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FLG Cuts NII & EPS Outlook, Pushes 2027 Profitability Target to 2028
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Key Takeaways
FLG cut its 2026 adjusted EPS outlook to 10-15 cents from 40-50 cents and lowered its NII forecast.
FLG expects 2027 adjusted EPS of 85-95 cents, down from $1.60-$1.70, amid higher credit costs.
FLG pushed its 2027 targets to 2028, projecting NII of $2.60-$2.70 billion and adjusted EPS of $1.60-$1.70.
During its third-quarter 2026 earnings conference call, Flagstar Bank, National Association (FLG - Free Report) lowered its net interest income (NII) and adjusted earnings per share (EPS) outlook for 2026 and 2027. The downward revisions reflect higher anticipated credit costs, competitive deposit pricing and slower balance-sheet growth, pushing FLG’s 2027 profitability targets to 2028.
Flagstar now expects NII of $1.82-$1.83 billion for 2026, down from its previous forecast of $1.86-$1.96 billion. The bank also slashed its adjusted EPS guidance to 10-15 cents from 40-50 cents of prior guidance. The revised outlook reflects higher anticipated credit provisions and slower balance-sheet growth amid a challenging interest rate environment.
Looking ahead to 2027, the bank projects NII of $2.20-$2.30 billion compared with its earlier guidance of $2.50-$2.65 billion. Meanwhile, its adjusted EPS is now expected to be 85-95 cents, substantially below the previous projection of $1.60-$1.70.
The weaker outlook largely reflects expectations of sustained higher interest rates, intensifying deposit competition and slower balance-sheet growth. In September 2026, the Federal Reserve raised interest rates by 25 basis points, with management expecting three additional hikes through June 2027. Slower deposit growth is expected to limit commercial and industrial (C&I) loan growth, while weaker mortgage originations and delayed resolution of nonaccrual loans will continue to weigh on NII. Additionally, rising credit risks, particularly in the New York City rent-regulated multifamily portfolio, prompted management to raise its provision for loan losses outlook to $160-$170 million for 2026 from $90-$140 million and to $175-$225 million for 2027 from $100-$150 million.
Due to near-term challenges, Flagstar has pushed its earlier 2027 profitability targets to 2028, projecting NII of $2.60-$2.70 billion and adjusted EPS of $1.60-$1.70 for the year. Repricing low-yielding loans, growth in higher-yielding C&I lending and an improving funding mix are expected to support earnings recovery. However, elevated credit costs and slower deposit growth remain key risks to achieving these targets.
2026 Outlook of FLG Peers
Similar to FLG, Huntington Bancshares Incorporated (HBAN - Free Report) and Citigroup Inc. (C - Free Report) have revised their outlooks.
At the Barclays 24th Annual Global Financial Services Conference, Huntington Bancshares lowered its 2026 net interest income growth outlook to approximately 35% from its previous projection of 39-43%, based on the 2025 baseline of $6.06 billion. Higher deposit costs, pricing competition and weaker loan volumes are likely to limit Huntington Bancshares’ net interest margin expansion.
During its third-quarter 2026 earnings call, Citigroup raised its 2026 NII outlook, excluding Markets, to mid-to-high 6% growth from its previous expectation of high-end 5-6% growth. Continued fee momentum in Services, Banking and Wealth is expected to support Citigroup’s revenue growth, partially offset by U.S. Consumer Cards.
FLG’s Price Performance & Zacks Rank
FLG’s shares have lost 28% in the past three months compared with the industry’s decline of 3.8%.
View the Zacks #1 Rank List
Image: Bigstock
FLG Cuts NII & EPS Outlook, Pushes 2027 Profitability Target to 2028
Key Takeaways
During its third-quarter 2026 earnings conference call, Flagstar Bank, National Association (FLG - Free Report) lowered its net interest income (NII) and adjusted earnings per share (EPS) outlook for 2026 and 2027. The downward revisions reflect higher anticipated credit costs, competitive deposit pricing and slower balance-sheet growth, pushing FLG’s 2027 profitability targets to 2028.
Flagstar now expects NII of $1.82-$1.83 billion for 2026, down from its previous forecast of $1.86-$1.96 billion. The bank also slashed its adjusted EPS guidance to 10-15 cents from 40-50 cents of prior guidance. The revised outlook reflects higher anticipated credit provisions and slower balance-sheet growth amid a challenging interest rate environment.
Looking ahead to 2027, the bank projects NII of $2.20-$2.30 billion compared with its earlier guidance of $2.50-$2.65 billion. Meanwhile, its adjusted EPS is now expected to be 85-95 cents, substantially below the previous projection of $1.60-$1.70.
The weaker outlook largely reflects expectations of sustained higher interest rates, intensifying deposit competition and slower balance-sheet growth. In September 2026, the Federal Reserve raised interest rates by 25 basis points, with management expecting three additional hikes through June 2027. Slower deposit growth is expected to limit commercial and industrial (C&I) loan growth, while weaker mortgage originations and delayed resolution of nonaccrual loans will continue to weigh on NII. Additionally, rising credit risks, particularly in the New York City rent-regulated multifamily portfolio, prompted management to raise its provision for loan losses outlook to $160-$170 million for 2026 from $90-$140 million and to $175-$225 million for 2027 from $100-$150 million.
Due to near-term challenges, Flagstar has pushed its earlier 2027 profitability targets to 2028, projecting NII of $2.60-$2.70 billion and adjusted EPS of $1.60-$1.70 for the year. Repricing low-yielding loans, growth in higher-yielding C&I lending and an improving funding mix are expected to support earnings recovery. However, elevated credit costs and slower deposit growth remain key risks to achieving these targets.
2026 Outlook of FLG Peers
Similar to FLG, Huntington Bancshares Incorporated (HBAN - Free Report) and Citigroup Inc. (C - Free Report) have revised their outlooks.
At the Barclays 24th Annual Global Financial Services Conference, Huntington Bancshares lowered its 2026 net interest income growth outlook to approximately 35% from its previous projection of 39-43%, based on the 2025 baseline of $6.06 billion. Higher deposit costs, pricing competition and weaker loan volumes are likely to limit Huntington Bancshares’ net interest margin expansion.
During its third-quarter 2026 earnings call, Citigroup raised its 2026 NII outlook, excluding Markets, to mid-to-high 6% growth from its previous expectation of high-end 5-6% growth. Continued fee momentum in Services, Banking and Wealth is expected to support Citigroup’s revenue growth, partially offset by U.S. Consumer Cards.
FLG’s Price Performance & Zacks Rank
FLG’s shares have lost 28% in the past three months compared with the industry’s decline of 3.8%.
Image Source: Zacks Investment Research
Currently, FLG carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.