Flagstar Bank, National Association

What they do

Flagstar operates approximately 340 locations across nine states, with footholds in the greater New York/New Jersey metropolitan region and the upper Midwest. It takes deposits and makes loans, with $61.0 billion of loans and $66.0 billion of deposits as of December 31, 2025. Net interest income is its primary source of income, supplemented by commercial and industrial (C&I) lending and private banking. The bank became the successor reporting company to Flagstar Financial, Inc. on October 17, 2025.

Revenue drivers

• Net interest income — Primary source of income, driven by the spread between yields on loans and securities and the cost of deposits and borrowings. Total interest-earning assets averaged $90.9 billion in 2025 with a yield of 4.91%, while interest-bearing deposits averaged $58.7 billion at a cost of 3.63%.
• Commercial and industrial (C&I) loans — Strategic focus area that grew $2.0 billion or 12% quarter over quarter to $18.6 billion in Q2 2026, with strategic C&I loan focus areas growing $2.1 billion or 29%.
• Multi-family CRE lending — A legacy portfolio being reduced; total multi-family CRE exposure declined $1.5 billion or 4% in Q2 2026, and total NYC multi-family loans declined $677 million or 5%.
• Deposits and funding — Total deposits increased $689 million or 1% in Q2 2026, with core deposits up $644 million and C&I and Private Bank deposits up $905 million or 4%. Deposit costs declined 5 basis points.

Recent performance

For Q2 2026, Flagstar reported net income of $34 million, up from $21 million in Q1 2026 and a net loss of $70 million in Q2 2025. Net income attributable to common stockholders was $26 million, or $0.06 per diluted share. Adjusted net income attributable to common stockholders, excluding a $4 million gain on the Figure investment, was $23 million or $0.05 per diluted share. For the six months ended June 30, 2026, net income was $55 million versus a net loss of $170 million a year earlier. Pre-provision net revenue (PPNR) was $66 million, up $34 million, with operating expenses down 3% and positive operating leverage of 7%.

Strategy

Management is executing a strategic transformation plan initiated in 2024 to evolve into a fully diversified, relationship-driven regional bank with a strong balance sheet and consistent earnings power. Priorities include growing core operations, executing a disciplined commercial banking and lending strategy, enhancing operational efficiency, and aligning regulatory and risk management. The bank is reducing non-core assets, including multi-family CRE, and improving its funding mix. It achieved profitability in the three months ended December 31, 2025. In July 2026, the Board authorized a $250 million share repurchase program.

Risks

• Interest rate risk — Changes in interest rates could reduce net interest income, as deposit and short-term borrowing costs are tied to short-term rates while loan and security yields are driven by intermediate-term rates.
• Credit risk — Non-accrual loans rose $123 million or 5% in Q2 2026, and net charge-offs to average loans increased to 0.66% from 0.52%.
• Regulatory risk — As a national bank, Flagstar is subject to OCC oversight, and failure to mitigate risks could result in increased regulatory risk and adverse impact on the bank.
• Concentration risk — The bank has significant multi-family CRE exposure, including $1.5 billion of total MF CRE exposure reduction, with substandard CRE payoffs totaling $1.1 billion in Q2 2026.

Outlook

Management believes continued successful execution of its transformation plan will drive sustainable earnings and long-term shareholder value. The bank reported a third consecutive quarter of profitability and improved its CRE concentration ratio to 350% from 367%. It emphasized growing core C&I and deposit relationships and maintaining expense discipline. The new $250 million share repurchase program reflects confidence in capital strength, with a CET1 ratio of 13.16% and $1.6 billion of excess capital.