Flagstar Financial Q4 Loss Narrower Than Expected, Expenses Fall Y/Y

Core Viewpoint - Flagstar Financial, Inc. reported a narrower loss per share in Q4 2024 compared to the previous year, but overall financial performance showed significant challenges, particularly in net interest income and loan balances [1][2][3]. Financial Performance - Q4 2024 loss per share was 34 cents, better than the Zacks Consensus Estimate of a loss of 50 cents, and improved from a loss of 80 cents in the same quarter last year [1] - For the full year 2024, loss per share was $2.66, also better than the Zacks Consensus Estimate of a loss of$3.02, but a decline from earnings per share of $1.92 in the prior year [2] - Quarterly revenues were$625 million, down 28% year-over-year, but exceeded the Zacks Consensus Estimate of $590.5 million [4] - Full-year revenues reached$2.55 billion, a 56% increase year-over-year, but fell short of the Zacks Consensus Estimate of $2.58 billion [4] Income and Expenses - Net interest income (NII) for Q4 was$461 million, a decrease of 37.7% from the prior-year quarter, with a net interest margin of 1.73%, down from 2.82% in the previous quarter [4] - Non-interest income was $164 million, up 29.1$89 million from the sale of mortgage servicing and third-party origination business [5] - Non-interest expenses were $718 million, a significant decrease of 77$556 million, down 8% from Q4 2023 [6] Asset Quality and Credit Metrics - Total loans and leases held for investment declined 4% sequentially to $68.3 billion, while total deposits fell 8.6$745.9 billion [7] - Non-performing assets increased to $2.6 billion from$442 million year-over-year, with net charge-offs rising 20% to $222 million [8] - The provision for credit losses was$108 million, down 80.4% from the prior-year quarter [8] Capital Ratios - As of Dec. 31, 2024, the common equity tier 1 ratio improved to 11.86% from 9.05% year-over-year, while the total risk-based capital ratio increased to 15.17% from 11.77% [9] - The leverage capital ratio declined to 8.08% from 8.48% year-over-year [9] Overall Assessment - The company faces challenges with deteriorating asset quality and declining loan and deposit balances, although an increase in fee income provided some positive support [10]