FLAGSTAR FINANCIAL, INC. REPORTS FIRST QUARTER 2025 GAAP NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS OF $0.26 PER DILUTED SHARE AND NON-GAAP ADJUSTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS OF $0.23 PER DILUTED SHARE

Press Releases

April 25, 2025

FLAGSTAR FINANCIAL, INC. REPORTS FIRST QUARTER 2025 GAAP NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS OF $0.26 PER DILUTED SHARE AND NON-GAAP ADJUSTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS OF $0.23 PER DILUTED SHARE

C&I LOAN ORIGINATIONS INCREASED OVER 40% ON A LINKED-QUARTER BASISADJUSTED OPERATING EXPENSES DECLINE 22% YEAR-OVER-YEARMAINTAINED STRONG CAPITAL AND LIQUIDITY POSITIONSNET INTEREST MARGIN STABILIZESCREDIT COSTS IMPROVE AS PROVISION FOR CREDIT LOSSES

C&I LOAN ORIGINATIONS INCREASED OVER 40% ON A LINKED-QUARTER BASIS
ADJUSTED OPERATING EXPENSES DECLINE 22% YEAR-OVER-YEAR
MAINTAINED STRONG CAPITAL AND LIQUIDITY POSITIONS
NET INTEREST MARGIN STABILIZES
CREDIT COSTS IMPROVE AS PROVISION FOR CREDIT LOSSES AND NET CHARGE-OFFS DECLINED ON A LINKED-QUARTER BASIS
LOAN SALES AND CONTINUED MANAGEMENT EMPHASIS ON LOAN PAYOFFS DRIVE FURTHER DECLINE IN COMMERCIAL REAL ESTATE EXPOSURE

First Quarter 2025 Summary

Asset Quality

Loans, Deposits, and Funding

• Total ACL of $1,215 million or 1.82% of total loans HFI

compared to 1.83% in previous quarter

• Multi-family ACL coverage of 1.82% v. 1.87% in Q4’24

• Multi-family with rent-regulated units equal to or greater

than 50% ACL at 2.82% v. 2.89% in Q4’24

• Office ACL coverage at 6.88% v. 7.01% in Q4’24

• Par pay-offs totaled $840 million with 59% being

substandard loans

• NCOs declined $107 million, or 48% to $115 million

• NCOs on an annualized basis declined 55 basis points to 0.68% of average loans

• Criticized loans declined $885 million or 6%

• Continue to reduce total CRE exposure

• Multi-family loans down $656 million or 2%

• CRE loans down $326 million or 3%

• Commercial lending business building momentum

• Over 4% loan growth in focus areas vs. prior quarter

• New credit commitments totaled $1,046 million, up 32%

• Originations were $769 million, up 42% v. Q4’24

• Q1 deposits reflect further payoffs of brokered deposits

• Brokered deposits declined $1.9 billion or 19%

Capital

Liquidity

• CET1 capital ratio improved to 11.9%, at or above peer

group levels

• Book value per common share of $18.43

• Tangible book value per share of $17.33

• Ample total liquidity of $30 billion

• Represents 231% coverage on uninsured deposits

• $18.1 billion of available borrowing capacity and high-

quality liquid assets

HICKSVILLE, N.Y., April 25, 2025 /PRNewswire/ — Flagstar Financial, Inc. (NYSE: FLG) (“the Company”), today reported results for first quarter 2025. First quarter 2025 net loss was $100 million compared to a net loss of $188 million for fourth quarter 2024, and a net loss of $327 million for first quarter 2024. The net loss attributable to common stockholders for first quarter 2025 was $108 million, or $0.26 per diluted share, compared to a net loss attributable to common stockholders of $196 million, or $0.47 per diluted share for fourth quarter 2024, and a net loss attributable to common stockholders of $335 million, or $1.36 per diluted share for first quarter 2024.

CEO COMMENTARY

Commenting on the Company’s first quarter 2025 performance, Chairman, President, and Chief Executive Officer, Joseph M. Otting stated, “I am very pleased with our solid financial results and operating performance during the quarter, as we continue to make progress on returning to profitability, executing on our strategic plan, and transforming the Company into a top-25 performing regional bank. In 2024, we successfully built capital, improved liquidity, and enhanced the credit quality of our loan portfolio. As a result, we begin the year in a strong balance sheet position with a CET1 capital ratio of around 12%, ACL reserve coverage of 1.82%, and ample liquidity of about $30 billion.

“Our 2025 focus is improving our earnings profile, executing on our C&I and Private Bank growth strategy, continuing to manage lower our commercial real estate exposure, and on credit normalization. Our first quarter operating trends reflect this focus. We reduced operating expenses and are on pace to meet our $600 million cost savings goal, reduced our credit costs as both the provision for credit losses and net charge-offs declined, our net interest margin was stable compared to the fourth quarter, we continued to reduce our multi-family and commercial real estate portfolios, and made further progress in our C&I business, adding additional talent and originating nearly $770 million in new loans, up over 40% compared to what we originated in the fourth quarter. More importantly, we grew C&I loans in our focus areas by over 4% compared to last quarter.

“During the quarter, we added 15 talented bankers in our commercial lending business bringing the total to 75 since we started expanding this business, and we plan to add another 80 to 90 bankers during the remainder of 2025. Additionally, we announced the hiring of Mark Pittsey to lead our Private Bank and Wealth Management businesses. Mark’s extensive background will help drive continued growth in these two core business lines.

“On the credit quality front, criticized loans declined 6% compared to the prior quarter, and although we had a pick-up in non-accrual loans, this was largely due to one credit relationship. Our total allowance for credit losses was 1.82%, virtually unchanged from the previous quarter, while reserve coverage on multi-family loans with rent-regulated units at 50% or more of the total units was 2.82%.

“The significant strides we made in 2024 have laid the groundwork for growth and have established a path to profitability by fourth quarter 2025. While the near-term macro environment is filled with some uncertainties, I remain confident in our ability to execute on our strategic plan and to transform the Company into a high-performing, top-tier regional bank.

“Lastly, I would like to especially thank all of our teammates whose dedication and commitment to the organization and its customers has been unmatched.”

BALANCE SHEET SUMMARY AS OF MARCH 31, 2025

At March 31, 2025, total assets were $97.6 billion, down $2.5 billion or 3% versus December 31, 2024. The linked-quarter decline was driven by a decrease in total loans and leases held for investment (“HFI”) as the Company continues to reduce its commercial real estate (“CRE”) exposure, along with a decrease in cash balances. During the first quarter 2025, we re-deployed some of our liquidity into available-for-sale (“AFS”) investment securities. Accordingly, AFS investment securities rose $2.4 billion or 23% to $12.8 billion on a linked-quarter basis.

Total loans and leases held for investment at March 31, 2025 were $66.6 billion, down $1.7 billion or 2% on a linked-quarter basis. The multi-family loan portfolio declined $656 million or 2% to $33.4 billion on a linked-quarter basis while the CRE portfolio decreased $326 million or 3% on a linked-quarter basis to $11.5 billion. The linked-quarter decrease was the result of exiting non-relationship borrowers, par payoffs, and loan sales, at or close to current valuations, that were previously disclosed during the fourth quarter of 2024. The declines in both of these portfolios is a continuation of the Company’s overall strategy to diversify the loan portfolio by reducing its multi-family and CRE exposure.

Total commercial and industrial (“C&I”) loans declined $634 million or 4% to $14.7 billion on a linked-quarter basis. The linked-quarter decrease is due to the Company’s strategy to reduce non-core loans within the specialty finance and leasing portfolios, as well as reducing exposures in the MSR lending business.

We experienced another strong quarter of production from our new C&I lending teams. During first quarter 2025, new credit commitments totaled $1,046 million of which we funded $769 million compared to $789 million and $542 million, respectively, in fourth quarter 2024.

Total deposits at March 31, 2025 were $73.9 billion, a $2.0 billion or 3% linked-quarter decrease. The linked-quarter decline was driven by the sale of our mortgage servicing/sub-servicing and third-party origination business during the fourth quarter of 2024, which included the transfer of mortgage escrow deposits to the buyer. Non-interest-bearing deposits declined $739 million or 5% on a linked-quarter basis due to the sale of the mortgage servicing business.

Certificates of deposit (“CDs”) decreased $1.4 billion or 5% to $25.9 billion on a linked-quarter basis. The linked-quarter decline was driven by a decrease in brokered CDs, reflecting our strategy to reduce higher cost funding. During the first quarter, the Company paid off approximately $1.4 billion in brokered CDs.

At March 31, 2025, wholesale borrowings totaled $13.2 billion, down $250 million or 2% on a linked-quarter basis. After rebuilding our liquidity position over the course of 2024 through deposit growth and asset sales, we paid down wholesale borrowings, primarily Federal Home Loan Bank of New York (“FHLB-NY”) advances, in the second half of 2024. In first quarter 2025, we paid off $250 million of FHLB-NY advances.

NET INCOME (LOSS) | NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS – AS ADJUSTED

First quarter 2025 results included two notable items. These items include $6 million in lease cost acceleration related to our previously announced branch closures and $5 million in trailing costs related to the sale of our mortgage servicing/sub-servicing and third-party origination business during the fourth quarter of last year. In addition, the Company also incurred $8 million of merger-related expenses during the quarter. As adjusted for these items, the net loss for first quarter 2025 was $86 million and the net loss attributable to common stockholders was $94 million or $0.23 per diluted share. This compares to a fourth quarter 2024 net loss, as adjusted for merger-related expenses and for certain items related to the sale of the servicing/sub-servicing and third-party origination business, severance costs, and long-term asset impairment charges related to various Company-owned or leased properties, of $158 million and a net loss attributable to common stockholders of $166 million or $0.40 per diluted share. First quarter 2024, net loss and net loss attributable to common stockholders, as adjusted for merger-related and restructuring expenses and the bargain purchase gain, was $174 million and $182 million or $0.74 per diluted share, respectively.

EARNINGS SUMMARY FOR THE THREE MONTHS ENDED MARCH 31, 2025

Net Interest Income, Net Interest Margin, and Average Balance Sheet

Net Interest Income

Net interest income for the first quarter 2025 totaled $410 million, down $51 million, or 11%, compared to fourth quarter 2024. The linked-quarter decline was driven by a smaller balance sheet partially offset by lower funding costs. Average loan balances decreased over the past five quarters due to several strategic actions that began during early 2024, including the sale of our mortgage warehouse business and mortgage servicing/sub-servicing and third-party origination business, a strategic reduction in the multi-family and commercial real estate portfolios from a combination of par payoffs and strategic loan sales, and lower net C&I balances as our growth was outpaced by the pay-down of certain non-core, non-strategic relationships. During first-quarter 2025, we utilized a portion of our cash position to purchase higher yielding investment securities. The decrease in average loan balances was partially offset by a lower level of average borrowed funds, as the Company paid off a substantial amount of wholesale borrowings, primarily FHLB-NY advances during 2024.

Net Interest Income

March 31, 2025

For the Three Months Ended

compared to (%):

(dollars in millions)

March 31,

2025

December 31,

2024

March 31,

2024

December 31,

2024

March 31,

2024

Net interest income

$ 410

$ 461

$ 624

-11 %

-34 %

Net Interest Margin

During first quarter 2025, we stabilized the net interest margin (“NIM”) as compared to fourth-quarter 2024. First-quarter 2025 NIM was 1.74%, up 1 basis point compared to fourth quarter 2024, but down 54 basis points compared to first quarter 2024. The linked-quarter improvement was driven by a 25 basis point decrease in the cost of average total interest-bearing liabilities to 4.02% partially offset by a 21 basis point decrease in the average total interest-earnings assets. The average cost of interest-bearing deposits dropped 34 basis points to 3.85% reflecting a decline in market rates, along with a $3.8 billion or 6% decrease in average interest-bearing deposits to $61.7 billion. Additionally, average borrowed funds declined $3.6 billion or 20% to $14.4 billion, while their cost increased 15 basis points to 4.71%.

Average loan balances declined $3.5 billion or 5% to $68.2 billion on a linked-quarter basis, while the average loan yield also declined 22 basis points to 5.06%. Average cash balances declined $7.7 billion or 35% to $14.3 billion as we used a portion of our cash to purchase investment securities and pay down wholesale borrowings. Average investment securities rose modestly, up $720 million or 5.83% to $13.1 billion.

The year-over-year decline in the NIM was due to several factors including lower average total interest-earnings assets due to our strategic actions to sell certain businesses and reduce our commercial real estate concentrations, offset partially by a reduction in average wholesale borrowings, as well as lower overall market interest rates. The average yield on interest-earnings assets declined 61 basis points on a year-over-year basis, while average balances declined $14.4 billion or 13%. This was only partially offset by a 17 basis point decrease in the average cost interest-bearing liabilities, while these average balances decreased $9.2 billion or 11%.

Year-over-year, average loan balances declined $15.9 billion or 19%, while the average loan yield dropped 62 basis points. Average securities balances increased $1.5 billion or 13% along with a corresponding 29 basis point increase in the average yield. This was offset in part by an $11.4 billion or 44% decrease in average borrowings, along with a 28 basis point decrease in the average cost of borrowings. Average deposit balances rose $2.2 billion or 4% on a year-over-year basis, while the average cost of deposits remained unchanged.

March 31, 2025

For the Three Months Ended

compared to (bp):

Yield/Cost

March 31,

2025

December 31,

2024

March 31,

2024

December 31,

2024

March 31,

2024

Mortgage and other loans, net

5.06 %

5.28 %

5.68 %

-22

-62

Securities

4.59 %

4.77 %

4.30 %

-18

Interest-earning cash and cash equivalents

4.42 %

4.79 %

5.52 %

-37

-110

Total interest-earning assets

4.90 %

5.11 %

5.51 %

-21

-61

Total interest-bearing deposits

3.85 %

4.19 %

3.85 %

-34

Borrowed funds

4.71 %

4.56 %

4.99 %

-28

Total interest-bearing liabilities

4.02 %

4.27 %

4.19 %

-25

-17

Net interest margin

1.74 %

1.73 %

2.28 %

-54

Average Balance Sheet

March 31, 2025

For the Three Months Ended

compared to:

(dollars in millions)

March 31,

2025

December 31,

2024

March 31,

2024

December 31,

2024

March 31,

2024

Mortgage and other loans, net

$68,212

$71,727

$84,123

-5 %

-19 %

Securities

13,067

12,347

11,576

6 %

13 %

Interest-earning cash and cash equivalents

14,344

22,048

14,345

-35 %

— %

Total interest-earning assets

95,623

106,122

110,044

-10 %

-13 %

Total interest-bearing deposits

61,727

65,576

59,539

-6 %

4 %

Borrowed funds

14,377

17,940

25,728

-20 %

-44 %

Total interest-bearing liabilities

76,104

83,516

85,267

-9 %

-11 %

Non-interest-bearing deposits

$13,068

$15,959

$19,355

-18 %

-32 %

Provision for Credit Losses

For the three months ended March 31, 2025, the provision for credit losses decreased $66 million compared to the three months ended December 31, 2024. This decrease is primarily due to lower net charge-offs, our continued focus on credit reviews, and the receipt of recent appraisals. Additionally, our ACL balance decreased since December 31, 2024, as result of the on-going strategic reduction of our multi-family, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by the negatively trending macro-economic environment.

Net charge-offs for the first quarter 2025 totaled $115 million, down $107 million or 48% compared to fourth quarter 2024, but were up $34 million or 42% compared to first quarter 2024. Net charge-offs on an annualized basis represented 0.68% of average loans outstanding, compared to 1.23% of fourth quarter 2024 and compared to 0.39% during first quarter 2024.

Pre-Provision Net Revenue

The table below details the Company’s PPNR and related measures, which are non-GAAP measures, for the periods noted:

March 31, 2025

For the Three Months Ended

compared to:

(dollars in millions)

March 31,

2025

December 31,

2024

March 31,

2024

December 31,

2024

March 31,

2024

Net interest income

$ 410

$ 461

$ 624

-11 %

-34 %

Non-interest income

164

-51 %

789 %

Total revenues

$ 490

$ 625

$ 633

-22 %

-23 %

Total non-interest expense

532

718

699

-26 %

-24 %

Pre – provision net loss (non-GAAP)

$ (42)

$ (93)

$ (66)

Bargain purchase gain

—

121

Merger-related and restructuring expenses

-33 %

-81 %

Net impact of mortgage/servicing sale and related activity

—

(80)

—

Severance costs

—

Long term asset impairment

—

Lease cost acceleration related to closing branches

—

Trailing mortgage sale costs with Mr. Cooper

—

Pre – provision net (loss)/revenue, as adjusted (non-GAAP)

$ (23)

$ (53)

$ 98

For the first quarter 2025, pre-provision net loss totaled $42 million compared to a pre-provision net loss of $93 million for fourth quarter 2024 and a pre-provision net loss of $66 million for first quarter 2024. First quarter 2025 pre-provision net loss included two notable items including $6 million related to lease cost accelerated related to branch closures and $5 million in trailing costs related to the sale of the mortgage servicing/sub-servicing and third-party originations business. As adjusted for these items and for merger-related expenses, the first quarter pre-provision net loss improved to $23 million compared to a pre-provision net loss of $53 million for fourth quarter 2024 and pre-provision net revenue of $98 million for first quarter 2024.

Non-Interest Income

In first quarter 2025, non-interest income totaled $80 million compared to $164 million in fourth quarter 2024 and $9 million in first quarter 2024. Included in fourth quarter 2024 non-interest income was a $89 million gain on the sale of our mortgage servicing/sub-servicing and third-party origination business, while first quarter 2024 non-interest income included a bargain purchase gain of $121 million. As adjusted for these items, first quarter 2025 non-interest income increased $8 million or 11% from