Flagstar Bank, National Association (FLG) risk factors, FY2024 10-K

Other

1. 01Changes in interest rates could reduce our net interest income and negatively impact the value of our loans, securities, and other assets, which could have a material adverse effect on our cash flows, financial condition, results of operations, and capital
2. 02Our allowance for credit losses might not be sufficient to cover our actual losses, which would adversely impact our financial condition, regulatory capital ratios and results of operations
3. 03Our concentration in multi-family loans and commercial real estate loans could expose us to increased lending risks and related loan losses
4. 04Our New York State multi-family loan portfolio could be adversely impacted by changes in legislation or regulation which, in turn, could have a material adverse effect on our financial condition and results of operations
5. 05We are subject to credit risk in connection with our lending activities, and our financial condition and results of operations may be negatively impacted by economic conditions and other factors that adversely affect our borrowers

Financial Statements Risk

1. 06Our accounting estimates and risk management processes rely on analytical and forecasting models, the nature of which are uncertain and may not reflect recent credit or macroeconomic factors
2. 07Impairment in the carrying value in finite lived intangible assets could negatively impact our financial condition and results of operations
3. 08Our failure to maintain effective internal controls may impact the accuracy and timeliness of financial reporting and increase our expenses
4. 09Failure to maintain an adequate level of liquidity could result in an inability to fulfill our financial obligations could subject us to material reputational and compliance risk and could lead to the financial failure of the Company
5. 10The elimination of our quarterly cash dividend could have an adverse impact on the market price of our common stock
6. 11The inability to receive dividends from our subsidiary bank could impact our ability to maintain or increase the current level of cash dividends we pay to our stockholders
7. 12Deferring payments on our trust preferred capital debt securities or being in default under the related indentures, would prohibit us from paying dividends on our common stock
8. 13Dividends on our Series A Preferred Stock and Series B Preferred Stock are discretionary and noncumulative and may not be paid if such payment will result in our failure to comply with all applicable laws and regulations
9. 14Our Series A Preferred Stock and Series B Preferred Stock initially have rights, preferences and privileges that are not held by, and are preferential to the rights of, our common stockholders, which could adversely affect our liquidity and financial condition

Legal and Regulatory Risks

1. 15Inability to fulfill minimum capital requirements could limit our ability to conduct or expand our business, pay a dividend, or result in termination of our FDIC deposit insurance, and thus impact our financial condition, our results of operations, and the market value of our stock
2. 16Our operations could be materially affected by the imposition of restrictions on our operations by bank regulators, and other governmental entities, further changes in bank regulation, or by our ability to comply with certain existing laws, rules, and regulations governing our industry
3. 17We are subject to enhanced prudential standards and additional capital and liquidity requirements including reporting, capital stress testing, and liquidity risk management. Non-compliance could result in regulatory risks and restrictions on our activities
4. 18Noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations could result in material financial loss
5. 19Failure to comply with OFAC regulations could result in legal and reputational risks
6. 20Our Risk Governance Framework may not be effective in mitigating the risks to which we are subject, based upon the size, scope, and complexity of the Company
7. 21We are subject to various legal or regulatory investigations and proceedings
8. 22If federal, state, or local tax authorities were to determine that we did not adequately provide for our taxes, our income tax expense could be increased, adversely affecting our earnings
9. 23We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions
10. 24The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny
11. 25New legislation and regulations focused on data privacy could increase our compliance and operational risks, among others, leading to litigation or regulatory enforcement and reputational damage

Financial and Market Risks

1. 26Economic conditions could adversely affect the value of the loans we originate and the securities in which we invest

Strategic Risks

1. 27Extensive competition for loans and deposits could adversely affect our ability to expand our business, as well as our financial condition and results of operations
2. 28We may be exposed to challenges in combining the operations of our recent acquisitions into our operations, which may prevent us from achieving the expected benefits from our acquisition activities

Operational Risks

1. 29Our stress testing processes rely on analytical and forecasting models that may prove to be inadequate or inaccurate, which could adversely affect the effectiveness of our strategic planning and our ability to pursue certain corporate goals
2. 30The Company and the Bank rely on third parties to perform certain key business functions, which may expose us to further operational risk
3. 31Failure to keep pace with technological changes could have a material adverse impact on our ability to compete for loans and deposits, and therefore on our financial condition and results of operations
4. 32The inability to attract and retain key personnel could adversely impact our operations
5. 33We recently appointed new members to the Board of Directors and the executive management team and are embarking upon a new strategic plan, which creates uncertainties and could harm our business
6. 34Many aspects of our operations are dependent upon the soundness of other financial intermediaries and thus could expose us to systemic risk
7. 35Completing the diversification of the Company’s loan portfolio may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the plan may not be realized
8. 36We may be required to pay interest on certain mortgage escrow accounts in accordance with certain state laws despite the Federal preemption under the National Bank Act
9. 37We could be exposed to fraud risks that affect our operations and reputation
10. 38We could be adversely affected by natural disasters, terrorist activities, international hostilities, domestic civil unrest or other extraordinary events beyond our control
11. 39Damage to our reputation could significantly harm the businesses we engage in, as well as our competitive position and prospects for growth
12. 40Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social, and governance practices may impose additional costs on us or expose us to new or additional risks