Flagstar Bank, National Association: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 24 April 2026: press release. Guidance figures: 1 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Second consecutive quarter of profitability: The company reported first quarter net income of $21 million, against $29 million in fourth quarter 2025 and a net loss of $100 million in first quarter 2025. Source
• NIM rose one basis point: Net interest margin was 2.15%, up 1 basis point. Excluding the fourth quarter 2025 hedge gain, the margin rose 10 basis points on lower deposit costs, partly offset by lower earning asset yields. Source
• C&I loans up $1.4 billion: C&I loans rose 9% to $16.6 billion, with growth from the two strategic growth areas and from secured lending and Mortgage Finance. Source
• Multi-family and CRE balances down 4%: Combined multi-family and CRE loans fell $1.6 billion, or 4%, linked-quarter and $8.3 billion, or 18%, year over year, mainly from par payoffs. Source
• Non-accrual loans fell 11%: Total non-accrual loans, including held-for-sale, were $2,682 million, down $323 million from December 31, 2025. Non-accrual loans held for investment were 4.43% of loans. Source
• Net charge-offs rose to 0.52%: Net charge-offs were $78 million, or 0.52% annualized. They included $34 million on one bankruptcy borrower, most of it previously reserved. Excluding that item the ratio was 0.29%. Source
• Adjusted operating expenses fell 5%: Adjusted operating expenses were $441 million, down $21 million from fourth quarter 2025. Total non-interest expense was $466 million, including no merger-related expense this quarter. Source
• CET1 ratio rose to 13.24%: The CET1 capital ratio was 13.24%, up from 12.83% at December 31, 2025 and 11.90% a year earlier. Source

“We saw meaningful improvement in asset quality, driven by proactive credit management, prudent underwriting and ongoing portfolio monitoring.”

Joseph M. Otting, Chairman, President, and Chief Executive Officer

Guidance

What changed from last quarter

• New: Fitch and Moody's reviewed the Bank and upgraded several ratings, including raising long-term and short-term deposit ratings to investment grade. Source
• Guidance kept: The 10.5% low-end target CET1 range is the same reference point used in the prior quarter's release. Source

Earnings and profitability

• Second consecutive quarter of profitability: The company reported first quarter net income of $21 million, against $29 million in fourth quarter 2025 and a net loss of $100 million in first quarter 2025. Source
• Diluted EPS $0.03 GAAP, $0.04 adjusted: Net income attributable to common stockholders was $13 million, or $0.03 per diluted share, compared with $21 million, or $0.05, in fourth quarter 2025. Source
• Adjusted results exclude Figure investment: Adjusted net income attributable to common stockholders was $20 million, or $0.04 per diluted share, excluding a $9 million fair value loss on the Figure investment. Source
• Adjusted PPNR rose 4%: Adjusted pre-provision net revenue was $41 million, up 4% excluding the fourth quarter 2025 hedge gain recognition. GAAP PPNR was $32 million. Source

Net interest margin and balances

• NIM rose one basis point: Net interest margin was 2.15%, up 1 basis point. Excluding the fourth quarter 2025 hedge gain, the margin rose 10 basis points on lower deposit costs, partly offset by lower earning asset yields. Source
• Net interest income fell 5% linked-quarter: Net interest income was $443 million, down $24 million from fourth quarter 2025, which included a $20.5 million hedge gain. Excluding that gain, it was down $4 million. Source

“Our strategy to diversify our loan portfolio by increasing our C&I lending is gaining momentum.”

Joseph M. Otting, Chairman, President, and Chief Executive Officer

C&I lending growth

• C&I loans up $1.4 billion: C&I loans rose 9% to $16.6 billion, with growth from the two strategic growth areas and from secured lending and Mortgage Finance. Source
• Specialized Industries drove growth: Specialized Industries Lending rose $595 million, or 14%. Corporate and Regional Commercial Banking rose $243 million, or 13%, and Mortgage Finance rose $395 million, or 60%. Source
• Equipment finance declined on de-risking: Equipment Finance fell $184 million, or 4%, as part of the company's de-risking efforts. All other C&I categories were up. Source
• Growth broad across C&I portfolio: Management described C&I growth as broad-based across categories, apart from the equipment finance decline. Source

CRE and multi-family run-off

• Multi-family and CRE balances down 4%: Combined multi-family and CRE loans fell $1.6 billion, or 4%, linked-quarter and $8.3 billion, or 18%, year over year, mainly from par payoffs. Source
• Par payoffs slowed to $1.1 billion: Par payoffs were $1.1 billion, down from $1.8 billion in the prior quarter. Of the first quarter payoffs, 42% were rated substandard. Source
• CRE concentration ratio fell to 367%: Management attributed the decline to lower multi-family and CRE balances and higher capital. Source

“We posted another quarter of solid net interest margin expansion with the NIM up one basis point compared to the prior quarter”

Joseph M. Otting, Chairman, President, and Chief Executive Officer

Credit quality and charge-offs

• Non-accrual loans fell 11%: Total non-accrual loans, including held-for-sale, were $2,682 million, down $323 million from December 31, 2025. Non-accrual loans held for investment were 4.43% of loans. Source
• Declines across all loan categories: Criticized and classified loans fell 3%, and non-accruals declined in every major loan category. Multi-family non-accruals fell 10% linked-quarter. Source
• Net charge-offs rose to 0.52%: Net charge-offs were $78 million, or 0.52% annualized. They included $34 million on one bankruptcy borrower, most of it previously reserved. Excluding that item the ratio was 0.29%. Source
• Provision for credit losses was zero: The provision was zero, against $3 million in fourth quarter 2025. Management tied the decline to lower multi-family and CRE balances and resolution of the bankruptcy relationship. Source
• Allowance covered 1.67% of loans: Total allowance for credit losses was 1.67% of loans held for investment, down from 1.79% at December 31, 2025. Source

Expenses and non-interest income

• Adjusted operating expenses fell 5%: Adjusted operating expenses were $441 million, down $21 million from fourth quarter 2025. Total non-interest expense was $466 million, including no merger-related expense this quarter. Source
• Compensation drove expense decline: Compensation and benefits fell $25 million, general and administrative expense fell $6 million, and FDIC insurance fell $3 million, linked-quarter. Source
• Non-interest income fell 39%: Non-interest income was $55 million, including a $9 million Figure investment loss. Adjusted for that item it fell 21% from fourth quarter 2025. Source
• Fourth quarter one-time items noted: Fourth quarter 2025 non-interest income included about $10 million of one-time items, including $7 million of BOLI death benefit receipts and $3 million from a property sale gain. Source
• Tax rate 34.9% in first quarter: The effective tax rate was 34.9% for the first quarter, against 35.3% in fourth quarter 2025. Source

Capital position

• CET1 ratio rose to 13.24%: The CET1 capital ratio was 13.24%, up from 12.83% at December 31, 2025 and 11.90% a year earlier. Source
• Tangible book value per share $17.42: Tangible book value per share was $17.42, and $15.70 when adjusted for warrant exercise. Source
• Total risk-based capital ratio 16.69%: Total risk-based capital ratio was 16.69%, Tier 1 risk-based 14.08% and leverage 9.61%, all above prior-quarter levels. Source

Deposits and balance sheet

• Core deposits up $1.1 billion: Core deposits, which exclude brokered deposits, rose 2% linked-quarter. Brokered deposits fell $298 million, or 12%. Source
• Checking and money market deposits grew: The linked-quarter deposit increase came from interest-bearing checking and money market accounts. Year over year, total deposits fell $7.1 billion, or 10%. Source
• Wholesale borrowings down 9%: Wholesale borrowings, mainly FHLB-NY advances, fell $1.0 billion to $10.2 billion, as management reduces higher-cost funding. Source
• Total assets flat at $87.1 billion: Total assets were $87.1 billion, down 0.44% from December 31, 2025 and down 11% from March 31, 2025. Source

Figures management reported

Risks management discussed

• Demand: Elevated CRE par payoff activity continued, with $1.1 billion of payoffs in the quarter, 42% of them rated substandard. Source
• Financial: Net charge-offs included $34 million tied to one bankruptcy borrower relationship, most of which had been reserved. Source
• Financial: Non-accrual held-for-investment loans were 4.43% of total loans held for investment, still above the prior-year level of 4.93% only in part. Source
• Financial: Year-over-year deposit decline came from lower certificates of deposit, mainly brokered CDs, and non-interest bearing accounts. Source

Earlier plans management reported on

• Met: The first quarter release states the borrower relationship in bankruptcy was resolved in the first quarter.
• Not stated: The first quarter release does not restate this expectation. It reports adjusted operating expenses down 5% and adjusted PPNR up 4%.

Other quarters

• Q2 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.