New York Community finds ways to diversify as it awaits OK on Flagstar deal

Abstract

For starters, the Hicksville, New York, company is making progress on remixing its funding base to rely less on higher-cost funding sources such as certificates of deposit and wholesale borrowing and more on interest-checking accounts. At the same time, it is also gathering more deposits from loan customers and expanding its capabilities to add deposits via fintech partnerships. If the charter switch is approved, the acquisition would need OKs from the Federal Reserve and the OCC rather than the Fed and the Federal Deposit Insurance Corp. The New York State Department of Financial Services gave the deal a green light in April. During the second quarter, deposits rose 21% year over year to $41.2 billion, largely due to New York Community's pursuit of banking-as-a-service opportunities. At New York Community, banking-as-a-service deposits are showing up in three categories: traditional banking-as-a-service business with fintech companies, government-related banking-as-a-service deposits and "Mortgage as a service" deposits, which include escrow deposits for principal, interest payments and tax payments, the company said Wednesday. As of June 30, traditional banking-as-a-service deposits totaled $5.5 billion, followed by "Mortgage as a service" deposits totaling $1.6 billion and government-related banking-as-a-service deposits of $652 million, the company said. Separately, New York Community is undergoing a "Cultural change" to make sure that more deposits are gathered from loan customers, Cangemi said.