# Flagstar Bank, National Association: Form 10-Q for the period ended Jun 30, 2025

- Company: [Flagstar Bank, National Association](/companies/flg.md) (CIK 910073)
- Form: 10-Q
- Filed: 2025-08-07
- Accepted by EDGAR: Aug 7, 2025, 16:10 ET
- Period: 2025-06-30
- Accession: 0000910073-25-000110
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/910073/000091007325000110/fbc-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/910073/000091007325000110/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | −$11.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | −$32.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$70.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$170.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.19 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.45 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.19 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.45 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 415,125,228 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 414,975,524 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$235.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 6 months, 2025-01-01 to 2025-06-30 | $8.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2025-06-30 | $8.09bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2025-06-30 | $92.24bn | us-gaap:Assets |
| Total liabilities | at 2025-06-30 | $84.14bn | us-gaap:Liabilities |
| Long-term debt | at 2025-06-30 | $13.18bn | us-gaap:LongTermDebt |
| Shareholders' equity | at 2025-06-30 | $8.10bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 76,341 characters.

### GENERAL

### Background

Flagstar Financial, Inc. is the parent company of Flagstar Bank, N.A., one of the largest regional banks in the country. We are headquartered in Hicksville, New York. At June 30, 2025, the Company had $92.2 billion of assets, $64.4 billion of loans, $69.7 billion of deposits, and total stockholders’ equity of $8.1 billion.

The Bank operates approximately 360 locations across nine states, with strong footholds in the greater New York/New Jersey metropolitan region and in the upper Midwest, along with a significant presence in fast-growing markets in Florida and the West Coast.

We operate in a single reportable segment and have identified one reporting unit which is the same as our operating segment. We continue to assess our reportable segments and reporting units, which may result in a change to either or both in future reporting periods. Please refer to Note 18 - Segment Reporting.

### Overview

As part of our commitment to delivering long-term shareholder value and sustained value creation, we are executing a strategic transformation plan designed to evolve into a fully diversified bank with a strong balance sheet, a robust capital position and consistent earnings power.

Our plan is guided by six strategic pillars: driving transformation and financial resilience, growing our core operations, executing a disciplined commercial banking and lending strategy, enhancing operational efficiency, developing talent and leadership and aligning regulatory and risk management.

To support these pillars, we have established strategic priorities focused on transforming the Company into a top-tier relationship-driven regional bank, creating a customer-centric culture that prioritizes valuable relationships, and building an effective risk management mindset that supports safe and sound operations.

Since initiating this plan in 2024, we have made measurable progress, including key leadership additions, reduction of non-core assets, and improved funding mix. We believe that successful execution of this plan will enhance our financial resilience, drive sustainable earnings and position us to deliver greater long-term value to shareholders.

#### Merger of Flagstar Financial, Inc. and Flagstar Bank N.A.

On July 24, 2025, the Company, as part of an internal reorganization to streamline its corporate structure, entered into an Agreement and Plan of Merger (the “Plan of Merger”) with its wholly-owned bank subsidiary, Flagstar Bank, N.A., a nationally chartered banking association. Under the terms of the Plan of Merger, the Company will be merged with and into the Bank (the “Merger”), with the Bank continuing as the surviving entity (the “Surviving Entity”). The Merger is expected to be completed, subject to shareholder and OCC approval, before the end of 2025.

At the effective time of the Merger, the outstanding shares of the Company’s common and Series A preferred stock will be cancelled and cease to exist, and the outstanding shares of the Company’s common and Series A preferred stock will automatically be converted into an equivalent number of shares of the Surviving Entity’s common and Series A preferred stock. The Company’s Series B and Series D preferred stock shall also be converted into common stock of the Bank, except that such conversion shall instead be into non-voting equity securities that are substantially identical to the Series B and Series D preferred stock to the extent that ownership of the additional common stock would otherwise be prohibited by law or require approval by a government entity. As a result, subject to the foregoing limitations, the shares of capital stock of the Surviving Entity will be owned directly by the Company’s shareholders in the same proportion as their ownership of the Company’s capital stock immediately prior to the Merger. Further, each warrant to purchase either Series D preferred stock or common stock of the Company will be converted automatically into a warrant to purchase common stock of the Surviving Entity.

Immediately following the Merger, the Surviving Entity will have substantially the same outstanding capital stock with substantially the same rights and privileges as the outstanding capital stock of the Company immediately prior to the Merger. Immediately after the Merger, the Surviving Entity will have substantially the same consolidated assets, liabilities and shareholders’ equity as the Company. The Surviving Entity will assume the Company’s debt obligations, equity incentive plans, equity compensation plans, and other compensation plans. As an initial step of closing the Merger, the Company will be an interim federal savings association, which will immediately merge with the Bank, with the Bank then continuing as the Surviving Entity.

Following the Merger, we expect that the Surviving Entity will be a publicly traded company on the New York Stock Exchange (NYSE) under the same ticker symbol currently used by the Company, “FLG.” The Surviving Entity’s common stock will be registered with the Surviving Entity’s primary banking regulator, the Office of the Comptroller of the Currency (“OCC”), under the Securities Exchange Act of 1934, as amended.

### RESULTS OF OPERATIONS

### Net Loss

For the three months ended June 30, 2025, we reported a net loss of $70 million compared to a net loss of $100 million for the three months ended March 31, 2025. The net loss attributable to common stockholders, which includes the impact from preferred dividends, for the three months ended June 30, 2025 was $78 million, or $0.19 per diluted share compared to a net loss attributable to common stockholders of $108 million, or $0.26 per diluted share for the three months ended March 31, 2025.

For the six months ended June 30, 2025, we reported a net loss of $170 million compared to a net loss of $650 million for the six months ended June 30, 2024. The net loss attributable to common stockholders, which includes the impact from preferred dividends, for the six months ended June 30, 2025 was $186 million, or $0.45 per diluted share compared to a net loss attributable to common stockholders of $668 million, or $2.48 per diluted share for the six months ended June 30, 2024. The net loss for the six months ended June 30, 2024 included the reduction in the Signature Transaction bargain purchase gain of $121 million.

### Net Interest Income

NII is our primary source of income. The amount of our NII is a function of the amount of interest-earning assets we hold, the manner in which we fund these assets, including interest-bearing liabilities, and the spread between the interest rates we earn on assets and the interest rates we pay on liabilities. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by various external factors, including the local economy, competition for loans and deposits, the monetary policy of the FOMC, and prevailing interest rates.

Our interest-bearing liabilities are comprised of customer deposits and funds we borrow. The average term of our fixed rate deposits is less than twelve months, therefore the cost of our deposits and most of our borrowed funds is largely based on short-term interest rates, the level of which is partially impacted by the actions of the FOMC. The yields on our held for-investment loans and investment securities are generally more sensitive to intermediate-term interest rates. However, a sizable portion of our held for investment loans have fixed rates that generally reset to the then current intermediate-term interest rates when they reach repricing dates.

The following table sets forth information regarding our NII and average balance sheet for the periods indicated. The average balance is derived from daily calculations of average balances.

*(in millions)*

| ASSETS: Interest-earning assets: | Three Months Ended, June 30, 2025 Average Balance | Interest | Average Yield/Cost | March 31, 2025 Average Balance | Interest | Average Yield/Cost |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Total loans and leases (1) | $65,824 | $840 | 5.12% | $68,212 | $860 | 5.06% |
| Securities (2) | 15,169 | 170 | 4.48% | 13,067 | 148 | 4.59% |
| Interest-earning cash and cash equivalents | 12,054 | 133 | 4.42% | 14,344 | 156 | 4.42% |
| Total interest-earning assets | $93,047 | $1,143 | 4.93% | $95,623 | $1,164 | 4.90% |
| Non-interest-earning assets | 3,663 |  |  | 3,484 |  |  |
| Total assets | $96,710 |  |  | $99,107 |  |  |
| **LIABILITIES AND STOCKHOLDERS' EQUITY:** |  |  |  |  |  |  |
| Interest-bearing deposits: |  |  |  |  |  |  |
| Interest-bearing checking and money market accounts | $20,497 | $162 | 3.16% | $21,023 | $167 | 3.23% |
| Savings accounts | 14,353 | 110 | 3.07% | 14,349 | 111 | 3.14% |
| Certificates of deposit | 25,310 | 287 | 4.55% | 26,355 | 308 | 4.74% |
| Total interest-bearing deposits | $60,160 | $559 | 3.73% | $61,727 | $586 | 3.85% |
| Total borrowed funds | $14,105 | $165 | 4.70% | $14,377 | $168 | 4.71% |
| Total interest-bearing liabilities | $74,265 | $724 | 3.91% | $76,104 | $754 | 4.02% |
| Non-interest-bearing deposits | 12,731 |  |  | 13,068 |  |  |
| Other liabilities | 1,724 |  |  | 1,732 |  |  |
| Total liabilities | $88,720 |  |  | $90,904 |  |  |
| Stockholders’ and mezzanine equity | 7,990 |  |  | 8,203 |  |  |
| Total liabilities and stockholders’ equity | $96,710 |  |  | $99,107 |  |  |
| Net interest income/interest rate spread |  | $419 | 1.02% |  | $410 | 0.88% |
| Net interest margin |  |  | 1.81% |  |  | 1.74% |
| Ratio of interest-earning assets to interest-bearing liabilities |  |  | 1.25 x |  |  | 1.26 x |

(1) Comprised of Loans and leases held for investment, net and Loans held for sale.

(2) Comprised of Debt securities available-for-sale at amortized cost, Equity investments with readily determinable fair values, at fair value and FHLB stock and FRB-NY stock, at cost.

*(dollars in millions)*

| ASSETS: Interest-earning assets: | Six Months Ended, June 30, 2025 Average Balance | Interest | Average Yield/Cost | June 30, 2024 Average Balance | Interest | Average Yield/Cost |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Total loans and leases (1) | $67,011 | $1,700 | 5.12% | $83,679 | $2,360 | 5.65% |
| Securities (2) | 14,124 | 318 | 4.50% | 11,835 | 262 | 4.46% |
| Interest-earning cash and cash equivalents | 13,193 | 289 | 4.42% | 16,114 | 439 | 5.48% |
| Total interest-earning assets | $94,328 | $2,307 | 4.93% | $111,628 | $3,061 | 5.50% |
| Non-interest-earning assets | 3,574 |  |  | 5,411 |  |  |
| Total assets | $97,902 |  |  | $117,039 |  |  |
| **LIABILITIES AND STOCKHOLDERS' EQUITY:** |  |  |  |  |  |  |
| Interest-bearing deposits: |  |  |  |  |  |  |
| Interest-bearing checking and money market accounts | $20,758 | $329 | 3.20% | $24,714 | $446 | 3.63% |
| Savings accounts | 14,351 | 221 | 3.10% | 8,787 | 111 | 2.54% |
| Certificates of deposit | 25,830 | 596 | 4.65% | 26,072 | 628 | 4.85% |
| Total interest-bearing deposits | $60,939 | $1,146 | 3.79% | $59,573 | $1,185 | 4.00% |
| Total borrowed funds | $14,240 | $332 | 4.71% | $27,171 | $695 | 5.32% |
| Total interest-bearing liabilities | $75,179 | $1,478 | 3.96% | $86,744 | $1,880 | 4.36% |
| Non-interest-bearing deposits | 12,899 |  |  | 18,994 |  |  |
| Other liabilities | 1,728 |  |  | 2,540 |  |  |
| Total liabilities | $89,806 |  |  | $108,278 |  |  |
| Stockholders’ and mezzanine equity | 8,096 |  |  | 8,761 |  |  |
| Total liabilities and stockholders’ equity | $97,902 |  |  | $117,039 |  |  |
| Net interest income/interest rate spread |  | $829 | 0.97% |  | $1,181 | 1.14% |
| Net interest margin |  |  | 1.77% |  |  | 2.13% |
| Ratio of interest-earning assets to interest-bearing liabilities |  |  | 1.25 x |  |  | 1.29 x |

(1) Comprised of Loans and leases held for investment, net and Loans held for sale.

(2) Comprised of Debt securities available-for-sale at amortized cost, Equity investments with readily determinable fair values, at fair value and FHLB stock and FRB-NY stock, at cost.

The following table summarizes the change in NII attributable to changes in rate and volume:

*(in millions)*

| INTEREST-EARNING ASSETS: | Three Months Ended, June 30, 2025 compared to March 31, 2025 Increase/(Decrease) Due to: Volume | Rate | Net | Six Months Ended, June 30, 2025 compared to June 30, 2024 Increase/(Decrease) Due to: Volume | Rate | Net |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Total loans and leases | $(31) | $11 | $(20) | $(426) | $(234) | $(660) |
| Securities | 24 | (2) | 22 | 52 | 4 | 56 |
| Interest earning cash & cash equivalent | (25) | 2 | (23) | (65) | (85) | (150) |
| Total interest-earnings assets | $(32) | $11 | $(21) | $(439) | $(315) | $(754) |
| **INTEREST-BEARING LIABILITIES:** |  |  |  |  |  |  |
| Interest-bearing checking and money market accounts | $(4) | $(1) | $(5) | $(64) | $(53) | $(117) |
| Savings accounts | — | (1) | (1) | 86 | 24 | 110 |
| Certificates of deposit | (12) | (9) | (21) | (5) | (27) | (32) |
| Total borrowed funds | $(3) | $— | $(3) | $(305) | $(58) | $(363) |
| Total interest-bearing liabilities | $(19) | $(11) | $(30) | $(288) | $(114) | $(402) |
| Change in net interest income | $(13) | $22 | $9 | $(151) | $(201) | $(352) |

10

#### Comparison to Prior Quarter

During the three months ended June 30, 2025, NIM increased 7 basis points and NII increased $9 million compared to the three months ended March 31, 2025. This was primarily as a result of the payoff of brokered certificates of deposit reflecting our actions to reduce higher cost funding, the pay down of wholesale borrowings and improved multi-family loan yield resets, partially offset by lower average total loans and leases due to the strategic reduction in our multi-family, CRE and non-core C&I loans that began in early 2024.

#### Comparison to Prior Year to Date

During the six months ended June 30, 2025, NIM decreased by 36 basis points and NII decreased $352 million compared to the six months ended June 30, 2024. This was primarily as a result of lower average total loans and leases due to the strategic reduction in multi-family, CRE, and C&I loans, the sale of our mortgage third party origination business and mortgage servicing business ("Mortgage Operations") during the three months ended December 31, 2024, the sale of our warehouse lending portfolio during the three months ended September 30, 2024, and lower interest rates. The decrease was partially offset by lower average borrowed funds driven by the pay down of wholesale borrowings during 2024 and the six months ended June 30, 2025.

### Provision for Credit Losses

The following table summarizes our Provision for credit losses for the respective periods:

*(in millions)*

|  | Three Months Ended, June 30, 2025 | March 31, 2025 | Change | Six Months Ended, June 30, 2025 | June 30, 2024 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Provision for credit losses | $64 | $79 | (19)% | $143 | $705 | (80)% |

#### Comparison to Prior Quarter

For the three months ended June 30, 2025, the provision for credit losses decreased $15 million compared to the three months ended March 31, 2025. This decrease is primarily due to the strategic reduction in our multi-family, CRE and non-core C&I loan portfolio, a reduction in our criticized assets, our continued focus on credit reviews and the receipt of recent appraisals. Additionally, our ACL balance decreased since March 31, 2025 as a result of the on-going strategic reduction in our multi-family, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by negatively trending macro-economic conditions.

#### Comparison to Prior Year to Date

For the six months ended June 30, 2025, the provision for credit losses decreased $562 million compared to the six months ended June 30, 2024. This decrease is primarily due to improving credit trends as property values and borrower financials normalize which has resulted in a stabilization in our ACL and lower net charge-offs in our multi-family and CRE portfolios. Additionally, our ACL balance decreased since June 30, 2024 as a result of the on-going strategic reduction in our multi-family, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by negatively trending macro-economic conditions.

### Non-Interest Income

The following table summarizes our non-interest income for the respective periods:

*(in millions)*

|  | Three Months Ended, June 30, 2025 | March 31, 2025 | Change | Six Months Ended, June 30, 2025 | June 30, 2024 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Fee income | $22 | $22 | —% | $44 | $75 | (41)% |
| Bank-owned life insurance | 10 | 10 | —% | 20 | 22 | (9)% |
| Net return on mortgage servicing rights | — | — | —% | — | 40 | NM |
| Net gain on loan sales and securitizations | 6 | 13 | (54)% | 19 | 38 | (50)% |
| Net loan administration income | 1 | 4 | (75)% | 5 | 11 | (55)% |
| Bargain purchase gain | — | — | — | — | (121) | NM |
| Other | 38 | 31 | 0 | 69 | 58 | 0 |
| Total non-interest income | $77 | $80 | (4)% | $157 | $123 | 28% |

#### Comparison to Prior Quarter

For the three months ended June 30, 2025, non-interest income decreased by $3 million compared to the three months ended March 31, 2025. The decline in non-interest income was a result of certain insignificant items.

#### Comparison to Prior Year to Date

For the six months ended June 30, 2025, non-interest income increased $34 million compared to the six months ended June 30, 2024. The increase in non-interest income was primarily due to the non-recurrence of the $121 million reduction in the Signature Transaction bargain purchase gain, partially offset by lower MSRs fees, fee income, net gain on loan sales and securitizations and net loan administration income as a result of the sale of our Mortgage Operations during the three months ended December 31, 2024.

### Non-Interest Expense

The following table summarizes our non-interest expense for the respective periods:

*(in millions)*

| Operating expenses: | Three Months Ended, June 30, 2025 | March 31, 2025 | Change | Six Months Ended, June 30, 2025 | June 30, 2024 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Compensation and benefits | $237 | $244 | (3)% | $481 | $645 | (25)% |
| FDIC insurance | 49 | 50 | (2)% | 99 | 141 | (30)% |
| Occupancy and equipment | 53 | 55 | (4)% | 108 | 104 | 4% |
| General and administrative | 133 | 147 | (10)% | 280 | 369 | (24)% |
| Total operating expense | $472 | $496 | (5)% | $968 | $1,259 | (23)% |
| Intangible asset amortization | 27 | 28 | (4)% | 55 | 68 | (19)% |
| Merger-related expenses | 14 | 8 | 75% | 22 | 77 | (71)% |
| Total non-interest expense | $513 | $532 | (4)% | $1,045 | $1,404 | (26)% |

#### Comparison to Prior Quarter

Total non-interest expenses for the three months ended June 30, 2025 decreased $19 million compared to the three months ended March 31, 2025, primarily due to a decrease in general and administrative expenses as we continue to focus on operating expense management.

#### Comparison to Prior Year to Date

Total non-interest expenses for the six months ended June 30, 2025 decreased $359 million compared to the six months ended June 30, 2024, primarily due to lower compensation and benefits costs stemming from the actions taken to optimize costs which continued in the six months ended June 30, 2025, a decrease in general and administrative expenses primarily due to the sale of our Mortgage Operations during the three months ended December 31, 2024 and as we continue to focus on operating expense management. Additionally, we had lower FDIC insurance costs as a result of a lower asset base and lower brokered deposits due to the sale of our Mortgage Operations, and lower merger-related expenses.

### Income Tax Benefit

The following table summarizes our income tax benefit and effective tax rate for the respective periods:

*(in millions)*

|  | Three Months Ended, June 30, 2025 | March 31, 2025 | Change | Six Months Ended, June 30, 2025 | June 30, 2024 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Income tax (benefit) | $(11) | $(21) | (48)% | $(32) | $(155) | (79)% |
| Effective tax rate | 12.9% | 17.8% |  | 15.9% | 19.3% |  |

We compute our tax benefit for interim periods by applying the estimated annual effective tax to our year-to-date (Loss) before income taxes and adjust for discrete items that occur in the quarter. For the three and six months ended June 30, 2025, we were unable to make a reliable estimate of our estimated annual effective tax rate as a result of our expected break-even results for 2025; therefore we used our actual effective tax rate to compute our income tax benefit for the three and six months ended June 30, 2025.

#### Comparison to Prior Quarter

The income tax benefit for the three months ended June 30, 2025 decreased $10 million compared to the three months ended March 31, 2025 primarily as a result of the reduction in our pre-tax loss.

#### Comparison to Prior Year to Date

The income tax benefit for the six months ended June 30, 2025 decreased $123 million compared to the six months ended June 30, 2024, primarily as a result of the reduction in our pre-tax loss, partially offset by the tax impact of the adjustment to the bargain purchase gain recorded net of tax during the three months ended March 31, 2024.

### FINANCIAL CONDITION

### Loans and Leases

The following table summarizes the composition of our loan portfolio:

*(in millions)*

|  | June 30, 2025 Amount | Percent of Loans Held for Investment | December 31, 2024 Amount | Percent of Loans Held for Investment |
| --- | ---: | ---: | ---: | ---: |
| Multi-family | $31,932 | 49.8% | $34,093 | 49.9% |
| Commercial real estate(1) | 10,636 | 16.6 | 11,836 | 17.4 |
| One-to-four family first mortgage | 5,445 | 8.5 | 5,201 | 7.6 |
| Commercial and industrial | 14,426 | 22.5 | 15,376 | 22.5 |
| Other loans | 1,682 | 2.6 | 1,766 | 2.6 |
| Total loans and leases held for investment | $64,121 | 100.0% | $68,272 | 100.0% |
| Allowance for credit losses on loans and leases | (1,106) |  | (1,201) |  |
| Total loans and leases held for investment, net | $63,015 |  | $67,071 |  |
| Loans held for sale | 319 |  | 899 |  |
| Total loans and leases, net | $63,334 |  | $67,970 |  |

(1) Includes ADC loans.

Total loans and leases held for investment decreased $4.2 billion at June 30, 2025 compared to December 31, 2024, primarily as a result of our continued strategy of diversifying our loan portfolio by reducing our multi-family, CRE and non-core C&I loan exposure, partially offset by $2.0 billion in originations within our C&I portfolio.

#### Loan Maturity and Repricing

The following table sets forth loans with adjustable rates ("Option Loans") by year of repricing and fixed rate loans ("Non-Option Loans") by year of contractual maturity:

*(in millions)*

| Repricing / Contractual Maturity Year | June 30, 2025 Multi-Family Option Loans by Repricing Date | Non-Option Loans by Contractual Maturity | Commercial Real Estate(2) Option Loans by Repricing Date | Non-Option Loans by Contractual Maturity | Total(1) |
| --- | ---: | ---: | ---: | ---: | ---: |
| 2025 | $2,061 | $850 | $1,843 | $334 | $5,088 |
| 2026 | 3,961 | 1,035 | 755 | 420 | 6,171 |
| 2027 | 7,446 | 1,128 | 929 | 558 | 10,061 |
| 2028 | 3,761 | 2,043 | 381 | 801 | 6,986 |
| 2029 | 2,307 | 1,661 | 243 | 541 | 4,752 |
| 2030 | 75 | 1,908 | 13 | 296 | 2,292 |
| 2031+ | 88 | 3,498 | 5 | 680 | 4,271 |
| Total amounts due or repricing, gross | $19,699 | $12,123 | $4,169 | $3,630 | $39,621 |

(1) Excludes Specialty Finance CRE loans and multi-family loans serviced-by-others totaling $465 million and $96 million respectively. Amounts presented reflect unpaid principal balance; total amortized cost adjustments were $97 million.

(2) Excludes ADC loans.

Option loans offer the borrower the ability to reprice to a fixed rate after the initial period. If not elected, the loan defaults to a variable rate. Option loans in the table are shown as being due in the period the interest rate is subject to change. Non-Option loans are beyond the option date and are reflected by maturity. Risks associated with loan repricing are discussed in the Credit Risk section.

#### Multi-Family Loans

Our multi-family loan portfolio decreased $2.2 billion at June 30, 2025 compared to December 31, 2024, primarily due to $1.9 billion of par payoffs since December 31, 2024, with greater than 50 percent of the payoffs from substandard loans. The reduction in our multi-family loan portfolio is consistent with our strategic decision to continue to diversify our loan portfolio by reducing our exposure to multi-family loans.

The majority of our multi-family loans are non-recourse and are secured by rental apartment buildings. At June 30, 2025, $17.7 billion or 55 percent of our total multi-family loan portfolio was secured by properties in New York State, $15.5 billion or 88 percent of which are subject to rent regulation laws to varying degrees, with $10.2 billion having 50 percent or more rent regulated units. The New York Housing Stability and Tenant Protection Act of 2019 significantly limits the ability to increase rents on regulated apartments upon vacancy. These limitations may reduce a borrower’s ability to generate additional revenues on those units to offset higher operating expenses due to inflation and the current interest rate environment. This could result in lower net operating income and could impact a borrower’s ability to satisfy repayment obligations during the term of the loan. In addition, the level of income generated by the property may be insufficient to qualify for refinancing at maturity.

To mitigate our exposure to rent-regulated properties, we are curtailing future originations of loans secured by rent-regulated properties. We are no longer utilizing mortgage brokers to refer loan origination opportunities to us. We are focusing originations and renewal retention on borrowers with whom we will have broader customer relationships beyond lending. Additionally, we are strategically diversifying our loan portfolio to shift from multi-family loans to other loan sectors.

Historically, our multi-family loans may have contained an initial interest-only period; however, they were underwritten on a fully amortizing basis, including calculation of the DSCR. Whether a borrower qualified for an interest-only period was based on the individual credit profile of the borrower, particularly the loan-to-value of the property. Our multi-family loan portfolio had $9.9 billion outstanding with interest-only payments at June 30, 2025. The weighted average interest-only period remaining was 19.3 months as of June 30, 2025, with approximately 36 percent of these loans entering their amortization period by the end of 2025 and 68 percent by the end of 2026.

We continue to monitor our loans held for investment portfolio and the related ACL, particularly, given the economic pressures facing the CRE and multi-family markets. Although occupancy levels, have historically tended to be stable due to below market rents, rent-regulated loans that are repricing are incurring debt service levels, by themselves, that when combined with inflationary pressure on operating costs and limits on the ability to increase rental rates, approach or exceed some properties’ net operating income and may require the borrower to support the loan from sources unrelated to the collateral until elevated interest rates subside.

The following table presents a geographical analysis of the multi-family loans in our held-for-investment loan portfolio:

*(in millions)*

| New York City: | June 30, 2025 Amount | Percent of Total | December 31, 2024 Amount | Percent of Total |
| --- | ---: | ---: | ---: | ---: |
| Manhattan | $5,847 | 18% | $6,246 | 18% |
| Brooklyn | 4,974 | 16 | 5,375 | 16 |
| Bronx | 2,914 | 9 | 3,272 | 10 |
| Queens | 2,408 | 8 | 2,526 | 7 |
| Staten Island | 74 | — | 98 | — |
| Total New York City | $16,217 | 51% | $17,517 | 51% |
| New Jersey | $4,137 | 13% | $4,509 | 13% |
| Long Island | 440 | 1 | 484 | 1 |
| Total Metro New York | $20,794 | 65% | $22,510 | 66% |
| Other New York State | $1,038 | 3% | $1,188 | 3% |
| Pennsylvania | 3,116 | 10 | 3,375 | 10 |
| Florida | 1,545 | 5 | 1,555 | 5 |
| Ohio | 989 | 3 | 1,007 | 3 |
| All other states | 4,450 | 14 | 4,458 | 13 |
| Total | $31,932 | 100% | $34,093 | 100% |

#### Commercial Real Estate

At June 30, 2025, CRE loans decreased $1.2 billion compared to December 31, 2024, primarily due to par payoffs. The reduction in our CRE portfolio is consistent with our strategic decision to continue to diversify our loan portfolio by reducing our exposure to CRE loans.

Certain of our CRE loans may contain an interest-only period which typically does not exceed three years; however, these loans are underwritten on a fully amortizing basis, including calculation of the DSCR. Whether a borrower qualifies for an interest-only period is based on the individual credit profile of the borrower, particularly the loan-to-value of the property.

Substantially all CRE loans we originate are non-recourse and are secured by income-producing properties such as office buildings, retail centers, mixed-use buildings, and multi-tenanted light industrial properties.

The following table presents an analysis of the property types that collateralize the CRE loans in our held-for-investment portfolio:

*(in millions)*

|  | June 30, 2025 Amount | Percent of Total | December 31, 2024 Amount | Percent of Total |
| --- | ---: | ---: | ---: | ---: |
| Office non-owner occupied | $2,097 | 20% | $2,271 | 19% |
| Retail (includes owner and non-owner occupied) | 1,812 | 17 | 1,934 | 16 |
| Industrial | 4,343 | 41 | 4,984 | 42 |
| Other | 2,384 | 22 | 2,647 | 23 |
| Total(1) | $10,636 | 100% | $11,836 | 100% |

(1) Includes ADC loans.

The following table presents a geographical analysis of the CRE loans in our held-for-investment loan portfolio:

*(in millions)*

|  | June 30, 2025 Amount | Percent of Total | December 31, 2024 Amount | Percent of Total |
| --- | ---: | ---: | ---: | ---: |
| New York | $4,264 | 40% | $4,634 | 39% |
| Michigan | 1,063 | 10 | 1,220 | 10 |
| California | 771 | 7 | 737 | 6 |
| New Jersey | 742 | 7 | 738 | 6 |
| Florida | 699 | 7 | 734 | 6 |
| Texas | 342 | 3 | 451 | 4 |
| All other states | 2,755 | 26 | 3,322 | 29 |
| Total(1) | $10,636 | 100% | $11,836 | 101% |

(1) Includes ADC loans.

#### Commercial and Industrial

Our C&I loan portfolio decreased $950 million at June 30, 2025 compared to December 31, 2024, primarily due to a $2.9 billion reduction resulting from our strategic decision to continue to diversify our loan portfolio by reducing our exposure to non-core C&I loans, partially offset by new originations of $2.0 billion.

A broad range of C&I loans, both collateralized and unsecured, are made available to businesses for working capital (including inventory and accounts receivable), business expansion, the purchase of machinery and equipment, and other general corporate needs. In determining the term and structure of C&I loans, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. C&I loans are often secured by business assets and personal guarantees of the borrower and include financial covenants to monitor the borrower’s financial stability. We continue to add experienced commercial, corporate and specialized industries banking professionals and credit underwriting and portfolio management personnel which will impact our noninterest expense as we continue to strategically diversify our loan portfolio to shift from multi-family loans to other portfolios, most notably C&I loans.

Specialty finance loans and leases included within our C&I loan portfolio were $3.6 billion, or 5.5 percent of total loans held for investment, reflecting a decrease of $308 million or 8 percent compared to December 31, 2024. The decrease in specialty finance loans is a result of our decision to run off certain non-core loans as part of our overall loan portfolio strategy.

Specialty finance loans and leases are generally made to large corporate obligors, many of which are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide. These loans fall into three categories: asset-based loans, dealer floor-plan lending and equipment loan and lease financing. Each of these credits is secured with a perfected first security interest in, or outright ownership of, the underlying collateral, and structured as senior debt or as a non-cancelable lease. As of June 30, 2025, 85 percent of specialty finance loan commitments are structured as floating rate obligations.

#### One-to-Four Family Loans

One-to-four family loans increased $244 million at June 30, 2025 compared to December 31, 2024, primarily driven by new originations.

One-to-four family loans include various types of conforming and non-conforming fixed and adjustable-rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties. The loan-to-value requirements on our residential first mortgage loans vary depending on occupancy, property type, loan amount, and FICO scores. Loans with loan-to-value ratios exceeding 80 percent are required to obtain mortgage insurance. As of June 30, 2025, excluding LGG, loans in this portfolio had an average current FICO score of 750 and an average loan-to-value ratio of 56 percent.

Substantially all LGG are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs. As of June 30, 2025 and December 31, 2024, LGG totaled $369 million and $360 million, respectively. Nonperforming repurchased loans in this portfolio earn interest at a rate based upon the 10-year U.S. Treasury note rate from the time the underlying loan becomes 60 days delinquent until the loan is conveyed to the U.S. Department of Housing and Urban Development (if foreclosure timelines are met), which is not paid by the FHA until claimed.

#### Other Loans

At June 30, 2025, other loans decreased $84 million compared to December 31, 2024, primarily driven by payoffs at par.

Other loans primarily consist of HELOANs, second mortgage loans, and HELOCs. As of June 30, 2025, loans in this portfolio had an average current FICO score of 756.

#### Loans Held for Sale

Loans held for sale at June 30, 2025 decreased $580 million compared to December 31, 2024, primarily due to the continued run-off of held for sale loans following the sale of our Mortgage Operations, partially offset by retail mortgage originations during the six months ended June 30, 2025.

Refer to Note 5 - Loans and Leases for our policy relating to classifying loans as held for sale.

#### Allowance for Credit Losses

The following table sets forth the allocation of the ACL on loans and leases at each period-end:

*(in millions)*

|  | June 30, 2025 Allowance for credit losses | Allowance as a percent of loans in each portfolio | Loans in each portfolio as a percent of total loans | December 31, 2024 Allowance for credit losses | Allowance as a percent of loans in each portfolio | Loans in each portfolio as a percent of total loans |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Multi-family loans | $538 | 1.68% | 49.8% | $639 | 1.87% | 49.9% |
| Commercial real estate loans(1) | 318 | 2.99 | 16.6 | 304 | 2.57 | 17.4 |
| One-to-four family first mortgage loans | 33 | 0.61 | 8.5 | 39 | 0.75 | 7.6 |
| Commercial and industrial | 160 | 1.11 | 22.5 | 151 | 0.98 | 22.5 |
| Other loans | 57 | 3.39 | 2.6 | 68 | 3.85 | 2.6 |
| Total loans | $1,106 | 1.72% | 100.0% | $1,201 | 1.76% | 100.0% |

(1) Includes ADC loans.

The ACL on loans and leases decreased $95 million from December 31, 2024 to June 30, 2025. This decrease is primarily due to improving credit trends as property values and borrower financials normalize, and the on-going strategic reduction in our multi-family, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by negatively trending macro-economic conditions.

Refer to Note 6 - Allowance for Credit Losses on Loans and Leases for our policy relating to the ACL.

#### Assets Quality Measures

The following table presents our asset quality measures at the respective dates:

|  | June 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Non-accrual loans to total loans held for investment | 4.96% | 3.83% |
| Non-performing assets to total assets | 3.57 | 2.62 |
| Allowance for credit losses on loans and leases to non-accrual loans | 34.78 | 45.93 |
| Allowance for credit losses on loans and leases to total loans held for investment | 1.72 | 1.76 |

#### Non-accrual Loans

The following table presents our non-accrual loans held for investment by loan type:

*(in millions)*

|  | June 30, 2025 | December 31, 2024 | Change |
| --- | ---: | ---: | ---: |
| Multi-family | $2,388 | $1,755 | $633 |
| Commercial real estate(1) | 563 | 564 | (1) |
| One-to-four family first mortgage | 81 | 70 | 11 |
| Commercial and industrial | 123 | 202 | (79) |
| Other Loans | 25 | 24 | 1 |
| Total non-accrual loans(2) | $3,180 | $2,615 | $565 |
| Repossessed assets | 11 | 14 | (3) |
| Total non-accrual loans and repossessed assets | $3,191 | $2,629 | $562 |

(1) Includes ADC loans.

(2) Excludes $4 million and $323 million of non-accrual held for sale loans at June 30, 2025 and December 31, 2024, respectively.

Refer to Note 5 - Loans and Leases for our policy relating to non-accrual loans.

The following table sets forth the changes in non-accrual loans at June 30, 2025:

*(in millions)*

|  |  |
| --- | ---: |
| Balance at December 31, 2024 | $2,615 |
| New non-accrual loans | 1,328 |
| Charge-offs | (143) |
| Transferred to held for sale | (25) |
| Loan payoffs, including dispositions and principal pay-downs | (472) |
| Restored to performing status | (123) |
| Balance at June 30, 2025 | $3,180 |

During the six months ended June 30, 2025 new non-accrual loans were $1.3 billion, primarily due to higher non-accrual multi-family loans as a result of one borrower relationship that was classified as non-accrual during the three months ended March 31, 2025, partially offset by loan payoffs and loans returned to accrual status. Approximately 43 percent of our non-accrual loans are current on their contractual payment terms.

#### Delinquencies

The following table presents our loans 30 to 89 days past due by loan type and the changes in the respective balances. As of June 30, 2025 approximately 85 percent of our multi-family 30-89 days past due loans were attributable to a single borrower relationship that continues to make payments in arrears subsequent to June 30, 2025.

*(in millions)*

| Loans 30 to 89 Days Past Due: | June 30, 2025 | December 31, 2024 | Change |
| --- | ---: | ---: | ---: |
| Multi-family | $392 | $749 | $(357) |
| Commercial real estate(1) | 115 | 70 | 45 |
| One-to-four family first mortgage | 30 | 25 | 5 |
| Commercial and industrial | 38 | 110 | (72) |
| Other loans | 29 | 11 | 18 |
| Total loans 30-89 days past due | $604 | $965 | $(361) |

(1) Includes ADC loans.

#### Charge-offs

The following table summarizes net charge-offs as an annualized percentage of average loans:

*(in millions)*

|  | Three Months Ended June 30, 2025 Net Charge-offs (Recoveries) | Average Balance | %(2) | 2024 Net Charge-offs (Recoveries) | Average Balance | %(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Multi-family | $96 | $32,847 | 1.17% | $76 | $36,670 | 0.83% |
| Commercial real estate(1) | 13 | 11,061 | 0.47 | 237 | 13,527 | 7.01 |
| One-to-four family residential | 1 | 4,995 | 0.08 | 1 | 5,786 | 0.07 |
| Commercial and industrial | 3 | 14,486 | 0.08 | 31 | 22,112 | 0.56 |
| Other | 4 | 1,711 | 0.94 | 4 | 1,738 | 0.92 |
| Total | $117 | $65,100 | 0.72% | $349 | $79,833 | 1.75% |

(1) Includes ADC loans.

(2) Three months ended presented on an annualized basis.

*(in millions)*

|  | Six Months Ended June 30, 2025 Net Charge-offs (Recoveries) | Average Balance | %(2) | 2024 Net Charge-offs (Recoveries) | Average Balance | %(2) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Multi-family | $176 | $33,378 | 1.05% | $86 | $36,872 | 0.47% |
| Commercial real estate(1) | 15 | 11,251 | 0.27 | 301 | 13,556 | 4.44 |
| One-to-four family residential | 2 | 4,989 | 0.08 | 1 | 5,876 | 0.03 |
| Commercial and industrial | 31 | 14,706 | 0.42 | 36 | 23,058 | 0.31 |
| Other | 8 | 1,728 | 0.93 | 7 | 2,028 | 0.69 |
| Total | $232 | $66,052 | 0.70% | $431 | $81,390 | 1.06% |

(1) Includes ADC loans.

(2) Six months ended presented on an annualized basis.

### Securities

#### Debt Securities Available-for-Sale

*(in millions)*

|  | June 30, 2025 | December 31, 2024 | Change |
| --- | ---: | ---: | ---: |
| Debt Securities Available-for-Sale | $14,823 | $10,402 | $4,421 |

Debt securities available-for-sale increased $4.4 billion compared to December 31, 2024. The increase was primarily a result of our decision to reinvest our cash into higher earning assets. At June 30, 2025, 27 percent of our portfolio is comprised of floating rate securities.

At June 30, 2025, debt securities available-for-sale had an estimated weighted average life of 5 years compared to 6 years at December 31, 2024. Mortgage-related securities included in debt securities available-for-sale were $12.1 billion and $8.6 billion at June 30, 2025 and December 31, 2024, respectively.

The following table summarizes the weighted average yields of debt securities available-for-sale for the maturities at June 30, 2025:

| Debt Securities Available-for-Sale: | Mortgage- Related Securities | U.S. Government and GSE Obligations | Corporate and Other Bonds | Asset-Backed Securities |
| --- | ---: | ---: | ---: | ---: |
| Due within one year | 4.56% | —% | —% | —% |
| Due from one to five years | 2.90 | 4.13 | 5.37 | — |
| Due from five to ten years | 2.44 | 1.61 | 5.40 | — |
| Due after ten years | 4.59 | — | 6.42 | 5.70 |
| Total debt securities available for sale | 4.53 | 2.62 | 5.56 | 5.70 |

20

### Deposits

We compete for deposits and customers through multiple channels, including our retail branch network, our private banking business and mobile and internet bank applications. Our ability to retain and attract deposits depends on numerous factors, including customer satisfaction, the rates of interest we pay, the types of products we offer and the attractiveness of their terms. The majority of our deposits are retail in nature, however, we also utilize brokered deposits depending on their availability and pricing relative to other funding sources.

The following table sets forth the weighted average interest rates for each type of deposit:

*(in millions)*

|  | June 30, 2025 Amount | Percent of Total | Weighted Average Interest Rate | December 31, 2024 Amount | Percent of Total | Weighted Average Interest Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest-bearing checking and money market accounts | $19,067 | 27% | 3.03% | $20,780 | 27% | 2.89% |
| Savings accounts | 14,460 | 21% | 3.06% | 14,282 | 19% | 3.22% |
| Certificates of deposit | 24,212 | 35% | 4.47% | 27,324 | 36% | 4.75% |
| Non-interest-bearing accounts | 12,006 | 17% | —% | 13,484 | 18% | —% |
| Total deposits | $69,745 | 100% | 3.64% | $75,870 | 100% | 3.12% |

Total deposits at June 30, 2025 decreased $6.1 billion compared to December 31, 2024, primarily due to the payoff of brokered CDs reflecting our strategy to reduce higher cost funding and custodial deposits as a result of the sale of our Mortgage Operations during the three months ended December 31, 2024.

The following table presents the composition of our brokered deposits for the periods presented:

*(in millions)*

|  | June 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Brokered interest-bearing checking and money market accounts | $75 | $714 |
| Brokered certificates of deposit | 6,053 | 9,510 |
| Total Brokered Deposits(1) | $6,128 | $10,224 |

(1) Excludes reciprocal deposits.

The following table indicates the amount of time deposits, by account, that are in excess of $250,000 per depositor by time remaining until maturity:

*(in millions)*

|  | June 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| 3 months or less | $3,441 | $3,530 |
| Over 3 months through 6 months | 2,768 | 2,637 |
| Over 6 months through 12 months | 2,539 | 4,329 |
| Over 12 months | 698 | 2,099 |
| Total time deposits in excess of $250,000 per depositor(1) | $9,446 | $12,595 |

(1) Includes brokered deposit accounts. Each brokered deposit account has balances in excess of $250,000, the funds are fully insured by the FDIC as each of the ultimate owners of the funds maintain balances below FDIC insurance limits.

The following table indicates the amount of custodial deposits by source:

*(in millions)*

|  | June 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Custodial deposits from subservicing relationships | $— | $947 |
| Non-servicing custodial deposits | 3,097 | 3,651 |
| Total Custodial Deposits | $3,097 | $4,598 |

21

#### Uninsured Deposits

At June 30, 2025, our deposit base included $12.9 billion of uninsured deposits that are uninsured or not collateralized by securities or letters of credit. Our uninsured deposits are the portion of deposit accounts that exceed the FDIC insurance limit.

As of June 30, 2025, total bank liquidity exceeds the balance of our uninsured deposits by $16.0 billion.

### Borrowed Funds

The following table summarizes the Company's borrowed funds:

*(in millions)*

| Wholesale borrowings: | June 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| FHLB advances | $12,150 | $13,400 |
| Total wholesale borrowings | $12,150 | $13,400 |
| Junior subordinated debentures | 584 | 582 |
| Subordinated notes | 446 | 444 |
| Total borrowed funds | $13,180 | $14,426 |

At June 30, 2025 total borrowed funds decreased $1.2 billion compared to December 31, 2024 primarily due to the repayment of $250 million and $1.0 billion of FHLB advances upon maturity in the three months ended March 31, 2025 and June 30, 2025, respectively.

At June 30, 2025, and December 31, 2024 our wholesale borrowings had $250 million of callable features.

See Note 9 - Borrowed Funds for a further discussion of our wholesale borrowings, our junior subordinated debentures and subordinated debt.

### Federal Reserve and Federal Home Loan Bank Stock

*(in millions)*

| Federal Home Loan Bank stock, at cost: | June 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| FHLB-NY stock, at cost | $542 | $598 |
| FHLB-Indianapolis stock, at cost | 255 | 329 |
| Total Federal Home Loan Bank stock, at cost: | $797 | $927 |
| Federal Reserve Bank stock, at cost | 220 | 219 |
| Federal Home Loan Bank stock and Federal Reserve Bank stock, at cost | $1,017 | $1,146 |

At June 30, 2025, the total FHLB and FRB-NY stock, decreased $129 million, primarily due to a reduction in borrowings in the three months ended June 30, 2025. FHLB advances are secured by eligible collateral in the form of loans and securities, under blanket collateral agreements with the FHLB.

### Risk Governance Framework

The Risk Management Division is responsible for formalizing the Company’s Risk Appetite Statement, which reflects the Board's and Management’s tolerance for risks and is set in alignment with the budget, strategic and capital plans. Internal controls and ongoing monitoring processes capture and address heightened risks that threaten our ability to achieve the Company’s goals and objectives, including the recognition of safety and soundness concerns and consumer protection. Additionally, key risk indicators are monitored against established risk warning levels and limits, as well as elevated risks escalated to the Chief Risk Officer.

To comprehensively manage our risk exposure, we focus on several critical areas outlined below, Credit Risk, Liquidity Risk, Interest Rate Risk and Regulatory Capital.

### Credit Risk

To mitigate the potential for credit losses, we underwrite our loans in accordance with credit standards that we consider to be prudent as described more fully in our Annual Report on Form 10-K for the year ended December 31, 2024.

It is our practice to continually review the risk in our loan portfolio. We receive financial information from borrowers annually and in some cases more frequently. We most often receive updated borrower financial information in the second calendar quarter. Upon receipt of the borrower financial information, we perform an analysis to determine whether the cash flow from the underlying collateral is sufficient to meet the contractual loan payments, commonly referred to as the DSCR. We consider the ability to cover debt service based upon the current contractual rate or, when a borrower’s initial fixed rate period expires in the near future, the lowest contractual rate reset option available under the loan terms using the current level for referenced indices. Loans that do not have a DSCR of 1.0 or greater are evaluated for a potential downgrade to substandard or non-accrual risk rating. All substandard loans, including non-accrual loans, are appraised at the time of downgrade and are re-appraised annually. Based upon this appraisal the loan is evaluated to determine if an adjustment to the carrying amount is required. The largest substandard and non-accrual loans are reported and reviewed with the Risk Assessment Committee at least quarterly.

Since the beginning of 2024, $4.2 billion of multifamily loans have reached their repricing date. As of June 30, 2025, over 80 percent of those loans remain current on their contractual payments.

Substandard and Non-Accrual loans ("Classified Loans") reflect the potential that a loss may occur if deficiencies in the primary source of repayment are unable to be corrected and borrowers are unwilling or unable to otherwise support the loans. Classified loans at June 30, 2025 and December 31, 2024 were $10.8 billion and $11.5 billion, respectively. The decrease in classified loans is primarily attributable to the par payoffs of multi-family substandard loans.

The procedures we follow with respect to delinquent loans are generally consistent across all categories, with late charges assessed, and notices mailed to the borrower, at specified dates. We attempt to reach the borrower by telephone to ascertain the reasons for delinquency and the prospects for repayment. When contact is made with a borrower at any time prior to foreclosure or recovery against collateral property, we attempt to obtain full payment and will consider a repayment schedule to avoid taking such action. Delinquencies are addressed by our Loan Workout Unit and every effort is made to collect rather than initiate foreclosure proceedings.

Refer to Note 5 - Loans and Leases for further information regarding our policies surrounding non-accrual loans.

In accordance with our charge-off policy, collateral-dependent loans are written down to their current appraised values less costs to sell. Workout specialists from our Loan Workout Unit actively pursue borrowers who are delinquent in repaying their loans in an effort to collect payment. In addition, outside counsel with experience in foreclosure proceedings are retained to support these efforts. Charge-offs of $207 million were recorded on multi-family and CRE loans during the six months ended June 30, 2025, primarily driven by appraisals received on those loans.

It is our policy to order updated appraisals for all Classified Loans that are collateralized by multi-family buildings, CRE properties, or land, if the most recent appraisal on file for the property is more than one year old. Appraisals are ordered at least annually until such time as the loan becomes pass rated. It is not our policy to obtain updated appraisals for performing loans that are not showing signs of credit weakness. However, appraisals may be ordered for performing loans when a borrower requests an increase in the loan amount, a modification in loan terms, an extension of a maturing loan, or when we determine an updated appraisal is needed as a result of our ongoing credit analysis. We evaluate loans that were previously placed on non-accrual at least quarterly to determine if additional charge-offs may be needed.

Properties and other assets that are acquired through foreclosure are classified as repossessed assets and are recorded at fair value at the date of acquisition, less the estimated cost of selling the property. Subsequent declines in the fair value of the assets are charged to earnings and are included in non-interest expense. It is our policy to require an appraisal, and an environmental assessment of properties classified as OREO before foreclosure and to re-appraise the properties at least annually until they are sold. We dispose of such properties as quickly and prudently as possible, given current market conditions and the property’s condition.

### Liquidity Risk

We have established a liquidity risk management framework designed to ensure that the Company can meet its funding obligations in daily, business-as-usual and liquidity stress periods. We maintain a Liquidity Risk Policy that has been approved by the Board of Directors and is subject to review at least annually or if there are significant changes to our business activity. The Liquidity Risk Policy establishes the Company’s Risk Appetite and provides guidance for the roles and responsibilities of management and various oversight committees to oversee the liquidity risk management framework. The Company also maintains a CFP which has been approved by the Board of Directors. The CFP provides guidance to plan for potential periods of stress and to navigate actual periods of stress. The CFP specifies a series of EWI which we use to monitor funding or market conditions that may indicate a trend toward a period of stress and to provide guiding principles for the Company during a period of stress including identifying the operational steps needed to access available and contingent sources of liquidity.

Our funding primarily stems from a diverse combination of business activities. The primary source of funding is the Company’s retail and institutional deposit base. Customer deposits provide us with a relatively stable, low-cost source of funding. The majority of our customer deposits are covered by FDIC deposit insurance with $12.9 billion of deposits that are uninsured or not collateralized by securities or letters of credit, representing 18 percent of our overall deposit base. We also obtain funding through various wholesale funding channels, including $12.2 billion of secured borrowings from the FHLB and an active brokered CDs issuance program with $6.1 billion outstanding as of June 30, 2025.

Our Liquidity Policy defines a limit framework which ensures the Company maintains liquidity and funding within our risk appetite. The limits require, among other elements, the Company to maintain a diverse funding profile while limiting concentration of funding by source, counterparty and maturity tenor. The policy also requires us to maintain sufficient on-balance sheet liquidity to support funding obligations under a severe, but plausible 30-day liquidity stress scenario. The Company monitors and reports its overall funding and liquidity risk appetite metrics on a daily basis and its cash position on an intraday basis.

We maintain a liquidity buffer of on-balance sheet cash reserves and HQLAs. We also maintain access to secured borrowings from the FHLB and FRB-NY Discount Window. The investment securities we consider HQLAs are all unencumbered, held as available-for-sale, and are either issued by government sponsored entities or are explicitly guaranteed by the U.S. government. We pledge eligible loan collateral with the FRB-NY Discount Window and FHLB New York to support borrowing capacity. The available borrowing capacity with the FRB-NY Discount Window and the FHLB, net of credit utilization primarily in the form of advances and letters of credit, is included in our Total Liquidity.

*(in billions)*

|  | June 30, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Cash at Federal Reserve | $7.6 | $15.0 |
| High-Quality Liquid Assets | 12.8 | 7.9 |
| Total On-Balance Sheet Liquidity | $20.4 | $22.9 |
| FHLB Available Capacity | 6.9 | 6.6 |
| Discount Window Available Capacity | 1.6 | 0.4 |
| Total Liquidity | $28.9 | $29.9 |

### Credit Ratings

We maintain credit ratings from three rating agencies: Moody’s, Fitch and Morningstar DBRS. As of June 30, 2025, our credit ratings were as follows:

|  |  |
| --- | --- |
| Long-Term Issuer Rating: |  |
| Moody's | B1 |
| Fitch | BB |
| Morningstar DBRS | BBB (low) |
| Short-Term Deposits Rating: |  |
| Moody's | NP |

During the three months ended March 31, 2025, Moody's upgraded our Long-Term Issuer rating from B2 to B1.

The primary mortgage loan agencies maintain standards that define the criteria that must be met for an institution to qualify as an eligible custodial depository for the deposits related to loans owned by those entities, including having an investment grade short-term issuer/deposit rating from Moody’s or S&P. We are currently not in compliance with that criteria. We have received a waiver of these criteria for all of our custodial deposits which could be revoked at any of the agencies' discretion. We have no other direct contractual relationships tied to further downgrades in our credit ratings, but may suffer reputational risk that could have an adverse effect on our business should that occur.

### Parent Company Liquidity

The Parent Company is a separate legal entity from the Bank and must provide for its own liquidity. At June 30, 2025, the Parent Company held cash and cash equivalents of $502 million. In addition to operating expenses, debt interest expense, and tax expense/credits, the Parent Company is responsible for paying any dividends declared to our common and preferred stockholders. As a Delaware corporation, the Parent Company is able to pay dividends either from surplus or, in case there is no surplus, from net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

The Parent Company has two primary funding sources for the payment of dividends, share repurchases, and other corporate uses: dividends paid to the Parent Company by the Bank; and capital raised through the issuance of equity.

Various legal restrictions limit the extent to which the Bank can supply funds to the Parent Company and its non-bank subsidiaries without receiving a prior written determination of no supervisory objection from the OCC. In the six months ended June 30, 2025, there were no dividends paid by the Bank to the Parent Company.

At June 30, 2025, we believe the Parent Company has sufficient liquidity and capital resources to meet its cash flow obligations through 2028.

### Contractual Obligations and Commitments

In the normal course of business, we enter into a variety of contractual obligations in order to manage our assets and liabilities, fund loan growth, operate our branch network, and address our capital needs.

For example, we offer CDs with contractual terms to our customers and also borrow funds under contract from the FHLB. These contractual obligations are reflected in the Condensed Consolidated Statements of Condition under “Deposits” and “Borrowed funds,” respectively. At June 30, 2025, we had CDs of $24.2 billion and long-term debt (defined as borrowed funds with an original maturity one year or more) of $11.2 billion.

We also are obligated under certain non-cancelable operating leases on the buildings and land we use in operating our branch network and in performing our back-office responsibilities. These obligations are included within Other liabilities within the Condensed Consolidated Statements of Condition and totaled $454 million at June 30, 2025 and $463 million at December 31, 2024.

At June 30, 2025, we also had commitments to extend credit in the form of other loan originations, as well as commercial, performance stand-by and financial stand-by letters of credit. These commitments consist of agreements to extend credit as long as there is no violation of any condition established in the contract under which the loan is made. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. The fees we collect in connection with the issuance of letters of credit are included in “Fee income” in the Condensed Consolidated Statements of (Loss) Income.

At June 30, 2025, our total liquidity position was $29 billion and we expect that our funding will be sufficient to fulfill our cash obligations and commitments when they are due both in the short term and long term.

For June 30, 2025, we did not engage in any off-balance sheet transactions that we expect to have a material effect on our financial condition, results of operations or cash flows.

### Interest Rate Risk

We manage our assets and liabilities to reduce our exposure to changes in market interest rates. The asset and liability management process has three primary objectives: to evaluate the interest rate risk inherent in certain balance sheet accounts; to determine the appropriate level of risk, given our business strategy, operating environment, capital and liquidity requirements, and performance objectives; and to manage that risk in a manner consistent with guidelines approved by the Boards of Directors of the Company and the Bank.

As a financial institution, we are focused on reducing our exposure to interest rate volatility, which represents our primary market risk. Changes in market interest rates represent the greatest challenge to our financial performance, as such changes can have a significant impact on the level of income and expense recorded on a large portion of our interest-earning assets and interest-bearing liabilities, and on the market value of all interest-earning assets, other than those possessing a short term to maturity. To reduce our exposure to changing rates, the Board of Directors and management monitor interest rate sensitivity on a regular or as needed basis so that adjustments to the asset and liability mix can be made when deemed appropriate.

The actual duration of held for investment mortgage loans and mortgage-related securities can be significantly impacted by changes in prepayment levels and market interest rates. The level of prepayments may, in turn, be impacted by a variety of factors, including the economy in the region where the underlying mortgages were originated; seasonal factors; demographic variables; and the assumability of the underlying mortgages. However, the factors with the most significant impact on prepayments are market interest rates and the availability of refinancing opportunities.

### Interest Rate Sensitivity Analysis

Interest rate sensitivity is monitored through the use of a model that generates estimates of the change in our EVE over a range of interest rate scenarios. EVE is defined as the net present value of expected cash flows from assets, liabilities, and off-balance sheet contracts. The EVE ratio, under any interest rate scenario, is defined as the EVE in that scenario divided by the market value of assets in the same scenario. The model assumes estimated loan and MBS prepayment rates, current market value spreads, and deposit decay rates and betas.

Based on the information and assumptions in effect at June 30, 2025, the following table sets forth our EVE, assuming the changes in interest rates noted:

| Change in Interest Rates (in basis points) | Estimated Percentage Change in Economic Value of Equity |
| --- | ---: |
| -200 shock | 2.4% |
| -100 shock | 1.3% |
| +100 shock | (2.1)% |
| +200 shock | (4.8)% |

The net changes in EVE presented in the preceding table are within the parameters approved by the Boards of Directors of the Company.

Accordingly, while the EVE analysis provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on our NII, and may very well differ from actual results.

Interest Rate Risk is also monitored through the use of a model that generates NII simulations over a range of interest rate scenarios. Modeling changes in NII requires that certain assumptions be made which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the NII analysis presented below assumes that the composition of our interest rate sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured, and also assumes that a particular change in interest rates is reflected uniformly across the yield curve, regardless of the duration to maturity or repricing of specific assets and liabilities. Furthermore, the model does not take into account the benefit of any strategic actions we may take to further reduce our exposure to interest rate risk. The assumptions used in the NII simulation are inherently uncertain. Actual results may differ significantly from those presented in the following table, due to the frequency, timing, and magnitude of changes in interest rates; changes in spreads between maturity and repricing categories; and prepayments, among other factors, coupled with any actions taken to counter the effects of any such changes.

At June 30, 2025, the estimated change in NII over the next twelve months for a 100 basis point reduction in short term interest rates with no change in long term interest rates is an increase of 1.70 percent and the estimated change for a 100 basis point increase in short term rates is a decrease of 1.98 percent.

The following table reflects the estimated percentage change in future NII for the next twelve months. In general, short- and long-term rates are assumed to increase in parallel instantaneously and then remain unchanged. Based on the information and assumptions in effect at June 30, 2025 the changes in interest rates are noted below:

| Change in Interest Rates (in basis points) | Estimated Percentage Change in Future Net Interest Income |
| --- | ---: |
| -200 shock | 0.8% |
| -100 shock | 0.6% |
| +100 shock | (1.1)% |
| +200 shock | (2.6)% |

The net changes in NII presented in the preceding table are within the parameters approved by the Boards of Directors of the Company.

Future changes in our mix of assets and liabilities may result in greater changes to our EVE, and/or NII simulations.

In the event that our EVE and NII sensitivities were to breach our internal policy limits, we would undertake the following actions to ensure that appropriate remedial measures were put in place:

- In formulating appropriate strategies, the ALCO would ascertain the primary causes of the variance from policy tolerances, the expected term of such conditions, and the projected effect on capital and earnings.
- Our ALCO would inform the Board of Directors of the variance, and present recommendations to the Board regarding proposed courses of action to restore conditions to within-policy tolerances.

Where temporary changes in market conditions or volume levels result in significant increases in risk, strategies may involve reducing open positions or employing other balance sheet management activities including the potential use of derivatives to reduce the risk exposure. Where variance from policy tolerances is triggered by more fundamental imbalances in the risk profiles of core loan and deposit products, a remedial strategy may involve restoring balance through natural hedges to the extent possible before employing synthetic hedging techniques. Other strategies might include:

- Asset restructuring, involving sales of assets having higher risk profiles, or a gradual restructuring of the asset mix over time to affect the maturity or repricing schedule of assets;
- Liability restructuring, whereby product offerings and pricing are altered or wholesale borrowings are employed to affect the maturity structure or repricing of liabilities;
- Expansion or shrinkage of the balance sheet to correct imbalances in the repricing or maturity periods between assets and liabilities; and/or
- Use or alteration of off-balance sheet positions, including interest rate swaps, caps, floors, options, and forward purchase or sales commitments.

### Regulatory Capital

The Company is a bank holding company subject to regulation, examination and supervision by the Federal Reserve while the Bank is a national bank subject to regulation, examination, and supervision by the OCC. Effective October 1, 2023, we became subject to Category IV prudential standards which included heightened requirements related to capital, liquidity and risk management, as follows:

- As a Category IV firm we maintain a capital plan approved by the Board of Directors which includes analysis under various company-derived stress scenarios. The Company submitted its 2024 capital plan to the Federal Reserve as required by regulation and received written feedback on the plan and associated governance which it has begun to address as part of the capital planning activities for 2025 and subsequent periods. Category IV institutions are subject to a supervisory stress test every other year. The supervisory stress test will first be applicable to the Company in 2026.
- Category IV institutions are required to perform liquidity stress tests that consider the potential impact of market and idiosyncratic stresses over various time horizons, and to maintain an on-balance sheet liquidity buffer at least equal to the 30-day stress horizon. The Company maintains the required liquidity buffer and has developed and continues to enhance its liquidity stress capabilities.
- Category IV firms are required to prepare and maintain an FDIC resolution plan for actions to be undertaken in the event of firm failure. In mid-2024, the FDIC updated its Final Rule with an effective date of October 1, 2024, and a submission date of July 1, 2025. The Company developed its resolution plan in alignment with the FDIC’s requirements. Following the Board’s approval, the Company submitted its resolution plan to the FDIC in late June 2025.
- Under regulatory heightened standards, a risk governance framework (the "Risk Governance Framework") is required to be developed and maintained to manage and control the risk-taking activities of the firm. Management has developed a written framework and is implementing the various components in an integrated fashion as underlying business processes mature. Heightened standards also require risk limits, metrics, and analytics which monitor the size and direction of key risks in the organization. The Company has established risk limits which are monitored by the Board of Directors and continues to enhance related metrics and analytics.

The Bank is subject to the Prompt Corrective Action regulatory capital framework that establishes five categories of capital adequacy ranging from “well capitalized” to “critically undercapitalized.” An institution’s capital category affects various matters, including legal requirements for regulators to take prompt corrective action and the level of a bank’s FDIC deposit insurance premium assessments. Capital amounts and classifications are also subject to the regulators’ qualitative judgments about the components of capital and risk weighting assets, among other factors, and the regulators have discretion to require that institutions maintain capital in excess of minimum levels.

The quantitative measures established to ensure capital adequacy require that banks and bank holding companies maintain minimum amounts and ratios of leverage capital to average assets and of common equity tier 1 capital, tier 1 capital, and total capital to risk-weighted assets (as such measures are defined in the regulations). As of June 30, 2025, our capital measures continued to exceed the minimum federal requirements for a bank holding company and for a bank. The following tables set forth the common equity tier 1, tier 1 risk-based, total risk-based, and leverage capital amounts and ratios for the Company on a consolidated basis and for the Bank on a stand-alone basis, as well as the respective minimum regulatory capital requirements, as of the dates shown:

The following table presents the Company's regulatory capital position:

*(in millions)*

| June 30, 2025 | Risk-Based Capital Common Equity Tier 1 Amount | Ratio | Tier 1 Amount | Ratio | Total Amount | Ratio | Leverage Capital Amount | Ratio |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Total capital | $7,849 | 12.33% | $8,353 | 13.12% | $10,044 | 15.77% | $8,353 | 8.61% |
| Minimum for capital adequacy purposes | 2,865 | 4.50 | 3,821 | 6.00 | 5,094 | 8.00 | 3,881 | 4.00 |
| Excess | $4,984 | 7.83% | $4,532 | 7.12% | $4,950 | 7.77% | $4,472 | 4.61% |
| **December 31, 2024** |  |  |  |  |  |  |  |  |
| Total capital | $7,997 | 11.83% | $8,501 | 12.57% | $10,238 | 15.14% | $8,501 | 7.68% |
| Minimum for capital adequacy purposes | 3,043 | 4.50 | 4,057 | 6.00 | 5,409 | 8.00 | 4,428 | 4.00 |
| Excess | $4,954 | 7.33% | $4,444 | 6.57% | $4,829 | 7.14% | $4,073 | 3.68% |

28

The increase in our capital ratios from December 31, 2024 was primarily a result of lower risk-weighted assets due to a reduction in Loans and leases held for investment.

The following table presents the Bank's regulatory capital position:

*(in millions)*

| June 30, 2025 | Risk-Based Capital Common Equity Tier 1 Amount | Ratio | Tier 1 Amount | Ratio | Total Amount | Ratio | Leverage Capital Amount | Ratio |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Total capital | $8,835 | 13.89% | $8,835 | 13.89% | $9,635 | 15.15% | $8,835 | 9.11% |
| Minimum for capital adequacy purposes | 2,863 | 4.50 | 3,817 | 6.00 | 5,089 | 8.00 | 3,878 | 4.00 |
| Excess | $5,972 | 9.39% | $5,018 | 7.89% | $4,546 | 7.15% | $4,957 | 5.11% |
| **December 31, 2024** |  |  |  |  |  |  |  |  |
| Total capital | $8,912 | 13.21% | $8,912 | 13.21% | $9,760 | 14.47% | $8,912 | 8.05% |
| Minimum for capital adequacy purposes | 3,036 | 4.50 | 4,048 | 6.00 | 5,398 | 8.00 | 4,426 | 4.00 |
| Excess | $5,876 | 8.71% | $4,864 | 7.21% | $4,362 | 6.47% | $4,486 | 4.05% |

At June 30, 2025, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by 777 basis points and the fully phased-in capital conservation buffer by 527 basis points.

At June 30, 2025, the Bank also exceeded the minimum capital requirements to be categorized as “Well Capitalized.” To be categorized as well capitalized, a bank must maintain a minimum common equity tier 1 ratio of 6.50 percent; a minimum tier 1 risk-based capital ratio of 8 percent; a minimum total risk-based capital ratio of 10 percent; and a minimum leverage capital ratio of 5 percent.

### Other Recent Developments

### Internal Control over Financial Reporting Remediation

We identified certain material weaknesses in management's report on internal control over financial reporting included within Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2024. Our progress toward remediation as of June 30, 2025 is discussed within Item 4 Part I of this Form 10-Q. We do not expect the operational costs to remediate these material weaknesses to be material to the condensed consolidated financial statements.

### Income Tax Reform

On July 4, 2025, the United States Congress enacted the One Big Beautiful Bill Act (“the Act”), which includes a broad range of tax reform provisions. We expect that the Act will have an immaterial impact on our financial results.

## Market risk

As filed, 571 characters.

Our most significant risks include interest rate risk and market risk. For more information regarding interest rate risk please refer to the "Interest Rate Risk" section of the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this Form 10-Q. There have been no changes with regard to our market risk disclosed in "Interest Rate Risk" in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

## Controls and procedures

As filed, 7,582 characters.

### Evaluation of Disclosure Controls and Procedures

Under the supervision of our Chief Executive Officer and Chief Financial Officer, Management evaluated the effectiveness of design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b), as adopted by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Management concluded its disclosure controls and procedures were not effective as of June 30, 2025, due to the material weaknesses in its system of Internal Control over Financial Reporting, as described below. Notwithstanding the material weaknesses, Management evaluated its disclosure controls and procedures, and concluded the financial statements included in this report fairly present, in all material respects, the Company’s financial position, results of operations, capital position, and cash flows, for the periods presented, in conformity with GAAP.

Per Rules 13a-15(e) and 15d-15(e), disclosure controls and procedures are the controls and other procedures designed to ensure information required to be disclosed in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include activities designed to ensure information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

### Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in Internal Control over Financial Reporting, such that there exists a reasonable possibility a material misstatement in the annual or interim financial statements may not be prevented or detected on a timely basis. Management has previously identified the following material weaknesses in its system of Internal Control over Financial Reporting.

*Risk assessment*: We lacked effective periodic risk assessment processes to identify and timely respond to emerging risks in certain financial reporting processes and related internal controls, including independent Credit Review, that were responsive to changes in the business operations and regulatory and economic environments in which the Company operates.

*Monitoring*: Our recurring monitoring activities over process level control activities, including independent Credit Review, were not operating effectively.

*Control activities*: We did not sufficiently maintain effective control activities related to independent Credit Review processes and certain loan data reconciliations. Specifically, our independent Credit Review process controls were ineffective as the Company lacked the consistent application of an appropriate framework to validate that the ratings were accurate, timely, and appropriately challenged. These ineffective controls impact the Company's ability to accurately disclose loan rating classifications, identify problem loans, and ultimately recognize the ACL on loans and leases.

As a result of these ineffective risk assessment, monitoring, and control activities, the Board of Directors were not able to exercise sufficient oversight.

These control deficiencies create a reasonable possibility that a material misstatement to the condensed consolidated financial statements may not be prevented or detected on a timely basis, and therefore we concluded that the deficiencies represent material weaknesses in our Internal Control over Financial Reporting.

### Remediation Status of Reported Material Weaknesses

The Company continues actively working to remediate the material weaknesses described above, including assessing the need for additional remediation steps and implementing additional measures to remediate the underlying causes of the material weaknesses, including governance and oversight of its system of Internal Control over Financial Reporting.

In early 2024, the Company appointed several new members to the Board of Directors with extensive experience as financial experts in our industry and backgrounds in risk management, including a new Lead Independent Director, a new Chairman of the Audit Committee and a new Chairman of the Risk Assessment Committee. The frequency of Audit Committee meetings increased substantially during 2024, with both Audit and Risk Assessment Committees dedicating sessions to evaluating credit risk in the portfolio. In addition, the Audit Committee dedicates sessions to discuss the Company’s ACL methodology and results.

Management has identified, and is implementing, the following actions to address the material weakness in our risk assessment processes:

- Appointed a Chief Risk Officer, a Chief Credit Officer and a new Senior Director of Credit Review, all with large commercial bank credit experience.
- Enhancing the depth and breadth of our Independent Credit Review program to make the necessary changes in scoping approach, risk assessment and related processes, and elevating the overall stature of the Independent Credit Review function. We have improved the experience-level of the personnel performing credit reviews.

Management has taken the following actions to address the material weakness in our monitoring activities:

- Increased the frequency and nature of reporting from our Independent Credit Review function and First-Line Business Units to the Board’s Risk Assessment Committee in support of the Boards' risk oversight role.

Management has identified, and is implementing, the following actions to address the material weakness in our control activities:

- Expanding the use of independent credit analysis and reducing the Company's reliance on tools and analyses prepared by First-line Business Units.
- Increased the Credit Review team's ability and elevated its stature within the organization to independently challenge risk rating methodologies and results.
- Assessed the adequacy of staffing levels and expertise within the Independent Credit Review function, considering the size, complexity, and risk profile of the loan portfolios. Management has enhanced the expertise and capacity of the Independent Credit Review function.
- Providing comprehensive risk rating process training to all employees involved in the lending and credit review processes.
- Enhancing processes to identify and assess risks associated with estimating the ACL and improving data governance processes.

While we believe our actions will be effective in remediating the material weaknesses, we continually assess the need for additional remediation actions. The material weaknesses will not be remediated until the remediation activities are in place, with applicable procedures and evidence to support sustainability, and Management concludes, based on validation testing, the remedial efforts are effective.

### Changes in Internal Control over Financial Reporting

Except for the actions noted above related to remediation of the Company's material weaknesses, there have been no changes in the Company’s system of Internal Control over Financial Reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2025 to which this report relates, which materially affect, or are reasonably likely to materially affect, the Company’s system of Internal Control over Financial Reporting.

## Risk factors

As filed, 4,366 characters.

Please see “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for information regarding risk factors that could materially affect the Company’s business, financial condition, or future results of operations. Except as set forth below, there have been no changes with regard to the risk factors disclosed in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

***Our recently announced internal reorganization transaction is subject to the receipt of consents and approvals from government entities that may impose conditions that could have an adverse effect on the Bank.***

On July 24, 2025, the Company, as part of an internal reorganization to streamline its corporate structure, entered into an Agreement and Plan of Merger (the “Plan of Merger”) with the Bank. Under the terms of the Plan of Merger, the Company will be merged with and into the Bank (the “Merger”), with the Bank continuing as the surviving entity (the “Surviving Entity”). Before the restructuring may be completed, various approvals or consents must be obtained from governmental entities. There can be no assurance as to the issuance, timing and/or outcome of the receipt of such regulatory approvals, and whether regulators will impose conditions on the completion of the restructuring or require changes to the terms of the restructuring. Furthermore, the issuance of any such conditions or changes could have the effect of delaying completion of the restructuring or imposing additional costs on, or otherwise impacting the earnings of, the Bank following the restructuring, any of which might have a material adverse effect on the Bank following the restructuring. In addition, future legislative, regulatory and economic developments occurring prior to, or following, the completion of the proposed transaction may also diminish or eliminate the anticipated benefits of the consolidation.

***Our recently announced internal reorganization transaction will not be completed unless important conditions are satisfied.***

Specified conditions set forth in the Plan of Merger must be satisfied or waived to complete our recently announced internal reorganization transaction. If the conditions are not satisfied, or waived in accordance with applicable law or stock exchange rules, the restructuring will not occur or will be delayed, and each of the Company and the Bank may lose some or all of the intended benefits of the restructuring. The following conditions, in addition to other closing conditions, must be satisfied or, if permissible, waived before the Company and the Bank complete the restructuring:

- the transactions contemplated by the Plan of Merger must be approved by the holders of the Company’s common stock;
- shares of the Bank’s common stock, Series A preferred stock and BONUSES Units to be issued in the Merger shall have been authorized for listing on the NYSE, subject to official notice of issuance;
- all approvals and authorizations of, filings and registrations with, and notifications to, all relevant governmental authorities required for the consummation of the restructuring shall have been obtained or made, and shall be in full force and effect and all waiting periods required by law shall have expired;
- no governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is in effect and prohibits consummation of the transactions contemplated by the Plan of Merger;
- all third-party consents and approvals required, or deemed by the Company’s board of directors to be advisable, to be obtained under any material note, bond, mortgage, deed of trust, security interest, indenture, law, regulation, lease, license, contract, agreement, plan, instrument or obligation to which the Company or any subsidiary or affiliate of the Company is a party in connection with the restructuring shall have been obtained; and
- the Company’s board of directors shall have received evidence in form and substance reasonably satisfactory to it that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

Filed Aug 7, 2025.
Source: SEC EDGAR, the filing index for accession 0000910073-25-000110. Last ingested by Listed: Nov 6, 2026, 16:58 ET. No prices; not investment advice.