Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

Filed by the registrant ☒

Filed by a party other than the registrant  ☐

Check the appropriate box:

Flagstar Financial, Inc.

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April 25, 2025

DEAR SHAREHOLDERS:

You are cordially invited to attend the Annual Meeting of Shareholders (the “Annual Meeting”) of Flagstar Financial, Inc. (the “Company”), the holding company for Flagstar Bank, N.A. The Annual Meeting will be held in a “virtual” format through a live webcast on June 4, 2025, at 10:00 a.m. Eastern Daylight Time. You will be able to attend the Annual Meeting, vote, and submit questions by visiting www.virtualshareholdermeeting.com/FLG2025.

Since early 2024, our Executive Leadership team and Board of Directors have focused on several strategic actions designed to return the organization to growth and profitability, including enhancing the leadership team, adding industry-leading talent, increasing capital levels, improving our liquidity and funding profile, enhancing risk management and asset quality of the commercial real estate portfolio, and enhancing the safety and soundness of our operations. We made tremendous progress in each of these areas over the past year, accomplishing a great deal in a relatively short period.

We meaningfully strengthened the Company’s credit, risk, compliance, internal audit, IT, and finance functions. In addition, as part of our strategy to diversify our business mix and reduce our reliance on commercial real estate lending, we are making substantial investments in our commercial and corporate banking business. To date, we have added 75 teammates and plan to add 80 to 90 new hires over the remainder of 2025. These new teammates have already made an impact having originated $1 billion in new commitments and funded $770 million in new loans during the first quarter of 2025.

In March 2024, we successfully completed a $1.05 billion capital raise. During the second half of 2024, we further increased our capital levels through the sale of several non-core businesses and assets – the mortgage warehouse business and the mortgage servicing/sub-servicing and third-party origination businesses and the mortgage servicing rights asset – the former also enhanced our liquidity position. Collectively, these actions increased our Common Equity Tier 1 capital ratio to 11.83%, a 280-basis point improvement compared to where we ended the prior year, ranking the Company in the top quartile among our peers. Even though we made the decision to exit these two mortgage verticals, we remain committed to the mortgage business, through our distributed retail and direct to consumer origination channels and in the Private Bank, where we recently introduced a new mortgage product for high-net worth clients.

We ended 2024 with strong liquidity of $29.9 billion. During the course of the year, we reduced wholesale borrowings by almost $7 billion or 34% and brokered CDs by nearly $3 billion. Since both of these funding sources are more expensive than traditional core deposits, the reduction should also help our net interest margin going forward.

In last year’s letter, I stated that we implemented a number of initiatives to proactively address the credit issues in our commercial real estate portfolio, including conducting a deep dive into the multi-family and office portfolios. We completed our review of these portfolios by the end of the year, proactively de-risking the multi-family and office portfolios through significant charge-offs of nearly $1 billion, $3.5 billion of par payoffs, and strategic loan sales. As a result, multi-family loans declined $3.2 billion or 9% over the course of the year while commercial real estate loans declined $1.8 billion or 17%. At the same time, we increased our total allowance for credit losses to $1.2 billion or 1.76% of total loans.

Significantly, at the end of last year, we introduced our 2025 – 2027 Strategic Plan, which at its core, articulates three Enterprise Strategic Goals:

Over the next three years as we strive to transform Flagstar Bank into a top-quartile performing regional bank, these three goals will serve as our north star. We feel that the Bank is on the right path and makes progress every quarter.

We are also on track to reach full-year profitability in 2026, and, as I said on our fourth-quarter 2024 earnings conference call, I believe that we will be profitable in the fourth-quarter of 2025. One of the lynch pins underlying our

return to profitability is a $600 million or 23% annualized reduction in our operating expenses (excluding merger-related expenses and intangible amortization). These cost reductions are focused in five areas: compensation and benefits; real estate optimization; the outsourcing/offshoring of many of our back-office operations; additional vendor cost savings; and lower FDIC insurance expenses. We have already realized approximately 80% of these cost savings and expect to realize the remaining cost savings over the next several quarters.

Importantly, as we reduce costs, at the same time, we are investing across various businesses, including our corporate and commercial banking business and within risk management to ensure that risk-taking activities align with the Bank’s strategy and risk appetite. We are also investing in our IT and operations infrastructure. Recently, the Board of Directors approved a $90 million investment to modernize technology and operations in 2025. As part of this investment, we have made a strategic shift to a hybrid-managed services model. This approach leverages a combination of internal talent and the industry-leading capabilities of two global services providers to create the new Flagstar S2 Bank platform – Simple and Sophisticated. The new platform is being built to enable our market strategy, strengthen our brand, and provide faster delivery of modern products and services into our markets. Importantly, this shift creates the necessary technology and operations foundation to accelerate an improved employee and customer experience along with the development of modern capabilities to support the Strategic Plan.

Over the course of last year, I spent a great deal of time talking to our teammates and our customers, either through in-person townhalls, virtual meetings, retail branch visits, or through a number of meet and greets across the country. All the feedback received from these conversations was very valuable, but three things stood out. One, we have great teammates from three quality legacy organizations, who are dedicated and eager to serve their retail, business, and private banking customers; two, we have a loyal customer base which appreciates their relationship with the Bank; and three, we have one of the best regional banking franchises in the country, 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. These three qualities will be essential in helping the organization transform into a well-diversified, high-performing regional bank.

On behalf of our Board of Directors and Executive Leadership team, I would like to express our thanks to our teammates, customers, and shareholders for your continued trust and support.

The March 2024 capital raise and other changes adopted by the Company, including turnover within and reduction in the size of the Board of Directors (the “2024 Board Turnover”) and changes to the management team (including the CEO), allowed the Company to better focus on executing its strategy from a position of strength and repositioning itself as a regional bank. These changes allowed the Company to enhance its capital position, proactively manage its liquidity profile, enhance its focus on credit risk management, continue to reduce its concentrations in commercial real estate, continue to build upon regulatory and compliance focus, and continue to strengthen its management team. The new leadership team, with the support of the reconstituted Board, will continue to take actions that they deem advisable to execute upon and realize the opportunities provided by the March 2024 capital raise to improve earnings, profitability and drive enhanced value for shareholders.

In connection with the March 2024 capital raise, on or shortly after March 11, 2024, Thomas Cangemi, James Carpenter, Leslie Dunn, Lawrence Rosano Jr, Ronald Rosenfeld, Lawrence Savarese, David Treadwell and Robert Wann resigned as directors of the Board. Additionally, in February 2024, Toan C. Huynh and Hanif (Wally) Dahya resigned as directors of the Board. Four directors who were serving on the Board as of December 31, 2023, continued to serve on the Board: Alessandro P. DiNello, Marshall Lux, Peter Schoels, and Jennifer R. Whip. Additionally, in connection with the March 2024 capital raise, on or shortly after March 11, 2024, five new directors were appointed to the Board: Former Treasury Secretary Steven T. Mnuchin, Joseph M. Otting, Milton Berlinski, Allen C. Puwalski and Alan Frank. Peter Schoels resigned as a director effective October 25, 2024, and the Liberty Investors exercised their right to appoint a second director, which resulted in Brian R. Callanan’s appointment to the Board effective December 16, 2024.

For the year ended 2024, the Company reported a net loss of $1,118 million compared to a net loss of $79 million for the year ended 2023. Net loss attributable to common stockholders for the year ended 2024 was $1,153 million or $3.49 per diluted share compared to a net loss attributable to common stockholders of $112 million or $0.49 per diluted share for the year ended 2023.

Both full-year 2024 and 2023 results included the impact of certain actions the Company took throughout 2024 and for 2023, including for 2023 those that were related mainly to the Signature transaction.

 

Service to our customers and the community is an important part of the Company’s and Bank’s culture. We support the communities we serve through lending, investments, services, and charitable giving, including the Flagstar Foundation, with the following notable highlights:

Our management and Board value direct and transparent engagement with our shareholders and regularly seek opportunities to obtain feedback in connection with our governance, management compensation, and strategies. We embrace engagement as an important tenet of good governance, and we value the views of our shareholders and other stakeholders. We believe that positive dialogue builds informed relationships that promote transparency and accountability, allowing us to respond more fully to the interests of our shareholders as they adjust to evolving governance and compensation norms in our competitive industry.

Our shareholder outreach program consists of regular management dialogue with the investor community (the “Management Outreach Program”) and formal outreach by our independent Board members to institutional shareholders.

As part of our Management Outreach Program, senior members of our management team conduct extensive investor communications, including conferences, non-deal road shows (“NDRs”) and individual and group conference calls with portfolio managers and industry analysts. Each quarter’s earnings press release is thoroughly reviewed in open investor conference calls with broad participation and significant Q&A by the analyst community. Our senior management regularly makes themselves available for such communications across the United States, focusing on elements of our strategic plans, business results, credit quality, and capital, and other topics of interest to shareholders. We believe that management can strengthen its ability to lead the Company by constructively discussing our business and strategy in such settings.

As part of the Management Outreach Program for 2024, we met with shareholders or prospective shareholders at two industry conferences and conducted numerous individual conference calls with institutional investors. In total, management met with 169 investors from 90 discrete institutions in 2024.

The Board encourages our shareholders to participate in its outreach program. We typically reach out to invite participation by our top 25 institutional shareholders at each year end and participation levels vary year to year. For 2024, our shareholder outreach consisted mainly of various investor contact opportunities under the Management Outreach Program.

We value shareholder input, and we encourage you to share your opinions with us. You can do so by writing to us at the address on page 22 of this proxy statement. You can also provide feedback on our executive compensation program by contacting us through our Investor Relations Department (please visit our website www.flagstar.com) or through the other contacts identified on page 22 of this proxy statement.

As a responsible steward of financial services, the Company through its wholly owned subsidiary Flagstar Bank, has continued to further its strategy and approach to environmental, social, and governance matters and is committed to operating in a responsible, transparent, and sustainable manner. Our corporate responsibility strategy is focused on cultivating and promoting prosperity for our key stakeholders while sustaining and protecting the environment. We have been recognized for our leadership in this space, including over the past year:

The Company’s sustainability foundation is built upon three pillars. These three pillars of our strategy each have climate and environmental related elements that assist in the transition to a more environmentally sustainable approach for our business and our stakeholders. Our three pillars include (i) reducing the environmental impact of our business; (ii) supporting a company culture which includes environmental sustainability; and (iii) developing sustainable products and services to meet customers' needs. As representative examples, in 2024 we further strengthened our environmental actions by:

Flagstar is committed to fostering a workplace where all employees feel valued and supported. We believe that a variety of perspectives, experiences, and skills contributes to stronger teams and better business outcomes. By cultivating an environment of trust and respect, we empower our employees to contribute meaningfully and reach their full potential.

We believe in the importance of corporate philanthropy and giving back to the communities in which we operate. We support the communities we serve through lending, investments, services and charitable giving, including through the Flagstar Foundation. The Flagstar Foundation provides grants to nonprofit organizations and supports charitable causes that align with our corporate philanthropy priorities of arts and culture, workforce readiness, and financial capability within the communities we serve. Since its creation in 2017, the Flagstar Foundation has awarded more than $16.8 million in grants to 995 community organizations. In 2024, the Flagstar Foundation contributed over $3.4 million to nonprofit initiatives relating to workforce readiness, arts and culture, and financial capability. The Flagstar Foundation, together with contributions raised by our employees, has also supported our Employee Assistance Fund, with over $371,000 going to employees in need since we started the program in 2020. Throughout the year we highlighted community and employee engagement internally and externally via our social media channels.

In 2024, Flagstar Bank’s Community Reinvestment Act (“CRA”) program contributed more than $4.4 million to community organizations throughout the Bank’s footprint. The Bank’s approach aims to find sustainable solutions, with teammates volunteering their expertise and time in support of our communities. In 2024, Bank teammates volunteered more than 8,000 hours at community organizations, participating in more than 2,000 community events across the communities we serve. In addition, Flagstar Bank provides multiple down payment assistance programs, specialty (CRA-focused) mortgage programs that invest in our communities, and Federal Home Loan Grant programs. In its most recent review of the Bank’s community reinvestment activities, the Office of the Comptroller of the Currency, the Bank’s primary regulator, assigned the Bank a Satisfactory CRA rating.

Our Procurement strategy strives to increase our partnerships with qualified vendors that help us innovate, create value, and put us at a competitive business advantage. In 2024, the Bank maintained our support with national certifying and/or advocacy organizations to promote supplier development opportunities and increase overall economic impact.

We also continue to provide tools, resources, and support to promote teammates’ financial, emotional, and physical well-being.

Our leadership and Board of Directors oversee and advance our corporate responsibility strategy and initiatives. The Nominating and Corporate Governance Committee of the Board of Directors oversees many of the Company’s corporate responsibility activities, including reviewing policies and programs for corporate responsibility, sustainability, human rights, inclusion, and other corporate responsibility issues, as well as advising on engagement with external stakeholders. In 2024, Flagstar leveraged its Corporate Responsibility Management Committee together with communications, inclusion, sustainability, and governance working groups to provide oversight and support these areas.

The Risk Assessment Committee of the Board of Directors provides oversight of the Company’s independent risk management function and reviews the Company’s risk policies and frameworks, including environmental and social risks. In 2022, the Company completed its first Task Force on Climate-Related Financial Disclosures (“TCFD”) report, which summarizes the initial progress we have made towards our goal of appropriately incorporating climate risk identification management into our overall business strategy. A full copy of the TCFD report can be found on the Environmental page of the Company’s website, flagstar.com/about-flagstar/environmental. TCFD and other framework mapping has been included within the Company’s annual Corporate Responsibility Report. The TCFD report and other information on the Company’s website is not incorporated by reference into this proxy statement.

In 2024, the Company completed its second corporate responsibility materiality assessment survey with input from both internal and external stakeholders to help identify risks and opportunities for financial, environmental, social, and corporate governance.

As of December 31, 2024, our workforce included 7,369 teammates. We believe our teammates are among our most significant resources and our teammates are critical to our continued success. We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations. We pay our teammates competitively and offer a broad range of benefits, which we believe are competitive with our industry peers and with other firms in the locations in which we do business. Our teammates receive salaries that are subject to annual review and periodic benchmarking. Our benefits program includes a 401(k) plan with an employer matching contribution, healthcare and other insurance benefits, flexible spending accounts, and paid time off. Many of our teammates are also eligible to participate in the Company’s equity award programs.

None of our teammates are represented by a collective bargaining agreement. We believe our teammate relations to be good.

Our management teams and all of our teammates are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All of our teammates must adhere to a code of conduct that sets standards for appropriate behavior and are required to complete annual training that focuses on preventing, identifying, reporting and stopping any type of unlawful discrimination.

The Company maintains an Ethics Report and Whistleblower Complaint (ERWC) Policy that encourages all teammates to bring forward complaints or concerns about our business practices, including human resources, regulatory compliance, and financial reporting or audit-related matters. We encourage all our teammates to make use of the EthicsPoint Hotline so we can promptly address their concerns and learn about issues that are important to the Company’s operations, performance, regulatory compliance, and strategic objectives. Employees can opt to raise any concerns anonymously if they choose.

In addition, management maintains a Culture and Conduct Task Force. The mission of the Task Force is to ensure that senior management is made aware of, and has the opportunity to opine on, key facets of the Company’s Ethics Program. Of primary focus is the data gathered within EthicsPoint, which helps identify key developments and trends that may impact the strength of the organization and culture, as well as its success with respect to operations, performance, regulatory compliance, and strategic objectives.

 

Our Board, as stewards of shareholder interests, is committed to maximizing long-term shareholder value creation and maintaining sound corporate governance principles consistent with current rules and best practices. Under the leadership of the Nominating and Corporate Governance Committee, we are concentrating significant efforts and resources on ensuring that our overall corporate governance practices serve the best interests of the Company, its shareholders, and its various other constituencies, focusing on the changing needs for financial institutions in the current operating and regulatory environment, and we have taken and continue to take into consideration the governance policies and practices of our peers.

Certain governance policies and practices in effect during 2024 included:

The Board-adopted Corporate Governance Guidelines are available on the corporate governance page of the Investor Relations portion of our website, ir.flagstar.com and are available in print to any shareholder who requests a copy. These guidelines address, among other matters, the qualifications and responsibilities of directors; functions of the Board and Board committees; director compensation, training, and performance evaluations; and management performance evaluations and succession.

The Board has determined that seven of our nine directors are “independent” within the meaning of the rules of the NYSE: Milton Berlinski, Brian R. Callanan, Alan Frank, Marshall Lux, Steven T. Mnuchin, Allen C. Puwalski, and Jennifer R. Whip. Additionally, the Board has determined that each of the members of the Audit, Nominating and Corporate Governance, and Compensation Committees is independent in accordance with the rules of the NYSE and, in the case of the members of the Audit Committee, the rules of the SEC. In determining the independence of its members, the Board broadly considers all facts and circumstances it deems to be relevant and does not limit such review to a specific set of categorical independence standards. Such determinations are made not only from the standpoint of the director, but also from that of persons or organizations with whom or which the director has an affiliation. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships, among others.

In arriving at its conclusions with respect to the directors named above, the Board determined that the directors had no material relationships (as such term is defined under the rules of the NYSE) with the Company. In making such a

determination, the Board considered (i) certain loan sale transactions between the Bank and affiliates of Reverence Capital Partners, L.P., for which Mr. Berlinski is a co-founder and managing partner, that were entered into following a competitive bid process, (ii) certain data migration and management services provided to the Bank by Mphasis, a software and technology solutions company for which Mr. Lux serves as a director; and (iii) loans previously made by the Bank to two organizations for which Ms. Whip serves as a director that have been paid in full and closed out as of the date of this proxy statement.

The Company does not have a formal policy with respect to the separation or combination of the offices of Chairman of the Board and Chief Executive Officer. Rather, the Board has the discretion to combine or separate these roles as it deems appropriate from time to time, which provides the Board with the necessary flexibility to adjust to changed circumstances. On June 3, 2024, the Board named President and Chief Executive Officer, Joseph M. Otting, to the additional role of Executive Chairman of the Board of Directors of the Company and the Bank, effective as of June 5, 2024. The Board has determined that Mr. Otting’s additional appointment as Executive Chairman will better facilitate his ability, alongside the new senior executive leadership team, to continue to improve all aspects of the Company’s operations and executed on its strategic initiatives.

In the position of Lead Independent Director, Secretary Mnuchin helps to identify strategic priorities to be discussed by the Board, oversees the Board’s functioning, and ensures that the Board fulfills its stewardship role. The Lead Independent Director presides at all Board meetings at which the Chairman is not present, presides over periodic executive sessions of the Board in which management directors and other members of management do not participate, and is responsible for coordinating the annual self-evaluations of the members of the Board. Additionally, the Lead Independent Director is available for consultation and communication with shareholders as part of the Board’s shareholder outreach program. As a result, the Lead Independent Director provides a source of Board leadership complementary to, collaborative with, and independent of the leadership of the Chairman, President and Chief Executive Officer, which promotes best practices and high standards of corporate governance.

The President and Chief Executive Officer plays a central role in establishing and communicating the Company’s goals and strategies while also carrying out many critical leadership functions in our day-to-day operations. In this role, Mr. Otting is expected to meet and confer with Secretary Mnuchin and other members of the Board, whose expertise and counsel provide for a sound and effective governance framework. As Executive Chairman of the Board, Mr. Otting presides at all Board meetings, having no greater nor lesser vote on matters considered by the Board than any other director and sharing the fiduciary obligations of all our directors to serve the best interests of our shareholders.

Some of the respective duties and responsibilities of the Chairman and Lead Independent Director include:

Committee Chairs – Except for the Chair of the Executive Committee, the Company’s Board Committee chairpersons are independent and are appointed annually by the Board. They approve agendas and materials for their respective committee meetings and serve as the liaisons between committee members and the Board and between committee members and senior management.

Risk Governance – Management of risk is important to the success of our operations and business strategies and our Board devotes significant attention to the oversight of risks inherent in our banking business, including, but not limited to, credit, interest rate, liquidity, price, operational, strategic, compliance and reputational risks.

The Board is expected to review key risks associated with the Company’s strategic plan annually and regularly throughout the year as part of its consideration of the strategic direction of the Company as well as regularly reviewing various risk management processes, reporting and reviewing risks associated with specific business units and corporate functions.

While the Board as a whole is responsible for risk management oversight, management is responsible for the day-to-day management of the risks faced by the Company. As part of our risk oversight processes, our Chief Risk Officer reports to the Board’s Risk Assessment Committee; the Chairman of the Risk Assessment Committee meets regularly with management to discuss the risks facing the Company and strategies to address these risks; and senior members of management attend Board meetings and are available to address questions or concerns raised by the Board and the Risk Assessment Committee on risk management and other matters.

In carrying out its responsibilities in this area, the Board has delegated important duties to its committees. The Board administers its risk oversight function primarily through the Risk Assessment Committee of the Board which meets jointly with the Risk Assessment Committee of the Board of Flagstar Bank, N.A., the Company’s principal banking subsidiary (together, the “Risk Committee”). The Chairman of the Risk Committee is independent, and the Nominating and Corporate Governance Committee of the Board has determined that the Chairman of the Risk Committee has the requisite risk experience for such position.

The Risk Committee has responsibility to oversee the Company’s enterprise risk management program and to ensure that risk is appropriately identified, measured, mitigated, monitored, and reported within approved governance structures. The Risk Committee meets approximately twice per quarter and receives reports from management, including the Chief Risk Officer, Chief Compliance Officer, Chief Information Security Officer (our “CISO”), Director of Credit Review, and other executives, regarding a variety of risk topics, including with respect to the status of risk exposures and controls within the core eight risk areas (credit, liquidity, interest rate, price, strategic, compliance, operational and reputational risk). Among its duties, the Risk Committee reviews with management Company policies regarding risk assessment and management of risks that may be material to the Company, the Company’s system of disclosure controls and system of internal controls over financial reporting, the Company’s governance structure and processes, related person transactions, certain compliance issues and Board and committee structures, and the Company’s compliance with legal and regulatory requirements.

The Risk Committee and the Boards of Directors of the Company and the Bank maintain a Board approved Risk Appetite Policy that identifies acceptable risk levels in respect of the core risk areas within their combined risk appetite and require the Chief Risk Officer and other members of management, as applicable, to report regularly regarding compliance with such risk appetite levels (also monitored as “Key Risk Indicators”), any breaches of such levels, and remediation of same. The Risk Committee requires that management, principally the Chief Risk Officer, promptly report to the Risk Committee on emerging material risks, control weaknesses, and risk limit breaches, which generally are all discussed at each meeting of the Risk Committee with in-depth discussion of more material items as they develop. For example, as limit breaches occur or are threatened, the Risk Committee requires that management provide greater depth and detail as to the nature, scope, and implications of such breaches or threatened breaches and proposed remediation plans. Additionally, the Risk Committee chairperson and members often confer separately with the Chief Risk Officer to discuss supervision of risk issues and controls, and the Risk Committee chairperson and Chief Risk Officer regularly report to the whole Boards on material risk issues as necessary or appropriate.

In addition to the Risk Committee, the Board’s other Committees, including the Technology Committee and Audit Committee, have other important risk oversight functions involving, among other things, ensuring the Company’s operations are maintained in accordance with the Board approved Risk Appetite Statement.

Information Security Risk – Our management devotes significant time and attention to protecting the information we maintain, including our customers’ sensitive information, and the Board of Directors requires regular reporting regarding our information security controls. Information security breaches and other cybersecurity events can lead to significant financial losses and reputational harm to a breached company, and information security, including cybersecurity, is a high priority for our Company.

The Risk Committee and Technology Committee are actively involved in oversight of the Company’s cybersecurity risks, remaining actively engaged in overseeing the Company’s processes for identifying, assessing, monitoring, and managing cybersecurity risk. Accordingly, we continue to develop policies and utilize technology to protect our information and that of our customers from cyberattacks or other corruption or loss. Our CISO is responsible for developing, implementing, and maintaining an effective information security program, which includes a multitude of techniques to secure our operations and proprietary information, such as the performance of risk assessments for the purpose of identifying and documenting risks and mitigating controls, network monitoring, access controls, and utilization of dedicated security personnel and consultation with third-party experts when necessary. The CISO provides regular and operational reports to the Risk Committee and the Technology Committee.

The information security program is subject to independent testing and relies upon industry standards, such as the Federal Financial Institutions Examination Council’s cybersecurity assessment framework, to gauge the program’s maturity level, and other evolving standards. The Board, directly and through the Risk and Technology Committees, actively oversees management’s efforts to maintain and enhance our cybersecurity practices, reviewing and approving information security policies and programs, including those relating to cybersecurity, security risk assessment, security strategies, disaster recovery, business continuity, and incident response plans. The CISO conducts training and awareness programs for the Board to ensure that the Board remains aware and informed of information security incidents and response plans.

Other Board Risk Management Functions – The Audit Committee serves a key role in managing our risk through oversight of the external and internal audit functions, which test the adequacy of internal controls and the financial reporting process. The Audit Committee oversees risks related to the Company’s financial statements, the financial reporting process, other financial matters, certain compliance issues, and accounting and legal matters.

The Compensation Committee has responsibility for overseeing certain risks in the Company’s incentive compensation practices and has authority to conduct annual reviews of such compensation arrangements and practices to ensure that they do not encourage inappropriate risk-taking. The Compensation Committee also oversees succession planning for possible successors to the position of Chief Executive Officer and planning for other key senior management positions. The Compensation Committee receives regular reports concerning the Company’s incentive compensation programs and has concluded that the Company’s current compensation arrangements do not encourage inappropriate risk taking.

In performing their respective risk oversight functions, the Risk Assessment, Technology, Audit, and Compensation Committees of the Board each have full access to management in the Enterprise Risk Management, Information Security, and Internal Audit areas and in other first and second line functions within the Company, as well as the ability to engage advisors. Each committee reports to the full Board and works with all members of the Board to fulfill its risk oversight objectives. Key members of management maintain regular dialogue with members of our Board and regular reporting to the Board Committees, as well as the whole Board, regarding various operational, lending, financial, and other issues and actions.

The entire Board reviews and approves, on an annual basis, all significant policies that address risk within our consolidated organization, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk, and reputational risk. The Board monitors risk through, among other things, reports frequently received from management.

Majority Voting in Director Elections – The Certificate of Incorporation requires that nominees for director in uncontested elections receive a majority of the votes cast in respect of their election as directors. If an election is uncontested, each of our director nominees has agreed to tender his or her irrevocable contingent resignation if he or she is not elected by a majority of votes cast by shareholders. The Nominating and Corporate Governance Committee will promptly consider the director’s resignation and recommend to the Board whether to accept or reject the resignation. Our Board is expected to act on the Nominating and Corporate Governance Committee’s recommendation within ninety days of the applicable shareholder meeting and will then publicly disclose its decision.

No Shareholder Rights Plan – We do not have a shareholder rights plan and are not currently considering adopting one.

Corporate Governance Guidelines – Our Corporate Governance Guidelines formalize certain of the Company’s and the Board of Directors’ existing governance policies and practices with respect to Board membership; leadership; roles, procedures and practices; committees; and executive officer evaluations, compensation and succession, and also address the governance policies discussed below. The Corporate Governance Guidelines are available on the Company’s website (flagstar.com) under Investor Relations.

Board Self-Evaluations – The Board of Directors annually assesses its effectiveness and the effectiveness of its committees. The Lead Independent Director coordinates the evaluation of the Board as a whole and its committees.

Proxy Access – Our amended and restated Bylaws permit a shareholder, or a group of up to 20 shareholders, which owns three percent or more of the Common Stock continuously for at least three years, to nominate and include in the Company’s proxy materials candidates for election as directors. Such shareholder(s) or group(s) of shareholders may nominate up to the greater of two individuals or 20% of the Board, provided that the shareholder(s) and the nominee(s) satisfy the eligibility, notice, and other requirements specified in the Bylaws.

Code of Professional Conduct and Code of Ethics for Senior Financial Officers – The Company maintains a Code of Conduct, applicable to all Company and Bank employees, which sets forth requirements relating to ethical conduct, conflicts of interest, and compliance with the law. The Code of Conduct requires that the Bank’s employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in the Company’s and the Bank’s best interests. The CEO, Chief Financial Officer and Chief Accounting Officer are bound by the Code of Conduct as well as our Code of Ethics for Senior Financial Officers. Copies of both Codes, which also apply to the directors of the Company, are available on the Corporate Governance pages of the Investor Relations portion of our website, ir.flagstar.com, and are available in print, free of charge, to any shareholder who requests a copy.

Insider Trading Policy - The Company has adopted the Flagstar Financial, Inc. Securities Trading Policy and related procedures governing the purchase, sale, and/or other disposition of its securities by its directors, officers, and employees that the Company believes are reasonably designed to promote compliance with insider trading laws, rules, and regulations, and applicable NYSE listing standards. A copy of the Flagstar Financial, Inc. Securities Trading Policy is filed as Exhibit 19.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In addition, with regard to the Company’s trading in its own securities, it is the Company’s policy to comply with the federal securities laws and the applicable NYSE listing requirements.

Insider Stock Ownership Policy – The Company maintains an Insider Stock Ownership Policy that is intended to align the interests of senior executives and non-executive directors of the Company with the interests of the Company’s shareholders, and to support sound risk management by requiring each of these individuals to attain and maintain a target level of stock ownership. The target level of stock ownership in the Company that each must attain and maintain shall differ depending on the applicable officer’s or director’s category and is expressed, for the year being measured, as a multiple of annual base salary for executives and as a multiple of annual retainer for non-executive directors. For the CEO, the multiple is six times base salary, for senior executives (including the NEOs), the multiple is four times base salary, and for the non-executive directors, the multiple is five times the annual retainer exclusive of any compensation for committee fees, meeting fees, and leadership roles (see Compensation Discussion and Analysis, Stock Ownership Requirements on page 37).

Executive Sessions of the Board – In 2024, the Board met in executive session with our CEO present and, in keeping with the Company’s Corporate Governance Guidelines, met at least once in executive session where no members of management nor non-independent directors were present.

Board Service and Tenure - As required under the Company’s Corporate Governance Guidelines, the Nominating and Corporate Governance Committee has adopted criteria to be used in evaluating candidates for Board membership, under which the Board and the Nominating and Corporate Governance Committee consider:

The Board has not established any specific minimum qualifications for nominees to the Board and evaluates each individual in the context of the Board as a whole, with the objective of recommending a group of members who will best enhance the Company’s success and represent shareholder interests through the exercise of sound judgment and varied experience. In determining whether to recommend a director for re-election, the Nominating and Corporate Governance Committee also considers the director’s past attendance at meetings and participation in, and contributions, to the activities of the Board. In addition, the Committee considers whether the Board has specific needs for certain skills or attributes at a given time (for example, financial or chief executive officer experience). Other criteria for Board membership are set forth in the Company’s Corporate Governance Guidelines and Nominating and Corporate Governance Committee Charter, copies of which are available, free of charge, on the Corporate Governance pages of the Investor Relations portion of our website, ir.flagstar.com and are available in print to any shareholder who requests a copy.

The composition of our Board of Directors is comprised of individuals with significant banking, finance, government and regulatory experience, including a former U.S. Secretary of the Treasury and a former U.S. Comptroller of the Currency, and has been strategically reconstituted to address the challenges of the current economic and banking environments. In connection with our March 2024 capital raise transaction, the size of our Board of Directors was reduced and four new directors (Steven T. Mnuchin, Joseph M. Otting, Allen C. Puwalski and Milton Berlinski) with significant banking, finance, government and regulatory experience were appointed to the Board. In addition, Alan Frank, who possesses significant banking and auditing experience, and Brian R. Callanan, who possesses investment banking experience, were subsequently appointed as directors of the Company and the Bank. These new Directors joined Legacy Directors Alessandro P. DiNello, Marshall Lux, and Jennifer R. Whip who, in addition to their significant banking and banking related experience and qualifications, also provide our Board of Directors with critical institutional knowledge of the Company’s and the Bank’s business and operations. Our Board believes that director tenure, like other governance factors, should be tailored to the Company’s unique governance needs and challenges. For more information on the qualifications and experience of our directors, see page 55 of this proxy statement.

Our Bylaws provide that, unless otherwise determined by a majority of the disinterested members of the Board, no person may be elected, appointed, or nominated as a director after December 31^st of the year in which such person attains the age of 75. None of the members of our Board attained the age of 75 as of December 31, 2024.

The Board conducts its business through periodic meetings and through the activities of its committees. In 2024, the Board held 31 meetings, and the various standing committees of the Board (outlined below) met another 54 times, for an aggregate of 85 meetings. All directors of the Board serving during 2024 attended at least 75% of the aggregate number of meetings of the Board and committees on which such directors served during their tenure as a director in 2024. Board members are expected to make reasonable efforts to attend all Board meetings and all meetings of the Board committees on which they serve. Absences are excused only for good cause.

The Board has six standing committees as follows: (i) Audit Committee, (ii) Compensation Committee, (iii) Nominating and Corporate Governance Committee, (iv) Risk Assessment Committee, (v) Technology Committee and (vi) Executive Committee. Each committee has a written charter adopted by the Board, which contains detailed lists of the respective committee’s duties and responsibilities. Charters for the Audit, Compensation, Nominating and Corporate Governance and Risk Assessment Committees can be found on the Investor Relations portion of the Company’s website at ir.flagstar.com, and are available in hardcopy to any shareholder who requests them. Each member of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee has been determined by the Board to be independent for purposes of the NYSE corporate governance listing standards and each member of the Audit Committee has been determined by the Board to be independent within the meaning of regulations of the SEC.

The following table presents the membership of our Board members on the various Board committees as of the Record Date:

A description of the nature and purpose of each of the Board committees follows. References below to the number of committee meetings are to meetings of the Board Committees during 2024.

The Board of Directors expects all directors to attend the Annual Meeting of Shareholders. Eight of the nine then-serving Board members of the Company attended the virtual Annual Meeting of Shareholders held on June 5, 2024.

Shareholders and other interested parties may communicate directly with the Company by directing correspondence to any of the individuals listed below. Letters addressed to the Lead Independent Director will be opened by the Company’s Corporate Secretary, who will review them and forward a summary of such correspondence to the Lead Independent Director and, if applicable, the Board. If the Corporate Secretary determines that an item of correspondence relates to the functions of the Board or its committees, or otherwise requires their attention, the Corporate Secretary will direct the item itself to the Lead Independent Director or other Board members. Directors may at any time review a log of all correspondence received by the Company that is addressed to the Lead Independent Director as provided above, and request copies of any correspondence.

It is the policy of the Nominating and Corporate Governance Committee to consider director candidates who appear to be qualified to serve on the Board and who are recommended by shareholders. The Nominating and Corporate Governance Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and if the Nominating and Corporate Governance Committee does not perceive a need to increase the size of the Board. The Nominating and Corporate Governance Committee will consider those director candidates recommended in accordance with the procedures set forth below. To submit a recommendation of a director candidate to the Nominating and Corporate Governance Committee, a shareholder should submit the following information in writing, addressed to the Chairman of the Nominating and Corporate Governance Committee, care of the Corporate Secretary, at the main office of the Company:

In order for a director candidate to be considered for nomination at the Company’s Annual Meeting of Shareholders, the recommendation must be received at the principal executive office of the Company not less than 90 days prior to the date of the meeting; provided, however, that in the event that less than 100 days’ notice or prior disclosure of the date of the annual meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made.

Under the proxy access provisions of our Bylaws, eligible shareholders and/or shareholder groups were permitted to include shareholder-nominated director candidates in our proxy materials for the 2025 annual meeting of shareholders. No such proposals were received. For details about the process to include shareholder-nominated director candidates in our proxy materials, please see Additional Information – Proxy Access Nominations and refer to Article I, Sections 6, 7, and 8 of our Bylaws. A copy of the Bylaws of the Company is available, free of charge, in print to any shareholder who requests a copy.

The Compensation Discussion and Analysis provides shareholders with important information regarding our executive compensation program, including:

2024 was a transitional year for the Company as a new senior leadership team was brought on to develop and execute the Company’s turnaround strategy. Key to the turnaround was an injection of more than $1 Billion in capital and the near total turnover of the Board and management team with the addition of directors and senior leaders who have the experience and expertise necessary to provide a new direction for the Company. Composition of the Compensation Committee changed as a result of the Company’s recapitalization transaction in March 2024, and the new Compensation Committee implemented a compensation program that was designed to attract and retain key personnel necessary to return the Company to profitability and safe and sound operating condition, and to align key executives’ pay with the long-term interests of shareholders.

The urgent circumstances following the Company’s earnings release in January 2024 and the subsequent capital raise in March 2024 created an immediate need to assemble a talented management team to drive the Company’s turnaround, and the compensation plan—consisting of base pay, long-term incentives pay, and short-term incentive pay—adopted by the Compensation Committee in 2024 was critical to achieving this objective.

This process started with the hiring of Mr. Otting as President and Chief Executive Officer and was followed by the hiring or other executives. Mr. Otting’s base salary as Chief Executive Officer was set at $1,250,000 per year. The base annual salary of Mr. Otting’s direct reports at the senior executive vice president level was uniformly set at $700,000 per year to better align the Company with market practice for executives in these key positions.²

In addition, Messrs. Otting, Gifford, Raffetto, Nguyen, Smith, and Davis were given special, one-time option grants that vest over a three-year period, as inducements to attract them to join or remain with the Company to lead its turnaround

and transformation into a diversified regional bank. Mr. Otting was awarded a special one-time stock option grant of 5,000,000 shares and Messrs. Smith, Raffetto, Davis, Nguyen, and Gifford each received a special one-time stock option grant of 1,000,000 shares (adjusted for the July 11, 2024, 1-for-3 reverse stock split).³ These option grants are expected to be the primary form of long-term incentive pay for the executives over three years, and is not expected to be an annual event. Additionally, Mr. Smith received a special one-time award of time-based vested restricted stock units in consideration of his key role in the sale of the Company’s mortgage business. Mr. DiNello received one-time stock option and restricted stock unit awards when he assumed the roles of Executive Chairman, President and Chief Executive Officer on an interim basis prior to Mr. Otting becoming Chief Executive Officer.

Additionally, in recognition of the unique business imperatives faced by the Company in 2024, the Compensation Committee adopted a Company-wide short-term incentive plan that focused on the attainment of specific operational goals, including (i) improving regulatory performance and risk management controls; (ii) bolstering management talent; (iii) achieving milestones along the path toward creating a diversified, high performing regional bank; and (iv) taking essential steps toward improving the Company’s capital and liquidity position, enhancing the quality of the Company’s financial reporting structure, and achieving expense reductions. The Committee considered a wide range of factors in each category in arriving at specific award determinations under the short-term incentive program: (i) Mr. Otting received an annual incentive award under the 2024 program at 100 percent of the target award level (180 percent of base salary) set under his employment offer term sheet or $2,250,000, (ii) Messrs. Smith, Raffetto, Davis, and Nguyen each received an annual incentive award at the target level set under the 2024 program (100 percent of base salary) or $700,000. Mr. Gifford received an award at 67% of target (100 percent of base salary) or $500,000 that reflected the Committee’s consideration of his contribution during the 2024 performance year and his departure from the Chief Financial Officer role. See, Short-Term Incentive Compensation below for detailed information concerning the 2024 program.

Looking ahead, the Compensation Committee has initiated a comprehensive review of our existing executive compensation program to ensure that the compensation program supports the Company’s strategic, financial and operational performance while aligning with the Company’s compensation philosophy and sound incentive compensation policies. We expect that the new program will focus our executives on the attainment of specific financial goals and successful execution of strategic initiatives. The Committee is also committed to ensuring that our incentive program reflects our risk appetite and appropriately balances our risk and reward.

The Company is pleased that a majority of the votes cast in our say-on-pay advisory vote at the 2024 Annual Meeting were in favor of our executive compensation program. As a result of our management restructuring, our executive pay program has undergone a significant transformation to improve the alignment of our management team with the long-term interests of our shareholders and to better reflect industry best practices. The Compensation Committee will continue to work to ensure that our executive incentive compensation program is consistent with our compensation philosophy and the feedback we receive from our shareholders.

Shareholder engagement is a continuous process for our Board and executive management. Our dialogue with shareholders is an important element in the evaluation of our executive compensation program and corporate governance practices. Accountability to Company shareholders is a cornerstone of sound corporate governance and essential to the attainment of the Company’s business objectives. The Compensation Committee considers feedback received from shareholders and carefully reviews assessments from Institutional Shareholder Services, Glass Lewis, and other external sources. Our 2024 executive pay program reflected the Company’s continuing efforts to improve the alignment of pay and performance in this transitional year and better aligns with peer and industry practice.

Our 2024 executive compensation program aimed to reward our executive management team for successfully implementing our turnaround strategy to fix the issues that led to the Company’s challenges and grow our business and create long-term shareholder value. The principles of our compensation philosophy influence the design and administration of our pay programs and pay decisions. Our approach to executive compensation is reflected in the following guiding principles:

The Compensation Committee, all the members of which are Independent Directors, makes decisions on the compensation of our named executive officers. This responsibility is discharged within the framework of a formal committee charter, which delegates a wide range of strategic and administrative issues to the Committee. Key among the Committee’s tasks is the development of, and monitoring of adherence to, the Company’s executive compensation philosophy. The Compensation Committee is responsible for, among other things, (a) reviewing and approving the Company’s compensation strategy and practices with respect to the executive officers and certain other officers; (b) determining the CEO’s compensation levels, reviewing and approving the goals and objectives relevant to the CEO’s compensation and evaluating the performance of the CEO in light of such goals and objectives; (c) approving CEO and other executive officer employment agreements, severance arrangements, and change in control agreements; (d) overseeing, and considering the results of, shareholder approval of certain executive compensation matters including advisory votes; (e) periodically reviewing and approving the peer group to be utilized in benchmarking executive and director compensation; and (f) administering our senior executive incentive compensation program, including the development of plan design, the selection of performance metrics, the designation of specific performance goals and award opportunities, and the certification of performance results. The Committee does not delegate any substantive responsibilities related to the determination of compensation for our NEOs, and the Committee members exercise their independent judgment when they make executive compensation decisions. See Board Committees – Compensation Committee for a detailed discussion of the Committee’s responsibilities and membership. The Committee’s charter is posted on the Corporate Governance pages within the Investor Relations portion of our website at ir.flagstar.com.

The Compensation Committee reviews the compensation of each NEO annually to evaluate whether the executive’s pay level is consistent with our compensation philosophy, risk profile, and the performance of both the Company and

the individual, and whether market practices dictate an adjustment in the form or level of the executive’s compensation. As part of this annual review, the Committee considers the executive’s individual contributions to the financial success of the Company, management of subordinates, contribution to safety and soundness objectives, and their long-term potential as a senior executive.

The Compensation Committee met 11 times in 2024, including discussions in executive session without management present.

The Compensation Committee meets throughout the year. In the months following the annual shareholder meeting, the Committee meets to consider the results of the meeting, including the say-on-pay vote and the analysis of proxy advisory firms. In addition, the Committee periodically receives input from the independent compensation consultant on emerging industry trends and best practices. Each year, the Committee typically reviews peer group composition and benchmarking data for NEOs, followed by consideration of changes to NEO base pay and short-and long-term incentive opportunities. In the February-March timeframe, the Committee typically authorizes awards, if any, under the incentive compensation program.

Our CEO is expected to provide the Committee with his evaluation of the other NEOs’ performance and recommend compensation adjustments and incentive opportunities for the current year. While the CEO provides input, the Committee has absolute discretion to accept, reject, or modify the CEO’s recommendations. Our CEO plays no role in, and is not present during, discussions regarding his own compensation or final decisions of the Committee regarding compensation of the other NEOs.

Our NEOs receive annual performance assessments following a process established by the Compensation Committee. Our CEO provides the Committee with an assessment of his direct reports, and the Committee, in turn, provides our CEO with an assessment of his performance and considers the CEO’s evaluation of his direct reports.

Meridian Compensation Partners, LLC (“Meridian”), our current independent compensation consultant, works with the Compensation Committee to review our executive compensation program relative to our performance and similarly sized institutions. While the Committee considers input from the independent consultant, the Committee’s decisions are the product of many factors and considerations. Management works with the independent consultant at the direction of the Committee to develop materials and analyses that are critical to the Committee’s evaluations and determinations. Such materials include data in which to determine an appropriate peer group, competitive market assessments and guidance on best practices and regulatory developments.

In 2024, Meridian did not provide other services to the Company and has no direct or indirect business relationships with the Company or its affiliates. The Legacy Committee considered Meridian’s independence for the 2024 fiscal year and whether its work raised conflicts of interest under the NYSE listing standards. Considering these factors, the Committee determined that the work performed by Meridian did not create any conflict of interest and that Meridian was independent of the Company’s management.

The peer group is a key reference point as the Compensation Committee assesses the competitiveness of the executive compensation program, including compensation levels, design features, and pay mix, and whether the program is aligned with industry best practices. The 2024 peer group was determined in late 2023 by the Legacy Committee prior to the Company’s management and board restructuring during March 2024. It is anticipated that the composition of the peer group will be reevaluated on an annual basis by the Compensation Committee and revised to the extent necessary to align the peer group with the Company’s asset size, geographic footprint, business focus, and market capitalization.

The 2024 peer group included the following financial institutions:

Pay-for-performance is an essential element of our compensation philosophy. To enhance the connection between pay and performance, the majority of CEO pay is “at-risk,” and the largest portion of NEO pay is in the form of equity-based awards. In 2024, 89% of our CEO’s total direct compensation (base salary + annual incentive + equity incentive) and, on average, 78% of the total direct compensation of our other NEOs (Messrs. Smith, Raffetto, Davis, Nguyen and Gifford) was at-risk in the form of stock option grants. The charts below illustrate the allocation of 2024 total direct compensation for Mr. Otting and our other NEOs.

 

In connection with the Company’s capital raise in March 2024, the Board of Directors extended an employment offer to Mr. Otting that set his annual salary at $1,250,000. The Board determined that Mr. Otting’s salary was consistent with the base compensation level of the prior Chief Executive Officer, which had been benchmarked against peer institutions, and the base pay level for Chief Executive Officers at peer institutions. Following a review of peer data and an assessment of industry best practices, the Compensation Committee determined that the base salary level for each of Mr. Otting’s direct reports at the senior executive vice president level would be set at $700,000. Messrs. Smith and Davis agreed to a salary reduction as part of the transition to the Committee’s new senior executive compensation program.

The urgent circumstances following the Company’s earnings release in January 2024 and the subsequent capital raise in March 2024 created an immediate need to assemble a talented management team to drive the Company’s turnaround. This process started with the hiring of Mr. Otting as President and Chief Executive Officer who was awarded a special one-time stock option grant covering 5,000,000 (adjusted for the July 11, 2024, 1-for-3 stock split) shares. To attract and, in the case of Messrs. Smith and Davis, retain key personnel, each of Mr. Otting’s direct reports, including Messrs. Smith, Raffetto, Davis, Nguyen, and Gifford received a special one-time stock option grant covering 1,000,000 shares (split adjusted). Separately, (i) Mr. DiNello received a one-time grant of stock options and restricted stock units in consideration of his service as Executive Chairman, President and Chief Executive Officer on an interim basis and (ii) Mr. Smith received a special one-time grant of restricted stock units in recognition of his significant contributions to the successful divestment of the Company’s mortgage business. Mr. Gifford forfeited his stock option grant upon his termination of employment on March 31, 2025. The one-time option grants for Messrs. Otting, Raffetto, Nguyen, Gifford, Smith, and Davis will vest over a three-year period and are expected to be the primary form of long-term incentive pay for the executives over a period of three years. Mr. DiNello’s 2024 stock option award became exercisable on the first anniversary of the grant date and expires on the tenth anniversary of the grant date.

In 2024, the Compensation Committee’s assessment of the Company’s turnaround strategy resulted in a move away from the design features of a traditional short-term incentive plan that primarily focuses on the attainment of specific financial goals as the measure of annual performance and refocuses on stabilizing the Company. Messrs. Otting, Smith, Raffetto, Davis, Nguyen, and Gifford participated in a Company-wide, cash-based annual incentive plan (“AIP”) that focused on the attainment of specific operational and strategic goals within four broad categories (see below) that the Board considered essential to the Company’s future prospects. Under his employment offer term sheet, Mr. Otting’s AIP target was set at $2,250,000 with a maximum award equal to 200 percent of target. The target bonus for Messrs. Smith, Raffetto, Davis, Nguyen and Gifford was set at 100 percent of base salary ($700,000) and the AIP set a maximum payout of 200 percent of target ($1,400,000) for each executive. The AIP did not include a threshold performance level. Messrs. DiNello, Cangemi, and Pinto did not participate in the 2024 AIP.

The following “scorecard” identifies (i) the performance assessment categories in the 2024 AIP and (ii) the Company’s specific achievements in each category.

After careful consideration of the Company’s achievements in each scorecard category and taking into account the priority of the objectives in 2024 to stabilize the Company, the Compensation Committee set the level of achievement under the AIP at 100 percent of target. The Committee determined that results in three assessment categories – (i) compliance, risk management and controls, (ii) talent, leadership, and culture and (iii) strategy, technology and innovation – met or exceeded the expectations for target level performance. The Committee noted the NEOs assumed responsibility for the execution of a turnaround strategy that touched on every area of the Company’s operations and, as a result of their leadership, the Company made significant advances in each of the assessment areas across a broad range of initiatives that were critical to the Company’s future prospects. However, the Committee limited the total award to 100 percent of target in recognition of the Company’s actual financial results in 2024. Mr. Gifford was given an award equal to 67 percent of target in light of his transition to a new role in 2024.

We maintain employment agreements with certain senior executives that provide severance pay and benefit continuation in the event of their termination without cause or for good reason (as defined in the agreements), disability, and upon termination in certain circumstances following a change in control (as defined in the agreements), consistent with applicable laws and regulations. No severance benefits are payable if the executive is terminated for cause or upon the executive’s voluntary resignation without good reason. In the change-in-control context, the agreements are “double trigger” requiring both the occurrence of a change in control and the executive’s involuntary termination of employment or constructive termination for good reason. The Company follows a policy that all new employment agreements for the senior executive group must reflect the following terms: (a) “double trigger” change in control benefits and (b) no indemnification for golden parachute excise tax liabilities. The Company believes that the employment agreements (i) will help retain our senior executives and facilitate an orderly transition during a change in control; (ii) will provide the senior executives with financial protection so they will continue to act in the best interests of the Company during the change in control process; and (iii) reflects an important element of a competitive compensation package for senior management. See Potential Post-Termination Payments and Benefits for additional information regarding our executive employment agreements.

We offer our employees a 401(k) plan with a Company match that enables them to add to their retirement savings on a tax-favored basis. In addition to our retirement plan, we provide our employees, including our NEOs, with coverage under medical, dental, life insurance, and disability plans on the same terms as our general employee population. We also provide employees with access to a flexible spending account program to pay their share of the cost of such medical, dental and similar coverage on a pre-tax basis.

We provide our NEOs with limited perquisites to further their ability to promote the business interests of the Company in our markets and to reflect competitive practices for similarly situated officers employed by our peers. In 2024, as part of our management restructuring plan, we provided a relocation benefit to certain of our NEOs and provided a tax gross up payment on the relocation benefit. See, Summary Compensation Table for additional information on the relocation benefits we provided in 2024.

A central tenet of our compensation philosophy is to provide incentives that are consistent with prudent risk management while recognizing that some level of risk is inherent in the operation of our business. Our approach to risk management takes as a starting point the guidelines established by our bank regulators: (i) incentive compensation should balance risk and financial results in a manner that does not provide incentives for excessive risk taking; (ii) risk management processes and internal controls should reinforce and support the development of balanced incentive compensation arrangements; and (iii) banks should have strong and effective corporate governance to help ensure sound compensation practices.

An essential element of our risk management process is the identification of the Company’s risk appetite, which establishes a baseline for the design of risk considerations under our incentive programs. The Compensation Committee monitors our incentive compensation programs periodically to ensure that the programs reflect a balanced mix of incentives that discourage unnecessary or excessive risk taking by our management team and by employees throughout the organization. The program is also subject to annual review by our Chief Risk Officer, and the Committee is briefed on pertinent risk management topics by our Chief Risk Officer.

Based on our assessment, we do not believe that the risks arising out of our incentive compensation programs are reasonably likely to have a material adverse effect on the Company. We believe our programs are balanced and do not encourage excessive risk taking by the participants that could threaten the value of the Company. This conclusion is supported by the following factors that are specific to our incentive compensation program:

Our stock ownership guidelines are designed to encourage our NEOs to achieve and maintain a significant equity stake in the Company. We believe that our guidelines affirm our commitment to stock ownership and retention as a central element of our compensation philosophy. The guidelines provide that, within five years of the initial point of service in their position, our CEO and other executive officers should accumulate and hold Company stock equal to a specified multiple of their annual base salary. The Compensation Committee is charged with monitoring compliance with the stock ownership guidelines. We count awards under our equity compensation program and stock held in our 401(k) plan toward the ownership guidelines. Currently, our CEO is required to hold Company stock equal to six times’ base salary and our other NEOs are required to hold stock equal to four times’ base salary. All our NEOs are currently in compliance or within the five-year compliance period.

In 2024, the Company adopted a revised Incentive Compensation Recoupment Policy that satisfies the rules promulgated by the NYSE and the SEC pursuant to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Recoupment Policy”). The Recoupment Policy provides for the prompt recovery of certain excess incentive-based compensation received during an applicable three-year recovery period by current or former executive officers in the event we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Triggering events include accounting restatements to correct an error in previously issued financial statements that is material to such previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Excess incentive-based compensation for these purposes generally means the amount of incentive-based compensation received by such executive officer that exceeds the amount of incentive-based compensation that would have been received by such executive officer had it been determined based on the restated amounts, without regard to any taxes paid. Incentive-based compensation potentially subject to recovery under the Recoupment Policy is in general limited to any compensation granted, earned, or vested based wholly or in part on the attainment of one or more financial reporting measures. In general, the Company may use a broad range of recoupment methods under the policy. The Recoupment Policy does not condition recovery on the fault of the executive officer, but we are not required to recoup amounts in limited circumstances where the Compensation Committee has made a determination that recovery would be impracticable and where (i) we have already attempted to recover such amounts but the direct expenses paid to a third party in an effort to enforce the Recoupment Policy would exceed the amount to be recovered or (ii) the recovery would cause the non-compliance of a tax-qualified retirement plan under the Internal Revenue Code and applicable regulations. We may not indemnify any such executive officer against the loss of such recovered compensation.

In addition to the Recoupment Policy, the Company maintains a separate policy that applies to all employees and requires recoupment of incentive compensation where an employee is found to have, among other things, (i) engaged in fraud, negligence or other misconduct; (ii) violated any risk management policies or engaged in excessive risk taking activities; (iii) violated the Company's Code of Conduct or otherwise engaged in conduct that violated ethical standards.

Our directors and officers are prohibited from hedging the value of our stock pursuant to a formal policy that bars the purchase and sale of puts, calls, options, or other derivative securities based on Company stock, or other transactions related to the monetization of the value of our stock. In addition, our officers and directors are not allowed to pledge Company stock as collateral or acquire Company stock on margin.

In consultation with our advisors, we evaluate the tax and accounting treatment of each of our compensation programs at the time of adoption and periodically thereafter to ensure that we understand the financial impact of each program on the Company. Our analysis includes a review of recently adopted and pending changes in tax and accounting requirements. As part of our review, we consider modifications and/or alternatives to existing programs to take advantage of favorable changes in the tax or accounting environment or to avoid adverse consequences. To the greatest extent possible, we structure our compensation programs in a tax efficient manner. Section 162(m) of the Internal Revenue Code generally limits a public company’s corporate income tax deduction to $1 million per year for certain executives, including our NEOs. While tax deductibility is one of several factors the Compensation Committee considers in determining compensation, we have retained the flexibility to provide our executives with competitive compensation arrangements, even if a portion of their compensation is nondeductible.

As discussed above, the urgent circumstances following the Company’s earnings release in January 2024 and the subsequent capital raise in March 2024 created an immediate need to assemble a talented management team to drive the Company’s turnaround. This process started with the hiring of Mr. Otting as President and Chief Executive Officer who was awarded a special one-time stock option grant covering 5,000,000 shares (adjusted for the July 11, 2024, 1-for-3 reverse stock split). To attract and retain key personnel, each of Mr. Otting’s direct reports, including Messrs. Davis, Nguyen, Gifford and Raffetto, received a special one-time stock option grant covering 1,000,000 shares (reverse split adjusted). Separately, Mr. DiNello received a one-time grant of stock options in consideration of his service as Executive Chairman, President and Chief Executive Officer on an interim basis. During fiscal 2024, the Compensation Committee awarded stock options to our NEOs in the period beginning four business days before our filing of a periodic report on Form 10-K or Form 10-Q or the filing or furnishing of a current report on Form 8-K that disclosed material non-public information (“MNPI”), and ending one business day after the filing or furnishing of such report (the “Designated Periods”). As required by Item 402(x) of Regulation S-K under the Exchange Act, we are providing the following information relating to stock options awarded to NEOs in the Designated Periods occurring during fiscal year 2024.