Flagstar Financial Inc. (NYSE:FLG) shares are dipping Friday after a split third-quarter report: earnings fell short of estimates while revenue beat them. Here’s what you should know.
- Flagstar Bank stock is at significant support. Why is FLG stock at lows?
Flagstar Stock Falls On Mixed Q3 Results
Flagstar shares are trading at around $10.40, below their previous 52-week low of $10.57 and down from a 52-week high of $15.44.
Earnings missed. Flagstar’s adjusted profit came to 1 cent per share, below the 8 cents analysts predicted. Revenue went the other way, reaching $530 million against a $487.8 million forecast.
Net income totaled $12 million. That is down from $34 million in the second quarter but better than the $36 million loss of a year ago. For common stockholders, income came to $3 million, or 1 cent a share, versus $26 million, or 6 cents, in the prior quarter.
Flagstar Pushes Long-Term Targets Back to 2028
CEO Joseph Otting named several pressures: higher interest rates, competition for deposits, persistent inflation and New York City rent regulation, which is raising credit costs on the bank’s multi-family loans. With rates expected to stay elevated, Otting said, reaching the bank’s long-term objectives “has shifted to 2028 from 2027.”
Flagstar’s 2028 targets include adjusted EPS of $1.60 to $1.70 and a net interest margin of 2.85% to 2.95%. It also targets net interest income of $2.6 billion to $2.7 billion and credit loss provisions of $150 million to $200 million that year. For earlier years, it targets net interest income of approximately $1.82 billion to $1.83 billion in 2026 and $2.2 billion to $2.3 billion in 2027.
Flagstar Loan Growth Offsets Higher Credit Costs
Otting pointed to progress in several core measures. Net interest margin widened 4 basis points to 2.17%, and net interest income rose 5% to $460 million. Loans grew $958 million to $61.9 billion, with commercial and industrial loans up 11% to $20.6 billion. Deposits in the commercial banking business rose 7%.
Credit costs moved the other way. Provisions jumped $58 million, mostly because of higher rates, which also affect the rent-regulated multi-family loans in New York City. Substandard loans increased by $248 million, alongside a $670 million rise in criticized and classified loans.
Flagstar reported a 12.38% CET1 capital ratio and wrapped up a $250 million buyback in early October.
FLG Shares Are Sliding
FLG Price Action: Flagstar shares were down 962% at $10.34 at the time of publication on Friday. The stock is trading at a new 52-week low, according to Benzinga Pro.
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