Item 8.01 Other Events.
Press Release
On October 28, 2022, Flagstar Bancorp, Inc. (the "Company" or "we") announced in
a press release that its Board of Directors (the "Board") has declared the
payment of a one-time special dividend. The special dividend of $2.50 per share
will be paid on November 17, 2022 (the "Payment Date") to shareholders of record
of the Company at the close of business on November 7, 2022. A copy of the press
release is attached as Exhibit 99.1 of this Current Report on Form 8-K.
The special dividend will be paid on the Payment Date regardless of the status
of the Company's proposed transaction with New York Community Bancorp, Inc., as
further described in the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on October 28, 2022.
Additional Tax Disclosure
Characterization of the Special Dividend as a Dividend
Although the matter is not entirely clear, we intend to report the special
dividend as a distribution with respect to our common stock for U.S. federal
income tax purposes. Assuming the special dividend is characterized as a
distribution with respect to our common stock, the special dividend will
generally be treated as a dividend to the extent paid from our current or
accumulated earnings and profits as determined for U.S. federal income tax
purposes. If a distribution exceeds our current and accumulated earnings and
profits, the excess will be treated first as a return of capital to the extent
of a holder's adjusted tax basis in our common stock and thereafter as capital
gain from the sale or exchange of such common stock.
U.S. holders (as defined in the Form S-4 filed by New York Community Bancorp,
Inc. ("NYCB") with the Securities and Exchange Commission (the "SEC") on June
11, 2021 (Registration No. 333-257045), as amended by (i) Amendment No. 1 to
Form S-4 Registration Statement filed by NYCB with the SEC on June 24, 2021,
(ii) Post-Effective Amendment No. 1 to Form S-4 Registration Statement filed by
NYCB with the SEC on August 3, 2022 and (iii) Post-Effective Amendment No. 2 to
Form S-4 Registration Statement filed by NYCB with the SEC on September 28, 2022
(the "Form S-4")) who are individuals that meet applicable holding period
requirements for "qualified dividends" (generally more than 60 days during the
121-day period surrounding the ex-dividend date) will generally be taxed on the
special dividend at preferential long-term capital gain rates. U.S. holders that
are corporations should consult their tax advisors regarding the possible
availability of a dividends received deduction and the potential applicability
of the extraordinary dividend rules with respect to the special dividend.
To the extent the special dividend is treated as a dividend for U.S. federal
income tax purposes, a holder of our common stock that is not a U.S. holder (a
"non-U.S. holder") is generally subject to withholding of U.S. federal income
tax at a 30% rate (or at a lower rate as may be specified by an applicable
income tax treaty). Special rules may apply to a non-U.S. holder to the extent
the special dividend is treated as "effectively connected" with a non-U.S.
holder's conduct of a trade or business within the United States.
Alternative Characterization of the Special Dividend as Merger Consideration in
a Reorganization within the Meaning of Section 368(a) of the Code
Notwithstanding the fact that we intend to report the special dividend as a
distribution with respect to our common stock for U.S. federal income tax
purposes, it is possible that for U.S. federal income tax purposes, the special
dividend could be characterized as merger consideration paid in exchange for a
portion of our common stock in the merger (as defined in the Form S-4). If this
characterization were to be sustained, the special dividend would be treated as
though it were cash consideration received in the merger. The remaining
discussion summarizes the treatment of the special dividend under this
alternative characterization, assuming that the merger qualifies as a
"reorganization" within the meaning of Section 368(a) of the Code.
Subject to the discussion below regarding the potential treatment of any gain
recognized as a dividend, a U.S. holder would recognize gain (but not loss) in
an amount equal to the lesser of (i) the amount by which the sum of the fair
market value of the NYCB common stock (as defined in the Form S-4) and the
special dividend received by the holder exceeds the holder's tax basis in our
common stock, and (ii) the amount of special dividend received by such holder of
our common stock (excluding any cash received instead of a fractional share of
NYCB common stock, which is discussed in the Form S-4 section entitled "U.S.
Federal Income Tax Consequences of the Merger -- Cash Instead of a Fractional
Share"). The aggregate tax basis of the NYCB common stock received in the merger
(including any fractional shares of NYCB common stock deemed received and
exchanged for cash) would be the same as the aggregate tax basis of our common
stock exchanged for NYCB common stock, decreased by the amount of the special
dividend and increased by the amount of gain recognized on the exchange
(excluding any gain recognized with respect to fractional shares of NYCB common
stock).
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Subject to the discussion below regarding the potential treatment of any gain
recognized as a dividend, the U.S. federal income tax consequences of the
special dividend for a non-U.S. holder would be the same as those described
above for U.S. holders, except that a non-U.S. holder would generally not be
subject to U.S. federal income tax on any gain realized in connection with the
merger unless:
•such gain is "effectively connected" with the conduct of a trade or business by
the non-U.S. holder in the United States; or
•the non-U.S. holder is an individual who is present in the United States for
183 days or more in the taxable year of the exchange and certain other
conditions are met.
Non-U.S. holders subject to the rules described in the two bullets above should
consult their tax advisors regarding the potential consequences of the special
dividend to them, should the special dividend be characterized as a
consideration paid in exchange for our common stock.
Any gain recognized may be treated as dividend income rather than capital gain
for U.S. federal income tax purposes if it has the effect of a distribution of a
dividend. For purposes of determining whether a holder's receipt of the special
dividend would have the effect of a distribution of a dividend, the holder would
be treated as if such holder first exchanged all of our common stock held by
such holder solely in exchange for NYCB common stock in the merger and then NYCB
immediately redeemed a portion of such NYCB common stock for the special
dividend. Receipt of the special dividend characterized as merger consideration
would generally have the effect of a dividend to a holder if such receipt is not
"substantially disproportionate" with respect to such holder or is "essentially
equivalent to a dividend" under the tests set forth in Section 302 of the Code.
The IRS has indicated in a revenue ruling that a minority shareholder in a
publicly-traded corporation will experience a "meaningful reduction" in the
holder's percentage ownership, and as a result a redemption will not be
"essentially equivalent to a dividend," if the shareholder (i) has a minimal
percentage stock interest, (ii) exercises no control over corporate affairs, and
(iii) experiences any reduction in its percentage stock interest. In applying
the above tests, a holder may, under constructive ownership rules, be deemed to
own stock that is owned by other persons or stock underlying a holder's option
to purchase stock, in addition to the stock actually owned by the holder. If any
gain recognized were treated as dividend income, the tax treatment of the
dividend income to U.S. and non-U.S. holders would be the same as described
above under "Characterization of the Special Dividend as a Dividend," in the
second and third paragraphs, respectively.
This discussion is subject in its entirety to the assumptions, qualifications
and limitations in the section titled "U.S. Federal Income Tax Consequences of
the Merger" of the Form S-4.
Item 9.01 Exhibits.
Exhibit
99.1 Press release of Flagstar Bancorp, Inc., dated October 28, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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