Shares of Flagstar Financial Inc. (NYSE:FLG) fell more than 3% in premarket trading on Friday after the bank reported first-quarter revenue below expectations, despite delivering an earnings beat.
The company posted adjusted earnings per share of $0.04, ahead of the $0.03 analyst forecast, while revenue came in at $498 million, missing the $552.9 million consensus estimate.
Return to Profitability
Flagstar reported net income attributable to common shareholders of $13 million, or $0.03 per diluted share, compared with a net loss of $108 million, or -$0.26 per share, in the same period last year.
On an adjusted basis—excluding a $9 million fair value loss tied to an equity investment—net income rose to $20 million, or $0.04 per diluted share.
Revenue declined 2% year-on-year from $490 million in the first quarter of 2025.
Loan Growth and Deposit Expansion
The bank saw solid growth in its commercial and industrial lending portfolio, with C&I loans increasing by $1.4 billion, or 9%, to $16.6 billion compared with the previous quarter.
“We are pleased to report another quarter of solid progress, highlighted by our second consecutive quarter of profitability and continued momentum across our core banking franchise,” said Joseph M. Otting.
Core deposits, excluding brokered deposits, rose by $1.1 billion, or 2%, while total deposits increased by $832 million, or 1%.
Improving Fundamentals
Asset quality showed improvement, with non-accrual loans falling 11% and criticised or classified loans declining 3% from the fourth quarter.
Net interest margin edged up to 2.15%, an increase of 1 basis point quarter-on-quarter, or 10 basis points excluding a one-off hedging gain in the prior quarter.
Operating expenses dropped 5% to $441 million, while the CET1 capital ratio strengthened to 13.24%, up 40 basis points from the previous quarter.