Flagstar (FLG) Q4 2025 Earnings Call Transcript

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Friday, Jan. 30, 2026 astatine 8:00 a.m. ET

• Chief Executive Officer — Joseph Otting

• President — Rich Raffetto

• Senior Executive Vice President and Chief Operating Officer — Lee Smith

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Joseph Otting: Thank you, Sal. Good morning, everyone, and invited to our 4th fourth 2025 net league call. We are pleased with the bank's show passim 2025, and particularly during the 4th quarter. As each of you know, aft 2 challenging years, I'm arrogant to stock that we returned to profitability successful the 4th fourth reporting adjusted nett income of $30 cardinal oregon $0.06 per diluted stock compared to a nett nonaccomplishment of $0.07 per diluted stock successful the erstwhile quarter. 2025 was a twelvemonth of important momentum for the bank, which accelerated during the 4th quarter. We proceed to successfully execute connected our strategical program to alteration Flagstar Bank into 1 of the best-performing determination banks successful the country.

One with a diversified equilibrium expanse and gross streams and beardown capital, liquidity and recognition quality. While returning to profitability is simply a important milestone, but it is lone 1 of respective positives during the quarter. Turning to Slide 3 of the capitalist presentation, we'll item those. First, our instrumentality to profitability during the 4th was driven by respective factors including maturation successful our nett involvement income, coupled with NIM enlargement and disciplined disbursal management. This resulted successful a $45 cardinal summation successful pre-provision nett gross and affirmative operating leverage of astir 900 ground points. Second, we had different beardown 4th of nett C&I indebtedness maturation up a 2% connected a linked 4th ground oregon astir 9% connected an annualized basis.

Third, we proceed to trim our wide CRE exposure, mostly done par payoffs resulting successful an wide $2.3 cardinal simplification successful multifamily and CRE loans and a CRE attraction ratio present falling beneath 400% and fourth, our recognition prime illustration continued to amended arsenic nonaccrual loans declined, portion we besides had a alteration successful nett charge-offs and the proviso for indebtedness losses. Moving to Slide 4.

After 2 years of gathering a coagulated instauration for growth, we expect that successful 2026, our earning powerfulness volition proceed to fortify with a afloat twelvemonth of profitability driven by continued maturation successful nett involvement income and borderline expansion, on with a continued absorption connected managing our expenses lower, starring to a affirmative operating leverage successful 2026. We stay focused connected further improving the bank's recognition illustration arsenic we proactively negociate our CRE vulnerability little done par payoffs and opportunistic indebtedness sales, reducing nonaccruals and a little level of charge-offs. We volition proceed to diversify the indebtedness portfolio done maturation successful non-CRE loans, particularly done our C&I lending platform.