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FLG Q1 Earnings Beat on NII Growth, Stock Dips as Fee Income Falls Y/Y
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Key Takeaways
FLG Q1 EPS of 4 cents beat estimates, aided by higher NII and no credit loss provisions; shares fell 2.2%.
FLG's NII rose 8% to $443M, with NIM up 41 bps to 2.15% due to lower funding costs and balance sheet moves.
FLG's non-interest income fell 31% to $55M on weaker fees, loan income, and prior mortgage servicing sales.
Flagstar Bank, National Association (FLG - Free Report) reported first-quarter 2026 adjusted earnings per share of 4 cents, beating the Zacks Consensus Estimate of 3 cents. In the year-ago quarter, the company had incurred a loss of 23 cents.
Results were primarily driven by an improvement in net interest income (NII), no provision for credit losses, and lower expenses. However, a decline in non-interest income acted as a headwind. Given the concern, FLG shares lost 2.2% during Friday’s trading session.
Results excluded certain non-recurring items. After considering these, the net income available to common shareholders (GAAP basis) was $13 million against a net loss of $108 million in the prior-year quarter.
FLG’s Quarterly Revenues Rise & Expenses Decline
Quarterly revenues were $498 million, missing the Zacks Consensus Estimate by 10.6%. The metric rose 2% from the prior-year quarter.
NII was $443 million, up 8% year over year. The net interest margin (NIM) of 2.15% expanded 41 basis points from the year-ago quarter, driven by a lower cost of funds and balance sheet repositioning.
Non-interest income was $55 million, which declined 31% from the year-ago quarter. The decrease was mainly due to lower fee income, reduced loan-related income, and the impact of prior mortgage servicing business sales.
Non-interest expenses of $466 million decreased 12% year over year. Adjusted operating expenses were $441 million, down 9% from the first quarter of 2025, reflecting lower compensation, FDIC insurance, and general administrative costs.
Total loans and leases held for investment declined nearly 1% sequentially to $60.4 billion as of March 31, 2026. As of the same date, total deposits increased 1% sequentially to $66.8 billion.
FLG’s Credit Quality: Improving Trend
Non-accrual loans were $2.7 billion, which decreased from $3.3 billion as of March 31, 2025. Net charge-offs were $78 million, which declined 32% from the prior-year quarter.
The company recorded nil provisions for credit losses compared with $79 million recorded in the year-ago quarter.
Flagstar Financial’s Capital Ratios Strengthen
As of March 31, 2026, the common equity tier 1 ratio was 13.24% compared with 11.90% as of March 31, 2025. The total risk-based capital ratio increased to 16.69% from 15.25% in the prior-year quarter.
The leverage capital ratio rose to 9.61% from 8.45% 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 remain encouraging. While lower non-interest income and balance sheet contraction persist as concerns, solid C&I loan growth, margin expansion, declining credit costs, and disciplined expense management supported another quarter of profitability. Notably, recent credit rating upgrades by Fitch and Moody’s reflect improving confidence in the bank’s balance sheet strength, profitability outlook, and ongoing business transformation. Continued execution on balance sheet optimization and revenue diversification will be key to sustaining this positive momentum.
Flagstar Bank, National Association Price, Consensus and EPS Surprise
Valley National Bancorp’s (VLY - Free Report) first-quarter 2026 adjusted earnings per share of 29 cents surpassed the Zacks Consensus Estimate of 27 cents. The bottom line also compared favorably with earnings of 18 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 other tailwinds. However, elevated expenses remained an undermining factor.
Zions Bancorporation (ZION - Free Report) reported first-quarter 2026 earnings of $1.56 per share, which beat the Zacks Consensus Estimate of $1.43. Moreover, the bottom line surged 38% from the year-ago quarter.
Results were primarily aided by higher net interest income and growth in fee-based income. Higher loan and deposit balances, along with a provision benefit, provided additional support. However, a rise in non-interest expenses was a headwind for ZION.
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FLG Q1 Earnings Beat on NII Growth, Stock Dips as Fee Income Falls Y/Y
Key Takeaways
Flagstar Bank, National Association (FLG - Free Report) reported first-quarter 2026 adjusted earnings per share of 4 cents, beating the Zacks Consensus Estimate of 3 cents. In the year-ago quarter, the company had incurred a loss of 23 cents.
Results were primarily driven by an improvement in net interest income (NII), no provision for credit losses, and lower expenses. However, a decline in non-interest income acted as a headwind. Given the concern, FLG shares lost 2.2% during Friday’s trading session.
Results excluded certain non-recurring items. After considering these, the net income available to common shareholders (GAAP basis) was $13 million against a net loss of $108 million in the prior-year quarter.
FLG’s Quarterly Revenues Rise & Expenses Decline
Quarterly revenues were $498 million, missing the Zacks Consensus Estimate by 10.6%. The metric rose 2% from the prior-year quarter.
NII was $443 million, up 8% year over year. The net interest margin (NIM) of 2.15% expanded 41 basis points from the year-ago quarter, driven by a lower cost of funds and balance sheet repositioning.
Non-interest income was $55 million, which declined 31% from the year-ago quarter. The decrease was mainly due to lower fee income, reduced loan-related income, and the impact of prior mortgage servicing business sales.
Non-interest expenses of $466 million decreased 12% year over year. Adjusted operating expenses were $441 million, down 9% from the first quarter of 2025, reflecting lower compensation, FDIC insurance, and general administrative costs.
Flagstar Financial’s Loans Decrease & Deposits Increase
Total loans and leases held for investment declined nearly 1% sequentially to $60.4 billion as of March 31, 2026. As of the same date, total deposits increased 1% sequentially to $66.8 billion.
FLG’s Credit Quality: Improving Trend
Non-accrual loans were $2.7 billion, which decreased from $3.3 billion as of March 31, 2025. Net charge-offs were $78 million, which declined 32% from the prior-year quarter.
The company recorded nil provisions for credit losses compared with $79 million recorded in the year-ago quarter.
Flagstar Financial’s Capital Ratios Strengthen
As of March 31, 2026, the common equity tier 1 ratio was 13.24% compared with 11.90% as of March 31, 2025. The total risk-based capital ratio increased to 16.69% from 15.25% in the prior-year quarter.
The leverage capital ratio rose to 9.61% from 8.45% 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 remain encouraging. While lower non-interest income and balance sheet contraction persist as concerns, solid C&I loan growth, margin expansion, declining credit costs, and disciplined expense management supported another quarter of profitability. Notably, recent credit rating upgrades by Fitch and Moody’s reflect improving confidence in the bank’s balance sheet strength, profitability outlook, and ongoing business transformation. Continued execution on balance sheet optimization and revenue diversification will be key to sustaining this positive momentum.
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) first-quarter 2026 adjusted earnings per share of 29 cents surpassed the Zacks Consensus Estimate of 27 cents. The bottom line also compared favorably with earnings of 18 cents in the year-ago quarter.
Zions Bancorporation (ZION - Free Report) reported first-quarter 2026 earnings of $1.56 per share, which beat the Zacks Consensus Estimate of $1.43. Moreover, the bottom line surged 38% from the year-ago quarter.
Results were primarily aided by higher net interest income and growth in fee-based income. Higher loan and deposit balances, along with a provision benefit, provided additional support. However, a rise in non-interest expenses was a headwind for ZION.