Group 1: Company Overview - Citizens Financial Group is a Rhode Island-based bank holding company with a history dating back to 1828, currently valued at $22 billion and known as the parent company of Citizens Bank [3] - As of June 30, Citizens Bank reported total assets of $220.1 billion, including $177.6 billion in deposits, operating through 1,000 branches and 3,100 ATMs across 14 states plus DC [2] Group 2: Financial Performance - In Q2 2025, Citizens reported a top line of $2.04 billion, a 4% year-over-year increase, beating forecasts by $30 million, with adjusted earnings of 92 cents per share, covering the dividend and exceeding estimates by 4 cents [6] - Flagstar Financial, previously known as New York Community Bancorp, reported Q2 2025 revenue of $496 million, down 26% year-over-year, with a net loss of 14 cents per share, marking an improvement from a $1.05 EPS loss in the same quarter last year [10][11] Group 3: Capital Return and Dividends - Citizens has a regular stock repurchase program, buying back $200 million worth of shares in both Q1 and Q2 of this year, and declared a dividend payment of 42 cents per common share, annualizing to $1.68 per share with a forward yield of 3.24% [1][6] Group 4: Analyst Insights - Cantor analyst Dave Rochester believes bank stocks should be included in investment portfolios, citing lower interest rates and a healthy economic backdrop as positive factors for credit trends [4] - Rochester projects EPS growth for Citizens of 17.2% in FY25, 38.1% in FY26, and 22.3% in FY27, with a price target of $61, indicating a potential one-year gain of 19% [7] - For Flagstar Financial, Rochester has an Overweight rating with a price target of $15, suggesting a 24% gain, while the stock currently trades at $12.10 with an average target price of $13.70, implying a 13% appreciation [11][12]

Question-and-Answer SessionJared David ShawBarclays Bank PLC, Research Division Yes. Maybe we'll start off maybe at a higher level with your background, Joseph is former controller of the currency and your lead director's background is former Secretary of the Treasury. It feels like Flagstar may be a little closer to regulatory leaders in the administration today than your average bank. Where would you see bank regulation? Or where do you expect bank regulation to go from here? We've all been eagerly awaiti ...

Flagstar Financial (NYSE:FLG) FY Conference September 09, 2025 02:00 PM ET Company ParticipantsLee Smith - Senior Executive Vice President and CFOJoseph Otting - Executive Chairman, President, and CFORichard Raffetto - Senior Executive Vice President and PresidentConference Call ParticipantsJared Shaw - Senior Equity Research Analyst and Managing DirectorJared ShawThanks, everybody. Good afternoon. We're excited to welcome Flagstar Financial with us as our next speaker in Fireside Chat. We're excited to hav ...

Company Overview - Flagstar Financial, Inc. is the parent company of Flagstar Bank, N.A., one of the largest regional banks in the United States, headquartered in Hicksville, New York [3] - As of June 30, 2025, the company reported total assets of $92.2 billion, loans amounting to $64.4 billion, deposits of $69.7 billion, and total stockholders' equity of $8.1 billion [3] - Flagstar Bank operates approximately 360 locations across nine states, with a strong presence in the greater New York/New Jersey metropolitan area and significant operations in Florida and the West Coast [3] Upcoming Events - The Chairman, President, and CEO Joseph Otting, along with other senior executives, will participate in the Barclays 23rd Annual Global Financial Services Conference in New York City on September 9, 2025, at 2:00 p.m. (ET) [1] - A live audio-only webcast of the event will be available on the company's website, with a replay accessible until October 7, 2025 [2]

Company Overview - Flagstar Financial, Inc. is the parent company of Flagstar Bank, N.A., one of the largest regional banks in the United States, headquartered in Hicksville, New York [4] - As of June 30, 2025, the company reported total assets of $92.2 billion, loans amounting to $64.4 billion, deposits of $69.7 billion, and total stockholders' equity of $8.1 billion [4] - Flagstar Bank operates approximately 360 locations across nine states, with significant presence in the greater New York/New Jersey metropolitan area, the upper Midwest, Florida, and the West Coast [4] Special Meeting of Shareholders - The Special Meeting of Shareholders is scheduled for October 15, 2025, at 10:00 a.m. Eastern Time, and will be conducted virtually via live webcast [1] - The record date for voting at the Special Meeting was set as August 18, 2025, allowing shareholders as of this date to receive notice and vote [2] - Further details on participation in the Special Meeting are available in the company's Proxy Statement and Notice filed with the SEC, and can also be accessed online [3] Financial and Strategic Context - The company has undergone significant changes, including a merger with Flagstar Bancorp, Inc. completed in December 2022, and the acquisition of substantial portions of the former Signature Bank through an FDIC-assisted transaction completed in March 2023 [5] - A capital raise of $1.05 billion was completed in March 2024, which is expected to impact the company's financial position [5] - The company is subject to various regulatory requirements and is focused on implementing risk management programs necessary for institutions with assets exceeding $100 billion [5]

Group 1 - The article aims to identify investment opportunities in Flagstar Financial, Inc. and its preferred stock [1] - Flagstar Financial, Inc. is listed on the NYSE under the ticker FLG and FLG.PR.A for its preferred shares [1] Group 2 - The article does not provide specific financial metrics or performance data for Flagstar Financial, Inc. [1]

[Front Matter & General Information](index=1&type=section&id=Front%20Matter%20%26%20General%20Information) This section provides foundational information about the report, including filing details, definitions of abbreviations, and a cautionary statement regarding forward-looking language [Filing Information](index=1&type=section&id=Filing%20Information) This section details Flagstar Financial, Inc.'s Quarterly Report on Form 10-Q for Q2 2025, confirming its status as a large accelerated filer and compliance with SEC requirements - Flagstar Financial, Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025[2](index=2&type=chunk) - The registrant is a large accelerated filer and has complied with all filing requirements[4](index=4&type=chunk)[5](index=5&type=chunk) Registrant Details | Detail | Value | | :--- | :--- | | State of Incorporation | Delaware | | IRS Employer ID No. | 06-1377322 | | Principal Executive Offices | 102 Duffy Avenue, Hicksville, New York 11801 | | Telephone Number | (516) 683-4100 | | Common Stock Trading Symbol | FLG | | Common Stock Exchange | New York Stock Exchange | | Shares Outstanding (July 31, 2025) | 415,574,267 shares | [Abbreviations and Acronyms](index=4&type=section&id=Abbreviations%20and%20Acronyms) This section lists abbreviations and acronyms used throughout the report to aid in understanding the financial statements and notes - The report includes a comprehensive list of abbreviations and acronyms to clarify terminology used in the financial statements and notes[10](index=10&type=chunk) [Cautionary Statement Regarding Forward-Looking Language](index=5&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20LANGUAGE) This section advises that the report contains forward-looking statements subject to inherent uncertainties and external factors, and actual results may differ materially - The report contains forward-looking statements, identified by words like 'anticipate,' 'believe,' 'estimate,' 'expect,' and similar expressions, which are based on certain assumptions and describe future plans and expectations[12](index=12&type=chunk)[13](index=13&type=chunk) - Actual results, performance, or achievements could differ materially from forward-looking statements due to numerous factors, many beyond the company's control, including economic conditions, market changes, interest rate fluctuations, and regulatory changes[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk)[20](index=20&type=chunk) - Readers are cautioned not to place undue reliance on these statements, and the company does not assume any obligation to revise or update them, except as required by law[19](index=19&type=chunk) [PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents Flagstar Financial, Inc.'s unaudited financial statements, management's discussion and analysis, and disclosures on market risk and internal controls [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=8&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes Flagstar Financial, Inc.'s financial condition and operational results, highlighting strategic transformation, performance, asset quality, and risk management for Q2 2025 [General](index=8&type=section&id=GENERAL) Flagstar Financial, Inc., a regional bank with **$92.2 billion** in assets, is undergoing a strategic transformation and plans an internal reorganization by the end of 2025 - Flagstar Financial, Inc. is a regional bank with approximately 360 locations across nine states, primarily in the greater New York/New Jersey metropolitan region and the upper Midwest[22](index=22&type=chunk)[23](index=23&type=chunk) Key Financials (June 30, 2025) | Metric | Amount (in billions) | | :--- | :--- | | Total Assets | $92.2 | | Total Loans | $64.4 | | Total Deposits | $69.7 | | Total Stockholders' Equity | $8.1 | - The company is executing a strategic transformation plan guided by six pillars to evolve into a fully diversified bank with a strong balance sheet, robust capital position, and consistent earnings power[25](index=25&type=chunk)[26](index=26&type=chunk) - An internal reorganization is underway to merge Flagstar Financial, Inc. into its wholly-owned bank subsidiary, Flagstar Bank, N.A., by the end of 2025, subject to shareholder and OCC approval, with the surviving entity publicly traded on the NYSE under 'FLG'[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) [Results of Operations](index=10&type=section&id=RESULTS%20OF%20OPERATIONS) Flagstar Financial reported a reduced net loss for Q2 2025, with increased net interest income QoQ but decreased YoY, alongside lower provision for credit losses and non-interest expenses [Net Loss](index=10&type=section&id=Net%20Loss) The company reported a net loss of **$(70) million** for Q2 2025, a reduction from previous periods, with a significant decrease compared to Q2 2024 Net Loss and EPS | Period | Net Loss (in millions) | Net Loss Attributable to Common Stockholders (in millions) | Diluted EPS | | :--- | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | $(70) | $(78) | $(0.19) | | Three Months Ended March 31, 2025 | $(100) | $(108) | $(0.26) | | Six Months Ended June 30, 2025 | $(170) | $(186) | $(0.45) | | Six Months Ended June 30, 2024 | $(650) | $(668) | $(2.48) | - The net loss for the six months ended June 30, 2024, included a **$121 million** reduction in the Signature Transaction bargain purchase gain[34](index=34&type=chunk) [Net Interest Income](index=10&type=section&id=Net%20Interest%20Income) Net Interest Income (NII) is the primary income source, showing a slight QoQ increase but a significant YoY decrease due to strategic loan portfolio reductions and asset sales - Net Interest Income (NII) is the primary source of income, influenced by interest-earning assets, funding methods, and the spread between interest rates earned and paid[35](index=35&type=chunk) Net Interest Income and Margin Trends | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended March 31, 2025 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income (in millions) | $419 | $410 | $829 | $1,181 | | Net Interest Margin (NIM) | 1.81 % | 1.74 % | 1.77 % | 2.13 % | | Interest Rate Spread | 1.02 % | 0.88 % | 0.97 % | 1.14 % | - QoQ: NIM increased by **7 basis points** and NII increased by **$9 million**, driven by payoff of brokered CDs, pay down of wholesale borrowings, and improved multi-family loan yield resets, partially offset by lower average total loans[44](index=44&type=chunk) - YoY: NIM decreased by **36 basis points** and NII decreased by **$352 million**, primarily due to strategic reduction in multi-family, CRE, and C&I loans, sale of Mortgage Operations, and lower interest rates, partially offset by lower average borrowed funds[45](index=45&type=chunk) [Provision for Credit Losses](index=13&type=section&id=Provision%20for%20Credit%20Losses) Provision for credit losses decreased significantly QoQ and YoY, reflecting strategic loan portfolio reductions, improved credit trends, and stabilization in the Allowance for Credit Losses Provision for Credit Losses | Period | Provision for Credit Losses (in millions) | Change QoQ | Change YoY | | :--- | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | $64 | (19)% | N/A | | Three Months Ended March 31, 2025 | $79 | N/A | N/A | | Six Months Ended June 30, 2025 | $143 | N/A | (80)% | | Six Months Ended June 30, 2024 | $705 | N/A | N/A | - QoQ: Decrease of **$15 million**, mainly due to strategic reduction in multi-family, CRE, and non-core C&I loan portfolios, reduced criticized assets, and improved credit reviews/appraisals, partially offset by negatively trending macro-economic conditions[47](index=47&type=chunk) - YoY: Decrease of **$562 million**, primarily due to improving credit trends, normalization of property values and borrower financials, stabilization in ACL, and lower net charge-offs in multi-family and CRE portfolios, partially offset by negatively trending macro-economic conditions[48](index=48&type=chunk) [Non-Interest Income](index=14&type=section&id=Non-Interest%20Income) Total non-interest income decreased QoQ by **$3 million** but increased YoY by **$34 million**, primarily due to the non-recurrence of a bargain purchase gain Non-Interest Income | Category | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended March 31, 2025 (in millions) | Change QoQ | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change YoY | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Fee income | $22 | $22 | — % | $44 | $75 | (41)% | | Bank-owned life insurance | $10 | $10 | — % | $20 | $22 | (9)% | | Net return on mortgage servicing rights | $0 | $0 | — % | $0 | $40 | NM | | Net gain on loan sales and securitizations | $6 | $13 | (54)% | $19 | $38 | (50)% | | Net loan administration income | $1 | $4 | (75)% | $5 | $11 | (55)% | | Bargain purchase gain | $0 | $0 | — | $0 | $(121) | NM | | Other | $38 | $31 | 0 | $69 | $58 | 0 | | **Total non-interest income** | **$77** | **$80** | **(4)%** | **$157** | **$123** | **28 %** | - QoQ: Non-interest income decreased by **$3 million** due to insignificant items[51](index=51&type=chunk) - YoY: Non-interest income increased by **$34 million**, primarily due to the non-recurrence of a **$121 million** reduction in the Signature Transaction bargain purchase gain, partially offset by lower MSRs fees, fee income, net gain on loan sales and securitizations, and net loan administration income following the sale of Mortgage Operations[52](index=52&type=chunk) [Non-Interest Expense](index=14&type=section&id=Non-Interest%20Expense) Total non-interest expenses decreased QoQ by **$19 million** and YoY by **$359 million**, reflecting cost optimization and the sale of Mortgage Operations Non-Interest Expense | Category | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended March 31, 2025 (in millions) | Change QoQ | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change YoY | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Compensation and benefits | $237 | $244 | (3)% | $481 | $645 | (25)% | | FDIC insurance | $49 | $50 | (2)% | $99 | $141 | (30)% | | Occupancy and equipment | $53 | $55 | (4)% | $108 | $104 | 4 % | | General and administrative | $133 | $147 | (10)% | $280 | $369 | (24)% | | **Total operating expense** | **$472** | **$496** | **(5)%** | **$968** | **$1,259** | **(23)%** | | Intangible asset amortization | $27 | $28 | (4)% | $55 | $68 | (19)% | | Merger-related expenses | $14 | $8 | 75 % | $22 | $77 | (71)% | | **Total non-interest expense** | **$513** | **$532** | **(4)%** | **$1,045** | **$1,404** | **(26)%** | - QoQ: Total non-interest expenses decreased by **$19 million**, primarily due to a decrease in general and administrative expenses as the company focuses on operating expense management[54](index=54&type=chunk) - YoY: Total non-interest expenses decreased by **$359 million**, mainly due to lower compensation and benefits from cost optimization, decreased general and administrative expenses (partially from Mortgage Operations sale), lower FDIC insurance costs due to a smaller asset base and fewer brokered deposits, and reduced merger-related expenses[55](index=55&type=chunk) [Income Tax Benefit](index=15&type=section&id=Income%20Tax%20Benefit) The company recorded an income tax benefit for Q2 2025, with the effective tax rate influenced by expected break-even results for the year Income Tax Benefit and Effective Tax Rate | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended March 31, 2025 (in millions) | Change QoQ | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change YoY | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Income tax (benefit) | $(11) | $(21) | (48)% | $(32) | $(155) | (79)% | | Effective tax rate | 12.9 % | 17.8 % | N/A | 15.9 % | 19.3 % | N/A | - The income tax benefit for the three and six months ended June 30, 2025, was computed using the actual effective tax rate due to an unreliable estimate of the annual effective tax rate, resulting from expected break-even results for 2025[56](index=56&type=chunk) - QoQ: Income tax benefit decreased by **$10 million**, primarily due to a reduction in pre-tax loss[57](index=57&type=chunk) - YoY: Income tax benefit decreased by **$123 million**, mainly due to a reduction in pre-tax loss, partially offset by the tax impact of the adjustment to the bargain purchase gain in Q1 2024[58](index=58&type=chunk) [Financial Condition](index=16&type=section&id=FINANCIAL%20CONDITION) Flagstar Financial's financial condition at June 30, 2025, reflects a strategic reduction in its loan portfolio, leading to decreased total loans, lower Allowance for Credit Losses, and reduced deposits and borrowed funds [Loans and Leases](index=16&type=section&id=Loans%20and%20Leases) Total loans and leases held for investment decreased by **$4.2 billion** from December 31, 2024, primarily due to strategic reductions in multi-family, CRE, and non-core C&I loan exposures Loan Portfolio Composition (in millions) | Loan Type | June 30, 2025 Amount | June 30, 2025 % of Total | December 31, 2024 Amount | December 31, 2024 % of Total | | :--- | :--- | :--- | :--- | :--- | | Multi-family | $31,932 | 49.8 % | $34,093 | 49.9 % | | Commercial real estate | $10,636 | 16.6 % | $11,836 | 17.4 % | | One-to-four family first mortgage | $5,445 | 8.5 % | $5,201 | 7.6 % | | Commercial and industrial | $14,426 | 22.5 % | $15,376 | 22.5 % | | Other loans | $1,682 | 2.6 % | $1,766 | 2.6 % | | **Total loans and leases held for investment** | **$64,121** | **100.0 %** | **$68,272** | **100.0 %** | | Allowance for credit losses | $(1,106) | N/A | $(1,201) | N/A | | Total loans and leases held for investment, net | $63,015 | N/A | $67,071 | N/A | | Loans held for sale | $319 | N/A | $899 | N/A | | **Total loans and leases, net** | **$63,334** | **N/A** | **$67,970** | **N/A** | - Total loans and leases held for investment decreased by **$4.2 billion** from December 31, 2024, primarily due to the strategic reduction in multi-family, CRE, and non-core C&I loan exposure, partially offset by **$2.0 billion** in C&I originations[60](index=60&type=chunk) - Multi-family loan portfolio decreased by **$2.2 billion**, with over **50% of payoffs from substandard loans**, consistent with the strategy to diversify away from multi-family loans[63](index=63&type=chunk) - Commercial Real Estate (CRE) loans decreased by **$1.2 billion** due to par payoffs, aligning with the strategy to reduce CRE exposure[69](index=69&type=chunk) - Commercial and Industrial (C&I) loan portfolio decreased by **$950 million**, driven by a **$2.9 billion** reduction in non-core C&I loans, partially offset by **$2.0 billion** in new originations[73](index=73&type=chunk) - One-to-four family loans increased by **$244 million**, primarily from new originations[78](index=78&type=chunk) - Loans held for sale decreased by **$580 million**, mainly due to the run-off following the sale of Mortgage Operations, partially offset by retail mortgage originations[82](index=82&type=chunk) [Allowance for Credit Losses](index=19&type=section&id=Allowance%20for%20Credit%20Losses) The Allowance for Credit Losses (ACL) on loans and leases decreased by **$95 million** from December 31, 2024, reflecting improving credit trends and strategic portfolio reductions Allowance for Credit Losses on Loans and Leases (in millions) | Loan Type | June 30, 2025 Allowance | June 30, 2025 % of Loans | December 31, 2024 Allowance | December 31, 2024 % of Loans | | :--- | :--- | :--- | :--- | :--- | | Multi-family loans | $538 | 1.68 % | $639 | 1.87 % | | Commercial real estate loans | $318 | 2.99 % | $304 | 2.57 % | | One-to-four family first mortgage loans | $33 | 0.61 % | $39 | 0.75 % | | Commercial and industrial | $160 | 1.11 % | $151 | 0.98 % | | Other loans | $57 | 3.39 % | $68 | 3.85 % | | **Total loans** | **$1,106** | **1.72 %** | **$1,201** | **1.76 %** | - The ACL on loans and leases decreased by **$95 million** from December 31, 2024, to June 30, 2025, primarily due to improving credit trends, normalizing property values and borrower financials, and the ongoing strategic reduction in multi-family, CRE, and non-core C&I portfolios, partially offset by negatively trending macro-economic conditions[85](index=85&type=chunk) [Assets Quality Measures](index=21&type=section&id=Assets%20Quality%20Measures) Asset quality metrics at June 30, 2025, show an increase in non-accrual loans but a decrease in delinquencies, with the ACL to non-accrual loans ratio at **34.78%** Asset Quality Measures | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-accrual loans to total loans held for investment | 4.96 % | 3.83 % | | Non-performing assets to total assets | 3.57 % | 2.62 % | | Allowance for credit losses on loans and leases to non-accrual loans | 34.78 % | 45.93 % | | Allowance for credit losses on loans and leases to total loans held for investment | 1.72 % | 1.76 % | [Non-accrual Loans](index=21&type=section&id=Non-accrual%20Loans) Total non-accrual loans increased by **$565 million** to **$3.18 billion** at June 30, 2025, primarily driven by higher non-accrual multi-family loans from one borrower relationship Non-accrual Loans Held for Investment (in millions) | Loan Type | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Multi-family | $2,388 | $1,755 | $633 | | Commercial real estate | $563 | $564 | $(1) | | One-to-four family first mortgage | $81 | $70 | $11 | | Commercial and industrial | $123 | $202 | $(79) | | Other Loans | $25 | $24 | $1 | | **Total non-accrual loans** | **$3,180** | **$2,615** | **$565** | | Repossessed assets | $11 | $14 | $(3) | | **Total non-accrual loans and repossessed assets** | **$3,191** | **$2,629** | **$562** | - New non-accrual loans totaled **$1.3 billion** for the six months ended June 30, 2025, primarily driven by higher non-accrual multi-family loans due to one borrower relationship, with approximately **43%** of non-accrual loans current on contractual payment terms[91](index=91&type=chunk) [Delinquencies](index=22&type=section&id=Delinquencies) Total loans 30-89 days past due decreased by **$361 million** to **$604 million** at June 30, 2025, with a significant portion of multi-family delinquencies attributed to a single borrower Loans 30 to 89 Days Past Due (in millions) | Loan Type | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Multi-family | $392 | $749 | $(357) | | Commercial real estate | $115 | $70 | $45 | | One-to-four family first mortgage | $30 | $25 | $5 | | Commercial and industrial | $38 | $110 | $(72) | | Other loans | $29 | $11 | $18 | | **Total loans 30-89 days past due** | **$604** | **$965** | **$(361)** | - Approximately **85%** of multi-family loans 30-89 days past due at June 30, 2025, were attributable to a single borrower relationship, which continues to make payments in arrears[92](index=92&type=chunk) [Charge-offs](index=22&type=section&id=Charge-offs) Net charge-offs for the six months ended June 30, 2025, totaled **$232 million**, with multi-family loans accounting for the largest portion at **$176 million** Net Charge-offs as an Annualized Percentage of Average Loans | Loan Type | 3 Months Ended June 30, 2025 Net Charge-offs (in millions) | 3 Months Ended June 30, 2025 % | 6 Months Ended June 30, 2025 Net Charge-offs (in millions) | 6 Months Ended June 30, 2025 % | | :--- | :--- | :--- | :--- | :--- | | Multi-family | $96 | 1.17 % | $176 | 1.05 % | | Commercial real estate | $13 | 0.47 % | $15 | 0.27 % | | One-to-four family residential | $1 | 0.08 % | $2 | 0.08 % | | Commercial and industrial | $3 | 0.08 % | $31 | 0.42 % | | Other | $4 | 0.94 % | $8 | 0.93 % | | **Total** | **$117** | **0.72 %** | **$232** | **0.70 %** | [Securities](index=23&type=section&id=Securities) Debt securities available-for-sale increased by **$4.4 billion** to **$14.8 billion** at June 30, 2025, as the company reinvested cash into higher earning assets Debt Securities Available-for-Sale (in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Debt Securities Available-for-Sale | $14,823 | $10,402 | $4,421 | | Weighted Average Life (June 30, 2025) | 5 years | N/A | N/A | | Weighted Average Life (December 31, 2024) | 6 years | N/A | N/A | - The increase of **$4.4 billion** in debt securities available-for-sale was primarily due to the decision to reinvest cash into higher earning assets, with **27%** of the portfolio comprising floating rate securities at June 30, 2025[98](index=98&type=chunk) [Deposits](index=24&type=section&id=Deposits) Total deposits decreased by **$6.1 billion** to **$69.7 billion**, primarily due to the payoff of brokered CDs and custodial deposits, reflecting a strategy to reduce higher-cost funding Deposit Composition and Weighted Average Interest Rates (in millions) | Deposit Type | June 30, 2025 Amount | June 30, 2025 % of Total | June 30, 2025 Weighted Average Interest Rate | December 31, 2024 Amount | December 31, 2024 % of Total | December 31, 2024 Weighted Average Interest Rate | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Interest-bearing checking and money market accounts | $19,067 | 27 % | 3.03 % | $20,780 | 27 % | 2.89 % | | Savings accounts | $14,460 | 21 % | 3.06 % | $14,282 | 19 % | 3.22 % | | Certificates of deposit | $24,212 | 35 % | 4.47 % | $27,324 | 36 % | 4.75 % | | Non-interest-bearing accounts | $12,006 | 17 % | — % | $13,484 | 18 % | — % | | **Total deposits** | **$69,745** | **100 %** | **3.64 %** | **$75,870** | **100 %** | **3.12 %** | - Total deposits decreased by **$6.1 billion**, primarily due to the payoff of brokered CDs (reflecting a strategy to reduce higher-cost funding) and custodial deposits resulting from the sale of Mortgage Operations[101](index=101&type=chunk) Brokered Deposits (in millions) | Brokered Deposit Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Brokered interest-bearing checking and money market accounts | $75 | $714 | | Brokered certificates of deposit | $6,053 | $9,510 | | **Total Brokered Deposits** | **$6,128** | **$10,224** | [Uninsured Deposits](index=25&type=section&id=Uninsured%20Deposits) Uninsured deposits totaled **$12.9 billion** at June 30, 2025, representing **18%** of the total deposit base, with total bank liquidity exceeding this amount by **$16.0 billion** - At June 30, 2025, uninsured deposits totaled **$12.9 billion**, representing **18%** of the overall deposit base[105](index=105&type=chunk)[122](index=122&type=chunk) - Total bank liquidity exceeded uninsured deposits by **$16.0 billion** at June 30, 2025[106](index=106&type=chunk) [Borrowed Funds](index=25&type=section&id=Borrowed%20Funds) Total borrowed funds decreased by **$1.2 billion** to **$13.2 billion**, primarily due to the repayment of FHLB advances Borrowed Funds (in millions) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Wholesale borrowings (FHLB advances) | $12,150 | $13,400 | | Junior subordinated debentures | $584 | $582 | | Subordinated notes | $446 | $444 | | **Total borrowed funds** | **$13,180** | **$14,426** | - Total borrowed funds decreased by **$1.2 billion**, primarily due to the repayment of **$250 million** and **$1.0 billion** of FHLB advances upon maturity in Q1 and Q2 2025, respectively[107](index=107&type=chunk) [Federal Reserve and Federal Home Loan Bank Stock](index=25&type=section&id=Federal%20Reserve%20and%20Federal%20Home%20Loan%20Bank%20Stock) Total FHLB and FRB-NY stock decreased by **$129 million** to **$1.017 billion**, primarily due to a reduction in borrowings FHLB and FRB Stock (in millions) | Stock Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | FHLB-NY stock, at cost | $542 | $598 | | FHLB-Indianapolis stock, at cost | $255 | $329 | | Federal Reserve Bank stock, at cost | $220 | $219 | | **Total FHLB and FRB stock, at cost** | **$1,017** | **$1,146** | - Total FHLB and FRB-NY stock decreased by **$129 million**, primarily due to a reduction in borrowings[109](index=109&type=chunk) [Risk Governance Framework](index=25&type=section&id=Risk%20Governance%20Framework) Flagstar Financial maintains a robust risk governance framework, including a formal Risk Appetite Statement and Contingency Funding Plan, to manage credit, liquidity, and interest rate risks, while exceeding minimum federal capital requirements [Credit Risk](index=26&type=section&id=Credit%20Risk) The company continuously reviews its loan portfolio risk, with classified loans decreasing to **$10.8 billion** at June 30, 2025, primarily due to multi-family substandard loan payoffs - The company continuously reviews its loan portfolio risk, performing annual financial analysis on borrowers to determine Debt Service Coverage Ratio (DSCR) and evaluating loans for potential downgrades if DSCR is below **1.0**[112](index=112&type=chunk)[113](index=113&type=chunk) - Classified loans (substandard and non-accrual) decreased from **$11.5 billion** at December 31, 2024, to **$10.8 billion** at June 30, 2025, primarily due to par payoffs of multi-family substandard loans[115](index=115&type=chunk) - Charge-offs of **$207 million** were recorded on multi-family and CRE loans during the six months ended June 30, 2025, mainly driven by appraisals[118](index=118&type=chunk) [Liquidity Risk](index=27&type=section&id=Liquidity%20Risk) The company maintains a liquidity risk management framework, including a Liquidity Risk Policy and Contingency Funding Plan, to ensure funding obligations are met under various stress scenarios - The company maintains a liquidity risk management framework, including a Liquidity Risk Policy and Contingency Funding Plan, to ensure funding obligations are met under various stress scenarios[121](index=121&type=chunk) - Primary funding sources include a diverse retail and institutional deposit base and wholesale funding channels like FHLB secured borrowings and brokered CDs[122](index=122&type=chunk) Total Liquidity (in billions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash at Federal Reserve | $7.6 | $15.0 | | High-Quality Liquid Assets | $12.8 | $7.9 | | **Total On-Balance Sheet Liquidity** | **$20.4** | **$22.9** | | FHLB Available Capacity | $6.9 | $6.6 | | Discount Window Available Capacity | $1.6 | $0.4 | | **Total Liquidity** | **$28.9** | **$29.9** | [Credit Ratings](index=27&type=section&id=Credit%20Ratings) Moody's upgraded the company's Long-Term Issuer rating from B2 to B1, though the company is not in compliance with primary mortgage loan agencies' criteria for eligible custodial depositories but has received a waiver Credit Ratings (as of June 30, 2025) | Rating Agency | Long-Term Issuer Rating | Short-Term Deposits Rating | | :--- | :--- | :--- | | Moody's | B1 | NP | | Fitch | BB | N/A | | Morningstar DBRS | BBB (low) | N/A | - Moody's upgraded the Long-Term Issuer rating from B2 to B1 during the three months ended March 31, 2025[126](index=126&type=chunk) - The company is not in compliance with primary mortgage loan agencies' criteria for eligible custodial depositories (requiring investment grade short-term issuer/deposit rating from Moody's or S&P) but has received a waiver[127](index=127&type=chunk) [Parent Company Liquidity](index=28&type=section&id=Parent%20Company%20Liquidity) The Parent Company held **$502 million** in cash and cash equivalents at June 30, 2025, and believes it has sufficient liquidity to meet obligations through 2028 - At June 30, 2025, the Parent Company held **$502 million** in cash and cash equivalents[128](index=128&type=chunk) - Primary funding sources for the Parent Company include dividends from the Bank and capital raised through equity issuance, with no dividends paid by the Bank to the Parent Company in the six months ended June 30, 2025[129](index=129&type=chunk)[130](index=130&type=chunk) - The Parent Company believes it has sufficient liquidity and capital resources to meet its cash flow obligations through 2028[130](index=130&type=chunk) [Contractual Obligations and Commitments](index=28&type=section&id=Contractual%20Obligations%20and%20Commitments) At June 30, 2025, the company had **$24.2 billion** in Certificates of Deposit and **$11.2 billion** in long-term debt, with a total liquidity position of **$29 billion** deemed sufficient for obligations - At June 30, 2025, the company had **$24.2 billion** in Certificates of Deposit and **$11.2 billion** in long-term debt (borrowed funds with original maturity of one year or more)[132](index=132&type=chunk) - Operating lease obligations totaled **$454 million** at June 30, 2025[133](index=133&type=chunk) - Total liquidity position was **$29 billion** at June 30, 2025, expected to be sufficient for short-term and long-term cash obligations and commitments[135](index=135&type=chunk) [Interest Rate Risk](index=29&type=section&id=Interest%20Rate%20Risk) Interest rate volatility is the primary market risk, significantly impacting income, expense, and market value of interest-earning assets, with estimated EVE and NII sensitivities provided - Interest rate volatility is the primary market risk, significantly impacting income, expense, and market value of interest-earning assets[137](index=137&type=chunk) Estimated Percentage Change in Economic Value of Equity (EVE) at June 30, 2025 | Change in Interest Rates (in basis points) | Estimated Percentage Change in EVE | | :--- | :--- | | -200 shock | 2.4% | | -100 shock | 1.3% | | +100 shock | (2.1)% | | +200 shock | (4.8)% | Estimated Percentage Change in Future Net Interest Income (NII) for the Next Twelve Months at June 30, 2025 | Change in Interest Rates (in basis points) | Estimated Percentage Change in Future NII | | :--- | :--- | | -200 shock | 0.8% | | -100 shock | 0.6% | | +100 shock | (1.1)% | | +200 shock | (2.6)% | - If EVE and NII sensitivities breach internal policy limits, the ALCO would recommend strategies such as reducing open positions, employing derivatives, asset/liability restructuring, or balance sheet expansion/shrinkage[145](index=145&type=chunk)[146](index=146&type=chunk) [Regulatory Capital](index=31&type=section&id=Regulatory%20Capital) The company's capital measures continued to exceed minimum federal requirements at June 30, 2025, with increased capital ratios primarily due to lower risk-weighted assets - Effective October 1, 2023, the company became subject to Category IV prudential standards, including heightened requirements for capital, liquidity, and risk management[147](index=147&type=chunk) Company's Regulatory Capital Position (in millions) | Capital Ratio | June 30, 2025 Amount | June 30, 2025 Ratio | December 31, 2024 Amount | December 31, 2024 Ratio | | :--- | :--- | :--- | :--- | :--- | | Common Equity Tier 1 | $7,849 | 12.33 % | $7,997 | 11.83 % | | Tier 1 | $8,353 | 13.12 % | $8,501 | 12.57 % | | Total | $10,044 | 15.77 % | $10,238 | 15.14 % | | Leverage Capital | $8,353 | 8.61 % | $8,501 | 7.68 % | - The company's capital measures continued to exceed minimum federal requirements for a bank holding company and for a bank at June 30, 2025[148](index=148&type=chunk) - The increase in capital ratios from December 31, 2024, was primarily due to lower risk-weighted assets from a reduction in Loans and leases held for investment[150](index=150&type=chunk) - At June 30, 2025, the Bank exceeded the minimum capital requirements to be categorized as 'Well Capitalized'[152](index=152&type=chunk) [Other Recent Developments](index=32&type=section&id=Other%20Recent%20Developments) The company is actively remediating material weaknesses in internal control over financial reporting, and the One Big Beautiful Bill Act is expected to have an immaterial financial impact - The company is actively working to remediate previously disclosed material weaknesses in internal control over financial reporting, with operational costs not expected to be material[153](index=153&type=chunk) - The recently enacted One Big Beautiful Bill Act, a tax reform provision, is expected to have an immaterial impact on the company's financial results[154](index=154&type=chunk) [Condensed Consolidated Financial Statements](index=33&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Flagstar Financial, Inc.'s unaudited condensed consolidated financial statements, including statements of financial condition, (loss) income, comprehensive (loss) income, stockholders' equity, and cash flows, along with detailed notes [Condensed Consolidated Statements of Financial Condition (unaudited)](index=33&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition%20(unaudited)) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at June 30, 2025, and December 31, 2024 Condensed Consolidated Statements of Financial Condition (in millions) | ASSETS | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $8,094 | $15,430 | | Total securities | $14,837 | $10,416 | | Loans held for sale | $319 | $899 | | Total loans and leases held for investment, net | $63,015 | $67,071 | | Federal Home Loan Bank stock and Federal Reserve Bank stock, at cost | $1,017 | $1,146 | | Premises and equipment, net | $474 | $562 | | Core deposit and other intangibles | $433 | $488 | | Bank-owned life insurance | $1,625 | $1,605 | | Other assets | $2,423 | $2,543 | | **Total assets** | **$92,237** | **$100,160** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total deposits | $69,745 | $75,870 | | Total borrowed funds | $13,180 | $14,426 | | Other liabilities | $1,216 | $1,696 | | **Total liabilities** | **$84,141** | **$91,992** | | Mezzanine equity: Preferred stock - Series B | $1 | $1 | | Total stockholders' equity | $8,095 | $8,167 | | **Total liabilities, mezzanine and stockholders' equity** | **$92,237** | **$100,160** | [Condensed Consolidated Statements of (Loss) Income (unaudited)](index=34&type=section&id=Condensed%20Consolidated%20Statements%20of%20(Loss)%20Income%20(unaudited)) This statement presents the company's net (loss) income for the three and six months ended June 30, 2025, and 2024, detailing interest income, expense, and non-interest items Condensed Consolidated Statements of (Loss) Income (in millions, except per share data) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total interest income | $1,143 | $1,548 | $2,307 | $3,061 | | Total interest expense | $724 | $991 | $1,478 | $1,880 | | **Net interest income** | **$419** | **$557** | **$829** | **$1,181** | | Provision for credit losses | $64 | $390 | $143 | $705 | | Net interest income after provision for credit loan losses | $355 | $167 | $686 | $476 | | Total non-interest income | $77 | $114 | $157 | $123 | | Total non-interest expense | $513 | $705 | $1,045 | $1,404 | | **(Loss) before income taxes** | **$(81)** | **$(424)** | **$(202)** | **$(805)** | | Income tax (benefit) | $(11) | $(101) | $(32) | $(155) | | **Net (loss)** | **$(70)** | **$(323)** | **$(170)** | **$(650)** | | Preferred stock dividends | $8 | $10 | $16 | $18 | | **Net (loss) attributable to common stockholders** | **$(78)** | **$(333)** | **$(186)** | **$(668)** | | Basic (loss) per common share | $(0.19) | $(1.14) | $(0.45) | $(2.48) | | Diluted (loss) per common share | $(0.19) | $(1.14) | $(0.45) | $(2.48) | [Condensed Consolidated Statement of Comprehensive (Loss) Income (unaudited)](index=35&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20(Loss)%20Income%20(unaudited)) This statement outlines the company's net (loss) and other comprehensive (loss) income, including changes in debt securities available for sale and cash flow hedges, for the periods presented Condensed Consolidated Statement of Comprehensive (Loss) Income (in millions) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) | $(70) | $(323) | $(170) | $(650) | | Other comprehensive (loss) income, net of tax: | | | | | | Debt securities available for sale | $16 | $(23) | $109 | $(93) | | Pension and post-retirement obligations | $0 | $(1) | $1 | $0 | | Cash flow hedges | $(5) | $27 | $(12) | $78 | | **Total other comprehensive (loss) income, net of tax** | **$11** | **$3** | **$98** | **$(15)** | | **Total comprehensive (loss), net of tax** | **$(59)** | **$(320)** | **$(72)** | **$(665)** | [Condensed Consolidated Statements of Stockholders' Equity (unaudited)](index=36&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20(unaudited)) This statement details changes in the company's stockholders' equity, including preferred stock, common stock, retained earnings, and accumulated other comprehensive loss, for the six months ended June 30, 2025 Condensed Consolidated Statements of Changes in Stockholders' Equity (in millions, except share data) | Category | Balance at Dec 31, 2024 | 6 Months Ended June 30, 2025 Changes | Balance at June 30, 2025 | | :--- | :--- | :--- | :--- | | Preferred Stock A | $503 | $0 | $503 | | Common Stock (Par Value: $0.01) | $4 | $0 | $4 | | Paid-in Capital in excess of Par | $9,282 | $9 | $9,291 | | (Accumulated deficit)/Retained Earnings | $(763) | $(194) | $(957) | | Treasury Stock, at Cost | $(219) | $15 | $(204) | | AOCL, Net of Tax | $(640) | $98 | $(542) | | **Total Stockholders' Equity** | **$8,167** | **$(72)** | **$8,095** | | Preferred Stock Mezzanine (Par Value: $0.01) | $1 | $0 | $1 | - Total stockholders' equity decreased by **$72 million** during the six months ended June 30, 2025, primarily due to net loss and dividends paid, partially offset by other comprehensive income[168](index=168&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=39&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) This statement summarizes the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(235) | $502 | | Net cash provided by investing activities | $164 | $1,172 | | Net cash (used in) provided by financing activities | $(7,317) | $5,773 | | **Net (decrease) increase in cash, cash equivalents, and restricted cash** | **$(7,388)** | **$7,447** | | Cash, cash equivalents, and restricted cash at beginning of period | $15,559 | $11,609 | | **Cash, cash equivalents, and restricted cash at end of period** | **$8,171** | **$19,056** | - Net cash used in financing activities significantly increased to **$(7,317) million** in the first six months of 2025, primarily due to a net decrease in deposits and repayments of long-term borrowed funds[171](index=171&type=chunk) [Notes to the Condensed Consolidated Financial Statements (unaudited)](index=40&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) These notes provide detailed information supporting the condensed consolidated financial statements, covering the company's organization, accounting policies, specific financial instruments, and risk management practices [Note 1 - Organization and Basis of Presentation](index=40&type=section&id=Note%201%20-%20Organization%20and%20Basis%20of%20Presentation) This note describes Flagstar Financial, Inc. as the holding company for Flagstar Bank N.A., operating across nine states, and confirms the financial statements conform to GAAP - Flagstar Financial, Inc. is the holding company for Flagstar Bank N.A., operating approximately 360 locations across nine states[172](index=172&type=chunk)[173](index=173&type=chunk) - The condensed consolidated financial statements conform to GAAP and include accounts of the company and its controlled entities, with estimates and judgments affecting reported amounts[174](index=174&type=chunk) [Note 2 - Earnings Per Common Share](index=40&type=section&id=Note%202%20-%20Earnings%20Per%20Common%20Share) This note details the calculation of earnings per common share using the two-class method, as unvested Restricted Stock Units are considered participating securities - EPS is calculated using the two-class method, as unvested Restricted Stock Units (RSUs) are considered participating securities[178](index=178&type=chunk) Basic and Diluted EPS | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) attributable to common stockholders (in millions) | $(78) | $(333) | $(186) | $(668) | | Weighted average common shares outstanding | 415,125,228 | 293,122,116 | 414,975,524 | 269,902,354 | | Basic (loss) per common share | $(0.19) | $(1.14) | $(0.45) | $(2.48) | | Diluted (loss) per common share | $(0.19) | $(1.14) | $(0.45) | $(2.48) | [Note 3 - Accumulated Other Comprehensive Loss](index=41&type=section&id=Note%203%20-%20Accumulated%20Other%20Comprehensive%20Loss) This note details changes in Accumulated Other Comprehensive Loss (AOCL), net of tax, which totaled **$(542) million** at June 30, 2025, including unrealized gains from terminated cash flow hedges Changes in Accumulated Other Comprehensive Loss (AOCL), Net of Tax (in millions) | Category | Balance, Dec 31, 2024 | Other comprehensive income (loss), net of tax (6 months ended June 30, 2025) | Balance, June 30, 2025 | | :--- | :--- | :--- | :--- | | Debt Securities AFS | $(653) | $109 | $(544) | | Cash Flow Hedges | $47 | $(12) | $35 | | Pension and Post-retirement Plans | $(34) | $1 | $(33) | | **Total AOCL** | **$(640)** | **$98** | **$(542)** | - At June 30, 2025, the company had **$35 million** (net-of-tax) of unrealized gains related to terminated cash flow hedges recorded in AOCL, with **$28 million** expected to be reclassified to lower interest expense over the next twelve months[184](index=184&type=chunk)[185](index=185&type=chunk) [Note 4 - Investment Securities](index=43&type=section&id=Note%204%20-%20Investment%20Securities) This note provides details on debt securities available for sale, which totaled **$14.823 billion** at fair value at June 30, 2025, and the company's policy for evaluating unrealized loss positions Debt Securities Available for Sale (in millions) | Category | Amortized Cost (June 30, 2025) | Fair Value (June 30, 2025) | Amortized Cost (Dec 31, 2024) | Fair Value (Dec 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | Total mortgage-related debt securities | $12,583 | $12,112 | $9,155 | $8,573 | | Total other debt securities | $2,956 | $2,711 | $2,140 | $1,829 | | **Total debt securities available for sale, net of allowance** | **$15,539** | **$14,823** | **$11,295** | **$10,402** | - At June 30, 2025, the ACL for debt securities available-for-sale was **$3 million**, and the company pledged **$14.5 billion** in investment securities as collateral for certain borrowings[190](index=190&type=chunk) - The company evaluates available-for-sale debt securities in unrealized loss positions quarterly to determine if an ACL is required, assessing intent and likelihood of sale before recovery of amortized cost basis[199](index=199&type=chunk) [Note 5 - Loans and Leases](index=46&type=section&id=Note%205%20-%20Loans%20and%20Leases) This note details the company's loan portfolio composition, reporting loans held for investment at amortized cost and loans held for sale at fair value or the lower of cost or fair value - Loans held for investment are reported at amortized cost, while loans held for sale are carried at fair value or the lower of amortized cost or fair value[202](index=202&type=chunk)[203](index=203&type=chunk) Loan Portfolio Composition (in millions) | Loan Type | June 30, 2025 Amount | June 30, 2025 % of Total | December 31, 2024 Amount | December 31, 2024 % of Total | | :--- | :--- | :--- | :--- | :--- | | Multi-family | $31,932 | 49.8 % | $34,093 | 49.9 % | | Commercial real estate | $10,636 | 16.6 % | $11,836 | 17.4 % | | One-to-four family first mortgage | $5,445 | 8.5 % | $5,201 | 7.6 % | | Commercial and industrial | $14,426 | 22.5 % | $15,376 | 22.5 % | | Other | $1,682 | 2.6 % | $1,766 | 2.6 % | | **Total loans and leases held for investment** | **$64,121** | **100.0 %** | **$68,272** | **100.0 %** | | Allowance for credit losses on loans and leases | $(1,106) | N/A | $(1,201) | N/A | | Total loans and leases held for investment, net | $63,015 | N/A | $67,071 | N/A | | Loans held for sale, at fair value | $319 | N/A | $899 | N/A | | **Total loans and leases, net** | **$63,334** | **N/A** | **$67,970** | **N/A** | - The company pledged **$34.4 billion** and **$44.6 billion** in loans as collateral for wholesale borrowings at June 30, 2025, and December 31, 2024, respectively[206](index=206&type=chunk) - Non-accrual loans are generally those **90 days or more past due** or impaired, with interest income ceasing and previously accrued interest reversed, and interest received applied to principal[208](index=208&type=chunk) Collateral-Dependent Loans Held for Investment (in millions) at June 30, 2025 | Collateral Type | Amount | | :--- | :--- | | Multi-family | $2,422 | | Commercial real estate | $514 | | One-to-four family first mortgage | $76 | | Commercial and industrial | $13 | | **Total collateral-dependent loans held for investment** | **$3,025** | - Loans modified for borrowers experiencing financial difficulty totaled **$19 million** for the three and six months ended June 30, 2025[225](index=225&type=chunk) - Substantially all Loans with Government Guarantees (LGG) are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs, totaling **$369 million** at June 30, 2025[231](index=231&type=chunk) [Note 6 - Allowance for Credit Losses on Loans and Leases](index=54&type=section&id=Note%206%20-%20Allowance%20for%20Credit%20Losses%20on%20Loans%20and%20Leases) This note details the activity and composition of the Allowance for Credit Losses (ACL) on loans and leases, which totaled **$1.106 billion** at June 30, 2025, reflecting improving credit trends and portfolio reductions Allowance for Credit Losses on Loans and Leases Activity (in millions) | Category | 6 Months Ended June 30, 2025 | | :--- | :--- | | Balance, beginning of period | $1,201 | | Charge-offs | $(264) | | Recoveries | $32 | | Provision for credit losses | $137 | | **Balance, end of period** | **$1,106** | - The ACL to total loans and leases held for investment ratio was **1.72%** at June 30, 2025, down from **1.76%** at December 31, 2024[236](index=236&type=chunk) - Higher interest rates continue to pressure borrowers' ability to cover debt service, especially for loans repricing, leading to a higher probability of default incorporated into ACL measurement[235](index=235&type=chunk)[236](index=236&type=chunk) Non-accrual Loans and Related Allowance (in millions) at June 30, 2025 | Loan Type | Non-accrual loans with no related allowance | Non-accrual loans with an allowance recorded | Total Non-accrual loans | Related Allowance | | :--- | :--- | :--- | :--- | :--- | | Multi-family | $1,781 | $607 | $2,388 | $91 | | Commercial real estate | $377 | $186 | $563 | $64 | | One-to-four family first mortgage | $58 | $23 | $81 | $2 | | Commercial and Industrial | $72 | $51 | $123 | $37 | | Other | $0 | $25 | $25 | $21 | | **Total** | **$2,288** | **$892** | **$3,180** | **$215** | [Note 7 - Leases, Premises and Equipment](index=56&type=section&id=Note%207%20-%20Leases%2C%20Premises%20and%20Equipment) This note provides information on the company's direct financing equipment leases, operating lease obligations totaling **$454 million**, and premises and equipment, net, valued at **$474 million** at June 30, 2025 - The company provides direct financing equipment leases, mainly to large corporate clients, with interest income on lease financing totaling **$48 million** for the six months ended June 30, 2025[242](index=242&type=chunk)[243](index=243&type=chunk) - Operating lease costs for offices, branches, and equipment were **$47 million** for the six months ended June 30, 2025[246](index=246&type=chunk) Operating Lease and Premises & Equipment Information (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operating lease right-of-use assets | $397 | $416 | | Operating lease liabilities | $454 | $463 | | Weighted average remaining lease term | 10.4 years | 10.7 years | | Weighted average discount rate | 4.78 % | 4.77 % | | Premises and equipment, net | $474 | $562 | | Depreciation expense (6 months ended June 30, 2025) | $21 | N/A | [Note 8 - Variable Interest Entities](index=57&type=section&id=Note%208%20-%20Variable%20Interest%20Entities) This note confirms the company had no consolidated Variable Interest Entities (VIEs) and details its maximum exposure to loss from unconsolidated securitization trusts, limited to **$159 million** - The company had no consolidated Variable Interest Entities (VIEs) as of June 30, 2025, and December 31, 2024[250](index=250&type=chunk) - Maximum exposure to loss from unconsolidated securitization trusts, where the company retains a **5%** interest, was limited to **$159 million** at June 30, 2025[251](index=251&type=chunk) [Note 9 - Borrowed Funds](index=57&type=section&id=Note%209%20-%20Borrowed%20Funds) This note details the company's borrowed funds, which totaled **$13.18 billion** at June 30, 2025, primarily consisting of wholesale borrowings (FHLB advances), junior subordinated debentures, and subordinated notes Borrowed Funds (in millions) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Wholesale borrowings (FHLB advances) | $12,150 | $13,400 | | Junior subordinated debentures | $584 | $582 | | Subordinated notes | $446 | $444 | | **Total borrowed funds** | **$13,180** | **$14,426** | - FHLB advances decreased by **$1.2 billion** due to repayments, with available capacity at **$6.9 billion** at June 30, 2025[255](index=255&type=chunk)[257](index=257&type=chunk) - The company had **$610 million** in outstanding junior subordinated debentures and **$446 million** in fixed-to-floating rate subordinated notes at June 30, 2025[260](index=260&type=chunk)[263](index=263&type=chunk) [Note 10 - Pension Benefits](index=61&type=section&id=Note%2010%20-%20Pension%20Benefits) This note outlines the components of net periodic pension expense (income), which resulted in a **$(3) million** income for the six months ended June 30, 2025 Components of Net Periodic Pension Expense (Income) (in millions) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Interest cost | $1 | $1 | $3 | $2 | | Expected return on plan assets | $(4) | $(4) | $(8) | $(8) | | Amortization of net actuarial loss | $1 | $1 | $2 | $2 | | **Net periodic expense (income)** | **$(2)** | **$(2)** | **$(3)** | **$(4)** | [Note 11 - Federal, State, and Local Taxes](index=61&type=section&id=Note%2011%20-%20Federal%2C%20State%2C%20and%20Local%20Taxes) This note provides details on the company's income tax benefit and effective tax rate, which was **15.9%** for the six months ended June 30, 2025 Income Tax Benefit and Effective Tax Rate | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income tax benefit (in millions) | $(11) | $(101) | $(32) | $(155) | | Effective tax rate | 12.9 % | 23.7 % | 15.9 % | 19.3 % | - The company believes it is unlikely that its recognized tax benefits related to uncertain tax positions will change by a material amount during the next twelve months[266](index=266&type=chunk) [Note 12 - Stock-Based Compensation](index=62&type=section&id=Note%2012%20-%20Stock-Based%20Compensation) This note details stock-based compensation expense, which totaled **$29 million** for the six months ended June 30, 2025, and outlines unrecognized compensation costs for unvested restricted stock and stock options Stock-Based Compensation Expense and Tax Benefit (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Stock-based compensation expense | $14 | $15 | $29 | $22 | | Tax benefit | $3 | $2 | $5 | $4 | - The company granted **4,806,308 shares** of restricted stock during the six months ended June 30, 2025, with an average fair value of **$11.62 per share**[271](index=271&type=chunk) - As of June 30, 2025, unrecognized compensation cost for unvested restricted stock totaled **$109 million** (weighted average life of **2.4 years**) and for stock options totaled **$36 million** (weighted average life of **1.8 years**)[272](index=272&type=chunk)[273](index=273&type=chunk) [Note 13 - Derivative and Hedging Activities](index=63&type=section&id=Note%2013%20-%20Derivative%20and%20Hedging%20Activities) This note describes the company's use of derivative financial instruments, including interest rate swaps and forward commitments, for both hedging and non-hedging purposes to manage interest rate and MSR asset value exposures - Derivative financial instruments are recorded at fair value and include interest rate swaps, foreign currency swaps, futures, swaptions, and forward commitments[275](index=275&type=chunk)[276](index=276&type=chunk) - The company uses derivatives for both hedging (cash flow and fair value hedges) and non-hedging purposes to manage exposure to interest rate changes and MSR asset values[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) Derivative Financial Instruments (in millions) | Derivative Type | Notional Amount (June 30, 2025) | Fair Value Other Assets (June 30, 2025) | Fair Value Other Liabilities (June 30, 2025) | | :--- | :--- | :--- | :--- | | Interest rate swaps (fair value hedge) | $2,993 | $0 | $0 | | Interest rate caps (cash flow hedge) | $2,000 | $0 | $0 | | Rate lock commitments (not designated) | $439 | $4 | $3 | | Mortgage-backed securities forwards (not designated) | $269 | $0 | $5 | | Interest rate swaps (not designated) | $3,229 | $17 | $22 | Cash Collateral Pledged (Received) for Derivatives (in millions) at June 30, 2025 | Derivative Type | Cash Collateral Pledged (Received) | | :--- | :--- | | Interest rate swaps (fair value hedge) | $66 | | Interest rate swaptions (assets) | $(1) | | Mortgage-backed securities forwards (liabilities) | $1 | | Interest rate swaps (liabilities) | $38 | [Note 14 - Intangible Assets](index=65&type=section&id=Note%2014%20-%20Intangible%20Assets) This note provides details on the company's intangible assets, including core deposit intangible and other intangibles, with a net carrying value of **$433 million** at June 30, 2025 Intangible Assets (in millions) | Intangible Asset | Gross Carrying Amount (June 30, 2025) | Accumulated Amortization (June 30, 2025) | Net Carrying Value (June 30, 2025) | Net Carrying Value (Dec 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | Core deposit intangible | $700 | $(282) | $418 | $471 | | Other intangible assets | $26 | $(11) | $15 | $17 | | **Total other intangible assets** | **$726** | **$(293)** | **$433** | **$488** | - Amortization expense for intangible assets was **$55 million** for the six months ended June 30, 2025[287](index=287&type=chunk) [Note 15 - Fair Value Measures](index=65&type=section&id=Note%2015%20-%20Fair%20Value%20Measures) This note explains the company's fair value measurements, categorized into a three-tier hierarchy, and details assets and liabilities measured at fair value on both recurring and non-recurring bases - Fair value is an 'exit' price, determined using a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (significant unobservable inputs)[288](index=288&type=chunk)[289](index=289&type=chunk) Assets and Liabilities Measured at Fair Value on a Recurring Basis (in millions) at June 30, 2025 | Category | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | | Total debt securities available for sale | $1,013 | $13,779 | $31 | $14,823 | | Total equity securities | $0 | $14 | $0 | $14 | | Loans held for sale | $0 | $317 | $0 | $317 | | Derivative assets | $0 | $17 | $4 | $21 | | **Total assets at fair value** | **$1,013** | **$14,127** | **$35** | **$15,175** | | Derivative liabilities | $0 | $27 | $3 | $30 | | **Total liabilities at fair value** | **$0** | **$27** | **$3** | **$30** | Assets Measured at Fair Value on a Non-Recurring Basis (in millions) at June 30, 2025 | Category | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | | Loans held for investment | $0 | $0 | $2,977 | $2,977 | | Loans held for sale | $0 | $2 | $0 | $2 | | Other assets | $0 | $0 | $52 | $52 | | **Total** | **$0** | **$2** | **$3,029** | **$3,031** | - The company elected the fair value option for certain financial instruments to align accounting with economic exposure, resulting in a net gain on loan sales and securitizations of **$6 million** for the three months ended June 30, 2025[317](index=317&type=chunk) [Note 16 - Mezzanine and Stockholders' Equity](index=71&type=section&id=Note%2016%20-%20Mezzanine%20and%20Stockholders%27%20Equity) This note provides a summary of the company's preferred stock series and details warrants issued in March 2024, convertible into **105 million** common shares Preferred Stock Summary (June 30, 2025) | Preferred Stock Series | Amount Outstanding (in millions) | Shares Authorized | Shares Issued | Shares Outstanding | Liquidation Preference Per Share | | :--- | :--- | :--- | :--- | :--- | :--- | | Series A | $503 | 5,000,000 | 515,000 | 515,000 | $1,000 | | Series B | $1 | 267,062 | 192,062 | 750 | — | | Series C | $0 | 523,369 | 0 | 0 | $2,000 | | Series D | $0 | 315,000 | 45 | 15 | $0.0001 | - Series A preferred stock pays fixed-to-floating rate dividends, totaling **$16 million** for the six months ended June 30, 2025[321](index=321&type=chunk) - Warrants issued in March 2024, with an exercise price reduced to **$2,483 per share**, entitle holders to purchase **315,000 shares** of Series D NVCE Stock, convertible into **105,000,000 common shares** at a strike price of **$7.45 per share**[325](index=325&type=chunk) [Note 17 - Commitments and Contingencies](index=73&type=section&id=Note%2017%20-%20Commitments%20and%20Contingencies) This note outlines the company's off-balance sheet commitments, totaling **$13.263 billion** at June 30, 2025, and discusses various legal actions and potential impacts from the Signature Transaction Off-Balance Sheet Commitments (in millions) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Multi-family and Commercial real estate | $988 | $2,478 | | One-to-four family including interest rate locks | $1,464 | $725 | | Other loan commitments | $10,112 | $9,837 | | **Total loan commitments** | **$12,564** | **$13,040** | | Stand-by letters of credit | $699 | $803 | | **Total commitments** | **$13,263** | **$13,843** | - The allowance for unfunded commitments was **$56 million** at June 30, 2025[328](index=328&type=chunk) - The company is involved in various legal actions, including stockholder, class, and derivative actions, and cyber breach litigations, with the estimated range of reasonably possible losses in excess of amounts accrued being immaterial at June 30, 2025[331](index=331&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) - Flagstar Bank continues to engage with the FDIC regarding the net settlement of historical activity related to the Signature Transaction, which may result in future material impacts[338](index=338&type=chunk) [Note 18 - Segment Reporting](index=75&type=section&id=Note%2018%20-%20Segment%20Reporting) This note states that the company operates in a single reportable segment, with the Chief Executive Officer evaluating performance on a consolidated basis, focusing on consolidated cost measures and net interest income - The company operates in a single reportable segment, with the Chief Executive Officer evaluating performance on a consolidated basis[339](index=339&type=chunk) - The focus of the chief operating decision maker is on consolidated cost measures, realigning business operations for long-term profitability, and key consolidated revenue sources like Net Interest Income[340](index=340&type=chunk) [Critical Accounting Estimates](index=77&type=section&id=Critical%20Accounting%20Estimates) This section highlights that the company's financial statements rely on critical accounting estimates, particularly for the Allowance for Credit Losses (ACL) and fair value measurements, which involve significant judgment - Key critical accounting estimates include the determination of the Allowance for Credit Losses (ACL) and fair value measurements[341](index=341&type=chunk) - These estimates are subject to inherent uncertainties, and actual results could differ from original estimates, necessitating future adjustments[341](index=341&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=77&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's most significant risks are interest rate risk and market risk, with no material changes to market risk disclosures since the 2024 Annual Report on Form 10-K - The most significant risks for the company are interest rate risk and market risk[342](index=342&type=chunk) - There have been no changes to the market risk disclosures since the Annual Report on Form 10-K for the year ended December 31, 2024[342](index=342&type=chunk) [Controls and Procedures](index=77&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to identified material weaknesses in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=77&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses, yet the financial statements are fairly presented - Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in Internal Control over Financial Reporting[343](index=343&type=chunk) - Despite the material weaknesses, management believes the financial statements in this report fairly present the company's financial position, results of operations, capital position, and cash flows in conformity with GAAP[343](index=343&type=chunk) [Material Weaknesses in Internal Control over Financial Reporting](index=77&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20over%20Financial%20Reporting) Material weaknesses were identified in risk assessment, monitoring, and control activities related to independent Credit Review processes and loan data reconciliations, creating a reasonable possibility of material misstatement - Material weaknesses were identified in risk assessment (lack of timely response to emerging risks), monitoring (ineffective recurring monitoring over process level control activities), and control activities (insufficient effective cont

Group 1 - The focus is on growth and dividend income as a strategy for retirement planning [1] - The portfolio is structured to generate monthly dividend income that grows through reinvestment and annual increases [1] Group 2 - The article expresses personal opinions and is not intended as investment advice [2] - It emphasizes the importance of conducting individual research before making investment decisions [2]

Core Viewpoint - Flagstar Financial, Inc. reported a second-quarter 2025 loss per share of 14 cents, which was wider than the expected loss of 12 cents, and a significant decline in revenues and net interest income impacted the results [1][9] Financial Performance - The net loss available to common shareholders was $78 million, an improvement from a net loss of $333 million in the prior-year quarter [2] - Quarterly revenues were $496 million, down 26% year-over-year, and missed the Zacks Consensus Estimate by 5.6% [3][9] - Net interest income (NII) was $419 million, a decrease of 24.8% from the prior-year quarter, with a net interest margin of 1.81%, down 17 basis points [3] - Non-interest income fell to $77 million, a decline of 32.4% year-over-year, primarily due to the absence of net return on mortgage servicing rights and lower fee income [4] - Non-interest expenses decreased to $513 million, down 27% year-over-year, with adjusted operating expenses at $460 million, a 27.8% decline [4] Efficiency and Asset Quality - The efficiency ratio was 95.3%, slightly up from 95.1% in the year-ago quarter, indicating deteriorating profitability [5] - Total loans and leases held for investment declined 3.7% sequentially to $64.1 billion, while total deposits decreased 5.6% sequentially to $69.7 billion [6] - Non-performing assets increased to $3.2 billion from $2.6 billion year-over-year, although net charge-offs decreased by 66.4% to $117 million [7] Capital Ratios - As of June 30, 2025, the common equity tier 1 ratio improved to 12.33% from 9.54% a year earlier, and the total risk-based capital ratio rose to 15.77% from 12.78% [8]

Financial Data and Key Metrics Changes - The CET1 capital ratio increased to 12.3%, ranking among the highest relative to peer groups [9][19][31] - Adjusted pre-provision, pre-tax net revenue was positive $9 million, an improvement of $32 million from the previous quarter [19][28] - The net loss per diluted share narrowed to $0.19, with an adjusted loss of $0.14 compared to $0.23 in the first quarter [27][28] Business Line Data and Key Metrics Changes - New commitments in the C and I business increased by 80% to $1.9 billion, while originations rose almost 60% to $1.2 billion [14][17] - The corporate regional commercial banking and specialized industries portfolios increased by $422 million, or about 12% compared to the previous quarter [17] - Record par payoffs in the CRE portfolio reached approximately $1.5 billion, nearly double the amount from the first quarter [32] Market Data and Key Metrics Changes - The overall C and I loans declined modestly due to a managed approach to derisking certain outsized credits [16] - The multifamily portfolio has declined nearly $4 billion or 12% year over year, with a strong reserve coverage of 1.68% [33] - The CRE concentration ratio decreased by 80 percentage points to 421% compared to 501% at year-end 2023 [32] Company Strategy and Development Direction - The company plans to merge its holding company into the bank to enhance corporate, legal, and regulatory structure, aiming for cost reductions and streamlined operations [10][11] - Focus areas for 2025 include improving earnings through margin expansion, fee income, and reducing operating expenses [12][30] - The strategy emphasizes growth in C and I and private banking, while proactively managing the CRE portfolio [12][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to grow C and I, which will diversify the loan portfolio and generate deposits and fee income [10][12] - The company anticipates further progress in the second half of the year, with a focus on returning to profitability [19][38] - Management highlighted the potential for stock price appreciation, indicating a significant valuation gap compared to peers [37][38] Other Important Information - The company reduced criticized assets by $1.3 billion during the quarter, achieving significant growth in new C and I originations [19][36] - The company has taken substantial actions against its New York rent-regulated exposure, with a current loan-to-value ratio of 69% [25][66] - The company is reviewing annual financial statements for borrowers, with more upgrades than downgrades reported [27][68] Q&A Session Summary Question: Can you provide details on the securities purchase and its impact on margin? - Management confirmed that $2 billion in securities purchases were accelerated to optimize NIM, with a weighted average coupon of about 5.25% [42] Question: Is stock repurchase still expected in mid-2026? - Management indicated that the focus remains on investing excess capital in growth rather than stock buybacks, but discussions may occur if profitability is achieved and the stock trades at a discount [46][48] Question: What is the outlook for net charge-offs? - Management expects charge-offs to decrease as the company moves into Q3 and Q4, with a significant reduction in criticized assets [93] Question: Can you elaborate on the health of rent-stabilized multifamily landlords? - Management provided insights on the multifamily portfolio, indicating a high occupancy rate and a significant portion of loans being pass-rated, with adequate reserves against criticized loans [66][68] Question: What is the strategy regarding the multifamily concentration? - Management stated that the strategy involves managing the portfolio through par payoffs and potential sales of non-accrual loans, while focusing on enhancing credit quality [82][84]