIAL MEETING

This section contains information for NYCB stockholders about the special meeting that NYCB has called to allow NYCB stockholders to consider and vote on the NYCB share issuance proposal and other related matters. This joint proxy statement/prospectus is accompanied by a notice of the NYCB special meeting, and a form of proxy card that the NYCB board of directors is soliciting for use by NYCB stockholders at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time and Place of the Meeting

The NYCB special meeting will be held virtually via the internet on August 4, 2021 at 10 a.m., Eastern Time. Due to the continuing public health impact of the COVID-19 pandemic and to support the well-being of our stockholders and employees, the NYCB special meeting will be held in a virtual meeting format conducted via webcast.

Matters to Be Considered

At the NYCB special meeting, NYCB stockholders will be asked to consider and vote upon the following proposals:

 

   

the NYCB share issuance proposal; and

 

   

the NYCB adjournment proposal.

Recommendation of NYCB’s Board of Directors

The NYCB board of directors recommends that you vote “FOR” the NYCB share issuance proposal and “FOR” the NYCB adjournment proposal. See “The Merger—NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors” beginning on page 53 for a more detailed discussion of the NYCB board of directors’ recommendation.

Record Date and Quorum

The NYCB board of directors has fixed the close of business on June 18, 2021 as the record date for the determination of holders of NYCB common stock entitled to notice of and to vote at the NYCB special meeting. As of the NYCB record date, there were 465,060,525 shares of NYCB common stock outstanding.

Holders of a majority of the shares of NYCB common stock outstanding on the record date must be present, either in attendance virtually via the NYCB special meeting website or by proxy, to constitute a quorum at the NYCB special meeting. If you fail to submit a proxy prior to the special meeting or to vote at the NYCB special meeting via the NYCB special meeting website, your shares of NYCB common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum.

Subject to the NYCB Limit, each share of NYCB common stock entitles the holder of record as of the NYCB record date to one vote at the NYCB special meeting on each proposal to be considered at the NYCB special meeting.

As of the close of business on the NYCB record date, NYCB directors and executive officers and their affiliates owned and were entitled to vote approximately 15,239,317 shares of NYCB common stock, representing less than three-and-a-half percent (3.277%) of the outstanding shares of NYCB common stock. We currently expect that NYCB’s current directors and current executive officers will vote their shares in favor of the NYCB share issuance proposal and the NYCB adjournment proposal, although none of them has entered into any agreements obligating them to do so.

Broker Non-Votes

A broker non-vote occurs when a broker, bank or other nominee is not permitted to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the broker, bank or other nominee with such instructions. Broker non-votes only count toward a quorum if at least one proposal is presented with respect to which the broker, bank or other nominee has discretionary authority. It is expected that all proposals to be voted on at the NYCB special meeting will be “non-routine” matters, and, as such, broker nonvotes, if any, will not be counted as present and entitled to vote for purposes of determining a quorum at the NYCB special meeting. If your broker, bank or other

 

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nominee holds your shares of NYCB common stock in “street name,” such entity will vote your shares of NYCB common stock only if you provide instructions on how to vote by complying with the instructions provided to you by your broker, bank or other nominee with this joint proxy statement/prospectus.

Vote Required; Treatment of Abstentions and Failure to Vote

NYCB Share Issuance Proposal:

 

   

Vote required: Approval of the NYCB share issuance proposal requires the affirmative vote of a majority of votes cast by NYCB stockholders at the NYCB special meeting. Approval of the NYCB share issuance proposal is a condition to the completion of the merger.

 

   

Effect of abstentions and broker non-votes: According to guidance from the NYSE, an abstention with respect to the NYCB share issuance proposal is treated as a vote cast on the NYCB share issuance proposal. Accordingly, if you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the NYCB share issuance proposal. If you fail to submit a proxy or to vote at the NYCB special meeting via the NYCB special meeting website or fail to instruct your broker, bank or other nominee how to vote with respect to the NYCB share issuance proposal, you will not be deemed to have cast a vote with respect to the NYCB share issuance proposal and it will have no effect on the NYCB share issuance proposal.

NYCB Adjournment Proposal:

 

   

Vote required: Whether or not a quorum will be present at the meeting, approval of the NYCB adjournment proposal requires the affirmative vote of a majority of the votes cast by NYCB stockholders at the NYCB special meeting. Approval of the NYCB adjournment proposal is not a condition to the completion of the merger.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or to vote at the NYCB special meeting via the NYCB special meeting website, or fail to instruct your broker, bank or other nominee how to vote with respect to the NYCB adjournment proposal, you will not be deemed to have cast a vote with respect to the NYCB adjournment proposal and it will have no effect on the NYCB adjournment proposal.

Holders of NYCB preferred stock are not entitled to and are not requested to vote at the NYCB special meeting.

Attending the Virtual Special Meeting

The NYCB special meeting may be accessed via the NYCB special meeting website, where NYCB stockholders will be able to listen to the NYCB special meeting, submit questions and vote online. You are entitled to attend the NYCB special meeting via the NYCB special meeting website only if you were a stockholder of record at the close of business on the record date (a “record holder”) or you held your NYCB shares beneficially in the name of a broker, bank or other nominee as of the record date (a “beneficial owner”), or you hold a valid proxy for the NYCB special meeting.

If you are a record holder you will be able to attend the NYCB special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/NYCB2021SM and following the instructions. Please have your 16-digit control number, which can be found on your notice, proxy card or voting instruction card, to access the meeting. If you are a beneficial owner, you also will be able to attend the NYCB special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/NYCB2021SM and following the instructions. Please have your 16-digit control number, which can be found on your notice, proxy card or voting instruction card, to access the meeting. Please review this information prior to the NYCB special meeting to ensure you have access.

See—“Shares Held in Street Name” below for further information.

Stockholders will have substantially the same opportunities to participate in the virtual NYCB special meeting as they would have at a physical, in-person meeting. Stockholders as of the record date will be able to attend, vote, examine the stockholder list, and submit questions during a portion of the meeting via the online platform. To ensure the NYCB special meeting is conducted in a manner that is fair to all stockholders, we may exercise discretion in determining the order in which questions are answered and the amount of time devoted to any one question. We reserve the right to edit or reject questions we deem inappropriate or not relevant to the NYCB special meeting’s limited purpose.

 

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Technical assistance will be available for stockholders who experience an issue accessing the NYCB special meeting. Contact information for technical support will appear on the NYCB special meeting website prior to the start of the NYCB special meeting.

Proxies

A holder of NYCB common stock may vote by proxy or at the NYCB special meeting via the NYCB special meeting website. If you hold your shares of NYCB common stock in your name as a record holder, to submit a proxy, you, as a holder of NYCB common stock, may use one of the following methods:

 

   

by telephone: by calling the toll-free number indicated on the accompanying proxy card and following the recorded instructions;

 

   

through the internet: by visiting the website indicated on the accompanying proxy card and following the instructions; or

 

   

by completing and returning the accompanying proxy card in the enclosed postage-paid envelope. The envelope requires no additional postage if mailed in the United States.

NYCB requests that NYCB stockholders vote by telephone, over the internet or by completing and signing the accompanying proxy card and returning it to NYCB as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed, the shares of NYCB common stock represented by it will be voted at the NYCB special meeting in accordance with the instructions contained on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the NYCB share issuance proposal and “FOR” the NYCB adjournment proposal.

If you are a beneficial owner, the holder should check the voting form used by your broker, bank or other nominee to determine whether the holder may vote by telephone or the internet.

Every vote is important. Accordingly, you should sign, date and return the enclosed proxy card, or vote via the internet or by telephone, whether or not you plan to attend the NYCB special meeting virtually via the NYCB special meeting website. Sending in your proxy card or voting by telephone or on the internet will not prevent you from voting your shares personally via the NYCB special meeting website at the meeting because you may revoke your proxy at any time before it is voted.

Shares Held in Street Name

If you are a beneficial owner, you will be able to attend the NYCB special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/NYCB2021SM and following the instructions. Please have your 16-digit control number, which can be found on the voting instructions provided by your broker, bank or other nominee, to access the meeting. Please contact your broker, bank or other nominee to obtain further instructions.

If you do not attend the NYCB special meeting and wish to vote, you must instruct the broker, bank or other nominee on how to vote your shares. Your broker, bank or other nominee will vote your shares only if you provide specific instructions on how to vote by following the instructions provided to you by your broker, bank or other nominee.

Further, brokers, banks or other nominees who hold shares of NYCB common stock on behalf of their customers may not give a proxy to NYCB to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting power on the proposals that will be voted upon at the NYCB special meeting, including the NYCB share issuance proposal and the NYCB adjournment proposal.

Revocability of Proxies

If you directly hold shares of NYCB common stock in your name as a record holder, you can change your vote at any time before your proxy is voted at your meeting. You can do this by:

 

   

submitting a written statement that you would like to revoke your proxy to the corporate secretary of NYCB;

 

   

signing and returning a proxy card with a later date prior to the NYCB special meeting;

 

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attending the special meeting virtually and voting by ballot at the NYCB special meeting; or

 

   

voting by telephone or the internet at a later time prior to the NYCB special meeting.

If your shares are held by a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

Attendance virtually at the NYCB special meeting will not in and of itself constitute revocation of a proxy. A revocation or later-dated proxy received by NYCB after the vote will not affect the vote. NYCB’s corporate secretary’s mailing address is: 615 Merrick Avenue, Westbury, New York 11590. If the NYCB virtual special meeting is postponed or adjourned, it will not affect the ability of NYCB stockholders of record as of the record date to exercise their voting rights or to revoke any previously granted proxy using the methods described above.

Delivery of Proxy Materials

As permitted by applicable law, only one copy of this joint proxy statement/prospectus is being delivered to NYCB stockholders residing at the same address, unless such NYCB stockholders have notified NYCB of their desire to receive multiple copies of the joint proxy statement/prospectus.

NYCB will promptly deliver, upon oral or written request, a separate copy of the joint proxy statement/prospectus to any NYCB stockholder residing at an address to which only one copy of such document was mailed. Requests for additional copies should be directed NYCB’s proxy solicitor, Equiniti (US) Services LLC, by calling toll-free at 833-434-0274.

Solicitation of Proxies

NYCB and Flagstar will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus. To assist in the solicitation of proxies, NYCB has retained Equiniti (US) Services LLC, and will pay Equiniti (US) Services LLC a fee of $8,000 plus reimbursement of certain costs and expenses incurred in connection with the solicitation and certain other fees, if incurred. NYCB and its proxy solicitor may also request brokers, banks and other nominees holding shares of NYCB common stock beneficially owned by others to send this document to, and obtain proxies from, the beneficial owners and may reimburse such record holders for their reasonable out-of-pocket expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone and other electronic means, advertisements and personal solicitation by the directors, officers or employees of NYCB. No additional compensation will be paid to our directors, officers or employees for solicitation.

Other Matters to Come Before the NYCB Special Meeting

NYCB management knows of no other business to be presented at the NYCB special meeting, but if any other matters are properly presented to the meeting or any adjournments thereof, the persons named in the proxies will vote upon them in accordance with the NYCB board of directors’ recommendations.

Assistance

If you need assistance in completing your proxy card, have questions regarding NYCB’s special meeting or would like additional copies of this joint proxy statement/prospectus, please contact Investor Relations, NYCB, 615 Merrick Avenue, Westbury, New York 11590, telephone (516) 682-4420, e-mail ir@mnycb.com, or NYCB’s proxy solicitor, Equiniti (US) Services LLC, by calling toll-free: 833-434-0274.

 

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NYCB PROPOSALS

Proposal 1: NYCB Share Issuance Proposal

Pursuant to the merger agreement, NYCB is asking NYCB stockholders to approve the issuance of NYCB common stock to Flagstar shareholders. NYCB stockholders should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the mergers. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

After careful consideration, the NYCB board of directors determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of NYCB and its stockholders and unanimously adopted and approved the merger agreement, the mergers and the other transactions contemplated by the merger agreement. See “The Merger—NYCB’s Reasons for the Merger; Recommendation of the NYCB Board of Directors” beginning on page 53 for a more detailed discussion of the NYCB board of directors’ recommendation.

The NYCB board of directors unanimously recommends a vote “FOR” the NYCB share issuance proposal.

Proposal 2: NYCB Adjournment Proposal

The NYCB special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the NYCB special meeting to approve the NYCB share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to NYCB stockholders. If, at the NYCB special meeting, the number of shares of NYCB common stock present or represented and voting in favor of the NYCB share issuance proposal is insufficient to approve the NYCB share issuance proposal, NYCB intends to move to adjourn the NYCB special meeting in order to enable the NYCB board of directors to solicit additional proxies for approval of the NYCB share issuance proposal, as the case may be. In that event, NYCB will ask NYCB stockholders to vote upon the NYCB adjournment proposal, but not the NYCB share issuance proposal.

In this proposal, NYCB is asking NYCB stockholders to authorize the holder of any proxy solicited by the NYCB board of directors, on a discretionary basis, if a quorum is not present, and (i) if there are not sufficient votes at the time of the NYCB special meeting to approve the NYCB share issuance proposal or (ii) if necessary or appropriate to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to NYCB stockholders, to vote in favor of adjourning the NYCB special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from NYCB stockholders who have previously voted. Pursuant to the NYCB bylaws, the NYCB special meeting may be adjourned without new notice being given.

The approval of the NYCB adjournment proposal by NYCB stockholders is not a condition to the completion of the merger.

The NYCB board of directors unanimously recommends a vote “FOR” the NYCB adjournment proposal.

 

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THE FLAGSTAR SPECIAL MEETING

This section contains information for Flagstar shareholders about the special meeting that Flagstar has called to allow Flagstar shareholders to consider and vote on the Flagstar merger proposal and other related matters. This joint proxy statement/prospectus is accompanied by a notice of the Flagstar special meeting, and a form of proxy card that the Flagstar board of directors is soliciting for use by Flagstar shareholders at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time and Place of the Meeting

The Flagstar special meeting will be held virtually via the internet on August 4, 2021 at 9 a.m., Eastern Time. In light of the ongoing developments related to the COVID-19 pandemic and to support the health and safety of our shareholders, employees and community, the Flagstar special meeting will be held in a virtual-only format conducted via live webcast.

Matters to Be Considered

At the Flagstar special meeting, Flagstar shareholders will be asked to consider and vote upon the following proposals:

 

   

the Flagstar merger proposal;

 

   

the Flagstar compensation proposal; and

 

   

the Flagstar adjournment proposal.

Recommendation of Flagstar’s Board of Directors

The Flagstar board of directors recommends that you vote “FOR” the Flagstar merger proposal, “FOR” the Flagstar compensation proposal and “FOR” the Flagstar adjournment proposal. See “The Merger—Flagstar’s Reasons for the Merger; Recommendation of Flagstar’s Board of Directors” beginning on page 75 for a more detailed discussion of the Flagstar board of directors’ recommendation.

Record Date and Quorum

The Flagstar board of directors has fixed the close of business on June 18, 2021 as the record date for determination of Flagstar shareholders entitled to notice of and to vote at the Flagstar special meeting. As of the record date, there were 52,791,585 shares of Flagstar common stock outstanding.

Holders of a majority of the outstanding shares of Flagstar common stock entitled to vote at the Flagstar special meeting must be present, either in attendance virtually via the Flagstar special meeting website or by proxy, to constitute a quorum at the Flagstar special meeting. If you fail to submit a proxy prior to the special meeting, or to vote at the Flagstar special meeting via the Flagstar special meeting website, your shares of Flagstar common stock will not be counted towards a quorum. Abstentions are considered present for the purpose of establishing a quorum.

At the Flagstar special meeting, each share of Flagstar common stock is entitled to one vote on all matters properly submitted to Flagstar shareholders.

As of the close of business on the Flagstar record date, Flagstar directors and executive officers and their affiliates owned and were entitled to vote approximately 1,094,009 shares of Flagstar common stock, representing slightly more than two percent (2.072%) of the outstanding shares of Flagstar common stock. We currently expect that Flagstar’s directors and executive officers will vote their shares in favor of the Flagstar merger proposal, the Flagstar compensation proposal and the Flagstar adjournment proposal, although none of them has entered into any agreements obligating them to do so.

Broker Non-Votes

A broker non-vote occurs when a bank, broker, trustee or other nominee is not permitted to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the bank, broker, trustee or other nominee with such instructions. Broker non-votes only count toward a quorum if at least one proposal is presented

 

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with respect to which the bank, broker, trustee or other nominee has discretionary authority. It is expected that all proposals to be voted on at the Flagstar special meeting will be “non-routine” matters, and, as such, broker non-votes, if any, will not be counted as present and entitled to vote for purposes of determining a quorum at the Flagstar special meeting. If your bank, broker, trustee or other nominee holds your shares of Flagstar common stock in “street name,” such entity will vote your shares of Flagstar common stock only if you provide instructions on how to vote by complying with the instructions provided to you by your bank, broker, trustee or other nominee with this joint proxy statement/prospectus.

Vote Required; Treatment of Abstentions and Failure to Vote

Flagstar Merger Proposal:

 

   

Vote required: Approval of the Flagstar merger proposal requires the affirmative vote of a majority of the outstanding shares of Flagstar common stock entitled to vote on the Flagstar merger proposal. Approval of the Flagstar merger proposal is a condition to the completion of the merger.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or to vote at the Flagstar special meeting via the Flagstar special meeting website or fail to instruct your bank, broker, trustee or other nominee how to vote with respect to the Flagstar merger proposal, it will have the same effect as a vote “AGAINST” the Flagstar merger proposal.

Flagstar Compensation Proposal:

 

   

Vote required: Approval of the Flagstar compensation proposal requires the affirmative vote of a majority of the votes cast by Flagstar shareholders at the Flagstar special meeting. Approval of the Flagstar compensation proposal is not a condition to the completion of the merger.

 

   

Effect of abstentions and broker non-votes: According to guidance from the NYSE, an abstention with respect to the Flagstar compensation proposal is treated as a vote cast on the Flagstar compensation proposal. Accordingly, if you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Flagstar compensation proposal. If you fail to submit a proxy or to vote at the Flagstar special meeting via the Flagstar special meeting website or fail to instruct your bank, broker, trustee or other nominee how to vote with respect to the Flagstar compensation proposal, you will not be deemed to have cast a vote with respect to the Flagstar compensation proposal and it will have no effect on the Flagstar compensation proposal.

Flagstar Adjournment Proposal:

 

   

Vote required: Whether or not a quorum will be present at the meeting, approval of the Flagstar adjournment proposal requires the affirmative vote of a majority of the votes cast by Flagstar shareholders at the Flagstar special meeting. Approval of the Flagstar adjournment proposal is not a condition to the completion of the merger.

 

   

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote at the Flagstar special meeting via the Flagstar special meeting website or fail to instruct your bank, broker, trustee or other nominee how to vote with respect to the Flagstar adjournment proposal, you will not be deemed to have cast a vote with respect to the Flagstar adjournment proposal and it will have no effect on the Flagstar adjournment proposal.

Attending the Virtual Special Meeting

The Flagstar special meeting may be accessed via the Flagstar special meeting website, where Flagstar shareholders will be able to listen to the Flagstar special meeting, submit questions and vote online. You are entitled to attend the Flagstar special meeting via the Flagstar special meeting website only if you were a shareholder of record at the close of business on the record date (a “record holder”) or you held your Flagstar shares beneficially in the name of a bank, broker, trustee or other nominee as of the record date (a “beneficial owner”), and you hold a valid legal proxy for the Flagstar special meeting.

If you are a record holder you will be able to attend the Flagstar special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/FBC2021SM and following the instructions. Please have your 16-digit control number, which can be found on your proxy card or notice previously received, to access the meeting. If you are a beneficial owner and you have a valid legal proxy for the Flagstar special meeting, you also will be able to attend the

 

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Flagstar special meeting online, ask questions and vote during the meeting. Please have your 16-digit control number, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee, to access the meeting. Please review this information prior to the Flagstar special meeting to ensure you have access.

See “—Shares Held in Street Name” below for further information.

Shareholders will have substantially the same opportunities to participate in the virtual Flagstar special meeting as they would have at a physical, in-person meeting. Shareholders of record as of the record date will be able to attend, vote, examine the shareholder list, and submit questions during a portion of the meeting via the online platform. To ensure the Flagstar special meeting is conducted in a manner that is fair to all shareholders, we may exercise discretion in determining the order in which questions are answered and the amount of time devoted to any one question. We reserve the right to edit or reject questions we deem inappropriate or not relevant to the Flagstar special meeting’s limited purpose.

Technical assistance will be available for shareholders who experience an issue accessing the Flagstar special meeting. Contact information for technical support will appear on the Flagstar special meeting website prior to the start of the Flagstar special meeting.

Proxies

A holder of Flagstar shares may vote by proxy or at the Flagstar special meeting via the Flagstar special meeting website. If you hold your shares of Flagstar common stock in your name as a record holder, to submit a proxy, you, as a holder of Flagstar common stock, may use one of the following methods:

 

   

by telephone: by calling the toll-free number indicated on the accompanying proxy card and following the recorded instructions;

 

   

through the internet: by visiting the website indicated on the accompanying proxy card and following the instructions; or

 

   

by completing and returning the accompanying proxy card in the enclosed postage-paid envelope. The envelope requires no additional postage if mailed in the United States.

Flagstar requests that Flagstar shareholders vote by telephone, over the internet or by completing and signing the accompanying proxy card and returning it to Flagstar as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed, the shares of Flagstar common stock represented by it will be voted at the Flagstar special meeting in accordance with the instructions contained on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the Flagstar merger proposal, “FOR” the Flagstar compensation proposal and “FOR” the Flagstar adjournment proposal.

If you are a beneficial owner, you should check the voting form used by that firm to determine whether you may vote by telephone or the internet.

Every vote is important. Accordingly, you should sign, date and return the enclosed proxy card, or vote via the internet or by telephone, whether or not you plan to attend the Flagstar special meeting virtually via the Flagstar special meeting website. Sending in your proxy card or voting by telephone or on the internet will not prevent you from voting your shares personally via the Flagstar special meeting website at the meeting because you may revoke your proxy at any time before it is voted.

Shares Held in Street Name

If you are a beneficial owner and you have a valid proxy for the Flagstar special meeting, you will be able to attend the Flagstar special meeting online, ask questions and vote during the meeting by visiting www.virtualshareholdermeeting.com/FBC2021SM and following the instructions. Please have your 16-digit control number, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee, to access the meeting. Please contact your bank, broker, trustee or other nominee to obtain further instructions.

If you do not attend the Flagstar special meeting and wish to vote, you must instruct the bank, broker, trustee or other nominee on how to vote your shares. Your bank, broker, trustee or other nominee will vote your shares only if you provide specific instructions on how to vote by following the instructions provided to you by your bank, broker, trustee or other nominee.

 

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Further, banks, brokers, trustees or other nominees who hold shares on behalf of their customers may not give a proxy to Flagstar to vote those shares with respect to any of the proposals without specific instructions from their customers, as banks, brokers, trustees and other nominees do not have discretionary voting power on the proposals that will be voted upon at the Flagstar special meeting, including the Flagstar merger proposal, the Flagstar compensation proposal and the Flagstar adjournment proposal.

Revocability of Proxies

If you directly hold shares of Flagstar common stock in your name as a record holder, you can change your proxy vote at any time before your proxy is voted at the Flagstar special meeting. You can do this by:

 

   

submitting a written statement that you would like to revoke your proxy to the corporate secretary of Flagstar;

 

   

signing and returning a proxy card with a later date;

 

   

attending the Flagstar special meeting virtually and voting at the Flagstar special meeting via the Flagstar special meeting website; or

 

   

voting by telephone or the internet at a later time.

If you are a beneficial owner of Flagstar common stock, you may change your vote by:

 

   

contacting your bank, broker, trustee or other nominee; or

 

   

attending the Flagstar special meeting virtually and voting your shares via the special meeting website if you have a valid legal proxy and your 16-digit control number, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee. Please contact your bank, broker, trustee or other nominee for further instructions.

Attendance virtually at the Flagstar special meeting will not in and of itself constitute revocation of a proxy. A revocation or later-dated proxy received by Flagstar after the vote will not affect the vote. Flagstar’s corporate secretary’s mailing address is 5151 Corporate Drive, Troy, Michigan 48098. If the Flagstar virtual special meeting is postponed or adjourned, it will not affect the ability of Flagstar shareholders of record as of the record date to exercise their voting rights or to revoke any previously granted proxy using the methods described above.

Delivery of Proxy Materials

As permitted by applicable law, only one copy of this joint proxy statement/prospectus is being delivered to Flagstar shareholders residing at the same address, unless such Flagstar shareholders have notified Flagstar of their desire to receive multiple copies of the joint proxy statement/prospectus.

Flagstar will promptly deliver, upon oral or written request, a separate copy of the joint proxy statement/prospectus to any holder of Flagstar common stock residing at an address to which only one copy of such document was mailed. Requests for additional copies should be directed to Flagstar’s proxy solicitor, Equiniti (US) Services LLC, by calling toll-free at 833-434-0274.

Solicitation of Proxies

Flagstar and NYCB will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus. To assist in the solicitation of proxies, Flagstar has retained Equiniti (US) Services LLC, for a fee of $8,000 plus reimbursement of certain costs and expenses incurred in connection with the solicitation and certain other fees, if incurred. Flagstar and its proxy solicitor will also request banks, brokers, trustees and other intermediaries holding shares of Flagstar common stock beneficially owned by others to send this document to, and obtain proxies from, the beneficial owners and may reimburse such record holders for their reasonable out-of-pocket expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone and other electronic means, advertisements and personal solicitation by the directors, officers or employees of Flagstar. No additional compensation will be paid to Flagstar’s directors, officers or employees for solicitation.

 

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You should not send in any Flagstar stock certificates with your proxy card (or, if you are a beneficial owner, your voting instruction card). The exchange agent will mail a transmittal letter with instructions for the surrender of stock certificates to Flagstar shareholders as soon as practicable after completion of the merger.

Other Matters to Come Before the Flagstar Special Meeting

Flagstar management knows of no other business to be presented at the Flagstar special meeting, but if any other matters are properly presented to the meeting or any adjournments thereof, the persons named in the proxies will vote upon them in accordance with the Flagstar board of directors’ recommendations.

Assistance

If you need assistance in completing your proxy card, have questions regarding Flagstar’s special meeting or would like additional copies of this joint proxy statement/prospectus, please contact Investor Relations, Flagstar at 5151 Corporate Drive, Troy, Michigan 48098, telephone (248) 312-5741, or Flagstar’s proxy solicitor, Equiniti (US) Services LLC, by calling toll-free 833-434-0274.

 

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FLAGSTAR PROPOSALS

Proposal 1: Flagstar Merger Proposal

Pursuant to the merger agreement, Flagstar is asking Flagstar shareholders to approve the merger agreement and the transactions contemplated thereby, including the merger. Flagstar shareholders should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

After careful consideration, the Flagstar board of directors, by a unanimous vote of all directors, adopted the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, to be advisable and in the best interest of Flagstar and Flagstar shareholders. See “The Merger—Flagstar’s Reasons for the Merger; Recommendation of Flagstar’s Board of Directors” beginning on page 75 for a more detailed discussion of the Flagstar board of directors’ recommendation.

The approval of the Flagstar merger proposal by Flagstar shareholders is a condition to the completion of the merger.

The Flagstar board of directors unanimously recommends a vote “FOR” the Flagstar merger proposal.

Proposal 2: Flagstar Compensation Proposal

Pursuant to Section 14A of the Exchange Act and Rule 14a-21(c) thereunder, Flagstar is seeking a non-binding, advisory stockholder approval of the compensation of Flagstar’s named executive officers that is based on or otherwise relates to the merger as disclosed in the section entitled “The Merger—Interests of Certain Flagstar Directors and Executive Officers in the Merger—Quantification of Potential Payments and Benefits to Flagstar’s Named Executive Officers in Connection with the Merger—Golden Parachute Compensation” beginning on page 107. The proposal gives Flagstar shareholders the opportunity to express their views on the merger-related compensation of Flagstar’s named executive officers.

Accordingly, Flagstar is asking Flagstar shareholders to vote “FOR” the adoption of the following resolution, on a non-binding advisory basis:

“RESOLVED, that the compensation that will or may be paid or become payable to the Flagstar named executive officers, in connection with the merger, and the agreements or understandings pursuant to which such compensation will or may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “Interests of Certain Flagstar Directors and Executive Officers in the Merger—Quantification of Potential Payments and Benefits to Flagstar’s Named Executive Officers in Connection with the Merger—Golden Parachute Compensation,” are hereby APPROVED.”

The advisory vote on the Flagstar compensation proposal is a vote separate and apart from the votes on the Flagstar merger proposal and the Flagstar adjournment proposal. Accordingly, if you are a holder of Flagstar common stock, you may vote to approve the Flagstar merger proposal and/or the Flagstar adjournment proposal and vote not to approve the Flagstar compensation proposal, and vice versa. The approval of the Flagstar compensation proposal by Flagstar shareholders is not a condition to the completion of the merger. If the merger is completed, the merger-related compensation will be paid to Flagstar’s named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements even if Flagstar shareholders fail to approve the advisory vote regarding merger-related compensation.

The Flagstar board of directors unanimously recommends a vote “FOR” the advisory Flagstar compensation proposal.

Proposal 3: Flagstar Adjournment Proposal

The Flagstar special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Flagstar special meeting to approve the Flagstar merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Flagstar shareholders.

If, at the Flagstar special meeting, the number of shares of Flagstar common stock present or represented and voting in favor of the Flagstar merger proposal is insufficient to approve the Flagstar merger proposal, Flagstar intends to move to adjourn

 

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the Flagstar special meeting in order to enable the Flagstar board of directors to solicit additional proxies for approval of the Flagstar merger proposal. In that event, Flagstar will ask Flagstar shareholders to vote upon the Flagstar adjournment proposal, but not the Flagstar merger proposal or the Flagstar compensation proposal.

In this proposal, Flagstar is asking Flagstar shareholders to authorize the holder of any proxy solicited by the Flagstar board of directors on a discretionary basis (i) if there are not sufficient votes at the time of the Flagstar special meeting to approve the Flagstar merger proposal or (ii) if necessary or appropriate to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Flagstar shareholders, to vote in favor of adjourning the Flagstar special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from Flagstar shareholders who have previously voted. Pursuant to the Flagstar bylaws, the Flagstar special meeting may be adjourned without new notice being given unless the adjournment is for more than 30 days or if a new record date is set for the adjourned meeting.

The approval of the Flagstar adjournment proposal by Flagstar shareholders is not a condition to the completion of the merger.

The Flagstar board of directors unanimously recommends a vote “FOR” the Flagstar adjournment proposal.

 

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INFORMATION ABOUT THE COMPANIES

New York Community Bancorp, Inc.

NYCB is a Delaware corporation and the bank holding company for NYCB Bank. Formerly known as Queens County Savings Bank, NYCB Bank converted from a state-chartered mutual savings bank to the capital stock form of ownership on November 23, 1993, at which date NYCB completed its initial offering of common stock (par value: $0.01 per share) at a price of $25.00 per share ($0.93 per share on a split-adjusted basis, reflecting the impact of nine stock splits between 1994 and 2004). As of March 31, 2021, NYCB had consolidated total assets of $57.7 billion, deposits of $34.2 billion and stockholders’ equity of $6.8 billion. NYCB had 2,956 employees as of March 31, 2021.

Established in 1859, NYCB Bank is a New York State-chartered savings bank with 237 branches as of March 31, 2021 that currently operates through eight local divisions, each with a history of strength and service: 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. NYCB Bank is a leading producer of multi-family loans in New York City, with an emphasis on non-luxury residential apartment buildings with rent-regulated units that feature below-market rents. In addition to multifamily loans, which are NYCB Bank’s principal asset, NYCB Bank originates CRE loans (primarily in New York City), specialty finance loans and leases, and, to a much lesser extent, ADC loans, and C&I loans (typically made to small and mid-size business in Metro New York).

NYCB’s common stock is traded on the NYSE under the symbol “NYCB.” The principal executive offices of NYCB are located at 615 Merrick Avenue, Westbury, New York 11590, and its telephone number is (516) 683-4100.

Flagstar Bancorp, Inc.

Flagstar is a savings and loan holding company incorporated under the state laws of Michigan. Flagstar is the holding company for Flagstar Bank, a federally chartered stock savings bank founded in 1987. As of March 31, 2021, Flagstar had consolidated total assets of $29.4 billion, deposits of $19.4 billion and stockholders’ equity of $2.4 billion. Flagstar had 5,418 full-time equivalent employees as of March 31, 2021.

The principal business of Flagstar is to provide, primarily through its principal subsidiary Flagstar Bank, commercial and consumer banking services. As of March 31, 2021, Flagstar is the sixth largest bank mortgage originator in the nation and the sixth largest subservicer of mortgage loans nationwide. The relationship-based business model leverages Flagstar Bank’s full-service bank’s capabilities and national mortgage platform to create and build financial solutions for its customers. At March 31, 2021, Flagstar operated 158 full service banking branches that offer a full set of banking products to consumer, commercial and government customers. Its bank branch footprint spans Michigan, Indiana, California, Wisconsin and Ohio.

Flagstar originates mortgages through a network of brokers and correspondents in all 50 states and its own loan officers, which includes its direct lending team, from 87 retail locations and three call centers. Flagstar is also a leading national servicer of mortgage loans and provides complementary ancillary offerings including MSR lending, servicing advance lending and MSR recapture services.

Flagstar’s common stock is traded on the NYSE under the symbol “FBC.” The principal executive offices of Flagstar are located at 5151 Corporate Drive, Troy, Michigan 48098, and its telephone number is (248) 312-2000.

Merger Sub

Merger Sub, a direct, wholly owned subsidiary of NYCB, is a Delaware corporation that was incorporated for the sole purpose of effecting the merger. In the merger, Merger Sub will merge with and into Flagstar, with Flagstar surviving as a direct, wholly owned subsidiary of NYCB and the separate corporate existence of Merger Sub will cease.

Its principal executive office is located at c/o New York Community Bancorp, Inc., 615 Merrick Avenue, Westbury, New York 11590 and its telephone number is (516) 683-4100.

 

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THE MERGER

This section of the joint proxy statement/prospectus describes material aspects of the merger. This summary may not contain all of the information that is important to you. You should carefully read this entire joint proxy statement/prospectus, including the documents attached as annexes to this joint proxy statement/prospectus, and other documents we refer you to, for a more complete understanding of the merger. In addition, important business and financial information about NYCB from documents filed with the SEC has been included in the annexes that are attached to this joint proxy statement/prospectus and about Flagstar from documents filed with the SEC has been incorporated by reference into this joint proxy statement/prospectus. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 159.

Terms of the Merger

Each of NYCB’s and Flagstar’s respective board of directors has unanimously approved the merger agreement. The merger agreement provides that, pursuant to the terms and subject to the conditions set forth in the merger agreement, Merger Sub will merge with and into Flagstar, with Flagstar as the surviving entity, which is referred to as the merger, and as soon as reasonably practicable following the merger, Flagstar will merge with and into NYCB, with NYCB as the surviving entity, which is referred to as the holdco merger. At a date and time following the holdco merger as determined by NYCB, Flagstar Bank will merge with and into NYCB Bank, with NYCB Bank as the surviving bank, which is referred to as the bank merger.

In the merger, each share of Flagstar common stock issued and outstanding immediately prior to the effective time, except for certain shares owned by NYCB or Flagstar (subject to certain exceptions described in the merger agreement), will be converted into the right to receive 4.0151 shares of NYCB common stock. NYCB will not issue any fractional shares of NYCB common stock in the merger. Instead, a former holder of Flagstar common stock who otherwise would have received a fraction of a share of NYCB common stock will receive for the fraction of a share an amount in cash (rounded to the nearest cent) based on the NYCB closing share value.

NYCB stockholders are being asked to approve the NYCB share issuance proposal and Flagstar shareholders are being asked to approve the Flagstar merger proposal. See the section entitled “The Merger Agreement” beginning on page 113 for additional and more detailed information regarding the legal documents that govern the merger, including information about the conditions to the completion of the merger and the provisions for terminating or amending the merger agreement.

Background of the Merger

As part of the ongoing consideration and evaluation of their respective long-term prospects and strategies, each of NYCB’s and Flagstar’s boards of directors and senior managements have regularly reviewed and assessed their respective business strategies and objectives, including assessments of potentially available strategic growth opportunities, business combinations involving other financial institutions or remaining independent, among other efforts to enhance value for their respective stockholders and shareholders. These reviews have focused on, among other things, prospects and developments in the financial services industry, the regulatory environment and the economy generally, and the implications of such developments for financial institutions generally and NYCB and Flagstar in particular. These reviews have also included assessments of ongoing consolidation in the financial services industry and the benefits and considerations to NYCB and Flagstar, respectively, and their respective stockholders and shareholders of strategic combinations.

Between late April and early June of 2019, Flagstar and NYCB had preliminary conversations regarding a potential strategic transaction, but those conversations did not develop into any more formal discussions or negotiations (the “2019 Preliminary Discussions”).

Beginning in January 2021, Mr. Thomas Cangemi, Chairman, President and Chief Executive Officer of NYCB, placed several calls to Mr. Alessandro P. DiNello, President and Chief Executive Officer of Flagstar, during which Mr. Cangemi and Mr. DiNello had preliminary conversations regarding a potential strategic transaction involving NYCB and Flagstar. During the first week of March 2021, Mr. Cangemi called Mr. DiNello to discuss dates for a follow-up in-person meeting to continue the discussion of a potential strategic transaction involving NYCB and Flagstar, and Mr. Cangemi and Mr. DiNello agreed to meet in person on March 8, 2021. Prior to the meeting, on March 7, 2021, NYCB and Flagstar executed a confidentiality agreement.

 

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In early March 2021, NYCB engaged Piper Sandler & Co. (“Piper Sandler”) and Goldman Sachs & Co. LLC (“Goldman Sachs”) as financial advisors with respect to a potential transaction with Flagstar.

At the March 8, 2021 meeting, Mr. Cangemi, on behalf of NYCB, delivered to Mr. DiNello a preliminary, non-binding proposal for a potential strategic transaction between NYCB and Flagstar, including the following terms (the “March 8 Proposal”): (i) all-stock merger, (ii) at-market fixed exchange ratio, (iii) board size and board representation to be determined, (iv) management structure to be determined, but indicating NYCB’s desire to have Mr. DiNello and other Flagstar employees have key executive and management roles at the combined company, (v) New York State savings bank charter for the combined company, (vi) maintaining the Flagstar brand for Flagstar’s mortgage business and (vii) maintaining NYCB’s current annual dividend of $0.68.

On March 15, 2021, the Flagstar board of directors held a meeting at which the March 8 Proposal was distributed to the directors and discussed, along with financial materials that had been prepared by Jefferies. Mr. DiNello reported to the Flagstar board of directors the terms of the March 8 Proposal and updated the board on the various discussions he had with Mr. Cangemi regarding the potential transaction. The Flagstar board of directors also discussed the directors’ fiduciary duties in the context of the March 8 Proposal. At the meeting, the board of directors also determined to engage Jefferies and Morgan Stanley as financial advisors to Flagstar and Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) as legal counsel to Flagstar. In addition, the board of directors determined to reconstitute the transactions committee of the board of directors (the “Flagstar Transactions Committee”), which had originally been established in connection with the 2019 Preliminary Discussions, for purposes of evaluating the proposed transaction with NYCB and considering and evaluating other potential strategic transactions and other alternatives.

On March 17, 2021, the Flagstar board of directors, via a unanimous written consent, effective as of that date, reconstituted the Flagstar Transactions Committee to consist of Jay J. Hansen, Peter Schoels, David Treadwell and Jennifer Whip. On March 18, 2021, Mr. DiNello called Mr. Cangemi to inform him that Flagstar was interested in continuing preliminary discussions regarding a potential transaction with NYCB.

On March 19, 2021, the Flagstar Transactions Committee held a meeting to discuss the March 8 Proposal and more generally a potential transaction with NYCB. Representatives of Jefferies and Skadden and certain members of Flagstar management were in attendance, and each of Jefferies and Skadden had prepared and distributed materials to the directors in advance of the meeting. A representative of Jefferies provided the directors with, among other information, a review and financial analysis of the March 8 Proposal, NYCB, Flagstar and other potential strategic transactions and other alternatives, including to continue to execute on Flagstar’s existing strategic plan. A representative of Skadden reviewed with the directors fiduciary duty and other process considerations. Following discussion, the Flagstar Transactions Committee determined that Flagstar should continue to consider the potential transaction with NYCB as well as other alternatives, including to continue to execute on Flagstar’s existing strategic plan. Regarding the March 8 Proposal, the Flagstar Transactions Committee instructed Mr. DiNello to negotiate for a premium to Flagstar’s share price in calculating the exchange ratio in a potential all-stock merger (the “Merger Exchange Ratio”).

Between March 19 and March 26, Mr. DiNello and certain members of the Flagstar Transactions Committee and Flagstar management, together with Morgan Stanley and Jefferies, held various calls and virtual meetings with representatives of NYCB, Piper Sandler and Goldman Sachs to discuss the terms of the March 8 Proposal and other financial matters of each of Flagstar and NYCB, including with respect to a premium to Flagstar’s share price in calculating the Merger Exchange Ratio.

On March 23, 2021, the NYCB board of directors held a meeting to discuss a potential transaction with Flagstar. Representatives of NYCB management, Piper Sandler and Goldman Sachs were in attendance. Mr. Cangemi described Flagstar and the potential transaction and summarized the conversations he had had with Mr. DiNello. Representatives of Piper Sandler and Goldman Sachs provided the directors with information based on public sources concerning, among other things, the transactional landscape in the banking industry, Flagstar’s business and operational and financial performance, and preliminary financial analysis regarding a potential transaction with Flagstar. The NYCB board of directors discussed Flagstar, the potential transaction and the preliminary terms discussed by Messrs. Cangemi and DiNello, and representatives of Piper Sandler and Goldman Sachs answered questions posed by the NYCB directors. After discussion, the directors expressed support for a potential transaction with Flagstar and resolved to authorize Mr. Cangemi to continue with the investigation and negotiation of the potential transaction.

On the evening of March 26, 2021, NYCB delivered to Flagstar a revised proposal reflecting a 10% premium to Flagstar’s share price in calculating the Merger Exchange Ratio (noting that such premium was conditioned on the final Merger

 

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Exchange Ratio being accretive to tangible book value) and also stating that Mr. Cangemi would remain Chairman of the Board of Directors (in addition to his role as President & Chief Executive Officer) of the combined company following the merger (the “March 26 Proposal”). The other terms of the March 8 Proposal were unchanged.

On March 28, 2021, the Flagstar Transactions Committee held a meeting to discuss the March 26 Proposal and more generally a potential transaction with NYCB and to discuss other potential strategic transactions and other alternatives, including to continue to execute on Flagstar’s existing strategic plan. Representatives of Morgan Stanley, Jefferies and Skadden were in attendance, and each of Jefferies and Morgan Stanley had prepared and distributed materials to the directors in advance of the meeting. Representatives of Morgan Stanley and Jefferies provided the directors with, among other information, a review and financial analysis of the March 26 Proposal, NYCB, Flagstar and other potential strategic transactions and other alternatives, including to continue to execute on Flagstar’s existing strategic plan. In discussing the 10% premium to Flagstar’s share price in calculating the Merger Exchange Ratio and potential to negotiate for a higher premium, Morgan Stanley, Jefferies and the directors discussed NYCB’s stated condition that the proposed transaction be meaningfully accretive to tangible book value of NYCB. A representative of Skadden reviewed with the directors additional fiduciary duty and other process considerations. Following discussion, the Flagstar Transactions Committee determined to recommend to the full board of directors that Flagstar continue to consider the potential transaction with NYCB and authorize management to continue to negotiate the terms of the NYCB transaction and proceed with a mutual diligence process.

On March 29, 2021, the Flagstar board of directors held a meeting to discuss the March 26 Proposal and more generally a potential transaction with NYCB and to discuss other potential strategic transactions and other alternatives, including to continue to execute on Flagstar’s existing strategic plan. Representatives of Morgan Stanley, Jefferies and Skadden were in attendance, and each of Jefferies and Morgan Stanley had prepared and distributed materials to the board of directors in advance of the meeting. Representatives of Morgan Stanley and Jefferies reviewed with the board of directors the materials and information reviewed and discussed at the March 28, 2021 meeting of the Flagstar Transactions Committee, as updated. In addition, the Flagstar Transactions Committee reviewed with the full board the process that had been undertaken by the Flagstar Transactions Committee and the recommendation that Flagstar continue to consider the potential transaction with NYCB and authorize management to continue to negotiate the terms of the NYCB transaction and proceed with a mutual diligence process. A representative of Skadden reviewed with the directors’ additional fiduciary duty and other process considerations Following discussion, the board of directors authorized the Flagstar Transactions Committee and certain members of management to continue to move forward with the review, exploration and negotiation of a potential transaction with NYCB and the mutual due diligence process.

On March 31, 2021 Flagstar made available to NYCB, and on April 12, 2021 NYCB made available to Flagstar documents for mutual due diligence review in virtual data rooms. NYCB and Flagstar, and their respective legal, financial and other advisors, engaged in mutual due diligence, including with respect to business, credit, operational, legal and compliance matters, among others.

Over the following weeks, Messrs. Cangemi and DiNello and other members of NYCB’s and Flagstar’s management, with the assistance of their respective companies’ financial and legal advisors, continued to discuss and negotiate the terms of the potential transaction.

On April 5, 2021, the Flagstar Transactions Committee held a meeting to discuss recent developments and updates regarding the ongoing discussions with respect to a potential transaction with NYCB. Representatives of Morgan Stanley, Jefferies and Skadden were in attendance, and Morgan Stanley had prepared and distributed materials to the directors in advance of the meeting and reviewed the same at the meeting. Among other matters discussed, the Flagstar Transactions Committee considered alternatives designed to ensure that Flagstar’s existing and successful businesses were appropriately continued at the potential combined company, for the benefit of the combined company and its shareholders. Following discussion, the Flagstar Transactions Committee directed Flagstar’s management to continue the mutual due diligence process and to continue negotiations with NYCB and, as part of the negotiations, to communicate to NYCB and its advisors that the Flagstar directors be at least proportionately represented on the NYCB board and hold key positions with a focus on risk and oversight.

On April 6 and April 7, 2021, members of the senior management teams of NYCB and Flagstar, as well as representatives of their respective financial and legal advisors, met virtually to facilitate NYCB’s further due diligence of Flagstar. Flagstar senior management provided an overview to NYCB’s senior management of the history, business lines, strategy and

 

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operations of Flagstar, and the parties also discussed Flagstar’s deposit base, loan portfolio, credit quality trends, financial performance and legal, regulatory and compliance history. Thereafter, NYCB and Flagstar continued to engage in mutual due diligence.

On April 7 and April 8, 2021, Mr. DiNello and Mr. Cangemi met to discuss, among other items, the combined company board and governance matters that the Flagstar Transactions Committee had discussed at its April 5, 2021 meeting. During these meetings, Mr. DiNello and Mr. Cangemi agreed to discuss with their respective boards a construct where Mr. DiNello would become non-executive chairman of the combined company’s board of directors for a period of two years and Mr. Treadwell would become risk committee chairman of the combined company’s board of directors.

On April 8, 2021, Sullivan & Cromwell LLP (“Sullivan & Cromwell”), NYCB’s legal counsel, shared with Skadden a first draft of the proposed merger agreement. From April 8, 2021 until April 24, 2021, NYCB and Flagstar and their respective legal advisors negotiated the proposed merger agreement and certain ancillary agreements, and exchanged drafts of the merger agreement and such ancillary agreements. The terms negotiated by the parties and their respective advisors included, among other things interim operating covenants, termination provisions and termination fees, the treatment of Flagstar’s outstanding equity awards rights, employment related agreements with certain members of Flagstar’s senior management and post-closing employee matters. Mutual due diligence continued in parallel with the negotiation of the transaction agreements during this time.

On April 9, 2021, the Flagstar Transactions Committee held a meeting to discuss recent developments and updates regarding the ongoing discussions with respect to a potential transaction with NYCB. Representatives of Morgan Stanley, Jefferies and Skadden were in attendance, and Morgan Stanley had prepared and distributed materials to the directors in advance of the meeting and reviewed the same at the meeting. In addition to the other matters covered, Mr. DiNello described that NYCB had confirmed agreement on certain board and governance matters, namely (i) Mr. DiNello becoming the non-executive chairman of the NYCB board for a period of two years, (ii) Mr. Treadwell becoming the risk committee chairman of the NYCB board and (iii) a combined company board of directors composition of eight NYCB legacy directors and four Flagstar legacy directors. A representative of Skadden reviewed with the directors certain merger agreement and legal due diligence items, including relating to the banking charter of the combined company being NYCB’s existing New York State savings bank charter. Following discussion, the Flagstar Transactions Committee directed Flagstar’s management to continue the mutual due diligence process and to continue negotiations with NYCB and, as part of the negotiations, to communicate to NYCB and its advisors the use of a volume weighted average price (VWAP) to determine the Merger Exchange Ratio. In addition, to ensure that Flagstar’s existing and successful businesses were appropriately continued at the potential combined company, for the benefit of the combined company and its shareholders, the Flagstar Transaction Committed directed Mr. DiNello to seek commitments from NYCB regarding the maintenance and continuity of Flagstar’s mortgage and banking businesses and related senior management. Later that day on April 9, 2021, Mr. DiNello had additional video calls with Mr. Cangemi and certain members of the NYCB board of directors to discuss the potential transaction with NYCB.

Between April 14 and April 17, 2021, members of the senior management teams of NYCB and Flagstar, as well as representatives of their respective financial and legal advisors, met virtually to facilitate Flagstar’s further due diligence of NYCB. NYCB senior management provided an overview to Flagstar’s senior management of the history, business lines, strategy and operations of NYCB, and the parties also discussed NYCB’s deposit base, loan portfolio, credit quality trends, financial performance and legal and compliance history. Thereafter, through April 24, 2021, NYCB and Flagstar continued to engage in mutual due diligence. In addition, over the following weeks, Messrs. Cangemi and DiNello and other members of NYCB’s and Flagstar’s management, with the assistance of their respective companies’ financial and legal advisors, continued to discuss and negotiate the terms of the potential transaction.

On April 15, 2021, the Flagstar Transactions Committee held a meeting to discuss recent developments and updates regarding the ongoing discussions with respect to a potential transaction with NYCB. Representatives of Morgan Stanley, Jefferies and Skadden were in attendance, and Morgan Stanley and Skadden had prepared and distributed materials to the directors in advance of the meeting and reviewed the same at the meeting. As part of the advisor presentations, a representative of Skadden reviewed with the directors certain merger agreement and legal due diligence items. In addition to the other matters covered, Mr. DiNello described that NYCB had confirmed agreement on certain additional board, governance and management matters, namely (i) a combined company board of directors composition of eight NYCB legacy directors and four Flagstar legacy directors, (ii) the establishment of an advisory board to the combined company consisting of Flagstar legacy directors not on the combined company board of directors and (iii) commitments from NYCB regarding the maintenance and continuity of Flagstar’s mortgage and banking businesses and related senior management, to be included in the merger agreement or by employment agreements.

 

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On April 20, 2021, the Flagstar board of directors held a meeting to discuss recent developments and updates regarding the ongoing discussions with respect to a potential transaction with NYCB. Representatives of Morgan Stanley, Jefferies and Skadden were in attendance, and Morgan Stanley and Skadden had prepared and distributed materials to the directors in advance of the meeting and reviewed the same at the meeting. As part of the advisor presentations, a representative of Skadden reviewed with the directors certain merger agreement terms and considerations and certain legal due diligence items. Also, as part of the advisor presentations, a representative of Morgan Stanley reviewed certain financial aspects of the proposed transaction, including with respect to the pro forma shareholder ownership of the combined company and, also, the calculation of the Merger Exchange Ratio using a five-day volume weighted average price (VWAP) to determine the Merger Exchange Ratio, which VWAP methodology had been agreed to by NYCB.

On April 22, 2021, the NYCB board of directors held a meeting to discuss, among other things, the potential transaction with Flagstar. Representatives of Piper Sandler, Goldman Sachs and Sullivan & Cromwell were in attendance. Representatives of NYCB management, including Mr. Cangemi, provided an overview of Flagstar and the potential transaction; summarized Mr. Cangemi’s meetings and discussions with Mr. DiNello; described the due diligence processes undertaken by NYCB and Flagstar with respect to the potential transaction and the meetings among management and legal and financial advisors; discussed the potential risks and benefits and certain financial aspects of the potential transaction; and reported the revised terms for the potential transaction. Representatives of Sullivan & Cromwell reviewed with the NYCB board of directors the NYCB directors’ fiduciary duties under applicable law and summarized the proposed merger agreement and other agreements in respect of the potential transaction. Representatives of each of Piper Sandler and Goldman Sachs reviewed the financial aspects of the potential transaction and their respective preliminary financial analyses, and each indicated that it expected to be in a position to deliver its respective final financial analyses and fairness opinion following final agreement on the transaction terms. In addition, Mr. Cangemi presented management’s recommendation for the approval of resolutions authorizing NYCB to enter into the merger agreement. The NYCB board of directors discussed the potential transaction and the terms of the agreements and representatives of NYCB management, Piper Sandler, Goldman Sachs and Sullivan & Cromwell answered questions posed by the NYCB directors. Following these discussions, the NYCB board of directors expressed support for the potential transaction and recessed the meeting until Saturday, April 24, 2021.

On April 23, 2021, the Flagstar Transactions Committee held a meeting to discuss the potential transaction with NYCB. Representatives of Morgan Stanley, Jefferies and Skadden were in attendance, and each of Morgan Stanley, Jefferies and Skadden had prepared and distributed materials to the directors in advance of the meeting and reviewed the same at the meeting. Representatives of Morgan Stanley and Jefferies presented their respective fairness analyses and noted that each was prepared to deliver its final fairness analyses and opinion upon final determination of the Merger Exchange Ratio, which would be determined prior to the Flagstar board of directors meeting scheduled for the following day. Representatives of Skadden updated the directors on the final terms of the proposed merger agreement and reported that the negotiations were substantially complete. Representatives of Skadden also reviewed the directors’ fiduciary duties. Following these discussions, the Flagstar Transactions Committee unanimously determined to recommend to the full board of directors the approval of resolutions authorizing Flagstar to enter into the merger agreement.

On Saturday, April 24, 2021, the Flagstar board of directors held a meeting to discuss the potential transaction with NYCB. Representatives of Morgan Stanley, Jefferies and Skadden were in attendance, and each of Morgan Stanley, Jefferies and Skadden had prepared and distributed materials to the directors in advance of the meeting and reviewed the same at the meeting. Representatives of Morgan Stanley and Jefferies presented their respective fairness analyses and rendered to the Flagstar board of directors their respective oral opinions, which were confirmed by written opinions dated April 24, 2021, to the effect that, as of that date and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken as set forth in their respective opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders of shares of Flagstar common stock (other than holders of the excluded shares). See “The Merger—Opinion of Flagstar’s Financial Advisors” beginning on page 77. Representatives of Skadden updated the directors on the final terms of the proposed merger agreement and reported that the negotiations were substantially complete. Representatives of Skadden also reviewed the directors’ fiduciary duties. The directors then engaged in a discussion regarding various aspects of the potential transaction, including the factors described under the section of this joint proxy statement/prospectus entitled “—Flagstar’s Reasons for the Merger; Recommendation of the Flagstar Board of Directors.” Following these discussions, the Flagstar management and Flagstar Transactions Committee presented their respective recommendations for the approval of resolutions authorizing Flagstar to enter into the merger agreement. The Flagstar board of directors then excused members of management and Flagstar’s financial and legal advisors and conducted an executive session, including discussion regarding management and employee retention matters.

Later on April 24, 2021, the Flagstar board of directors, via a unanimous written consent, effective as of that date, determined that the merger agreement and the transactions contemplated by the merger agreement (including the merger, holdco merger

 

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and bank merger) were advisable and in the best interests of Flagstar and its shareholders, approved and adopted the merger agreement and the transactions contemplated by the merger agreement (including the mergers), and recommended the approval by Flagstar shareholders of the merger agreement and the transactions contemplated thereby. See “—Flagstar’s Reasons for the Merger; Recommendation of the Flagstar Board of Directors.”

On April 24, 2021, the NYCB board of directors resumed its meeting that had commenced on April 22, 2021. Representatives of Piper Sandler, Goldman Sachs and Sullivan & Cromwell were in attendance. Mr. Cangemi provided an update on the potential transaction. Representatives of Sullivan & Cromwell provided an update on legal matters relating to the potential transaction and a review of the final terms of the transaction agreements. Representatives of Piper Sandler and Goldman Sachs presented their respective financial analyses and rendered to the NYCB board of directors their respective oral opinions, which were subsequently confirmed by their respective written opinions dated April 24, 2021, to the effect that, as of that date and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken as set forth in their respective opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to NYCB. See “The Merger—Opinion of NYCB’s Financial Advisors” beginning on page 55. Representatives of NYCB management restated management’s recommendation for the approval of resolutions authorizing NYCB to enter into the merger agreement. The directors then engaged in a discussion regarding various aspects of the potential transaction, including the factors described below under “NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors.” Following this discussion, the NYCB board of directors unanimously approved the proposed merger agreement and the transactions contemplated thereby, and recommended the approval and adoption by NYCB stockholders of the merger agreement and the transactions contemplated thereby.

In the evening of Saturday, April 24, 2021, NYCB and Flagstar executed the merger agreement. The transaction was announced in the morning of Monday, April  26, 2021, before the opening of the financial markets in New York, in a press release jointly issued by NYCB and Flagstar.

NYCB’s Reasons for the Merger; Recommendation of NYCB’s Board of Directors

After careful consideration, the NYCB board of directors at a special meeting held on April 24, 2021, unanimously (i) determined that the merger agreement and the transactions contemplated by the merger agreement (including the merger and the NYCB share issuance) were advisable and fair to and in the best interests of NYCB and its stockholders, (ii) approved the merger agreement and the transactions contemplated by the merger agreement (including the mergers and the NYCB share issuance), and (iii) recommended the approval by NYCB stockholders of the NYCB share issuance proposal and the other matters to be voted upon at the NYCB special meeting in accordance with the merger agreement. In reaching this decision, the NYCB board of directors evaluated the merger agreement, the merger and the other matters contemplated by the merger agreement in consultation with NYCB’s senior management, as well as with NYCB’s legal and financial advisors, and considered a number of factors, including the following:

 

   

each of NYCB’s and Flagstar’s business, operations, financial condition, asset quality, earnings and prospects;

 

   

the strategic rationale for the merger, which will enhance NYCB’s ability to deliver a broader set of commercial and retail banking offerings to customers nationally and in the geographies where NYCB will maintain branch and lending offices;

 

   

the lack of overlap between the footprints of NYCB and Flagstar, which will expand NYCB’s banking presence in the Midwest and Southwest;

 

   

the compatibility of NYCB’s and Flagstar’s credit philosophies, and the expectation that the combined business will diversify NYCB’s loan portfolio and reduce NYCB’s existing concentration in multi-family loans and commercial real estate loans, while maintaining both NYCB’s and Flagstar’s low risk credit models;

 

   

the expanded possibilities for growth that will be available to NYCB, including through Flagstar’s national bank mortgage origination and sub-servicing businesses and access to an extensive base of retail and commercial customers;

 

   

the ability to leverage NYCB’s investments in technology across a greater number of customers;

 

   

the compatibility of NYCB’s and Flagstar’s culture and values, including with respect to client-centric mindsets, commitment to local communities, team-based approaches and corporate, social, environmental and governance responsibility;

 

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the complementary nature of the products, customers and markets of the two companies, which NYCB believes should provide the opportunity to mitigate risks and increase potential returns and capital generation;

 

   

the potential changes to NYCB’s funding profile as a result of the merger, including the potential to decrease NYCB’s cost of funding by reducing the percentage of NYCB’s liquidity sourced in the form of wholesale borrowings;

 

   

the anticipated pro forma financial impact of the merger on NYCB, including potential tangible book value accretion, as well as positive impact on earnings, return on equity, asset quality, liquidity and regulatory capital levels;

 

   

the expectation of cost synergies resulting from the merger;

 

   

the expectation that the merger will offer potentially significant revenue synergies across multiple business lines and the fact that such revenue synergies were identified but not included in the financial analysis;

 

   

its review and discussions with NYCB’s senior management concerning NYCB’s due diligence examination of, among other areas, the operations, financial condition and regulatory compliance programs and prospects of Flagstar;

 

   

its review with Piper Sandler and Goldman Sachs, NYCB’s financial advisors, of the financial terms of the merger agreement and its review with NYCB’s legal advisor of the other terms of the merger agreement, including the representations, covenants, deal protection and termination provisions;

 

   

the respective oral opinions of Piper Sandler and Goldman Sachs rendered to the NYCB board of directors, subsequently confirmed in Piper Sandler’s and Goldman Sachs’ written opinions, to the effect that, as of the date of such written opinions and subject to the various assumptions made, procedures followed, matters considered, and the qualifications and limitations on the scope of review undertaken by Piper Sandler and Goldman Sachs as set forth in their respective written opinions, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to NYCB, as more fully described below in the section “—Opinions of NYCB’s Financial Advisors” beginning on page 55;

 

   

the fact that the exchange ratio would be fixed, which the NYCB board of directors believed was consistent with market practice for transactions of this type and with the strategic purpose of the transaction;

 

   

its expectation that the requisite regulatory approvals could be obtained in a timely fashion;

 

   

the current and prospective environment in the financial services industry, including economic conditions and the interest rate and regulatory environments, the accelerating pace of technological change in the financial services industry, operating costs resulting from regulatory and compliance mandates, scale and marketing expenses, increasing competition from both banks and non-bank financial and financial technology firms, current financial market conditions, and the likely effects of these factors on NYCB’s potential growth, development, productivity and strategic options both with and without the merger;

 

   

the fact that Mr. Cangemi would continue to serve as the Chief Executive Officer of NYCB and the governance structure for NYCB following the completion of the merger, including the fact that four Flagstar directors will join the NYCB’s board of directors upon the closing; and

 

   

NYCB’s past records of integrating acquisitions and of realizing expected financial and other benefits of such acquisitions and the strength of NYCB’s management and infrastructure to successfully complete the integration process.

The NYCB board of directors also considered the potential risks related to the transaction. The board concluded that the anticipated benefits of combining with Flagstar were likely to outweigh these risks substantially. These potential risks included:

 

   

the possibility that the anticipated benefits of the transaction will not be realized when expected or at all, including as a result of the impact of, or difficulties arising from, the integration of the two companies or as a result of the state of the economy, general market conditions and competitive factors in the areas where NYCB and Flagstar operate businesses;

 

   

the costs to be incurred in connection with the merger and the integration of Flagstar’s business into NYCB and the possibility that the transaction and the integration may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

 

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the possibility of encountering difficulties in achieving anticipated cost savings and synergies in the amounts currently estimated or within the time frame currently contemplated;

 

   

the possibility of encountering difficulties in successfully integrating the businesses, operations and workforces of NYCB and Flagstar;

 

   

the risk of losing key NYCB or Flagstar employees during the pendency of the merger and following the closing;

 

   

the possible diversion of management focus and resources from the operation of NYCB’s business while working to implement the transaction and integrate the two companies;

 

   

the risk that, because the exchange ratio under the merger agreement would not be adjusted for changes in the market price of NYCB common stock or Flagstar common stock, the value of the shares of NYCB common stock to be issued to Flagstar shareholders upon the completion of the merger could be significantly more than the value of such shares immediately prior to the announcement of the parties’ entry into the merger agreement;

 

   

the risk that the regulatory and other approvals required in connection with the merger may not be received in a timely manner or at all or may impose conditions that may adversely affect the anticipated operations, synergies and financial results of NYCB following the completion of the merger;

 

   

the dilution caused by NYCB’s issuance of additional shares of its capital stock in connection with the proposed transaction;

 

   

the potential for legal claims challenging the merger; and

 

   

the other risks described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

The foregoing discussion of the information and factors considered by the NYCB board of directors is not intended to be exhaustive, but includes the material factors considered by the board. In reaching its decision to approve and adopt the merger agreement and the transactions contemplated by the merger agreement, the NYCB board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The board considered all these factors as a whole, including discussions with, and questioning of, NYCB’s management and NYCB’s independent financial and legal advisors, and overall considered the factors to support its determination.

For the reasons set forth above, the NYCB board of directors determined that the merger agreement and the transactions contemplated thereby (including the merger and the NYCB share issuance) are advisable and fair to and in the best interests of NYCB and its stockholders.

In considering the recommendation of the NYCB board of directors, you should be aware that certain directors and executive officers of NYCB may have interests in the merger that are different from, or in addition to, interests of NYCB stockholders generally and may create potential conflicts of interest.

It should be noted that this explanation of the reasoning of the NYCB board of directors and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” on page 26.

Opinions of NYCB’s Financial Advisors

Opinion of Piper Sandler & Co.

NYCB retained Piper Sandler to act as financial advisor to NYCB’s board of directors in connection with NYCB’s consideration of a possible business combination with Flagstar. NYCB selected Piper Sandler to act as its financial advisor because Piper Sandler is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Piper Sandler is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.

Piper Sandler acted as financial advisor to NYCB’s board of directors in connection with the proposed merger and participated in certain of the negotiations leading to the execution of the Agreement. At the April 24, 2021 meeting at which

 

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NYCB’s board of directors considered the merger and the Agreement, Piper Sandler delivered to the board of directors its oral opinion, which was subsequently confirmed in writing on April 24, 2021, to the effect that, as of such date, the exchange ratio was fair to NYCB from a financial point of view. The full text of Piper Sandler’s opinion is attached as Annex B to this joint proxy statement. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Piper Sandler in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Holders of NYCB common stock are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.

Piper Sandler’s opinion was directed to the board of directors of NYCB in connection with its consideration of the merger and the Agreement and does not constitute a recommendation to any shareholder of NYCB as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the approval of the merger and adoption of the Agreement. Piper Sandler’s opinion was directed only to the fairness, from a financial point of view, of the exchange ratio to NYCB and did not address the underlying business decision of NYCB to engage in the merger, the form or structure of the merger or any other transactions contemplated in the Agreement, the relative merits of the merger as compared to any other alternative transactions or business strategies that might exist for NYCB or the effect of any other transaction in which NYCB might engage. Piper Sandler also did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the merger by any officer, director or employee of NYCB or Flagstar, or any class of such persons, if any, relative to the compensation to be received in the merger by any other shareholder. Piper Sandler’s opinion was approved by Piper Sandler’s fairness opinion committee.

In connection with its opinion, Piper Sandler reviewed and considered, among other things:

 

   

an execution copy of the Agreement;

 

   

certain publicly available financial statements and other historical financial information of NYCB that Piper Sandler deemed relevant;

 

   

certain publicly available financial statements and other historical financial information of Flagstar that Piper Sandler deemed relevant;

 

   

certain internal preliminary financial information for NYCB for the quarter ending March 31, 2021, as provided by the senior management of NYCB;

 

   

certain internal preliminary financial information for Flagstar for the quarter ending March 31, 2021, as provided by the senior management of Flagstar;

 

   

publicly available median analyst earnings per share (“EPS”) estimates for NYCB for the quarters ending June 30, 2021, September 30, 2021 and December 31, 2021 as well as for the year ending December 31, 2022, as well as an estimated annual EPS growth rate for the years ending December 31, 2023 through December 31, 2025 and estimated dividends per share for the years ending December 31, 2021 through December 31, 2025, as provided by the senior management of NYCB;

 

   

publicly available median analyst EPS and dividends per share estimates for Flagstar for the quarters ending June 30, 2021, September 30, 2021 and December 31, 2021 as well as for the year ending December 31, 2022, as well as an estimated annual EPS growth rate for the years ending December 31, 2023 through December 31, 2025 and estimated dividends per share for the years ending December 31, 2023 through December 31, 2025, as provided by the senior management of NYCB;

 

   

the pro forma financial impact of the merger on NYCB based on certain assumptions relating to transaction expenses, purchase accounting adjustments and cost savings, as well as certain adjustments for current expected credit losses (“CECL”) accounting standards and the granting of a certain number of restricted stock awards by Flagstar prior to the closing of the merger, as provided by the senior management of NYCB;

 

   

the publicly reported historical price and trading activity for NYCB common stock and Flagstar common stock, including a comparison of certain stock trading information for NYCB common stock and Flagstar common stock and certain stock indices, as well as similar publicly available information for certain other companies, the securities of which are publicly traded;

 

   

a comparison of certain financial information for NYCB and Flagstar with similar financial institutions for which information is publicly available;

 

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the financial terms of certain recent merger and acquisition transactions in the bank and thrift industry (on a nationwide basis), to the extent publicly available;

 

   

the current market environment generally and the banking environment in particular; and

 

   

such other information, financial studies, analyses and investigations and financial, economic and market criteria as Piper Sandler considered relevant.

Piper Sandler also discussed with certain members of the senior management of NYCB and its representatives the business, financial condition, results of operations and prospects of NYCB and held similar discussions with certain members of the management of Flagstar and its representatives regarding the business, financial condition, results of operations and prospects of Flagstar.

In performing its review, Piper Sandler relied upon the accuracy and completeness of all of the financial and other information that was available to and reviewed by Piper Sandler from public sources, that was provided to Piper Sandler by NYCB or Flagstar or their respective representatives, or that was otherwise reviewed by Piper Sandler, and Piper Sandler assumed such accuracy and completeness for purposes of rendering its opinion without any independent verification or investigation. Piper Sandler relied on the assurances of the respective managements of NYCB and Flagstar that they were not aware of any facts or circumstances that would have made any of such information inaccurate or misleading. Piper Sandler was not asked to and did not undertake an independent verification of any of such information and Piper Sandler did not assume any responsibility or liability for the accuracy or completeness thereof. Piper Sandler did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of NYCB or Flagstar, nor was Piper Sandler furnished with any such evaluations or appraisals. Piper Sandler rendered no opinion or evaluation on the collectability of any assets or the future performance of any loans of NYCB or Flagstar. Piper Sandler did not make an independent evaluation of the adequacy of the allowance for loan losses of NYCB or Flagstar, or of the combined entity after the merger, and Piper Sandler did not review any individual credit files relating to NYCB or Flagstar. Piper Sandler assumed, with NYCB’s consent, that the respective allowances for loan losses for both NYCB and Flagstar were adequate to cover such losses and would be adequate on a pro forma basis for the combined entity.

In preparing its analyses, Piper Sandler received and used the information described in the fourth through eighth bullets of the third preceding paragraph. With respect to such information, the respective senior managements of NYCB and Flagstar confirmed to Piper Sandler that such information reflected (or, in the case of the publicly available analyst estimates referred to above, were consistent with) the best currently available estimates and judgments of those respective managements as to the future financial performance of NYCB and Flagstar, respectively, and the other matters covered thereby, and Piper Sandler assumed that the future financial performance reflected in such information would be achieved. Piper Sandler expressed no opinion as to such information, or the assumptions on which such information was based. Piper Sandler also assumed that there had been no material change in the respective assets, financial condition, results of operations, business or prospects of NYCB or Flagstar since the date of the most recent financial statements made available to Piper Sandler. Piper Sandler assumed in all respects material to its analyses that NYCB and Flagstar would remain as going concerns for all periods relevant to its analyses.

Piper Sandler also assumed, with NYCB’s consent, that (i) each of the parties to the Agreement would comply in all material respects with all material terms and conditions of the Agreement and all related agreements, that all of the representations and warranties contained in such agreements were true and correct in all material respects, that each of the parties to such agreements would perform in all material respects all of the covenants and other obligations required to be performed by such party under such agreements and that the conditions precedent in such agreements were not and would not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on NYCB, Flagstar, the merger or any related transactions, and (iii) the merger and any related transactions would be consummated in accordance with the terms of the Agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements. Piper Sandler expressed no opinion as to any legal, accounting or tax matters relating to the merger and the other transactions contemplated by the Agreement.

Piper Sandler’s opinion was necessarily based on financial, economic, regulatory, market and other conditions as in effect on, and the information made available to Piper Sandler as of, the date thereof. Events occurring after the date thereof could materially affect Piper Sandler’s opinion. Piper Sandler has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date thereof. Piper Sandler expressed no opinion as to the trading

 

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value of NYCB common stock or Flagstar common stock at any time or what the value of NYCB common stock would be once it is actually received by the holders of Flagstar common stock.

In rendering its opinion, Piper Sandler performed a variety of financial analyses. The summary below is not a complete description of all the analyses underlying Piper Sandler’s opinion or the presentation made by Piper Sandler to NYCB’s board of directors, but is a summary of the material analyses performed and presented by Piper Sandler. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Piper Sandler believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Piper Sandler’s comparative analyses described below is identical to NYCB or Flagstar and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or transaction values, as the case may be, of NYCB and Flagstar and the companies to which they were compared. In arriving at its opinion, Piper Sandler did not attribute any particular weight to any analysis or factor that it considered. Rather, Piper Sandler made qualitative judgments as to the significance and relevance of each analysis and factor. Piper Sandler did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion, rather, Piper Sandler made its determination as to the fairness of the exchange ratio to NYCB from a financial point of view on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole.

In performing its analyses, Piper Sandler also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of NYCB, Flagstar and Piper Sandler. The analyses performed by Piper Sandler are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Piper Sandler prepared its analyses solely for purposes of rendering its opinion and provided such analyses to NYCB’s board of directors at its April 24, 2021 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Piper Sandler’s analyses do not necessarily reflect the value of NYCB common stock or Flagstar common stock or the prices at which NYCB or Flagstar common stock may be sold at any time. The analyses of Piper Sandler and its opinion were among a number of factors taken into consideration by NYCB’s board of directors in making its determination to approve the Agreement and the analyses described below should not be viewed as determinative of the decision of NYCB’s board of directors with respect to the fairness of the exchange ratio.

Summary of Proposed Merger Consideration and Implied Transaction Metrics.

Piper Sandler reviewed the financial terms of the proposed merger. Pursuant to the terms of the Agreement, at the effective time of the merger each share of Flagstar common stock issued and outstanding immediately prior to the effective time of the transaction, except for certain shares as set forth in the Agreement, shall be converted into the right to receive 4.0151 shares of common stock of NYCB. Piper Sandler calculated an aggregate implied transaction value of approximately $2.6 billion and an implied purchase price per share of $48.14 consisting of the implied value of 52,752,606 shares of Flagstar common stock, 1,129,444 Flagstar restricted awards outstanding and 222,264 total restricted awards estimated to be issued in 2021 and based on the closing price of NYCB common stock on April 23, 2021. Based upon financial information for Flagstar as of or for the last 12 months (“LTM”) ended March 31, 2021 and the closing price of Flagstar’s common stock on April 23, 2021, Piper Sandler calculated the following implied transaction metrics:

 

Transaction Price Per Share / Tangible Book Value per Share

     115

Transaction Price Per Share / LTM EPS

     4.2

Transaction Price / 2021E Median Consensus EPS

     6.6

Transaction Price / 2022E Median Consensus EPS

     9.3

Core Deposit Premium1

     2.2

Core Deposit Premium2

     2.1

Market Premium as of April 23, 2021

     6.1

 

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1 

Excludes jumbo time deposits greater than $100,000 as of December 31, 2020 per Flagstar’s call report

2 

Excludes jumbo time deposits greater than $250,000 as of December 31, 2020 per Flagstar’s call report

Stock Trading History.

Piper Sandler reviewed the publicly available historical reported trading prices of NYCB common stock and Flagstar common stock for the one-year and three-year periods ended April 23, 2021. Piper Sandler then compared the relationship between the movements in the price of NYCB common stock and Flagstar common stock, respectively, to movements in their respective peer groups (as described below) as well as certain stock indices.

NYCB’s One-Year Stock Performance

 

     Beginning Value
April 23, 2020
    Ending Value
April 23, 2021
 

NYCB

     100     124.8

NYCB Peer Group

     100     224.6

S&P 500 Index

     100     149.4

NASDAQ Bank Index

     100     192.1

NYCB’s Three-Year Stock Performance

 

     Beginning Value
April 23, 2018
    Ending Value
April 23, 2021
 

NYCB

     100     93.2

NYCB Peer Group

     100     103.4

S&P 500 Index

     100     156.5

NASDAQ Bank Index

     100     111.9

Flagstar’s One-Year Stock Performance

 

     Beginning Value
April 23, 2020
    Ending Value
April 23, 2021
 

Flagstar

     100     216.7

Flagstar Peer Group

     100     183.2

S&P 500 Index

     100     149.4

NASDAQ Bank Index

     100     192.1

Flagstar’s Three-Year Stock Performance

 

     Beginning Value
April 23, 2018
    Ending Value
April 23, 2021
 

Flagstar

     100     135.0

Flagstar Peer Group

     100     92.7

S&P 500 Index

     100     156.5

NASDAQ Bank Index

     100     111.9

 

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Comparable Company Analyses.

Piper Sandler used publicly available information to compare selected financial information for NYCB with a group of financial institutions selected by Piper Sandler. The NYCB peer group included banks, thrifts and bank holding companies whose securities are publicly traded on a major exchange (NYSE, NYSEAM, and NASDAQ) headquartered in the continental United States with total assets between $40 billion and $100 billion, but excluded First Citizens BancShares, Inc. due to its announced and pending merger (referred to in this section as the “NYCB Peer Group”). The NYCB Peer Group consisted of the following companies:

 

BOK Financial Corporation

   Signature Bank

Comerica, Inc.

   Synovus Financial Corporation

Cullen/Frost Bankers

   Valley National Corporation

East West Bancorp

   Wintrust Financial Corporation

First Horizon Corporation

   Zions Bancorporation

The analysis compared publicly available financial information for NYCB with corresponding data for the NYCB Peer Group as of or for the year ended December 31, 2020 (unless otherwise noted) with pricing data as of April 23, 2021. The table below sets forth the data for NYCB and the median, mean, low and high data for the NYCB Peer Group.

NYCB Comparable Company Analysis

 

     NYCB
3/31/20211
     NYCB
12/31/2020
     NYCB
Peer
Group
Median
     NYCB
Peer
Group
Mean
     NYCB
Peer
Group
Low
     NYCB
Peer
Group
High
 

Total assets ($B)

     57.7        56.3        56.0        63.3        40.7        87.5  

Loans / Deposits (%)

     126.1        132.2        76.2        75.0        49.9        100.9  

LLRs / Gross Loans (%)

     0.46        0.45        1.46        1.34        0.81        1.81  

Common Equity Tier 1 Ratio

     9.8        9.7        11.0        11.0        9.0        12.9  

Tier 1 Leverage Ratio (%)

     8.4        8.5        8.4        8.5        8.1        9.1  

Total RBC Ratio (%)

     13.1        13.0        14.0        13.8        12.6        15.4  

CRE / Total RBC Ratio (%)

     —          736        162        211        110        403  

MRQ Return on average assets (%)

     1.03        1.38        1.07        1.10        0.86        1.42  

MRQ Return on average equity (%)

     8.63        11.22        11.80        11.47        8.46        14.69  

MRQ Net interest margin (%)

     2.48        2.46        2.75        2.72        2.24        3.09  

MRQ Efficiency ratio (%)

     39.9        41.4        58.2        55.2        37.5        66.6  

Price / Tangible book value (%)

     —          142        171        177        138        234  

Price / Annualized MRQ EPS (x)

     —          7.7        10.9        12.0        7.1        20.9  

Price / 2021E EPS (x)

     —          10.5        11.9        13.3        10.4        21.3  

Price / 2022E EPS (x)

     —          9.5        13.4        14.1        11.3        22.6  

Current Dividend Yield (%)

     —          5.8        2.6        2.6        0.9        4.0  

Market value ($B)

     —          5.6        8.1        8.4        4.4        13.6  

 

1 

Reflects preliminary financial data as of March 31, 2021 as provided by NYCB management

Note:

Financial data for the quarter ended December 31, 2020; Financial data for BOK Financial Corporation, Comerica, Inc., East West Bancorp, Inc., First Horizon Corporation, Signature Bank, Synovus Financial Corporation, Wintrust Financial Corporation, and Zions Bancorporation reflect data for the quarter ended March 31, 2021

 

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Piper Sandler used publicly available information to perform a similar analysis for Flagstar by comparing selected financial information for Flagstar with a group of financial institutions selected by Piper Sandler. The Flagstar peer group included banks, thrifts and bank holding companies whose securities are publicly traded on a major exchange (NYSE, NYSEAM and NASDAQ) headquartered in the continental United States with total assets between $15 billion and $50 billion with either (i) 1-4 family loans accounting for greater than or equal to 20.0% of the total loan portfolio or (ii) loans to non-depository financial institutions accounting for greater than or equal to 20.0% of the total loan portfolio, as defined in the respective company’s Y-9C as of December 31, 2020, but excluded BancorpSouth Bank due to its announced and pending merger (referred to in this section as the “Flagstar Peer Group”). The Flagstar Peer Group consisted of the following companies:

 

Associated Banc-Corp

   First Midwest Bancorp, Inc.

BankUnited, Inc.

   Prosperity Bancshares, Inc.

Cathay General Bancorp

   Texas Capital Bancshares, Inc.

Customers Bancorp, Inc.

   Washington Federal, Inc.

The analysis compared publicly available financial information for Flagstar with corresponding data for the Flagstar Peer Group as of or for the year ended December 31, 2020 (unless otherwise noted) with pricing data as of April 23, 2021. The table below sets forth the data for Flagstar and the median, mean, low and high data for the Flagstar Peer Group.

Flagstar Comparable Company Analysis

 

     Flagstar
3/31/20211
     Flagstar
12/31/2020
     Flagstar
Peer
Group
Median
     Flagstar
Peer
Group
Mean
     Flagstar
Peer
Group
Low
     Flagstar
Peer
Group
High
 

Total assets ($B)

     29.4        31.0        27.6        27.8        18.4        40.1  

Loans / Deposits (%)

     89.3        93.8        88.2        91.9        73.1        139.3  

1-4 Family Loans / Loans (%)

     —          8.8        26.5        23.5        2.1        36.6  

Loans to Non-Depository Institutions / Loans (%)

     —          31.2        9.4        12.8        0.0        44.0  

LLRs / Gross Loans

     0.99        0.98        1.06        1.18        0.91        1.56  

Common Equity Tier 1 Ratio (%)

     10.3        9.2        10.8        11.4        8.1        13.7  

Tier 1 Leverage Ratio (%)

     8.1        7.7        9.0        9.2        8.3        10.9  

Total RBC Ratio (%)

     13.2        11.9        14.3        14.2        11.9        15.5  

CRE / Total RBC Ratio (%)

     —          108        211        206        156        262  

MRQ Return on average assets (%)

     2.00        2.08        1.12        1.14        0.72        1.63  

MRQ Return on average equity (%)

     25.70        27.56        9.41        11.01        6.71        20.76  

MRQ Net interest margin (%)

     2.82        2.79        2.77        2.75        2.05        3.51  

MRQ Efficiency ratio (%)

     67.7        60.1        56.4        54.6        39.6        63.6  

Price / Tangible book value (%)

     —          117        142        153        115        251  

Price / Annualized MRQ EPS (x)

     —          4.0        12.0        11.5        4.9        15.1  

Price / 2021E EPS (x)

     —          6.2        13.9        13.0        5.9        15.2  

Price / 2022E EPS (x)

     —          8.4        14.0        13.2        8.4        15.0  

Current Dividend Yield (%)

     —          0.5        2.7        2.1        0.0        3.5  

Market value ($B)

     —          2.4        3.3        3.4        1.0        7.1  

 

1 

Reflects preliminary financial data as of March 31, 2021 as provided by Flagstar management

Note:

Financial data for the quarter ended December 31, 2020; Financial data for Associated Banc-Corp, BankUnited, Inc., First Midwest Bancorp, Inc., Texas Capital Bancshares, Inc., and Washington Federal, Inc. reflect data for the quarter ended March 31, 2021

Analysis of Precedent Transactions.

Piper Sandler reviewed a group of historical, nationwide merger and acquisition transactions. The nationwide group consisted of bank and thrift transactions announced between January 1, 2017 and April 23, 2021 where the target’s assets were between $10 billion and $75 billion at announcement, but excluded transactions defined as merger of equals (referred to in this section as the “Nationwide Precedent Transactions”).

 

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The Nationwide Precedent Transactions group was composed of the following transactions:

 

Acquiror

  

Target

M&T Bank Corporation

  

People’s United Financial, Inc.

Huntington Bancshares Inc.

  

TCF Financial Corporation

First Citizens BancShares, Inc.

  

CIT Group, Inc.

Mechanics Bank

  

Rabobank NA

Synovus Financial Corp.

  

FCB Financial Holdings Inc.

Fifth Third Bancorp

  

MB Financial, Inc.

First Horizon National Corporation

  

Capital Bank Financial Corp.

Sterling Bancorp

  

Astoria Financial Corporation

Using the latest publicly available information prior to the announcement of the relevant transaction, Piper Sandler reviewed the following transaction metrics: transaction price to last-12-months EPS, transaction price to forward EPS, transaction price to tangible book value per share, core deposit premium, and one-day market premium. Piper Sandler compared the indicated transaction metrics for the merger to the median, mean, low and high metrics of the Nationwide Precedent Transactions group.

 

     NYCB/
Flagstar
     Nationwide Precedent Transactions  
      Median        Mean        Low       High   

Transaction Price / LTM Earnings Per Share (x)

     4.2        17.7        17.4        10.3       23.6  

Transaction Price / Fwd EPS (x)

     9.3        16.4        17.3        13.8       21.3  

Transaction Price / Tangible Book Value Per Share (%)

     115        185        178        44       271  

Tangible Book Value Premium to Core Deposits (%)1

     2.2        8.2        8.7        (7.4     21.4  

1-Day Market Premium (%)

     6.1        9.9        8.7        (2.9     24.2  

 

1 

Excludes jumbo time deposits greater than $100,000 as of December 31, 2020 per Flagstar’s call report

Net Present Value Analyses.

Piper Sandler performed an analysis that estimated the net present value of NYCB common stock assuming NYCB performed in accordance with publicly available median analyst EPS estimates for NYCB for the quarters ending June 30, 2021, September 30, 2021 and December 31, 2021 as well as for the year ending December 31, 2022, as well as an estimated annual EPS growth rate for the years ending December 31, 2023 through December 31, 2025 and estimated dividends per share for the years ending December 31, 2021 through December 31, 2025, as provided by the senior management of NYCB. To approximate the terminal value of a share of NYCB common stock at December 31, 2025, Piper Sandler applied price to earnings multiples ranging from 9.0x to 15.0x and multiples of tangible book value ranging from 140% to 190%. The terminal values were then discounted to present values using different discount rates ranging from 8.0% to 13.0%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of NYCB common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of NYCB common stock of $9.38 to $17.21 when applying multiples of earnings and $11.14 to $17.46 when applying multiples of tangible book value.

Earnings Per Share Multiples

 

Discount
Rate

    9.0x     10.2x     11.4x     12.6x     13.8x     15.0x  
  8.0%     $ 11.37     $ 12.54     $ 13.71     $ 14.87     $ 16.04     $ 17.21  
  9.0%       10.93       12.05       13.17       14.28       15.40       16.52  
  10.0%       10.51       11.58       12.65       13.72       14.80       15.87  
  11.0%       10.11       11.14       12.17       13.19       14.22       15.24  
  12.0%       9.74       10.72       11.70       12.69       13.67       14.65  
  13.0%       9.38       10.32       11.26       12.20       13.15       14.09  

 

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Tangible Book Value Per Share Multiples

 

Discount
Rate

    140%     150%     160%     170%     180%     190%  
  8.0%     $ 13.55     $ 14.33     $ 15.12     $ 15.90     $ 16.68     $ 17.46  
  9.0%       13.02       13.77       14.52       15.26       16.01       16.76  
  10.0%       12.51       13.23       13.95       14.66       15.38       16.10  
  11.0%       12.03       12.72       13.41       14.09       14.78       15.46  
  12.0%       11.57       12.23       12.89       13.55       14.21       14.86  
  13.0%       11.14       11.77       12.40       13.03       13.66       14.29  

Piper Sandler also considered and discussed with the NYCB’s board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to earnings. To illustrate this impact, Piper Sandler performed a similar analysis, assuming NYCB’s earnings varied from 15% above estimates to 15% below estimates. This analysis resulted in the following range of per share values for NYCB’s common stock, applying the price to earnings multiples range of 9.0x to 15.0x referred to above and a discount rate of 10.82%.

Earnings Per Share Multiples

 

Annual
Estimate
Variance

    9.0x     10.2x     11.4x     12.6x     13.8x     15.0x  
  (15.0%)     $ 9.02     $ 9.90     $ 10.78     $ 11.66     $ 12.54     $ 13.41  
  (10.0%)       9.41       10.34       11.27       12.20       13.13       14.06  
  (5.0%)       9.80       10.78       11.76       12.74       13.73       14.71  
  0.0%       10.18       11.22       12.25       13.29       14.32       15.35  
  5.0%       10.57       11.66       12.74       13.83       14.91       16.00  
  10.0%       10.96       12.10       13.23       14.37       15.51       16.65  
  15.0%       11.35       12.54       13.73       14.91       16.10       17.29  

Piper Sandler also performed an analysis that estimated the net present value per share of Flagstar common stock, assuming Flagstar performed in accordance with publicly available median analyst EPS and dividends per share estimates for Flagstar for the quarters ending June 30, 2021, September 30, 2021 and December 31, 2021 as well as for the year ending December 31, 2022, as well as an estimated annual EPS growth rate for the years ending December 31, 2023 through December 31, 2025 and estimated dividends per share for the years ending December 31, 2023 through December 31, 2025, as provided by the senior management of NYCB. To approximate the terminal value of a share of Flagstar common stock at December 31, 2025, Piper Sandler applied price to earnings multiples ranging from 8.0x to 14.0x and multiples of tangible book value ranging from 110% to 160%. The terminal values were then discounted to present values using different discount rates ranging from 9.0% to 14.0%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Flagstar common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of Flagstar common stock of $26.10 to $55.45 when applying multiples of earnings and $41.17 to $73.40 when applying multiples of tangible book value.

Earnings Per Share Multiples

 

Discount
Rate

    8.0x     9.2x     10.4x     11.6x     12.8x     14.0x  
  9.0%     $ 32.19     $ 36.84     $ 41.49     $ 46.15     $ 50.80     $ 55.45  
  10.0%       30.84       35.30       39.75       44.21       48.66       53.11  
  11.0%       29.56       33.83       38.10       42.36       46.63       50.90  
  12.0%       28.35       32.44       36.53       40.61       44.70       48.79  
  13.0%       27.19       31.11       35.03       38.95       42.87       46.79  
  14.0%       26.10       29.85       33.61       37.37       41.13       44.89  

 

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Tangible Book Value Per Share Multiples

 

Discount
Rate

    110%     120%     130%     140%     150%     160%  
  9.0%     $ 50.84     $ 55.35     $ 59.86     $ 64.38     $ 68.89     $ 73.40  
  10.0%       48.70       53.02       57.34       61.66       65.99       70.31  
  11.0%       46.67       50.81       54.95       59.09       63.23       67.37  
  12.0%       44.74       48.71       52.67       56.64       60.61       64.58  
  13.0%       42.91       46.71       50.51       54.32       58.12       61.92  
  14.0%       41.17       44.81       48.46       52.11       55.76       59.40  

Piper Sandler also considered and discussed with the NYCB’s board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to earnings. To illustrate this impact, Piper Sandler performed a similar analysis assuming Flagstar’s earnings varied from 15.0% above estimates to 15.0% below estimates. This analysis resulted in the following range of per share values for Flagstar common stock, applying the price to earnings multiples range of 8.0x to 14.0x referred to above and a discount rate of 11.44%.

Earnings Per Share Multiples

 

Annual
Estimate
Variance

    8.0x     9.2x     10.4x     11.6x     12.8x     14.0x  
  (15.0%)     $ 24.83     $ 28.39     $ 31.95     $ 35.51     $ 39.07     $ 42.63  
  (10.0%)       26.23       30.00       33.77       37.53       41.30       45.07  
  (5.0%)       27.62       31.60       35.58       39.56       43.54       47.52  
  0.0%       29.02       33.21       37.40       41.58       45.77       49.96  
  5.0%       30.42       34.81       39.21       43.61       48.00       52.40  
  10.0%       31.81       36.42       41.02       45.63       50.24       54.84  
  15.0%       33.21       38.02       42.84       47.66       52.47       57.29  

In addition, Piper Sandler performed an analysis that estimated the net present value per share of Flagstar common stock, assuming Flagstar performed in accordance with publicly available median analyst EPS and dividends per share estimates for Flagstar for the quarters ending June 30, 2021, September 30, 2021 and December 31, 2021 as well as for the year ending December 31, 2022, as well as an estimated annual EPS growth rate for the years ending December 31, 2023 through December 31, 2025 and estimated dividends per share for the years ending December 31, 2023 through December 31, 2025, including annual cost savings of approximately $125 million, or approximately 11% of Flagstar’s expense base, as provided by the senior management of NYCB. For purposes of Piper Sandler’s analysis, cost savings were assumed to be 75% phased-in in the year ending December 31, 2022 and 100% in the year ending December 31, 2023 and thereafter. To approximate the terminal value of a share of Flagstar common stock at December 31, 2025, Piper Sandler applied price to earnings multiples ranging from 8.0x to 14.0x and multiples of tangible book value ranging from 110% to 160%. The terminal values were then discounted to present values using different discount rates ranging from 9.0% to 14.0%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Flagstar common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of Flagstar common stock of $34.12 to $72.82 when applying multiples of earnings and $43.25 to $77.15 when applying multiples of tangible book value.

Earnings Per Share Multiples

 

Discount
Rate

    8.0x     9.2x     10.4x     11.6x     12.8x     14.0x  
  9.0%     $ 42.11     $ 48.25     $ 54.40     $ 60.54     $ 66.68     $ 72.82  
  10.0%       40.34       46.22       52.10       57.99       63.87       69.75  
  11.0%       38.67       44.30       49.93       55.56       61.20       66.83  
  12.0%       37.07       42.47       47.87       53.26       58.66       64.06  
  13.0%       35.56       40.73       45.91       51.08       56.25       61.43  
  14.0%       34.12       39.08       44.04       49.00       53.97       58.93  

 

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Tangible Book Value Per Share Multiples

 

Discount
Rate

    110%     120%     130%     140%     150%     160%  
  9.0%     $ 53.41     $ 58.16     $ 62.90     $ 67.65     $ 72.40     $ 77.15  
  10.0%       51.16       55.71       60.25       64.80       69.35       73.89  
  11.0%       49.03       53.38       57.74       62.09       66.45       70.80  
  12.0%       47.00       51.17       55.35       59.52       63.69       67.87  
  13.0%       45.08       49.08       53.08       57.08       61.08       65.08  
  14.0%       43.25       47.08       50.92       54.75       58.59       62.43  

Piper Sandler also considered and discussed with NYCB’s board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to earnings. To illustrate this impact, Piper Sandler performed a similar analysis assuming Flagstar’s earnings varied from 15.0% above estimates to 15.0% below estimates. This analysis resulted in the following range of per share values for Flagstar common stock, applying the price to earnings multiples range of 9.0x to 14.0x referred to above and a discount rate of 11.44%.

Earnings Per Share Multiples

 

Annual
Estimate
Variance

    8.0x     9.2x     10.4x     11.6x     12.8x     14.0x  
  (15.0%)     $ 32.43     $ 37.12     $ 41.82     $ 46.52     $ 51.22     $ 55.92  
  (10.0%)       34.27       39.24       44.22       49.19       54.17       59.14  
  (5.0%)       36.11       41.36       46.61       51.87       57.12       62.37  
  0.0%       37.95       43.48       49.01       54.54       60.07       65.59  
  5.0%       39.80       45.60       51.41       57.21       63.01       68.82  
  10.0%       41.64       47.72       53.80       59.88       65.96       72.04  
  15.0%       43.48       49.84       56.20       62.55       68.91       75.27  

Piper Sandler noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.

Pro Forma Transaction Analysis.

Piper Sandler analyzed certain potential pro forma effects of the merger on NYCB assuming the transaction closes on December 31, 2021. Piper Sandler also utilized the following information and assumptions: (i) publicly available median analyst EPS estimates for NYCB for the quarters ending June 30, 2021, September 30, 2021 and December 31, 2021 as well as for the year ending December 31, 2022, as well as an estimated annual EPS growth rate for the years ending December 31, 2023 through December 31, 2025 and estimated dividends per share for the years ending December 31, 2021 through December 31, 2025, as provided by the senior management of NYCB; (ii) publicly available median analyst EPS and dividends per share estimates for Flagstar for the quarters ending June 30, 2021, September 30, 2021 and December 31, 2021 as well as for the year ending December 31, 2022, as well as an estimated annual EPS growth rate for the years ending December 31, 2023 through December 31, 2025 and estimated dividends per share for the years ending December 31, 2023 through December 31, 2025, as provided by the senior management of NYCB; and (iii) certain assumptions relating to transaction expenses, purchase accounting adjustments and cost savings, as well as certain adjustments for CECL accounting standards and the granting of a certain number of restricted stock awards by Flagstar prior to the closing of the merger, as provided by the senior management of NYCB. The analysis indicated that the merger could be accretive to NYCB’s estimated EPS (excluding one-time transaction costs and expenses) in the year ending December 31, 2022 and immediately accretive to NYCB’s estimated tangible book value per share.

In connection with this analysis, Piper Sandler considered and discussed with the NYCB’s board of directors how the analysis would be affected by changes in the underlying assumptions, including the impact of final purchase accounting adjustments determined at the closing of the merger, and noted that the actual results achieved by the combined company may vary from projected results and the variations may be material.

 

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Piper Sandler’s Relationship.

Piper Sandler is acting as NYCB’s financial advisor in connection with the merger and will receive a fee for such services in an amount equal to $13.0 million, which fee is contingent upon the closing of the merger. Piper Sandler also received a $3.0 million fee from NYCB upon rendering its opinion, which opinion fee will be credited in full towards the advisory fee which will become payable to Piper Sandler upon closing of the merger. NYCB has also agreed to indemnify Piper Sandler against certain claims and liabilities arising out of Piper Sandler’s engagement and to reimburse Piper Sandler for certain of its out-of-pocket expenses incurred in connection with Piper Sandler’s engagement.

Piper Sandler did not provide any other investment banking services to NYCB in the two years preceding the date of its opinion, nor did Piper Sandler provide any investment banking services to Flagstar in the two years preceding the date of its opinion. In the ordinary course of Piper Sandler’s business as a broker-dealer, Piper Sandler may purchase securities from and sell securities to NYCB, Flagstar and their respective affiliates. Piper Sandler may also actively trade the equity and debt securities of NYCB, Flagstar and their respective affiliates for Piper Sandler’s account and for the accounts of Piper Sandler’s customers.

Opinion of Goldman Sachs & Co. LLC

At a meeting of the NYCB board of directors, Goldman Sachs rendered to the NYCB board of directors its oral opinion, subsequently confirmed in Goldman Sachs’ written opinion dated as of April 24, 2021, to the effect that, as of the date of Goldman Sachs’ written opinion, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to NYCB.

The full text of the written opinion of Goldman Sachs, dated April 24, 2021, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this joint proxy statement/prospectus as Annex C. The summary of the Goldman Sachs opinion contained in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the NYCB board of directors in connection with its consideration of the proposed merger and the opinion does not constitute a recommendation as to how any holder of shares of NYCB common stock should vote with respect to the proposed merger or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

   

the merger agreement;

 

   

annual reports to stockholders and Annual Reports on Form 10-K of NYCB and Flagstar for the five years ended December 31, 2020;

 

   

certain publicly available research analyst reports for NYCB and Flagstar;

 

   

certain internal financial analyses and forecasts for Flagstar prepared by its management; and

 

   

certain financial analyses and forecasts for Flagstar on a stand-alone basis and certain internal financial analyses and forecasts for NYCB on a stand-alone basis and pro-forma for the proposed merger, in each case, as prepared by the management of NYCB and approved for Goldman Sachs’ use by NYCB, which are referred to in this section as the “Forecasts,” including certain operating synergies projected by the management of NYCB to result from the proposed merger, as approved for Goldman Sachs’ use by NYCB, which are referred to in this section as the “Synergies” (as described in the section entitled “—Certain Unaudited Prospective Financial Information,” beginning on page 94).

Goldman Sachs also held discussions with members of the senior managements of NYCB and Flagstar regarding their assessment of the past and current business operations, financial condition and future prospects of Flagstar and with the members of senior management of NYCB regarding their assessment of the past and current business operations, financial condition and future prospects of NYCB and the strategic rationale for, and the potential benefits of, the proposed merger; reviewed the reported price and trading activity for the shares of NYCB common stock and shares of Flagstar common stock; compared certain financial and stock market information for NYCB and Flagstar with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the banking industry; and performed such other studies and analyses, and considered such other factors, as Goldman Sachs deemed appropriate.

 

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For purposes of rendering its opinion, Goldman Sachs, with the consent of the NYCB board of directors, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the NYCB board of directors that the Forecasts, including the Synergies, were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of NYCB. Goldman Sachs did not review individual credit files or make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of NYCB or Flagstar or any of their respective subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs is not an expert in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances and marks for losses with respect thereto, and, accordingly, Goldman Sachs assumed that such allowances and marks for losses for NYCB or Flagstar were, in the aggregate, adequate to cover such losses. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the proposed merger would be obtained without any adverse effect on NYCB or Flagstar or on the expected benefits of the proposed merger in any way meaningful to Goldman Sachs’ analysis. Goldman Sachs assumed that the proposed merger would be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion did not address the underlying business decision of NYCB to engage in the proposed merger, or the relative merits of the proposed merger as compared to any strategic alternatives that may be available to NYCB; nor did it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addressed only the fairness from a financial point of view to NYCB, as of the date of Goldman Sachs’ written opinion, of the exchange ratio pursuant to the merger agreement. Goldman Sachs did not express any view on, and its opinion does not address, any other term or aspect of the merger agreement or the proposed merger or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the proposed merger, including the fairness of the proposed merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of NYCB; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of NYCB or Flagstar, or any class of such persons, in connection with the proposed merger, whether relative to the exchange ratio pursuant to the merger agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which the shares of NYCB common stock or Flagstar common stock would trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on NYCB or Flagstar, or as to the impact of the proposed merger on the solvency or viability of NYCB or Flagstar or the ability of NYCB or Flagstar to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs, as of the date of Goldman Sachs’ written opinion, and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and its opinion were provided for the information and assistance of the NYCB board of directors in connection with its consideration of the proposed merger and Goldman Sachs’ opinion does not constitute a recommendation as to how any holder of shares of NYCB common stock should vote with respect to the proposed merger or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Summary of Financial Analyses

The following is a summary of the material financial analyses presented by Goldman Sachs to the NYCB board of directors in connection with rendering to the NYCB board of directors the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent the relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before April 23, 2021, and is not necessarily indicative of current market conditions.

Analysis of Implied Deal Premia and Multiples

Goldman Sachs calculated and compared certain implied premia and multiples using the closing price for shares of Flagstar common stock on April 23, 2021, and the implied value of the merger consideration to be paid by NYCB for each share of Flagstar common stock pursuant to the merger agreement. For purposes of its analysis, Goldman Sachs calculated an implied

 

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value for the merger consideration of $48.14 by multiplying the exchange ratio pursuant to the merger agreement by $11.99, the closing price for the shares of NYCB common stock on April 23, 2021.

Goldman Sachs calculated and/or compared the following:

 

   

the implied premia represented by the closing price of $45.37 per share of Flagstar common stock on April 23, 2021 and the $48.14 implied value of the merger consideration, in each case, relative to:

 

   

$45.37, the closing price for shares of Flagstar common stock on April 23, 2021, the last full trading day prior to announcement of the proposed merger,

 

   

$44.99, and $45.98, the average trading prices for shares of Flagstar common stock over the 10-day and 30-day periods ended April 23, 2021, respectively, and

 

   

$51.12, the highest trading price for shares of Flagstar common stock over the 52-week period ended April 23, 2021;

 

   

the closing price of $45.37 for shares of Flagstar common stock on April 23, 2021 and the $48.14 implied value of the merger consideration, in each case, as a multiple of

 

   

the estimated EPS for 2021 and 2022 for Flagstar Bancorp, calculated using both the EPS estimates for Flagstar reflected in the Forecasts and median EPS estimates for Flagstar published by Institutional Broker Estimate System (“IBES”) as of April 23, 2021; and

 

   

the tangible book value per share (“TBV”) per share, for Flagstar Bancorp, as of March 31, 2021, using TBV per share information reflected in the Forecasts.

The results of these calculations were as follows:

Premia/(Discount)

 

Implied Premium/(Discount) to:

   Flagstar April 23,
2021
Closing Price
of $45.37
    Implied Value of
Merger
Consideration
of $48.14
 

April 23, 2021 Closing Price of $45.37

     —         6.1

10-Day Average Price of $44.99

     0.8     7.0

30-Day Average Price of $45.98

     (1.3 )%      4.7

52-Week High Price of $51.12

     (11.2 )%      (5.8 )% 

Implied Multiples

 

     Management Forecasts      IBES Median Estimates  
     Flagstar April 23,
2021 Closing
Price of $45.37
     Implied Value of
Merger
Consideration of
$48.14
     Flagstar April 23,
2021 Closing
Price of $45.37
     Implied Value of
Merger
Consideration of
$48.14
 

Price/2021E EPS

     6.1x        6.5x        6.2x        6.6x  

Price/2022E EPS

     8.7x        9.3x        8.7x        9.3x  

 

     Flagstar April 23,
2021
Closing Price
of $45.37
     Implied Value of
Merger
Consideration
of $48.14
 

Price/March 31, 2021 TBV per share

     1.1x        1.2x  

Selected Companies Analysis for Flagstar on a Stand-Alone Basis

Goldman Sachs reviewed and compared certain financial information for Flagstar on a stand-alone basis to corresponding financial information and public market multiples for the selected publicly traded companies in the banking industry listed below. Although none of the selected companies is directly comparable to Flagstar, the selected companies were chosen because they are publicly traded companies with operations that, for purposes of analysis, may be considered similar to certain operations of Flagstar.

 

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For each of Flagstar on a stand-alone basis and the selected companies, Goldman Sachs calculated and compared its closing price per share as of April 23, 2021 as a multiple of each of:

 

   

estimated EPS for the next 12 months (“NTM”) and for calendar years 2021 and 2022; and

 

   

stated book value (“SBV”) per share and TBV per share, with respect to each selected company, as of its most recently completed fiscal quarter for which SBV per share and TBV per share information was publicly available as of April 23, 2021 and with respect to Flagstar Bancorp, as of March 31, 2021, based on SBV per share and TBV per share information reflected in the Forecasts.

For purposes of its calculations, Goldman Sachs used 2021, NTM and 2022 EPS estimates for Flagstar on a stand-alone basis and the selected companies reflecting the most recent median EPS estimates for such companies published by IBES as of April 23, 2021. For Flagstar on a stand-alone basis, Goldman Sachs also used the 2021, NTM and 2022 EPS estimates reflected in the Forecasts.

The multiples calculated by Goldman Sachs for the selected companies and multiples calculated by Goldman Sachs for Flagstar on a stand-alone basis are as follows:

 

Selected Company

   Price/2021E
EPS
     Price/NTM
EPS
     Price/2022E
EPS
     Price/SBV
per share
     Price/TBV
per share
 

Western Alliance Bancorporation

     13.1x        12.6x        11.7x        3.0x        3.2x  

Texas Capital Bancshares Inc.

     14.5x        14.6x        14.6x        1.2x        1.2x  

F.N.B Corp.

     11.9x        12.0x        12.4x        0.9x        1.6x  

BankUnited Inc.

     14.6x        14.0x        13.1x        1.4x        1.5x  

Prosperity Bancshares Inc.

     14.2x        14.2x        14.2x        1.2x        2.5x  

Associated Banc-Corp

     13.0x        13.3x        13.7x        0.9x        1.3x  

United Bankshares Inc.

     15.7x        16.2x        17.2x        1.2x        2.1x  

Investors Bancorp Inc.

     13.3x        12.6x        11.4x        1.4x        1.4x  

First Midwest Bancorp Inc.

     14.8x        14.9x        15.2x        1.0x        1.6x  

Ameris Bancorp

     11.8x        12.2x        12.9x        1.3x        2.1x  

Top Quartile

     14.6x        14.5x        14.5x        1.4x        2.1x  

Median

     13.8x        13.7x        13.4x        1.2x        1.6x  

Bottom Quartile

     13.1x        12.6x        12.5x        1.0x        1.4x  

Flagstar Bancorp

              

Management Forecasts/Public Information

     6.1x        6.9x        8.7x        1.1x        1.1x  

IBES Median EPS Estimates/Public Information

     6.2x        6.9x        8.7x        —          —    

Illustrative Present Value of Future Stock Price Analysis for Flagstar on a Stand-Alone Basis

Goldman Sachs performed an illustrative analysis to derive a range of illustrative present values per share of Flagstar common stock on a stand-alone basis, based on theoretical future prices calculated by Goldman Sachs for the shares of Flagstar common stock on a stand-alone basis.

Goldman Sachs derived a range of theoretical future values per share for the shares of Flagstar common stock on a stand-alone basis as of December 31, 2022, 2023 and 2024 by applying illustrative one-year forward price to EPS multiples of 9.0x and 11.0x to the estimates of the EPS of Flagstar on a stand-alone basis for 2022, 2023 and 2024, respectively, using the Forecasts. By applying a discount rate of 8.5%, reflecting an estimate of Flagstar’s cost of equity on a stand-alone basis, Goldman Sachs discounted to present value as of March 31, 2021 both the theoretical future values per share it derived for Flagstar on a stand-alone basis and the estimated dividends to be paid per share of Flagstar common stock through the end of the applicable year as reflected in the Forecasts, to yield illustrative present values per share of Flagstar common stock on a stand-alone basis ranging from $39.66 to $51.90.

The illustrative one-year forward price to EPS multiples used in the foregoing analysis were derived by Goldman Sachs using its professional judgment and experience, taking into account the multiples calculated by Goldman Sachs as set forth above under “—Selected Companies Analysis for Flagstar on a Stand-Alone Basis.” Goldman Sachs derived the discount rate used in the foregoing analysis by application of the capital asset pricing model (“CAPM”), which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the United States financial markets generally.

 

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Regression Analysis for Flagstar on a Stand-Alone Basis

Goldman Sachs performed a regression analysis using the Price/TBV per share multiples for the selected companies calculated by Goldman Sachs as described above under “—Selected Companies Analysis for Flagstar on a Stand-Alone Basis.” Goldman Sachs compared to the 2022 estimated return on average tangible common equity (“2022E ROATCE”) for those selected companies using the median estimates for such companies published by IBES as of April 23, 2021 to derive a regression line reflecting a range of Price/TBV per share multiples at a range of 2022E ROATCE for the selected companies. Goldman Sachs observed that the 2022E ROATCE for Flagstar as reflected in the Forecasts corresponded to an implied Price/TBV per share multiple of 1.6x on the regression line. Goldman Sachs calculated that the closing price for Flagstar common stock on April 23, 2021 reflected a multiple of approximately 1.1x TBV per share as of March 31, 2021 for Flagstar, as reflected in the Forecasts.

Goldman Sachs applied implied Price/TBV per share multiples ranging from 1.5x (0.1x less than the 2022E ROATCE regression implied stand-alone Price/TBV per share multiple of 1.6x) to 1.7x (0.1x more than the 2022E ROATCE regression implied stand-alone Price/TBV per share multiple) to the TBV per share as of March 31, 2021 for Flagstar on a stand-alone basis as reflected in the Forecasts, and applied a 25% discount (reflecting the observed historical discount on Flagstar’s Price/TBV multiple relative to its regression implied Price/TBV multiple on a stand-alone basis) to derive regression implied values per share of Flagstar common stock on a stand-alone basis ranging from $48.49 to $54.75.

Illustrative Discounted Dividend Analyses for Flagstar on a Stand-Alone Basis

Using the Forecasts, Goldman Sachs performed an illustrative discounted dividend analysis for Flagstar on a stand-alone basis, to derive a range of illustrative present values per share of the Flagstar common stock on a stand-alone basis.

Using discount rates ranging from 6.5% to 10.5%, reflecting estimates of the cost of equity for Flagstar on a stand-alone basis, Goldman Sachs derived a range of illustrative equity values for Flagstar on a stand-alone basis by discounting to present value as of March 31, 2021, (a) the implied distributions to Flagstar’s shareholders on a stand-alone basis over the period beginning April 1, 2021 through December 31, 2025 calculated using the Forecasts assuming that Flagstar would make distributions of capital in excess of the amount necessary to achieve a 10.0% common equity tier 1 capital target as provided by NYCB management, and (b) a range of illustrative terminal values for Flagstar as of December 31, 2025, calculated by applying illustrative one-year forward price to EPS multiples ranging from 9.0x to 11.0x to the estimate of Flagstar’s terminal year (2026) net income on a stand-alone basis, as reflected in the Forecasts. Goldman Sachs derived the range of discount rates by application of the CAPM. To derive illustrative terminal values for Flagstar, Goldman Sachs applied illustrative one-year forward price to EPS multiples based on its professional judgment and experience, taking into account the multiples it calculated as described above under “—Selected Companies Analysis for Flagstar on a Stand-Alone Basis.”

Goldman Sachs divided the range of illustrative equity values it derived for Flagstar by the total number of fully diluted shares of Flagstar common stock outstanding as provided by Flagstar’s management to derive illustrative present values per share of Flagstar common stock on a stand-alone basis ranging from $50.68 to $67.46.

Selected Companies Analysis for NYCB on a Stand-Alone Basis

Goldman Sachs reviewed and compared certain financial information for NYCB on a stand-alone basis to corresponding financial information and public market multiples for the selected publicly traded companies in the banking industry listed below. Although none of the selected companies is directly comparable to NYCB, the selected companies were chosen because they are publicly traded companies with operations that, for purposes of analysis, may be considered similar to certain operations of NYCB.

For each of NYCB on a stand-alone basis and the selected companies, Goldman Sachs calculated and compared its closing price per share as of April 23, 2021 as a multiple of each of:

 

   

estimated EPS for NTM and calendar years 2021 and 2022; and

 

   

its SBV per share and TBV per share, with respect to each selected company, as of its most recently completed fiscal quarter for which SBV per share and TBV per share information was publicly available as of April 23, 2021 and with respect to NYCB, as of March 31, 2021, based on SBV per share and TBV per share information reflected in the Forecasts.

 

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For purposes of its calculations, Goldman Sachs used 2021, NTM and 2022 EPS estimates for NYCB on a stand-alone basis and for the selected companies reflecting the most recent median EPS estimates for such companies published by IBES as of April 23, 2021. For NYCB on a stand-alone basis, Goldman Sachs also used the 2021, NTM and 2022 EPS estimates reflected in the Forecasts.

The multiples calculated by Goldman Sachs for the selected companies and multiples calculated by Goldman Sachs for NYCB on a stand-alone basis are as follows:

 

Selected Company

   Price/2021E
EPS
     Price/NTM
EPS
     Price/2022E
EPS
     Price/SBV
per share
     Price/TBV
per share
 

Regions Financial Corp.

     10.8x        10.7x        10.6x        1.2x        1.8x  

Comerica Inc.

     10.7x        11.6x        13.7x        1.3x        1.4x  

First Horizon Corp.

     10.6x        10.8x        11.2x        1.3x        1.8x  

Zions Bancorp. NA

     10.0x        10.7x        12.4x        1.2x        1.4x  

Signature Bank

     18.6x        17.6x        15.9x        2.5x        2.5x  

Synovus Financial Corp.

     11.1x        11.2x        11.4x        1.5x        1.7x  

East West Bancorp Inc.

     14.5x        14.3x        14.0x        2.0x        2.2x  

BOK Financial Corp.

     12.2x        12.6x        13.6x        1.2x        1.5x  

Wintrust Financial Corp.

     11.5x        12.4x        14.7x        1.2x        1.4x  

Western Alliance Bancorp

     13.1x        12.6x        11.7x        3.0x        3.2x  

Cullen/Frost Bankers Inc.

     20.9x        21.4x        22.6x        1.8x        2.1x  

Valley National Bancorp

     12.7x        12.4x        12.0x        1.3x        1.9x  

South State Corporation

     14.4x        14.3x        14.0x        1.3x        2.0x  

Texas Capital Bancshares Inc.

     14.5x        14.6x        14.6x        1.2x        1.2x  

F.N.B. Corp.

     11.9x        12.0x        12.4x        0.9x        1.6x  

BankUnited Inc.

     14.6x        14.0x        13.1x        1.4x        1.5x  

Pinnacle Financial Partners

     15.2x        15.3x        15.5x        1.4x        2.4x  

Prosperity Bancshares Inc.

     14.2x        14.2x        14.2x        1.2x        2.5x  

Hancock Whitney Corp.

     9.9x        10.2x        10.9x        1.1x        1.6x  

Associated Banc-Corp

     13.0x        13.3x        13.7x        0.9x        1.3x  

Commerce Bancshares Inc.

     19.6x        20.3x        21.8x        2.7x        2.9x  

UMB Financial Corp.

     17.3x        17.2x        17.0x        1.5x        1.6x  

Top Quartile

     14.6x        14.5x        14.7x        1.5x        2.2x  

Median

     13.1x        12.9x        13.7x        1.3x        1.7x  

Bottom Quartile

     11.2x        11.7x        12.1x        1.2x        1.5x  

New York Community Bancorp

              

Management Forecasts/Public Information

     10.2x        10.1x        9.6x        0.9x        1.4x  

IBES Median EPS Estimates/Public Information

     10.4x        10.1x        9.6x        —          —    

Illustrative Present Value of Future Stock Price Analysis for NYCB on a Stand-Alone Basis

Goldman Sachs performed an illustrative analysis to derive a range of illustrative present values per share of NYCB common stock on a stand-alone basis, based on theoretical future prices calculated by Goldman Sachs for the shares of NYCB common stock on a stand-alone basis.

Goldman Sachs derived a range of theoretical future values per share for the shares of NYCB common stock on a stand-alone basis as of December 31, 2022, 2023 and 2024 by applying illustrative one-year forward price to EPS multiples of 12.0x to 14.0x to the estimates of the EPS of NYCB on a stand-alone basis for 2023, 2024 and 2025, respectively, using the Forecasts. By applying a discount rate of 7.0%, reflecting an estimate of NYCB’s cost of equity on a stand-alone basis, Goldman Sachs discounted to present value as of March 31, 2021 both the theoretical future values per share it derived for NYCB on a stand-alone basis and the estimated dividends to be paid per share of NYCB common stock on a stand-alone basis through the end of the applicable year as reflected in the Forecasts, to yield illustrative present values per share of NYCB common stock on a stand-alone basis ranging from $14.94 to $17.44.

The illustrative one-year forward price to EPS multiples used in the foregoing analysis were derived by Goldman Sachs based on its professional judgment and experience, taking into account the multiples calculated by Goldman Sachs as set

 

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forth above under “—Selected Companies Analysis for NYCB on a Stand-Alone Basis.” Goldman Sachs derived the discount rate used in the foregoing analysis by application of CAPM.

Regression Analysis for NYCB on a Stand-Alone Basis

Goldman Sachs observed that the 2022E ROATCE basis for NYCB on a stand-alone basis as reflected in the Forecasts corresponded to an implied Price/TBV per share multiple of 2.1x on the regression line derived by Goldman Sachs reflecting a range of Price/TBV per share multiples at a range of 2022E ROATCEs for the selected companies as described above under “—Selected Companies Analysis for NYCB on a Stand-Alone Basis.”

Goldman Sachs applied implied Price/TBV per share multiples ranging from 2.0x (0.1x less than the 2022E ROATCE regression implied stand-alone Price/TBV per share multiple of 2.1x) to 2.2x (0.1x more than the 2022E ROATCE regression implied stand-alone Price/TBV per share multiple) to the TBV per share as of March 31, 2021 for NYCB on a stand-alone basis as reflected in the Forecasts to derive regression implied values per share of NYCB common stock on a stand-alone basis ranging from $16.37 to $18.03 (no historical premium or discount was observed on NYCB’s Price/TBV multiple relative to its regression implied Price/TBV multiple on a stand-alone basis).

Illustrative Discounted Dividend Analyses for NYCB on a Stand-Alone Basis

Using the Forecasts, Goldman Sachs performed illustrative discounted dividend analysis for NYCB on a stand-alone basis, to derive a range of illustrative present values per share of NYCB common stock on a stand-alone basis.

Using discount rates ranging from 6.0% to 8.0%, reflecting estimates of the cost of equity for NYCB on a stand-alone basis, Goldman Sachs derived a range of illustrative equity values for NYCB on a stand-alone basis by discounting to present value as of March 31, 2021, (a) the implied distributions to NYCB stockholders on a stand-alone basis over the period beginning April 1, 2021 through December 31, 2025, on a stand-alone basis, calculated using the Forecasts assuming at the direction of NYCB management that NYCB would make distributions of capital in excess of the amount necessary to achieve a 10.0% common equity tier 1 capital target, and (b) a range of illustrative terminal values for NYCB on a stand-alone basis as of December 31, 2025, calculated by applying illustrative one-year forward price to EPS multiples ranging from 12.0x to 14.0x to the estimate of NYCB’s terminal year (2026) net income on a stand-alone basis, as reflected in the Forecasts. Goldman Sachs derived the range of discount rates by application of the CAPM. To derive illustrative terminal values for NYCB on a stand-alone basis, Goldman Sachs applied illustrative one-year forward price to EPS multiples based on its professional judgment and experience, taking into account the multiples it calculated for the selected companies as described above under “—Selected Companies Analysis for NYCB on a Stand-Alone Basis” and the multiples it calculated for NYCB on a stand-alone basis as set forth above under “—Selected Companies Analysis for NYCB on a Stand-Alone Basis.”

Goldman Sachs divided the range of illustrative equity values it derived for NYCB on a stand-alone basis by the total number of fully diluted shares of NYCB common stock outstanding as provided by NYCB management to derive illustrative present values per share of NYCB common stock on a stand-alone basis ranging from $15.75 to $19.26.

Illustrative Present Value of Future Stock Price Analyses for NYCB on a Pro Forma Basis

Goldman Sachs performed an illustrative analysis to derive a range of illustrative present values per share of NYCB common stock on a pro forma basis (giving effect to the proposed merger), based on theoretical future prices calculated by Goldman Sachs for the shares of NYCB common stock on a pro forma basis.

Goldman Sachs derived a range of theoretical future values per share for the shares of NYCB common stock on a pro forma basis as of December 31, 2022, 2023 and 2024 by applying illustrative one-year forward price to EPS multiples of 11.0 x to 13.0x to the estimates of the EPS of NYCB on a pro forma basis for 2023, 2024 and 2025, respectively, using the Forecasts taking into account the Synergies. By applying a discount rate of 7.50%, reflecting an estimate of NYCB’s cost of equity on a pro forma basis (based on the estimated cost of equity for each of Flagstar and NYCB on a stand-alone basis blended based on their respective market capitalization), Goldman Sachs discounted to present value as of March 31, 2021 both the theoretical future values per share it derived for NYCB on a pro forma basis and the estimated dividends to be paid per share of NYCB common stock on a pro forma basis through the end of the applicable year as reflected in the Forecasts to yield illustrative present values per share of NYCB common stock on a pro forma basis ranging from $15.48 to $18.16.

 

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The illustrative one-year forward price to EPS multiples used in the foregoing analysis were derived by Goldman Sachs based on its professional judgment and experience, taking into account the multiples calculated by Goldman Sachs as set forth above under “—Selected Companies Analysis for NYCB on a Stand-Alone Basis.”

Regression Analysis for NYCB Shares on a Pro Forma Basis

Goldman Sachs observed that the estimated pro forma 2022E ROATCE on a fully phased-in basis for NYCB as reflected in the Forecasts corresponded to an implied Price/TBV per share multiple of 2.2x on the regression line derived by Goldman Sachs reflecting a range of Price/TBV per share multiples at a range of 2022E ROATCEs for the selected companies as described above under “—Regression Analysis for NYCB on a Stand-Alone Basis.”

Goldman Sachs applied implied Price/TBV per share multiples ranging from 2.1x (0.1x less than the 2022E ROATCE regression implied pro forma Price/TBV per share multiple of 2.2x) to 2.3x (0.1x more than the 2022E ROATCE regression implied pro forma Price/TBV per share multiple) to the TBV per share as of March 31, 2021 for NYCB on a pro forma basis as reflected in the Forecasts, and applied a 5.0% discount (reflecting the blended historical discount to the regression line implied Price/TBV per share multiple as observed on Flagstar and NYCB on a stand-alone basis and blended based on their respective market capitalization), to derive a range of regression implied present values per share of NYCB common stock on a pro forma basis of $17.58 to $19.21.

Illustrative Discounted Dividend Analyses for NYCB Shares on a Pro Forma Basis

Using the Forecasts, Goldman Sachs performed illustrative discounted dividend analysis for NYCB on a pro forma basis (giving effect to the proposed merger). Using discount rates ranging from 6.50% to 8.50%, reflecting estimates of the cost of equity for NYCB on a pro forma basis, Goldman Sachs derived a range of illustrative equity values for NYCB on a pro forma basis by discounting to present value as of March 31, 2021, (a) the implied distributions to/ infusions from NYCB’s stockholders on a pro forma basis from December 31, 2022 through December 31, 2025 calculated using the Forecasts, taking into account the Synergies, assuming at the direction of NYCB management that NYCB would on a pro forma basis make distributions/require infusions of capital as necessary to achieve a 10.0% common equity tier 1 capital target for 2022 through 2025, and (b) a range of illustrative terminal values for NYCB on a pro forma basis as of December 31, 2025, calculated by applying illustrative one-year forward price to EPS multiples ranging from 11.0x to 13.0x to the estimate of NYCB’s terminal year (2026) net income on a pro forma basis, as reflected in the Forecasts, taking into account the Synergies. To derive illustrative terminal values for NYCB on a pro forma basis, Goldman Sachs applied illustrative one-year forward price to EPS multiples based on its professional judgment and experience, the multiples it calculated for the selected companies and NYCB on a stand-alone basis as described above under “—Selected Companies Analysis for NYCB on a Stand-Alone Basis” and the multiples it calculated for Flagstar on a stand-alone basis as set forth above under “—Selected Companies Analysis for Flagstar on a Stand-Alone Basis.”

Goldman Sachs divided the range of illustrative equity values it derived for NYCB on a pro forma basis by the total number of fully diluted shares of NYCB common stock outstanding, increased by the number of shares of NYCB common stock anticipated to be issued in the proposed merger, as provided by NYCB management to derive a range of illustrative present values per share of NYCB common stock on a pro forma basis of $15.74 to $19.48.

Illustrative Contribution Analysis

Using the Forecasts and publicly available information, Goldman Sachs analyzed the implied equity contributions of Flagstar and NYCB to the pro forma combined company based on specific historical and estimated future operating and financial information of each company, including, among other things, market capitalization based on closing stock prices of each company as of April 23, 2021, estimated net income for 2021 and 2022, and certain balance sheet items as of March 31, 2021.

 

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Based on the number of fully diluted shares of Flagstar common stock and NYCB common stock outstanding as of March 31, 2021, as provided by NYCB management, following the consummation of the proposed merger, holders of NYCB common stock would hold approximately 68% of the fully diluted shares of the pro forma combined company, and holders of Flagstar common stock would hold approximately 32% of the fully diluted shares of the pro forma combined company. The following table presents the results of this analysis:

 

     NYCB     Flagstar  

Market Capitalization

     69     31

Projections

    

2021E Net Income

     58     42

2022E Net Income

     68     32

Balance Sheet (March 31, 2021)

    

Assets

     66     34

Loans

     64     36

Deposits

     64     36

Tangible Common Equity

     64     36

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company used in the above analyses as a comparison is directly comparable to NYCB or Flagstar.

Goldman Sachs prepared these analyses for purposes of providing its opinion to the NYCB board of directors that, as of the date of the opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to NYCB. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon projections of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of NYCB, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The exchange ratio pursuant to the merger agreement and the resulting merger consideration to be paid by NYCB for each share of Flagstar common stock pursuant to the merger agreement was determined through arm’s-length negotiations between NYCB and Flagstar and was approved by the NYCB board of directors. Goldman Sachs provided advice to NYCB during these negotiations. Goldman Sachs did not, however, recommend any specific exchange ratio or amount of consideration to NYCB or that any specific exchange ratio or amount of consideration constituted the only appropriate consideration for the proposed merger.

As described above, Goldman Sachs’ opinion was one of many factors taken into consideration by the NYCB board of directors in making its determination to approve the proposed merger. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the delivery of its fairness opinion to the NYCB board of directors and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex C to this joint proxy statement/prospectus.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of NYCB, Flagstar and any of their respective affiliates and third parties, or any currency or commodity that may be involved in the proposed merger. Goldman Sachs acted as financial advisor to NYCB in connection with, and participated

 

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in certain of the negotiations leading to, the proposed merger. Goldman Sachs expects to receive fees for its services in connection with the proposed merger, the principal portion of which is contingent upon consummation of the proposed merger, and NYCB has agreed to reimburse certain of Goldman Sachs’ expenses arising, and indemnify Goldman Sachs against certain liabilities that may arise, out of its engagement. During the two year period ended April 24, 2021, the Investment Banking Division of Goldman Sachs has not been engaged by NYCB, Flagstar or their respective affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may in the future provide financial advisory and/or underwriting services to NYCB, Flagstar and their respective affiliates for which its Investment Banking Division may receive compensation.

NYCB selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the proposed merger. Pursuant to an engagement letter dated April 22, 2021, Goldman Sachs was engaged to serve as the financial advisor to the NYCB board of directors in connection with the proposed merger. The engagement letter between NYCB and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of announcement, at approximately $13 million, $3 million of which became payable upon the execution of the merger agreement, and the remainder of which is payable contingent upon completion of the proposed merger. In addition, NYCB agreed to reimburse Goldman Sachs for certain of its expenses, including reasonable attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Flagstar’s Reasons for the Merger; Recommendation of Flagstar’s Board of Directors

After careful consideration, the Flagstar board of directors, by action by unanimous written consent dated as of April 24, 2021, unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, holdco merger and bank merger, are advisable and in the best interests of Flagstar and its shareholders, and (ii) approved and adopted the merger agreement and the consummation of the transactions contemplated thereby, including the merger, holdco merger and bank merger. Accordingly, the Flagstar board of directors unanimously recommends that the Flagstar shareholders vote “FOR” the Flagstar merger proposal, “FOR” the Flagstar compensation proposal and “FOR” the Flagstar adjournment proposal.

In reaching its decision to adopt and approve the merger agreement and the transactions contemplated thereby, including the merger, holdco merger and bank merger, and to recommend that Flagstar’s shareholders approve the merger agreement, the Flagstar board of directors evaluated the merger agreement, the merger and the other transactions contemplated by the merger agreement in consultation with Flagstar management, as well as with Flagstar’s financial and legal advisors, and considered a number of factors, including the following:

 

   

each of Flagstar’s and NYCB’s business, operations, financial condition, stock performance, asset quality, earnings and prospects. In reviewing these factors, including the information obtained through due diligence, the Flagstar board of directors considered that NYCB’s and Flagstar’s respective business, operations and risk profile complement each other and that the companies’ separate earnings and prospects, and the synergies and scale potentially available in the proposed transaction, create the opportunity for the combined company to leverage complementary and diversified revenue streams and to have superior future earnings and prospects compared to Flagstar’s earnings and prospects on a stand-alone basis;

 

   

the combined company’s position as a top-tier regional bank with greater national scale and geographic and business line diversification;

 

   

the fact that, upon the closing, the combined company’s board of directors would include four legacy Flagstar directors, including Messrs. DiNello (non-executive chairman) and Treadwell (risk committee chairman), which the Flagstar board of directors believes enhances the likelihood that the strategic benefits Flagstar expects to achieve as a result of the merger will be realized;

 

   

the fact that, upon the closing, the remainder of the Flagstar directors immediately prior to the effective time who will not be directors of the combined company’s board of directors will be appointed to a two year term as a member of the advisory board;

 

   

its knowledge of the current environment in the financial services industry, including economic conditions and the interest rate and regulatory environments, increased operating costs resulting from regulatory and compliance mandates, increasing competition from both banks and non-bank financial and financial technology firms, current financial market conditions and the likely effects of these factors on Flagstar’s and the combined company’s potential growth, development, productivity and strategic options;

 

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its views with respect to other strategic alternatives potentially available to Flagstar, including continuing as a stand-alone company and a transformative transaction with another potential acquiror or merger partner, and its belief that a transaction with such other potential transaction partners would not deliver the financial and operational benefits that could be achieved in the proposed merger with NYCB;

 

   

the exchange ratio in relation to the respective earnings contributions of Flagstar and NYCB;

 

   

the fact that the exchange ratio represents a 10% premium to the five-day volume weighted average price per share of Flagstar common stock (from April 19, 2021 to April 23, 2021);

 

   

the anticipated pro forma financial impact of the merger on the combined company, including earnings, earnings per share accretion, tangible book value accretion, dividends, return on average tangible common equity, return on average assets, asset quality, operational efficiency, liquidity and regulatory capital levels;

 

   

the fact that the dividends paid by NYCB to its stockholders were higher than dividends paid by Flagstar to its shareholders, even after applying the exchange ratio;

 

   

the complementary nature of Flagstar’s and NYCB’s businesses and prospects given the markets they serve and products they offer, and the expectation that the transaction would provide economies of scale, cost savings opportunities and enhanced opportunities for growth;

 

   

Flagstar’s and NYCB’s shared views regarding the best approach to combining and integrating the two companies, structured to maximize the potential for synergies and positive impact to local communities and minimize the loss of customers and employees and to further diversify the combined company’s operating risk profile compared to the risk profile of either company on a stand-alone basis;

 

   

the fact that, upon the closing, the combined company will re-adopt Flagstar’s existing lending policies and procedures with respect to the existing Flagstar business and the fact that the combined company intends to appoint certain senior management of Flagstar in mortgage and banking functions to equivalent senior positions at the combined company, which the Flagstar board of directors believes enhances the likelihood that the strategic benefits Flagstar expects to achieve as a result of the merger will be realized;

 

   

its review and discussions with Flagstar’s management concerning Flagstar’s due diligence examination of the operations, financial condition, regulatory and compliance programs and prospects of NYCB;

 

   

the expectation that the requisite regulatory approvals could be obtained in a timely fashion;

 

   

the expectation that the transaction will be generally tax-free to Flagstar and its shareholders for United States federal income tax purposes, as more fully described below under the section entitled “U.S. Federal Income Tax Consequences of the Merger” beginning on page 131;

 

   

the fact that the exchange ratio would be fixed at the signing, which the Flagstar board of directors believed was consistent with market practice for transactions of this type and with the strategic purpose of the transaction;

 

   

the shares of NYCB common stock that the Flagstar shareholders will receive as merger consideration would represent 32% of the outstanding shares of NYCB common stock, after giving effect to the exchange ratio and the merger;

 

   

the fact that Flagstar’s shareholders will have an opportunity to vote on the approval of the merger agreement and the transactions contemplated thereby;

 

   

the separate opinions of Morgan Stanley and Jefferies to the Flagstar board of directors, which were in each case dated April 24, 2021, as to the fairness, from a financial point of view, and as of the date of the opinions, to the holders of Flagstar common stock (other than holders of the excluded shares) of the exchange ratio in the proposed merger. See “—Opinions of Flagstar Financial Advisors—Opinion of Morgan Stanley & Co. LLC” and “—Opinions of Flagstar Financial Advisors—Opinion of Jefferies LLC” beginning on pages 77 and 87, respectively; and

 

   

the terms of the merger agreement (including the representations, covenants, deal protection and termination provisions), which the Flagstar board reviewed with its legal advisor following negotiation of several drafts of the merger agreement with NYCB.

 

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The Flagstar board of directors also considered the potential risks related to the transaction, but concluded that the anticipated benefits of combining with NYCB were likely to outweigh these risks. These potential risks include:

 

   

the possible diversion of management attention and resources from other strategic opportunities and operational matters while working to implement the transaction and integrate the two companies;

 

   

the risk of losing key Flagstar employees during the pendency of the merger and thereafter;

 

   

the restrictions on the conduct of Flagstar’s business during the period between execution of the merger agreement and the consummation of the merger, which could potentially delay or prevent Flagstar from undertaking business opportunities that might arise or certain other actions it might otherwise take with respect to its operations absent the pendency of the merger;

 

   

the potential effect of the merger on Flagstar’s overall business, including its relationships with customers, employees, suppliers and regulators;

 

   

the fact that Flagstar’s shareholders would not be entitled to dissenters’ rights in connection with the merger;

 

   

the possibility of encountering difficulties in achieving cost savings and synergies in the amounts currently estimated or within the time frame currently contemplated;

 

   

certain anticipated merger-related costs, which could also be higher than expected;

 

   

the regulatory and other approvals required in connection with the merger, the holdco merger and the bank merger and the risk that such regulatory approvals will not be received or will not be received in a timely manner or may impose burdensome or unacceptable conditions;

 

   

the potential for legal claims challenging the merger;

 

   

the risk that the merger may not be completed despite the combined efforts of Flagstar and NYCB or that completion may be unduly delayed, including as a result of delays in obtaining the requisite regulatory approvals; and

 

   

the other risks described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” beginning on pages 26 and 28, respectively.

The foregoing discussion of the information and factors considered by the Flagstar board of directors is not intended to be exhaustive, but includes the material factors considered by the board. In reaching its decision to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger, holdco merger and bank merger, the Flagstar board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors.

For the reasons set forth above, the Flagstar board of directors determined that the merger agreement and the transactions contemplated thereby are advisable and in the best interests of Flagstar and its shareholders, and approved and adopted the merger agreement and the transactions contemplated thereby, including the merger, holdco merger and bank merger.

Opinions of Flagstar’s Financial Advisors

Opinion of Morgan Stanley & Co. LLC

Flagstar retained Morgan Stanley to provide it with financial advisory services in connection with a possible merger with NYCB, and, if requested by Flagstar, a financial opinion with respect thereto. Flagstar selected Morgan Stanley to act as one of its financial advisors based on Morgan Stanley’s qualifications, expertise and reputation and its knowledge of the business and affairs of Flagstar. Morgan Stanley rendered to the Flagstar board of directors at its special meeting on April 24, 2021, its oral opinion, subsequently confirmed by delivery of a written opinion dated April 24, 2021, that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth therein, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to holders of shares of Flagstar common stock (other than holders of the excluded shares).

The full text of the written opinion of Morgan Stanley, dated April 24, 2021, is attached as Annex D to this joint proxy statement/prospectus. The opinion sets forth, among other things, the assumptions made, procedures followed,

 

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matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. Shareholders are urged to, and should, read the opinion carefully and in its entirety. Morgan Stanley’s opinion is directed to the Flagstar board of directors and addresses only the fairness, from a financial point of view, to holders of shares of Flagstar common stock (other than holders of excluded shares) of the exchange ratio pursuant to the merger agreement as of the date of the opinion. Morgan Stanley’s opinion does not address any other aspect of the transactions contemplated by the merger agreement and does not constitute a recommendation to shareholders of Flagstar or shareholders of NYCB as to how to vote at any shareholders meetings held with respect to the merger or any other matter or whether to take any other action with respect to the merger. The summary of Morgan Stanley’s opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. In addition, the opinion does not in any manner address the price at which NYCB common stock will trade following the consummation of the merger or at any time.

For purposes of rendering its opinion, Morgan Stanley, among other things:

 

   

reviewed certain publicly available financial statements and other business and financial information of Flagstar and NYCB, respectively;

 

   

reviewed certain internal financial statements and other financial and operating data concerning Flagstar and NYCB, respectively;

 

   

reviewed certain financial projections prepared by the managements of Flagstar and NYCB, respectively (for information regarding such financial projections, see “—Certain Unaudited Prospective Financial Information” beginning on page 94 of this joint proxy statement/prospectus);

 

   

reviewed information relating to certain strategic, financial and operational benefits anticipated from the merger, prepared by the managements of Flagstar and NYCB, respectively (for information regarding the Synergies, see “—Certain Unaudited Prospective Financial Information —Certain Estimated Synergies Attributable to the Merger” beginning on page 97 of this joint proxy statement/prospectus);

 

   

discussed the past and current operations and financial condition and the prospects of Flagstar, including information relating to certain strategic, financial and operational benefits anticipated from the merger, with senior executives of Flagstar;

 

   

discussed the past and current operations and financial condition and the prospects of NYCB, including information relating to certain strategic, financial and operational benefits anticipated from the merger, with senior executives of NYCB;

 

   

reviewed the pro forma impact of the merger on NYCB’s EPS, consolidated capitalization and certain financial ratios and measures;

 

   

reviewed the reported prices and trading activity for Flagstar common stock and NYCB common stock;

 

   

compared the financial performance of Flagstar and NYCB and the prices and trading activity of Flagstar common stock and NYCB common stock with that of certain other publicly-traded companies comparable with Flagstar and NYCB, respectively, and their securities;

 

   

participated in certain discussions and negotiations among representatives of Flagstar and NYCB and certain parties and their financial and legal advisors;

 

   

reviewed the merger agreement and certain related documents; and

 

   

performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.

In arriving at its opinion, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to it by Flagstar and NYCB, and formed a substantial basis for its opinion.

At Flagstar’s direction, Morgan Stanley’s analysis relating to the business and financial prospects for Flagstar for purposes of its opinion was made on the basis of (i) certain financial projections with respect to Flagstar prepared by the management of Flagstar, which forecasts were approved by Flagstar for Morgan Stanley’s use (referred to in this section as the “Flagstar Financial Projections”) and (ii) certain financial projections with respect to Flagstar that were primarily derived from a

 

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consensus of selected Wall Street equity research financial forecasts identified by the management of Flagstar, which forecasts were extrapolated at the direction of Flagstar for certain fiscal years based on Flagstar’s guidance and reviewed and approved by Flagstar for Morgan Stanley’s use (such forecasts and extrapolations thereof are referred to in this section as the “Flagstar Street Forecasts”). At Flagstar’s direction, Morgan Stanley’s analysis relating to the business and financial prospects for NYCB for purposes of its opinion was made on the basis of certain financial projections with respect to NYCB that were primarily derived from a consensus of selected Wall Street equity research financial forecasts identified by the management of NYCB, which forecasts were extrapolated at the direction of Flagstar for certain fiscal years based on Flagstar’s guidance and reviewed and approved by Flagstar for Morgan Stanley’s use (such forecasts and extrapolations thereof are referred to in this section as the “NYCB Street Forecasts”). Morgan Stanley was advised by Flagstar, and assumed, with the consent of Flagstar, that the Flagstar Financial Projections, including information relating to certain strategic, financial and operational benefits anticipated from the merger, reflect the best currently available estimates of the future financial performance of Flagstar, and the Flagstar Street Forecasts and NYCB Street Forecasts were reasonable bases upon which to evaluate the business and financial prospects of Flagstar and NYCB, respectively. Morgan Stanley expressed no view as to the Flagstar Financial Projections, the NYCB Street Forecasts or the Flagstar Street Forecasts or the assumptions on which they were based, including the selection of the equity research financial forecasts from which the Flagstar Street Forecasts and NYCB Street Forecasts were derived.

In addition, Morgan Stanley assumed that the merger will be consummated in accordance with the terms set forth in the merger agreement without any waiver, amendment or delay of any terms or conditions, including, among other things, that the merger will be treated as a tax-free reorganization, pursuant to the Internal Revenue Code of 1986, as amended, and that the definitive merger agreement would not differ in any material respect from the draft thereof furnished to Morgan Stanley. Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the proposed merger, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed merger. Morgan Stanley is not an expert in the evaluation of allowance for loan losses, and it neither made an independent evaluation of the adequacy of the allowance for loan losses at Flagstar or NYCB, nor did it examine any individual loan credit files of Flagstar or NYCB nor was it requested to conduct such a review, and, as a result, Morgan Stanley assumed that the aggregate allowance for loan losses of Flagstar and NYCB, respectively, is adequate. Morgan Stanley is not a legal, tax or regulatory advisor. Morgan Stanley is a financial advisor only and relied upon, without independent verification, the assessment of Flagstar and NYCB and their legal, tax or regulatory advisors with respect to legal, tax or regulatory matters. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of Flagstar’s officers, directors or employees, or any class of such persons, relative to the exchange ratio to be paid to the holders of shares of the Flagstar common stock in the transaction. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of Flagstar or NYCB, nor was it furnished with any such valuations or appraisals, upon which Morgan Stanley relied without independent verification. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, April 24, 2021. Events occurring after such date may affect Morgan Stanley’s opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion.

Morgan Stanley’s opinion did not address the relative merits of the transactions contemplated by the merger agreement as compared to any other alternative business transaction, or other business or financial strategies that might be available to Flagstar, nor did it address the underlying business decision of Flagstar to enter into the merger agreement or proceed with the transactions contemplated by the merger agreement.

Summary of Financial Analyses of Morgan Stanley

The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion letter dated April 24, 2021. The various financial analyses summarized below were based on closing prices of Flagstar common stock and NYCB common stock as of April 23, 2021, the last full trading day preceding the day of the special meeting of the Flagstar board of directors to consider, approve, adopt and authorize the merger agreement. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Furthermore, mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using the data referred to below.

 

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Flagstar Standalone Analyses

Flagstar Public Trading Comparables Analysis

Morgan Stanley performed a public trading comparables analysis, which is designed to provide an implied trading value of a company by comparing it to selected companies with similar characteristics to the company. Morgan Stanley compared certain financial information of Flagstar with publicly available information for two groups of selected companies. The selected companies were chosen based on Morgan Stanley’s knowledge of the industry and because these companies have businesses that may be considered similar to Flagstar’s.

Comparable Peer Group 1

The first group of selected companies consisted of all publicly traded banks headquartered in the Midwest region of the United States with total assets between $7.5 billion and $50 billion, excluding any companies that were merger targets in pending transactions. The selected companies consisted of:

 

   

Wintrust Financial Corporation

 

   

Associated Banc-Corp

 

   

UMB Financial Corporation

 

   

Commerce Bancshares, Inc.

 

   

Old National Bancorp

 

   

First Midwest Bancorp, Inc.

 

   

Heartland Financial USA, Inc.

 

   

First Financial Bancorp.

 

   

First Merchants Corporation

 

   

Great Western Bancorp, Inc.

 

   

First Busey Corporation

 

   

Enterprise Financial Services Corp

 

   

Merchants Bancorp

 

   

Capital Federal Financial, Inc.

 

   

Park National Corporation

Comparable Peer Group 2

The second group of selected companies consisted of all publicly traded mortgage companies in the United States, excluding any technology-enabled mortgage companies. The selected companies consisted of:

 

   

UWM Holdings Corporation

 

   

PennyMac Financial Services, Inc.

 

   

Mr. Cooper Group Inc.

 

   

Home Point Capital Inc.

 

   

Guild Holdings Company

In all instances, multiples were based on closing stock prices on April 23, 2021. For each of the following analyses performed by Morgan Stanley, financial and market data for both groups of the selected companies were based on the most recent publicly available information and Wall Street consensus estimates.

With respect to both groups of the selected companies, the information Morgan Stanley presented included:

 

   

multiple of price to estimated EPS for 2022, or Price / 2022E EPS; and

 

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multiple of price to tangible book value per share, or Price / Tangible Book Value

 

     Group 1 of
Selected
Companies’
Median
     Group 2 of
Selected
Companies’
Median
     Flagstar
(Flagstar
Financial
Projections)
     Flagstar
(Flagstar
Street
Forecasts)
 

Price / 2022E EPS

     14.4x        4.9x        7.4x        8.8x  

Price / Tangible Book Value

     1.6x        1.3x        1.1x        1.1x  

Based on the analysis of the relevant metrics for each of the selected companies, and taking into account differences between Flagstar and the selected companies including with respect to business mix and operating model, Morgan Stanley selected a range of multiples and applied this range of multiples to the relevant financial statistics for Flagstar. For purposes of this analysis, Morgan Stanley utilized estimated EPS for 2022 and 2023 as set forth in the Flagstar Financial Projections and for 2022 as set forth in the Flagstar Street Forecasts. Due to lack of analyst estimates for 2023, Morgan Stanley assumed a five percent growth on the estimated EPS for 2022 as set forth in the Flagstar Street Forecasts to determine estimated EPS for 2023.

Morgan Stanley estimated the implied trading value per share of Flagstar common stock as of April 23, 2021, as follows:

 

     Flagstar
Metric
    Multiple
Statistic
Range
  Implied Value Per
Share of Flagstar
Common Stock
 

Price / 2022E EPS (Flagstar Street Forecasts)

   $ 5.19     7.0x – 9.0x   $ 36.30 – $46.67  

Price / 2022E EPS (Flagstar Financial Projections)

   $ 6.14     7.0x – 9.0x   $ 42.96 – $55.24  

Price / 2023E EPS (Flagstar Street Forecasts)

   $ 5.44 (1)    6.4x – 8.2x(2)   $ 34.81 – $44.75  

Price / 2023E EPS (Flagstar Financial Projections)

   $ 6.27     6.4x – 8.2x(2)   $ 40.08 – $51.53  

 

(1)

2023E street estimates based on 5% growth on 2022E street estimates due to lack of 2023E analyst estimates.

(2)

Based on multiple of price to estimated EPS for 2022 discounted by a cost of equity of 9.5%.

Morgan Stanley also did a regression-based analysis based on Price / Tangible Book Value versus 2022 return on tangible common equity for each of the selected companies. The range of estimated regression-based analysis implied values represents a 40% to 20% discount to the value implied by the regression line equation. Utilizing a 2022 return on tangible common equity estimate for Flagstar of 11.1%, as set forth in the Flagstar Street Forecasts, the low-end range of $40.28 represents the implied value if Flagstar were valued at 60% of the value implied by the regression line and the high-end range of $53.70 represents the implied value if Flagstar were valued at 80% of the value implied by the regression line. Utilizing a 2022 return on tangible common equity estimate for Flagstar of 13.0%, as set forth in the Flagstar Financial Projections, the low-end range of $43.88 represents the implied value if Flagstar were valued at 60% of the value implied by the regression line and the high-end range of $58.51 represents the implied value if Flagstar were valued at 80% of the value implied by the regression line.

No company in the public trading comparables analysis is identical to Flagstar. In evaluating the group of selected companies, Morgan Stanley made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Flagstar, such as the impact of competition on the business of Flagstar or the industry generally, industry growth and the absence of any material adverse change in the financial condition and prospects of Flagstar or the industry or in the financial markets in general. Mathematical analysis, such as determining the average or median, is not in itself a meaningful method of using peer group data.

Flagstar Dividend Discount Analysis

Using the Flagstar Street Forecasts for 2021 and 2022 and the Flagstar Financial Projections for 2021, 2022 and 2023, and assuming, at the direction of Flagstar management, 5.0% annual growth after 2022 for the Flagstar Street Forecasts and after 2023 for the Flagstar Financial Projections and that Flagstar would make distributions of capital in excess of the amount necessary to achieve a 10.0% common equity Tier 1 ratio level, Morgan Stanley performed a dividend discount analysis for Flagstar on a standalone basis. Morgan Stanley calculated a range of implied values per share of Flagstar common stock based on the sum of the discounted present values of (1) projected dividends on shares of Flagstar common stock as of December 31, 2020 through December 31, 2026 and (2) a projected terminal value of Flagstar common stock as of December 31, 2026.

 

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Morgan Stanley based its analysis on a range of terminal forward multiples of 7.0x to 9.0x to the terminal year 2026 estimated forward earnings, 8.5% to 10.5% discount rates, using the capital asset pricing model, and a 1.0% opportunity cost of cash. Utilizing the range of discount rates and terminal value multiples, Morgan Stanley derived an implied valuation range of present value indications per share of Flagstar common stock ranging from $43.23 to $55.21 using the Flagstar Street Forecasts and $49.47 to $61.45 using the Flagstar Financial Projections.

Flagstar Analyst Price Targets Analysis

For reference only, and not as a component of its fairness analysis, Morgan Stanley reviewed future public market trading price targets for Flagstar common stock prepared and published by research analysts prior to April 23, 2021, as reported by Capital IQ. These forward targets reflected each analyst’s estimate of the future public market trading price of Flagstar common stock. The range of such analyst price targets per share for the Flagstar common stock discounted for one year back to April 23, 2021 at a rate of 9.5%, such discount rate selected by Morgan Stanley, upon the application of the capital asset pricing model together with its professional judgment, to reflect Flagstar’s cost of equity as of April 23, 2021, was $45.67 to $54.80 per share.

The public market trading price targets published by research analysts do not necessarily reflect current market trading prices for Flagstar common stock, and these estimates are subject to uncertainties, including the future financial performance of Flagstar and future financial market conditions.

NYCB Standalone Analyses

NYCB Public Trading Comparables Analysis

Morgan Stanley performed a public trading comparables analysis, which is designed to provide an implied trading value of a company by comparing it to selected companies with similar characteristics to the company. Morgan Stanley compared certain financial information of NYCB with publicly available information for the selected companies. The selected companies were chosen based on Morgan Stanley’s knowledge of the industry and because these companies have businesses that may be considered similar to NYCB’s.

The selected companies consisted of all publicly traded banks in the United States with total assets between $35 billion and $100 billion, excluding any companies that were merger targets in pending transactions. The selected companies consisted of:

 

   

Comerica Incorporated

 

   

First Horizon Corporation

 

   

Zions Bancorporation, National Association

 

   

Signature Bank Corp

 

   

Synovus Financial Corp.

 

   

East West Bancorp, Inc.

 

   

First Citizens BancShares, Inc.

 

   

BOK Financial Corporation

 

   

Wintrust Financial Corporation

 

   

Cullen/Frost Bankers, Inc.

 

   

Valley National Bancorp

 

   

South State Corporation

 

   

Texas Capital Bancshares, Inc.

 

   

F.N.B. Corporation

 

   

Western Alliance Bancorporation

 

   

BankUnited, Inc.

 

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In all instances, multiples were based on closing stock prices on April 23, 2021. For each of the following analyses performed by Morgan Stanley, financial and market data for the selected companies were based on the most recent publicly available information and Wall Street consensus estimates.

With respect to the selected companies, the information Morgan Stanley presented included:

 

   

multiple of price to estimated EPS for 2022, or Price / 2022E EPS; and

 

   

multiple of price to tangible book value per share, or Price / Tangible Book Value

 

     Selected
Companies’
Median
     NYCB  

Price / 2022E EPS

     13.4x        9.6x  

Price / Tangible Book Value

     1.6x        1.4x  

Based on the analysis of the relevant metrics for each of the selected banks, Morgan Stanley selected a range of multiples and applied this range of multiples to the relevant financial statistics for NYCB. For purposes of this analysis, Morgan Stanley utilized estimated EPS for 2022 as set forth in the NYCB Street Forecasts. Due to lack of analyst estimates for 2023, Morgan Stanley assumed a five percent growth on the estimated EPS for 2022 as set forth in the NYCB Street Forecasts to determine estimated EPS for 2023.

Morgan Stanley estimated the implied trading value per share of NYCB common stock as of April 23, 2021, as follows:

 

     NYCB Metric     Multiple Statistic
Range
  Implied Value Per
Share of NYCB
Common Stock
 

Price / 2022E EPS

   $ 1.25     9.0x – 11.0x   $ 11.25 – $13.75    

Price / 2023E EPS

   $ 1.31 (1)    8.3x – 10.1x(2)   $ 10.89 – $13.31    

 

(1)

2023E street estimates based on 5% growth on 2022E street estimates due to lack of 2023E analyst estimates.

(2)

Based on multiple of price to estimated EPS for 2022 discounted by a cost of equity of 8.5%.

Morgan Stanley also did a regression-based analysis based on Price / Tangible Book Value versus 2022 return on tangible common equity for each of the selected companies. The range of estimated regression-based analysis implied values represents a 30% to 0% discount to the value implied by the regression line equation. Utilizing a 2022 return on tangible common equity estimate for NYCB of 13.5%, as set forth in the NYCB Street Forecasts, the low-end range of $11.74 represents the implied value if NYCB were valued at 70% of the value implied by the regression line and the high-end range of $16.77 represents the implied value if NYCB were valued at 100% of the value implied by the regression line.

No company in the public trading comparables analysis is identical to NYCB. In evaluating the group of selected companies, Morgan Stanley made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of NYCB, such as the impact of competition on the business of NYCB or the industry generally, industry growth and the absence of any material adverse change in the financial condition and prospects of NYCB or the industry or in the financial markets in general. Mathematical analysis, such as determining the average or median, is not in itself a meaningful method of using peer group data.

NYCB Dividend Discount Analysis

Using the NYCB Street Forecasts for 2021 through 2022 and assuming, at the direction of management of Flagstar, 5% annual growth for 2023 and thereafter and that NYCB would make distributions of capital in excess of the amount necessary to achieve a 10.0% common equity Tier 1 ratio level, Morgan Stanley performed a dividend discount analysis for NYCB on a standalone basis. Morgan Stanley calculated a range of implied values per share of NYCB common stock based on the sum of the discounted present values of (1) projected dividends on shares of NYCB common stock as of December 31, 2020 through December 31, 2026 and (2) a projected terminal value of NYCB common stock as of December 31, 2026.

Morgan Stanley based its analysis on a range of terminal forward multiples of 9.0x to 11.0x to the terminal year 2026 estimated forward earnings, 7.5% to 9.5% discount rates, using the capital asset pricing model, and a 1.0% opportunity cost of cash. Utilizing the range of discount rates and terminal value multiples, Morgan Stanley derived an implied valuation range of present value indications per share of NYCB common stock ranging from $12.73 to $15.99.

 

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NYCB Analyst Price Targets Analysis

For reference only, and not as a component of its fairness analysis, Morgan Stanley reviewed future public market trading price targets for NYCB common stock prepared and published by research analysts prior to April 23, 2021, as reported by Capital IQ. These forward targets reflected each analyst’s estimate of the future public market trading price of NYCB common stock. The range of such analyst price targets per share for the NYCB common stock discounted for one year back to April 23, 2021 at a rate of 8.5%, such discount rate selected by Morgan Stanley, upon the application of the capital asset pricing model together with its professional judgment, to reflect NYCB’s cost of equity as of April 23, 2021, was $10.60 to $15.67 per share.

The public market trading price targets published by research analysts do not necessarily reflect current market trading prices for NYCB common stock, and these estimates are subject to uncertainties, including the future financial performance of NYCB and future financial market conditions.

Exchange Ratios Analysis

Using the implied value per share reference ranges for Flagstar and NYCB indicated in the public trading comparables analyses, the regression analyses and the dividend discount analyses of Flagstar and NYCB described above, Morgan Stanley calculated ranges of implied exchange ratios of Flagstar common stock into NYCB common stock. The implied exchange ratios represent the range of high-to-low and low-to-high exchange ratios implied by the respective valuation analyses. This implied exchange ratio analysis indicated the following implied exchange ratio reference ranges, as compared to the exchange ratio of 4.0151x provided for in the merger agreement:

 

     Implied Exchange
Ratio
 

Public Trading Comparables

  

Price / 2022E EPS (NYCB Street Forecasts / Flagstar Street Forecasts)

     2.640x – 4.148x  

Price / 2022E EPS (NYCB Street Forecasts / Flagstar Financial Projections)

     3.124x – 4.910x  

Price / 2023E EPS (NYCB Street Forecasts / Flagstar Street Forecasts)

     2.616x – 4.110x  

Price / 2023E EPS (NYCB Street Forecasts / Flagstar Financial Projections)

     3.012x – 4.733x  

Regression Analysis

  

Regression Based (NYCB Street Forecasts / Flagstar Street Forecasts)

     2.402x – 4.574x  

Regression Based (NYCB Street Forecasts / Flagstar Financial Projections)

     2.617x – 4.984x  

Dividend Discount Analysis

  

Dividend Discount Analysis (NYCB Street Forecasts / Flagstar Street Forecasts)

     2.703x – 4.338x  

Dividend Discount Analysis (NYCB Street Forecasts / Flagstar Financial Projections)

     3.094x – 4.828x  

Morgan Stanley also reviewed the historical trading prices for Flagstar common stock and NYCB common stock from April 23, 2018 to April 23, 2021 and calculated implied historical exchange ratios by dividing the average daily closing price per share of Flagstar common stock by the average daily closing price per share of NYCB common stock. This implied historical exchange ratio analysis indicated the following historical exchange ratios, as compared to the exchange ratio of 4.0151x provided for in the merger agreement:

 

     Implied Exchange
Ratio
 

April 23, 2021

     3.7840x  

5-Day VWAP

     3.6501x  

Average since March 25, 2021

     3.5447x  

One-Month Average

     3.5971x  

One-Year Average

     3.4463x  

Three-Year Average

     3.1275x  

The historical exchange ratios were presented for reference purposes only, and were not relied upon for valuation purposes.

 

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Contribution Analysis

Morgan Stanley compared NYCB’s and Flagstar’s respective percentage contributions for certain financial metrics described below to the combined company. Morgan Stanley utilized NYCB’s and Flagstar’s respective balance sheet as of December 31, 2020 and estimates of net income for calendar years 2022 and 2023 as set forth in the Flagstar Street Forecasts, Flagstar Financial Projections and NYCB Street Forecasts. The following table summarizes Morgan Stanley’s analysis:

 

     NYCB
Contribution
    Flagstar
Contribution
 

Balance Sheet

    

Loans HFI

     73     27

Deposits

     62     38

Common Equity

     74     26

Tangible Common Equity

     66     34

Net Income (NYCB Street Forecasts / Flagstar Street Forecasts)

    

2022E Net Income

     68     32

2023E Net Income

     68     32

Net Income (NYCB Street Forecasts / Flagstar Financial Projections)

    

2022E Net Income

     66     34

2023E Net Income

     68     32

Pro Forma Accretion/Dilution Analysis

Morgan Stanley reviewed and analyzed the estimated pro forma impact of the merger on (i) projected accretion/(dilution) to holders of NYCB common stock for the year 2022, (ii) projected accretion/(dilution) to holders of Flagstar common stock for the year 2022, (iii) tangible book value per share of NYCB as of the closing date, (iv) common equity Tier 1 ratio as of the closing date and (v) annual dividend per share for holders of Flagstar common stock as of the closing date, in each case based on the Flagstar Street Forecasts, the Flagstar Financial Projections, the NYCB Street Forecasts and the Synergies. For purposes of the tangible book value per share and common equity Tier 1 ratio analyses, Morgan Stanley utilized an estimated closing date of December 31, 2021. Based on these analyses, Morgan Stanley calculated (a) an estimated pro forma accretive impact to EPS for holders of NYCB common stock for 2022 of 16% based on the Flagstar Street Forecasts and 18% based on the Flagstar Financial Projections, in each case