Financial Data and Key Metrics Changes - The adjusted net loss narrowed to $0.07 per diluted share, a significant improvement compared to the previous quarter [3][16] - The net interest margin (NIM) expanded for the third consecutive quarter, increasing by 10 basis points to 1.91% [4][18] - Operating expenses decreased by approximately $800 million on an annualized basis compared to the previous year [4][18] - Criticized and classified assets declined by $600 million or 5% quarter-over-quarter and by $2.8 billion or 20% year-to-date [4][24] 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 [4][15] - Multifamily and Community Reinvestment Act (CRA) payoffs totaled $1.3 billion, continuing a trend of exceeding forecasts [4][14] - The provision for loan losses decreased by 41%, while net charge-offs declined by 38% [5][15] Market Data and Key Metrics Changes - The total Commercial Real Estate (CRE) balances have declined by $9.5 billion or 20% since year-end 2023, aiding in the diversification of the loan portfolio [21] - The CRE concentration ratio decreased by 95 basis points to 407% since year-end 2023 [21] Company Strategy and Development Direction - The company is focused on transforming into a top-performing regional bank, emphasizing a customer-centric relationship-based culture [27] - The strategy includes reducing reliance on wholesale funding and enhancing liquidity, which has resulted in a significant reduction in funding costs [12][20] - The company plans to start originating new high-quality CRE loans in the fourth quarter, diversifying its portfolio geographically [15][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of profitability, citing a consistent narrowing of net losses and improved credit quality [3][5] - The company anticipates continued growth in the C&I business, with expectations of funding between $1.7 billion to $2.2 billion in C&I loans per quarter going forward [36][48] - Management noted that the balance sheet is expected to stabilize in the fourth quarter and begin to grow in 2026 [46][68] Other Important Information - The company completed a holding company reorganization, simplifying its corporate structure and reducing operating expenses by approximately $15 million [27][28] - The CET1 capital ratio stands at 12.45%, ranking among the highest among regional bank peers [19] Q&A Session Summary Question: NII guidance for the year - Management indicated that the balance sheet would likely be at its low point in Q4, with expectations for growth in 2026 and continued NIM expansion [30][31] Question: C&I production expectations - Management expects C&I production to stabilize at $1.7 billion to $2.2 billion per quarter, with plans to hire additional staff to support growth [36][41] Question: Regulatory relief from holding company elimination - The elimination of the holding company reduces regulatory burdens and streamlines examinations, freeing up resources and time [49][50] 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 [57][60] 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 [61][62] Question: Credit quality and provisioning outlook - Management anticipates a downward trend in non-performing loans and has a pipeline for significant reductions in the fourth quarter [64][66]

Flagstar Bank (FLG) came out with a quarterly loss of $0.07 per share versus the Zacks Consensus Estimate of a loss of $0.06. This compares to a loss of $0.69 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -16.67%. A quarter ago, it was expected that this bank holding company would post a loss of $0.12 per share when it actually produced a loss of $0.14, delivering a surprise of -16.67%.Over the last four quarters, the compan ...

Third Quarter 2025 Results October 24, 2025 Cautionary Statement Forward-Looking Information This earnings presentation and the associated conference call may include forward‐looking statements by us and our authorized officers pertaining to such matters as our goals, beliefs, intentions, and expectations regarding, among other things: (a) revenues, earnings, loan production, asset quality, liquidity position, capital levels, risk analysis, divestitures, acquisitions, and other material transactions, among ...

Financial Performance - The net loss attributable to common stockholders for Q3 2025 was $45 million, or $0.11 per diluted share, an improvement of 44% from Q2 2025 and 86% from Q3 2024[6][5]. - The company reported adjusted net loss of $31 million, or $0.07 per diluted share, a 50% improvement from Q2 2025[21]. - The company reported a net (loss) income of $(206) million for the nine months ended September 30, 2025, a 78% improvement from $(930) million in the same period of 2024[73]. - Basic (loss) earnings per common share for the nine months ended September 30, 2025, was $(0.56), an 82% improvement from $(3.16) in the same period of 2024[73]. - GAAP net loss for the three months ended September 30, 2025, was $36 million, compared to a loss of $70 million for the previous quarter and a loss of $280 million for the same period in 2024[78]. Asset Quality - Total criticized and classified loans decreased by $2.8 billion, or 19%, since December 31, 2024, indicating improved asset quality[2][12]. - Non-accrual loans held for investment increased to $3.241 billion, representing 5.17% of total loans held for investment, up from 3.54% a year earlier[52]. - The allowance for credit losses on loans and leases was $1.071 billion at September 30, 2025, down 15% from $1.264 billion a year earlier[55]. - The allowance for credit losses on loans to non-accrual loans held for investment was 33.05% as of September 30, 2025, down from 45.93% at December 31, 2024[95]. Loan and Deposit Trends - C&I loans increased by $448 million, or 3%, from the prior quarter, with new loan originations rising 41% to $1.7 billion[3][17]. - Total loans Held-for-Investment (HFI) were $62.7 billion, down $1.5 billion, or 2%, linked-quarter, and down $5.6 billion, or 8%, year-over-year[16][15]. - Total deposits decreased by $0.6 billion, or 1%, linked-quarter, and by $6.7 billion, or 9%, year-over-year, primarily due to a decline in certificates of deposits[19][20]. - Average loan balances declined by $2.3 billion or 3% to $63.5 billion on a linked-quarter basis, while average loan yield increased by 3 basis points to 5.15%[27]. Income and Expenses - Total non-interest expenses were $522 million, up $9 million, or 2%, compared to Q2 2025, while adjusted operating expenses decreased by 1%[2][3]. - Total non-interest income for the first nine months of 2025 totaled $251 million, a $150 million or 39% decline compared to $380 million for the same period in 2024[41]. - Total non-interest expense for the nine months ended September 30, 2025, was $1,567 million, a decrease of 26% from $2,120 million in the same period of 2024[73]. - Total non-interest income for the three months ended September 30, 2025, was $94 million, a 22% increase from $77 million in the previous quarter, but a 17% decrease from $113 million year-over-year[71]. Capital and Equity - The common equity tier 1 ratio for Flagstar Financial, Inc. was 12.45% as of September 30, 2025, compared to 11.83% at the end of 2024[59]. - The total stockholders' equity remained relatively stable at $8.108 billion, a slight decrease of 1% compared to $8.095 billion in the previous quarter[69]. - The company raised $1.05 billion in capital in March 2024, which is expected to impact future growth and stability[63]. Regulatory and Structural Changes - The company completed a holding company reorganization on October 17, 2025, simplifying its corporate structure and reducing regulatory burden[4][13]. - The company completed the merger with Flagstar Bancorp in December 2022 and the acquisition of substantial portions of the former Signature Bank in March 2023, which are expected to enhance operational efficiencies[65]. - The company is focused on addressing previously disclosed material weaknesses in internal control over financial reporting to enhance governance and risk management[63]. Tax and Efficiency - The effective tax rate for the third quarter 2025 was 12.2%, down from 16.3% in the same quarter of 2024[50]. - The efficiency ratio improved to 100.46% in Q3 2025 from 114.93% in Q3 2024, indicating better cost management[91].

Core Insights - Flagstar Bank reported significant improvements in its financial performance for the third quarter of 2025, with a net loss of $36 million, a notable reduction from previous quarters and the same period last year [3][4][5] Financial Performance - The net loss attributable to common stockholders for Q3 2025 was $45 million, or $0.11 per diluted share, representing a 44% improvement from Q2 2025 and an 86% improvement from Q3 2024 [4][5] - For the first nine months of 2025, the net loss was $206 million compared to $930 million for the same period in 2024, with a loss attributable to common stockholders of $231 million or $0.56 per diluted share [5] Earnings and Revenue - Adjusted net loss for Q3 2025 was $31 million, a 50% improvement from Q2 2025 and an 89% improvement from Q3 2024 [20] - Net interest income for Q3 2025 totaled $425 million, up 1% from Q2 2025 but down 17% year-over-year [23] - Non-interest income in Q3 2025 was $94 million, a 22% increase from Q2 2025 but a 17% decrease from Q3 2024 [37] Asset Quality and Loans - Total criticized and classified loans decreased by $2.8 billion or 19% since December 31, 2024, indicating improved asset quality [10][12] - C&I loans increased by $448 million or 3% from the prior quarter, with new loan originations rising by 41% [13][16] Capital and Liquidity - The CET1 capital ratio improved to 12.45%, remaining at or above peer levels, indicating strong capital position [12] - Total assets as of September 30, 2025, were $91.7 billion, down 1% from the previous quarter and down 8% from the end of 2024 [15] Operating Expenses - Total non-interest expense for Q3 2025 was $522 million, up 2% from Q2 2025 but down 27% year-over-year [43] - Adjusted operating expenses for Q3 2025 were $457 million, down 1% from Q2 2025 and down approximately 30% year-over-year [43][46] Strategic Initiatives - The company completed a holding company reorganization on October 17, 2025, simplifying its corporate structure and reducing regulatory burdens [11] - The focus on transforming Flagstar into a top-performing regional bank continues, with a strong emphasis on customer-centric culture and effective risk management [11]

Core Viewpoint - Flagstar Bank has completed its holding company reorganization, which aims to simplify its corporate structure, reduce regulatory burdens, and lower operating expenses [1][2]. Group 1: Reorganization Details - The reorganization involved the merger of Flagstar Financial Inc. into its wholly owned subsidiary, Flagstar Bank, N.A., making Flagstar Bank the surviving entity and public company [2]. - The reorganization will not affect client accounts, services, or day-to-day operations, and customers will continue to interact with familiar teams and platforms [4]. Group 2: Strategic Focus - The company is committed to executing its strategic plan to transform into a top-performing regional bank, emphasizing a customer-centric culture and effective risk management to drive long-term value [3]. Group 3: Financial Overview - As of June 30, 2025, Flagstar Financial, Inc. had consolidated assets of $92.2 billion, loans of $64.4 billion, deposits of $69.7 billion, and total stockholders' equity of $8.1 billion [5]. - Flagstar Bank operates approximately 360 locations across nine states, with significant presence in the greater New York/New Jersey metropolitan area and growing markets in Florida and the West Coast [5]. Group 4: Stock Trading Information - Starting October 20, 2025, Flagstar Bank's common stock will trade on the New York Stock Exchange under the name Flagstar Bank, National Association, while retaining the ticker symbol "FLG" [4].

Core Viewpoint - Flagstar Financial (FLG) is anticipated to report a year-over-year increase in earnings despite lower revenues for the quarter ended September 2025, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The consensus EPS estimate for Flagstar Financial is a loss of $0.06 per share, reflecting a year-over-year change of +91.3%. Revenues are projected to be $514.03 million, down 17.5% from the previous year [3]. - The upcoming earnings report is scheduled for October 24, and the stock may rise if the actual numbers exceed expectations, while a miss could lead to a decline [2]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised 11.81% higher, indicating a collective reassessment by analysts [4]. - The Most Accurate Estimate for Flagstar Financial is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +4.51%, suggesting a bullish outlook on the company's earnings prospects [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. - Flagstar Financial currently holds a Zacks Rank of 3, which, along with the positive Earnings ESP, suggests a likelihood of beating the consensus EPS estimate [12]. Historical Performance - In the last reported quarter, Flagstar Financial was expected to post a loss of $0.12 per share but actually reported a loss of -$0.14, resulting in a surprise of -16.67% [13]. - Over the past four quarters, the company has surpassed consensus EPS estimates twice [14]. Industry Comparison - Valley National (VLY), another player in the Zacks Banks - Northeast industry, is expected to report an EPS of $0.26 for the same quarter, indicating a year-over-year change of +44.4% and revenues of $512.75 million, up 8.5% from the previous year [18]. - Valley National's consensus EPS estimate has been revised 0.5% higher recently, with an Earnings ESP of +2.6% and a Zacks Rank of 2, suggesting a strong likelihood of beating the consensus EPS estimate [19].

Core Insights - Flagstar Financial, Inc. announced that shareholders approved all proposals related to the holding company reorganization during a Special Meeting on October 15, 2025, indicating strong shareholder support for the strategic direction of the company [1][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. As of June 30, 2025, the company reported $92.2 billion in assets, $64.4 billion in loans, $69.7 billion in deposits, and total stockholders' equity of $8.1 billion [3]. Reorganization Details - The approved proposals include the merger of Flagstar Financial, Inc. into Flagstar Bank, with the Bank as the surviving entity, and the conversion of Flagstar Financial, Inc. into an interim federal savings association prior to the merger [5][2]. - The merger is expected to close in mid-to-late October 2025, with the resulting entity continuing to operate under the name Flagstar Bank, N.A., and its common stock remaining listed on the New York Stock Exchange under the ticker symbol "FLG" [2][3]. Strategic Implications - The reorganization aims to simplify the company's structure and build a stronger foundation for future growth, enhancing clarity and focus in operations to better serve customers, communities, and shareholders [2].

Core Viewpoint - Flagstar Financial, Inc. has received a recommendation from Institutional Shareholder Services (ISS) for shareholders to vote "FOR" the company's proposals to merge the holding company into its bank subsidiary at the upcoming Special Meeting of Shareholders on October 15 [1][2]. Group 1: 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 $92.2 billion in assets, $64.4 billion in loans, $69.7 billion in deposits, and total stockholders' equity of $8.1 billion [3]. - Flagstar Bank operates approximately 360 locations across nine states, with significant presence in the greater New York/New Jersey metropolitan area and the upper Midwest, as well as growing markets in Florida and the West Coast [3]. Group 2: Strategic Initiatives - The proposed reorganization aims to simplify the organizational structure, streamline managerial and operational functions, reduce costs, and eliminate redundant corporate activities [2]. - The endorsement from ISS highlights the strategic benefits of the reorganization, which is seen as a milestone in the company's transformation efforts [2]. - The company is committed to delivering value to shareholders while building a diversified, leading regional bank [2].

Core Insights - Black Bear Value Fund reported a return of -7.1% in September, -1.0% for the quarter, and -12.7% year-to-date, underperforming the S&P 500 which returned +3.6% in September, +8.1% for the quarter, and +14.8% year-to-date [1] - The fund highlighted Flagstar Financial, Inc. (NYSE:FLG) as a notable stock, which had a one-month return of -5.23% and a 52-week gain of 8.73%, closing at $11.96 per share with a market capitalization of $4.97 billion [2][3] Company Analysis - Flagstar Financial, Inc. is described as the former New York Community Bank, formed from a combination of Flagstar Bank, New York Community Bank, and assets from Signature Bank, indicating a complex corporate structure [3] - The fund noted that Flagstar Financial shares similarities with other short investments like Silicon Valley Bank and First Republic due to balance sheet issues related to multifamily and office real estate [3] - Despite acknowledging the potential of Flagstar Financial as an investment, the fund believes that certain AI stocks present greater upside potential and lower downside risk [4] Hedge Fund Interest - Flagstar Financial, Inc. was held by 36 hedge fund portfolios at the end of the second quarter, unchanged from the previous quarter, indicating stable interest among hedge funds [4]