FLG · Flagstar Bank, National Association

Flagstar Bank achieved its second straight profitable quarter with Q1 2026 GAAP net income attributable to common stockholders of $13 million ($0.03 diluted EPS), down slightly from $21 million ($0.05) in Q4 2025 but a sharp turnaround from a $108 million loss in Q1 2025. Adjusted for a $9 million fair value loss on the Figure Investment, earnings reached $20 million ($0.04 EPS). Net interest income held steady at $443 million (down 5% linked-quarter due to a prior hedge gain but flat adjusted), with NIM expanding to 2.15% (up 10 bps adjusted) from declining funding costs, including lower brokered deposits and FHLB advances. Provision for credit losses was zero, down from $3 million prior quarter, reflecting CRE reductions and bankruptcy resolutions, though net charge-offs rose to 0.52% of average loans (0.29% adjusted). CEO Joseph M. Otting highlighted disciplined execution, with C&I loans surging $1.4 billion (9%) to $16.6 billion via broad-based growth in specialized industries (+14%), corporate/regional banking (+13%), and mortgage finance (+60%), offsetting $1.6 billion (4%) CRE/multi-family decline from $1.1 billion par payoffs (42% substandard). Core deposits grew $1.1 billion (2%), total deposits $0.8 billion (1%), bolstering liquidity. Credit improved with non-accruals down 11% ($323 million), criticized/classified loans down 3%, and CRE concentration at 367% (from 381%). CET1 rose to 13.24% with $1.6 billion excess capital. Expenses fell 5% to $441 million adjusted. Guidance projects 2026 NIM 2.30-2.40%, adjusted EPS $0.60-$0.65, net income $275-$325 million; 2027 EPS $1.80-$1.90. Fitch and Moody's upgraded ratings to investment grade, signaling progress toward sustainable profitability.