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Flagstar Financial Q4 Earnings Beat, NII Rises Y/Y, Expenses Fall
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Key Takeaways
FLG posted Q4 adjusted EPS of 6 cents, swinging from a year-ago loss as provisions and expenses fell sharply.
Net interest income inched up 1% y/y as margin expanded 41 bps, helped by lower funding costs.
Non-interest income dropped 45% y/y, reflecting fewer mortgage servicing gains and lower fee income.
Flagstar Financial, Inc. (FLG - Free Report) reported fourth-quarter 2025 adjusted earnings per share of 6 cents, beating the Zacks Consensus Estimate of 3 cents. In the year-ago quarter, the company had incurred a loss of 34 cents.
Results were primarily driven by an improvement in net interest income (NII), a sharp decline in provision for credit losses and lower expenses. However, lower non-interest income acted as a partial headwind.
Results excluded certain non-recurring items. After considering these, the net income available to common shareholders (GAAP basis) was $21 million against a net loss of $196 million in the prior-year quarter.
For 2025, the company incurred an adjusted loss per share of 50 cents compared with the year-ago loss of $3.49. Net loss available to common shareholders (GAAP basis) was $210 million compared with a net loss of $1.2 billion in 2024.
FLG’s Quarterly Revenues & Expenses Decline
Quarterly revenues were $557 million, beating the Zacks Consensus Estimate by 4.3%. The metric declined 10.9% from the prior-year quarter.
Revenues for 2025 were $1.9 billion, up 28.6% from the year-ago period.
NII was $467 million, up 1% year over year. The net interest margin (NIM) of 2.14% expanded 41 basis points from the year-ago quarter, driven by a lower cost of funds and balance sheet repositioning.
Non-interest income was $90 million, which declined 45% from the year-ago quarter. The decrease was mainly due to the absence of gains related to the sale of mortgage servicing operations and lower fee income.
Non-interest expenses of $509 million decreased 29% year over year. Adjusted operating expenses (excluding intangible asset amortization and merger-related expenses) were $462 million, down 17% from the fourth quarter of 2024.
Flagstar Financial’s Loans & Deposits Decline
Total loans and leases held for investment declined 3% sequentially to $60.7 billion as of Dec. 31, 2025. As of the same date, total deposits decreased 5% sequentially to $66 billion.
FLG’s Credit Quality: Improving Trend
Non-accrual loans totaled $3 billion, modestly higher than the year-ago level. Net charge-offs were $46 million, which plummeted 79% from the prior-year quarter.
The provision for credit losses was $3 million, sharply down from $145 million in the year-ago quarter, reflecting stabilization in credit trends and a reduction in multi-family and CRE exposure.
Flagstar Financial’s Capital Ratios Strengthen
As of Dec. 31, 2025, the common equity tier 1 ratio was 12.83% compared with 11.83% as of Dec. 31, 2024. The total risk-based capital ratio increased to 16.23% from 15.14% in the prior-year quarter.
The leverage capital ratio rose to 9.22% from 7.68% a year ago, reflecting improved capital strength.
Our View on FLG
Flagstar Financial’s continued reduction in commercial real estate exposure and improving credit quality are encouraging. While declines in loan and deposit balances, along with lower non-interest income, remain concerns, margin expansion, a sharp drop in credit costs and disciplined expense management drove a return to profitability in the fourth quarter. Continued execution on balance sheet optimization and cost controls will be key to sustaining performance, going forward.
Flagstar Bank, National Association Price, Consensus and EPS Surprise
Valley National Bancorp’s (VLY - Free Report) fourth-quarter 2025 adjusted earnings per share of 31 cents surpassed the Zacks Consensus Estimate of 29 cents. The bottom line also compared favorably with 13 cents in the year-ago quarter.
VLY’s results were primarily aided by increased net interest income and non-interest income, along with lower provision. Higher loan and deposit balances were another tailwind. However, elevated expenses remained as the undermining factor.
Zions Bancorporation’s (ZION - Free Report) fourth-quarter 2025 adjusted EPS of $1.75 beat the Zacks Consensus Estimate of $1.57. Moreover, the bottom line rose 30.5% from the year-ago quarter.
ZION’s results were primarily aided by higher NII and non-interest income. Growth in loan and deposit balances further supported the company’s performance. However, a rise in non-interest expenses was a headwind.
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Flagstar Financial Q4 Earnings Beat, NII Rises Y/Y, Expenses Fall
Key Takeaways
Flagstar Financial, Inc. (FLG - Free Report) reported fourth-quarter 2025 adjusted earnings per share of 6 cents, beating the Zacks Consensus Estimate of 3 cents. In the year-ago quarter, the company had incurred a loss of 34 cents.
Results were primarily driven by an improvement in net interest income (NII), a sharp decline in provision for credit losses and lower expenses. However, lower non-interest income acted as a partial headwind.
Results excluded certain non-recurring items. After considering these, the net income available to common shareholders (GAAP basis) was $21 million against a net loss of $196 million in the prior-year quarter.
For 2025, the company incurred an adjusted loss per share of 50 cents compared with the year-ago loss of $3.49. Net loss available to common shareholders (GAAP basis) was $210 million compared with a net loss of $1.2 billion in 2024.
FLG’s Quarterly Revenues & Expenses Decline
Quarterly revenues were $557 million, beating the Zacks Consensus Estimate by 4.3%. The metric declined 10.9% from the prior-year quarter.
Revenues for 2025 were $1.9 billion, up 28.6% from the year-ago period.
NII was $467 million, up 1% year over year. The net interest margin (NIM) of 2.14% expanded 41 basis points from the year-ago quarter, driven by a lower cost of funds and balance sheet repositioning.
Non-interest income was $90 million, which declined 45% from the year-ago quarter. The decrease was mainly due to the absence of gains related to the sale of mortgage servicing operations and lower fee income.
Non-interest expenses of $509 million decreased 29% year over year. Adjusted operating expenses (excluding intangible asset amortization and merger-related expenses) were $462 million, down 17% from the fourth quarter of 2024.
Flagstar Financial’s Loans & Deposits Decline
Total loans and leases held for investment declined 3% sequentially to $60.7 billion as of Dec. 31, 2025. As of the same date, total deposits decreased 5% sequentially to $66 billion.
FLG’s Credit Quality: Improving Trend
Non-accrual loans totaled $3 billion, modestly higher than the year-ago level. Net charge-offs were $46 million, which plummeted 79% from the prior-year quarter.
The provision for credit losses was $3 million, sharply down from $145 million in the year-ago quarter, reflecting stabilization in credit trends and a reduction in multi-family and CRE exposure.
Flagstar Financial’s Capital Ratios Strengthen
As of Dec. 31, 2025, the common equity tier 1 ratio was 12.83% compared with 11.83% as of Dec. 31, 2024. The total risk-based capital ratio increased to 16.23% from 15.14% in the prior-year quarter.
The leverage capital ratio rose to 9.22% from 7.68% a year ago, reflecting improved capital strength.
Our View on FLG
Flagstar Financial’s continued reduction in commercial real estate exposure and improving credit quality are encouraging. While declines in loan and deposit balances, along with lower non-interest income, remain concerns, margin expansion, a sharp drop in credit costs and disciplined expense management drove a return to profitability in the fourth quarter. Continued execution on balance sheet optimization and cost controls will be key to sustaining performance, going forward.
Flagstar Bank, National Association Price, Consensus and EPS Surprise
Flagstar Bank, National Association price-consensus-eps-surprise-chart | Flagstar Bank, National Association Quote
Currently, FLG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Valley National Bancorp’s (VLY - Free Report) fourth-quarter 2025 adjusted earnings per share of 31 cents surpassed the Zacks Consensus Estimate of 29 cents. The bottom line also compared favorably with 13 cents in the year-ago quarter.
VLY’s results were primarily aided by increased net interest income and non-interest income, along with lower provision. Higher loan and deposit balances were another tailwind. However, elevated expenses remained as the undermining factor.
Zions Bancorporation’s (ZION - Free Report) fourth-quarter 2025 adjusted EPS of $1.75 beat the Zacks Consensus Estimate of $1.57. Moreover, the bottom line rose 30.5% from the year-ago quarter.
ZION’s results were primarily aided by higher NII and non-interest income. Growth in loan and deposit balances further supported the company’s performance. However, a rise in non-interest expenses was a headwind.