Flagstar Bank (FLG) Q1 2026 earnings summary

Executive summary

• Achieved second consecutive quarter of profitability, with Q1 2026 adjusted net income of $20 million ($0.04 per diluted share), reflecting strong C&I loan growth, core deposit expansion, and disciplined expense management.

• Continued progress in reducing nonaccrual and criticized/classified loans, with positive credit migration and improved asset quality.

• Upgrades from Fitch and Moody's returned deposit ratings to investment grade, supporting deposit growth strategy.

• CRE exposure and concentration ratio declined, with $1.1 billion in CRE par payoffs and concentration ratio dropping to 367% from 381%.

• Resolved previously disclosed material weakness in internal controls.

Financial highlights

• Net C&I loan growth of $1.4 billion (9% linked-quarter), with C&I originations of $2.6 billion and $2 billion funded.

• Adjusted diluted EPS increased to $0.04 in Q1 2026; net income attributable to common stockholders was $20 million (adjusted).

• Net interest income was $443 million; net interest margin expanded to 2.15%, up 10 basis points quarter-over-quarter (excluding one-time hedge gain).

• Operating expenses declined 5% quarter-over-quarter to $441 million.

• Core deposits (excluding brokered) grew $1.1 billion; total deposits up $0.8 billion (1%) sequentially; deposit costs reduced by 21 basis points.

Outlook and guidance

• Adjusted EPS forecast: $0.60–$0.65 for 2026, $1.80–$1.90 for 2027; NIM expected to expand to 2.30–2.40% in 2026 and 2.70–2.80% in 2027.

• Efficiency ratio targeted at 70–75% for 2026, improving to 50–55% in 2027.

• Total assets expected to reach $94 billion by end of 2026 and $102 billion by end of 2027.

• Board to consider capital distributions in the second half of the year, contingent on sustained profitability and further reduction in nonaccrual loans.

• Management remains focused on sustainable profitability, improving returns, and long-term shareholder value.