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FLAGSTAR BANK, NATIONAL ASSOCIATION (FLG)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 narrowed losses and improved operating trends: GAAP diluted EPS was $(0.11) versus $(0.19) in Q2 and $(0.79) in Q3 2024; adjusted diluted EPS improved to $(0.07) on higher NIM, controlled OpEx, and lower credit costs .
  • Net interest margin expanded 10 bps to 1.91% (third consecutive quarter of expansion) as deposit costs fell and higher-cost brokered CDs were paid down; adjusted operating expenses declined year over year by ~30% ($800M annualized) .
  • C&I lending was a breakout: $2.4B of new commitments and $1.7B funded drove portfolio growth of $448M (+3%), while CRE/multifamily par payoffs remained strong at $1.3B (42% substandard), reducing CRE exposure .
  • Guidance/catalysts: management reiterated expected profitability in Q4 2025, raised C&I funding run-rate to $1.75–$2.0B/quarter, and completed holding company reorganization to simplify structure and lower costs; common dividend of $0.01 was declared for Q4 .
  • Versus Street: S&P Global consensus EPS was met (adjusted EPS $(0.07)), while S&P “Revenue” was a miss ($481M actual vs $517.3M* est), noting the company-reported total revenues of $519M [GetEstimates]* .

What Went Well and What Went Wrong

  • What Went Well

    • “Breakout” C&I quarter with $2.4B of new commitments and $1.7B funded; C&I loans grew $448M (+3%), the first positive growth in over a year .
    • NIM rose to 1.91% (+10 bps QoQ), helped by 13 bps lower deposit costs and paydowns of $2.0B brokered CDs at 5.08% .
    • Credit stabilization: provision fell 41% QoQ to $38M; net charge-offs declined 38% QoQ to $73M (0.46% of average loans) .
    • “We expect to be profitable in Q4,” and raised C&I funding run-rate to $1.75–$2.0B per quarter going forward, assuming stable conditions .
    • Completed holding company reorganization, simplifying structure, reducing regulatory burden, and lowering operating expenses .

  • What Went Wrong

    • S&P Global “Revenue” missed consensus ($481M* actual vs $517.3M* est), despite company total revenues of $519M; definitions differ, but optics are a miss on Street’s measure [GetEstimates]* .
    • Non-accrual loans increased modestly QoQ (+2% HFI to $3.241B; total $3.272B), and NPLs/Loans rose to 5.17%; management cited an already-identified large borrower and expects reductions ahead .
    • Efficiency ratio remained high at 100.46% (92.12% adjusted), reflecting still-elevated non-interest expense and revenue mix, though trending better YoY .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Millions)$490 $496 $519
GAAP Diluted EPS ($USD)$(0.26) $(0.19) $(0.11)
Adjusted Diluted EPS ($USD)$(0.23) $(0.14) $(0.07)
Net Interest Income ($USD Millions)$410 $419 $425
Non-Interest Income ($USD Millions)$80 $77 $94
Provision for Credit Losses ($USD Millions)$79 $64 $38
Total Non-Interest Expense ($USD Millions)$532 $513 $522
Net Interest Margin (%)1.74% 1.81% 1.91%
Net Charge-Offs ($USD Millions)$115 $117 $73
NPLs / Total Loans HFI (%)4.93% 4.96% 5.17%

Q3 2025 vs Wall Street Consensus (S&P Global):

MetricConsensusActual# of Estimates
Adjusted EPS ($USD)$(0.07)*$(0.07)*16*
Revenue ($USD)$517.3M*$481.0M*10*

Values retrieved from S&P Global.*

Segment/Lending Mix (Loans HFI):

Loans HFI ($USD Billions)Q1 2025Q2 2025Q3 2025
Multi-Family$33.44 $31.93 $30.47
Commercial Real Estate$11.51 $10.64 $10.16
Commercial & Industrial$14.74 $14.43 $14.87
Total Loans HFI$66.59 $64.12 $62.66

KPIs and Capital

KPIQ1 2025Q2 2025Q3 2025
C&I New Commitments ($USD Billions)$1.046 $1.900 $2.400
C&I Fundings ($USD Billions)$0.769 $1.200 $1.700
CRE/Multifamily Par Payoffs ($USD Billions)$0.840 (59% substandard) $1.500 (45% substandard) $1.300 (42% substandard)
CET1 Ratio (Company) (%)11.90 12.33 12.45
Adjusted Operating Expenses ($USD Millions)$485 $460 $457
PPNR, Adjusted ($USD Millions)$(23) $9 $15

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Profitability timingQ4 2025“Return to profitability in Q4 2025” “Expect to be profitable in Q4 2025” Maintained
Adjusted diluted EPSFY 2025Not disclosedRange: $(0.36) to $(0.41) per diluted share Introduced
C&I funding run-rateNear-term quarterly≥$1.5B per quarter (target) $1.75–$2.0B per quarter (assumes stable conditions) Raised
Deposit betaWith Fed cutsNot specifiedTarget 55–60% on interest-bearing deposits Formalized
NIM trajectoryQ4 2025 onwardNIM 1.81% in Q2; improving NIM 1.91% in Q3; expect further improvement Raised
Non-accrual reductionQ4 2025 & FY 2026Not specified~$400–$500M reduction in Q4; up to ~$1B reduction in 2026 Introduced
Securities balanceQ4 2025Not specifiedExpect ≈+$1B increase in securities in Q4 Introduced
Common dividendQ4 2025 payout$0.01 $0.01 declared Maintained
Holding company reorgOct 2025Announced plan (Q2) Completed Oct 17, 2025 Achieved

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
C&I growthQ1: $769M funded; Q2: $1.2B funded, momentum building $2.4B commitments, $1.7B funded; +$448M C&I growth; run-rate raised Accelerating
CRE/multifamily payoffsQ1: $0.84B (59% substandard); Q2: $1.5B (45%) $1.3B (42%) payoffs; exposure/criticized down Continued de-risking
NIM1.74% (Q1); 1.81% (Q2) 1.91% (Q3); expect further improvement Expanding
Expense managementAdjusted OpEx: $485 (Q1); $460 (Q2) $457 (Q3); ~$800M annualized YoY reduction Improving
Asset qualityCriticized down; provision/NCOs moderating Provision/NCOs down; non-accruals stable with reduction pipeline Stabilizing
Corporate reorgPlan announced (Q2) Completed Oct 17 Structural simplification
Technology efficienciesNot highlightedData center consolidation from six to two sites to cut costs Executing
Deposits/funding costBrokered CD paydowns; lower deposit costs Paid off $2.0B brokered CDs; deposit beta target 55–60% Lowering cost of funds

Management Commentary

  • CEO: “Our third-quarter performance provides further evidence that we are successfully executing on each of our strategic priorities… adjusted net loss narrowed… pre-provision net revenue continues to trend higher… strong growth in C&I lending, a higher net interest margin, and well controlled operating expenses... problem loans continued to decrease” .
  • CEO: “We completed our holding company reorganization… simplifies our corporate structure, reduces our regulatory burden, and lowers operating expenses” .
  • CFO: “We achieved net interest margin expansion of 10 basis points… unadjusted PPNR improved… adjusted PPNR improved… CET1 capital ratio of 12.45%” .
  • CFO: “We’ve surpassed our target of $1.5B of funded C&I loans per quarter and believe we can fund $1.75B to $2B per quarter going forward… will start originating new CRE loans… high credit quality and geographically diverse” .
  • CFO: “Deposit costs reduced by 13 bps QoQ… targeting a 55% to 60% deposit beta with Fed rate cuts” .

Q&A Highlights

  • NII/NIM and balance sheet: Q4 total assets expected to bottom at ~$90–$91B; continued NIM expansion supported by C&I growth, CRE resets/payoffs, deposit cost reductions, and non-accrual reductions .
  • C&I run-rate and risk controls: originations guided to $1.7–$2.2B per quarter; underwriting uses first-line credit products team and independent credit approvers; average new loan size just over $30M to avoid outsized single-name exposures .
  • Reorganization/regulatory relief: removal of duplicative examinations/interactions reduces burden and frees resources; aligned with business model avoiding non-permissible activities .
  • Asset quality trajectory: line of sight to ~$400–$500M non-performing loan reductions in Q4 and up to ~$1B in 2026; large single borrower in bankruptcy expected to resolve early 2026 .
  • Deposits: C&I deposit-only initiatives target ~$6B of new deposits; CRE relationship deposits add ~$2.5B; focus on non-interest-bearing and low-cost balances .
  • Capital/shares: warrants increase share count to ~480M beginning Q4; tangible book outlook adjusted accordingly .
  • Profitability: management expects profitability in Q4 2025, noting progress quarter over quarter .

Estimates Context

  • S&P Global consensus for Q3 2025 adjusted EPS was $(0.07); the company delivered $(0.07), in line with consensus [GetEstimates]*.
  • S&P Global “Revenue” for Q3 2025 was $481.0M* versus consensus $517.3M*, a miss; note that the company reported total revenues of $519M, indicating definitional differences versus S&P’s “Revenue” measure [GetEstimates]* .
  • Q4 2025 S&P Global consensus: adjusted EPS $0.0316* and revenue $534.96M*, offering a setup for potential estimate revisions given management’s profitability and NIM expansion commentary [GetEstimates]* .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Operating momentum is intact: NIM expanded to 1.91%, adjusted PPNR turned positive ($15M), and adjusted EPS improved to $(0.07), supported by lower funding costs and disciplined OpEx .
  • Balance sheet de-risking continues: CRE/multifamily payoffs of $1.3B (42% substandard) reduced exposures and criticized/classified loans; provision and NCOs stepped down QoQ .
  • Growth engine ramping: C&I commitments/fundings accelerated (to $2.4B/$1.7B), with raised run-rate guidance ($1.75–$2.0B per quarter), supporting NII and NIM trajectories .
  • Street optics mixed: EPS met S&P consensus but S&P “Revenue” missed; anticipate potential model tweaks as management guides to Q4 profitability and continued margin expansion [GetEstimates]* .
  • Structural simplification is a tailwind: holding company reorg lowers regulatory burden and costs; management flagged further tech/data-center consolidation savings ahead .
  • Funding cost relief continues: $2.0B brokered CDs paid off in Q3 (5.08% WAC), deposit beta targeted at 55–60% with Fed cuts; expect NIM support from rate resets and mix shift .
  • Watch asset quality catalysts: Q4 non-accrual reduction pipeline ($400–$500M) plus up to $1B reductions in 2026 could unlock NIM and capital efficiency benefits .

Additional Relevant Press Releases (Q3 2025)

  • Holding company reorganization completed (Oct 17, 2025) .
  • Common dividend of $0.01 declared (payable Dec 17, 2025) .

Prior Two Quarters (Trend Context)

  • Q1 2025: NIM stabilized at 1.74%; adjusted OpEx $485M; provision $79M; par payoffs $0.84B (59% substandard); C&I commitments/fundings $1.046B/$0.769B .
  • Q2 2025: NIM rose to 1.81%; adjusted OpEx $460M; provision $64M; par payoffs $1.5B (45% substandard); C&I commitments/fundings $1.9B/$1.2B; announced plan to eliminate holding company .

Notes: All company metrics and commentary cited from the Q3 press release and 8-K (Oct 24, 2025) and Q3 earnings call transcript. S&P Global consensus and actual figures for EPS and Revenue marked with an asterisk and sourced via S&P Global.