Good morning, everyone, and thank you for joining us today. Welcome to New York Community Bancorp's 2021 Annual Shareholders Meeting. My name is Thomas Cangemi. I am the company's new Chairman, President, and Chief Executive Officer. I hope that each of you and your families are doing well after one of the most difficult and challenging years in our country's history. Despite the fact that over the past several weeks, both the state and city have relaxed their social distancing rules, and many businesses have started to reopen, we feel an abundance of caution and a consideration of the health and well-being of our board, employees, and shareholders to once again hold our annual meeting virtually via live webcast. Despite the virtual format, you will still be able to ask any proposal-related questions when that specific proposal is being discussed.
There will also be an opportunity to respond to your other questions after I complete my formal presentation and remarks. Also, instructions on how to vote, change your vote, or ask a question are contained in the rules of order, which are posted on the website. I'm joined on today's webcast by all of the directors from our corporate board, as well as several members of our senior executive management team, who are also joining online today. I would like to personally thank all of you for your service to the company over the past year, and on behalf of the entire board of directors, I would like to thank you, our shareholders, for your investment in NYCB and for participating in today's meeting. As many of you already know, my predecessor, Joseph R. Ficalora, retired at the end of last year after a distinguished 55-year career with the company.
It is rare today for someone to spend their entire career with the same company, let alone with the dedication and passion that Joe held for the bank over five decades. NYCB, as we know it today, would probably not be the same company had it not been for his vision and commitment. We are all thankful for everything he has done for the bank during his long tenure. At the same time, I would like to acknowledge Michael Levine, who retired as chairman of the board earlier this year. After 17 years of loyal service, Mike capably served the company first as a director, including as a member of several committees, then as chairman of both the Risk Assessment and Corporate Governance Committee.
Prior to being named Chairman as the board's independent presiding director, we thank Mike for his service and for his insight and business acumen over the years. Lastly, I would like to thank all of our employees who worked so diligently last year under very challenging conditions. I cannot be more proud of how our entire organization pulled together during 2020. Our results could not have been achieved without their commitment to the company and our customers. Now, I would like to turn the meeting over to Patrick Quinn, who is serving as Secretary of today's meeting to review the rules of order and provide a notice of annual meeting.
Thank you, Mr. Cangemi. First, I would like to draw your attention to the agenda, the rules of order, and the safe harbor statement, which is available on the website for today's meeting. As stated in the notice of annual meeting you received in the mail or online, the purpose of today's meeting is to consider five proposals. First, the election of three director nominees to the board to serve for three-year terms of office. Second, to ratify the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2021. Third, to approve on a non-binding advisory basis the compensation of the company's named executive officers. Fourth, a proposal to amend the amended and restated certificate of incorporation of the company to phase out the classification of the board of directors and provide instead for the annual election of directors.
Fifth, a shareholder proposal requesting board action to amend the Amended and Restated Certificate of Incorporation and Bylaws of the company to provide for the right to act by Written Consent, as described in the Proxy Statement, if properly presented at today's meeting. As indicated on the agenda, a discussion period will follow the presentation of each of the five proposals. You will have the ability to ask questions online at that time. Online voting will be conducted after all five proposals have been discussed. In addition, after Mr. Cangemi's formal presentation, there will be an opportunity for general Q&A, which you can also participate in through the website. As the rules of order indicate, we would appreciate you limiting your questions to two per shareholder. Only shareholders as of April 1, 2021, are permitted to ask questions during the virtual annual meeting.
To ask a question, you may do so by typing it in the field provided on the website. If there are any matters of individual concern to you as a customer, I would ask that you contact John Fennell from our retail banking group at the following phone number, 516-683-4577, or by emailing John at john.fennell@mynycb.com. If you have any questions about your shareholder accounts, please contact our investor relations department at 516-683-4420 or by emailing the department at ir@mynycb.com. Resolutions providing for the annual meeting to be held virtually at this time and date and directing that such notice be given were adopted by the board of directors of the company. The board also fixed April 1, 2021, as the record date to determine those persons eligible to receive notice of and to vote at this meeting.
An alphabetical list of shareholders of record as of April 1, 2021, showing their respective addresses and the number of shares held by each, is available online through the provided link for inspection by shareholders in accordance with the company's bylaws and applicable law. As of April 1, 2021, there were 465,074,384 outstanding shares of the common stock of New York Community Bancorp entitled to vote. A notice of meeting, proxy statement, and form of proxy for a notice of internet access to such information was duly mailed on or about April 16, 2021, to every shareholder of record as of the April 1st record date. An affidavit of mailing prepared by Broadridge Financial, our proxy distributor and vote tabulator, will be filed with the minutes of this meeting.
The board of directors has appointed Mr. Peter Descovich, an independent agent, to serve as inspector of elections at this meeting. Mr. Descovich has filed with me his oath of office as inspector of election. The inspector of elections has in his possession the list of shareholders entitled to vote and the voted proxies received prior to the onset of this meeting. I have been advised by the inspector of election that there are present today in person or by proxy holders of at least 374,117,299 shares of New York Community Bancorp common stock. This represents more than a majority of the outstanding shares of the company's common stock entitled to vote at today's meeting. Accordingly, I declare that a quorum is present and this meeting is duly convened. The polls for voting are now open at 10:07 A.M.
Thank you, Patrick. First, if you have already voted, there is no need for you to recast your vote unless you wish to revote or change your vote. If you have not voted, there are instructions on the website on how to cast your vote. Each proposal will be open for discussion as it is presented. Shareholders who wish to ask questions regarding the proposal are asked to observe the established rules of order. Questions may be submitted to the field provided in the web portal at or before the time the matters are before the annual meeting for consideration. Please limit your questions or comments at this time to the proposal under discussion. The first proposal we will consider is the election of directors.
The board has nominated three directors for three-year terms of office to expire at the annual meeting of shareholders to be held in the year 2024 or until their successors are elected and qualified. Information about the nominees' principal occupations and service with New York Community Bancorp and other pertinent matters may be found in your proxy statement. Are there any comments with respect to the nomination for directors at this time? No comments. The second proposal to be considered calls for the ratification of the appointment of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021. Representatives of KPMG are on the line today to answer any questions related to their engagement. Operator, please unmute the line of Paul Laurenzano. Mr. Laurenzano, do you wish to make a statement?
No statement's necessary. Thank you.
Thank you, Paul. In that case, are there any comments with respect to the ratification of KPMG as the company's independent registered public accounting firm for the fiscal year? No comments. The third proposal on the agenda calls for the approval on a non-binding advisory basis of the compensation of the company's named executive officers. Are there any comments regarding this proposal? No comments. The fourth proposal on the agenda is a proposal to amend the company's certificate of incorporation to phase out the classification of the board of directors and provide instead for an annual election of directors. Are there any comments with regard to this proposal? There are no comments.
The fifth and final proposal on the agenda is a shareholder proposal being submitted by Kenneth Steiner requesting board action to amend the amended and restated Certificate of Incorporation and bylaws of the company to provide for the right to act by written consent. I believe Mr. Chevedden is representing Mr. Steiner. So Mr. Chevedden, you can read your brief statement now. Operator, please unmute Mr. Chevedden's line.
Hello, this is John Chevedden. Can you hear me okay?
Yes.
Proposal five, adopt a mainstream shareholder right, written consent. Shareholders request that our board of directors take the necessary steps to permit written consent by the shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present in voting. This proposal topic won 95% support at Dover Corporation and 79% support at Xerox. Taking action by written consent in place of a meeting is the means shareholders can use to raise important matters outside the normal annual meeting cycle, like the election of a new director. For instance, Mr. Dominick Ciampa, age 87, was rejected by 81 million votes in 2020, and Mr. Lawrence Rosano was rejected by 57 million votes. In spite of such strong rejection, Mr. Ciampa is untouchable by a shareholder vote again until he is age 89.
These negative votes represent a failure in the so-called shareholder outreach program. The high negative votes raise the question on whether the so-called management outreach program had any clue that such substantial negative votes would be registered. The management outreach program also apparently failed to predict that 67% of shares would reject management pay at our 2018 annual meeting. Directors Mr. John Tsimbinos, age 83, Mr. Ronald Rosenfeld, age 80, and Mr. James O'Donovan , age 77, would only be up for election once in three years. Corporate governance reform such as this proposal is important for New York Community Bancorp since our stock is now down from $17 in 2015 and down from $34 in 2004. Contrary to the management text, there is no incentive for confusion with written consent because confusion only leads to more support for management.
Shareholders deserve a right to act by written consent to make up for the transition to online shareholder meetings. That means it is easier for management to dominate an online shareholder meeting. For instance, the 2021 Kohl's annual meeting was nine minutes. An example of the near total dominance that management can now display at an online shareholder meeting is AT&T, which would not even let shareholders speak at two consecutive online shareholder meetings. The shareholders supporting written consent could only accomplish their objective if 68% of the shares that normally voted at our annual meeting give approval. In resisting this proposal, management is opposed to listening to the voice of 68% of shares. Please vote yes, adopt a mainstream shareholder right, written consent proposal five.
Thank you, Mr. Chevedden. Are there any other comments related to this proposal? There are no comments. There being no further discussion, let us now proceed with the vote. If you have already cast your vote by proxy and do not wish to change your vote, there is no need to vote now. If you would like to vote now or change your vote, you can do so by following the directions on your screen. With respect to proposal number one, the election of directors, the nominations have already been presented, and no further action with respect to this proposal is required. At this time, please electronically mark your ballot with respect to proposal number one. The vote will now be taken on the ratification of KPMG LLP as the independent registered public accounting firm of New York Community Bancorp for the fiscal year ending December 31, 2021.
Please electronically mark your ballot with respect to proposal number two. With respect to proposal number three, the vote will now be taken on the approval on a non-binding advisory basis of the compensation of the company's named executive officers. Please electronically mark your ballot now with respect to proposal number three. Next, the vote will be taken on proposal number four, which is requesting to phase out the classification of the board of directors and provide for annual director elections instead. Please electronically mark your ballot now with respect to proposal number four.
Lastly, the vote will now be taken on proposal number five, the shareholder proposal requesting board action to amend the amended and restated certificate of incorporation and bylaws of the company to provide for the right to act by written consent. Please electronically mark your ballot now with respect to proposal number five.
This completes the presentation of the proposals for voting. If you have just entered your vote electronically, please make sure that you've entered your vote correctly and received confirmation that your vote was submitted. At this time, I would ask Mr. Dahya to electronically submit the ballot that is being cast by the proxy committee of the board of directors.
Mr. Cangemi, Mr. Dahya has submitted the ballot on behalf of the proxy committee of the board of directors.
The polls for voting on the matters before this annual meeting are hereby closed at approximately 10:17 A.M. As in the past, during this time that the votes are being tabulated, I will discuss the company's financial results and our recently announced transaction with Flagstar Bancorp. Once the presentation has ended, we will do our very best to answer any questions you may have. The presentation will be shown on your screen and is also available on the investor relations section of our website. Starting with slide four, you can see that based on all the relevant metrics, asset size, loans, deposits, and market capitalization, we are one of the largest banking organizations in the United States and also one of the largest regional banks in the New York metro market.
Even though we are one of the largest banks in the country, we do not have all of the risks that other large banks have. As depicted by this slide, we consistently lead the industry in credit performance. No matter how you look at it, and over various cycles, we have produced impressively low loan loss rates. Since we went public in 1993, our cumulative losses are about 1% compared to 23.7% for the industry and 13.2% compared to our peer group. Next slide shows our first quarter 2021 results compared to the prior year's quarter. As you can see, we've experienced strong improvements across the board. For the three months ended March 31, 2021, we reported diluted earnings per share of $0.29 a share, up 45% and $0.02 ahead of expectations.
Our first quarter results were characterized by double-digit net income growth, continued margin expansion, good loan growth, strong deposit growth, lower operating expenses, and a continuation of market-leading, superior asset quality. Net income available to common shareholders increased 49% to $137 million, driven primarily by an impressive 30% increase in net interest income due to lower interest expenses. On the net interest margin front, our first quarter margin was up 2.48%, up 47 basis points compared to the year ago quarter, as our cost of funds continued to decline in 2021. We're also very happy with our trend in our efficiency ratio, as it also continued to improve, declining to just under 40%. On the lending side, total loans increased $833 million, or 2%, compared to the year-ago quarter, led by growth in both the multifamily and specialty financed portfolios.
As I have articulated previously, one of NYCB's top goals has been to diversify our funding mix. During the current first quarter, we entered into a third-party relationship to bring in low-cost deposits. To this end, total deposits increased $2.2 billion, or 7%, on a year-over-year basis to $34.2 billion. $1.6 billion of this amount came from this new relationship and our non-interest- bearing. Lastly, our asset quality metrics remained strong, as non-performing assets declined, and we had net recoveries for the quarter. Additionally, 100% of the loans that were on full payment deferral due to COVID-19 have now returned to payment status. Moreover, the vast majority of these loans, currently modified and paying interest only, are expected to come off their deferral period during the second quarter, at which time we expect them to return to full payment status.
In terms of the regional economy, our outlook is increasingly positive. The vaccine rollout has resulted in a significant decline in the number of new COVID-19 cases. Accordingly, stay-at-home orders, travel restrictions, and social distancing requirements have been lifted, and economic activity has picked up again. Employees are recalling workers to their offices, more people are returning to live in New York City, and many businesses have reopened. We continue to be optimistic about the full reopening of the city. On the real estate front, our portion of the New York City real estate market, the non-luxury rent-regulated portion of the multifamily market, continues to perform extremely well. Our borrowers have strong balance sheets, and rent collections are above pre-pandemic levels, hovering in the high 90% range.
Overall, this has been a very strong start to the year, and we believe that these trends bode well for us over the remainder of the year on a standalone basis. Not only am I pleased about our first quarter results, but I am very excited about our recently announced combination with Flagstar Bancorp. When I was appointed President and CEO early this year, I outlined what my strategic priorities would be. A key priority was to seek a like-minded partner who would provide us with a diverse revenue stream, improve our funding profile, and accelerate our transition to a dynamic commercial banking organization. In Flagstar, we found such a partner. The merger of our two organizations will provide us with a more robust product offering for our customers, a strong employee talent pool, and significant balance sheet size to accelerate our combined transformation to a high-performing commercial bank.
It also provides for both product and geographical diversification, including a top 10 national mortgage origination and servicing business. We are combining two strong banks with similar risk-averse cultures, performance-based values, and complementary business models, positioning us as a stronger financial institution for the future. I am very bullish about what this combination means for our customers, our employees, our communities, and our shareholders. Turning to the next slide, let's discuss some of the key ways that this transaction will enhance shareholder value. This combination accelerates our standalone plan to transform our business model to a commercial bank.
It creates a top-tier regional bank with significant scale, broader diversification, and drives strong, sustainable financial performance and significant capital generation, improves our overall funding profile and interest rate positioning, combines a best-in-class multifamily lender with a top-ranked national mortgage originator and servicer, preserves each bank's unique low credit risk model, and combines two very strong management teams and boards. This next slide summarizes some of the key transaction terms. The deal is structured as a tax-free 100% stock deal with a fixed exchange ratio of 4.0151 NYCB shares for each Flagstar share. This works out to be 6.4 times 2022 consensus EPS estimates using fully realized cost savings, 115% of tangible book value per share, and a 2.2% core deposit premium. Our new company will remain headquartered on Long Island with a regional headquarters in Troy, Michigan.
The board will be comprised of 12 directors, eight from NYCB, and four from Flagstar. Alessandro DiNello, currently Flagstar's president and CEO, will be non-executive chairman, and I am pleased to announce that Lee Smith and Reginald Davis will join our executive leadership team as senior executive vice presidents. Lee will be President of Mortgage and Reggie President of Banking. A hallmark of our previous M&A transactions is that deals must be accretive to earnings and tangible book value per share. As you can see on slide 10, this transaction nicely meets this criteria. Financially, the transaction is very compelling with expected double-digit earnings per share accretion of 16% and an immediate 3.5% accretion to tangible book value per share using conservative modeling assumptions.
Cost savings are estimated at $125 million, but given the fact that both companies are on the same core system, this estimate could prove to be conservative. Our capital ratios post-close will also be very strong with a Common Equity Tier 1 ratio of over 10%. We plan to maintain NYCB's dividend at $0.68 per share. Based on our pro forma EPS, the dividend payout ratio will decline to 47%, and our annual capital generation after payout of the dividend will be approximately $500 million annually. And finally, our credit quality remains strong with estimated pro forma three-year cumulative charge-offs of only 20 basis points. This metric will be even lower if we exclude taxi medallion-related charge-offs, which have accounted for the majority of NYCB's modest charge-offs over the past three years. Turning to the next slide, I'd like to make a few comments about Flagstar's remarkable banking franchise.
Flagstar currently ranks as one of the leading regional banks in the country with a diversified relationship-based business model comprised of Consumer, CRE, and C&I lending with a low-risk credit profile and a low-cost deposit base, along with strong market share in Michigan. It currently operates throughout 158 traditional branches in five states, mostly in the Upper Midwest, as well as in Southern California. Flagstar's mortgage business is the sixth-largest bank originator nationally and is a leading sub-servicer as well, handling payments and record-keeping for nearly $250 billion of loans across almost 1.1 million accounts. Slide 12 highlights the scale of our combined franchise. The new company will have $87 billion in assets and operate nearly 400 traditional branches throughout nine states and 87 retail lending offices in 28 states.
We see significant opportunity to put our much larger balance sheet to work, boosting existing and future lending and other capabilities across the extensive reach of our new retail and digital platforms. Next slide, slide 13 highlights some of those combined company's complementary product offerings. As you can see, we are pairing commercial and retail capabilities that will enable us to better serve our customers' evolving banking needs. Although we are not modeling revenue synergies, there is real opportunity over time for significant synergies. We now have the leadership expertise and product sets to accelerate our strategy and grow our business. Our enhanced scale and capital generation provides the combined company with a greater capacity to lend and the opportunity to deepen our deposit relationships.
In addition, there is a tremendous opportunity within NYCB's branch network, which historically has been underutilized through the introduction of retail lending capabilities such as mortgages, home equity loans, and fee-based products. Slide 14 shows a breakdown of our pro forma loan portfolio. On a combined basis, we will meaningfully reduce the new company's relative dependency on CRE and residential mortgages, while at the same time, our interest rate sensitivity migrates to an asset-sensitive position compared to our current liability-sensitive position, given the substantial balance of variable-rate loans in Flagstar's portfolio and a better core funding mix driven by a higher concentration in low-cost deposits. Additionally, our CRE concentration drops to about 555% on a pro forma basis compared to 750% standalone and to under 300%, excluding our rent-regulated multifamily loans.
On the funding side, you will see in slide 15 that on a consolidated basis, our funding mix improves substantially, and the cost of our funding declines, given a higher concentration of low-cost deposits, in particular non-interest-bearing deposits, and our overall reliance on wholesale funding sources. In addition, we now have the flexibility to reduce our historical dependency on wholesale funding. Slide 16 shows our combined revenue profile. As you can see by the small pie chart on the right side of the slide, for NYCB, the contribution from fee income more than doubles to 35% of total revenue compared to 14% on a standalone basis, while Flagstar's mortgage fee revenue declines from 36% on a standalone basis to 20% on a combined basis. Flagstar's mortgage platform is a market-leading business that will continue to perform very well through the cycle, with attractive growth opportunities in which we will invest.
As we continue to grow and invest in our businesses over time, we expect that the mix of our revenues and earnings will naturally shift towards a more commercially focused banking model. As you can see on slide 17, NYCB has a history of 11 previous accretive transactions, which have added to our franchise value. The acquisition of Flagstar is our 12th and largest acquisition to date. Both sides undertook a comprehensive due diligence process led by key executives from both companies, as well as our advisors and consultants. We also reviewed integration plans and are very comfortable in our ability to execute on them. This is made easier by the fact that both companies operate on the same core systems platform.
Lastly, on slide 18, our companies have shared values, including, among other things, a strong credit risk management discipline, a common commitment to expanding and diversifying our operations and balance sheets, and moving forward into the new channels for capturing and servicing the nation's banking needs. These values translate into a meaningful commitment to our employees, all of our customers, and to every community that we serve. Additionally, both organizations see these transactions as an inclusive and culturally rich corporate environment. Thank you.
I will now open the floor to your questions. Since we are webcasting today's meeting, you can answer your questions via the website by entering your name and control number to verify your identity and then typing your question into the field provided. To ensure that everyone with a question has the opportunity to ask it, I would appreciate that being mindful of the rules of order.
We will do our very best to get to all your questions within the time allotted. Again, if your questions or comments are regarding your shareholder account or your customer account, please contact either our investor relations department or our retail banking group at your convenience. And now, I will be happy to take your questions.
Mr. Cangemi, you have several questions. The first one from a shareholder is whether the company will be looking for additional acquisitions after Flagstar. Obviously, we appreciate that question. The company has a hallmark of growth to an acquisition strategy, but clearly, our largest acquisition, being Flagstar at a $2.6 billion market cap, has us very busy currently, and the focus and priorities for the company is to get the transaction closed, integrated, and focus on new growth opportunities in the future.
But no question, over time, the historical business model has been to look at future growth through opportunities on the acquisition side. But more importantly, I would say that it's not just on company acquisitions, it'll also be on new vertical lines of businesses and, obviously, employee talent opportunities. So clearly, we're looking at all opportunities within the marketplace, but the priority at the current state of our position here is to get the Flagstar deal closed and integrated and focus on putting these two companies together culturally. That's the most important commitment for us right now. Thank you for the question. Thank you. The next question from our shareholders is regarding our lending, and they want to know, "What is NYCB doing to promote best practices among the landlords whose buildings we finance?" So excellent question. We've been very active with our community groups.
We've been very active within the cities that we serve, but there's no question that we take that as a very serious priority of the company's focus on management to ensure that when we lend, we lend properly, and we work with our customers and our constituents in the marketplace. So we do work with the community groups, and we do have a strategy and a plan to make sure that we are lending responsibly. It is a priority for the bank and will always be a priority for the bank as we grow this institution into new markets as well. Great. Thank you. Thank you for that question. So the next question actually is from several shareholders, and they would like to know how the company is better tying executive compensation specifically to the company's particular strategy.
Great question. Obviously, we've had some significant overhaul over the past five to six years regarding best practice on the compensation. If you read the proxy material, you'll see a very detailed discussion about what we've done historically, and then, obviously, we believe that we're in a position of best practices. We have long-term incentives that are tied to the financial performance of the company, as well as goals and objectives on a long-term strategy, which ties to the performance of the company.
There's no question that both the short-term goals and long-term goals are better aligned where we currently stand today, and I believe they are within best practices and within our industry standards of our peer groups. So clearly, a focus of the company's priority is to ensure that we have the best compensation practices and are aligned with our shareholders' interests. And I believe that we've made the relevant changes over the past few years to get that in place. Thank you, Sal.
Okay. At this point, there are no further questions. Mr. Cangemi, I understand that the vote tally is complete. Thank you, Patrick.
Mr. Descovich, will you please present your report on the vote? Operator, please unmute the line to Mr. Descovich.
Thank you, Mr. Cangemi. The preliminary results of the voting are as follows. With respect to proposal one, all three director nominees have been duly elected by a majority of the votes cast. With respect to proposal number two, the appointment of KPMG LLP as an independent registered public accounting firm for the fiscal year ending December 31, 2021, has been ratified. With regard to proposal number three, a majority of the votes cast were voted for the compensation plan for the company's named executive officers.
Therefore, proposal number three has been approved. With regard to proposal number four, the proposal to amend the amended and restated certificate of incorporation to phase out the classification of the board and provide for annual elections of directors did not receive the required votes needed to pass and, therefore, is not approved, and finally, regarding proposal number five, regarding the shareholder proposal to request that the board take action to amend the amended and restated certificate of incorporation and bylaws to provide for the right to act by written consent, a majority of the votes cast were voted for this proposal. My final report and certificate as inspector of election will be executed and delivered to the secretary of this meeting within 24 hours so that the final vote results can be included in a Form 8-K that the company will file with the SEC .
Thanks you. The preliminary report of the inspector of election as presented, is accepted. We appreciate all of your support this year. With respect to proposal five, I will ask the board to consider the outcome of today's vote when it next meets. Mr. Quinn, please safeguard the ballots, proxies, and the oath and certificate, and report of the inspector of elections, and maintain them among the records of the company. On behalf of the board of directors, I thank you again for joining us today and for your investment in New York Community Bancorp. This meeting is now adjourned.