Core Viewpoint - Flagstar Financial (FLG) is expected to report a year-over-year increase in earnings despite lower revenues, with the consensus outlook being crucial for assessing the company's earnings picture [1][2]. Earnings Expectations - The upcoming earnings report is anticipated to be released on July 25, with a consensus EPS estimate of a loss of $0.12 per share, reflecting an 88.6% year-over-year change. Revenues are projected to be $527.48 million, down 21.4% from the previous year [3][2]. - The consensus EPS estimate has been revised 26.41% higher in the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +9.47% for Flagstar Financial, suggesting analysts have become more optimistic about the company's earnings prospects [12]. - The stock currently holds a Zacks Rank of 3, indicating a hold position, which combined 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 $0.26 per share but actually reported a loss of -$0.23, resulting in a surprise of +11.54% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates two times [14]. Industry Comparison - Midland States Bancorp (MSBI), another player in the Zacks Banks - Northeast industry, is expected to report an EPS of $0.63 for the same quarter, indicating a year-over-year change of +215% with revenues expected to be $77.4 million, up 6.5% from the previous year [18]. - The consensus EPS estimate for Midland States Bancorp has been revised 1.5% higher, but a lower Most Accurate Estimate results in an Earnings ESP of -3.18%, making it difficult to predict a beat on the consensus EPS estimate [19].

Led by industry-specialized experts, the group delivers trusted advice and tailored solutions across 12 verticals—helping clients grow, access capital, and navigate what's aheadHICKSVILLE, N.Y., July 9, 2025 /PRNewswire/ -- Flagstar Bank, N.A., (the "Bank") a subsidiary of Flagstar Financial, Inc. (NYSE: FLG) (the "Company"), today announced a significant expansion of its Specialized Industries Group, a major milestone in its long-term growth and transformation strategy. This group comprises 12 distinct ind ...

Group 1 - The Conservative Income Portfolio aims to target value stocks with high margins of safety while reducing volatility through well-priced options [1] - The Enhanced Equity Income Solutions Portfolio is designed to generate yields of 7-9% while minimizing volatility [1] - The Covered Calls Portfolio focuses on lower volatility income investing with an emphasis on capital preservation [2][3] Group 2 - Trapping Value consists of a team of analysts with over 40 years of combined experience in generating options income and capital preservation [3] - The investment group operates the Conservative Income Portfolio in collaboration with Preferred Stock Trader, featuring two income-generating portfolios and a bond ladder [3]

Flagstar Financial (FLG) 2025 Conference June 11, 2025 12:15 PM ET Speaker0 Great. Up next, we have Flagstar Financial. I'll read our disclosures. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. The taking of photographs and the use of recording devices is not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. And we are delighted to have with us today Lee Smith, Chief Financial Offi ...

[Financial Highlights](index=6&type=section&id=Financial%20Highlights) Flagstar reported a reduced net loss in Q1 2025, reflecting strategic portfolio reductions and cost optimization amidst a challenging interest rate environment [Overall Performance](index=6&type=section&id=Overall%20Performance) Flagstar reported a reduced net loss in Q1 2025, reflecting strategic portfolio reductions and cost optimization amidst a challenging interest rate environment Key Financial Metrics | Financial Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | **Net (Loss)** | ($100M) | ($188M) | ($327M) | | **Net (Loss) Attributable to Common** | ($108M) | ($196M) | ($335M) | | **Diluted (Loss) Per Share** | ($0.26) | ($0.47) | ($1.36) | | **Net Interest Income** | $410M | $461M | $624M | | **Net Interest Margin (NIM)** | 1.74% | 1.73% | 2.28% | - The net loss in Q4 2024 was impacted by an **$89 million** gain on the sale of Mortgage Operations, a **$77 million** long-term asset impairment, and **$31 million** in severance costs[23](index=23&type=chunk) - As of March 31, 2025, the company had total assets of **$97.6 billion**, loans of **$67.1 billion**, and deposits of **$73.9 billion**[19](index=19&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=6&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, condition, and risk management strategies for the period [Results of Operations](index=6&type=section&id=Results%20of%20Operations) Operating results reflect a reduced net loss, driven by lower net interest income from strategic portfolio reductions, decreased provision for credit losses, and reduced non-interest expenses [Net Interest Income](index=6&type=section&id=Net%20Interest%20Income) Net interest income declined quarter-over-quarter and year-over-year due to strategic loan reductions and lower interest-earning asset balances Net Interest Income and Margin Trends | Metric | Q1 2025 ($ millions) | Q4 2024 ($ millions) | Q1 2024 ($ millions) | | :--- | :--- | :--- | :--- | | **Net Interest Income** | $410M | $461M | $624M | | **Net Interest Margin (NIM)** | 1.74% | 1.73% | 2.28% | - Net interest income decreased by **$51 million** quarter-over-quarter, primarily due to lower average balances on mortgage, CRE, and C&I loans from strategic reductions, and lower average interest-earning cash, partly offset by paying off higher-cost brokered CDs[29](index=29&type=chunk)[30](index=30&type=chunk) - Compared to the prior year, net interest income fell by **$214 million**, driven by the sale of the Mortgage Operations and warehouse lending portfolio, strategic loan reductions, and lower interest rates[29](index=29&type=chunk)[31](index=31&type=chunk) [Provision for Credit Losses](index=9&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses significantly decreased due to lower net charge-offs and strategic loan portfolio reductions Provision for Credit Losses Trends | Period | Provision for Credit Losses ($ millions) | Change from Q4'24 | Change from Q1'24 | | :--- | :--- | :--- | :--- | | **Q1 2025** | $79M | -46% | -75% | | **Q4 2024** | $145M | | | | **Q1 2024** | $315M | | | - The decrease in provision was primarily due to lower net charge-offs, ongoing credit reviews, and the receipt of recent appraisals, with the Allowance for Credit Losses (ACL) balance also decreasing due to strategic portfolio reductions[33](index=33&type=chunk)[34](index=34&type=chunk) [Non-Interest Income](index=9&type=section&id=Non-Interest%20Income) Non-interest income declined quarter-over-quarter due to a one-time gain in the prior period but increased year-over-year due to a non-recurring prior-year reduction Non-Interest Income Breakdown | Category | Q1 2025 ($ millions) | Q4 2024 ($ millions) | Q1 2024 ($ millions) | | :--- | :--- | :--- | :--- | | Fee income | $22M | $33M | $34M | | Net gain on mortgage/servicing sale | $0M | $89M | $0M | | Net gain on loan sales | $13M | $5M | $20M | | Bargain purchase gain | $0M | $0M | ($121M) | | **Total Non-Interest Income** | **$80M** | **$164M** | **$9M** | - The **$84 million** quarter-over-quarter decrease was primarily due to the non-recurrence of an **$89 million** gain from the sale of Mortgage Operations in Q4 2024[36](index=36&type=chunk) - The **$71 million** year-over-year increase was mainly due to the non-recurrence of a **$121 million** reduction in the Signature Transaction bargain purchase gain recorded in Q1 2024[37](index=37&type=chunk) [Non-Interest Expense](index=10&type=section&id=Non-Interest%20Expense) Non-interest expenses significantly decreased quarter-over-quarter and year-over-year due to cost optimization and non-recurring prior-period charges Non-Interest Expense Breakdown | Category | Q1 2025 ($ millions) | Q4 2024 ($ millions) | Q1 2024 ($ millions) | | :--- | :--- | :--- | :--- | | Compensation and benefits | $244M | $302M | $333M | | General and administrative | $147M | $252M | $186M | | **Total Non-Interest Expense** | **$532M** | **$718M** | **$699M** | - Expenses decreased by **$186 million** quarter-over-quarter, driven by the non-recurrence of a **$77 million** asset impairment charge, lower compensation costs from optimization actions, and lower FDIC insurance costs[39](index=39&type=chunk) - Year-over-year expenses decreased by **$167 million** due to lower compensation and benefits, reduced general and administrative costs following the sale of the Mortgage Business, and lower merger-related expenses[40](index=40&type=chunk) [Financial Condition](index=11&type=section&id=Financial%20Condition) The balance sheet contracted with reduced assets, loans, and deposits, reflecting strategic portfolio reductions, while asset quality metrics showed some stress despite strong liquidity [Loans and Leases](index=11&type=section&id=Loans%20and%20Leases) Total loans held for investment decreased due to strategic reductions in Multi-Family, CRE, and C&I portfolios, with a significant portion of MF loans in New York State Loan Portfolio Composition and Changes | Loan Portfolio | Amount (Mar 31, 2025, $ billions) | % of Total HFI | Change from Dec 31, 2024 ($ millions) | | :--- | :--- | :--- | :--- | | Multi-family (MF) | $33.4B | 50.2% | ($656M) | | Commercial Real Estate (CRE) | $11.5B | 17.3% | ($326M) | | Commercial & Industrial (C&I) | $14.7B | 22.1% | ($634M) | | **Total Loans Held for Investment (HFI)** | **$66.6B** | **100.0%** | **($1.7B)** | - The reduction in loan portfolios is part of a continued strategy to diversify the loan portfolio by reducing exposure to MF, CRE, and non-core C&I loans[46](index=46&type=chunk)[49](index=49&type=chunk)[55](index=55&type=chunk) - Within the Multi-Family portfolio, **$18.6 billion (56%)** is secured by properties in New York State, many subject to rent regulation, with **$11.5 billion** having interest-only payments as of March 31, 2025[50](index=50&type=chunk)[52](index=52&type=chunk) [Asset Quality](index=15&type=section&id=Asset%20Quality) Asset quality metrics showed an increase in non-accrual loans, primarily due to a single large Multi-Family borrower, while the Allowance for Credit Losses decreased Key Asset Quality Ratios | Asset Quality Metric | Mar 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Non-accrual loans to total HFI loans | 4.93% | 3.83% | | Non-performing assets to total assets | 3.37% | 2.62% | | ACL on loans to non-accrual loans | 35.61% | 45.93% | | ACL on loans to total HFI loans | 1.75% | 1.76% | - Total non-accrual loans increased by **$665 million** to **$3.28 billion** quarter-over-quarter, primarily due to a single large Multi-Family borrower relationship being classified as non-accrual[71](index=71&type=chunk)[72](index=72&type=chunk) - The Allowance for Credit Losses (ACL) on loans decreased by **$33 million** to **$1.17 billion**, mainly due to lower net charge-offs and strategic loan portfolio reductions, partially offset by a negatively trending macroeconomic environment[79](index=79&type=chunk) - Net charge-offs for Q1 2025 were **$115 million**, up from **$81 million** in Q1 2024, with Multi-Family charge-offs increasing to **$80 million**[82](index=82&type=chunk) [Deposits and Borrowed Funds](index=19&type=section&id=Deposits%20and%20Borrowed%20Funds) Total deposits and borrowed funds decreased, primarily due to the runoff of higher-cost brokered CDs and repayment of FHLB advances Deposits and Borrowed Funds Overview | Liability | Amount (Mar 31, 2025, $ billions) | Change from Dec 31, 2024 ($ billions) | | :--- | :--- | :--- | | **Total Deposits** | **$73.9B** | **($2.0B)** | | - Brokered Deposits | $8.3B | ($1.9B) | | - Uninsured Deposits | $13.0B | N/A | | **Total Borrowed Funds** | **$14.2B** | **($0.2B)** | - The decrease in total deposits was primarily due to the payoff of brokered certificates of deposit and a reduction in custodial deposits following the sale of the Mortgage Operations[87](index=87&type=chunk) - Total borrowed funds decreased mainly due to the repayment of **$250 million** of FHLB advances[92](index=92&type=chunk) [Risk Management](index=21&type=section&id=Risk%20Management) The company maintains a robust risk management framework, with stable liquidity, manageable interest rate risk, and a recent Moody's rating upgrade, despite a slight increase in classified loans - Classified loans stood at **$11.6 billion** at March 31, 2025, a slight increase from **$11.5 billion** at year-end 2024, primarily attributed to one large relationship being placed on non-accrual status[101](index=101&type=chunk) Liquidity Position | Liquidity Source | Mar 31, 2025 ($ billions) | Dec 31, 2024 ($ billions) | | :--- | :--- | :--- | | Cash at Federal Reserve | $12.0B | $15.0B | | High-quality Liquid Assets | $10.6B | $7.9B | | **Total On-Balance Sheet Liquidity** | **$22.6B** | **$22.9B** | | FHLB Available Capacity | $5.8B | $6.6B | | Discount Window Available Capacity | $1.6B | $0.4B | | **Total Liquidity** | **$30.0B** | **$29.9B** | - During Q1 2025, Moody's upgraded the company's Long-Term Issuer rating from **B2 to B1**[112](index=112&type=chunk) Interest Rate Sensitivity Analysis | Interest Rate Shock | Estimated % Change in EVE | Estimated % Change in NII (12-mo) | | :--- | :--- | :--- | | +100 bps | (2.1)% | (1.3)% | | +200 bps | (5.1)% | (2.9)% | | -100 bps | 2.3% | 0.1% | | -200 bps | 5.9% | 0.5% | [Regulatory Capital](index=27&type=section&id=Regulatory%20Capital) The company and its bank subsidiary maintained well-capitalized status with improved CET1 ratio, exceeding all minimum regulatory requirements as a Category IV firm Company Regulatory Capital Ratios | Capital Ratio (Company) | Mar 31, 2025 | Dec 31, 2024 | Minimum Requirement | | :--- | :--- | :--- | :--- | | **Common Equity Tier 1 (CET1)** | 11.90% | 11.83% | 4.50% | | **Tier 1 Risk-Based** | 12.65% | 12.57% | 6.00% | | **Total Risk-Based** | 15.25% | 15.14% | 8.00% | | **Leverage Ratio** | 8.45% | 7.68% | 4.00% | - The Bank subsidiary also exceeded all minimum requirements to be categorized as **"Well Capitalized,"** with a CET1 ratio of **13.36%** at March 31, 2025[138](index=138&type=chunk)[139](index=139&type=chunk) - Effective October 1, 2023, the company became subject to **Category IV prudential standards**, which include heightened requirements for capital planning, stress testing, liquidity risk management, and resolution planning[134](index=134&type=chunk)[136](index=136&type=chunk) [Financial Statements (Unaudited)](index=29&type=section&id=PART%20I.%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements, including the balance sheet, income statement, and cash flow statement, for the period ended March 31, 2025 [Condensed Consolidated Financial Statements](index=29&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements provide a snapshot of the company's financial position, results of operations, and cash flows as of March 31, 2025 Condensed Consolidated Balance Sheet Highlights | Balance Sheet Highlights | Mar 31, 2025 ($ millions) | Dec 31, 2024 ($ millions) | | :--- | :--- | :--- | | **Total Assets** | $97,628M | $100,160M | | **Total Loans and Leases, net** | $65,955M | $67,970M | | **Total Deposits** | $73,906M | $75,870M | | **Total Borrowed Funds** | $14,178M | $14,426M | | **Total Stockholders' Equity** | $8,153M | $8,167M | Condensed Consolidated Income Statement Highlights | Income Statement Highlights (3 Months Ended) | Mar 31, 2025 ($ millions) | Mar 31, 2024 ($ millions) | | :--- | :--- | :--- | | **Net Interest Income** | $410M | $624M | | **Provision for Credit Losses** | $79M | $315M | | **Total Non-Interest Income** | $80M | $9M | | **Total Non-Interest Expense** | $532M | $699M | | **Net (Loss)** | ($100M) | ($327M) | [Notes to the Condensed Consolidated Financial Statements](index=34&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes provide disclosures on financial statement presentation, loan portfolio, credit quality, fair value, derivatives, regulatory capital, and commitments, including legal proceedings - A **1-for-3 reverse stock split** effective July 11, 2024, has been retroactively applied to all share and per-share amounts presented[164](index=164&type=chunk) - The allowance for credit losses on loans and leases decreased from **$1,201 million** at year-end 2024 to **$1,168 million** at March 31, 2025, with a provision of **$82 million** offset by net charge-offs of **$115 million** for the quarter[217](index=217&type=chunk) - The company has various off-balance sheet commitments, including **$12.5 billion** in loan commitments and **$776 million** in letters of credit as of March 31, 2025[324](index=324&type=chunk) - The company is involved in various legal proceedings, including shareholder class actions related to recent disclosures and stock performance, and class actions related to three separate cyber breach incidents[329](index=329&type=chunk)[359](index=359&type=chunk)[363](index=363&type=chunk) [Controls and Other Information](index=67&type=section&id=Controls%20and%20Other%20Information) This section addresses the effectiveness of internal controls and procedures, ongoing remediation efforts, and other pertinent information including legal proceedings and share repurchases [Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting, with ongoing remediation efforts - Management concluded that disclosure controls and procedures were **not effective** as of March 31, 2025[340](index=340&type=chunk) - The ineffectiveness is due to **material weaknesses** in internal control over financial reporting related to risk assessment, monitoring, and control activities, specifically independent Credit Review[342](index=342&type=chunk)[343](index=343&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - Remediation efforts are ongoing and include appointing a new Chief Risk Officer and Chief Credit Officer, enhancing the Independent Credit Review program, and increasing reporting frequency to the Board's committees[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk) [Other Information](index=72&type=section&id=PART%20II.%20%E2%80%93%20OTHER%20INFORMATION) This section details ongoing legal proceedings, including shareholder and cyber breach class actions, and reports share repurchases for tax obligations on employee stock awards - The company is a defendant in a consolidated shareholder class action and multiple derivative actions alleging violations of federal securities laws related to disclosures made between March 2023 and February 2024 concerning the Flagstar and Signature transactions and the CRE loan portfolio[359](index=359&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk) - The company is also defending three separate sets of class actions related to cyber breach incidents that occurred in January 2021, December 2021, and the MOVEit breach in 2023[363](index=363&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk) - During Q1 2025, the company repurchased **376,569 shares** at an average price of **$10.53 per share**, withheld to cover tax obligations for vesting stock awards and not part of the publicly announced repurchase program[368](index=368&type=chunk)[371](index=371&type=chunk)

Core Viewpoint - Flagstar Financial, Inc. reported a narrower loss per share of 23 cents in Q1 2025, compared to a loss of 75 cents in the same quarter last year, primarily due to a decline in net interest income and lower loan and deposit balances, although increased fee income and reduced expenses provided some support [1][2]. Financial Performance - The company’s quarterly revenues were $490 million, a decline of 22.6% year-over-year, missing the Zacks Consensus Estimate by 5.6% [3]. - Net interest income (NII) was $410 million, down 34% from the prior-year quarter, with a net interest margin of 1.74%, decreasing by 54 basis points year-over-year [3]. - Non-interest income rose significantly to $80 million from $9 million in the year-ago quarter, although adjusted non-interest income fell by 38% year-over-year to $8 million [4]. - Non-interest expenses decreased by 24% year-over-year to $532 million, with adjusted non-interest expenses down 22% to $485 million [4]. - The efficiency ratio increased to 101.3% from 82.5% in the prior-year quarter, indicating deteriorating profitability [5]. Asset Quality and Capital Ratios - Total loans and leases held for investment declined by 2% sequentially to $66.6 billion, while total deposits decreased by 3% to $73.9 billion [6]. - Non-performing assets rose significantly to $3.3 billion from $798 million a year ago, with net charge-offs increasing by 42% to $115 million [7]. - The provision for credit losses decreased to $79 million from $315 million in the prior-year quarter [7]. - Capital ratios improved, with the common equity tier 1 ratio at 11.90%, up from 9.45% a year ago, and the total risk-based capital ratio at 15.25%, increasing from 13.09% [8].

Flagstar Financial (FLG) Q1 2025 Earnings Call April 25, 2025 06:19 PM ET Company Participants Salvatore DiMartino - Executive VP & Director of Investor RelationsJoseph Otting - Executive Chairman, President & CEOLee Smith - Senior Executive Vice President & CFOMark Fitzgibbon - Head of FSG ResearchJared Shaw - Managing DirectorBen Gerlinger - Vice President of Equity ResearchChristopher Marinac - Director of ResearchChristopher Mcgratty - MD & Head of U.S. Bank ResearchEbrahim Poonawala - Managing Director ...

Core Viewpoint - Flagstar Financial reported a significant decline in revenue and a less negative EPS for the quarter ended March 2025, indicating challenges in performance compared to the previous year and market expectations [1]. Financial Performance - Revenue for the quarter was $490 million, down 22.6% year-over-year, and below the Zacks Consensus Estimate of $518.85 million, resulting in a surprise of -5.56% [1]. - EPS was reported at -$0.23, an improvement from -$0.75 in the same quarter last year, with an EPS surprise of +11.54% against a consensus estimate of -$0.26 [1]. Key Metrics - Net Interest Margin was 1.7%, below the five-analyst average estimate of 1.9% [4]. - Book value per common share (GAAP) was $18.43, slightly lower than the average estimate of $18.65 [4]. - Average Balances-Interest earning assets were $95.62 billion, compared to the average estimate of $96.85 billion [4]. - Efficiency Ratio was reported at 108.7%, significantly higher than the average estimate of 100% [4]. - Net Interest Income was $410 million, below the average estimate of $446.35 million [4]. - Total non-interest income was $80 million, exceeding the average estimate of $70.30 million [4]. - Fee income was reported at $22 million, significantly lower than the average estimate of $37.12 million [4]. - Other non-interest income was $31 million, higher than the average estimate of $22.17 million [4]. Stock Performance - Flagstar Financial's shares returned -5.5% over the past month, compared to the Zacks S&P 500 composite's -4.8% change, indicating underperformance relative to the broader market [3]. - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the market in the near term [3].

First Quarter 2025 Results April 25, 2025 Our forward‐looking statements are subject to, among others, the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities, credit and financial markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of our loan or in ...

[Q1 2025 Financial Performance Overview](index=1&type=section&id=FLAGSTAR%20FINANCIAL%2C%20INC.%20REPORTS%20FIRST%20QUARTER%202025) Flagstar Financial reported a Q1 2025 GAAP net loss of $0.26 per diluted share and an adjusted net loss of $0.23 per share, demonstrating progress in strategic goals and aiming for profitability by Q4 2025 [Key Financial and Operational Highlights](index=1&type=section&id=First%20Quarter%202025%20Summary) Flagstar Financial reported a Q1 2025 GAAP net loss of $0.26 per diluted share and an adjusted net loss of $0.23 per share, demonstrating progress in strategic goals and aiming for profitability by Q4 2025 Key Financial Metrics | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | **Net Loss Attributable to Common Stockholders** | ($108M) | ($196M) | ($335M) | | **GAAP Diluted Loss Per Share** | ($0.26) | ($0.47) | ($1.36) | | **Non-GAAP Adjusted Diluted Loss Per Share** | ($0.23) | ($0.40) | ($0.74) | - Key operational achievements include a **48% linked-quarter decline in net charge-offs**, a **6% decrease in criticized loans**, and a **32% increase in new credit commitments to over $1 billion**[2](index=2&type=chunk) - The company continued to reduce its CRE exposure, with multi-family loans down **$656 million** and CRE loans down **$326 million** from the prior quarter[2](index=2&type=chunk)[12](index=12&type=chunk) [CEO Commentary and Strategic Outlook](index=2&type=section&id=CEO%20COMMENTARY) The CEO emphasized strong financial performance and a robust balance sheet, outlining a 2025 strategy focused on earnings improvement, C&I and Private Bank growth, CRE reduction, and achieving profitability by Q4 2025 through $600 million in cost savings - The company's 2025 focus is on **improving its earnings profile**, executing its **C&I and Private Bank growth strategy**, and continuing to **manage down CRE exposure**[6](index=6&type=chunk) - C&I loan originations grew **over 40% linked-quarter** to **nearly $770 million**, and the company added **15 new commercial bankers**, bringing the total to **75**[6](index=6&type=chunk)[7](index=7&type=chunk) - The company is on pace to meet its **$600 million cost savings goal** and has laid the groundwork for a return to **profitability by the fourth quarter of 2025**[6](index=6&type=chunk)[9](index=9&type=chunk) [Detailed Earnings Analysis](index=4&type=section&id=EARNINGS%20SUMMARY%20FOR%20THE%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202025) Net Interest Income decreased due to a smaller balance sheet, while Net Interest Margin stabilized, and non-interest income and expenses reflected strategic adjustments and cost-saving measures [Net Interest Income (NII) and Net Interest Margin (NIM)](index=4&type=section&id=Net%20Interest%20Income%2C%20Net%20Interest%20Margin%2C%20and%20Average%20Balance%20Sheet) Net Interest Income decreased to $410 million due to a smaller balance sheet, while Net Interest Margin stabilized at 1.74% driven by reduced cost of interest-bearing liabilities Net Interest Income and Margin Trends | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | **Net Interest Income ($M)** | $410 | $461 | $624 | | **Net Interest Margin (NIM) (%)** | 1.74% | 1.73% | 2.28% | | **Cost of Total Interest-Bearing Liabilities (%)** | 4.02% | 4.27% | 4.19% | - The linked-quarter decline in NII was driven by a **$3.5 billion (5%) decrease** in average loan balances, a result of **strategic reductions in CRE and C&I portfolios**[19](index=19&type=chunk)[22](index=22&type=chunk) [Non-Interest Income](index=7&type=section&id=Non-Interest%20Income) Non-interest income reached $80 million in Q1 2025, showing an 11% adjusted increase linked-quarter but a 38% year-over-year decrease primarily due to the prior sale of the mortgage business Non-Interest Income Breakdown | (in millions) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | **Total Non-Interest Income (GAAP) ($M)** | $80 | $164 | $9 | | Net gain on loan sales ($M) | $13 | $5 | $20 | | Fee income ($M) | $22 | $33 | $34 | | **Adjusted Non-Interest Income (Non-GAAP) ($M)** | $80 | $72 | $130 | - The linked-quarter increase in adjusted income was driven by a **$8 million increase** in net gain on loan sales[32](index=32&type=chunk) [Non-Interest Expense](index=8&type=section&id=Non-Interest%20Expense) Non-interest expense decreased 26% linked-quarter to $532 million, with adjusted expenses at $485 million, reflecting successful cost-saving measures in compensation and general administrative categories Non-Interest Expense Breakdown | (in millions) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | **Total Non-Interest Expense (GAAP) ($M)** | $532 | $718 | $699 | | Compensation and benefits ($M) | $244 | $302 | $333 | | General and administrative ($M) | $147 | $252 | $186 | | **Adjusted Non-Interest Expense (Non-GAAP) ($M)** | $485 | $556 | $621 | - The linked-quarter decrease in adjusted expenses was driven by a **$27 million decline** in compensation and benefits, a **$24 million decrease** in FDIC insurance expense, and a **$21 million decline** in general and administrative costs[35](index=35&type=chunk) [Balance Sheet Analysis](index=3&type=section&id=BALANCE%20SHEET%20SUMMARY%20AS%20OF%20MARCH%2031%2C%202025) Total assets and deposits decreased due to strategic loan reductions and funding management, while the company actively grew its C&I lending business [Asset Composition](index=3&type=section&id=Asset%20Composition) Total assets decreased by 3% to $97.6 billion, primarily due to a $1.7 billion reduction in loans held for investment, reflecting strategic CRE and multi-family loan exposure reduction Asset Composition Overview | Asset Category (in billions) | Q1 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets ($B)** | $97.6 | $100.2 | -3% | | **Total Loans HFI ($B)** | $66.6 | $68.3 | -2% | | Multi-family Loans ($B) | $33.4 | $34.1 | -2% | | CRE Loans ($B) | $11.5 | $11.8 | -3% | | C&I Loans ($B) | $14.7 | $15.4 | -4% | - The company is actively growing its C&I lending business, with new credit commitments of **$1.05 billion** and new funded loans of **$769 million** in Q1 2025[14](index=14&type=chunk) [Deposits and Funding](index=3&type=section&id=Deposits%20and%20Funding) Total deposits decreased by $2.0 billion to $73.9 billion, driven by mortgage escrow transfers and strategic reduction of higher-cost brokered CDs, alongside a $250 million decline in wholesale borrowings Deposits and Funding Overview | Liability Category (in billions) | Q1 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Deposits ($B)** | $73.9 | $75.9 | -3% | | Certificates of Deposit (CDs) ($B) | $25.9 | $27.3 | -5% | | Non-interest-bearing Deposits ($B) | $12.7 | $13.5 | -5% | | **Wholesale Borrowings ($B)** | $13.2 | $13.4 | -2% | - The decline in CDs was driven by a **$1.4 billion payoff** of brokered CDs, in line with the strategy to reduce higher-cost funding[16](index=16&type=chunk) [Credit Quality Analysis](index=9&type=section&id=ASSET%20QUALITY) Asset quality showed mixed trends with declining net charge-offs but increased non-accrual loans, primarily due to a single multi-family borrower relationship [Asset Quality Overview](index=9&type=section&id=Asset%20Quality%20Overview) Asset quality showed mixed trends in Q1 2025, with declining net charge-offs and strong ACL coverage, but an increase in non-accrual loans primarily due to a single multi-family borrower relationship Asset Quality Ratios | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | **Total ACL % of total loans HFI (%)** | 1.82% | 1.83% | 1.56% | | **NPLs to total loans HFI (%)** | 4.93% | 3.83% | 0.97% | | **Net charge-offs to average loans (annualized) (%)** | 0.68% | 1.23% | 0.39% | - The total allowance for credit losses was **$1.215 billion**, nearly unchanged from the previous quarter's coverage level, reflecting a stable credit outlook despite portfolio changes[41](index=41&type=chunk)[42](index=42&type=chunk) [Non-Performing Assets (NPAs)](index=9&type=section&id=Non-Performing%20Assets) Total non-accrual loans increased by $363 million to $3.3 billion, primarily driven by a single multi-family borrower relationship, which, if excluded, would have shown a decrease Non-Accrual Loans Held for Investment | Non-Accrual Loans HFI (in millions) | Q1 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Non-Accrual Loans HFI ($M)** | $3,280 | $2,615 | +25% | | Multi-family ($M) | $2,361 | $1,755 | +35% | | Commercial Real Estate ($M) | $589 | $564 | +4% | - The ratio of non-accrual loans HFI to total loans HFI increased to **4.93%** from **3.83%** in the prior quarter[40](index=40&type=chunk) [Provision and Net Charge-Offs](index=5&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses significantly decreased to $79 million due to lower net charge-offs and strategic loan portfolio reductions, with net charge-offs totaling $115 million Provision for Credit Losses and Net Charge-Offs | (in millions) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | **Provision for Credit Losses ($M)** | $79 | $145 | $315 | | **Net Charge-Offs ($M)** | $115 | $222 | $81 | - The annualized net charge-off rate improved to **0.68%** of average loans, compared to **1.23%** in Q4 2024[28](index=28&type=chunk) [Capital and Liquidity](index=10&type=section&id=CAPITAL%20POSITION) The company maintained a strong capital position, exceeding regulatory minimums, and robust liquidity, providing substantial coverage for uninsured deposits [Capital Position](index=10&type=section&id=Capital%20Position) The company's capital position strengthened, exceeding regulatory minimums with a Common Equity Tier 1 (CET1) ratio improving to 11.90%, positioning it favorably against peers Regulatory Capital Ratios | Regulatory Capital Ratios (Flagstar Financial, Inc.) | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | **Common equity tier 1 ratio (%)** | 11.90% | 11.83% | | **Tier 1 risk-based capital ratio (%)** | 12.66% | 12.57% | | **Total risk-based capital ratio (%)** | 15.25% | 15.14% | | **Leverage capital ratio (%)** | 8.45% | 7.68% | - Tangible book value per common share was **$17.33**, a slight increase from **$17.30** in the prior quarter[2](index=2&type=chunk)[63](index=63&type=chunk) [Liquidity Position](index=1&type=section&id=Liquidity) The company maintained a strong liquidity position with $30 billion in total liquidity, providing 231% coverage of uninsured deposits and supported by substantial borrowing capacity and high-quality liquid assets - Total liquidity of **$30 billion** provides **231% coverage** on uninsured deposits[2](index=2&type=chunk) - The liquidity position is supported by **$18.1 billion** of available borrowing capacity and high-quality liquid assets[2](index=2&type=chunk)