-- CONTINUED MOMENTUM IN C&I LENDING WITH COMMITMENTS UP 28% TO $3 BILLION
AND ORIGINATIONS UP 22% TO $2.1 BILLION; TOTAL C&I LOANS UP $343 MILLION
OR 2% COMPARED TO PRIOR QUARTER, DRIVEN BY GROWTH IN KEY STRATEGIC FOCUS
AREAS
-- NET INTEREST MARGIN UP 23 BASIS POINTS TO 2.14% QUARTER-OVER-QUARTER; AS
ADJUSTED UP 14 BASIS POINTS TO 2.05% AS COST OF FUNDS DECLINED
-- CREDIT QUALITY IMPROVED AS NON-ACCRUAL LOANS DECLINED 8% COMPARED TO
PRIOR QUARTER WHILE PROVISION DECLINED 92% AND NET CHARGE-OFFS IMPROVED
TO 0.30% OF AVERAGE LOANS
-- FURTHER REDUCTION IN CRE EXPOSURE WITH CRE PAR PAYOFFS OF $1.8 BILLION,
INCLUDING 50% IN SUBSTANDARD AND A CRE CONCENTRATION RATIO OF 381%
COMPARED TO 405% IN PRIOR QUARTER
-- STRONG EXPENSE MANAGEMENT WITH OPERATING EXPENSES DOWN 3% COMPARED TO
PRIOR QUARTER AND DOWN 26% IN FULL-YEAR 2025
Fourth Quarter 2025 Summary
------------------------------------------------------------------------------
Asset Quality Loans and Deposits
------------------------------------- -------------------------------------
Criticized/Classified loans declined Total C&I commitments of $3.0
$330 million or 2% vs. Q3'25 and billion, up 28% vs. Q3'25 Total C&I
$2.9 billion or 19% since December originations of $2.1 billion, up 22%
31, 2024 Non-accrual loans decreased vs. Q3'25 Strategic C&I focus areas
$267 million or 8% vs. Q3'25 CRE grew loans by $1.5 billion or 31% vs.
concentration ratio improved to 381% Q3'25 Total MF/CRE exposure down $2.3
vs. 405% at Q3'25 Total ACL of $1.1 billion or 6% vs. Q3'25 Multi-family
billion or 1.79% of total loans HFI loans down $1.5 billion or 5% vs.
Multi-family ACL coverage of 1.89% Q3'25 CRE loans declined $849 million
Multi-family ACL coverage for or 8% vs. Q3'25 Reduced brokered
rent-regulated units equal to or deposits by $7.8 billion or 77% YTD
greater than 50% of 3.44% NCOs to to $2.4 billion Wholesale borrowings
average loans improves to 0.30% from declined $1.0 billion or 8% vs. Q3'25
0.46% and $2.2 billion vs. Q4'25
Capital Profitability
------------------------------------- -------------------------------------
CET1 capital ratio improved to Adjusted PPNR improved to $60 million
12.83%, at or above peer group vs. $15 million in Q3'25 Positive
levels Excess capital of $1.4 operating leverage of approximately
billion, after tax, using low end of 900 basis points NIM, excluding hedge
target CET1 range of 10.5% Tangible gains, increased 14 basis points to
book value per share of $17.45 2.05% vs. Q3'25 NIE was $509 million,
Tangible book value per share down 2% vs. Q3'25 Adjusted operating
adjusted for warrant exercise is expenses of $462 million, up 1% vs.
$15.82 Q3'25
------------------------------------- -------------------------------------
HICKSVILLE, N.Y., Jan. 30, 2026 /PRNewswire/ -- Flagstar Bank, N.A. (the "Bank") $(FLG)$, today reported results for the fourth quarter and full-year ended 2025. Flagstar Bank returned to profitability during the fourth quarter 2025, reporting net income of $29 million compared to a net loss of $36 million in third quarter 2025 and a net loss of $188 million in fourth quarter 2024.
Net income attributable to common stockholders in fourth quarter 2025 was $21 million, or $0.05 per diluted share, compared to a net loss attributable to common stockholders of $45 million, or $0.11 per diluted share in third quarter 2025 and a net loss attributable to common stockholders of $196 million, or $0.47 per diluted share in fourth quarter 2024.
For the full-year ended 2025, the Bank reported a net loss of $177 million compared to a net loss of $1,118 million for the full-year ended 2024. The net loss attributable to common stockholders for the full-year ended 2025 was $210 million or $0.50 per diluted share compared to a net loss attributable to common stockholders for the full-year ended 2024 of $1,153 million or $3.49 per diluted share.
CEO COMMENTARY
Commenting on the Bank's fourth quarter and full-year ended 2025 performance, Chairman, President, and Chief Executive Officer, Joseph M. Otting stated, "We are extremely pleased with our performance in the fourth quarter of 2025. After two challenging years, I'm proud to share that during the fourth quarter, the Bank returned to profitability, as we reported net income attributable to common stockholders of $21 million or $0.05 per diluted share, and $30 million on an adjusted basis or $0.06 per diluted share.
"The past year was one of significant progress for Flagstar. This progress strengthened in the fourth quarter, during which, we successfully continued to execute on our strategy to transform the Bank into one of the best performing regional banks in the country, with a diversified balance sheet and strong capital and credit quality metrics.
"In addition to returning to profitability during the fourth quarter, we also had positive operating leverage, which we expect to continue in 2026. Our return to profitability during the fourth quarter is a significant milestone in the Bank's turnaround, but it is only one of several positive trends, including continued growth in the C&I portfolio, NIM expansion coupled with an increase in net interest income, ongoing expense management, and an improving credit quality profile.
"Over the past year, we strategically and deliberately built a significant C&I banking platform by adding over 250 experienced bankers and support staff, who have successfully brought in new relationships. This resulted in a second consecutive quarter of growth in total C&I loans, which increased at a 9% annualized rate this quarter. This growth continues to be led by our two key focus areas - Specialized Industries and Regional Commercial and Corporate Banking - which collectively had loan growth of $1.5 billion, up 31% compared to the third quarter.
"We also recorded another quarter of net interest margin expansion, up 14 basis points compared to the previous quarter, excluding a one-time benefit from a hedging gain, along with a double-digit increase in net interest income, up 10% on a linked-quarter basis. In addition, we continue to prudently manage our expense base, resulting in operating expenses declining 3% quarter-over-quarter and 26% year-over-year.
On the credit quality front, our non-accrual loans declined 8% compared to the third quarter, while criticized/classified loans declined 2% compared to the third quarter and are down $2.9 billion or 19% over the past year. In addition, our CRE concentration is at an all time low, ending the year at 381%, as we have diligently focused on reducing our commercial real estate exposure over the last two years.
BALANCE SHEET SUMMARY AS OF DECEMBER 31, 2025
At December 31, 2025, total assets were $87.5 billion, down $4.2 billion or 5% versus September 30, 2025 and down $12.6 billion or 13% versus December 31, 2024. Both the linked-quarter and year-over-year decreases are due to a continuation of the Bank's strategy to reduce its multi-family and commercial real estate ("CRE") exposure and further deleveraging of the balance sheet. In addition, the Bank used its cash balance to fund the run off in brokered deposits and wholesale borrowings, as well as to purchase higher yielding investment securities, resulting in a decline in cash balances over the course of the year.
Total loans and leases held for investment ("HFI") at December 31, 2025 were $60.7 billion, down $1.9 billion or 3% on a linked-quarter basis and down $7.5 billion or 11% versus December 31, 2024. The multi-family loan portfolio declined $1.5 billion or 5% to $29.0 billion on a linked-quarter basis and declined $5.1 billion or 15% versus December 31, 2024. The CRE portfolio decreased $849 million or 8% on a linked-quarter basis to $9.3 billion and declined $2.5 billion or 21% versus December 31, 2024. Both the linked-quarter and year-to date declines were mainly driven by par payoffs. During the fourth quarter, par payoffs totaled $1.8 billion compared to par payoffs of $1.3 billion in the previous quarter, while on a year-to-date basis, par payoffs totaled $5.5 billion.
Fourth quarter 2025 marked another strong quarter of production from the Bank's commercial and industrial ("C&I") lending teams within our two strategic growth areas - Specialized Industries Lending and Corporate and Regional Commercial Banking, which grew $1.5 billion or 31% compared to the prior quarter. Overall, total C&I loans grew $343 million or 2% on a linked-quarter basis to $15.2 billion, the second consecutive quarter of net C&I loan growth.
During the fourth quarter, total new C&I credit commitments increased to $3 billion, up $653 million or 28% compared to $2.4 billion in the third quarter. Of this amount, we originated $2.1 billion during the fourth quarter, up $367 million or 22% compared to $1.7 billion in the third quarter. Our strategic growth areas on a combined basis recorded total commitments of $2.7 billion up $593 million or 29% compared to $2.1 billion in the third quarter; total originations from these two areas during the fourth quarter were $1.7 billion, up $300 million or 21% compared to $1.4 billion in the third quarter.
Total deposits at December 31, 2025 were $66.0 billion, a $3.2 billion or 5% linked-quarter decrease and $9.9 billion or 13% decrease versus December 31, 2024. Both the quarter-over-quarter and year-to-date decreases were due to a decline in certificates of deposits ("CDs") and lower mortgage escrow deposits.
During the fourth quarter, CDs decreased $1.5 billion or 7% to $20.8 billion on a linked-quarter basis and decreased $6.5 billion or 24% versus December 31, 2024. Both the linked-quarter and year-to-date declines in CDs were primarily driven by a decline in brokered deposits, as part of the Bank's strategy to reduce higher cost funding. During the fourth quarter, the Bank reduced brokered deposits by $1.7 billion with a weighted average cost of 5.08%. On a year-to-date basis, the Bank reduced brokered deposits by $7.8 billion with a weighted average cost of 4.91%. This led to a 26 basis point quarter-over-quarter improvement in the cost of deposits.
Wholesale borrowings, consisting primarily of Federal Home Loan Bank of New York ("FHLB-NY") advances declined $1.0 billion or 8% to $11.2 billion on a linked-quarter basis and $2.2 billion or 17% compared to year-end 2024. During fourth-quarter 2025, the Bank pre-paid approximately $2.5 billion in longer dated FHLB-NY advances, some of which was replaced with short dated advances. This accounted for the majority of both the linked-quarter and year-over-year decline in wholesale borrowings.
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS - AS ADJUSTED
On an as adjusted basis, which excludes the impact of certain notable items, including a $9 million fair value gain related to the Bank's equity investment in Figure Technology Solutions, Inc., (the "Figure Investment"), $4 million in severance and $17 million of merger-related expenses, the fourth quarter 2025 net income attributable to common stockholders was $30 million or $0.06 per diluted share compared to a third quarter 2025 net loss attributable to common stockholders of $31 million or $0.07 per diluted share and a fourth quarter 2024 net loss attributable to common stockholders of $166 million or $0.40 per diluted share.
For the year ended 2025, on an adjusted basis, net loss attributable to common stockholders was $154 million or $0.37 per diluted share. The Bank's full-year 2025 results exclude several notable items, including a $30 million fair value gain related to the Figure Investment, a $14 million litigation settlement, $56 million in merger-related expenses, $13 million in lease cost acceleration related to branch closures, $8 million in trailing costs related to the sale of our mortgage servicing/sub-servicing business, and $14 million in severance costs related to branch closures and employee reduction actions.
For the year ended 2024, on an adjusted basis, the Bank reported a net loss of $850 million and a net loss attributable to common stockholders of $885 million or $2.68 per diluted share. Included in the full year 2024 results were $106 million of merger-related expenses, $32 million in certain items related to the sale of the mortgage warehouse business, $80 million in gains related to the sale of the mortgage servicing business, $31 million in severance expenses, $77 million long term asset impairment, and a $121 million reduction in the bargain purchase gain arising from the Signature transaction.
EARNINGS SUMMARY FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2025
Net Interest Income, Net Interest Margin, and Average Balance Sheet
Net Interest Income
Net interest income for the fourth quarter 2025 totaled $467 million, up $42 million, or 10%, compared to third quarter 2025 and up $6 million or 1% on a year-over-year basis. The above-mentioned accelerated repayment of certain FHLB-NY advances led to the recognition of hedge gains which accounted for approximately $20.5 million of the linked-quarter increase in net interest income. Over the course of 2025, the Bank strategically reduced its multi-family and CRE portfolios, while at the same time paid down higher cost deposits and wholesale borrowings. This strategy led to lower average interest-earning assets and average interest-bearing liabilities and a significant reduction in our cost of funds, partially offset by lower asset yields.
For the year ended 2025, net interest income decreased $431 million or 20% to $1.7 billion compared to $2.2 billion for the year ended 2024. The year-over-year decrease is due to the decline in average interest-earning assets along with a concurrent decline in the average yield. The decrease in average interest-earning assets was primarily driven by a decline in average loan balances due to the Bank's strategy to reduce its exposure to multi-family and CRE loans and the sale of the mortgage warehouse business and the mortgage servicing/sub-servicing and third-party origination business during 2024. This was partially offset by a decline in average interest-bearing liabilities, mainly the result of the Bank reducing a substantial amount of wholesale borrowings and brokered deposits during 2024 and 2025.
Net Interest Margin
During fourth quarter 2025, the Bank's net interest margin ("NIM") increased compared to third quarter 2025. The fourth quarter 2025 NIM was 2.14%, up 23 basis points compared to third quarter 2025, and up 41 basis points compared to fourth quarter 2024. The above-mentioned accelerated repayment of certain FHLB-NY advances led to the recognition of hedge gains, which accounted for 9 basis points of the linked-quarter NIM improvement. In addition, there was a 39 basis point decrease in the cost of average interest-bearing liabilities.
On a linked-quarter basis, average interest-bearing deposits declined $1.6 billion or 3% to $56 billion along with a 26 basis point improvement in the average cost of interest-bearing deposits to 3.34%, while they declined $9.9 billion or 15% year-over-year along with an 85 basis point decline in the average cost of funds.
Average loan balances declined $1.7 billion or 3% to $61.8 billion on a linked-quarter basis, while the average loan yield decreased 6 basis points to 5.09%. Average securities balances rose $0.7 billion or 4% to $17.3 billion and the average yield improved to 4.44%, up 18 basis points compared to third quarter 2025.
The year-over-year increase in the NIM was driven by the redeployment of cash into higher-yielding investment securities and C&I loans, along with a significant reduction in brokered deposits and wholesale borrowings.
Average loans declined $9.9 billion or 14% to $61.8 billion, while the average yield declined 19 basis points to 5.09% on a year-over-year basis. Average securities balances increased $5.0 billion or 40% to $17.3 billion, while the average yield decreased 33 basis points to 4.44% year-over-year. Average total borrowings decreased $5.1 billion or 28% to $12.8 billion while their average cost declined 77 basis points to 3.79% compared to the prior year. Average deposits declined $9.9 billion or 15% to $55.6 billion on a year-over-year basis; however, the average cost of deposits declined 85 basis points to 3.34% year-over-year.
For the year ended 2025, the NIM was 1.89%, down 6 basis points compared to the year ended 2024. The year-over-year decrease was largely the result of a smaller balance sheet driven by lower average loan balances offset partially by higher average securities balances and lower average deposits and borrowed funds.
Average loan balances during the year ended 2025 declined $14.1 billion or 18% to $64.8 billion compared to the year ended 2024, while the average yield decreased 45 basis points to 5.09%. Average securities balances increased $3.3 billion or 27% to $15.6 billion, while the average securities yield decreased 6 basis points to 4.51%. Average cash balances declined $9.0 billion or 46% to $10.5 billion, while the average yield decreased 94 basis points to 4.32%.
Average borrowed funds declined $10.5 billion or 44% to $13.6 billion and their average cost decreased 57 basis points as the Bank paid down FHLB-NY advances throughout 2024 and continuing into 2025. At the same time average interest-bearing deposits declined $3.4 billion or 6% to $58.7 billion with their average cost declining 52 basis points to 3.63%.
Provision for Credit Losses
For the fourth quarter 2025, the provision for credit losses decreased $35 million or 92% to $3 million compared to the third quarter 2025 and it decreased $142 million or 98% compared to fourth quarter 2024. The decrease in the provision for credit losses is due to the strategic reduction in multi-family and CRE loan balances, lower charge-offs, a decline in criticized assets and a stabilization in appraised collateral values and borrower financials.
Net charge-offs for the fourth quarter 2025 totaled $46 million, down $27 million or 37% compared to third quarter 2025 and down $176 million or 79% compared to fourth quarter 2024. Fourth quarter 2025 net charge-offs on an annualized basis represented 0.30% of average loans outstanding, compared to 0.46% for third quarter 2025 and compared to 1.24% for fourth quarter 2024.
For the year ended 2025, the provision for credit losses totaled $184 million compared to $1,092 million for the year ended 2024, down $908 million or 83%. The year-over-year decrease was mainly the result of a significant decrease in net charge-offs primarily related to our multi-family and CRE portfolios, which led to stabilization in the allowance for credit losses.
For the year ended 2025, net charge-offs totaled $351 million compared to $892 million for the year ended 2024. Net charge-offs for the year ended 2025 represented 0.55% of average loans outstanding compared to 1.16% of average loans outstanding for the year ended 2024. The decrease was due to normalizing credit trends, including stabilizing property values and borrower financials.
Pre-Provision Net Revenue
The table below details the Bank's pre-provision net revenue ("PPNR") and PPNR, as adjusted, which are non-GAAP measures, for the periods noted:
December 31, 2025
For the Three Months Ended compared to:
------------------------------------------------------------ -------------------
December
December 31, September December 31, September 31,
(dollars in millions) 2025 30, 2025 2024 30, 2025 2024
------------------- ------------------ ------------------- --------- --------
Net interest income $ 467 $ 425 $ 461 10 % 1 %
Non-interest income 90 94 164 -4 % -45 %
------------------- ------------------ -------------------
Total revenues $ 557 $ 519 $ 625 7 % -11 %
Total non-interest
expense 509 522 718 -2 % -29 %
------------------- ------------------ -------------------
Pre - provision net
revenue/(loss)
(non-GAAP) $ 48 $ (3) $ (93) NM NM
Merger-related
expenses 17 17 11 -- % 55 %
Net impact of
mortgage/servicing
sale and related
activity -- -- (80) NM NM
Severance 4 8 31 -50 % -87 %
Long term asset
impairment -- -- 77 NM NM
Litigation settlement -- 14 -- NM NM
Net gain on investment
security (9) (21) -- -57 % NM
Pre - provision net
revenue/(loss), as
adjusted
(non-GAAP)(1) $ 60 $ 15 $ (53) NM NM
=================== ================== ===================
(1) Amounts may not foot as a result of rounding.
For the fourth quarter 2025, PPNR totaled $48 million compared to a pre-provision net loss of $3 million for third quarter 2025 and a pre-provision net loss of $93 million for fourth quarter 2024. Fourth quarter 2025 PPNR included a $9 million fair value gain related to the Figure Investment, and $4 million in severance costs. As adjusted for these items and for $17 million in merger-related expenses, fourth quarter 2025 PPNR was $60 million compared to a PPNR of $15 million for third quarter 2025 and a pre-provision net loss of $53 million for fourth quarter 2024.
For the Year Ended
--------------------------------------------------------------------- --------
(dollars in millions) December 31, 2025 December 31, 2024 % Change
------------------------------------ ------------------------------- --------
Net interest income $ 1,721 $ 2,152 -20 %
Non-interest income 341 400 -15 %
------------------------------------ -------------------------------
Total revenues $ 2,062 $ 2,552 -19 %
Total non-interest
expense 2,076 2,838 -27 %
------------------------------------ -------------------------------
Pre - provision net
revenue / (loss)
(non-GAAP) $ (14) $ (286) -95 %
Merger-related
expenses 56 106 -47 %
Certain items related
to sale on mortgage
warehouse business -- 32 NM
Net impact of
mortgage/servicing
sale and related
activity -- (80) NM
Severance 14 31 -55 %
Long term asset
impairment -- 77 NM
Lease cost
acceleration related
to closing branches 13 -- NM
Trailing mortgage sale
costs with Mr. Cooper 8 -- NM
Litigation settlement 14 -- NM
Net gain on investment
security (30) -- NM
Bargain purchase gain -- 121 NM
Pre - provision net
revenue, as adjusted
(non-GAAP) $ 61 $ 1 NM
==================================== ===============================
For the year ended 2025, pre-provision net loss was $14 million compared to pre-provision net loss of $286 million for the year ended 2024. The year ended 2025 pre-provision net loss included several notable items including a $30 million fair value gain related to the Figure Investment, a $14 million increase in litigation reserves related to a recent settlement, $14 million in severance costs, $13 million in lease cost acceleration expense, and $8 million in trailing mortgage sale costs.
As adjusted for these items and for $56 million in merger-related expenses, pre-provision net revenue was $61 million for the year ended 2025 compared to pre-provision net revenue of $1 million for the year ended 2024, which included a $121 million reduction in the bargain purchase gain arising from the Signature transaction and $32 million in certain items related to the sale of the mortgage warehouse business, along with $106 million of merger-related expenses, $80 million related to the sale of the mortgage business, $31 million in severance, and $77 million in long-term asset impairment.
Non-Interest Income
Non-interest income in fourth quarter 2025 was $90 million, down $4 million or 4% compared to $94 million in third quarter 2025 and down $74 million or 45% compared to fourth quarter 2024. Fourth-quarter 2025 non-interest income includes a $9 million fair value gain on the Figure Investment, while in the third quarter, the fair value gain was $21 million. Excluding this item, fourth quarter 2025 non-interest income was $81 million, up $8 million or 11% on a linked quarter basis and up $9 million or 13% on a year-over-year basis, excluding a $92 million gain on sale of the mortgage operations.
The year-over-year declines were due to the sale of the Bank's mortgage servicing/subservicing business last year. The sale impacted various categories within non-interest income including fee income (through lower loan origination fees), the net return on mortgage servicing rights, and loan administration income.
On a linked-quarter basis, net gain on loan sales and securitizations increased $3 million or 60% to $8 million and other income increased $1 million or 3% to $33 million and fee income was down $11 million or 33% year-over-year to $22 million, largely due to a decline in loan origination income. This was partially offset by a $4 million or 14% year-over-year increase in other income to $33 million.
December 31, 2025
For the Three Months Ended compared to:
December December December
31, September 31, September 31,
(dollars in millions) 2025 30, 2025 2024 30, 2025 2024
-------- --------- -------- --------- --------
Fee income $22 $23 $33 -4 % -33 %
Bank-owned life
insurance 17 12 10 42 % 70 %
Net gain on investment
securities 9 22 -- -59 % NM
Net return on mortgage
servicing rights -- -- (1) NM NM
Net gain on loan sales
and securitizations 8 5 5 60 % 60 %
Net gain on
mortgage/servicing
sale -- -- 89 NM NM
Net loan
administration income
(loss) 1 -- (1) NM NM
Other income 33 32 29 3 % 14 %
-------- --------- --------
Total non-interest
income $90 $94 $164 -4 % -45 %
======== ========= ========
Impact of Adjustments:
Net gain on investment
security (9) (21) -- -57 % NM
Gain on
mortgage/servicing
sale and related
activity -- -- (92) NM NM
-------- --------- --------
Adjusted noninterest
income (non-GAAP) $81 $73 $72 11 % 13 %
======== ========= ========
For the year ended 2025, non-interest income totaled $341 million compared to $400 million for the year ended 2024. Included in full-year 2025 non-interest income is the aforementioned $30 million fair value gain on the Figure Investment, while the year ended 2024 includes a reduction of the bargain purchase gain of $121 million related to the Signature transaction, a $92 million gain on the sale of our mortgage operations, and $23 million related to the sale of the mortgage warehouse business. As adjusted for these items, non-interest income for the year ended 2025 was $311 million compared to $452 million for the year ended 2024, a $141 million or 31% decline.
The year-over-year decline was driven by a $73 million decrease in the net return on MSRs to zero for the year ended 2025, a $16 million or 33% decline in the net gain on loan sales and securitizations, and a $61 million or 41% decline in fee income largely driven by the decline in loan origination income. Each of these decreases was due to the sale of our mortgage servicing/sub-servicing and third-party origination business. This was partially offset by a $17 million or 15% increase in other income.
For the Year Ended
December 31, December 31,
(dollars in millions) 2025 2024 % Change
------------ ------------ --------
Fee income $89 $150 -41 %
Bank-owned life insurance 49 42 17 %
Net gain on investment securities 31 -- NM
Net return on mortgage servicing
rights -- 73 NM
Net gain on loan sales and
securitizations 32 48 -33 %
Net gain on mortgage/servicing sale -- 89 NM
Net loan administration income 6 2 NM
Bargain purchase gain -- (121) NM
Other income 134 117 15 %
------------ ------------
Total non-interest income $341 $400 -15 %
============ ============
Impact of Notable Item:
Net gain on investment security (30) -- NM
Certain items related to sale on
mortgage warehouse business -- 23 NM
Gain on mortgage/servicing sale and
related activity -- (92) NM
Bargain purchase gain -- 121 NM
------------ ------------
Adjusted noninterest income
(non-GAAP) $311 $452 -31 %
============ ============
Non-Interest Expense
Fourth quarter 2025 non-interest expense totaled $509 million, down $13 million or 2% on a linked-quarter basis and down $209 million or 29% on a year-over-year basis. Fourth quarter 2025 included $4 million of severance costs. As adjusted, for this item and excluding intangible amortization and merger-related expenses, fourth quarter 2025 operating expenses totaled $462 million, up $5 million or 1% on a linked-quarter basis and down $94 million or 17% on a year-over-year basis.
On an adjusted basis, the linked-quarter increase was mainly driven by a $15 million increase in compensation and benefits expense, largely driven by an increase in short-term incentive compensation, a $6 million decrease in general and administrative expenses, and a $4 million decrease in FDIC insurance expense. The year-over-year decline, on an adjusted basis, was the result of a $22 million decrease in compensation and benefits expense, a $30 million decline in general and administrative expenses, a $41 million or 55% decline in FDIC insurance expense, and a $1 million decrease in occupancy and equipment expense.
December 31, 2025
For the Three Months Ended compared to:
-----------------------------
December December December
31, September 31, September 31,
(dollars in millions) 2025 30, 2025 2024 30, 2025 2024
-------- --------- -------- --------- --------
Operating expenses:
Compensation and
benefits $253 $242 $302 5 % -16 %
FDIC insurance 33 37 74 -11 % -55 %
Occupancy and
equipment 47 47 48 -- % -2 %
General and
administrative 133 153 252 -13 % -47 %
-------- --------- --------
Total operating
expenses 466 479 676 -3 % -31 %
Intangible asset
amortization 26 26 31 -- % -16 %
Merger-related
expenses 17 17 11 -- % 55 %
Total non-interest
expense $509 $522 $718 -2 % -29 %
======== ========= ========
Impact of Adjustments:
Total operating
expenses $466 $479 $676 -3 % -31 %
Certain items related
to sale of mortgage
servicing business -- -- (12) NM NM
Severance (4) (8) (31) -50 % -87 %
Long term asset
impairment -- -- (77) NM NM
Litigation settlement -- (14) -- NM NM
-------- --------- --------
Adjusted operating
expenses (non-GAAP) $462 $457 $556 1 % -17 %
======== ========= ========
For the year ended 2025, total non-interest expense was $2.1 billion, down $762 million or 27% compared to the year ended 2024. Full-year 2025 results include a number of notable items, including $14 million in severance costs, $13 million of lease cost acceleration, $8 million in trailing mortgage sale costs, and a $14 million litigation settlement. As adjusted for these items and excluding intangible asset amortization and merger expenses, year ended 2025 operating expenses were $1.9 billion compared to $2.5 billion for year ended 2024, down $603 million or 24%.
On an adjusted basis, the year-over-year improvement was primarily driven by a $270 million decrease in compensation and benefits expense, a $144 million decline in FDIC insurance expense, a $180 million decrease in general and administrative expense, and a $9 million decline in occupancy and equipment expense.
For the Year Ended
------------------------------------ --------
(dollars in millions) December 31, 2025 December 31, 2024 % Change
----------------- ----------------- --------
Operating expenses:
Compensation and benefits $976 $1,263 -23 %
FDIC insurance 169 313 -46 %
Occupancy and equipment 202 211 -4 %
General and
administrative 566 809 -30 %
----------------- -----------------
Total operating expenses 1,913 2,596 -26 %
Intangible asset
amortization 107 136 -21 %
Merger-related expenses 56 106 -47 %
Total non-interest expense $2,076 $2,838 -27 %
================= =================
Impact of Notable Items:
Total operating expenses $1,913 $2,596 -26 %
Certain items related to
sale on mortgage
warehouse business -- (9) NM
Gain on
mortgage/servicing sale
and related activity -- (12) NM
Severance (14) (31) -55 %
Long term asset
impairment -- (77) NM
Lease cost acceleration
related to closing
branches (13) -- NM
Trailing mortgage sale
costs with Mr. Cooper (8) -- NM
Litigation settlement (14) -- NM
----------------- -----------------
Adjusted operating
expenses (non-GAAP) $1,864 $2,467 -24 %
================= =================
Income Taxes
For the fourth quarter 2025, the Bank reported income tax expense of $16 million compared to a benefit for income taxes of $5 million for the third quarter 2025 and a benefit of $50 million for the fourth quarter 2024. The effective tax rate for the fourth quarter 2025 was 35.3% compared to 12.2% for the third quarter 2025, and 21.3% for the fourth quarter 2024.
For the year ended 2025, the Bank reported an income tax benefit of $21 million compared to an income tax benefit of $260 million for the year ended 2024. The effective tax rate for the year ended 2025 was 10.6% compared to 18.9% for the year ended 2024.
CREDIT QUALITY
December 31, 2025
As of compared to:
December December December
31, September 31, September 31,
(dollars in millions) 2025 30, 2025 2024 30, 2025 2024
-------- --------- -------- --------- --------
Total non-accrual
loans held for
investment $2,975 $3,241 $2,615 -8 % 14 %
Non-accrual loans held
for sale $30 $31 $323 -3 % -91 %
NPLs to total loans
held for investment 4.90 % 5.17 % 3.83 % -5 % 28 %
NPAs to total assets 3.41 % 3.56 % 2.62 % -4 % 30 %
Allowance for credit
losses on loans and
leases $1,030 $1,071 $1,201 -4 % -14 %
Total ACL, including
on unfunded
commitments $1,085 $1,128 $1,251 -4 % -13 %
ACL % of total loans
held for investment 1.70 % 1.71 % 1.76 % -1 bps -6 bps
Total ACL % of total
loans held for
investment 1.79 % 1.80 % 1.83 % -1 bps -5 bps
ACL on loans and
leases % of NPLs 35 % 33 % 46 % 5 % -25 %
Total ACL % of NPLs 36 % 35 % 48 % 5 % -24 %
Non-Accrual Loans
At December 31, 2025, total non-accrual loans, including held-for-sale, were $3,005 million, down $267 million or 8% compared to $3,272 million at September 30, 2025, and up a modest $67 million or 2% compared to $2,938 million at December 31, 2024. The linked-quarter improvement was broad-based with all major loan categories declining.
The increase compared to year-end 2024 was driven by higher multi-family non-accruals, partially offset by declines in C&I and CRE non-accrual loans. The majority of the increase in multi-family non-accrual loans is related to the one previously disclosed borrower relationship that went on non-accrual status in first quarter 2025 and remained on non-accrual as of December 31, 2025. With regard to this borrower, the bankruptcy auction process was recently finalized and confirmed by the bankruptcy court. We expect to close the sale of these loans before the end of the first quarter of 2026.
Total non-accrual loans HFI to total loans HFI were 4.90% at December 31, 2025 compared to 5.17% at September 30, 2025 and 3.83% at December 31, 2024.
Total Allowance for Credit Losses
The total allowance for credit losses including the allowance for unfunded commitments was $1,085 million at December 31, 2025 compared to $1,128 million at September 30, 2025 and $1,251 million at December 31, 2024. The total allowance for credit losses on loans and leases at December 31, 2025 was $1,030 million compared to $1,071 million at September 30, 2025 and $1,201 million at December 31, 2024.
The total allowance for credit losses to total loans HFI at December 31, 2025 was 1.79% compared to 1.80% at September 30, 2025 and 1.83% at December 31, 2024. The total allowance for credit losses on loans and leases to total loans HFI was 1.70% at December 31, 2025 compared to 1.71% at September 30, 2025 and 1.76% at December 31, 2024.
The allowance for credit losses in the fourth quarter 2025 declined slightly as a result of our ongoing focus on credit and declines in total loan HFI, and stabilization in collateral values and borrower financials, which have led to a stabilization in the allowance for credit losses.
CAPITAL POSITION
The Bank's regulatory capital ratios continue to exceed regulatory minimums to be classified as "Well Capitalized," the highest regulatory classification. The table below depicts the Bank's regulatory capital ratios at those respective periods.
September 30,
December 31, 2025 2025 December 31, 2024
----------------- ----------------- -----------------
REGULATORY
CAPITAL RATIOS:
(1)
Common equity
tier 1 ratio 12.83 % 12.45 % 11.83 %
Tier 1 risk-based
capital ratio 13.66 % 13.25 % 12.57 %
Total risk-based
capital ratio 16.23 % 15.92 % 15.14 %
Leverage capital
ratio 9.22 % 9.03 % 7.68 %
(1) The minimum regulatory requirements for classification as a
well-capitalized institution are a common equity tier 1 capital ratio of
6.5%; a tier one risk-based capital ratio of 8.00%; a total risk-based
capital ratio of 10.00%; and a leverage capital ratio of 5.00%.
Flagstar Bank, N.A.
Flagstar Bank, N.A. is one of the largest regional banks in the country and is headquartered in Hicksville, New York. At December 31, 2025, the Bank had $87.5 billion of assets, $61.0 billion of loans, deposits of $66.0 billion, and total stockholders' equity of $8.1 billion. Flagstar Bank, N.A. operates approximately 340 locations across ten states, with strong footholds in the greater New York/New Jersey metropolitan region and in the upper Midwest, along with a significant presence in fast-growing markets in Florida and the West Coast.
Post-Earnings Release Conference Call
The Bank will host a conference call on January 30, 2026 at 8:00 a.m. (Eastern Time) to discuss its fourth quarter 2025 performance. The conference call may be accessed by dialing (888) 596-4144 (for domestic calls) or (646) 968-2525 (for international calls) and providing the following conference ID: 5857240. The live webcast will be available at ir.flagstar.com under Events.
A replay will be available approximately three hours following completion of the call through 11:59 p.m. on February 3, 2026 and may be accessed by calling (800) 770-2030 (domestic) or (609) 800-9909 (international) and providing the following conference ID: 5857240. In addition, the conference call will be webcast at ir.flagstar.com and archived through 5:00 p.m. on February 27, 2026.
Investor/Media Contact: Salvatore J. DiMartino (516) 683-4286
Cautionary Statements Regarding Forward-Looking Language
This earnings release 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 other matters; (b) the future costs and benefits of the actions we may take; (c) our assessments of credit risk and probable losses on loans and associated allowances and reserves; (d) our assessments of interest rate and other market risks; (e) our ability to achieve profitability goals within projected timeframes and to execute on our strategic plan, including the sufficiency of our internal resources, procedures and systems; (f) our ability to attract, incentivize, and retain key personnel and the roles of key personnel; (g) our ability to achieve our financial and other strategic goals, including those related to our recent holding company reorganization, which was completed in October 2025 (the "Reorganization"), our merger with Flagstar Bancorp, Inc., which was completed in December 2022, our acquisition of substantial portions of the former Signature Bank through an FDIC-assisted transaction, which was completed in March 2023, and our ability to comply with the heightened regulatory standards with respect to governance and risk management programs to which we are subject as a national bank with assets of $50 billion or more; (h) the impact of the $1.05 billion capital raise we completed in March 2024; (i) our previously disclosed material weaknesses in internal control over financial reporting; (j) the conversion or exchange of shares of our preferred stock; (k) the payment of dividends on shares of our capital stock, including adjustments to the amount of dividends payable on shares of our preferred stock; (l) the availability of equity and dilution of existing equity holders associated with future equity awards and stock issuances; (m) the effects of the reverse stock split we effected in July 2024; and (n) the impact of the 2024 sale of our mortgage servicing operations, third party mortgage loan origination business, and mortgage warehouse business.
Forward--looking statements are typically identified by such words as "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "should," "confident," and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. Additionally, forward--looking statements speak only as of the date they are made; we do not assume any duty, and do not undertake, to update our forward--looking statements. Furthermore, because forward--looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in our statements, and our future performance could differ materially from our historical results.
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 investment portfolios, including associated allowances and reserves; changes in future allowance for credit losses, including changes required under relevant accounting and regulatory requirements; the ability to pay future dividends; changes in our capital management and balance sheet strategies and our ability to successfully implement such strategies; our ability to achieve the anticipated benefits of the Reorganization; changes in our Board of Directors and our executive management team; changes in our strategic plan, including changes in our internal resources, procedures and systems, and our ability to successfully implement such plan; our ability to successfully remediate our previously disclosed material weaknesses in internal control over financial reporting; changes in competitive pressures among financial institutions or from non--financial institutions; changes in legislation, regulations, and policies; the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts; the outcome of federal, state, and local elections and the resulting economic and other impact on the areas in which we conduct business; the impact of changing political conditions or federal government shutdowns; the imposition of restrictions on our operations by bank regulators; the outcome of pending or threatened litigation, or of investigations or any other matters before regulatory agencies, whether currently existing or commencing in the future; our ability to comply with heightened regulatory standards with respect to governance and risk management programs to which we are subject as a national bank with assets of $50 billion or more; the restructuring of our mortgage business; our ability to recognize anticipated cost savings and enhanced efficiencies with respect to our balance sheet and expense reduction strategies; the impact of failures or disruptions in or breaches of our operational or security systems, data or infrastructure, or those of third parties, including as a result of cyberattacks or campaigns; the impact of natural disasters, extreme weather events, civil unrest, international military conflict, terrorism or other geopolitical events; and a variety of other matters which, by their nature, are subject to significant uncertainties and/or are beyond our control. Our forward-looking statements are also subject to the following principal risks and uncertainties with respect to our merger with Flagstar Bancorp, which was completed in December 2022, and our acquisition of substantial portions of the former Signature Bank through an FDIC-assisted transaction, which was completed in March 2023: the possibility that the anticipated benefits of the transactions will not be realized when expected or at all; the possibility of increased legal and compliance costs, including with respect to any litigation or regulatory actions related to the business practices of acquired companies or the combined business; diversion of management's attention from ongoing business operations and opportunities; the possibility that we may be unable to achieve expected synergies and operating efficiencies in or as a result of the transactions within the expected timeframes or at all; and revenues following the transactions may be lower than expected.
More information regarding some of these factors is provided in the Risk Factors section of our Annual Report on Form 10--K for the year ended December 31, 2024, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, and in other SEC reports we file. Our forward--looking statements may also be subject to other risks and uncertainties, including those we may discuss in this news release, on our conference call, during investor presentations, or in our securities disclosure filings, which are accessible on our website and at the SEC's website, www.sec.gov.
- Financial Statements and Highlights Follow -
FLAGSTAR BANK, N.A.
CONSOLIDATED STATEMENTS OF CONDITION
(unaudited)
December 31, 2025
compared to
December 31, September December 31, September December 31,
(dollars in millions) 2025 30, 2025 2024 30, 2025 2024
------------------- --------------- ------------------- --------- ------------
Assets
Cash and due from
banks $ 553 $ 450 $ 434 23 % 27 %
Interest-earning
deposits and other
securities with
financial
institutions 5,341 8,034 14,996 -34 % -64 %
------------------- --------------- -------------------
Total cash and cash
equivalents 5,894 8,484 15,430 -31 % -62 %
Securities:
Debt securities
available-for-sale 15,701 15,052 10,402 4 % 51 %
Equity investments
with readily
determinable fair
values, at fair
value 65 55 14 18 % NM
------------------- --------------- -------------------
Total securities 15,766 15,107 10,416 4 % 51 %
Loans held for sale 265 535 899 -50 % -71 %
Loans and leases held
for investment:
Multi-family 28,983 30,466 34,093 -5 % -15 %
Commercial real
estate(1) 9,314 10,163 11,836 -8 % -21 %
One-to-four family
first mortgage 5,630 5,513 5,201 2 % 8 %
Commercial and
industrial 15,217 14,874 15,376 2 % -1 %
Other loans 1,588 1,645 1,766 -3 % -10 %
------------------- --------------- -------------------
Total loans and leases
held for investment 60,732 62,661 68,272 -3 % -11 %
Less: Allowance for
credit losses on
loans and leases (1,030) (1,071) (1,201) -4 % -14 %
------------------- --------------- -------------------
Total loans and leases
held for investment,
net 59,702 61,590 67,071 -3 % -11 %
Premises and
equipment, net 477 464 562 3 % -15 %
Core deposit and other
intangibles 381 407 488 -6 % -22 %
Other assets 5,027 5,081 5,294 -1 % -5 %
------------------- --------------- -------------------
Total assets $ 87,512 $ 91,668 $ 100,160 -5 % -13 %
=================== =============== ===================
Liabilities and
Stockholders' Equity
Deposits:
Interest-bearing
checking and money
market accounts $ 18,233 $ 20,045 $ 20,780 -9 % -12 %
Savings accounts 14,864 14,782 14,282 1 % 4 %
Certificates of
deposit 20,843 22,369 27,324 -7 % -24 %
Non-interest-bearing
accounts 12,060 11,956 13,484 1 % -11 %
------------------- --------------- -------------------
Total deposits 66,000 69,152 75,870 -5 % -13 %
------------------- --------------- -------------------
Borrowed funds:
Wholesale borrowings 11,151 12,150 13,400 -8 % -17 %
Junior subordinated
debentures 585 584 582 -- % 1 %
Subordinated notes 448 448 444 -- % 1 %
------------------- --------------- -------------------
Total borrowed funds 12,184 13,182 14,426 -8 % -16 %
Other liabilities 1,184 1,225 1,696 -3 % -30 %
Total liabilities 79,368 83,559 91,992 -5 % -14 %
------------------- --------------- -------------------
Mezzanine equity:
Preferred stock -
Series B 1 1 1 -- % -- %
Stockholders' equity:
Preferred stock -
Series A and D 503 503 503 -- % -- %
Common stock 4 4 4 -- % -- %
Paid-in capital in
excess of par 9,303 9,300 9,282 -- % -- %
Retained earnings (988) (1,006) (763) -2 % 29 %
Treasury stock, at
cost (190) (198) (219) -4 % -13 %
Accumulated other
comprehensive loss,
net of tax: (489) (495) (640) -1 % -24 %
Total stockholders'
equity 8,143 8,108 8,167 -- % -- %
------------------- --------------- -------------------
Total liabilities,
Mezzanine and
Stockholders' Equity $ 87,512 $ 91,668 $ 100,160 -5 % -13 %
=================== =============== ===================
(1) Includes Acquisition, Development, and Construction loans.
FLAGSTAR BANK, N.A.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(unaudited)
December 31, 2025
For the Three Months Ended compared to
December 31, September December 31, September December 31,
2025 30, 2025 2024 30, 2025 2024
------------------- ---------------- ------------------ --------- ------------
(dollars in millions,
except per share
data)
Interest Income:
Loans and leases $ 791 $ 819 $ 948 -3 % -17 %
Securities and money
market investments 267 282 410 -5 % -35 %
------------------- ---------------- ------------------
Total interest income 1,058 1,101 1,358 -4 % -22 %
Interest Expense:
Interest-bearing
checking and money
market accounts 132 151 205 -13 % -36 %
Savings accounts 108 113 124 -4 % -13 %
Certificates of
deposit 228 255 362 -11 % -37 %
Borrowed funds 123 157 206 -22 % -40 %
------------------- ---------------- ------------------
Total interest expense 591 676 897 -13 % -34 %
------------------- ---------------- ------------------
Net interest income 467 425 461 10 % 1 %
Provision for credit
losses 3 38 145 -92 % -98 %
------------------- ---------------- ------------------
Net interest income
after provision for
credit losses 464 387 316 20 % 47 %
------------------- ---------------- ------------------
Non-Interest Income:
Fee income 22 23 33 -4 % -33 %
Bank-owned life
insurance 17 12 10 42 % 70 %
Net gain on
investment
securities 9 22 -- -59 % NM
Net return on
mortgage servicing
rights -- -- (1) NM NM
Net gain on loan
sales and
securitizations 8 5 5 60 % 60 %
Net gain on
mortgage/servicing
sale -- -- 89 NM NM
Net loan
administration
income (loss) 1 -- (1) NM NM
Other income 33 32 29 3 % 14 %
------------------- ---------------- ------------------
Total non-interest
income 90 94 164 -4 % -45 %
------------------- ---------------- ------------------
Non-Interest Expense:
Operating expenses:
Compensation and
benefits 253 242 302 5 % -16 %
FDIC insurance 33 37 74 -11 % -55 %
Occupancy and
equipment 47 47 48 -- % -2 %
General and
administrative 133 153 252 -13 % -47 %
------------------- ---------------- ------------------
Total operating
expenses 466 479 676 -3 % -31 %
Intangible asset
amortization 26 26 31 -- % -16 %
Merger-related
expenses 17 17 11 -- % 55 %
Total non-interest
expense 509 522 718 -2 % -29 %
------------------- ---------------- ------------------
Income (loss) before
income taxes 45 (41) (238) NM NM
Income tax (benefit)
expense 16 (5) (50) NM NM
------------------- ---------------- ------------------
Net income (loss) 29 (36) (188) NM NM
Preferred stock
dividends 8 9 8 -11 % -- %
------------------- ---------------- ------------------
Net income (loss)
attributable to
common stockholders $ 21 $ (45) $ (196) NM NM
=================== ================ ==================
Basic earnings (loss)
per common share $ 0.05 $ (0.11) $ (0.47) NM NM
=================== ================ ==================
Diluted earnings
(loss) per common
share $ 0.05 $ (0.11) $ (0.47) NM NM
=================== ================ ==================
Dividends per common
share $ 0.01 $ 0.01 $ 0.01 -- % -- %
=================== ================ ==================
FLAGSTAR BANK, N.A.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(unaudited)
For the Year Ended Change
--------------------------------------
December 31, December 31,
2025 2024 Amount Percent
------------------ ------------------ ------- -------
(dollars in millions,
except per share
data)
Interest Income:
Loans and leases $ 3,310 $ 4,369 (1,059) -24 %
Securities and money
market investments 1,156 1,584 (428) -27 %
------------------ ------------------
Total interest income 4,466 5,953 (1,487) -25 %
Interest Expense:
Interest-bearing
checking and money
market accounts 612 869 (257) -30 %
Savings accounts 442 345 97 28 %
Certificates of
deposit 1,078 1,362 (284) -21 %
Borrowed funds 613 1,225 (612) -50 %
------------------ ------------------
Total interest expense 2,745 3,801 (1,056) -28 %
------------------ ------------------
Net interest income 1,721 2,152 (431) -20 %
Provision for credit
losses 184 1,092 (908) -83 %
------------------ ------------------
Net interest income
after provision for
credit losses 1,537 1,060 477 45 %
------------------ ------------------
Non-Interest Income:
Fee income 89 150 (61) -41 %
Bank-owned life
insurance 49 42 7 17 %
Net gain on
investment
securities 31 -- 31 NM
Net return on
mortgage servicing
rights -- 73 (73) NM
Net gain on loan
sales and
securitizations 32 48 (16) -33 %
Net gain on
mortgage/servicing
sale -- 89 (89) NM
Net loan
administration
income 6 2 4 NM
Bargain purchase gain -- (121) 121 NM
Other income 134 117 17 15 %
------------------ ------------------
Total non-interest
income 341 400 (59) -15 %
------------------ ------------------
Non-Interest Expense:
Operating expenses:
Compensation and
benefits 976 1,263 (287) -23 %
FDIC insurance 169 313 (144) -46 %
Occupancy and
equipment 202 211 (9) -4 %
General and
administrative 566 809 (243) -30 %
------------------ ------------------
Total operating
expenses 1,913 2,596 (683) -26 %
Intangible asset
amortization 107 136 (29) -21 %
Merger-related
expenses 56 106 (50) -47 %
Total non-interest
expense 2,076 2,838 (762) -27 %
------------------ ------------------
(Loss) income before
income taxes (198) (1,378) 1,180 -86 %
Income tax (benefit)
expense (21) (260) 239 -92 %
------------------ ------------------
Net (loss) income (177) (1,118) 941 -84 %
Preferred stock
dividends 33 35 (2) -6 %
------------------ ------------------
Net (loss) income
attributable to
common stockholders $ (210) $ (1,153) 943 -82 %
================== ==================
Basic earnings (loss)
per common share $ (0.50) $ (3.49) 2.99 -86 %
================== ==================
Diluted earnings
(loss) per common
share $ (0.50) $ (3.49) 2.99 -86 %
================== ==================
Dividends per common
share $ 0.04 $ 0.20 (0.16) -80 %
================== ==================
FLAGSTAR BANK, N.A.
RECONCILIATIONS OF CERTAIN GAAP AND NON-GAAP FINANCIAL MEASURES
In addition to GAAP measures, management considers various non-GAAP measures when evaluating the performance of the business.
We believe that non-interest income, operating expenses, pre-provision net (loss) revenue (which includes both non-interest income and non-interest expense), net income (loss), net income (loss) attributed to common stockholders, diluted earnings (loss) per share, the net interest margin, and our efficiency ratio as adjusted for items that we believe are not indicative of core operating results, such as but not limited to merger and restructuring expenses, litigation settlement expenses related to cases prior to the acquisition of Flagstar Bank, NA, fair value adjustments on non-core equity investments, as well as adjustments for severance and impairment charges and other exit costs resulting from strategic shifts in our operations provide valuable insights to investors by highlighting our underlying performance. These non-GAAP metrics also facilitate meaningful comparisons to other financial institutions, as they are widely used and frequently referenced by investors and analysts.
We believe average tangible common stockholders' equity, tangible common stockholders' equity, average tangible assets and tangible book value per share are important measures for evaluating the performance of the business without the impact of our intangible assets. These non-GAAP metrics also provide investors with important indications regarding our ability to grow the business, our ability to pay dividends as well as engage in capital strategies in addition to facilitating meaningful comparisons to other financial institutions, as they are widely used and frequently referenced by investors and analysts.
These non-GAAP measures should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. Moreover, the way we calculate these non-GAAP measures may differ from that of other companies reporting non-GAAP measures with similar names. The following tables reconcile the above the non-GAAP financial measures we use to their comparable GAAP financial measures, to the extent not reconciled earlier in this earnings release, for the stated periods:
At or for the At or for the
------------------------------------------- ----------------------------
Three Months Ended, Year Ended,
-------------------------------------------
December 31, September December December December
(dollars in millions) 2025 30, 2025 31, 2024 31, 2025 31, 2024
-------------- ------------ ------------- ------------- -------------
Total Stockholders'
Equity $ 8,143 $ 8,108 $ 8,167 $ 8,143 $ 8,167
Less: Core deposit and
other intangible
assets (381) (407) (488) (381) (488)
Less: Preferred stock
- Series A and D (503) (503) (503) (503) (503)
-------------- ------------ ------------- ------------- -------------
Tangible common
stockholders' equity $ 7,259 $ 7,198 $ 7,176 $ 7,259 $ 7,176
Total Stockholders'
Equity $ 8,143 $ 8,108 $ 8,167 $ 8,143 $ 8,167
Less: Preferred stock $ (503) $ (503) $ (503) $ (503) $ (503)
-------------- ------------ ------------- ------------- -------------
Common stockholders'
equity $ 7,641 $ 7,605 $ 7,664 $ 7,641 $ 7,664
Total Assets $ 87,512 $ 91,668 $ 100,160 $ 87,512 $ 100,160
Less: Core deposit and
other intangible
assets (381) (407) (488) (381) (488)
-------------- ------------ ------------- ------------- -------------
Tangible Assets $ 87,131 $ 91,261 $ 99,672 $ 87,131 $ 99,672
Average common
stockholders' equity $ 7,670 $ 7,628 $ 8,070 $ 7,621 $ 8,020
Less: Other intangible
assets (398) (424) (508) $ (437) $ (560)
-------------- ------------ ------------- ------------- -------------
Average tangible
common stockholders'
equity $ 7,272 $ 7,204 $ 7,562 $ 7,184 $ 7,460
Average Assets $ 90,384 $ 91,983 $ 110,489 $ 94,515 $ 115,734
Less: Core deposit and
other intangible
assets (398) (424) (508) (437) (560)
-------------- ------------ ------------- ------------- -------------
Average tangible
assets $ 89,986 $ 91,559 $ 109,981 $ 94,078 $ 115,174
GAAP MEASURES:
(Loss) return on
average assets (1) 0.13 % (0.16) % (0.68) % (0.19) % (0.97) %
(Loss) return on
average common
stockholders' equity
(2) 1.11 % (2.31) % (9.73) % (2.75) % (14.38) %
Book value per common
share $ 18.37 $ 18.30 $ 18.47 $ 18.37 $ 18.47
Common stockholders'
equity to total
assets 8.73 % 8.30 % 7.65 % 8.73 % 7.65 %
NON-GAAP MEASURES:
(Loss) return on
average tangible
assets (1) 0.17 % (0.10) % (0.58) % (0.13) % (0.74) %
(Loss) return on
average tangible
common stockholders'
equity (2) 1.64 % (1.70) % (8.82) % (2.16) % (11.87) %
Tangible book value
per common share $ 17.45 $ 17.32 $ 17.30 $ 17.45 $ 17.30
Tangible common
stockholders' equity
to tangible assets 8.33 % 7.89 % 7.20 % 8.33 % 7.20 %
(1) To calculate return on average assets for a period, we divide net income,
or non-GAAP net income, generated during that period by average assets
recorded during that period. To calculate return on average tangible
assets for a period, we divide net income by average tangible assets
recorded during that period.
(2) To calculate return on average common stockholders' equity for a period,
we divide net income attributable to common stockholders, or non-GAAP net
income attributable to common stockholders, generated during that period
by average common stockholders' equity recorded during that period. To
calculate return on average tangible common stockholders' equity for a
period, we divide net income attributable to common stockholders
generated during that period by average tangible common stockholders'
equity recorded during that period.
For the Three Months Ended For the Year Ended
-----------------------------------
(dollars in millions,
except per share December September 30, December December December
data) 31, 2025 2025 31, 2024 31, 2025 31, 2024
----------------- --------------------- ----------------- ----------------- ----------------
Net (loss) income -
GAAP $ 29 $ (36) $ (188) $ (177) $ (1,118)
Merger-related
expenses 17 17 11 56 106
Certain items related
to sale on mortgage
warehouse business -- -- -- -- 32
Net impact of
mortgage/servicing
sale and related
activity -- -- (80) -- (80)
Severance 4 8 31 14 31
Long term asset
impairment -- -- 77 -- 77
Lease cost
acceleration related
to closing branches -- -- -- 13 --
Trailing mortgage sale
costs with Mr. Cooper -- -- -- 8 --
Litigation settlement -- 14 -- 14 --
Net gain on investment
security (9) (21) -- (30) --
Bargain purchase gain -- -- -- -- 121
Total adjustments $ 12 $ 18 $ 39 $ 75 $ 287
Tax effect on
adjustments (3) (4) (9) (19) (19)
----------------- --------------------- ----------------- ----------------- ----------------
Net (loss) income, as
adjusted - non-GAAP $ 38 $ (22) $ (158) $ (121) $ (850)
Preferred stock
dividends 8 9 8 33 35
----------------- --------------------- ----------------- ----------------- ----------------
Net (loss) income
attributable to
common stockholders,
as adjusted - non-
GAAP $ 30 $ (31) $ (166) $ (154) $ (885)
================= ===================== ================= ================= ================
(1) Certain merger-related items are not taxable or deductible.
(2) Amounts may not foot as a result of rounding.
For the Three Months Ended For the Year Ended
-----------------------------------
December 31, September 30, December 31, December 31,
2025 2025 2024 2025 December 31, 2024
---------------- ----------------- --------------- ---------------- -----------------
Per Per Per Per
Amount Share Amount Per Share Amount Share Amount Share Amount Share
------ -------- ------ --------- ------ ------- ------ -------- -------- -------
Diluted
(Loss)
Earnings
Per Share -
GAAP $21 $0.05 $(45) $(0.11) $(196) $(0.47) $(210) $(0.50) $(1,153) $(3.49)
Adjustments 12 0.03 18 0.04 39 0.09 75 0.18 287 0.87
Tax effect
on
adjustments (3) (0.01) (4) (0.01) (9) (0.02) (19) (0.05) (19) (0.05)
------ -------- ------ --------- ------ ------- ------ -------- -------- -------
Diluted
(Loss)
Earnings
Per Share,
as adjusted
- non-GAAP $30 0.06 $(31) (0.07) $(166) (0.40) $(154) (0.37) $(885) (2.68)
====== ======== ====== ========= ====== ======= ====== ======== ======== =======
Total shares
for diluted
earnings
per common
share 458,727,765 415,563,380 415,089,512 415,327,556 330,713,517
(1) Amounts may not foot as a result of rounding.
For the Three Months Ended For the Year Ended
-------------------------------------------
December 31, September 30, December 31, December 31, December 31,
2025 2025 2024 2025 2024
--------------------- --------------------- --------------------- -------------------- ---------------------
(dollars in millions)
Net interest income $ 467 $ 425 $ 461 $ 1,721 $ 2,152
Non-interest income 90 94 164 341 400
--------------------- --------------------- --------------------- -------------------- ---------------------
Total revenues $ 557 $ 519 $ 625 $ 2,062 $ 2,552
Total non-interest
expense 509 522 718 2,076 2,838
--------------------- --------------------- --------------------- -------------------- ---------------------
Pre - provision net
revenue (non-GAAP) $ 48 $ (3) $ (93) $ (14) $ (286)
Merger-related
expenses 17 17 11 56 106
Certain items related
to sale on mortgage
warehouse business -- -- -- -- 32
Net impact of
mortgage/servicing
sale and related
activity -- -- (80) -- (80)
Severance 4 8 31 14 31
Long term asset
impairment -- -- 77 -- 77
Lease cost
acceleration related
to closing branches -- -- -- 13 --
Trailing mortgage sale
costs with Mr. Cooper -- -- -- 8 --
Litigation settlement -- 14 -- 14 --
Net gain on investment
security (9) (21) -- (30) --
Bargain purchase gain -- -- -- -- 121
Pre - provision net
revenue excluding
merger-related
expenses, as adjusted
(non-GAAP) $ 60 $ 15 $ (53) $ 61 $ 1
Provision for credit
losses (3) (38) (145) (184) (1,092)
Merger-related
expenses (17) (17) (11) (56) (106)
Certain items related
to sale on mortgage
warehouse business -- -- -- -- (32)
Net impact of
mortgage/servicing
sale and related
activity -- -- 80 -- 80
Severance (4) (8) (31) (14) (31)
Long term asset
impairment -- -- (77) -- (77)
Lease cost
acceleration related
to closing branches -- -- -- (13) --
Trailing mortgage sale
costs with Mr. Cooper -- -- -- (8) --
Litigation settlement -- (14) -- (14) --
Net gain on investment
security 9 21 -- 30 --
Bargain purchase gain -- -- -- -- (121)
(Loss) income before
taxes $ 45 $ (41) $ (238) $ (198) $ (1,378)
Income tax (benefit)
expense 16 (5) (50) (21) (260)
--------------------- --------------------- --------------------- -------------------- ---------------------
Net (Loss) Income
(GAAP) $ 29 $ (36) $ (188) $ (177) $ (1,118)
===================== ===================== ===================== ==================== =====================
(1) Amounts may not foot as a result of rounding.
FLAGSTAR BANK, N.A.
NET INTEREST INCOME ANALYSIS
LINKED-QUARTER AND YEAR-OVER-YEAR COMPARISONS (unaudited)
For the Three Months Ended
December 31, 2025 September 30, 2025 December 31, 2024
------------------------------------ ----------------------------------- --------------------------------------
Average Average Average Average Average Average
(dollars in millions) Balance Interest Yield/Cost Balance Interest Yield/Cost Balance Interest Yield/Cost
------------ -------- ------------ ----------- -------- ------------ ----------- --------- --------------
Assets:
Interest-earning
assets:
Total loans and
leases (1) $ 61,797 $ 791 5.09 % $ 63,541 $ 819 5.15 % $ 71,727 $ 948 5.28 %
Securities(2) 17,314 192 4.44 16,610 192 4.62 12,347 144 4.77
Interest-earning cash
and cash
equivalents 7,501 75 3.95 8,216 90 4.36 22,048 266 4.79
------------ -------- ----------- -------- ----------- ---------
Total
interest-earning
assets 86,612 $ 1,058 4.85 88,367 $ 1,101 4.94 106,122 $ 1,358 5.11
Non-interest-earning
assets 3,772 3,616 4,367
------------ ----------- -----------
Total assets $ 90,384 $ 91,983 $ 110,489
============ =========== ===========
Liabilities and
Stockholders' Equity:
Interest-bearing
deposits:
Interest-bearing
checking and money
market accounts $ 19,260 $ 132 2.73 % $ 19,562 $ 151 3.05 % $ 23,007 $ 205 3.54 %
Savings accounts 14,802 108 2.89 14,573 113 3.08 13,996 124 3.51
Certificates of
deposit 21,575 228 4.19 23,052 255 4.38 28,573 362 5.04
------------ -------- ----------- -------- ----------- ---------
Total
interest-bearing
deposits 55,637 468 3.34 57,187 519 3.60 65,576 691 4.19
Borrowed funds 12,830 123 3.79 13,191 157 4.74 17,940 206 4.56
------------ -------- ----------- -------- ----------- ---------
Total
interest-bearing
liabilities 68,467 $ 591 3.42 70,378 $ 676 3.81 $ 83,516 $ 897 4.27
Non-interest-bearing
deposits 12,326 12,079 15,959
Other liabilities 1,417 1,394 2,440
------------ ----------- -----------
Total liabilities 82,210 83,851 101,915
Stockholders' and
mezzanine equity 8,174 8,132 8,574
------------ ----------- -----------
Total liabilities and
stockholders'
equity $ 90,384 $ 91,983 $ 110,489
============ =========== ===========
Net interest
income/interest rate
spread $ 467 1.43 % $ 425 1.13 % $ 461 0.84 %
======== ============ ======== ============ ========= ==============
Net interest margin 2.14 % 1.91 % 1.73 %
============ ============ ==============
Ratio of 1.27 1.26 1.27 x
interest-earning x x
assets to
interest-bearing
liabilities
============ ============ ==============
(1) Comprised of Loans and leases held for investment, net and Loans held for
sale.
(2) Comprised of Debt securities available-for-sale at amortized cost, Equity
investments with readily determinable fair values, at fair value and FHLB
stock and FRB-NY stock, at cost.
(3) Amounts may not foot as a result of rounding.
For the Year Ended
December 31, 2025 December 31, 2024
-------------------------------------------------- -----------------------------------------------
Average Average Average Average
(dollars in millions) Balance Interest Yield/Cost Balance Interest Yield/Cost
----------------- ----------------- ------------ ------------------- ------------ ------------
Assets:
Interest-earning
assets:
Total loans and
leases (1) $ 64,822 $ 3,310 5.09 % $ 78,883 $ 4,369 5.54 %
Securities(2) 15,554 702 4.51 12,222 559 4.57
Interest-earning cash
and cash
equivalents 10,504 454 4.32 19,478 1,024 5.26
----------------- ----------------- ------------------- ------------
Total
interest-earning
assets 90,880 $ 4,466 4.91 110,583 $ 5,952 5.38
Non-interest-earning
assets 3,635 5,151
----------------- -------------------
Total assets $ 94,515 $ 115,734
================= ===================
Liabilities and
Stockholders' Equity:
Interest-bearing
deposits:
Interest-bearing
checking and money
market accounts $ 20,079 $ 612 3.05 % $ 23,654 $ 869 3.67 %
Savings accounts 14,521 442 3.04 10,975 345 3.14
Certificates of
deposit 24,057 1,078 4.48 27,477 1,362 4.96
----------------- ----------------- ------------------- ------------
Total
interest-bearing
deposits 58,657 2,132 3.63 62,106 2,576 4.15
Borrowed funds 13,620 613 4.50 24,168 1,224 5.07
----------------- ----------------- ------------------- ------------
Total
interest-bearing
liabilities 72,277 $ 2,745 3.80 86,274 $ 3,800 4.40
Non-interest-bearing
deposits 12,548 18,140
Other liabilities 1,565 2,595
----------------- -------------------
Total liabilities 86,390 107,009
Stockholders' and
mezzanine equity 8,125 8,725
----------------- -------------------
Total liabilities and
stockholders'
equity $ 94,515 $ 115,734
================= ===================
Net interest
income/interest rate
spread $ 1,721 1.11 % $ 2,152 0.98 %
================= ============ ============ ============
Net interest margin 1.89 % 1.95 %
============ ============
Ratio of 1.26 1.28
interest-earning x x
assets to
interest-bearing
liabilities
============ ============
(1) Comprised of Loans and leases held for investment, net and Loans held for
sale.
(2) Comprised of Debt securities available-for-sale at amortized cost, Equity
investments with readily determinable fair values, at fair value and FHLB
stock and FRB-NY stock, at cost.
(3) Amounts may not foot as a result of rounding.
FLAGSTAR BANK, N.A.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(dollars in millions)
For the Three Months Ended For the Year Ended
(dollars in millions,
except share and per December September December December December 31,
share data) 31, 2025 30, 2025 31, 2024 31, 2025 2024
----------- ----------- ----------- ----------- ------------
OTHER FINANCIAL
MEASURES:
Efficiency ratio(1) 91.27 % 100.46 % 114.98 % 100.64 % 111.21 %
Efficiency ratio, as
adjusted (2) 83.56 92.12 108.18 92.75 97.12
Operating expenses to
average assets 2.06 2.08 2.45 2.02 2.24
Effective tax rate 35.3 12.2 21.3 10.6 18.9
Shares used for basic
EPS per common share 415,784,315 415,563,380 415,089,512 415,327,556 330,713,517
Shares used for
diluted EPS per
common share 458,727,765 415,563,380 415,089,512 415,327,556 330,713,517
Common shares
outstanding at the
respective
period-ends 415,982,036 415,608,145 414,934,628 415,982,036 414,934,628
(1) We calculate our efficiency ratio by dividing our non-interest expense by
the sum of our net interest income and non-interest income.
(2) We calculate our efficiency ratio, as adjusted, by dividing our operating
expenses by the sum of our net interest income and non-interest income,
excluding the bargain purchase gain.
FLAGSTAR BANK, N.A.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
ASSET QUALITY SUMMARY
The following table presents the Bank's asset quality measures at the respective dates:
December 31, 2025
compared to
-----------------------
December 31, September 30, September December 31,
(dollars in millions) 2025 2025 December 31, 2024 30, 2025 2024
------------------- -------------------- ------------------------- --------- ------------
Non-accrual loans held
for investment:
Multi-family $ 2,261 $ 2,440 $ 1,755 -7 % 29 %
Commercial real
estate(1) 489 551 564 -11 % -13 %
One-to-four family
first mortgage 64 70 70 -9 % -9 %
Commercial and
industrial 130 154 202 -16 % -36 %
Other non-accrual
loans 31 26 24 19 % 29 %
------------------- -------------------- -------------------------
Total non-accrual
loans held for
investment 2,975 3,241 2,615 -8 % 14 %
Repossessed assets 11 21 14 -48 % -21 %
------------------- -------------------- -------------------------
Total non-accrual held
for investment loans
and repossessed
assets $ 2,986 $ 3,262 $ 2,629 -8 % 14 %
=================== ==================== =========================
Non-accrual loans held
for sale:
Multi-family $ 22 $ -- $ 51 NM -57 %
Commercial real
estate(1) -- 27 215 NM NM
One-to-four family
first mortgage 8 4 57 NM -86 %
------------------- -------------------- -------------------------
Total non-accrual
mortgage loans held
for sale $ 30 $ 31 $ 323 -3 % -91 %
=================== ==================== =========================
(1) Includes Acquisition, Development, and Construction loans.
The following table presents the Bank's asset quality measures at the
respective dates:
September 30,
December 31, 2025 2025 December 31, 2024
----------------- ----------------- -----------------
Non-accrual held
for investment
loans to total
loans held for
investment 4.90 % 5.17 % 3.83 %
Non-accrual held
for investment
loans and
repossessed
assets to total
assets 3.41 3.56 2.62
Allowance for
credit losses on
loans to
non-accrual
loans held for
investment 34.62 33.05 45.93
Allowance for
credit losses on
loans to total
loans held for
investment 1.70 1.71 1.76
FLAGSTAR BANK, N.A.
SUPPLEMENTAL FINANCIAL INFORMATION (unaudited)
The following table presents the Bank's loans 30 to 89 days past due at the respective dates:
December 31, 2025
compared to
September December 31,
(dollars in millions) December 31, 2025 September 30, 2025 December 31, 2024 30, 2025 2024
------------------------- ----------------------------- ------------------------- --------- ------------
Loans 30 to 89 Days
Past Due:
Multi-family $ 588 $ 344 $ 749 71 % -21 %
Commercial real
estate(1) 155 117 70 32 % NM
One-to-four family
first mortgage 78 19 25 NM NM
Commercial and
industrial 126 34 110 NM 15 %
Other loans 39 21 11 86 % NM
------------------------- ----------------------------- -------------------------
Total loans 30 to 89
days past due $ 986 $ 535 $ 965 84 % 2 %
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January 30, 2026 06:00 ET (11:00 GMT)