Flagstar Financial Reports $100 Million Net Loss, Improved from Last Year

Flagstar Financial, Inc. reported a net loss of $100 million for the first quarter of 2025, a significant improvement compared to a net loss of $327 million in the same period last year. The company's total interest income decreased to $1.164 billion from $1.513 billion year-over-year, primarily due to a decline in loan and lease income. Total non-interest expenses also saw a reduction, decreasing by $167 million compared to the first quarter of 2024, largely attributed to lower compensation and benefits costs and a decrease in general and administrative expenses following the sale of its Mortgage Operations.

In terms of operational metrics, Flagstar's total loans and leases held for investment decreased to $66.592 billion as of March 31, 2025, down from $68.272 billion at the end of 2024. This decline was driven by the company's strategic decision to diversify its loan portfolio, particularly reducing exposure to multi-family and commercial real estate loans. The allowance for credit losses on loans and leases decreased to $1.168 billion, representing 1.75% of total loans held for investment, slightly down from 1.76% at the end of 2024.

Flagstar's customer engagement metrics reflected a mixed performance. The company reported an increase in non-interest-bearing deposits, which rose to $12.745 billion, while total deposits decreased to $73.906 billion, down from $75.870 billion at the end of 2024. The company attributed this decrease to the payoff of brokered certificates of deposit and a strategic reduction in higher-cost funding. Additionally, the bank's employee headcount remained stable, with no significant changes reported during the quarter.

Looking ahead, Flagstar's management expressed cautious optimism regarding the company's financial outlook, emphasizing ongoing efforts to enhance operational efficiency and risk management practices. The company is actively working to address identified material weaknesses in its internal controls over financial reporting, which it believes will strengthen its overall governance and operational framework. The bank's capital ratios remain robust, with total risk-based capital exceeding regulatory requirements, positioning it well for future growth and stability in a challenging economic environment.