Flagstar Bank (FLG) investor relations material

Commercial growth and relationships

• Since March 2024, strategy has targeted a more balanced mix of one-third CRE, one-third consumer cash flows and one-third C&I.

• More than 400 bankers hired; new lending runs at $2.8B-$3B per quarter and roughly 75 new relationships per quarter.

• Over six months, commercial and private banking boarded $4.4B of loans and $2.4B of deposits; full relationships are expected to add deposits and fee income.

• Growth areas include oil and gas, healthcare, entertainment, sports, renewable energy and food, alongside commercial expansion in existing retail markets.

• Commercial onboarding is 70-80 relationships per quarter; deeper treasury management, capital markets, private banking and wealth products are the next opportunity.

Balance sheet and credit

• CRE is about 48% of loans, consumer cash flows 28% and C&I roughly 26%, versus more than 70% CRE when management arrived.

• Management expects to reach its targeted balance-sheet range by early 2028.

• CRE runoff is targeted at $800M-$1B per quarter; management expects net C&I growth of $2B+ per quarter, with deposits funding growth beyond CRE runoff.

• CRE origination is selectively reopening; Q3 activity is expected to improve markedly, with bankers and underwriters being added in Southern California, Chicago, Dallas, the Mid-Atlantic and South Florida.

• Non-accruals total $2.8B, 40% performing and current; higher rates may slow the pace of reduction.

Net interest income and funding

• In 2027, $9B of multifamily loans with coupons below 3.9% reset or mature, providing a contractual NIM lift or liquidity for C&I lending.

• Q2 net C&I growth exceeded $2B at an average spread of 225 bps over SOFR; all-in coupon was around 6%. Interest-bearing deposit cost was 3.05%, with spot total deposit cost around 2.52%.

• NIM expansion drivers are multifamily repricing, C&I growth and reducing non-accruals; CRE runoff is intended to remain within $800M-$1B per quarter.

• Deposit balances grew while interest-bearing deposit costs declined in H1; the aim is to keep costs relatively flat, with a 3.75% APY promotion.

• Stable deposit costs would support continued reductions in FHLB advances and funding costs.