Flagstar Financial, Inc. (NYSE:FLG) posted an adjusted net loss of $0.14 per share for the second quarter on Friday, matching analyst forecasts as the bank advances its shift into a more diversified regional player.
Following the earnings release, Flagstar’s stock gained 0.83% in pre-market trading.
The bank reported $496 million in revenue for the quarter, falling short of the consensus estimate of $519.38 million. However, several important indicators showed progress. The net interest margin rose to 1.81%, up 7 basis points from the prior quarter, and credit costs eased, with provisions for credit losses dropping compared to the first quarter.
“I am very pleased with the progress the Company made during the second quarter across multiple fronts as we continued to execute on our successful strategy of transforming Flagstar into a top-performing, well-diversified regional bank,” stated Chairman, President, and CEO Joseph M. Otting.
Commercial and industrial lending gained strong traction, with new loan originations growing 57% and new commitments up 80% quarter-over-quarter. Meanwhile, the bank decreased its commercial real estate exposure, with CRE loans falling by $874 million, or 8%, from the previous quarter.
Credit quality improved as criticized and classified assets dropped 9% from the prior quarter and 15% year-to-date. Non-accrual loans also declined 4% compared to the first quarter.
Flagstar continued to manage expenses tightly, cutting adjusted operating costs by 5% quarter-over-quarter. The company also plans to eliminate its bank holding company structure to lower expenses and simplify operations.
“We have made great strides during the first half of the year and anticipate further progress over the remainder of the year,” Otting added, highlighting expectations for a return to profitability in Q4.
Flagstar Financial stock price
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