Flagstar Bank, N.A. (NYSE: FLG) has announced that its board of directors authorized a common stock repurchase plan, allowing the company to buy back up to $250 million of its outstanding common shares over the next twelve months.
The announcement of the repurchase program coincided with the release of the company's second-quarter earnings results. The financial report shows that Flagstar has now achieved profitability for three consecutive quarters. For the second quarter, net income attributable to common shareholders was $26 million, or $0.06 per diluted share, a significant improvement from $13 million in the first quarter and reversing a loss of $78 million from the same period last year. Adjusted net income stood at $23 million, or $0.05 per diluted share.
Executive Chairman and Chief Executive Officer Joseph M. Otting stated that the buyback plan reflects the company's substantial progress in executing its strategic initiatives, the strength of its balance sheet, and its long-term growth prospects. The company believes that returning capital to shareholders through stock repurchases at this time is a highly attractive and prudent use of excess capital.
As of the end of the second quarter, Flagstar Bank's Common Equity Tier 1 (CET1) capital ratio was 13.16%, which is evaluated as one of the strongest levels among regional banks. This capital level is well above its target operating range of 10.5% to 11.5%, implying that the company holds approximately $1.6 billion in after-tax excess capital relative to the lower end of that target range.
This repurchase plan represents approximately 3% of the company's market capitalization based on its tangible book value of $17.51 per share, marking another significant step in the company's strategic transformation. During the second quarter, the company achieved its first overall positive loan growth since the end of 2023, with commercial and industrial loans growing 12% quarter-over-quarter, demonstrating the effectiveness of its diversification strategy. The buybacks will be conducted through open market or privately negotiated transactions, with the specific timing and quantity depending on various factors. The program does not obligate the company to acquire any specific number of shares and may be modified, suspended, or terminated at any time.