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Flagstar Financial Q3 Loss Widens as NII & Fee Income Decline Y/Y
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Key Takeaways
{\"0\":\"Flagstar Financial reported a Q3 loss per share of 7 cents, wider than the year-ago loss of 69 cents.\",\"1\":\"Lower NII, fee income, and reduced loan and deposit balances pressured overall quarterly results.\",\"2\":\"Non-interest expenses fell nearly 30%, while capital ratios improved year over year.\"}
Flagstar Financial, Inc. (FLG - Free Report) reported a third-quarter 2025 adjusted loss per share of 7 cents, wider than the Zacks Consensus Estimate of a loss of 6 cents. It had incurred a loss of 69 cents in the year-ago quarter.
Results were primarily affected by a decline in net interest income (NII) and fee income, along with lower loan and deposit balances. However, lower expenses acted as a tailwind.
Results excluded certain non-recurring items. After considering these, the net loss available to common shareholders (GAAP basis) was $45 million compared with $289 million reported in the prior-year quarter.
FLG’s Quarterly Revenues & Expenses Decline
Quarterly revenues were $519 million, which declined 16.7% from the prior-year quarter. Nonetheless, the top line surpassed the Zacks Consensus Estimate by nearly 1%.
NII was $425 million, down 16.7% from the prior-year quarter. The net interest margin of 1.91% decreased 12 basis points from the previous-year quarter.
Non-interest income was $94 million, which decreased 16.8% from the year-ago quarter. The decline is mainly due to the absence of net return on mortgage servicing rights and lower fee income.
Non-interest expenses of $522 million decreased 27.1% year over year. Adjusted operating expenses (excluding intangible asset amortization and merger and restructuring expenses) were $457 million, down 29.9% from the third quarter of 2024.
The efficiency ratio was 92.1%, which decreased from 105.9% in the year-ago quarter. A decrease in the efficiency ratio indicates an improvement in profitability.
Flagstar Financial’s Loans & Deposits Decline
Total loans and leases held for investment declined 2.3% sequentially to $62.7 billion as of Sept. 30, 2025. Nonetheless, as of the same date, total deposits declined nearly 1% sequentially to $69.1 billion.
FLG’s Credit Quality: Mixed Bag
Non-accruals loans were $3.2 billion, which increased from $2.5 billion as of Sept. 30, 2024. Net charge-offs were $73 million, which declined 69.6% from the prior-year quarter.
The provision for credit losses was $38 million, which decreased from $242 million in the prior-year quarter.
Flagstar Financial’s Capital Ratios Improve
As of Sept. 30, 2025, the common equity tier 1 ratio was 12.45%, which increased from 10.76% as of Sept. 30, 2024. The total risk-based capital ratio was 15.92%, which grew from 13.92% in the prior-year quarter.
The leverage capital ratio rose to 9.03% from 7.32% in the year-ago quarter.
Our View on FLG
Flagstar Financial’s deteriorating asset quality and geographic concentration might act as headwinds. The decline in loan and deposit balances, along with lower NII and fee income in the third quarter, is likely to affect its balance sheet position. However, the decrease in non-interest expenses served as a positive factor.
Flagstar Financial, Inc. Price, Consensus and EPS Surprise
Valley National Bancorp’s (VLY - Free Report) third-quarter 2025 adjusted earnings per share of 28 cents surpassed the Zacks Consensus Estimate of 26 cents. Also, the bottom line increased 55.6% on a year-over-year basis.
VLY’s results were primarily aided by increased NII and non-interest income. A decline in provisions was another tailwind. However, higher expenses alongside lower loan balances were spoilsports.
Zions Bancorporation’s (ZION - Free Report) third-quarter 2025 adjusted earnings per share of $1.54 beat the Zacks Consensus Estimate of $1.40. Moreover, the bottom line surged 12.4% from the year-ago quarter.
Results were primarily aided by higher NII and non-interest income. Additionally, a higher deposit balance was a positive. However, a rise in adjusted non-interest expenses and provisions alongside a decline in loans was a major headwind for ZION.
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Flagstar Financial Q3 Loss Widens as NII & Fee Income Decline Y/Y
Key Takeaways
Flagstar Financial, Inc. (FLG - Free Report) reported a third-quarter 2025 adjusted loss per share of 7 cents, wider than the Zacks Consensus Estimate of a loss of 6 cents. It had incurred a loss of 69 cents in the year-ago quarter.
Results were primarily affected by a decline in net interest income (NII) and fee income, along with lower loan and deposit balances. However, lower expenses acted as a tailwind.
Results excluded certain non-recurring items. After considering these, the net loss available to common shareholders (GAAP basis) was $45 million compared with $289 million reported in the prior-year quarter.
FLG’s Quarterly Revenues & Expenses Decline
Quarterly revenues were $519 million, which declined 16.7% from the prior-year quarter. Nonetheless, the top line surpassed the Zacks Consensus Estimate by nearly 1%.
NII was $425 million, down 16.7% from the prior-year quarter. The net interest margin of 1.91% decreased 12 basis points from the previous-year quarter.
Non-interest income was $94 million, which decreased 16.8% from the year-ago quarter. The decline is mainly due to the absence of net return on mortgage servicing rights and lower fee income.
Non-interest expenses of $522 million decreased 27.1% year over year. Adjusted operating expenses (excluding intangible asset amortization and merger and restructuring expenses) were $457 million, down 29.9% from the third quarter of 2024.
The efficiency ratio was 92.1%, which decreased from 105.9% in the year-ago quarter. A decrease in the efficiency ratio indicates an improvement in profitability.
Flagstar Financial’s Loans & Deposits Decline
Total loans and leases held for investment declined 2.3% sequentially to $62.7 billion as of Sept. 30, 2025. Nonetheless, as of the same date, total deposits declined nearly 1% sequentially to $69.1 billion.
FLG’s Credit Quality: Mixed Bag
Non-accruals loans were $3.2 billion, which increased from $2.5 billion as of Sept. 30, 2024. Net charge-offs were $73 million, which declined 69.6% from the prior-year quarter.
The provision for credit losses was $38 million, which decreased from $242 million in the prior-year quarter.
Flagstar Financial’s Capital Ratios Improve
As of Sept. 30, 2025, the common equity tier 1 ratio was 12.45%, which increased from 10.76% as of Sept. 30, 2024. The total risk-based capital ratio was 15.92%, which grew from 13.92% in the prior-year quarter.
The leverage capital ratio rose to 9.03% from 7.32% in the year-ago quarter.
Our View on FLG
Flagstar Financial’s deteriorating asset quality and geographic concentration might act as headwinds. The decline in loan and deposit balances, along with lower NII and fee income in the third quarter, is likely to affect its balance sheet position. However, the decrease in non-interest expenses served as a positive factor.
Flagstar Financial, Inc. Price, Consensus and EPS Surprise
Flagstar Financial, Inc. price-consensus-eps-surprise-chart | Flagstar Financial, Inc. Quote
Currently, FLG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Valley National Bancorp’s (VLY - Free Report) third-quarter 2025 adjusted earnings per share of 28 cents surpassed the Zacks Consensus Estimate of 26 cents. Also, the bottom line increased 55.6% on a year-over-year basis.
VLY’s results were primarily aided by increased NII and non-interest income. A decline in provisions was another tailwind. However, higher expenses alongside lower loan balances were spoilsports.
Zions Bancorporation’s (ZION - Free Report) third-quarter 2025 adjusted earnings per share of $1.54 beat the Zacks Consensus Estimate of $1.40. Moreover, the bottom line surged 12.4% from the year-ago quarter.
Results were primarily aided by higher NII and non-interest income. Additionally, a higher deposit balance was a positive. However, a rise in adjusted non-interest expenses and provisions alongside a decline in loans was a major headwind for ZION.