Financial Performance - For the three months ended September 30, 2025, the company reported a net loss of $36 million, an improvement from a net loss of $70 million for the previous quarter[31]. - For the nine months ended September 30, 2025, the net loss was $206 million, significantly reduced from a net loss of $930 million for the same period in 2024[32]. - The company reported a net loss of $36 million for the three months ended September 30, 2025, compared to a net loss of $280 million for the same period in 2024, indicating an improvement in financial performance[161]. - The company experienced a net loss of $930 million for the nine months ended September 30, 2025, compared to a net loss of $206 million for the same period in 2024, indicating challenges in profitability[163]. - Basic loss per common share for the three months ended September 30, 2025, was $0.11, compared to a loss of $0.79 for the same period in 2024[155]. - Basic loss per common share for the nine months ended September 30, 2025, was $0.56, compared to a loss of $3.16 in the same period of 2024[179]. Assets and Liabilities - As of September 30, 2025, the company reported total assets of $91.7 billion, loans of $63.2 billion, deposits of $69.2 billion, and stockholders' equity of $8.1 billion[22]. - Total assets decreased to $91,668 million as of September 30, 2025, down from $100,160 million at December 31, 2024, representing a decline of approximately 8.3%[153]. - Total liabilities decreased to $83,559 million as of September 30, 2025, down from $91,992 million at December 31, 2024, a reduction of approximately 9.2%[153]. - Total deposits decreased to $69,152 million as of September 30, 2025, down from $75,870 million at December 31, 2024, a decline of about 8.8%[153]. - Total borrowed funds decreased by $1.2 billion to $13.182 billion as of September 30, 2025, primarily due to the repayment of $1.25 billion in FHLB advances[106]. Income and Expenses - Net interest income (NII) for the three months ended September 30, 2025, was $425 million, with a net interest margin of 1.91%[36]. - For the three months ended September 30, 2025, net interest income (NII) increased by $6 million compared to the previous quarter, primarily due to lower-interest bearing deposits and improved yields on loans and leases[42]. - Non-interest income for the three months ended September 30, 2025, increased by $17 million compared to the previous quarter, primarily due to a $21 million gain on investment in Figure Technology Solutions, Inc.[48]. - Total non-interest expenses for the three months ended September 30, 2025, increased by $9 million compared to the previous quarter, driven by higher general and administrative expenses and compensation costs[51]. - Total non-interest income for the nine months ended September 30, 2025, increased by $15 million compared to the same period in 2024, mainly due to the non-recurrence of a prior bargain purchase gain[49]. Credit Quality and Losses - The provision for credit losses for the three months ended September 30, 2025, decreased by $26 million compared to the previous quarter, mainly due to volume declines from the strategic reduction in loan portfolios[45]. - For the nine months ended September 30, 2025, the provision for credit losses decreased by $766 million compared to the same period in 2024, reflecting improving credit trends and stabilization in the allowance for credit losses[46]. - Provision for credit losses was $38 million for the three months ended September 30, 2025, significantly lower than $242 million in the same period of 2024, indicating improved credit quality[155]. - The allowance for credit losses on loans and leases was $1.071 billion as of September 30, 2025, compared to $1.201 billion as of December 31, 2024[203]. - Non-accrual loans increased by $626 million to $3.241 billion as of September 30, 2025, driven mainly by the classification of $566 million in loans within the multi-family portfolio due to a single borrower undergoing bankruptcy proceedings[89]. Loan Portfolio and Strategy - The company operates approximately 340 locations across nine states, with a strong presence in the New York/New Jersey metropolitan area and significant growth in Florida and the West Coast[23]. - The strategic transformation plan initiated in 2024 aims to evolve into a fully diversified bank, focusing on financial resilience and sustainable earnings[25][28]. - Total loans and leases held for investment decreased by $5.6 billion as of September 30, 2025, compared to December 31, 2024, due to a strategy of diversifying the loan portfolio[57]. - The multi-family loan portfolio decreased by $3.6 billion to $30.466 billion as of September 30, 2025, primarily due to $2.8 billion in par payoffs and a strategic decision to diversify the loan portfolio[60]. - The company is strategically diversifying its loan portfolio by shifting focus from multi-family loans to other sectors, including C&I loans[62]. Capital and Regulatory Compliance - The Company's total capital as of September 30, 2025, is $7,828 million, with a Common Equity Tier 1 ratio of 12.45%[146]. - The Bank's total capital as of September 30, 2025, is $8,832 million, with a Common Equity Tier 1 ratio of 14.05%[147]. - The Company exceeded the minimum capital requirements for a bank holding company by 792 basis points as of September 30, 2025[147]. - The company identified material weaknesses in internal control over financial reporting, with remediation progress discussed in the latest report[149]. - The capital amounts and classifications are subject to regulators' qualitative judgments about the components of capital and risk weighting assets[145]. Market and Economic Conditions - The estimated change in Economic Value of Equity (EVE) for a 100 basis point increase in interest rates is a decrease of 1.3%[136]. - The estimated change in Net Interest Income (NII) over the next twelve months for a 100 basis point reduction in short-term interest rates is an increase of 1.66%[139]. - The estimated percentage change in future NII for a 200 basis point increase in interest rates is a decrease of 1.5%[140].

Core Insights - Flagstar Financial, Inc. (FLG) reported a third-quarter 2025 adjusted loss per share of 7 cents, slightly worse than the Zacks Consensus Estimate of a loss of 6 cents, but an improvement from a loss of 69 cents in the same quarter last year [1][10] - The results were primarily impacted by a decline in net interest income (NII) and fee income, alongside lower loan and deposit balances, although reduced expenses provided some support [10] Financial Performance - Quarterly revenues totaled $519 million, reflecting a 16.7% decline from the prior-year quarter, yet this figure exceeded the Zacks Consensus Estimate by nearly 1% [3] - NII was reported at $425 million, down 16.7% year-over-year, with a net interest margin of 1.91%, decreasing by 12 basis points from the previous year [3] - Non-interest income fell to $94 million, a decrease of 16.8% from the year-ago quarter, primarily due to the absence of net return on mortgage servicing rights and lower fee income [4] - Non-interest expenses were $522 million, down 27.1% year-over-year, with adjusted operating expenses at $457 million, a reduction of 29.9% from Q3 2024 [4] Efficiency and Capital Ratios - The efficiency ratio improved to 92.1%, down from 105.9% in the year-ago quarter, indicating enhanced profitability [5] - As of September 30, 2025, the common equity tier 1 ratio increased to 12.45% from 10.76% a year earlier, while the total risk-based capital ratio rose to 15.92% from 13.92% [8] Asset Quality and Loan/Deposit Trends - Total loans and leases held for investment decreased by 2.3% sequentially to $62.7 billion, while total deposits declined nearly 1% to $69.1 billion [6] - Non-accrual loans increased to $3.2 billion from $2.5 billion year-over-year, although net charge-offs decreased significantly by 69.6% to $73 million [7] Industry Context - Other banks such as Valley National Bancorp and Zions Bancorporation reported positive earnings growth, driven by increased NII and non-interest income, contrasting with FLG's challenges [12][13]

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Core Insights - Flagstar Financial, Inc. (FLG) reported a third-quarter 2025 adjusted loss per share of 7 cents, wider than the Zacks Consensus Estimate of a loss of 6 cents, compared to a loss of 69 cents in the year-ago quarter [1][10] - The results were primarily impacted by a decline in net interest income (NII) and fee income, along with lower loan and deposit balances, although lower expenses provided some support [10] Financial Performance - The quarterly revenues were $519 million, a decline of 16.7% from the prior-year quarter, but exceeded the Zacks Consensus Estimate by nearly 1% [3] - NII was $425 million, down 16.7% year over year, with a net interest margin of 1.91%, decreasing by 12 basis points from the previous year [3] - Non-interest income was $94 million, down 16.8% from the year-ago quarter, primarily due to the absence of net return on mortgage servicing rights and lower fee income [4] - Non-interest expenses decreased by 27.1% year over year to $522 million, with adjusted operating expenses down 29.9% from the third quarter of 2024 [4] Efficiency and Capital Ratios - The efficiency ratio improved to 92.1%, down from 105.9% in the year-ago quarter, indicating enhanced profitability [5] - As of September 30, 2025, the common equity tier 1 ratio was 12.45%, up from 10.76% a year earlier, while the total risk-based capital ratio rose to 15.92% from 13.92% [8] Loan and Deposit Trends - Total loans and leases held for investment declined by 2.3% sequentially to $62.7 billion as of September 30, 2025, while total deposits decreased nearly 1% sequentially to $69.1 billion [6] Credit Quality - Non-accrual loans increased to $3.2 billion from $2.5 billion a year ago, while net charge-offs were $73 million, down 69.6% from the prior-year quarter [7] - The provision for credit losses was $38 million, a decrease from $242 million in the prior-year quarter [7]

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Core Insights - Flagstar Financial, Inc. has undergone a significant rebranding, which may influence analysts' perspectives and price targets [1] - The company operates in a competitive banking sector, providing a range of financial services [1] Price Target Trends - Over the past year, Flagstar Financial's consensus price target has fluctuated, with the current average at $14.00, down from $14.50 last quarter and up from $13.50 a year ago, indicating a generally stable outlook with slight optimism [2] - Analysts like Jared Shaw from Barclays have set a cautious price target of $13, reflecting a belief that the company may surpass earnings estimates despite recent decreases in price targets [3][6] Recent Earnings Performance - Flagstar Financial's Q2 2025 earnings report showed a larger-than-expected loss, with declines in revenue, net interest income, and deposits compared to the previous year, impacting the current price target set by Barclays [4][6] - The company's earnings conference call attracted participation from key executives and analysts, highlighting the scrutiny and interest in its financial health and future prospects [5]

Core Insights - Flagstar Bank reported a revenue of $519 million for the quarter ended September 2025, reflecting a decrease of 16.7% year-over-year [1] - The earnings per share (EPS) was -$0.07, an improvement from -$0.69 in the same quarter last year [1] - The reported revenue slightly exceeded the Zacks Consensus Estimate of $514.03 million, resulting in a surprise of +0.97% [1] - The EPS fell short of the consensus estimate of -$0.06, leading to an EPS surprise of -16.67% [1] Financial Metrics - Net Interest Margin stood at 1.9%, matching the six-analyst average estimate [4] - Efficiency Ratio was reported at 100.5%, significantly higher than the estimated 92.7% [4] - Book value per common share (GAAP) was $18.30, slightly below the average estimate of $18.46 [4] - Average Balances of Interest-earning assets were $88.37 billion, lower than the estimated $89.6 billion [4] - Net charge-offs to average loans were 0.5%, better than the estimated 0.6% [4] - Leverage Capital Ratio was 9%, consistent with the average estimate [4] - Net Interest Income was $425 million, slightly below the average estimate of $431.69 million [4] - Total non-interest income was $94 million, exceeding the estimated $82.57 million [4] - Fee income reached $23 million, above the estimated $22.79 million [4] - Bank-owned life insurance income was $12 million, surpassing the average estimate of $9.81 million [4] - Other non-interest income was $32 million, below the average estimate of $38.47 million [4] - Net gain on loan sales and securitizations was $5 million, lower than the estimated $9.05 million [4] Stock Performance - Flagstar Bank's shares returned +0.1% over the past month, compared to a +1.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Financial Data and Key Metrics Changes - The company reported an adjusted net loss of $0.07 per diluted share, a significant narrowing compared to the previous quarter [4][16] - The net interest margin (NIM) expanded by 10 basis points to 1.91%, marking the third consecutive quarter of growth [5][18] - Operating expenses decreased by $800 million on an annualized basis compared to the previous year [5][19] - Criticized and classified assets declined by $600 million or 5% quarter-over-quarter and by $2.8 billion or 20% year-to-date [5][25] Business Line Data and Key Metrics Changes - The Commercial and Industrial (C&I) business originated $1.7 billion in new loan outstandings, with net loan growth of $448 million in the C&I portfolio [5][15] - Multifamily and Community Reinvestment Act (CRA) payoffs totaled $1.3 billion, continuing a trend of exceeding forecasts [6][22] - The provision for loan losses decreased by 41%, while net charge-offs declined by 38% [6][25] Market Data and Key Metrics Changes - The company has seen a significant reduction in overall Commercial Real Estate (CRE) balances, down $9.5 billion or 20% since year-end 2023 [22] - The CRE concentration ratio declined by 95 basis points to 407% since year-end 2023 [22] Company Strategy and Development Direction - The company is focused on transforming into a top-performing regional bank, emphasizing a customer-centric relationship-based culture [28] - Plans to originate new high-quality CRE loans in diverse geographic areas are set to begin in the fourth quarter [15][37] - The company aims to diversify its loan portfolio to a mix of one-third CRE, one-third C&I, and one-third consumer [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of profitability, citing a consistent narrowing of net losses and improved credit quality [4][6] - The company anticipates continued growth in C&I loans, projecting a run rate of $1.7 billion to $2.2 billion in originations per quarter [40][57] - Management noted that the balance sheet is expected to stabilize and begin growing in 2026 [53][81] Other Important Information - The company completed a holding company reorganization, which simplifies its corporate structure and is expected to lower operating expenses by approximately $15 million [28] - The CET1 capital ratio improved by nearly 350 basis points, ranking among the highest among regional banks [12][20] Q&A Session Summary Question: NII guidance for the year - Management indicated that the balance sheet would likely stabilize in Q4 and begin to grow in 2026, with continued NIM expansion expected [33][35] Question: C&I production expectations - Management expects C&I originations to continue growing, with a run rate of $1.7 billion to $2.2 billion per quarter anticipated [40][46] Question: Regulatory relief from holding company elimination - The elimination of the holding company is expected to reduce regulatory burdens and streamline operations, leading to cost savings [58][59] Question: Expense outlook and cost-saving opportunities - Management highlighted significant reductions in non-interest expenses and identified further opportunities for cost savings in FDIC expenses and vendor costs [68][70] Question: Non-interest-bearing deposit growth - Management expects non-interest-bearing deposits to grow as new C&I relationships are established and private banking efforts are enhanced [72][74] Question: Credit quality and non-performing loans - Management noted a strong reduction in non-performing loans and indicated a focus on managing credit quality moving forward [78][80]

Financial Data and Key Metrics Changes - The company reported an adjusted net loss of $0.07 per diluted share, a significant improvement compared to the previous quarter [4][16] - The net interest margin (NIM) expanded for the third consecutive quarter, increasing by 10 basis points to 1.91% [5][18] - Operating expenses decreased year-over-year by $800 million on an annualized basis [5][18] - Criticized and classified assets declined by $600 million or 5% on a linked quarter basis and by $2.8 billion or 20% year-to-date [5][25] Business Line Data and Key Metrics Changes - The Commercial and Industrial (C&I) business originated $1.7 billion in new loan outstandings, with overall net loan growth of $448 million in the C&I portfolio [5][15] - Multifamily and Community Reinvestment Act (CRA) payoffs totaled $1.3 billion, continuing a trend of exceeding forecasts [5][16] - The provision for loan losses decreased by 41%, while net charge-offs declined by 38% [5][25] Market Data and Key Metrics Changes - The company has seen a significant reduction in overall Commercial Real Estate (CRE) balances, which have declined by $9.5 billion or 20% since year-end 2023 [22] - The CRE concentration ratio decreased by 95 basis points to 407% since year-end 2023 [22] Company Strategy and Development Direction - The company is focused on transforming into a top-performing regional bank, emphasizing a customer-centric relationship-based culture [28] - Plans to originate new high-quality CRE loans in diverse geographic areas are set to begin in the fourth quarter [15][37] - The company aims to diversify its loan portfolio to a mix of one-third CRE, one-third C&I, and one-third consumer [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of C&I loan growth, projecting a run rate of $1.7 billion to $2.2 billion in originations per quarter [40][57] - The company anticipates balance sheet growth starting in Q1 2026, with a target of reaching approximately $108 billion by the end of 2027 [81] Other Important Information - The company completed a holding company reorganization, which simplifies its corporate structure and is expected to reduce operating expenses by approximately $15 million [28] - The CET1 capital ratio stands at 12.45%, ranking among the highest among regional bank peers [20] Q&A Session Summary Question: NII guidance for the year - Management indicated that the balance sheet would likely stabilize in Q4 and expects continued NIM expansion due to various factors, including the management of funding costs [33][35] Question: C&I production outlook - Management expects C&I production to continue growing, with a run rate of $1.7 billion to $2.2 billion per quarter anticipated [40][46] Question: Regulatory relief from holding company elimination - The elimination of the holding company is expected to reduce regulatory burdens and streamline operations, leading to cost savings [58] Question: Expense management and future cost savings - Management highlighted significant reductions in non-interest expenses and identified further opportunities for cost savings in FDIC expenses and vendor costs [68][70] Question: Non-interest-bearing deposit growth - Management expects growth in non-interest-bearing deposits from new C&I relationships, private banking, and retail branches [72][74]

Financial Data and Key Metrics Changes - The company reported an adjusted net loss of $0.07 per diluted share, a significant narrowing compared to the previous quarter [4][19] - The net interest margin expanded for the third consecutive quarter, increasing by 10 basis points to 1.91% [5][20] - Operating expenses decreased by approximately $800 million on an annualized basis, reflecting effective cost control measures [5][16] Business Line Data and Key Metrics Changes - The Commercial and Industrial (C and I) business experienced a breakout quarter with new loan originations of $1.7 billion and overall net loan growth of $448 million [5][9] - New commitments in the C and I sector increased by 26% to $2.4 billion, while originations grew by 41% [10] - Multifamily and Community Reinvestment Act (CRA) payoffs totaled $1.3 billion, continuing a trend of exceeding forecasts [5][25] Market Data and Key Metrics Changes - The company reported a decline in criticized and classified assets, down $600 million or 5% quarter-over-quarter, and $2.8 billion or 20% year-to-date [5][30] - Total Commercial Real Estate (CRE) balances decreased by $9.5 billion or 20% since year-end 2023 [25] - The reserve coverage on the multifamily portfolio remains strong at 1.83%, the highest among peers [26] Company Strategy and Development Direction - The company is focused on transforming into a top-performing regional bank, emphasizing a customer-centric relationship-based culture [33] - Plans to diversify the loan portfolio into a mix of one-third CRE, one-third C and I, and one-third consumer loans [25] - The company aims to continue growing its C and I business, with expectations of funding between $1.75 billion to $2 billion per quarter going forward [17][61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of profitability, citing improvements in key metrics and a strong pipeline for C and I loans [4][6] - The company anticipates continued net interest margin expansion driven by lower funding costs and growth in C and I and other portfolios [20][40] - Management noted that the fourth quarter is expected to be the low point for total assets, with growth anticipated in 2026 [58] Other Important Information - The company completed a holding company reorganization, simplifying its corporate structure and reducing regulatory burdens [33] - The CET1 capital ratio improved to 12.45%, ranking among the best capitalized regional banks [13][21] Q&A Session Summary Question: NII guidance for the year - Management indicated that the balance sheet is expected to stabilize in Q4, with continued NIM expansion anticipated [39][40] Question: C and I loan growth sustainability - Management expects C and I loan originations to maintain a run rate of $1.7 billion to $2.2 billion per quarter, with ongoing hiring to support growth [45][61] Question: Regulatory relief from holding company elimination - The elimination of the holding company reduces regulatory burdens and streamlines examinations, freeing up resources [62][64] Question: Expense outlook and cost-saving opportunities - Management highlighted ongoing efforts to reduce FDIC expenses and vendor costs, with technology projects expected to drive further efficiencies [71][74] Question: Non-interest bearing deposit growth - Growth in non-interest bearing deposits is anticipated from new C and I relationships, private banking, and retail branches [78][79]