Third Quarter 2026
Filed Oct 23, 2026FLAGSTAR BANK REPORTS THIRD QUARTER 2026 NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS OF $0.01 PER DILUTED SHARE
Net interest income, margin and C&I loan growth improved, but the $76 million provision for credit losses, higher operating expenses and a $22 million tax benefit left GAAP diluted EPS at $0.01.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net interest incomeGAAP | $460M | 5% | 8% |
| Net interest marginGAAP | 2.17% | 4 basis points | 26 basis points |
| Total revenuesGAAP | $530M | 3% | 2% |
| Non-interest incomeGAAP | $70M | -8% | -26% |
| Fee incomeGAAP | $29M | 12% | 26% |
| Bank-owned life insuranceGAAP | $11M | -15% | -8% |
| Net gain on loan sales and securitizationsGAAP | $3M | -25% | -40% |
| Other incomeGAAP | $27M | -4% | -16% |
| Adjusted noninterest incomenon-GAAP | $70M | -3% | -4% |
| Total operating expensesGAAP | $441M | 3% | -8% |
| Total non-interest expenseGAAP | $464M | 3% | -11% |
| Adjusted operating expensesnon-GAAP | $441M | 3% | -4% |
| Pre-provision net revenuenon-GAAP | $66M | — % | NM |
| Pre-provision net revenue, as adjustednon-GAAP | $66M | 6% | NM |
| Provision for credit lossesGAAP | $76M | NM | NM |
| Income (loss) before income taxesGAAP | −$10M | NM | -76% |
| Income tax expense (benefit)GAAP | −$22M | NM | NM |
| Effective tax rateGAAP | 217.8% | – | – |
| Net incomeGAAP | $12M | -65% | NM |
| Net income, as adjustednon-GAAP | $12M | – | NM |
| Net income attributable to common stockholdersGAAP | $3M | -88% | NM |
| Net income attributable to common stockholders, as adjustednon-GAAP | $3M | – | NM |
| Diluted earnings per common shareGAAP | $0.01 | -83% | NM |
| Diluted earnings per common share, as adjustednon-GAAP | $0.01 | – | – |
| Efficiency ratioother | 87.56% | – | – |
| Efficiency ratio, as adjustednon-GAAP | 83.24 | – | – |
| Total loans and leases held for investmentGAAP | $61.95B | 2% | – |
| Commercial and industrial loansGAAP | $20.58B | 11% | 35% |
| Multi-family loansGAAP | $25.95B | -4% | -10% |
| Commercial real estate loansGAAP | $8.10B | -2% | -13% |
| Total depositsGAAP | $67.82B | — % | – |
| Total assetsGAAP | $87.41B | — % | – |
| Total cash and cash equivalentsGAAP | $4.05B | -21% | – |
| Total borrowed fundsGAAP | $10.94B | — % | – |
| Total stockholders' equityGAAP | $7.64B | -6% | – |
| Total non-accrual loans held for investmentGAAP | $2.82B | 1% | -13% |
| Total allowance for credit losses, including on unfunded commitmentsGAAP | $927M | — % | -18% |
| Total ACL % of total loans held for investmentGAAP | 1.50% | -2 bps | -30 bps |
| Net charge-offsGAAP | $74M | -26% | 1% |
| Net charge-offs to average loansGAAP | 0.49% | – | – |
| Common equity tier 1 ratioother | 12.38% | – | – |
| Tangible book value per common sharenon-GAAP | $17.05 | – | – |
| Book value per common shareGAAP | $17.82 | – | – |
Capital returns
- Completed $250 million buyback in early October
- Dividends per common share were $0.01.
- Common shares outstanding at the respective period-ends were 400,635,645.
What drove it
- Net interest income rose $20 million or 5% to $460 million as the net interest margin increased 4 basis points to 2.17%.
- Commercial and industrial loans increased $2.0 billion or 11% to $20.6 billion, driven primarily by Specialized Industries and Corporate & Regional Commercial Banking.
- Commercial Bank deposits grew $575 million, up 7%.
- The combined multi-family and CRE portfolio declined $1.1 billion or 3% to $34.1 billion, while the Bank originated approximately $375 million of new CRE loans.
- Adjusted PPNR increased $4 million or 6%, driven by higher net interest income, partly offset by lower non-interest income and higher non-interest expenses.
Concerns
- The provision for credit losses increased to $76 million from $18 million in the second quarter, reflecting net charge-offs and higher interest rates including on the New York City rent-regulated multi-family portfolio.
- GAAP net income attributable to common stockholders fell to $3 million from $26 million, and GAAP diluted EPS was $0.01 versus $0.06.
- Operating expenses increased $14 million or 3% sequentially to $441 million, led by compensation and benefits and professional services.
- Total non-accrual loans held for investment increased 1% sequentially to $2,817 million, while commercial and industrial non-accrual loans increased 30% to $144 million.
- The CET1 ratio declined to 12.38% from 13.16%, and total stockholders' equity declined to $7,644 million from $8,140 million.
What to watch
- The pace of C&I loan growth and Commercial Bank deposit growth relative to continued reductions in multi-family and commercial real estate exposures.
- The effect of higher interest rates and New York City rent regulation policies on credit costs in the multi-family portfolio.
- Provision for credit losses, net charge-offs and non-accrual loan trends, particularly within commercial and industrial lending.
- Whether net interest margin expansion continues as deposit competition and funding costs evolve.
- Progress toward the Bank's stated long-term strategic objectives, whose full realization management said has shifted to 2028 from 2027.
Balance sheet and cash flow
- Total cash and cash equivalents were $4,046 million, compared to $5,108 million at June 30, 2026.
- Total loans and leases held for investment were $61,945 million, compared to $60,987 million at June 30, 2026.
- Total deposits were $67,820 million, compared to $67,521 million at June 30, 2026.
- Total borrowed funds were $10,937 million, unchanged compared to June 30, 2026.
- Total stockholders' equity was $7,644 million, compared to $8,140 million at June 30, 2026.
Analysis
Third-quarter operating trends improved in core spread income. Net interest income rose to $460 million from $440 million in the second quarter and $425 million a year earlier, while net interest margin increased to 2.17% from 2.13% sequentially and 1.91% a year earlier. Average interest-earning assets increased to $84.3 billion sequentially, while the average yield increased 6 basis points and the average cost of funds increased 2 basis points. Total revenue increased to $530 million, although non-interest income declined to $70 million from $76 million sequentially and $94 million a year earlier.
The balance-sheet mix continued to shift toward C&I lending. Total loans and leases held for investment increased to $61,945 million from $60,987 million, led by commercial and industrial loans of $20,579 million, up 11% sequentially and 35% year over year. Multi-family loans fell to $25,948 million and commercial real estate loans fell to $8,102 million. Management said total C&I loans represented 24% of total assets, compared with 21% last quarter and 17% at year-end 2025, while total CRE loans including multi-family represented 39% of total assets, compared with 40% last quarter and 44% at year-end 2025. Deposits increased modestly to $67,820 million.
Credit costs were the principal offset to operating improvement. The provision for credit losses was $76 million, compared with $18 million in the second quarter and $38 million a year earlier. Net charge-offs were $74 million, down from $100 million sequentially but slightly above $73 million a year earlier. Total non-accrual loans held for investment rose to $2,817 million from $2,800 million sequentially, though they declined from $3,241 million a year earlier. The total ACL, including unfunded commitments, was $927 million, and total ACL as a percentage of total loans held for investment was 1.50%.
Expenses increased sequentially despite lower year-over-year costs. Total operating expenses were $441 million, up from $427 million, reflecting higher compensation and benefits and professional services. Adjusted operating expenses were also $441 million, up 3% sequentially and down 4% year over year. PPNR remained $66 million, while adjusted PPNR increased to $66 million from $62 million. The quarter also included an income tax benefit of $22 million tied to the settlement of a 2019-2021 federal tax audit. Even with that benefit, net income attributable to common stockholders was $3 million and diluted EPS was $0.01.
Capital remained above the stated well-capitalized thresholds, but declined sequentially. The CET1 ratio was 12.38%, versus 13.16% at June 30, 2026, and total stockholders' equity was $7,644 million, versus $8,140 million. The Bank completed a $250 million buyback in early October. Management did not provide quantitative financial guidance, but stated that the expected full realization of its long-term strategic objectives has shifted to 2028 from 2027 because of the higher-for-longer interest-rate environment.
Management, verbatim
Our third quarter results reflect the fact that the Bank's core underlying fundamentals continued to improve despite the emergence of several headwinds, including a higher interest rate environment, deposit competition, persistent inflation, as well as the continuing impact of rent regulation policies on our New York City multi-family portfolio, which pressured our credit costs.
Joseph M. Otting, Executive Chairman and Chief Executive Officer
We believe we are on track toward achieving our long-term strategic objectives, however given the higher for longer interest rate environment, the full realization of these objectives has shifted to 2028 from 2027.
Joseph M. Otting, Executive Chairman and Chief Executive Officer
We also recorded another quarter of solid loan growth driven by broad-based growth across the C&I platform, along with deposit growth within that business.
Joseph M. Otting, Executive Chairman and Chief Executive Officer
Not in the filing
stated, not guessed- Quantitative forward revenue guidance
- Quantitative forward net interest income guidance
- Quantitative forward net interest margin guidance
- Quantitative forward operating expense guidance
- Quantitative forward tax-rate guidance
- Previous-release outlook for comparison
- Operating cash flow
- Free cash flow
- Gross margin
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.