Flagstar Bank (NYSE: FLG) posts Q2 2026 profit with stronger margin and capital
Rhea-AI Filing Summary
Flagstar Bank, National Association reported net income of $34 million for the quarter ended June 30, 2026 and $55 million for the first six months of 2026, compared with a net loss of $170 million a year earlier. Net income attributable to common stockholders was $39 million year-to-date, or $0.08 per diluted share. Net interest income rose to $883 million for the first half as net interest margin increased to 2.14% from 1.77%, helped by lower funding costs and reduced higher‑cost deposits and borrowings. The provision for credit losses fell to $18 million from $143 million, and non‑interest expense declined to $916 million from $1,045 million, reflecting lower FDIC insurance, compensation and general expenses and the absence of merger‑related costs.
As of June 30, 2026, Flagstar had $87.7 billion of assets, $61.2 billion of loans, $67.5 billion of deposits, and stockholders’ equity of $8.1 billion. The loan mix shifted toward commercial and industrial lending, which increased 22% to $18.6 billion, while multi‑family and commercial real estate balances fell 7% and 11%, respectively. Non‑accrual loans decreased to $2.8 billion, or 4.59% of total loans, and non‑performing assets were 3.20% of total assets; 30–89 day delinquencies declined 63%, although $51 million of loans were 90 days or more past due and still accruing. The allowance for credit losses was $869 million, or 1.42% of total loans. Flagstar noted credit risk from New York City rent regulation, with $12.8 billion of multi‑family loans secured by rent‑regulated properties, and is reducing this concentration. Capital remained strong, with a common equity tier 1 ratio of 13.16% and total risk‑based capital of 16.58%, while total liquidity of $27.2 billion exceeded uninsured deposits of $14.5 billion by $12.7 billion.
Positive
- Return to profitability with stronger margin – For the six months ended June 30, 2026, net income reached $55 million versus a $170 million loss a year earlier, as net interest margin improved to 2.14% and non‑interest expenses fell 12%.
Negative
- None.
Filing Explained
Restricted-stock issuance and common-share repurchases changed the share base, while $1.6 billion of multifamily loans had repriced by June 30.
This Form 10-Q is an unaudited quarterly report for the quarter ended
During the six months ended
Under the supplied dilution definition, issuing additional shares increases the total share count and reduces an existing holder’s percentage ownership absent offsetting changes; the issuance and purchase entries therefore move the common-share base in opposite directions.
The
A specific credit watch is the New York City rent freeze, effective in
The company also reports
Key Figures
Total assets: $87.7 billion
Loans held for investment: $60.987 billion
Total deposits: $67.521 billion
+5 more
8 metrics
Total assets
$87.7 billion
As of June 30, 2026
Loans held for investment
$60.987 billion
Gross loans and leases held for investment at June 30, 2026
Total deposits
$67.521 billion
Deposits outstanding as of June 30, 2026
Net income Q2 2026
$34 million
Three months ended June 30, 2026
Net income six months 2026
$55 million
Six months ended June 30, 2026 versus $170 million loss in 2025
Net interest margin
2.14%
Six months ended June 30, 2026; 1.77% in prior-year period
Common equity tier 1 ratio
13.16%
Regulatory capital ratio at June 30, 2026
Non-performing assets to total assets
3.20%
Non-performing assets relative to total assets at June 30, 2026
Key Terms
Net interest margin, Allowance for credit losses, High-Quality Liquid Assets, Economic value of equity, +1 more
5 terms
Net interest margin financial
"Net interest margin | 2.14 | % | 1.77 | %"
Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.
Allowance for credit losses financial
"Allowance for credit losses on loans and leases | ( 869 )"
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
High-Quality Liquid Assets financial
"We maintain a liquidity buffer of on-balance sheet cash reserves and HQLAs."
High-quality liquid assets are cash and investments that can be converted into cash quickly with minimal loss of value, such as short-term government bonds or highly rated money market instruments. For investors, they signal a company or bank’s ability to meet sudden cash demands or unexpected losses—think of them as an emergency savings account that reduces the chance of a fire sale of assets and limits the risk that a firm will miss payments or need drastic measures to raise cash.
Economic value of equity financial
"Interest rate sensitivity is monitored using a model that estimates changes in EVE"
Non-performing assets financial
"Total non-performing assets | $ | 2,808 | $ | 2,986"
Loans or other credit exposures that are not producing expected income because borrowers have stopped making scheduled payments for a significant period (commonly around 90 days). Think of it like a business lending money that has gone quiet — the cash flow stops while the lender still carries the debt on its books. High levels of non-performing assets matter to investors because they reduce a lender’s earnings, tie up capital that could be used for growth, and signal higher risk of future losses.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Flagstar Bank (FLG) perform financially in Q2 2026?
Flagstar generated net income of $34 million in Q2 2026, versus a $70 million loss a year earlier. For the first half of 2026, net income was $55 million, and net income attributable to common stockholders was $39 million, or $0.08 per diluted share.
What happened to Flagstar Bank (FLG)’s net interest margin and income?
Net interest margin rose to 2.14% for the six months ended June 30, 2026, from 1.77% a year earlier. Net interest income increased to $883 million from $829 million, driven by lower funding costs and reduced higher‑cost deposits and borrowings, partly offset by lower loan yields.
How strong are Flagstar Bank (FLG)’s capital ratios and liquidity?
As of June 30, 2026, Flagstar’s common equity tier 1 ratio was 13.16% and total risk‑based capital ratio 16.58%, above minimums. Total liquidity was $27.2 billion, including cash and high‑quality liquid assets plus borrowing capacity, exceeding $14.5 billion of uninsured deposits by $12.7 billion.
What is the credit quality of Flagstar Bank (FLG)’s loan portfolio?
Non‑accrual loans were $2.8 billion, or 4.59% of total loans, down from $3.0 billion at year‑end 2025. Non‑performing assets were 3.20% of total assets, and the allowance for credit losses stood at $869 million, or 1.42% of total loans held for investment.
How is Flagstar Bank (FLG) changing its loan mix?
Flagstar is reducing exposure to multi‑family and commercial real estate while expanding commercial and industrial lending. As of June 30, 2026, C&I loans rose 22% to $18.6 billion, while multi‑family and CRE balances fell 7% and 11%, aligning with a diversification strategy.
What exposure does Flagstar Bank (FLG) have to New York rent‑regulated multi‑family properties?
At June 30, 2026, $14.6 billion of multi‑family loans were secured by New York State properties, of which $12.8 billion (about 87%) were subject to rent regulation. Flagstar is curtailing new originations on rent‑regulated properties and focusing growth on broader relationship borrowers.
How significant are uninsured deposits at Flagstar Bank (FLG)?
Uninsured or uncollateralized deposits totaled $14.5 billion, about 21% of total deposits, at June 30, 2026. Flagstar reported total liquidity of $27.2 billion, comprising cash, high‑quality liquid assets, and borrowing capacity, which exceeded uninsured deposits by $12.7 billion.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission file number: 001-31565
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| | ||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code: (516 ) 683-4100
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated Filer | ☐ | Smaller Reporting Company | ||||||||||||||||||||
| Non-Accelerated Filer | ☐ | Emerging growth company | |||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The number of shares of the registrant’s common stock outstanding as of July 31, 2026 was 415,092,836 shares.
FLAGSTAR BANK, NATIONAL ASSOCIATION
FORM 10-Q
PART I. – FINANCIAL INFORMATION | ||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 5 | ||||||
| Item 1. | Condensed Consolidated Financial Statements | |||||||
Condensed Consolidated Statements of Condition (unaudited) | 16 | |||||||
Condensed Consolidated Statements of Income (Loss) (unaudited) | 17 | |||||||
| Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) | 18 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) | 19 | |||||||
Condensed Consolidated Statements of Cash Flows (unaudited) | 20 | |||||||
Notes to the Condensed Consolidated Financial Statements (unaudited) | ||||||||
Note 1 - Organization and Basis of Presentation | 21 | |||||||
Note 2 - Earnings Per Common Share | 21 | |||||||
Note 3 - Accumulated Other Comprehensive Loss | 22 | |||||||
Note 4 - Investment Securities | 23 | |||||||
Note 5 - Loans and Leases | 23 | |||||||
Note 6 - Allowance for Credit Losses on Loans and Leases | 24 | |||||||
Note 7 - Leases, Premises and Equipment | 24 | |||||||
Note 8 - Variable Interest Entities | 24 | |||||||
Note 9 - Borrowed Funds | 25 | |||||||
Note 10 - Pension Benefits | 25 | |||||||
Note 11 - Federal, State, and Local Taxes | 26 | |||||||
Note 12 - Stock-Based Compensation | 26 | |||||||
Note 13 - Derivative and Hedging Activities | 26 | |||||||
Note 14 - Intangible Assets | 26 | |||||||
Note 15 - Fair Value Measurement | 26 | |||||||
Note 16 - Mezzanine and Stockholders' Equity | 27 | |||||||
Note 17 - Commitments and Contingencies | 27 | |||||||
Note 18 - Segment Reporting | 27 | |||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 28 | ||||||
| Item 4. | Controls and Procedures | 28 | ||||||
PART II. – OTHER INFORMATION | ||||||||
| Item 1. | Legal Proceedings | 29 | ||||||
| Item 1A. | Risk Factors | 29 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 29 | ||||||
| Item 3. | Defaults Upon Senior Securities | 29 | ||||||
| Item 4. | Mine Safety Disclosures | 29 | ||||||
| Item 5. | Other Information | 29 | ||||||
| Item 6. | Exhibits | 29 | ||||||
SIGNATURES | 30 | |||||||
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ABBREVIATIONS AND ACRONYMS
The following list of abbreviations and acronyms are provided as a tool for the reader and may be used throughout this Report, including the Condensed Consolidated Financial Statements and Notes:
| Term | Definition | Term | Definition | |||||||||||||||||
| ACL | Allowance for Credit Losses | GSE | Government-sponsored enterprises | |||||||||||||||||
| ADC | Acquisition, development, and construction loan | GSIB | Global Systemically Important Bank | |||||||||||||||||
| ALCO | Asset/Liability Committee | HELOC | Home Equity Line of Credit | |||||||||||||||||
| AOCL | Accumulated Other Comprehensive Loss | HELOAN | Home Equity Loan | |||||||||||||||||
| BOLI | Bank-owned life insurance | HQLAs | High-Quality Liquid Assets | |||||||||||||||||
| C&I | Commercial and industrial loan | HUD | U.S. Department of Housing and Urban Development | |||||||||||||||||
| CDs | Certificates of deposit | HVCRE | High volatility commercial real estate | |||||||||||||||||
| CDIs | Core deposit intangibles | LGG | Loans with government guarantees | |||||||||||||||||
| CFP | Contingent Funding Plan | MBS | Mortgage-backed securities | |||||||||||||||||
| CMOs | Collateralized mortgage obligations | MSR | Mortgage servicing rights | |||||||||||||||||
| CRE | Commercial real estate | NBA | National Bank Act | |||||||||||||||||
| DFA | Dodd-Frank Wall Street Reform and Consumer Protection Act | NII | Net Interest Income | |||||||||||||||||
| DSCR | Debt service coverage ratio | NIM | Net interest margin | |||||||||||||||||
| EGRRCPA | Economic Growth, Regulatory Relief, and Consumer Protection Act | NVCE | Non‑Voting Common Equivalent | |||||||||||||||||
| EPS | Earnings per common share | NYSE | New York Stock Exchange | |||||||||||||||||
| EVE | Economic value of equity | OCC | Office of the Comptroller of the Currency | |||||||||||||||||
| EWI | Early Warning Indicators | OREO | Other real estate owned | |||||||||||||||||
| Fannie Mae | Federal National Mortgage Association | PCD | Purchase credit deteriorated | |||||||||||||||||
FCCR | Fixed-charge coverage ratio | PCG | Private client group | |||||||||||||||||
| FDIC | Federal Deposit Insurance Corporation | PSUs | Performance-Based Restricted Stock Units | |||||||||||||||||
| FHA | Federal Housing Administration | RSAs | Restricted Stock Awards | |||||||||||||||||
| FHLB | Federal Home Loan Bank | RSUs | Restricted Stock Units | |||||||||||||||||
| FOMC | Federal Open Market Committee | SEC | U.S. Securities and Exchange Commission | |||||||||||||||||
| FRB-NY | Federal Reserve Bank of New York | SOFR | Secured Overnight Financing Rate | |||||||||||||||||
| Freddie Mac | Federal Home Loan Mortgage Corporation | TDM | Troubled debt modification | |||||||||||||||||
| GAAP | U.S. generally accepted accounting principles | VIE | Variable Interest Entity | |||||||||||||||||
| GNMA | Government National Mortgage Association | |||||||||||||||||||
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Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Flagstar,” "the Company," “the Bank,” “we,” “us,” and “our” refer to Flagstar Bank, National Association and our consolidated subsidiaries.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING LANGUAGE
This report, like many written and oral communications presented by Flagstar and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of said safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of Flagstar, are generally identified by use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “seek,” “strive,” “try,” or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. Although we believe that our plans, intentions, and expectations as reflected in these forward-looking statements are reasonable, we can give no assurance that they will be achieved or realized.
Our ability to predict results or the actual effects of our plans and strategies is inherently uncertain. Accordingly, actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements contained in this report.
There are a number of factors, many of which are beyond our control, that could cause actual conditions, events, or results to differ significantly from those described in our forward-looking statements. These factors include, but are not limited to:
•general economic conditions, including higher inflation and its impacts, either nationally or in some or all of the areas in which we and our customers conduct our respective businesses;
•conditions in the securities markets and real estate markets or the banking industry;
•changes in real estate values, which could impact the quality of the assets securing the loans in our portfolio;
•changes in interest rates, which may affect our net income, prepayment penalty income, and other future cash flows, or the market value of our assets, including our investment securities;
•changes in the quality or composition of our loan or securities portfolios;
•changes in our capital management policies, including those regarding business combinations, dividends, and share repurchases, among others;
•our ability to execute our capital management strategies, including our ability to complete our current stock repurchase program and to implement future stock repurchase programs;
•heightened regulatory focus on commercial real estate and on CRE loans concentrations;
•changes in competitive pressures among financial institutions or from non-financial institutions;
•changes in deposit flows and wholesale borrowing facilities;
•our ability to maintain sufficient liquidity and funding to fulfill cash obligations and commitments when they become due in the short-term and long-term;
•changes in the demand for deposit, loan, and investment products and other financial services in the markets we serve;
•our timely development of new lines of business and competitive products or services in a changing environment, and the acceptance of such products or services by our customers;
•our ability to obtain timely stockholder and regulatory approvals of any capital raise transactions, corporate restructurings or other significant transactions we may propose;
•certain matters relating to our recently completed holding company reorganization transaction, including the anticipated benefits thereof, including, without limitation, on our future financial and operating results; our ability to achieve anticipated benefits from the consolidation; and legislative, regulatory and economic developments that may diminish or eliminate the anticipated benefits of the consolidation;
•our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may acquire into our operations, and our ability to realize related synergies and cost savings within expected time frames, including those related to our acquisition of Flagstar Bancorp, Inc. ("Flagstar Bancorp") and the purchase and assumption of certain assets and liabilities of Signature Bridge Bank, N.A. ("Signature");
•potential exposure to unknown or contingent liabilities of companies we have acquired, may acquire, or target for acquisition, including our acquisition of Flagstar Bancorp and the purchase and assumption of certain assets and liabilities of Signature;
•the ability to invest effectively in new information technology systems and platforms;
•the heightened regulatory standards with respect to governance and risk management to which we are subject as a national bank with assets of $50 billion or more, and the expenses we will continue to incur to develop and maintain policies, programs and systems that comply with these heightened standards;
•changes in future ACL requirements under relevant accounting and regulatory requirements;
•the ability to pay future dividends, including as a result of the failure to receive any required regulatory approval to pay a dividend, or for any other reasons;
•the ability to hire and retain key personnel and qualified members of our Board of Directors;
•the ability to execute on our strategic plan, including the sufficiency of our internal resources, procedures and systems;
•the ability to achieve our strategic financial and other strategic goals;
•the ability to attract new customers and retain existing ones in the manner anticipated;
•changes in our customer base or in the financial or operating performances of our customers’ businesses;
•the potential for deposit attrition, including for reasons related to the departure of private banking teams whose responsibilities include the acquisition and retention of customer deposits;
•any interruption in customer service due to circumstances beyond our control;
•the outcome of pending or threatened litigation, or of investigations or any other matters before regulatory agencies, whether currently existing or commencing in the future, including with respect to any litigation, investigation or other regulatory actions related to (i) the business practices of acquired companies, including our acquisition of Flagstar Bancorp and subsequent purchase and assumption of certain assets and liabilities of Signature, (ii) the capital raise transaction we completed in March of 2024, (iii) past cyber security breaches, and (iv) various historical events and circumstances involving Flagstar, including our full year 2023 earnings announcement, disclosures regarding credit losses, provisioning and goodwill impairment, and negative news and expectations about the prospects of Flagstar (and associated stock price volatility and changes);
•environmental conditions that exist or may exist on properties owned by, leased by, or mortgaged to Flagstar;
•potential for deferred tax asset valuation allowance relating to Section 382 of the Internal Revenue Code arising from aggregation risk of new shareholder share issuances and warrant exercises related to our March 2024 $1.05 billion capital raise, the Flagstar Bancorp acquisition and additional potential market transactions not in Flagstar’s control;
•cybersecurity incidents, including any interruption or breach of security resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems managed either by us or third parties;
•operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to industry changes in information technology systems, on which we are highly dependent;
•the ability to keep pace with, and implement on a timely basis, technological changes;
•changes in legislation, regulation, policies, guidance, or administrative practices, whether by judicial, governmental, or legislative action, and other changes pertaining to banking, securities, taxation, rent regulation and housing (including the New York Housing Stability and Tenant Protection Act of 2019 and recent legislative action in New York City to freeze rents on certain rent-regulated properties), financial accounting and reporting, environmental protection, insurance, and the ability to comply with such changes in a timely manner;
•changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System;
•the outcome of federal, state and local elections and the resulting economic and other impact on the areas in which we conduct business;
•changes in accounting principles, policies, practices, and guidelines;
•changes in regulatory expectations relating to predictive models we use in connection with stress testing and other forecasting or in the assumptions on which such modeling and forecasting are predicated;
•changes to federal, state, and local income tax laws;
•changes in our credit ratings, or in our ability to access the capital markets;
•increases in our FDIC insurance premium or future assessments;
•the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts;
•the impact of changing political conditions or federal government shutdowns;
•the potential impact to Flagstar from climate change, including higher regulatory compliance, increased expenses, operational changes, and reputational risks;
•the effects of geopolitical instability and unforeseen or catastrophic events including natural disasters, war, conflicts, terrorist activities, civil unrest, pandemics, epidemics, and other health emergencies, and the potential impact, directly or indirectly, on our business;
•other economic, competitive, governmental, regulatory, technological, and geopolitical factors affecting our operations, pricing, and services;
•completing the diversification of Flagstar’s loan portfolio may be more difficult, costly or time consuming than expected;
•the ability to achieve anticipated expense reductions and enhanced efficiencies;
•the ability to successfully integrate branches and operations and to implement appropriate internal controls and regulatory functions relating to such activities;
•the ability to limit the outflow of deposits, and to successfully retain and manage any loans;
•the ability to attract new deposits, and to generate new interest-earning assets, in geographic areas that have not been previously served;
•our ability to effectively manage liquidity, including our success in deploying any liquidity arising from a transaction into assets bearing sufficiently high yields without incurring unacceptable credit or interest rate risk or to utilize available collateral to obtain funding;
•the ability to obtain cost savings and control incremental non-interest expense;
•the ability to generate acceptable levels of NII and non-interest income, including fee income, from acquired operations;
•the diversion of management’s attention from existing operations;
•the ability to address an increase in working capital requirements; and
•limitations on the ability to successfully reposition our post-merger balance sheet when deemed appropriate.
In addition, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control.
See Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2025 for a further discussion of important risk factors that could cause actual results to differ materially from our forward-looking statements.
Readers should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this report. We do not assume any obligation to revise or update these forward-looking statements except as may be required by law.
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PART I. FINANCIAL INFORMATION
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | ||||
GENERAL
Background
Flagstar Bank, National Association, is a national banking association headquartered in Hicksville, New York. At June 30, 2026, we had $87.7 billion of assets, $61.2 billion of loans, $67.5 billion of deposits, and total stockholders’ equity of $8.1 billion.
We operate approximately 340 locations across nine states, with strong footholds in the greater New York/New Jersey metropolitan region and in the upper Midwest, along with a significant presence in fast-growing markets in Florida and the West Coast. In addition, the Bank has approximately 20 private bank branches located primarily in the metropolitan New York City region and on the West Coast, which serve the needs of high-net worth individuals and their businesses.
We operate in a single reportable segment and have identified one reporting unit which is the same as our operating segment. We continue to assess our reportable segments and reporting units, which may result in a change to either or both in future reporting periods. Please refer to Note 18 - Segment Reporting.
Overview
As part of our commitment to delivering long-term shareholder value and sustained value creation, we are executing a strategic transformation plan designed to evolve into a fully diversified bank with a strong balance sheet, a robust capital position, and consistent earnings power.
Our plan is anchored in enterprise strategic priorities that drive our approach to transformation and growth. These priorities focus on transforming Flagstar into a top-tier, relationship-driven regional bank, creating a customer-centric culture that prioritizes valuable relationships, and building an effective risk management mindset that supports safe and sound operations. From these priorities, we have established key strategies that guide execution: driving transformation and financial resilience, growing our core operations, executing a disciplined commercial banking and lending strategy, enhancing operational efficiency, developing talent and leadership, and aligning regulatory and risk management.
Since initiating this plan in 2024, we have made measurable progress, including making key leadership additions, diversifying our balance sheet and revenue streams, reducing non-core assets, improving our funding mix, enhancing our financial resilience, and improving our liquidity. We believe that the continued successful execution of this plan will drive sustainable earnings and position us to deliver long-term value to shareholders.
RESULTS OF OPERATIONS
Net Income (loss)
For the three months ended June 30, 2026, we reported net income of $34 million compared to net income of $21 million for the three months ended March 31, 2026. The net income attributable to common stockholders for the three months ended June 30, 2026 was $26 million, or $0.06 per diluted share compared to net income attributable to common stockholders of $13 million, or $0.03 per diluted share for the three months ended March 31, 2026.
For the six months ended June 30, 2026, we reported net income of $55 million compared to net loss of $170 million for the six months ended June 30, 2025. The net income attributable to common stockholders for the six months ended June 30, 2026 was $39 million, or $0.08 per diluted share compared to net loss attributable to common stockholders of $186 million, or $0.45 per diluted share for the six months ended June 30, 2025.
Net Interest Income
Net interest income is a function of the amount of interest-earning assets we hold, the manner in which we fund these assets, including interest-bearing liabilities, and the spread between the interest rates we earn on assets and the interest rates we pay on liabilities. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by various external factors, including the local economy, competition for loans and deposits, the monetary policy of the FOMC, and market interest rates.
Our interest-bearing liabilities are comprised of customer deposits and funds we borrow. The cost of our deposits and most of our borrowed funds is largely based on short-term rates of interest, the level of which is partially impacted by the actions of the FOMC. The yields on our held for investment loans and investment securities are generally more sensitive to intermediate-term market interest rates. However, a significant portion of our held for investment loans have fixed rates and generally reset to intermediate-term market rates when they reach repricing dates.
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The following table sets forth certain information regarding our NII and average balance sheet for the periods indicated. Average yields are calculated by dividing the interest income produced by the average balance of interest-earning assets. Average costs are calculated by dividing the interest expense produced by the average balance of interest-bearing liabilities. The average balances for the periods are derived from average balances that are calculated daily.
| Three Months Ended, | |||||||||||||||||||||||
| June 30, 2026 | March 31, 2026 | ||||||||||||||||||||||
(in millions) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | |||||||||||||||||
| ASSETS: | |||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||
Total loans and leases (1) | $ | 60,971 | $ | 751 | 4.91 | % | $ | 60,840 | $ | 754 | 4.97 | % | |||||||||||
Securities (2) | 17,037 | 180 | 4.22 | % | 16,840 | 179 | 4.25 | % | |||||||||||||||
| Interest-earning cash and cash equivalents | 5,042 | 45 | 3.63 | % | 5,631 | 51 | 3.64 | % | |||||||||||||||
| Total interest-earning assets | $ | 83,050 | $ | 976 | 4.71 | % | $ | 83,311 | $ | 984 | 4.79 | % | |||||||||||
| Non-interest-earning assets | 3,644 | 3,746 | |||||||||||||||||||||
| Total assets | $ | 86,694 | $ | 87,057 | |||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | |||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||
| Interest-bearing checking and money market accounts | $ | 19,617 | $ | 126 | 2.55 | % | $ | 18,703 | $ | 114 | 2.49 | % | |||||||||||
| Savings accounts | 14,857 | 97 | 2.63 | % | 14,905 | 101 | 2.74 | % | |||||||||||||||
| Certificates of deposit | 20,694 | 201 | 3.90 | % | 20,565 | 203 | 4.00 | % | |||||||||||||||
| Total interest-bearing deposits | $ | 55,168 | $ | 424 | 3.08 | % | $ | 54,173 | $ | 418 | 3.13 | % | |||||||||||
| Total borrowed funds | 10,276 | 112 | 4.37 | % | 11,401 | 123 | 4.38 | % | |||||||||||||||
| Total interest-bearing liabilities | $ | 65,444 | $ | 536 | 3.28 | % | $ | 65,574 | $ | 541 | 3.35 | % | |||||||||||
| Non-interest-bearing deposits | 11,970 | 11,955 | |||||||||||||||||||||
| Other liabilities | 1,106 | 1,330 | |||||||||||||||||||||
| Total liabilities | $ | 78,520 | $ | 78,859 | |||||||||||||||||||
| Stockholders’ and mezzanine equity | 8,174 | 8,198 | |||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 86,694 | $ | 87,057 | |||||||||||||||||||
| Net interest income/interest rate spread | $ | 440 | 1.43 | % | $ | 443 | 1.44 | % | |||||||||||||||
| Net interest margin | 2.13 | % | 2.15 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.27 | x | 1.27 | x | |||||||||||||||||||
(1)Comprised of Loans and leases held for investment, net of deferred loan fees and costs, and Loans held for sale.
(2)Comprised of Debt securities available-for-sale at amortized cost, Equity investments with readily determinable fair values, at fair value and FHLB stock and FRB-NY stock, at cost.
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| Six Months Ended, | |||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||
(in millions) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | |||||||||||||||||
| ASSETS: | |||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||
Total loans and leases (1) | $ | 60,906 | $ | 1,505 | 4.94 | % | $ | 67,011 | $ | 1,700 | 5.12 | % | |||||||||||
Securities (2) | 16,939 | 359 | 4.24 | % | 14,124 | 318 | 4.50 | % | |||||||||||||||
| Interest-earning cash and cash equivalents | 5,335 | 96 | 3.64 | % | 13,193 | 289 | 4.42 | % | |||||||||||||||
| Total interest-earning assets | $ | 83,180 | $ | 1,960 | 4.75 | % | $ | 94,328 | $ | 2,307 | 4.93 | % | |||||||||||
| Non-interest-earning assets | 3,694 | 3,574 | |||||||||||||||||||||
| Total assets | $ | 86,874 | $ | 97,902 | |||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | |||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||
| Interest-bearing checking and money market accounts | $ | 19,162 | $ | 240 | 2.52 | % | $ | 20,758 | $ | 329 | 3.20 | % | |||||||||||
| Savings accounts | 14,881 | 198 | 2.69 | % | 14,351 | 221 | 3.10 | % | |||||||||||||||
| Certificates of deposit | 20,630 | 404 | 3.95 | % | 25,830 | 595 | 4.65 | % | |||||||||||||||
| Total interest-bearing deposits | $ | 54,673 | $ | 842 | 3.10 | % | $ | 60,939 | $ | 1,145 | 3.79 | % | |||||||||||
Total borrowed funds | 10,835 | 235 | 4.32 | % | 14,240 | 333 | 4.71 | % | |||||||||||||||
| Total interest-bearing liabilities | $ | 65,508 | $ | 1,077 | 3.31 | % | $ | 75,179 | $ | 1,478 | 3.96 | % | |||||||||||
| Non-interest-bearing deposits | 11,963 | 12,899 | |||||||||||||||||||||
| Other liabilities | 1,218 | 1,728 | |||||||||||||||||||||
| Total liabilities | $ | 78,689 | $ | 89,806 | |||||||||||||||||||
Stockholders’ and mezzanine equity | 8,185 | 8,096 | |||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 86,874 | $ | 97,902 | |||||||||||||||||||
| Net interest income/interest rate spread | $ | 883 | 1.44 | % | $ | 829 | 0.97 | % | |||||||||||||||
| Net interest margin | 2.14 | % | 1.77 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.27 | x | 1.25 | x | |||||||||||||||||||
(1)Comprised of Loans and leases held for investment, net of deferred loan fees and costs, and Loans held for sale.
(2)Comprised of Debt securities available-for-sale at amortized cost, Equity investments with readily determinable fair values, at fair value and FHLB stock and FRB-NY stock, at cost.
The following table summarizes the change in NII attributable to changes in rate and volume:
| Three Months Ended, | Six Months Ended, | |||||||||||||||||||||||||
June 30, 2026 compared to March 31, 2026 Increase/(Decrease) Due to: | June 30, 2026 compared to June 30, 2025 Increase/(Decrease) Due to: | |||||||||||||||||||||||||
| (in millions) | Volume | Rate | Net | Volume | Rate | Net | ||||||||||||||||||||
| INTEREST-EARNING ASSETS: | ||||||||||||||||||||||||||
Total loans and leases | $ | 2 | $ | (6) | $ | (4) | $ | (151) | $ | (44) | $ | (195) | ||||||||||||||
| Securities | 2 | (1) | 1 | 60 | (19) | 41 | ||||||||||||||||||||
| Interest earning cash & cash equivalent | (5) | — | (5) | (143) | (50) | (193) | ||||||||||||||||||||
| Total interest-earnings assets | $ | (1) | $ | (7) | $ | (8) | $ | (234) | $ | (113) | $ | (347) | ||||||||||||||
| INTEREST-BEARING LIABILITIES: | ||||||||||||||||||||||||||
| Interest-bearing checking and money market accounts | $ | 6 | $ | 5 | $ | 11 | $ | (20) | $ | (69) | $ | (89) | ||||||||||||||
| Savings accounts | — | (3) | (3) | 7 | (30) | (23) | ||||||||||||||||||||
| Certificates of deposit | 1 | (3) | (2) | (103) | (89) | (192) | ||||||||||||||||||||
Total borrowed funds | (12) | 1 | (11) | (73) | (24) | (97) | ||||||||||||||||||||
| Total interest-bearing liabilities | $ | (5) | $ | — | $ | (5) | $ | (189) | $ | (212) | $ | (401) | ||||||||||||||
| Change in net interest income | $ | 4 | $ | (7) | $ | (3) | $ | (45) | $ | 99 | $ | 54 | ||||||||||||||
Comparison to Prior Quarter
During the three months ended June 30, 2026, NIM decreased 2 basis points, and NII decreased $3 million compared to the three months ended March 31, 2026. The decrease in NII was primarily due to higher average balances and rates paid on interest-bearing checking and money market accounts, reflecting deposit pricing adjustments in response to competitive market conditions, as well as lower yields on our loan portfolio as we continued our strategy of diversifying our portfolio. These decreases were partially offset by the continued paydown of borrowed funds.
Comparison to Prior Year to Date
During the six months ended June 30, 2026, NIM increased 37 basis points and NII increased $54 million compared to the six months ended June 30, 2025. The increase was primarily driven by the paydown of higher-cost deposits and borrowings during the year ended December 31, 2025, and the decision to reinvest cash into higher-earning assets. These increases were partially offset by lower yields on our loan portfolio as we continued our strategy of diversifying our loan portfolio.
Provision for Credit Losses
The following table summarizes our Provision for credit losses for the respective periods:
| Three Months Ended, | Six Months Ended, | |||||||||||||||||||||||||||||||||||||
| (in millions) | June 30, 2026 | March 31, 2026 | Change | June 30, 2026 | June 30, 2025 | Change | ||||||||||||||||||||||||||||||||
Provision for credit losses | $ | 18 | $ | — | NM | $ | 18 | $ | 143 | (87) | % | |||||||||||||||||||||||||||
Comparison to Prior Quarter
For the three months ended June 30, 2026, the provision for credit losses increased $18 million compared to the three months ended March 31, 2026. The increase was primarily due to credit adjustments driven by recent regulatory action in New York City to freeze rents on multifamily properties, higher net charge-offs, and growth in our C&I portfolio. These increases were partially offset by lower reserve requirements resulting from strategic reductions in our multi-family and CRE portfolios.
Comparison to Prior Year to Date
For the six months ended June 30, 2026, the provision for credit losses decreased $125 million compared to the six months ended June 30, 2025. The decrease was primarily due to strategic reductions in our multi-family and CRE portfolios and lower net charge-offs.
Non-Interest Income
The following table summarizes our non-interest income for the respective periods:
| Three Months Ended, | Six Months Ended, | |||||||||||||||||||||||||||||||||||||
| (in millions) | June 30, 2026 | March 31, 2026 | Change | June 30, 2026 | June 30, 2025 | Change | ||||||||||||||||||||||||||||||||
| Fee income | $ | 26 | $ | 23 | 13 | % | $ | 49 | $ | 44 | 11 | % | ||||||||||||||||||||||||||
| Bank-owned life insurance | 13 | 10 | 30 | % | 23 | 20 | 15 | % | ||||||||||||||||||||||||||||||
| Net gain (loss) on investment securities | 4 | (9) | NM | (5) | — | NM | ||||||||||||||||||||||||||||||||
| Net gain on loan sales and securitizations | 4 | 5 | (20) | % | 9 | 19 | (53) | % | ||||||||||||||||||||||||||||||
Net loan administration income | 1 | — | NM | 1 | 5 | (80) | % | |||||||||||||||||||||||||||||||
| Other | 28 | 26 | 8 | % | 54 | 69 | (22) | % | ||||||||||||||||||||||||||||||
| Total non-interest income | $ | 76 | $ | 55 | 38 | % | $ | 131 | $ | 157 | (17) | % | ||||||||||||||||||||||||||
Comparison to Prior Quarter
For the three months ended June 30, 2026, non-interest income increased $21 million compared to the three months ended March 31, 2026. The increase was primarily due to a $4 million gain on the sale of our investment in Figure Technology Solutions, Inc. compared to a $9 million loss recognized in the prior quarter, higher income from our bank-owned life insurance driven by death benefit claims, and higher fee income resulting from treasury management and capital markets income.
Comparison to Prior Year to Date
For the six months ended June 30, 2026, non-interest income decreased $26 million compared to the six months ended June 30, 2025. The decrease was primarily due to lower other income driven by lower MSR adjustments, which were elevated in the prior year due to the wind down of the mortgage and servicing operations, a $5 million loss on our investment in Figure Technology Solutions, Inc, and lower gains on loan sales and securitizations resulting from the non-recurrence of prior year gains related to the wind-down of the mortgage and servicing operations. The decrease was partially offset by higher fee income driven by capital market and treasury management income, as well as higher bank-owned life insurance income driven by death benefit claims.
Non-Interest Expense
The following table summarizes our non-interest expense for the respective periods:
| Three Months Ended, | Six Months Ended, | |||||||||||||||||||||||||||||||||||||
| (in millions) | June 30, 2026 | March 31, 2026 | Change | June 30, 2026 | June 30, 2025 | Change | ||||||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||||
| Compensation and benefits | $ | 220 | $ | 228 | (4) | % | $ | 448 | $ | 481 | (7) | % | ||||||||||||||||||||||||||
| Occupancy and equipment | 46 | 50 | (8) | % | 96 | 108 | (11) | % | ||||||||||||||||||||||||||||||
Software expense | 49 | 47 | 4 | % | 96 | 80 | 20 | % | ||||||||||||||||||||||||||||||
| FDIC insurance | 30 | 30 | — | % | 60 | 99 | (39) | % | ||||||||||||||||||||||||||||||
Professional services | 19 | 22 | (14) | % | 41 | 49 | (16) | % | ||||||||||||||||||||||||||||||
| General and administrative | 63 | 64 | (2) | % | 127 | 151 | (16) | % | ||||||||||||||||||||||||||||||
| Total operating expense | $ | 427 | $ | 441 | (3) | % | $ | 868 | $ | 968 | (10) | % | ||||||||||||||||||||||||||
| Intangible asset amortization | 23 | 25 | (8) | % | 48 | 55 | (13) | % | ||||||||||||||||||||||||||||||
Merger-related expense | — | — | NM | — | 22 | (100) | % | |||||||||||||||||||||||||||||||
| Total non-interest expense | $ | 450 | $ | 466 | (3) | % | $ | 916 | $ | 1,045 | (12) | % | ||||||||||||||||||||||||||
Comparison to Prior Quarter
Total non-interest expenses for the three months ended June 30, 2026 decreased $16 million compared to the three months ended March 31, 2026. The decrease was primarily due to lower compensation and benefits stemming from the actions taken to optimize costs as well as lower occupancy and equipment costs as result of lower seasonal maintenance activities.
Comparison to Prior Year to Date
Total non-interest expenses for the six months ended June 30, 2026 decreased $129 million compared to the six months ended June 30, 2025. The decrease was primarily due to lower FDIC insurance expense as a result of improved assessment factors and a reduced asset base, lower compensation and benefits costs stemming from the actions taken to optimize costs, the absence of merger-related expenses, and a decrease in general and administrative expenses reflecting our continued operating expense discipline. These decreases were partially offset by higher software expenses attributable to ongoing infrastructure development and system enhancements.
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Income Tax Expense (Benefit)
The following table summarizes our income tax expense (benefit) and effective tax rate for the respective periods:
| Three Months Ended, | Six Months Ended, | |||||||||||||||||||||||||||||||||||||
| (in millions) | June 30, 2026 | March 31, 2026 | Change | June 30, 2026 | June 30, 2025 | Change | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) | $ | 14 | $ | 11 | 27 | % | $ | 25 | $ | (32) | (178) | % | ||||||||||||||||||||||||||
Effective tax rate | 28.2 | % | 34.9 | % | 30.9 | % | 15.9 | % | ||||||||||||||||||||||||||||||
We compute our tax provision (benefit) for interim periods by applying the estimated annual effective tax rate to our year-to-date income (loss) before income taxes, adjusted for discrete items recognized during the quarter. For the six months ended June 30, 2025, we were unable to make a reliable estimate of our estimated annual effective tax rate as a result of our expected results for 2025; therefore, we used our actual effective tax rate to compute our income tax benefit for those periods. During 2026, we resumed applying the estimated annual effective tax rate methodology.
Comparison to Prior Quarter
The income tax expense for the three months ended June 30, 2026 increased by $3 million compared to the three months ended March 31, 2026 primarily as a result of higher pre-tax income.
Comparison to Prior Year to Date
The income tax expense for the six months ended June 30, 2026 increased by $57 million compared to the six months ended June 30, 2025, primarily as a result of the increase in our pre-tax income and the application of our estimated annual effective tax rate for the current period compared to the use of our actual effective tax rate in the prior year.
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FINANCIAL CONDITION
Loans and Leases
The following table summarizes the composition of our loan portfolio:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
(in millions) | Amount | Percent of Loans Held for Investment | Amount | Percent of Loans Held for Investment | |||||||||||||
| Multi-family | $ | 26,931 | 44.2 | % | $ | 28,983 | 47.7 | % | |||||||||
Commercial real estate | 8,244 | 13.5 | 9,314 | 15.3 | |||||||||||||
| One-to-four family first mortgage | 5,767 | 9.5 | 5,630 | 9.3 | |||||||||||||
Commercial and industrial | 18,563 | 30.4 | 15,217 | 25.1 | |||||||||||||
| Other loans | 1,482 | 2.4 | 1,588 | 2.6 | |||||||||||||
| Total loans and leases held for investment | $ | 60,987 | 100.0 | % | $ | 60,732 | 100.0 | % | |||||||||
| Allowance for credit losses on loans and leases | (869) | (1,030) | |||||||||||||||
| Total loans and leases held for investment, net | $ | 60,118 | $ | 59,702 | |||||||||||||
| Loans held for sale | 208 | 265 | |||||||||||||||
| Total loans and leases, net | $ | 60,326 | $ | 59,967 | |||||||||||||
Total loans and leases held for investment increased $255 million at June 30, 2026 compared to December 31, 2025, primarily as a result of growing originations within our C&I portfolio, partially offset by our continued strategy of diversifying our loan portfolio by reducing our concentration in our multi-family portfolio as well as par payoffs within our CRE portfolio.
Loan Maturity and Repricing
The following table sets forth loans with adjustable rates ("Option Loans") by year of repricing and fixed rate loans ("Non-Option Loans") by year of contractual maturity:
| June 30, 2026 | |||||||||||||||||||||||||||||
| (in millions) | Multi-Family | Commercial Real Estate(2) | |||||||||||||||||||||||||||
| Repricing / Contractual Maturity Year | Option Loans by Repricing Date | Non-Option Loans by Contractual Maturity | Option Loans by Repricing Date | Non-Option Loans by Contractual Maturity | Total(1)(3) | ||||||||||||||||||||||||
| 2026 | $ | 2,035 | $ | 665 | $ | 1,263 | $ | 282 | $ | 4,245 | |||||||||||||||||||
| 2027 | 7,038 | 1,465 | 802 | 751 | 10,056 | ||||||||||||||||||||||||
| 2028 | 3,524 | 1,923 | 354 | 1,351 | 7,152 | ||||||||||||||||||||||||
| 2029 | 2,238 | 1,605 | 235 | 637 | 4,715 | ||||||||||||||||||||||||
| 2030 | 75 | 1,973 | 12 | 353 | 2,413 | ||||||||||||||||||||||||
| 2031+ | 86 | 4,105 | 5 | 1,000 | 5,196 | ||||||||||||||||||||||||
| Total amounts due or repricing, gross | $ | 14,996 | $ | 11,736 | $ | 2,671 | $ | 4,374 | $ | 33,777 | |||||||||||||||||||
(1)Excludes Specialty Finance CRE loans and multi-family loans serviced-by-others totaling $65 million and $95 million respectively. Amounts presented reflect unpaid principal balance; total amortized cost adjustments were $138 million.
(2)Excludes ADC loans.
(3)Excludes $132 million of loans past their contractual maturity date that are in the process of modification or foreclosure.
Option loans offer the borrower the ability to reprice to a fixed rate after the initial fixed rate period. If not elected, the loan defaults to a variable rate. Option loans in the table are shown as being due in the period the interest rate is subject to change. Non-Option loans are beyond the option date and are reflected by maturity. Risks associated with loan repricing are discussed in the Credit Risk section.
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Multi-Family Loans
| (in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | ||||||||||||||||||||||
Multi-family | $ | 26,931 | $ | 28,983 | $ | (2,052) | (7) | % | ||||||||||||||||||
Our multi-family loan portfolio decreased $2.1 billion at June 30, 2026 compared to December 31, 2025, primarily due to $1.7 billion of par payoffs since December 31, 2025, with 42 percent of the payoffs from substandard loans. The reduction in our multi-family loan portfolio is consistent with our strategic decision to continue to diversify our loan portfolio by reducing our exposure to multi-family loans.
The majority of our multi-family loan portfolio consists of non-recourse loans secured by rental apartment buildings. As of June 30, 2026 and December 31, 2025, $14.6 billion or 54 percent and $15.8 billion or 55 percent of our total multi-family loan portfolio was secured by properties in New York State, respectively. Of these amounts, $12.8 billion or 87 percent and $13.9 billion or 88 percent were subject to rent regulation laws to varying degrees at June 30, 2026 and December 31, 2025, respectively. Additionally, $8.9 billion and $9.5 billion of these loans, as of June 30, 2026 and December 31, 2025, respectively, were secured by properties in which at least 50 percent of the units were rent-regulated.
To mitigate our exposure to rent-regulated properties, we are curtailing future originations of loans secured by rent-regulated properties. We are focusing originations and renewal retention on borrowers with whom we will have broader customer relationships beyond lending. Additionally, we are strategically diversifying our loan portfolio to shift from multi-family loans to other loan sectors.
Historically, our multi-family loans may have contained an initial interest-only period; however, they were underwritten on a fully amortizing basis, including calculation of the DSCR. Whether a borrower qualified for an interest-only period was based on the individual credit profile of the borrower, particularly the loan-to-value of the property. Our multi-family loan portfolio had $5.3 billion outstanding with interest-only payments at June 30, 2026. The weighted average interest-only period remaining was 25.4 months as of June 30, 2026, with approximately 31 percent of these loans entering their amortization period by the end of 2026.
We continue to monitor our loans held for investment portfolio and the related ACL, particularly, given the economic pressures facing the commercial real estate and multi-family markets. Although occupancy levels have historically tended to be stable due to below market rents, rent-regulated loans that are repricing are incurring debt service levels that, when combined with inflationary pressure on operating costs and limits on the ability to increase rental rates, approach or exceed some properties’ net operating income and may require the borrower to support the loan from sources unrelated to the collateral until elevated interest rates subside and/or over time as rents are able to be increased.
The following table presents a geographical analysis of the multi-family loans in our held for investment loan portfolio:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
(in millions) | Amount | Percent of Total | Amount | Percent of Total | |||||||||||||
| New York City: | |||||||||||||||||
| Manhattan | $ | 4,513 | 17 | % | $ | 4,901 | 17 | % | |||||||||
| Brooklyn | 4,175 | 16 | 4,559 | 16 | |||||||||||||
| Bronx | 2,604 | 10 | 2,723 | 9 | |||||||||||||
| Queens | 2,028 | 8 | 2,206 | 8 | |||||||||||||
| Staten Island | 68 | — | 69 | — | |||||||||||||
| Total New York City | $ | 13,388 | 51 | % | $ | 14,458 | 50 | % | |||||||||
| New Jersey | 3,314 | 12 | % | 3,715 | 13 | % | |||||||||||
| Long Island | 372 | 1 | 426 | 1 | |||||||||||||
| Total Metro New York | $ | 17,074 | 64 | % | $ | 18,599 | 64 | % | |||||||||
| Other New York State | 872 | 3 | % | 930 | 3 | % | |||||||||||
| Pennsylvania | 2,699 | 10 | 2,831 | 10 | |||||||||||||
| Florida | 1,289 | 5 | 1,483 | 5 | |||||||||||||
| Ohio | 940 | 4 | 968 | 3 | |||||||||||||
| All other states | 4,057 | 14 | 4,172 | 15 | |||||||||||||
| Total | $ | 26,931 | 100 | % | $ | 28,983 | 100 | % | |||||||||
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Commercial Real Estate
| (in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | ||||||||||||||||||||||
Commercial real estate | $ | 8,244 | $ | 9,314 | $ | (1,070) | (11) | % | ||||||||||||||||||
At June 30, 2026, CRE loans decreased $1.1 billion compared to December 31, 2025, primarily due to par payoffs, and paydowns, partially offset by originations since December 31, 2025.
Certain of our CRE loans may contain an interest-only period which typically does not exceed three years; however, these loans are underwritten on a fully amortizing basis, including calculation of the DSCR. Whether a borrower qualifies for an interest-only period is based on the individual credit profile of the borrower, particularly the loan-to-value of the property.
Substantially all CRE loans we originate are non-recourse and are secured by income-producing properties such as office buildings, retail centers, mixed-use buildings, and multi-tenanted light industrial properties.
The following table presents an analysis of the property types that collateralize the CRE loans in our held for investment portfolio:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
| (in millions) | Amount | Percent of Total | Amount | Percent of Total | |||||||||||||
| Office (includes owner and non-owner occupied) | $ | 1,784 | 22 | % | $ | 1,954 | 21 | % | |||||||||
| Retail (includes owner and non-owner occupied) | 1,348 | 16 | 1,560 | 17 | |||||||||||||
| Industrial | 3,273 | 40 | 3,928 | 42 | |||||||||||||
| Other | 1,839 | 22 | 1,872 | 20 | |||||||||||||
| Total | $ | 8,244 | 100 | % | $ | 9,314 | 100 | % | |||||||||
The following table presents a geographical analysis of the CRE loans in our held for investment loan portfolio:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
(in millions) | Amount | Percent of Total | Amount | Percent of Total | |||||||||||||
| New York | $ | 3,463 | 42 | % | $ | 3,626 | 39 | % | |||||||||
| Michigan | 788 | 9 | 929 | 10 | |||||||||||||
| California | 710 | 9 | 703 | 8 | |||||||||||||
| New Jersey | 485 | 6 | 640 | 7 | |||||||||||||
| Florida | 630 | 8 | 626 | 7 | |||||||||||||
| Texas | 238 | 3 | 318 | 3 | |||||||||||||
All other states | 1,930 | 23 | 2,472 | 26 | |||||||||||||
Total | $ | 8,244 | 100 | % | $ | 9,314 | 100 | % | |||||||||
Commercial and Industrial
| (in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | ||||||||||||||||||||||
Commercial and industrial | $ | 18,563 | $ | 15,217 | $ | 3,346 | 22 | % | ||||||||||||||||||
Our C&I loan portfolio increased $3.3 billion at June 30, 2026 compared to December 31, 2025, primarily due to $4.8 billion of new originations driven by $6.8 billion of new and increased loan commitments during the six months ended June 30, 2026, partially offset by paydowns in the existing portfolio. The increase in our C&I loan portfolio was primarily due to continued growth in Specialized Industries and Regional Commercial Banking.
We originate a broad range of C&I loans, both collateralized and unsecured, which are made available to businesses for working capital (including inventory and accounts receivable), business expansion, the purchase of machinery and equipment, and other general corporate needs. In determining the term and structure of C&I loans, many factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. C&I loans are often secured by business assets of the borrower and often include financial covenants to monitor the borrower’s financial stability.
The majority of the C&I loan portfolio is structured as floating rate obligations, through a variety of teams dedicated to various markets, products and sectors, including corporate and regional commercial banking, specialized industries, equipment finance and private banking. We continue to add experienced commercial, corporate and specialized industries banking professionals and credit underwriting and portfolio management personnel to support our growth.
One-to-Four Family Loans
| (in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | ||||||||||||||||||||||
One-to-four family first mortgage | $ | 5,767 | $ | 5,630 | $ | 137 | 2 | % | ||||||||||||||||||
One-to-four family loans increased $137 million at June 30, 2026 compared to December 31, 2025, primarily driven by new originations.
One-to-four family loans include various types of conforming and non-conforming fixed and adjustable-rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties. The loan-to-value requirements on our residential first mortgage loans vary depending on occupancy, property type, loan amount, and FICO scores. Loans with loan-to-value ratios exceeding 80 percent are required to obtain mortgage insurance. As of June 30, 2026, excluding LGG, loans in this portfolio had an average current FICO score of 744 and an average loan-to-value ratio of 50 percent.
Other Loans
| (in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | ||||||||||||||||||||||
Other loans | $ | 1,482 | $ | 1,588 | $ | (106) | (7) | % | ||||||||||||||||||
At June 30, 2026, other loans decreased $106 million compared to December 31, 2025, primarily driven by payoffs at par.
Other loans primarily consist of HELOANs, second mortgage loans, and HELOCs. As of June 30, 2026, loans in this portfolio had an average current FICO score of 759.
Loans Held for Sale
| (in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | ||||||||||||||||||||||
Loans held for sale | $ | 208 | $ | 265 | $ | (57) | (22) | % | ||||||||||||||||||
Loans held for sale at June 30, 2026 decreased $57 million compared to December 31, 2025, primarily due to the completion of loan sales during the six months ended June 30, 2026.
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Allowance for Credit Losses
The following table sets forth the allocation of the ACL on loans and leases as of:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| (in millions) | Allowance for credit losses | Allowance as a percent of loans in each portfolio | Loans in each portfolio as a percent of total loans | Allowance for credit losses | Allowance as a percent of loans in each portfolio | Loans in each portfolio as a percent of total loans | |||||||||||||||||||||||||||||
| Multi-family loans | $ | 439 | 1.63 | % | 44.2 | % | $ | 549 | 1.89 | % | 47.7 | % | |||||||||||||||||||||||
Commercial real estate loans | 153 | 1.86 | 13.5 | 229 | 2.46 | 15.3 | |||||||||||||||||||||||||||||
| One-to-four family first mortgage loans | 35 | 0.61 | 9.5 | 35 | 0.62 | 9.3 | |||||||||||||||||||||||||||||
Commercial and industrial | 177 | 0.95 | 30.4 | 150 | 0.99 | 25.1 | |||||||||||||||||||||||||||||
| Other loans | 65 | 4.39 | 2.4 | 67 | 4.22 | 2.6 | |||||||||||||||||||||||||||||
| Total loans | $ | 869 | 1.42 | % | 100.0 | % | $ | 1,030 | 1.70 | % | 100.0 | % | |||||||||||||||||||||||
The ACL on loans and leases as of June 30, 2026 decreased $161 million from December 31, 2025. The decrease was primarily driven by charged-off loans which had specific reserves and declines in our higher-risk multi-family and CRE portfolios, primarily from payoffs.
Non-accrual Loans
The following table presents our non-accrual loans held for investment by loan type as of:
(in millions) | June 30, 2026 | December 31, 2025 | $ Change | % Change | |||||||||||||||||||
| Multi-family | $ | 2,132 | $ | 2,261 | $ | (129) | (6) | % | |||||||||||||||
| Commercial real estate | 471 | 489 | (18) | (4) | % | ||||||||||||||||||
| One-to-four family first mortgage | 60 | 64 | (4) | (6) | % | ||||||||||||||||||
| Commercial and industrial | 111 | 130 | (19) | (15) | % | ||||||||||||||||||
| Other non-accrual loans | 26 | 31 | (5) | (16) | % | ||||||||||||||||||
Total non-accrual loans(1) | $ | 2,800 | $ | 2,975 | $ | (175) | (6) | % | |||||||||||||||
| Repossessed assets | 8 | 11 | (3) | (27) | % | ||||||||||||||||||
| Total non-performing assets | $ | 2,808 | $ | 2,986 | $ | (178) | (6) | % | |||||||||||||||
Non-accrual loans to total loans held for investment | 4.59 | % | 4.90 | % | |||||||||||||||||||
Non-performing assets to total assets | 3.20 | % | 3.41 | % | |||||||||||||||||||
Allowance for credit losses on loans and leases to non-accrual loans | 31.04 | % | 34.62 | % | |||||||||||||||||||
(1)Excludes $5 million and $30 million of non-accrual held for sale loans at June 30, 2026 and December 31, 2025, respectively.
The following table sets forth the changes in non-accrual loans for the six months ended June 30, 2026:
| (in millions) | |||||
Balance at December 31, 2025 | $ | 2,975 | |||
New non-accrual loans | 780 | ||||
| Charge-offs | (100) | ||||
Transferred to Other assets | (4) | ||||
| Loan payoffs, including dispositions and principal pay-downs | (836) | ||||
| Restored to performing status | (15) | ||||
Balance at June 30, 2026 | $ | 2,800 | |||
During the six months ended June 30, 2026 non-accrual loans decreased $175 million primarily due to the resolution of a single borrower relationship undergoing bankruptcy proceedings. Approximately 40 percent of our non-accrual loans are current on their contractual payment terms.
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Delinquencies
The following table presents our loans held for investment 30 to 89 days past due by loan type and the changes in the respective balances.
(in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | |||||||||||||||||||
| Loans 30 to 89 Days Past Due: | |||||||||||||||||||||||
| Multi-family | $ | 233 | $ | 588 | $ | (355) | (60) | % | |||||||||||||||
Commercial real estate | 30 | 155 | (125) | (81) | % | ||||||||||||||||||
| One-to-four family first mortgage | 9 | 78 | (69) | (88) | % | ||||||||||||||||||
| Commercial and industrial | 82 | 126 | (44) | (35) | % | ||||||||||||||||||
| Other loans | 14 | 39 | (25) | (64) | % | ||||||||||||||||||
| Total loans 30-89 days past due | $ | 368 | $ | 986 | $ | (618) | (63) | % | |||||||||||||||
As of June 30, 2026, we had $51 million of loans 90 days or more past due that were still accruing interest compared to no loans 90 days or more past due and still accruing interest as of December 31, 2025.
Charge-offs
The following table summarizes net charge-offs as a percentage of average loans:
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| (in millions) | Net Charge-offs (Recoveries) | Average Balance | %(1) | Net Charge-offs (Recoveries) | Average Balance | %(1) | |||||||||||||||||||||||||||||
| Multi-family | $ | 80 | $ | 27,331 | 1.17 | % | $ | 96 | $ | 32,847 | 1.17 | % | |||||||||||||||||||||||
Commercial real estate | 1 | 8,723 | 0.05 | 13 | 11,061 | 0.47 | |||||||||||||||||||||||||||||
One-to-four family first mortgage | 1 | 5,353 | 0.07 | 1 | 4,995 | 0.08 | |||||||||||||||||||||||||||||
| Commercial and industrial | 13 | 17,446 | 0.30 | 3 | 14,486 | 0.08 | |||||||||||||||||||||||||||||
| Other | 5 | 1,514 | 1.32 | 4 | 1,711 | 0.94 | |||||||||||||||||||||||||||||
| Total | $ | 100 | $ | 60,367 | 0.66 | % | $ | 117 | $ | 65,100 | 0.72 | % | |||||||||||||||||||||||
(1)Three months ended presented on an annualized basis.
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| (in millions) | Net Charge-offs (Recoveries) | Average Balance | %(1) | Net Charge-offs (Recoveries) | Average Balance | %(1) | |||||||||||||||||||||||||||||
| Multi-family | $ | 152 | $ | 27,939 | 1.09 | % | $ | 176 | $ | 33,378 | 1.05 | % | |||||||||||||||||||||||
Commercial real estate | 9 | 8,962 | 0.20 | 15 | 11,251 | 0.27 | |||||||||||||||||||||||||||||
One-to-four family first mortgage | 2 | 5,319 | 0.08 | 2 | 4,989 | 0.08 | |||||||||||||||||||||||||||||
| Commercial and industrial | 5 | 16,541 | 0.06 | 31 | 14,706 | 0.42 | |||||||||||||||||||||||||||||
| Other | 10 | 1,536 | 1.30 | 8 | 1,728 | 0.93 | |||||||||||||||||||||||||||||
| Total | $ | 178 | $ | 60,297 | 0.59 | % | $ | 232 | $ | 66,052 | 0.70 | % | |||||||||||||||||||||||
(1)Six months ended presented on an annualized basis.
Securities
Debt Securities Available-for-Sale
(in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | |||||||||||||||||||
Debt Securities Available-for-Sale | $ | 16,553 | $ | 15,701 | $ | 852 | 5 | % | |||||||||||||||
At June 30, 2026, debt securities available-for-sale increased $852 million compared to December 31, 2025. The increase was primarily due to our decision to reinvest cash into higher earning assets. At June 30, 2026, 21 percent of our portfolio is comprised of floating rate securities.
At June 30, 2026, debt securities available-for-sale had an estimated weighted average life of 4 years compared to 5 years at December 31, 2025. Mortgage-related securities included in debt securities available-for-sale were $13.9 billion and $13.0 billion at June 30, 2026 and December 31, 2025, respectively.
The following table summarizes the weighted average yields of debt securities available-for-sale for the maturities at June 30, 2026:
| Mortgage- Related Securities | U.S. Government and GSE Obligations | Corporate and Other Bonds | Asset-Backed Securities | ||||||||||||||||||||
Debt Securities Available-for-Sale: (1) | |||||||||||||||||||||||
| Due within one year | — | % | — | % | — | % | — | % | |||||||||||||||
| Due from one to five years | 2.61 | 3.55 | 4.69 | — | |||||||||||||||||||
| Due from five to ten years | 2.41 | 1.61 | 5.37 | — | |||||||||||||||||||
| Due after ten years | 4.34 | — | 5.77 | 5.28 | |||||||||||||||||||
Total debt securities available-for-sale | 4.30 | 2.62 | 5.00 | 5.28 | |||||||||||||||||||
(1)The weighted average yields are calculated by multiplying each carrying value by its yield and dividing the sum of these results by the total carrying values and are not presented on a tax-equivalent basis.
Deposits
We compete for deposits and customers through multiple channels, including our retail branch network, our private banking business and mobile and internet banking applications. Our ability to retain and attract deposits depends on numerous factors, including customer satisfaction, the rates of interest we pay, the types of products we offer, and the attractiveness of their terms.
The following table summarizes the change in our deposits:
(in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | |||||||||||||||||||
Interest-bearing checking and money market accounts | $ | 20,477 | $ | 18,233 | $ | 2,244 | 12 | % | |||||||||||||||
Savings accounts | 14,836 | 14,864 | (28) | — | % | ||||||||||||||||||
Certificates of deposit | 20,477 | 20,843 | (366) | (2) | % | ||||||||||||||||||
Non-interest-bearing accounts | 11,731 | 12,060 | (329) | (3) | % | ||||||||||||||||||
Total deposits (1) | $ | 67,521 | $ | 66,000 | $ | 1,521 | 2 | % | |||||||||||||||
(1) Includes $2.6 billion and $2.1 billion of non-servicing custodial deposits as of June 30, 2026 and December 31, 2025, respectively.
Total deposits at June 30, 2026 increased $1.5 billion compared to December 31, 2025, primarily driven by growth in commercial and private bank deposits, partially offset by lower brokered deposits.
The following table presents the composition of our brokered deposits for the periods presented:
| (in millions) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Brokered interest-bearing checking and money market accounts | $ | — | $ | 76 | ||||||||||
Brokered certificates of deposit | 2,148 | 2,326 | ||||||||||||
Total Brokered Deposits(1) | $ | 2,148 | $ | 2,402 | ||||||||||
(1) Excludes reciprocal deposits.
The following table indicates the amount of time deposits, by account, that are in excess of $250,000 per depositor by time remaining until maturity:
| (in millions) | June 30, 2026 | December 31, 2025 | |||||||||
| 3 months or less | $ | 1,825 | $ | 2,758 | |||||||
| Over 3 months through 6 months | 1,166 | 1,933 | |||||||||
| Over 6 months through 12 months | 2,072 | 1,175 | |||||||||
| Over 12 months | 1,003 | 466 | |||||||||
Total time deposits in excess of $250,000 per depositor(1) | $ | 6,066 | $ | 6,332 | |||||||
(1) Includes brokered certificates of deposit of $2.2 billion and $2.3 billion at June 30, 2026 and December 31, 2025, respectively. Brokered certificates of deposit with balances in excess of $250,000 are fully insured by the FDIC as each of the ultimate owners of the funds maintain balances below FDIC insurance limits.
Uninsured Deposits
At June 30, 2026, our deposit base included $14.5 billion of deposits that are uninsured or not collateralized by securities or letters of credit. Our uninsured deposits are the portion of deposit accounts that exceed the FDIC insurance limit.
As of June 30, 2026, total bank liquidity exceeds the balance of our uninsured deposits by $12.7 billion.
Borrowed Funds
The following table summarizes our borrowed funds:
| (in millions) | June 30, 2026 | December 31, 2025 | ($) Change | (%) Change | |||||||||||||||||||
Short-term borrowings(1) | |||||||||||||||||||||||
| FHLB advances | $ | 4,251 | $ | 4,000 | $ | 251 | 6 | % | |||||||||||||||
Total short-term borrowings | $ | 4,251 | $ | 4,000 | $ | 251 | 6 | % | |||||||||||||||
Long-term debt | |||||||||||||||||||||||
| FHLB advances | $ | 5,650 | $ | 7,151 | $ | (1,501) | (21) | % | |||||||||||||||
| Junior subordinated debentures | 587 | 585 | 2 | — | % | ||||||||||||||||||
| Subordinated notes | 449 | 448 | 1 | — | % | ||||||||||||||||||
Total long-term debt | $ | 6,686 | $ | 8,184 | $ | (1,498) | (18) | % | |||||||||||||||
| Total borrowed funds | $ | 10,937 | $ | 12,184 | $ | (1,247) | (10) | % | |||||||||||||||
(1)Borrowings with original maturities of one year or less are classified as short-term borrowings.
At June 30, 2026 total borrowed funds decreased $1.2 billion compared to December 31, 2025 primarily due to our continued strategy of reducing higher-cost wholesale borrowings.
FHLB advances are secured by eligible collateral in the form of loans and securities, under blanket collateral agreements with the FHLB. As of June 30, 2026 and December 31, 2025, our wholesale borrowings had $250 million of callable features, respectively.
Risk Governance Framework
The Risk Management Division is responsible for formalizing our Risk Appetite Statement, which reflects the Board's and Management’s tolerance for risks and is set in alignment with the Bank's budget, strategic and capital plans. Internal controls and ongoing monitoring processes capture and address heightened risks that threaten our ability to achieve our goals and objectives, including the recognition of safety and soundness concerns and consumer protection. Additionally, key risk indicators are monitored against established risk warning levels and limits, as well as elevated risks escalated to the Chief Risk Officer.
To comprehensively manage our risk exposure, we focus on several critical areas outlined below, Credit Risk, Liquidity Risk, Interest Rate Risk and Regulatory Capital.
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Credit Risk
It is our practice to continually review the risk in our loan portfolio. For our multi-family and CRE loan portfolios, we receive financial information from borrowers annually and in some cases more frequently. Generally, updated annual borrower financial information is received during the second calendar quarter. Upon receipt of the borrower financial information, we perform an analysis to determine whether the cash flow from the underlying collateral is sufficient to meet the contractual loan payments, commonly referred to as the DSCR. We consider the ability to cover debt service based upon the current contractual rate or, when a borrower’s initial fixed rate period expires in the near future, the lowest contractual rate reset option available under the loan terms using the current level for referenced indices. Loans that do not have a DSCR of 1.0 or greater are evaluated for a potential downgrade to substandard or non-accrual risk rating. All substandard loans, including non-accrual loans, are appraised at the time of downgrade and are re-appraised annually. Based upon this appraisal the loan is evaluated to determine if an adjustment to the carrying amount is required. The rent freeze applicable to rent-regulated multi-family apartment buildings in New York City, as approved by its Rent Guidelines Board in June 2026 and effective in October 2026, could increase credit risk for loans secured by multi-family properties in New York City by limiting rental revenue growth against rising operating costs.
For our C&I loan portfolio, we receive financial information from borrowers quarterly and in some cases less frequently. Quarterly borrower financial information is typically received within 45 to 60 days of quarter end. Upon receipt of the borrower financial information, we perform analyses to (i) determine whether borrower cash flow is sufficient to meet the contractual loan payments, commonly using a FCCR which is often a financial covenant of our borrowers (ii) test all borrower financial covenants, (iii) review and update collateral values, and (iv) update our internal borrower risk ratings. Loans that do not have a FCCR of 1.0 or greater are evaluated for a potential downgrade to substandard or non-accrual risk rating.
The largest substandard and non-accrual loans within our portfolio are reported and reviewed with the RAC at least quarterly.
As of June 30, 2026, $1.6 billion of multifamily loans have reached their repricing date. Approximately, 93 percent of the loans that repriced during 2026 are current on their contractual payments or paid off during the year.
Substandard and Non-Accrual loans ("Classified Loans") reflect the potential that a loss may occur if deficiencies in the primary source of repayment are unable to be corrected and borrowers are unwilling or unable to otherwise support the loans. Classified Loans at June 30, 2026 and December 31, 2025 were $8.5 billion and $9.7 billion, respectively. The decrease in Classified Loans is primarily attributable to the par payoffs of multi-family and CRE substandard loans and the resolution of a single borrower relationship undergoing bankruptcy proceedings.
The procedures we follow with respect to delinquent loans are generally consistent across all categories, with late charges assessed, and notices mailed to the borrower, at specified dates. We attempt to reach the borrower by telephone to ascertain the reasons for delinquency and the prospects for repayment. When contact is made with a borrower at any time prior to foreclosure or recovery against collateral property, we attempt to obtain full payment and will consider a repayment schedule to avoid taking such action. Generally, we make every effort to collect rather than initiate foreclosure or other recovery proceedings.
We actively pursue borrowers who are delinquent in repaying their loans in an effort to collect payment. In addition, outside counsel with experience in foreclosure proceedings are retained to support these efforts. Gross charge-offs of $193 million were recorded on multi-family and CRE loans during the six months ended June 30, 2026, primarily driven by appraisals received on those loans and the resolution of a single borrower relationship undergoing bankruptcy proceedings during the three months ended March 31, 2026.
It is our policy to order updated appraisals for all substandard and non-accrual loans that are collateralized by multi-family buildings, commercial real estate properties, or land, if the most recent appraisal on file for the property is more than one year old. Appraisals are ordered at least annually until such time as the loan becomes pass rated. It is not our policy to obtain updated appraisals for performing loans that are not showing signs of credit weakness. However, appraisals may be ordered for performing loans when a borrower requests an increase in the loan amount, a modification in loan terms, or an extension of a maturing loan, or when we determine an updated appraisal is needed as a result of our ongoing credit analysis. We evaluate loans that were previously placed on non-accrual at least quarterly to determine if additional charge-offs may be needed.
Properties and other assets that are acquired through foreclosure are classified as repossessed assets and are recorded at fair value at the date of acquisition, less the estimated cost of selling the property. Subsequent declines in the fair value of the assets are charged to earnings and are included in non-interest expense. It is our policy to require an appraisal, and an
environmental assessment of properties classified as other real estate owned before foreclosure and to re-appraise the properties at least annually until they are sold. We dispose of such properties as quickly and prudently as possible, given current market conditions and the property’s condition.
Liquidity Risk
We have established a liquidity risk management framework designed to ensure that we can meet our funding obligations in daily, business-as-usual and liquidity stress periods. We maintain a Liquidity Risk Policy that has been approved by the Board and is subject to review at least annually or if there are significant changes to our business activity. The Liquidity Risk Policy outlines our Risk Appetite and provides guidance for the roles and responsibilities of management and various oversight committees to oversee the liquidity risk management framework. We also maintain a CFP which has been approved by the Board. The CFP provides guidance to plan for potential periods of stress and to navigate actual periods of stress. The CFP specifies a series of EWI which we use to monitor funding or market conditions that may indicate a trend toward a period of stress and to provide guiding principles for us during a period of stress including identifying the operational steps needed to access available and contingent sources of liquidity.
Our funding primarily stems from a diverse combination of business activities. The primary source of funding is our retail and institutional deposit base. Customer deposits provide us with a relatively stable, low-cost source of funding. The majority of our customer deposits are covered by FDIC deposit insurance with $14.5 billion of deposits that are uninsured or not collateralized by securities or letters of credit as of June 30, 2026, representing 21 percent of our overall deposit base as of that date. We also obtain funding through various wholesale funding channels, including $9.9 billion of secured borrowings from the FHLB and an active brokered CDs issuance program with $2.1 billion outstanding as of June 30, 2026.
Our Liquidity Policy defines a limit framework which ensures we maintain liquidity and funding within our risk appetite. The limits require, among other elements, that we maintain a diverse funding profile while limiting concentration of funding by source, counterparty and maturity tenor. The policy also requires us to maintain sufficient on-balance sheet liquidity to support funding obligations under a severe, but plausible 30-day liquidity stress scenario. We monitor and report our overall funding and liquidity risk appetite metrics on a daily basis and our cash position on an intraday basis.
We maintain a liquidity buffer of on-balance sheet cash reserves and HQLAs. We also maintain access to secured borrowings from the FHLB and FRB-NY Discount Window. The investment securities we consider HQLAs are all unencumbered, held as available-for-sale, and are either issued by government sponsored entities or are explicitly guaranteed by the U.S. government. We pledge eligible loan and securities collateral with the FRB-NY Discount Window and FHLB New York to support borrowing capacity. The available borrowing capacity with the FRB-NY Discount Window and the FHLB, net of credit utilization primarily in the form of advances and letters of credit, is included in our Total Liquidity.
| (in billions) | June 30, 2026 | December 31, 2025 | |||||||||
| Cash at Federal Reserve | $ | 4.6 | $ | 5.3 | |||||||
High-Quality Liquid Assets | 14.3 | 13.5 | |||||||||
| Total On-Balance Sheet Liquidity | $ | 18.9 | $ | 18.8 | |||||||
| FHLB Available Capacity | 5.6 | 6.5 | |||||||||
| Discount Window Available Capacity | 2.7 | 1.8 | |||||||||
| Total Liquidity | $ | 27.2 | $ | 27.1 | |||||||
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Credit Ratings
We maintain credit ratings from three rating agencies: Moody’s, Fitch and DBRS. As of July 31, 2026, our credit ratings were as follows:
| Moody's | Fitch | DBRS | |||||||||||||||
Long-Term Issuer Rating | Ba3 | BB+ | BBB | ||||||||||||||
Long-Term Deposits | Baa3 | BBB | BBB | ||||||||||||||
Short-Term Deposits | Prime-3 | F3 | |||||||||||||||
In April 2026, Moody’s upgraded our credit ratings. This upgrade reflects the continued improvement in our credit profile.
The primary mortgage loan agencies maintain standards for institutions serving as eligible custodial depositories, including the requirement to maintain an investment grade short‑term issuer/deposit rating from Moody’s or S&P. Following the Moody's upgrade in April 2026, we are now in compliance with this criteria. We have no other direct contractual relationships tied to further downgrades in our credit ratings; however, any such downgrades could result in reputational risk that may adversely affect our business.
Contractual Obligations and Commitments
In the normal course of business, we enter into a variety of contractual obligations in order to manage our assets and liabilities, fund loan growth, operate our branch network, and address our capital needs.
For example, we offer CDs with contractual terms to our customers and also borrow funds under contract from the FHLB. These contractual obligations are reflected in the Condensed Consolidated Statements of Condition under “Deposits” and “Borrowed funds,” respectively. At June 30, 2026, we had CDs of $20.5 billion and long-term debt (defined as borrowed funds with an original maturity one year or more) of $6.7 billion.
We also are obligated under certain non-cancelable operating leases on the buildings and land we use in operating our branch network and in performing our back-office responsibilities. These obligations are included within Other liabilities within the Condensed Consolidated Statements of Condition and totaled $418 million at June 30, 2026, a decrease of $9 million compared to $427 million at December 31, 2025.
At June 30, 2026, we also had commitments to extend credit in the form of mortgage and other loan originations, as well as commercial, performance stand-by and financial stand-by letters of credit. These commitments consist of agreements to extend credit as long as there is no violation of any condition established in the contract under which the loan is made. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. The fees we collect in connection with the issuance of letters of credit are included in “Fee income” in the Condensed Consolidated Statements of Income (Loss).
At June 30, 2026, our total liquidity position was $27.2 billion and we expect that our funding will be sufficient to fulfill our cash obligations and commitments when they are due both in the short term and long term.
For June 30, 2026, we did not engage in any off-balance sheet transactions that we expect to have a material effect on our financial condition, results of operations or cash flows.
Interest Rate Risk
We manage our assets and liabilities to reduce our exposure to changes in market interest rates. The asset and liability management process has three primary objectives: (i) to evaluate the interest rate risk inherent in our balance sheet; (ii) to determine the appropriate level of risk given our business strategy, operating environment, capital and liquidity requirements, and performance objectives; and (iii) to manage that risk in a manner consistent with guidelines approved by our Board of Directors.
As a financial institution, interest rate risk represents our primary market risk. Changes in market interest rates can significantly affect the income and expense generated by our interest-earning assets and interest-bearing liabilities, as well as
the market value of our interest-earning assets. Accordingly, the Board and management monitor interest rate risk on a regular basis so that changes to the balance sheet may be made when deemed appropriate.
The actual duration of held for investment mortgage loans and mortgage-related securities can be significantly affected by changes in prepayment behavior and market interest rates. Prepayment levels may also be influenced by economic conditions in the geographies where the underlying mortgages were originated, seasonal factors, demographic trends, and the assumability of the underlying mortgages. However, market interest rates and the availability of refinancing opportunities generally have the most significant influence on prepayment activity.
Interest Rate Sensitivity Analysis
Interest rate sensitivity is monitored using a model that estimates changes in EVE under a range of interest rate scenarios. EVE represents the net present value of the expected cash flows from assets, liabilities, and off-balance sheet contracts. Under each interest rate scenario, the estimated percentage change in EVE is measured relative to the base case. The model incorporates assumptions regarding loan and MBS prepayments, market value spreads, deposit decay rates and betas, and other assumptions regarding the expected behavior of assets and liabilities.
Based on the information and assumptions in effect at June 30, 2026, the following table sets forth our EVE, assuming the changes in interest rates noted:
| Change in Interest Rates (in basis points) | Estimated Percentage Change in Economic Value of Equity | |||||||
| -200 shock | 4.3% | |||||||
| -100 shock | 2.6% | |||||||
| +100 shock | (3.6)% | |||||||
| +200 shock | (7.7)% | |||||||
The net changes in EVE presented in the preceding table are within the limits approved by the Board.
Accordingly, while the EVE analysis provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on the EVE, and actual results may differ materially from those presented.
Interest rate risk is also monitored using a model that generates NII simulations under a range of interest rate scenarios. Estimating changes in NII requires a number of assumptions that may not fully reflect how actual yields and funding costs respond to changes in market interest rates. The NII analysis assumes that the composition of interest earning assets and interest-bearing liabilities existing at the beginning of the measurement period remains constant throughout the period. It also assumes that changes in interest rates are reflected uniformly across the yield curve, regardless of the maturity or repricing characteristics of individual assets and liabilities. In addition, the model does not incorporate the potential benefit of management actions that may be taken in response to changes in interest rates to mitigate interest rate risk.
Because these assumptions are inherently uncertain, actual results may differ materially from those presented, due to the timing, magnitude, and frequency of changes in market interest rates, changes in yield curve relationships and spreads, customer behavior, including prepayments and deposit repricing categories, and management actions taken in response to changing market conditions.
At June 30, 2026, the estimated change in NII over the next twelve months for a 100 basis point reduction in short term interest rates with no change in long term interest rates is an increase of 0.72 percent and the estimated change for a 100 basis point increase in short term rates is a decrease of 0.24 percent.
The following table presents the estimated percentage change in future NII over the next twelve months under various instantaneous parallel interest rate shock scenarios. Based on the information and assumptions in effect at June 30, 2026, the estimated changes are presented below:
Change in Interest Rates (in basis points) | Estimated Percentage Change in Future Net Interest Income | |||||||
| -200 shock | (3.9)% | |||||||
| -100 shock | (1.7)% | |||||||
| +100 shock | 0.8% | |||||||
| +200 shock | 1.4% | |||||||
The net changes in NII presented in the preceding table are within the parameters approved by our Board.
Future changes in the composition of our assets and liabilities, customer behavior, or market conditions may result in changes to our EVE and NII sensitivity profiles.
In the event that our EVE and NII sensitivities were to breach our internal policy limits, we would undertake appropriate remedial measures:
•ALCO would evaluate the primary causes of the policy limit breach, the expected duration of the condition, and the projected impact on earnings and capital.
•ALCO would inform the Board of Directors of the variance and present recommendations regarding proposed courses of action to restore conditions within policy limits.
These potential strategies may include asset restructuring, liability restructuring, expansion or contraction of the balance sheet, and the use or modification of off-balance sheet positions, including interest rate swaps, caps, floors, options, and forward purchase or sale commitments.
Regulatory Capital
The Bank is subject to prudential standards applicable to national banks:
•The OCC’s capital adequacy standards establish minimum capital requirements and overall capital adequacy standards.
•The Prompt Corrective Action regulatory capital framework establishes five categories of capital adequacy ranging from “well capitalized” to “critically undercapitalized.” An institution’s capital category affects various matters, including legal requirements for regulators to take prompt corrective action and the level of a bank’s FDIC deposit insurance premium assessments. Capital amounts and classifications are subject to the regulators’ qualitative judgments about the components of capital and risk weighted assets, among other factors. Regulators have the discretion to require capital to be maintained in excess of minimum levels.
•Under regulatory heightened standards, a risk governance framework is required to be developed and maintained to manage and control the risk-taking activities of the Bank. Management has developed a written framework and is implementing the various components in an integrated fashion as underlying business processes mature. Heightened standards also require risk limits, metrics, and analytics which monitor the size and direction of key risks in the organization. We have established risk limits which are monitored by the Board and are continuing to enhance related metrics and analytics.
As of June 30, 2026, our capital measures continued to exceed the minimum federal requirements. The following tables set forth the Bank's common equity tier 1, tier 1 risk-based, total risk-based, and leverage capital amounts and ratios as well as the respective minimum regulatory capital requirements, as of the dates shown:
| Risk-Based Capital | |||||||||||||||||||||||||||||||||||
| (in millions) | Common Equity Tier 1 | Tier 1 | Total | Leverage Capital | |||||||||||||||||||||||||||||||
| June 30, 2026 | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||
Actual capital | $ | 7,937 | 13.16 | % | $ | 8,441 | 13.99 | % | $ | 10,003 | 16.58 | % | $ | 8,441 | 9.70 | % | |||||||||||||||||||
| Minimum for capital adequacy purposes | 2,715 | 4.50 | 3,619 | 6.00 | 4,826 | 8.00 | 3,479 | 4.00 | |||||||||||||||||||||||||||
| Excess | $ | 5,222 | 8.66 | % | $ | 4,822 | 7.99 | % | $ | 5,177 | 8.58 | % | $ | 4,962 | 5.70 | % | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
Actual capital | $ | 7,845 | 12.83 | % | $ | 8,348 | 13.66 | % | $ | 9,921 | 16.23 | % | $ | 8,348 | 9.22 | % | |||||||||||||||||||
| Minimum for capital adequacy purposes | 2,751 | 4.50 | 3,668 | 6.00 | 4,890 | 8.00 | 3,623 | 4.00 | |||||||||||||||||||||||||||
| Excess | $ | 5,094 | 8.33 | % | $ | 4,680 | 7.66 | % | $ | 5,031 | 8.23 | % | $ | 4,725 | 5.22 | % | |||||||||||||||||||
The increase in our capital ratios from December 31, 2025 was primarily driven by a reduction in risk-weighted assets associated with the loans held for investment portfolio.
With capital levels above our target operating range, we expect to deploy excess capital through the following prioritized approach (1) Organic Growth —Profitable loan growth and other business growth opportunities across the Bank. We view disciplined organic growth as our highest-return use of capital, (2) Shareholder Returns — Capital beyond what is needed to fund our near-term growth plans may be returned to shareholders through stock repurchases and dividends, and (3) Strategic Flexibility — We retain capital capacity to fund future acquisitions and other strategic opportunities as they arise. This framework guides our capital allocation decisions and is evaluated on an ongoing basis by management and the Board.
At June 30, 2026, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by 858 basis points and the fully phased-in capital conservation buffer by 608 basis points.
At June 30, 2026, the Bank also exceeded the minimum capital requirements to be categorized as “Well Capitalized.” To be categorized as well capitalized, a bank must maintain a minimum common equity tier 1 ratio of 6.50 percent; a minimum tier 1 risk-based capital ratio of 8 percent; a minimum total risk-based capital ratio of 10 percent; and a minimum leverage capital ratio of 5 percent.
Other Recent Developments
On March 19, 2026, the OCC, FRB, and FDIC issued notices of proposed rulemaking that would substantially revise the U.S. regulatory capital framework. The agencies’ proposals would rescind the July 2023 proposed rules to implement the final components of the Basel III framework and replace them with a recalibrated package that is expected to reduce aggregate common equity tier 1 capital requirements across the banking industry.
The proposals would replace the existing “advanced approaches” capital rules with a new “expanded risk-based approach.” The expanded risk-based approach could be elected by any banking organization. This would introduce an explicit operational risk requirement calculated based on a firm’s income and expenses, standardized risk-weighting methodologies for credit, equity, and operational risks, and would require firms to reflect most elements of accumulated other comprehensive income in regulatory capital.
Additionally, the proposals would revise the risk-based capital treatment of certain exposure categories under the standardized approach, aiming to improve the calibration and risk sensitivity of certain risk weights that are particularly significant to our lending activities. The proposals would require Category III and IV banking organizations to recognize most elements of accumulated other comprehensive income in their regulatory capital with a five-year phase-in period.
Finally, the proposals would modify aspects of the GSIB surcharge, which is not applicable to us.
We are reviewing the proposals and their potential impact on us.
On May 15, 2026, the OCC issued two final rules on preemption of state interest-on-escrow laws. First, the OCC codified the longstanding authority of a national bank like Flagstar to establish or maintain real estate lending escrow accounts and to
exercise judgment as to the terms and conditions of the accounts, including as to interest rates. Second, the OCC issued a preemption determination pursuant to the Dodd-Frank Act procedures concluding that federal law preempts state laws that restrict a national bank's flexibility to decide whether and to what extent to pay interest on escrow accounts and assess fees in connections with such accounts.
On June 25, 2026, the FDIC proposed to amend the rule requiring resolution plan submissions by certain insured depository institutions with $50 billion or more in total assets. The current rule requires most covered banks to file a full resolution plan every three years, with interim supplements in off-cycle years. Flagstar filed its full resolution plan in July 2025. The FDIC's proposal, among other things, would raise the threshold for determining whether a bank is subject to the rule from $50 billion to $100 billion. If finalized as proposed, Flagstar would not be subject to the rule at its current asset size.
Critical Accounting Estimates
Various elements of our accounting policies, by their nature, are subject to estimation techniques, valuation assumptions and other subjective assessments. Certain accounting policies that, due to the judgment, estimates and assumptions used, are critical to an understanding of our Condensed Consolidated Financial Statements and the Notes, are described in detail in Note 2 of our Form 10-K for the year ended December 31, 2025. These policies relate to the determination of our ACL. We believe the judgment, estimates and assumptions used in the preparation of our Condensed Consolidated Financial Statements and the Notes are reasonable; however, due to the inherent uncertainties in developing estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.
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Table of Contents | Flagstar Bank, National Association | |||||||
| Condensed Consolidated Statements of Condition (unaudited) | ||||||||
| ITEM 1. | FINANCIAL STATEMENTS | ||||
| June 30, 2026 | December 31, 2025 | ||||||||||
| (in millions, except per share data) | (unaudited) | ||||||||||
| ASSETS: | |||||||||||
Cash and due from banks | $ | $ | |||||||||
| Interest-earning deposits and other securities with financial institutions | |||||||||||
| Debt securities available-for-sale | |||||||||||
| Equity investments with readily determinable fair values, at fair value | |||||||||||
Loans held for sale | |||||||||||
Loans and leases held for investment, net of deferred loan fees and costs | |||||||||||
Less: Allowance for credit losses on loans and leases | ( | ( | |||||||||
| Total loans and leases held for investment, net | |||||||||||
| Premises and equipment, net | |||||||||||
| Core deposit and other intangibles | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | |||||||||||
| Deposits: | |||||||||||
| Interest-bearing checking and money market accounts | $ | $ | |||||||||
| Savings accounts | |||||||||||
| Certificates of deposit | |||||||||||
| Non-interest-bearing accounts | |||||||||||
| Total deposits | |||||||||||
Borrowed funds | |||||||||||
| Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (refer to Note 17) | |||||||||||
| Mezzanine equity: | |||||||||||
| Preferred stock - Series B | |||||||||||
| Stockholders' equity: | |||||||||||
Preferred stock - Series A and D | |||||||||||
Common stock at par $ shares issued; and | |||||||||||
| Paid-in capital in excess of par | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
Treasury stock, at cost ( | ( | ( | |||||||||
Accumulated other comprehensive loss, net of tax | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities, mezzanine and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to the condensed consolidated financial statements.
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Table of Contents | Flagstar Bank, National Association | |||||||
| Condensed Consolidated Statements of Income (Loss) (unaudited) | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (in millions, except per share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| INTEREST INCOME: | |||||||||||||||||||||||
| Loans and leases | $ | $ | $ | $ | |||||||||||||||||||
| Securities and money market investments | |||||||||||||||||||||||
| Total interest income | |||||||||||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||||||||
| Interest-bearing checking and money market accounts | |||||||||||||||||||||||
| Savings accounts | |||||||||||||||||||||||
| Certificates of deposit | |||||||||||||||||||||||
| Borrowed funds | |||||||||||||||||||||||
| Total interest expense | |||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||
Net interest income after provision for credit losses | |||||||||||||||||||||||
| NON-INTEREST INCOME: | |||||||||||||||||||||||
| Fee income | |||||||||||||||||||||||
| Bank-owned life insurance | |||||||||||||||||||||||
| Net gain (loss) on investment securities | ( | ||||||||||||||||||||||
| Net gain on loan sales and securitizations | |||||||||||||||||||||||
Net loan administration income | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total non-interest income | |||||||||||||||||||||||
| NON-INTEREST EXPENSE: | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Compensation and benefits | |||||||||||||||||||||||
| Occupancy and equipment | |||||||||||||||||||||||
Software expense | |||||||||||||||||||||||
| FDIC insurance | |||||||||||||||||||||||
Professional services | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total operating expense | |||||||||||||||||||||||
| Intangible asset amortization | |||||||||||||||||||||||
Merger-related expense | |||||||||||||||||||||||
| Total non-interest expense | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ( | |||||||||||||||||||||
| Income tax expense (benefit) | ( | ( | |||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Basic earnings (loss) per common share | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Diluted earnings (loss) per common share | $ | $ | ( | $ | $ | ( | |||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
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Table of Contents | Flagstar Bank, National Association | |||||||
| Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||||||||||
Net unrealized gain (loss) on securities available-for-sale | ( | ( | |||||||||||||||||||||
Net unrealized gain (loss) in pension and post-retirement obligations | |||||||||||||||||||||||
Net unrealized gain (loss) on cash flow hedges | ( | ( | |||||||||||||||||||||
Total other comprehensive (loss) income, net of tax | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Total comprehensive income (loss), net of tax | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Income tax expense (benefit) of items included in other comprehensive income: | |||||||||||||||||||||||
Net unrealized gain (loss) on securities available-for-sale | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Net unrealized gain (loss) in pension and post-retirement obligations | |||||||||||||||||||||||
Net unrealized gain (loss) on cash flow hedges | ( | ( | |||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
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Table of Contents | Flagstar Bank, National Association | |||||||
| Condensed Consolidated Statements of Stockholders' Equity (unaudited) | ||||||||
| (in millions, except share data) | Shares Outstanding | Preferred Stock A (Par Value: $ | Common Stock (Par Value: $ | Paid-in Capital in excess of Par | Accumulated deficit | Treasury Stock, at Cost | AOCL, Net of Tax | Total Stockholders’ Equity | Preferred Stock Mezzanine (Par Value: $ | ||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued for restricted stock, net of forfeitures | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Compensation expense related to restricted stock awards | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on preferred stock ($ | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common stock | ( | — | — | — | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | — | ( | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued for restricted stock, net of forfeitures | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Compensation expense related to restricted stock awards | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on preferred stock ($ | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common stock | ( | — | — | — | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| (in millions, except share data) | Shares Outstanding | Preferred Stock A (Par Value: $ | Common Stock (Par Value: $ | Paid-in Capital in excess of Par | Accumulated deficit | Treasury Stock, at Cost | AOCL, Net of Tax | Total Stockholders’ Equity | Preferred Stock Mezzanine (Par Value: $ | ||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued for restricted stock, net of forfeitures | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Compensation expense related to restricted stock awards | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on preferred stock Series A ($ | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common stock | ( | — | — | — | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | — | ( | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued for restricted stock, net of forfeitures | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Compensation expense related to restricted stock awards | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on common stock ($ | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on preferred stock Series A ($ | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common stock | ( | — | — | — | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
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Table of Contents | Flagstar Bank, National Association | |||||||
| Condensed Consolidated Statements of Cash Flows (unaudited) | ||||||||
| Six Months Ended June 30, | |||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||||||
Provision for credit losses | |||||||||||
Depreciation and amortization | |||||||||||
| Stock-based compensation | |||||||||||
Deferred tax expense (benefit) | ( | ||||||||||
Other operating activities | ( | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Decrease in other miscellaneous assets | |||||||||||
| Decrease in other miscellaneous liabilities | ( | ( | |||||||||
| Change in loans held for sale, net | |||||||||||
| Net cash provided by (used in) operating activities | ( | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Proceeds from repayment of securities available-for-sale | |||||||||||
Proceeds from sales of securities available-for-sale including loans that have been securitized | |||||||||||
Purchase of securities available-for-sale | ( | ( | |||||||||
| Redemption of Federal Home Loan Bank stock | |||||||||||
| Purchases of Federal Home Loan Bank and Federal Reserve Bank stock | ( | ( | |||||||||
Other changes in loans, net | ( | ||||||||||
Purchases of premises and equipment | ( | ( | |||||||||
| Proceeds from sales of equity securities | |||||||||||
Other investing activities | |||||||||||
| Net cash (used in) provided by investing activities | ( | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Net increase (decrease) in deposits | ( | ||||||||||
Net decrease in short-term borrowed funds | ( | ( | |||||||||
| Proceeds from long-term borrowed funds | |||||||||||
| Repayments of long-term borrowed funds | ( | ( | |||||||||
| Cash dividends paid on common stock | ( | ( | |||||||||
| Cash dividends paid on preferred stock | ( | ( | |||||||||
Other financing activities, net | ( | ||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
Net decrease in cash, cash equivalents, and restricted cash | ( | ( | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ | |||||||||
| Supplemental information: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Non-cash investing and financing activities: | |||||||||||
Securitization of loans to mortgage-backed securities available-for-sale | |||||||||||
| Transfer of loans from held for investment to held for sale | |||||||||||
| Transfer of loans from held for sale to held for investment | |||||||||||
| Shares issued for restricted stock awards | |||||||||||
See accompanying notes to the condensed consolidated financial statements.
20
Table of Contents | Flagstar Bank, National Association | |||||||
Notes to the Condensed Consolidated Financial Statements (unaudited) | ||||||||
Note 1 - Organization and Basis of Presentation
Organization
Flagstar Bank, National Association, is a national banking association. Throughout this report we refer to Flagstar Bank, National Association and its consolidated subsidiaries in a simplified and collective manner, using words like "we," "our," "us" and "the Bank."
The Bank is headquartered in Hicksville, New York with regional headquarters in Troy, Michigan. We are subject to regulation and oversight by the OCC. We currently operate approximately 340 locations across 9 states, with strong footholds in the greater New York/New Jersey metropolitan region and in the upper Midwest, along with a significant presence in fast-growing markets in Florida and on the West Coast.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Bank and other entities in which the Bank has a controlling financial interest. We prepare these consolidated financial statements in accordance with GAAP and with the instructions to Form 10-Q and Article 10 of Regulation S-X. All inter-company accounts and transactions are eliminated in consolidation. The Bank currently has certain unconsolidated subsidiaries in the form of wholly-owned statutory business trusts, which were formed to issue guaranteed capital securities. See Note 9 - Borrowed Funds, for additional information regarding these trusts.
Note 2 - Earnings Per Common Share
Earnings per Common Share (Basic and Diluted)
The following table presents basic and diluted net earnings per common share based on the weighted average outstanding shares:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net income (loss) attributable to common stockholders | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Less: Income allocated to participating securities | |||||||||||||||||||||||
Net income (loss) attributable to common stockholders | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||
Basic income (loss) per common share | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Net income (loss) attributable to common stockholders | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||
Dilutive potential common shares | |||||||||||||||||||||||
Total shares for diluted earnings per common share computation | |||||||||||||||||||||||
Diluted income (loss) per common share and common share equivalents | $ | $ | ( | $ | $ | ( | |||||||||||||||||
For the three and six months ended June 30, 2026, there were no
21
Table of Contents | Flagstar Bank, National Association | |||||||
Notes to the Condensed Consolidated Financial Statements (unaudited) | ||||||||
Note 3 - Accumulated Other Comprehensive Loss
The table below summarizes the changes in AOCL, net of tax:
Securities AFS | Cash Flow Hedges | Pension and Post-retirement Plans | Total | ||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||
Balance, beginning of period | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassification, net of tax | ( | ( | |||||||||||||||||||||
Amounts reclassified from AOCL to (income)/expense, net of tax | |||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||||||||
Balance, end of period | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||
Balance, beginning of period | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassification, net of tax | |||||||||||||||||||||||
Amounts reclassified from AOCL to (income)/expense, net of tax | ( | ( | |||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ||||||||||||||||||||||
Balance, end of period | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||
Balance, beginning of period | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassification, net of tax(2) | ( | ( | |||||||||||||||||||||
Amounts reclassified from AOCL, net of tax | |||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||||||||
Balance, end of period | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||
Balance, beginning of period | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassification, net of tax(2) | |||||||||||||||||||||||
Amounts reclassified from AOCL, net of tax | ( | ( | |||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ||||||||||||||||||||||
Balance, end of period | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
The following table summarizes the amounts reclassified from AOCL, net of tax:
Amount Reclassified out of AOCL | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | Affected Line Item in the Condensed Consolidated Statements of Income (Loss) | ||||||||||||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||||||||
Realized gain on cash flow hedges | $ | $ | $ | $ | Interest expense - Borrowed funds | |||||||||||||||||||||
Tax benefit (expense) | ( | ( | Income tax (benefit) | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
Pension and Post-retirement Plans: | ||||||||||||||||||||||||||
Amortization of actuarial losses | ( | ( | General and administrative | |||||||||||||||||||||||
Tax benefit (expense) | Income tax (benefit) | |||||||||||||||||||||||||
| $ | $ | $ | $ | ( | ||||||||||||||||||||||
| Amounts reclassified from AOCL, net of tax | $ | $ | $ | $ | ||||||||||||||||||||||
22
Table of Contents | Flagstar Bank, National Association | |||||||
Notes to the Condensed Consolidated Financial Statements (unaudited) | ||||||||
Note 4 - Investment Securities
Debt securities available-for-sale
The following tables summarize our portfolio of debt securities available-for-sale:
| June 30, 2026 | |||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||||||||||
Debt securities available-for-sale | |||||||||||||||||||||||
| Mortgage-Related Debt Securities: | |||||||||||||||||||||||
| GSE CMOs | $ | $ | $ | $ | |||||||||||||||||||
| GSE certificates | |||||||||||||||||||||||
| Private label CMOs | |||||||||||||||||||||||
| Total mortgage-related debt securities | $ | $ | $ | $ | |||||||||||||||||||
| Other Debt Securities: | |||||||||||||||||||||||
| GSE debentures | $ | $ | $ | $ | |||||||||||||||||||
U. S. Treasury obligations | |||||||||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
| Capital trust notes | |||||||||||||||||||||||
| Municipal bonds | |||||||||||||||||||||||
Total debt securities | $ | $ | $ | $ | |||||||||||||||||||
Total debt securities available-for-sale, net of allowance(1)(2)(3)(4) | $ | $ | $ | $ | |||||||||||||||||||
(1)At June 30, 2026, substantially all of our debt securities available-for-sale are comprised of securities issued by GSEs or are explicitly guaranteed by the U.S. government.
(2)As of June 30, 2026, the ACL was $2 million.
(3)Excludes accrued interest receivable of $63 million included in in the Condensed Consolidated Statements of Condition.
(4)We pledged investment securities of $16.3 billion as collateral for certain borrowings as of June 30, 2026.
| December 31, 2025 | |||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||||||||||
Debt securities available-for-sale | |||||||||||||||||||||||
| Mortgage-Related Debt Securities: | |||||||||||||||||||||||
| GSE CMOs | $ | $ | $ | $ | |||||||||||||||||||
| GSE certificates | |||||||||||||||||||||||
| Private label CMOs | |||||||||||||||||||||||
| Total mortgage-related debt securities | $ | $ | $ | $ | |||||||||||||||||||
| Other Debt Securities: | |||||||||||||||||||||||
| GSE debentures | $ | $ | $ | $ | |||||||||||||||||||
| U. S. Treasury obligations | |||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
Asset-backed securities | |||||||||||||||||||||||
| Capital trust notes | |||||||||||||||||||||||
| Municipal bonds | |||||||||||||||||||||||
Total debt securities | $ | $ | $ | $ | |||||||||||||||||||
Total debt securities available-for-sale, net of allowance(1)(2)(3)(4) | $ | $ | $ | $ | |||||||||||||||||||
(1)At December 31, 2025, substantially all of our debt securities available-for-sale are comprised of securities issued by GSEs or are explicitly guaranteed by the U.S. government.
(2)As of December 31, 2025, the ACL was $2 million.
(3)Excludes accrued interest receivable of $58 million included in in the Condensed Consolidated Statements of Condition.
(4)We pledged investment securities of $15.4 billion as collateral for certain borrowings as of December 31, 2025.
There were no 75
There were no
The following table summarizes, by contractual maturity, the fair value of securities at June 30, 2026:
| Mortgage- Related Securities | U.S. Government and GSE Obligations | Corporate and Other Bonds | Asset-Backed Securities | Total | |||||||||||||||||||||||||
| Available-for-Sale Debt Securities: | |||||||||||||||||||||||||||||
| Due within one year | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Due from one to five years | |||||||||||||||||||||||||||||
| Due from five to ten years | |||||||||||||||||||||||||||||
| Due after ten years | |||||||||||||||||||||||||||||
Total debt securities available-for-sale, net of allowance | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
The following table presents debt securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of June 30, 2026:
Number of Debt Securities(1) | Less than Twelve Months | Twelve Months or Longer | Total | ||||||||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||||||||||||||||||||
Debt securities in a continuous unrealized loss position: | |||||||||||||||||||||||||||||||||||||||||
GSE CMOs | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| U.S. Government agency and GSE obligations | |||||||||||||||||||||||||||||||||||||||||
| GSE certificates | |||||||||||||||||||||||||||||||||||||||||
U. S. Treasury obligations(2) | |||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||||||||||||||||||||
| Capital trust notes | |||||||||||||||||||||||||||||||||||||||||
| Municipal bonds | |||||||||||||||||||||||||||||||||||||||||
Total debt securities in a continuous unrealized loss position | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
(1)Count of securities that have been in a loss position for twelve or more months.
(2)Count of U.S. Treasury obligations that have been in a loss position for less than twelve months.
The following table presents debt securities having a continuous unrealized loss position for less than twelve months and for twelve months or longer as of December 31, 2025:
Number of Debt Securities(1) | Less than Twelve Months | Twelve Months or Longer | Total | ||||||||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||||||||||||||||||||
Debt securities in a continuous unrealized loss position: | |||||||||||||||||||||||||||||||||||||||||
| U.S. Government agency and GSE obligations | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| GSE certificates | |||||||||||||||||||||||||||||||||||||||||
GSE CMOs | |||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||||||||||||||||||||
| Municipal bonds | |||||||||||||||||||||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||||||||||||||||||||
| Capital trust notes | |||||||||||||||||||||||||||||||||||||||||
Total debt securities in a continuous unrealized loss position | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
We evaluate available-for-sale debt securities in unrealized loss positions at least quarterly to determine if an ACL is required. We also assess whether (i) we intend to sell, or (ii) it is more likely than not that we will be required to sell the
security before recovery of its amortized cost basis. If either of these criteria is met, any previously recognized allowances are charged off and the security’s amortized cost basis is written down to fair value through income and recorded in Provision for credit losses on the Condensed Consolidated Statements of Income (Loss). Otherwise, we evaluate whether the decline in fair value has resulted from credit losses or other factors. If a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the expected amount to be collected is less than the amortized cost, an ACL is established for the shortfall, but not in excess of the difference between the amortized cost basis and the fair value. Any unrealized loss that has not been recorded through an ACL is recognized in Other comprehensive (loss) income.
Equity investments with readily determinable fair values
As of June 30, 2026 and December 31, 2025, we held equity securities with readily determinable fair values of $14 million and $65 million, respectively. During the three and six months ended June 30, 2026, we recognized a gain of $4 million and a loss of $5 million, respectively, related to our investment in Figure Technology Solutions, Inc. These amounts were recorded in Net (loss) gain on investment securities in the Condensed Consolidated Statements of Income (Loss). During the three months ended June 30, 2026, we sold our entire investment for $46 million.
Note 5 - Loans and Leases
The composition of our loan portfolio for the periods indicated was as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Amount | Amount | ||||||||||
Loans and leases held for investment: | |||||||||||
| Multi-family | $ | $ | |||||||||
Commercial real estate | |||||||||||
| One-to-four family first mortgage | |||||||||||
Commercial and industrial(1) | |||||||||||
| Other | |||||||||||
Total loans and leases held for investment (2)(3) | $ | $ | |||||||||
| Allowance for credit losses on loans and leases | ( | ( | |||||||||
| Total loans and leases held for investment, net | $ | $ | |||||||||
Loans held for sale | |||||||||||
| Total loans and leases, net | $ | $ | |||||||||
(1)Includes lease financing receivables (net of unearned income of $166 million and $129 million, respectively) of $1.8 billion and $1.7 billion at June 30, 2026 and December 31, 2025, respectively.
(2)Excludes accrued interest receivable of $253 million and $242 million at June 30, 2026 and December 31, 2025, respectively, which is included in in the Condensed Consolidated Statements of Condition.
HFI loans are reported at amortized cost which includes the outstanding principal balance adjusted for any unamortized premiums, discounts, deferred fees and costs, hedge accounting adjustments and fair value adjustments for acquired loans. The unamortized premiums, discounts, deferred fees and costs and hedge accounting adjustments totaled $383 million and $431 million as of June 30, 2026 and December 31, 2025, respectively.
Loans with Government Guarantees
Substantially all LGG are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs. As of June 30, 2026 and December 31, 2025, LGG totaled $323 million and $331 million, respectively. These loans are recorded in one-to-four family first mortgages and are reported as current within the asset quality information and as pass within our credit rating by vintage table.
Related Party Loans
In the ordinary course of business, the Bank has made loans to officers, directors, and their related interests and parties. All such loans have been made in accordance with regulatory requirements, are on substantially the same terms and underwriting as those prevailing at the time for comparable transactions with unrelated persons, and do not involve higher than normal risk of collectability. During the three months ended March 31, 2026, a member of the Board of Directors was appointed to the board of another entity with which we had a previous lending relationship. As a result of that appointment, $167 million in outstanding loans now qualifies as loans to a related-party as of June 30, 2026. As of December 31, 2025, the Bank had no material related-party transactions requiring disclosure.
Asset Quality
For the three and six months ended June 30, 2026 and 2025, there was an immaterial amount of interest income recognized on non-accrual loans classified as held for investment.
The following table presents information regarding the delinquency status of our loans held for investment at June 30, 2026:
Current | Loans 30-89 Days Past Due | Loans 90 Days or More Past Due and Still Accruing | Non-Accrual Loans | Total Loans Receivable | ||||||||||||||||||||||||||||
| Multi-family | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||
| One-to-four family first mortgage | ||||||||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The following table presents information regarding the delinquency status of our loans held for investment at December 31, 2025:
| Current | Loans 30-89 Days Past Due | Loans 90 Days or More Past Due and Still Accruing | Non-Accrual Loans | Total Loans Receivable | ||||||||||||||||||||||||||||
| Multi-family | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||
| One-to-four family first mortgage | ||||||||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The following table presents the credit rating by vintage for our loans held for investment as of June 30, 2026:
Term Loans | Revolving Loans | Revolving Loans Converted to Term Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost Basis by Origination Year | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2026 | 2025 | 2024 | 2023 | 2022 | Prior to 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
Multi-family: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Multi-family | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Commercial Real Estate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
One-to-Four Family: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total One-to-Four Family | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Commercial and Industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Other Loans: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Other Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
The following table presents the credit rating by vintage for our loans held for investment as of December 31, 2025:
Term Loans | Revolving Loans | Revolving Loans Converted to Term Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost Basis by Origination Year | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2025 | 2024 | 2023 | 2022 | 2021 | Prior to 2021 | Total | |||||||||||||||||||||||||||||||||||||||||||||||
Multi-family: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Multi-family | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Commercial Real Estate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
One-to-Four Family: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total One-to-Four Family | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Commercial and Industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Other Loans: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-accrual | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Other Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year-to-date gross charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
The classifications in the preceding tables reflect the most recent credit evaluations as of the respective dates, which are generally performed within the last twelve months. In addition, they follow regulatory guidelines and can generally be described as follows: pass loans are of satisfactory quality; special mention loans have potential weaknesses that deserve management’s close attention; substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness and there is a possibility that we will sustain some loss); and non-accrual loans, which based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable.
Collateral Dependent Loans
The following table summarizes the recorded investment of our collateral-dependent loans held for investment by collateral type as of June 30, 2026:
| Real Property | |||||
| Multi-family | $ | ||||
Commercial real estate | |||||
| One-to-four family first mortgage | |||||
| Commercial and industrial | |||||
| Total collateral-dependent loans held for investment | $ | ||||
Collateral dependent loans generally include multi-family and CRE loans secured by apartment buildings, office buildings, retail and industrial buildings. The primary source of repayment on these loans is expected to come from the sale of the real estate property collateral. Multi-family and CRE loans are impacted by fluctuations in the values of the real estate property.
At June 30, 2026 and December 31, 2025, we had $17 million and $19 million, respectively, of residential mortgage loans in the process of foreclosure.
Modifications to Borrowers Experiencing Financial Difficulty
When borrowers are experiencing financial difficulty, we may make certain loan modifications as part of loss mitigation strategies to maximize expected payment. Modifications provided to borrowers who are experiencing financial difficulties are generally in the form of term extension, an interest rate reduction, and in limited circumstances, principal forgiveness.
The following table summarizes the amortized cost basis of loans modified during the reporting period to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of modification:
| Amortized Cost | |||||||||||||||||||||||||||||
| Interest Rate Reduction | Term Extension | Combination - Interest Rate Reduction & Term Extension | Total | Percent of Total Loan class | |||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||
Multi-family | $ | $ | $ | $ | % | ||||||||||||||||||||||||
| Commercial real estate | % | ||||||||||||||||||||||||||||
| One-to-four family first mortgage | % | ||||||||||||||||||||||||||||
Other consumer | % | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
| Commercial real estate | $ | $ | $ | $ | % | ||||||||||||||||||||||||
| One-to-four family first mortgage | % | ||||||||||||||||||||||||||||
| Other Consumer | % | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||
| Multi-family | $ | $ | $ | $ | % | ||||||||||||||||||||||||
| Commercial real estate | % | ||||||||||||||||||||||||||||
| One-to-four family first mortgage | % | ||||||||||||||||||||||||||||
Other consumer | % | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
| Commercial real estate | $ | $ | $ | $ | % | ||||||||||||||||||||||||
| One-to-four family first mortgage | % | ||||||||||||||||||||||||||||
| Other Consumer | % | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
The following table describes the financial effect of the modification made to borrowers experiencing financial difficulty:
| Interest Rate Reduction | Term Extension | ||||||||||||||||
| Weighted-average contractual interest rate | |||||||||||||||||
| From | To | Weighted-Average Term (in years) | |||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||
| Multi-family | % | % | |||||||||||||||
Commercial real estate | % | % | |||||||||||||||
| One-to-four family first mortgage | % | % | |||||||||||||||
Other | % | % | |||||||||||||||
| Three months ended June 30, 2025 | |||||||||||||||||
Commercial real estate | % | % | |||||||||||||||
| One-to-four family first mortgage | % | % | |||||||||||||||
Other | % | % | |||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||
| Multi-family | % | % | |||||||||||||||
Commercial real estate | % | % | |||||||||||||||
| One-to-four family first mortgage | % | % | |||||||||||||||
Other | % | % | |||||||||||||||
| Six months ended June 30, 2025 | |||||||||||||||||
Commercial real estate | % | % | |||||||||||||||
| One-to-four family first mortgage | % | % | |||||||||||||||
Other | % | % | |||||||||||||||
The following table presents the amortized cost basis of the modifications for borrowers experiencing financial difficulty that subsequently defaulted and were within twelve months of the modification date:
| Interest Rate Reduction | Term Extension | Principal Forgiveness | Combination - Interest Rate Reduction and Term/Payment Extension/Delay | Total | |||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||
| Multi-family | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||
| One-to-four family first mortgage | |||||||||||||||||||||||||||||
Other Consumer | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
| One-to-four family first mortgage | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Six months ended June 30, 2026 | |||||||||||||||||||||||||||||
| Multi-family | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||
| One-to-four family first mortgage | |||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||
| Other Consumer | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
| One-to-four family first mortgage | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
We closely monitor the performance of loans in which modifications were made to borrowers experiencing financial difficulty to understand the effectiveness of modification efforts. For purposes of this disclosure a payment default is defined as 30 days or more past due.
| June 30, 2026 | Current | 30 - 89 Past Due | 90+ Past Due | Total | ||||||||||||||||||||||
Multi-family | $ | $ | $ | $ | ||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||
| One-to-four family first mortgage | ||||||||||||||||||||||||||
| Other Consumer | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||||||||
| Commercial real estate | $ | $ | $ | $ | ||||||||||||||||||||||
| One-to-four family first mortgage | ||||||||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
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Table of Contents | Flagstar Bank, National Association | |||||||
Notes to the Condensed Consolidated Financial Statements (unaudited) | ||||||||
Note 6 - Allowance for Credit Losses on Loans and Leases
The following table summarizes activity in the ACL on loans and leases for the periods indicated:
| Multi- Family | Commercial Real Estate | One-to-Four Family First Mortgage | Commercial and Industrial | Other | Total | ||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||
| Provision for (recovery of) credit losses on loans and leases | ( | ||||||||||||||||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||
| Provision for (recovery of) credit losses on loans and leases | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||
| Provision for (recovery of) credit losses on loans and leases | ( | ||||||||||||||||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||
| Provision for (recovery of) credit losses on loans and leases | ( | ( | |||||||||||||||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
The ACL to total loans and leases held for investment ratio as of June 30, 2026 and December 31, 2025 was 1.42 percent and 1.70 percent, respectively.
The following table presents additional information about our non-accrual loans at June 30, 2026:
| Non-accrual loans with no related allowance: | Non-accrual loans with an allowance recorded: | Total non-accrual loans: | Related allowance: | ||||||||||||||||||||
| Multi-family | $ | $ | $ | $ | |||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
| One-to-four family first mortgage | |||||||||||||||||||||||
| Commercial and Industrial | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
The following table presents additional information about our non-accrual loans at December 31, 2025:
| Non-accrual loans with no related allowance: | Non-accrual loans with an allowance recorded: | Total non-accrual loans: | Related allowance: | ||||||||||||||||||||
| Multi-family | $ | $ | $ | $ | |||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
| One-to-four family first mortgage | |||||||||||||||||||||||
| Commercial and Industrial | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Note 7 - Leases, Premises and Equipment
Lessor Arrangements
We provide direct financing leases for equipment included in our commercial loan portfolio.
Interest income on lease financing is recorded over the lease term and recorded in Interest income - Loans and leases on the Condensed Consolidated Statements of Income (Loss). The following table presents our interest income on lease financing:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Interest income on lease financing | $ | $ | $ | $ | |||||||||||||||||||
Lessee Arrangements
We have operating leases for offices, branches, equipment and other items.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
Supplemental balance sheet information related to our operating lease arrangements is presented below:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Operating Leases: | |||||||||||
| $ | $ | ||||||||||
| $ | $ | ||||||||||
| Weighted average remaining lease term | |||||||||||
| Weighted average discount rate % | % | % | |||||||||
The table below presents the supplemental cash flow information related to the leases:
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows from operating leases | $ | $ | |||||||||
Premises and Equipment
The table below presents our Premises and equipment:
| June 30, 2026 | December 31, 2025 | ||||||||||
Premises and equipment | $ | $ | |||||||||
Less: Accumulated depreciation | ( | ( | |||||||||
Premises and equipment, net | $ | $ | |||||||||
The table below presents our depreciation expense:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
Depreciation expense(1) | $ | $ | $ | $ | ||||||||||||||||||||||
(1)Included in Occupancy and equipment expense in the Condensed Consolidated Statements of Income (Loss).
Note 8 - Variable Interest Entities
An entity that has a controlling financial interest in a VIE is referred to as the primary beneficiary and consolidates the VIE. An entity is deemed to have a controlling financial interest and is the primary beneficiary of a VIE if it has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.
We have no
24
Table of Contents | Flagstar Bank, National Association | |||||||
| Notes to the Condensed Consolidated Financial Statements (unaudited) | ||||||||
Note 9 - Borrowed Funds
The following table summarizes our borrowed funds:
| June 30, 2026 | December 31, 2025 | ||||||||||
Short-term borrowings(1) | |||||||||||
FHLB advances | $ | $ | |||||||||
Total short-term borrowings | $ | $ | |||||||||
Long-term debt | |||||||||||
FHLB advances | $ | $ | |||||||||
Junior subordinated debentures | |||||||||||
Subordinated notes | |||||||||||
Total long-term debt | $ | $ | |||||||||
Borrowed Funds | $ | $ | |||||||||
Weighted average interest rate on short-term borrowings | % | % | |||||||||
Weighted average interest rate on long-term debt | % | % | |||||||||
(1)Borrowings with original maturities of one year or less are classified as short-term borrowings.
The following table summarizes our total interest expense:
| Three Months Ended, | Six Months Ended, | |||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||||||||||||
| Interest expense on short-term borrowings | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest expense on long-term debt | ||||||||||||||||||||||||||
Total interest expense(1) | $ | $ | $ | $ | ||||||||||||||||||||||
Accrued interest on borrowed funds is included in Other liabilities in the Condensed Consolidated Statements of Condition and was $41 million and $39 million at June 30, 2026 and December 31, 2025, respectively.
FHLB Advances
The contractual maturities and the next call dates of FHLB advances outstanding at June 30, 2026 were as follows:
| Contractual Maturity | Earlier of Contractual Maturity or Next Call Date | ||||||||||||||||||||||
| Amount | Weighted Average Interest Rate | Amount | Weighted Average Interest Rate | ||||||||||||||||||||
| 2026 | $ | $ | |||||||||||||||||||||
| 2027 | |||||||||||||||||||||||
| 2028 | |||||||||||||||||||||||
| 2032 | |||||||||||||||||||||||
| Total FHLB advances | $ | $ | |||||||||||||||||||||
FHLB advances include fixed-rate advances, floating rate advances and advances under the FHLB convertible advance program, which gives the FHLB the option of either calling the advance after an initial lock-out period of up to five years and quarterly thereafter until maturity, or a one-time call at the initial call date.
We maintain access to secured borrowings from the FHLB and FRB-NY Discount Window. Our FHLB available capacity has been expanded from overnight funding to 12-month tenor on new and rollover of existing advances. We pledge eligible loan and securities collateral with the FRB-NY Discount Window and FHLB New York to support borrowing capacity. The available borrowing capacity with the FRB-NY Discount Window and the FHLB, net of credit utilization primarily in the form of advances and letters of credit, was $8.3 billion and $8.3 billion at June 30, 2026 and December 31, 2025, respectively.
Junior Subordinated Debentures
We have outstanding junior subordinated deferrable interest debentures (“junior subordinated debentures”) held by statutory business trusts that issued guaranteed capital securities, excluding purchase accounting adjustments.
The following table presents contractual terms of the junior subordinated debentures outstanding at June 30, 2026:
| Issuer | Interest Rate of Capital Securities and Debentures | Junior Subordinated Debentures Amount Outstanding | Capital Securities Amount Outstanding | Date of Original Issue | Stated Maturity | ||||||||||||||||||||||||
New York Community Capital Trust V (BONUSES Units) (1) | % | $ | $ | November 04, 2002 | November 01, 2051 | ||||||||||||||||||||||||
New York Community Capital Trust X (2) | % | December 14, 2006 | December 15, 2036 | ||||||||||||||||||||||||||
PennFed Capital Trust III (2) | % | June 02, 2003 | June 15, 2033 | ||||||||||||||||||||||||||
New York Community Capital Trust XI (2) | % | April 16, 2007 | June 30, 2037 | ||||||||||||||||||||||||||
Flagstar Statutory Trust II (2)(3) | % | December 26, 2002 | December 26, 2032 | ||||||||||||||||||||||||||
Flagstar Statutory Trust III (2)(3) | % | February 19, 2003 | April 7, 2033 | ||||||||||||||||||||||||||
Flagstar Statutory Trust IV (2)(3) | % | March 19, 2003 | March 19, 2033 | ||||||||||||||||||||||||||
Flagstar Statutory Trust V (2)(3) | % | December 29, 2004 | January 07, 2035 | ||||||||||||||||||||||||||
Flagstar Statutory Trust VI (2)(3) | % | March 30, 2005 | April 7, 2035 | ||||||||||||||||||||||||||
Flagstar Statutory Trust VII (2)(3) | % | March 29, 2005 | June 15, 2035 | ||||||||||||||||||||||||||
Flagstar Statutory Trust VIII (2)(3) | % | September 22, 2005 | October 7, 2035 | ||||||||||||||||||||||||||
Flagstar Statutory Trust IX (2)(3) | % | June 28, 2007 | September 15, 2037 | ||||||||||||||||||||||||||
Flagstar Statutory Trust X (2)(3) | % | August 31, 2007 | September 15, 2037 | ||||||||||||||||||||||||||
Total junior subordinated debentures | $ | $ | |||||||||||||||||||||||||||
(1)Callable subject to certain conditions as described in the prospectus filed with the SEC on November 4, 2002.
(2)Callable at any time.
(3)Excludes Flagstar Bancorp acquisition fair value adjustments of $24 million, which amortizes over the contractual term.
Subordinated Notes
As of June 30, 2026 and December 31, 2025, we had a total of $449 million and $448 million. The following table presents the contractual terms of the subordinated notes at June 30, 2026:
| Date of Original Issue | Stated Maturity | Interest Rate | Original Issue Amount | ||||||||||||||||||||
(1) | November 6, 2018 | November 6, 2028 | $ | ||||||||||||||||||||
(2) | October 28, 2020 | November 1, 2030 | $ | ||||||||||||||||||||
(1)The interest rate will reset quarterly to an annual interest rate equal to the then-current three-month SOFR plus 304.16 basis points payable quarterly.
(2)The Notes bear a variable rate tied to SOFR until maturity. We have the option to redeem all or a part of the Notes.
Note 10 - Pension Benefits
The following table sets forth certain disclosures for our pension plan for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Components of net periodic pension expense (income):(1) | |||||||||||||||||||||||
| Interest cost | $ | $ | $ | $ | |||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
| Amortization of net actuarial loss | |||||||||||||||||||||||
Net periodic expense (income) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(1)Amounts are included in General and administrative expense on the Condensed Consolidated Statements of Income (Loss).
25
Table of Contents | Flagstar Bank, National Association | |||||||
Notes to the Condensed Consolidated Financial Statements (unaudited) | ||||||||
Note 11 - Federal, State, and Local Taxes
The following table presents our income tax expense (benefit) and the effective tax rate for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Income tax expense (benefit) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Effective tax rate | % | % | % | % | |||||||||||||||||||
Note 12 - Stock-Based Compensation
We issue stock-based compensation in the form of RSUs and stock options through the Flagstar Bank, N.A. 2020 Omnibus Incentive Plan. Additionally, we have also granted one-time stock options as employment inducement awards to certain key executives in accordance with Rule 303A.08 of the NYSE. As of June 30, 2026, we have authorized 14,517,164 shares available for grant.
The following table presents total stock-based compensation expense and the related tax benefit for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Tax benefit | |||||||||||||||||||||||
Restricted Stock
During the six months ended June 30, 2026, we granted 6,263,522 shares of restricted stock, which vest over a to three year period, with an average fair value of $12.37 per share on the date of grant.
The following table summarizes RSU activity for the period indicated:
| Six Months Ended June 30, 2026 | |||||||||||
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Unvested at beginning of year | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Unvested at end of period | |||||||||||
As of June 30, 2026, unrecognized compensation cost relating to unvested restricted stock totaled $111 million. This amount will be recognized over the remaining weighted average life of 2.1 years.
Stock Options
The following table summarizes stock option activity for the period indicated:
| Six months ended June 30, 2026 | |||||||||||
Number of Options | Weighted-Average Exercise Price per Share | ||||||||||
Unvested at beginning of year | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | |||||||||||
| Unvested at end of period | |||||||||||
Exercisable at end of period | |||||||||||
As of June 30, 2026, the remaining amount of unamortized compensation expense relating to stock options totaled $16 million. This amount will be recognized over the remaining weighted average life of 0.9 years.
Note 13 - Derivative and Hedging Activities
The following tables set forth information regarding our derivative financial instruments:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||
| Notional Amount | Other Assets | Other Liabilities | Expiration Dates | Notional Amount | Other Assets | Other Liabilities | Expiration Dates | ||||||||||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest rate swaps (fair value hedge) | $ | $ | $ | 2027-2029 | $ | $ | $ | 2027-2029 | |||||||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
Rate lock commitments(1) | $ | $ | $ | 2026 | $ | $ | $ | 2026 | |||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities forwards(2) | 2026 | 2026 | |||||||||||||||||||||||||||||||||||||||||||||
Interest rate swaps(2) | 2026-2057 | 2025-2027 | |||||||||||||||||||||||||||||||||||||||||||||
Interest rate caps(3) | 2028 | 2028 | |||||||||||||||||||||||||||||||||||||||||||||
Foreign currency forwards | 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
(1)The amounts recorded in Net gain on loan sales and securitizations in the Condensed Consolidated Statements of Income (Loss) for the three months ended June 30, 2026 and 2025 were immaterial immaterial and $(9 ) million, respectively.
(2)The amounts recorded in Fee income in the Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2026 and 2025 were immaterial.
(3)The amounts recorded in Borrowed funds in the Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2026 and 2025 were immaterial.
The following amounts were recorded in the Condensed Consolidated Statements of Condition related to items designated and qualifying as hedged items in a fair value hedging relationship:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Carrying Amount of Hedged Items | Cumulative Amount of Fair Value Hedging Adjustments | Carrying Amount of Hedged Items | Cumulative Amount of Fair Value Hedging Adjustments | ||||||||||||||||||||
U.S. treasury obligations | $ | $ | ( | $ | $ | ||||||||||||||||||
| GSE CMOs | ( | ||||||||||||||||||||||
GSE debentures | ( | ||||||||||||||||||||||
Debt securities available-for-sale(1) | $ | $ | ( | $ | $ | ||||||||||||||||||
Loans and leases held for investment(2)(3) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
(1)The amounts recorded in Interest income - Securities and money market investments in the Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2026 and 2025 were immaterial.
(2)The amounts recorded in Interest income - Loans and leases in the Condensed Consolidated Statements of Income (Loss) for three and six months ended June 30, 2026 and 2025 were immaterial.
(3)December 31, 2025 primarily relates to hedges on multi-family loans that were discontinued in 2024 and expired in 2026.
The tables below present the gross derivative assets and liabilities, and the related cash pledged as collateral at June 30, 2026 and December 31, 2025. No amounts were netted in the Condensed Consolidated Statements of Condition.
| June 30, 2026 | ||||||||||||||
Gross Amounts Not Offset in the Statements of Condition | Cash Collateral Pledged (Received) | |||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||
Interest rate swaps | $ | $ | ||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||
| Assets | ||||||||||||||
Interest rate swaps | ( | |||||||||||||
| Total derivative assets | $ | $ | ( | |||||||||||
| Liabilities | ||||||||||||||
| Mortgage-backed securities forwards | $ | $ | ||||||||||||
Interest rate swaps | ||||||||||||||
| Total derivative liabilities | $ | $ | ||||||||||||
| December 31, 2025 | ||||||||||||||
Gross Amounts Not Offset in the Statements of Condition | Cash Collateral Pledged (Received) | |||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||
Interest rate swaps | $ | $ | ||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||
| Assets | ||||||||||||||
Interest rate swaps | $ | $ | ||||||||||||
| Total derivative assets | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||
| Mortgage-backed securities forwards | $ | $ | ||||||||||||
Interest rate swaps | ||||||||||||||
| Total derivative liabilities | $ | $ | ||||||||||||
The following table provides a reconciliation of Cash and due from banks, Interest-earning deposits and other securities with financial institutions, and restricted cash within the Condensed Consolidated Statements of Condition that sum to the total of the same amounts shown in the Condensed Consolidated Statements of Cash Flows:
| June 30, 2026 | |||||
Cash and due from banks | $ | ||||
Interest-earning deposits and other securities with financial institutions | |||||
Restricted cash included in other assets | |||||
Total | $ | ||||
Note 14 - Intangible Assets
At June 30, 2026 and December 31, 2025, intangible assets consisted of the following:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||||||
| Core deposit intangible | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Other intangible assets | ( | ( | |||||||||||||||||||||||||||||||||
| Total Core deposit and other intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
The following table presents our amortization expense for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Amortization expense | $ | $ | $ | $ | |||||||||||||||||||
Note 15 - Fair Value Measurement
The following tables present assets and liabilities that were measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, and that were included in the Condensed Consolidated Statements of Condition at those dates:
| June 30, 2026 | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3)(1) | Total Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Mortgage-related debt securities available-for-sale: | |||||||||||||||||||||||
GSE CMOs | $ | $ | $ | $ | |||||||||||||||||||
| GSE certificates | |||||||||||||||||||||||
Private label CMOs | |||||||||||||||||||||||
| Total mortgage-related debt securities | $ | $ | $ | $ | |||||||||||||||||||
Other debt securities available-for-sale: | |||||||||||||||||||||||
| GSE debentures | $ | $ | $ | $ | |||||||||||||||||||
U. S. treasury obligations | |||||||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
Municipal bonds and capital trust | |||||||||||||||||||||||
| Total other debt securities | $ | $ | $ | $ | |||||||||||||||||||
Total debt securities available-for-sale | $ | $ | $ | $ | |||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||
| Mutual funds and common stock | $ | $ | $ | $ | |||||||||||||||||||
| Total equity securities | $ | $ | $ | $ | |||||||||||||||||||
| Total securities | $ | $ | $ | $ | |||||||||||||||||||
Loans held for sale: | |||||||||||||||||||||||
One-to-four family first mortgage | $ | $ | $ | $ | |||||||||||||||||||
Derivative assets: | |||||||||||||||||||||||
Interest rate swaps | |||||||||||||||||||||||
Rate lock commitments (fallout adjustments) | |||||||||||||||||||||||
Interest rate caps | |||||||||||||||||||||||
| Total assets at fair value | $ | $ | $ | $ | |||||||||||||||||||
Derivative liabilities: | |||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
| Mortgage-backed securities forwards | |||||||||||||||||||||||
| Total liabilities at fair value | $ | $ | $ | $ | |||||||||||||||||||
(1)The change in the fair value due to significant unobservable inputs was immaterial.
| December 31, 2025 | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3)(1) | Total Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Mortgage-related debt securities available-for-sale: | |||||||||||||||||||||||
GSE CMOs | $ | $ | $ | $ | |||||||||||||||||||
| GSE certificates | |||||||||||||||||||||||
Private label CMOs | |||||||||||||||||||||||
| Total mortgage-related debt securities | $ | $ | $ | $ | |||||||||||||||||||
Other debt securities available-for-sale: | |||||||||||||||||||||||
| GSE debentures | $ | $ | $ | $ | |||||||||||||||||||
| U. S. Treasury obligations | |||||||||||||||||||||||
| Asset-backed securities | |||||||||||||||||||||||
| Corporate bonds | |||||||||||||||||||||||
Municipal bonds, foreign notes, and capital trust | |||||||||||||||||||||||
| Total other debt securities | $ | $ | $ | $ | |||||||||||||||||||
Total debt securities available-for-sale | $ | $ | $ | $ | |||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||
| Mutual funds and common stock | $ | $ | $ | $ | |||||||||||||||||||
| Total equity securities | $ | $ | $ | $ | |||||||||||||||||||
| Total securities | $ | $ | $ | $ | |||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||
Residential first mortgage loans | $ | $ | $ | $ | |||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||
Interest rate swaps | |||||||||||||||||||||||
Rate lock commitments (fallout adjustments) | |||||||||||||||||||||||
Interest rate caps | |||||||||||||||||||||||
| Total assets at fair value | $ | $ | $ | $ | |||||||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
Rate lock commitments | |||||||||||||||||||||||
| Mortgage-backed securities forwards | |||||||||||||||||||||||
| Total liabilities at fair value | $ | $ | $ | $ | |||||||||||||||||||
(1)The change in the fair value due to significant unobservable inputs was immaterial.
Assets Measured at Fair Value on a Non-Recurring Basis
The following tables present assets that were measured at fair value on a non-recurring basis:
Fair Value Measurements at June 30, 2026 Using | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||||||||
Loans held for investment(1) | $ | $ | $ | $ | |||||||||||||||||||
Other assets(2) | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
(1)Represents the fair value of impaired loans, based primarily on the value of the collateral less costs to sell.
(2)Primarily comprised of equity securities without readily determinable fair values.
Fair Value Measurements at December 31, 2025 Using | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||||||||
Loans held for investment(1) | $ | $ | $ | $ | |||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||
Other assets (2) | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
(1)Represents the fair value of impaired loans, based primarily on the value of the collateral less costs to sell.
(2)Primarily comprised of equity securities without readily determinable fair values.
The fair values of collateral-dependent loans are determined using various valuation techniques, including appraisal values less costs to sell or other observable market data.
Other Fair Value Disclosures
For the disclosure of fair value information about our on- and off-balance sheet financial instruments, when available, quoted market prices are used as the measure of fair value. In cases where quoted market prices are not available, fair values are based on present-value estimates or other valuation techniques. Such fair values are significantly affected by the assumptions used, the timing of future cash flows, and the discount rate.
Because assumptions are inherently subjective in nature, estimated fair values cannot be substantiated by comparison to independent market quotes. Furthermore, in many cases, the estimated fair values provided would not necessarily be realized in an immediate sale or settlement of such instruments.
The following tables summarize the carrying values, estimated fair values, and fair value measurement levels of financial instruments that were not carried at fair value on the Bank’s Condensed Consolidated Statements of Condition:
| June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Fair Value Measurement Using | |||||||||||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Interest-earning deposits and other securities with financial institutions | |||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
FHLB and FRB-NY stock (1) | |||||||||||||||||||||||||||||||||||
Loans and leases held for investment, net(2) | |||||||||||||||||||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||||||||||||||
| Deposits | $ | $ | $ | (3) | $ | (4) | $ | ||||||||||||||||||||||||||||
| Borrowed funds | |||||||||||||||||||||||||||||||||||
(1)Carrying value and estimated fair value are at cost.
(2)Carrying value and estimated fair value include impaired loans held for investment.
(3)Includes interest-bearing checking and money market accounts, savings accounts, and non-interest-bearing accounts.
(4)Includes CDs.
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Fair Value Measurement Using | |||||||||||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Interest-earning deposits and other securities with financial institutions | |||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
FHLB and FRB-NY stock (1) | |||||||||||||||||||||||||||||||||||
Loans and leases held for investment, net(2) | |||||||||||||||||||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||||||||||||||
| Deposits | $ | $ | $ | (3) | $ | (4) | $ | ||||||||||||||||||||||||||||
| Borrowed funds | |||||||||||||||||||||||||||||||||||
(1)Carrying value and estimated fair value are at cost.
(2)Carrying value and estimated fair value include impaired loans held for investment.
(3)Includes interest-bearing checking and money market accounts, savings accounts, and non-interest-bearing accounts.
(4)Includes CDs.
The methods and significant assumptions used to estimate fair values for our financial instruments are described below:
Cash and Cash Equivalents
Cash and cash equivalents is comprised of cash and due from banks and interest-earning deposits and other securities with financial institutions. Cash and due from banks includes cash on hand, cash equivalents, and balances with other banks. Interest-earning deposits and other securities primarily comprise interest-bearing deposits and short-term money market investments. The estimated fair values of cash and cash equivalents are assumed to equal their carrying values, as these financial instruments are either due on demand or have short-term maturities.
Federal Home Loan Bank Stock
Ownership in equity securities of the FHLB is generally restricted and there is no established liquid market for their resale; therefore the estimated fair value of the FHLB securities is assumed to equal their carrying value.
Loans and leases
We determine the fair value on substantially all of our loans and leases measured at amortized cost, on an individual loan basis generally using a discounted cash flow method. The discount rates reflect current market rates for loans with similar terms to borrowers having similar credit quality on an exit price basis. For impaired loans and leases we determine the fair value based on the collateral value less costs to sell.
Deposits
The fair values of deposit liabilities with no stated maturity (i.e., interest-bearing checking and money market accounts, savings accounts, and non-interest-bearing accounts) are equal to the carrying amounts payable on demand. The fair values of CDs represent contractual cash flows, discounted using interest rates currently offered on deposits with similar characteristics and remaining maturities. These estimated fair values do not include the intangible value of core deposit relationships, which comprise a portion of our deposit base.
Borrowed Funds
The estimated fair value of borrowed funds is based either on bid quotations received from securities dealers or the discounted value of contractual cash flows with interest rates currently in effect for borrowed funds with similar maturities and structures.
Fair Value Option
We elected the fair value option for certain items as discussed throughout the Notes to the Condensed Consolidated Financial Statements to more closely align the accounting method with the underlying economic exposure.
The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Loans held for sale: | |||||||||||||||||||||||
Net gain on loan sales and securitizations | $ | $ | $ | $ | |||||||||||||||||||
The following table reflects the difference between the aggregate fair value and aggregate remaining contractual principal balance outstanding for assets and liabilities for which the fair value option has been elected:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Unpaid Principal Balance | Fair Value | Fair Value Over / (Under) UPB | Unpaid Principal Balance | Fair Value | Fair Value Over / (Under) UPB | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Non-accrual loans: | |||||||||||||||||||||||||||||||||||
| Loans held for sale | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Total non-accrual loans | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Accrual loans: | |||||||||||||||||||||||||||||||||||
| Loans held for sale | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Total accrual loans | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Total loans: | |||||||||||||||||||||||||||||||||||
| Loans held for sale | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
26
Table of Contents | Flagstar Bank, National Association | |||||||
Notes to the Condensed Consolidated Financial Statements (unaudited) | ||||||||
Note 16 - Mezzanine and Stockholders' Equity
The following table and paragraphs summarize our preferred stock as of June 30, 2026 and December 31, 2025:
As of June 30, 2026 and December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Preferred Stock Series | Shares Authorized | Shares Issued | Shares Outstanding | Par Value | Liquidation Preference Per Share | June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Fixed Rate Perpetual Noncumulative Convertible Series B | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Non-Voting Common Equivalent Series D | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Stock Repurchase Program
In July 2026, the Bank's Board of Directors authorized a stock repurchase program (the "Program") to repurchase up to $250 million of the Bank's outstanding shares of common stock over the next 12-month period. The Program may be suspended, modified, or discontinued at any time without prior notice.
Under the Program, shares may be repurchased from time to time on the open market or otherwise, including through Rule 10b5-1 trading plans, in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended, or through privately negotiated transactions. The timing and exact amount of any share repurchases will be subject to a variety of factors, including the availability of stock for repurchases, the Bank's capital position and financial performance, regulatory considerations, and general market conditions. The Program does not obligate the Bank to acquire any particular amount of common stock.
Series A Preferred stock
Each Series A preferred depositary share represents a 1/40th interest in a share of our Fixed-to-Floating Rate Series A Noncumulative Perpetual Preferred Stock, with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). Dividends accrue on the shares at a fixed rate equal to 6.375 percent per annum until March 17, 2027, and a floating rate equal to three-month SOFR plus 408.26 basis points per annum beginning on March 17, 2027. Dividends are payable in arrears on March 17, June 17, September 17, and December 17 of each year, which commenced on June 17, 2017. For the six months ended June 30, 2026 and 2025, we paid $16
Series B Preferred Stock
As of June 30, 2026, the outstanding shares of Series B Noncumulative Convertible Preferred Stock (the "Series B Preferred Stock") represented the right (on an as-converted basis) to receive approximately 250 thousand shares of our common stock. Series B Preferred Stock shareholders do not have voting rights, except in limited circumstances.
The Series B Preferred Stock is classified in mezzanine equity as it is contingently convertible into shares of preferred stock that are redeemable for cash, contingent on events that are not solely in our control. The Series B Preferred Stock is not remeasured because it is currently not probable that it will become redeemable. For the six months ended June 30, 2026 and 2025, we paid an immaterial amount of dividends on our Series B preferred stock.
Warrants
Warrants to purchase shares of Series D NVCE Stock, par value $0.01 per share, for an initial exercise price of $2,500 per share (collectively, the "Warrants"), were issued in conjunction with the March 2024 capital raise. The Warrants were not exercisable until September 10, 2024 and expire 7 years after issuance. Pursuant to the terms of the Warrants, as a result of the dividend paid on shares of our common stock, the exercise price of the Warrants was reduced to $2,476 as of June 30, 2026 ($7.43 per common share assuming full conversion). At the time of issuance, the Warrants entitled the holders thereof to receive an aggregate of 315 thousand shares of Series D NVCE Stock (subject to net settlement of shares) upon exercise of the Warrants. Series D NVCE Stock is convertible into common stock at a conversion rate of 333 common shares per one share of Series D NVCE Stock or approximately 105 million shares of common stock.
Following the Bank's holding company merger in October 2025, each outstanding Warrant was converted to be exercisable for shares of the Bank's common stock instead of Series D NVCE Stock, at the same conversion rate as would be received under the terms of the Series D NVCE stock. However, if a holder's receipt of common stock upon exercise requires regulatory approval or non-objection, that Warrant will remain exercisable for shares of Series D NVCE Stock until such approval or non-objection is obtained.
Note 17 - Commitments and Contingencies
Loan Commitments and Letters of Credit
In the normal course of business, we have various commitments outstanding to extend credit in the form of loan originations, as well as commercial, performance and financial stand-by letters of credit, which are not included on our Condensed Consolidated Statements of Condition.
The following table summarizes our off-balance sheet commitments to originate loans and letters of credit:
| June 30, 2026 | December 31, 2025 | ||||||||||
Multi-family and Commercial real estate | $ | $ | |||||||||
| One-to-four family including interest rate locks | |||||||||||
| Other loan commitments | |||||||||||
| Total loan commitments | $ | $ | |||||||||
Stand-by letters of credit | |||||||||||
Total commitments(1) | $ | $ | |||||||||
These commitments consist of agreements to extend credit as long as there is no violation of any condition established in the contract under which the loan is made. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. The fees we collect in connection with the issuance of letters of credit are included in Fee income in the Condensed Consolidated Statements of Income (Loss).
These instruments involve, to varying degrees, elements of credit and interest rate risk beyond the amount recognized on the Condensed Consolidated Statements of Condition. Our exposure to credit losses in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The contractual amount of standby letters of credit represents the maximum potential amount of future payments that we could be required to make and represents our maximum credit risk. We utilize the same credit policies in making commitments and conditional obligations as we do for balance sheet instruments.
Legal Proceedings
We are involved in various legal actions arising in the ordinary course of our business, including stockholder, class and derivative actions. The outcome of pending or threatened litigation, or of investigations or any other matters before regulatory agencies is uncertain, whether currently existing or commencing in the future, including with respect to any litigation, investigation or other regulatory actions related to: (i) the business and disclosure practices of acquired companies, including our acquisition of Flagstar Bancorp and the purchase and assumption of certain assets and liabilities of Signature Bridge Bank, N.A. (“Signature”), (ii) the capital raise transaction we completed in March of 2024, (iii) our past material weaknesses in internal control over financial reporting, (iv) past cyber security breaches, and (v) recent events and circumstances involving the
Bank, including our full year 2023 earnings announcement, disclosures regarding credit losses, provisioning and goodwill impairment, and negative news and expectations about the prospects of the Bank (and associated stock price volatility and changes).
We have established an accrual related to the legal actions where we believe that a loss is probable, and the amount can be reasonably estimated. As of June 30, 2026 and December 31, 2025, the accrual for legal actions was immaterial. When we can do so, we also determine estimates of reasonably possible losses or ranges of reasonably possible losses, whether in excess of any related accrued liability or where there is no accrued liability. We currently estimate the range of reasonably possible losses in excess of amounts accrued at June 30, 2026 is immaterial.
There can be no assurance: (i) that we will not incur material losses due to damages, penalties, costs and/or expenses as a result of such litigation, investigations or regulatory proceedings, (ii) that the reserves we have established will be sufficient to cover such losses, or (iii) that such losses will not materially exceed such reserves and have a material impact on our financial condition or results of operations. We may incur significant legal expenses in defending such litigation, or as a result of our involvement in such investigations or regulatory proceedings, during the pendency of these matters, and in connection with any other potential cases, including expenses for the potential reimbursement of legal fees of officers and directors under indemnification obligations.
Securities Litigation
Flagstar and certain former executive officers of Flagstar and certain current and former directors of Flagstar have been named as defendants in a consolidated purported shareholder class action captioned Lemm, Jr. v. New York Community Bancorp, Inc., et al., Case No. 1:24-cv-00903, filed on February 6, 2024 (and later amended on September 6, 2024) in the United States District Court for the Eastern District of New York. This action seeks unspecified compensatory damages to be proven at trial, alleges violations of the federal securities laws, including Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5, with respect to disclosures concerning our business, operations and prospects, particularly regarding the impact of the Flagstar Bancorp and Signature transactions and the Bank’s CRE loan portfolio and related matters, that were made in our public SEC filings and press releases during the period beginning on July 27, 2022 and ending on February 29, 2024. In addition, plaintiffs allege claims of violations of various federal securities laws related to the registration statement filed by NYCB in connection with its merger with Flagstar in 2022.
On December 19, 2024, another purported shareholder of Flagstar filed an additional purported shareholder class action, captioned Garfield v. Flagstar Financial, Inc. et al., Case No. 1:24-cv-08655, in the United States District Court for the Eastern District of New York against the Bank and certain current and former directors and executive officers of Flagstar. This additional purported class action alleged substantially the same claims as those set forth in the Lemm complaint and the plaintiff has filed a motion to consolidate this matter with the Lemm matter. On April 28, 2025, the Court entered a stipulated order consolidating the Lemm and Garfield matters. The action formerly known as Lemm was then recaptioned by the Court to In re: New York Community Bancorp, Inc. Securities Litigation. On August 8, 2025, Flagstar and the individual defendants filed a motion to dismiss for this matter which is fully briefed and is pending decision by the Court. We are vigorously defending the allegations set forth in the purported class action complaints and also intend to vigorously defend any related actions.
Flagstar's former President and Chief Executive Officer and former Senior Executive Vice President and Chief Financial Officer, as well as all of Flagstar’s directors as of January 31, 2024, have also been named as defendants in the following purported shareholder derivative actions: Hauser v. Cangemi, et al., Case No. 1:24-cv-01207, filed on February 15, 2024 in the United States District Court for the Eastern District of New York; Pierce v. Cangemi, et al., Case No. 1:24-cv-01408, filed on February 26, 2024 in the United States District Court for the Eastern District of New York; Karp v. Cangemi et al., Case No. 1:24-cv-01421, filed on February 26, 2024 in the United States District Court for the Eastern District of New York; Wang v. Cangemi et al. Case No. 1:24-cv-01422, filed on February 26, 2024 in the United States District Court for the Eastern District of New York; and Podems v. Cangemi, et al., Case No. 608697/2024, filed on May 17, 2024 in the Supreme Court of New York State (Nassau County). These actions, which also name Flagstar as a nominal defendant and seek unspecified compensatory damages and certain corporate governance and internal procedures reforms, allege claims of breach of fiduciary duty, gross mismanagement, waste of corporate assets, unjust enrichment, and aiding and abetting with respect to the director defendants, and violations of Sections 10(b) and 21D of the Exchange Act with respect to the officer defendants. The allegations in the complaints relate to disclosures concerning our business, operations and prospects, particularly regarding the impact of the Flagstar Bancorp and Signature transactions and the Bank’s CRE loan portfolio and related matters, that were made in our public SEC filings and press releases during the period beginning on March 1, 2023 and ending on January 31, 2024, as well as the defendants’ management of Flagstar during such period. The parties filed a stipulated motion to consolidate and stay the related matters, pending the entry of a decision on the defendants' motions to dismiss in the related federal securities class action, which was granted by the court on August 18, 2025. The order re-captioned the action as In Re: New York Community Bank Stockholder Derivative Litigation. Plaintiffs filed a consolidated complaint on October 29, 2025. Flagstar has filed a notice to remove the Podems state derivative action to federal court. On March 3, 2025, the federal magistrate granted Podems’ motion to remand the derivative case back to New York state court. Flagstar filed an objection. On April 9, 2025, the judge entered an order adopting the Magistrate Judge’s Report and Recommendation recommending that the Court grant Plaintiff’s motion to remand the case to state court. Therefore, the Podems matter will now proceed in the Supreme Court of New York, Nassau County. On May 27, 2025, the court entered a stipulated order to stay the Podems action in New York State court until the resolution of the motion to dismiss the federal securities class action. Flagstar and the named defendants are vigorously defending these actions and also intend to vigorously defend any related actions.
Cyber breach incidents
Flagstar has been named as a defendant in three different sets of purported class actions related to three separate cyber breach incidents. Flagstar has vigorously defended these actions and also intends to vigorously defend any future or related actions. The first set, captioned Phillip Angus et al v. Flagstar Bank, Case No. 2:21-cv-10657-MFL-DRG, filed in the United States District Court for the Eastern District of Michigan, relates to a data breach that occurred in January 2021, after threat actors exploited vulnerabilities in a File Transfer Appliance (FTA) used by Flagstar Bancorp, which was acquired by Flagstar in December 2022, to gain access to confidential customer information. The action seeks unspecified compensatory damages to be proven at trial and alleges breach of implied-in-fact contract, breach of confidence and public disclosure of private fact and also violations of various California consumer protection laws. On March 27, 2025, the court granted Flagstar’s motion to dismiss as to certain allegations and denied Flagstar’s motion to dismiss as to certain other allegations. On April 4, 2025, the court entered a stipulated Order to Stay Proceedings Pending Mediation. The order stayed the matter for 90 days, to allow the parties to participate in mediation to resolve both this matter and the In re: Flagstar December 2021 Data Security Incident Litigation matter, discussed below.
The second set, captioned In re: Flagstar December 2021 Data Security Incident Litigation, Case No. 2:22-cv-11385 is comprised of twenty purported class action lawsuits that were consolidated into a single action filed on June 23, 2023, in the United States District Court for the Eastern District of Michigan, and relates to a cyber breach of Flagstar Bancorp’s information technology system that occurred in December 2021. The action seeks unspecified compensatory damages to be proven at trial and alleges common law and statutory claims associated with the exposure of customers’ Personally Identifiable Information (PII) as a result of the data breach and seeks class certification. On September 30, 2024, the court dismissed 17 of the 18 claims in the plaintiff’s consolidated complaint, allowing only the claim under the California Consumer Privacy Act to proceed, thereby limiting participation in the action to California class members. On April 4, 2025, the court entered a stipulated Order to Stay Proceedings Pending Mediation. The order stayed the matter for 90 days, to allow the parties to participate in mediation to resolve this matter and the Phillip Angus et al v. Flagstar Bank matter, discussed above.
On August 8, 2025, the parties reached a global settlement for both In re: Flagstar December 2021 Data Security Incident Litigation and Phillip Angus et al v. Flagstar Bank. The settlement, which requires court approval would fully resolve the common law and statutory claims of all potential claimants associated with the combined lawsuits. In order to consolidate the two data breach cases, In re: Flagstar December 2021 Data Security Incident Litigation was reassigned to the judge presiding over Phillip Angus et al v. Flagstar Bank. An order was issued on August 25, 2025, closing out In re: Flagstar December 2021
Data Security Incident Litigation and consolidating the two cases into the Angus matter (Case No. 2:21-cv-10657 (E.D. Mich.). As part of the global settlement process, Plaintiffs first filed a consolidated class action complaint on September 24, 2025 and then, on October 1, 2025, filed an unopposed Motion for Preliminary Approval of Class Settlement with the Court. On January 15, 2026, the court scheduled a hearing on the Motion for Preliminary Approval of Class Action Settlement. On February 20, 2026, following a hearing, the Court requested the Plaintiff's submit a written order to the Court for its approval. On March 12, 2026, the Court entered the Preliminary Approval Order which includes a scheduling order for administration of the settlement agreement. On April 1, 2026, we made payment to the settlement administrator as required by the scheduling order. A hearing for final approval of the settlement is scheduled for October 1, 2026.
The third set, captioned In re: MOVEit Customer Data Security Breach Litigation, MDL No.1:23-md-03083-ADB-PGL, includes four purported class action lawsuits filed against Flagstar Bank, N.A in October 2023 that are part of the United States Judicial Panel on Multidistrict Litigation (JPML) case, captioned as, In Re MOVEit Customer Data Security Breach Litigation pending in the United States District Court for the District Court of Massachusetts. The class actions involving Flagstar allege claims of negligence, breach of contract, unjust enrichment, and other claims related to the MOVEit data breach, and seek unspecified compensatory and punitive damages. Litigation involving Flagstar is currently stayed pending ongoing court proceedings against a representative group of the larger class actions and which are intended to address critical legal and factual issues common to the parties.
Signature Bridge Bank
On March 20, 2023, Flagstar Bank entered into a Purchase and Assumption Agreement (the “Agreement”) with the FDIC, as receiver of Signature, to acquire certain assets and assume certain liabilities of Signature (the “Signature Transaction”). In connection with the Signature Transaction, Flagstar Bank assumed all of Signature’s branches. Flagstar Bank acquired only certain parts of Signature it believed to be financially and strategically complementary that were intended to enhance its future growth.
Pursuant to the terms of the Agreement, Flagstar Bank was not required to make a cash payment to the FDIC on March 20, 2023, as consideration for the acquired assets and assumed liabilities. Any items identified that affected the bargain gain were recorded in the period they were identified as a result of ongoing discussion that impacted the assets and liabilities acquired or assumed through the three months end March 31, 2024. Due to the complexity of the transaction that included only certain assets and liabilities of Signature and the servicing agreement, which ceased on March 20, 2024, Flagstar Bank remains engaged with the FDIC regarding the net settlement of historical activity and the amounts assumed at the transaction date as well as the balances of certain assets and liabilities at the time of the Signature Transaction. This is expected to take time to resolve and may result in net settlement payments to or from the FDIC which could impact other income or expense which, although not expected, could be material to the financial statements in future periods.
Interest on Escrow Preemption
Flagstar Bank is pursuing an appeal of a trial court’s decision that it had violated California Civil Code section 2954.8(a), which requires financial institutions to pay at least 2 % interest annually on escrow accounts associated with mortgage loans. Plaintiffs filed a class action lawsuit, asserting that Flagstar's refusal to pay interest on California mortgage escrow accounts was an unlawful business act or practice under California law. In response, Flagstar argued that applicable California law was preempted by the NBA because it significantly interfered with Flagstar’s exercise of its federal powers. The district court certified a class of California borrowers, rejected Flagstar’s preemption argument, and granted Plaintiffs’ motion for summary judgment on liability, holding Flagstar liable for failing to pay interest on escrowed funds. The court later enjoined Flagstar to pay interest going forward, and awarded the class $9.3 million in restitution and prejudgment interest. Flagstar then posted a bond with the trial court to stay enforcement of the judgment while Flagstar appealed. The 9th Circuit Court of Appeals affirmed the district court’s preemption holding, based on Lusnak v. Bank of America, N.A., 883 F.3d 1185 (9th Cir. 2018), wherein the Court ruled that the NBA did not preempt California’s interest on escrow statute as applied to another national bank.
In Cantero v. Bank of America, N.A., 49 F.4th 121 (2d Cir. 2022), a separate action not involving Flagstar, the Second Circuit reached a contrary conclusion about preemption of New York’s interest-on-escrow law. Both Flagstar and the Cantero plaintiffs petitioned the Supreme Court for certiorari to resolve the conflict. The Supreme Court granted certiorari in Cantero and reversed. The Court held instead that in applying Dodd-Frank’s codified Barnett Bank standard, courts must conduct a “nuanced comparative analysis” lining up the challenged state law against those the Supreme Court previously examined in its precedents “on which Barnett Bank relied.” On June 10, 2024, the Supreme Court granted Flagstar’s certiorari petition, vacated the panel’s initial decision, and remanded “for consideration in light of Cantero” Flagstar Bank, N.A. v. Kivett, No. 22-349.
On remand, the panel issued a new memorandum disposition decision similar to its pre-Cantero decision and held again that Lusnak’s “unqualified” language controlled and thus California law was not preempted. After Flagstar sought panel rehearing or rehearing en banc, the panel requested supplemental briefing and argument. The panel then issued a new published decision, again affirming the district court’s preemption holding. On November 17, 2025, Flagstar filed its petition for re-hearing en banc, arguing a rehearing is warranted in order to bring the Ninth Circuit’s precedents in line with Cantero.
In November, 2025, the OCC and supporting trade groups filed amicus briefs in support of Flagstar’s rehearing petition. On December 8, 2025, the Ninth Circuit ordered plaintiffs to respond to Flagstar’s petition for rehearing en banc. Plaintiff’s response to Flagstar's petition was filed on January 28, 2026. On March 26, 2026, the Ninth Circuit Court of Appeals issued an Order denying Flagstar's petition for rehearing and petition for rehearing en banc.
In Cantero, the 2nd Circuit issued its decision on May 5, 2026, and held that New York’s IOE law is preempted by the National Banking Act. On May 22, 2026, Plaintiffs in Cantero filed their Petition for certiorari. Bank of America’s response brief was filed on July 27, 2026.
We have been monitoring the Cantero decision and another similar case in the 1st Circuit Court of Appeals (Conti v Citizens Bank.), In Conti, Citizens Bank petitioned the Supreme Court for certiorari, appealing the First Circuit’s decision, finding that the National Bank Act does not preempt Rhode Island’s IOE law (reversing the District Court’s holding that it did). Citizens’ petition for Certiorari was initially denied on April 20, 2026. On May 11, 2026, following the Cantero decision, Citizens Bank filed a Petition for Rehearing with the United States Supreme Court, arguing that the 2nd Circuit’s decision in Cantero creates a circuit split between the First and Second Circuits, and presents an intervening circumstance of substantial effect that warrants rehearing. The Court ordered a response to Citizens Bank’s petition for re-hearing, which was filed on July 8, 2026.
Note 18 - Segment Reporting
Our chief operating decision maker is the Chief Executive Officer. We have evaluated our operating structure and determined that we operate in one
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Table of Contents
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | ||||
Our most significant risks include interest rate risk and market risk. For more information regarding interest rate risk please refer to the "Interest Rate Risk" section of the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this Form 10-Q. There have been no changes with regard to our market risk disclosed in "Interest Rate Risk" in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Bank’s Annual Report on Form 10-K for the year ended December 31, 2025.
| Item 4. | Controls and Procedures | ||||
Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2026. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026 our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our system of Internal Control over Financial Reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2026 to which this report relates, which materially affect, or are reasonably likely to materially affect, our system of Internal Control over Financial Reporting.
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PART II - OTHER INFORMATION
| Item 1. | Legal Proceedings | ||||
The information included under Note 17 - Commitments and Contingencies to our condensed consolidated financial statements is incorporated by reference into this Part II, Item 1.
| Item 1A. | Risk Factors | ||||
Please see “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025 for information regarding risk factors that could materially affect our business, financial condition, or future results of operations. There have been no changes with regard to the risk factors disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||||
Shares Repurchased Pursuant to Flagstar’s Stock-Based Incentive Plans
Participants in the Bank’s stock-based incentive plans may have shares of common stock withheld to fulfill the income tax obligations that arise in connection with the vesting of their stock awards. Shares that are withheld for this purpose are repurchased pursuant to the terms of the applicable stock-based incentive plan.
Shares Repurchased Pursuant to the Board of Directors’ Share Repurchase Authorization
We had no active share repurchase programs as of June 30, 2026. In July 2026, the Board authorized a stock repurchase program to repurchase up to $250 million of the Bank's outstanding shares of common stock over the next 12-month period. The Program may be suspended, modified, or discontinued at any time without prior notice. Share repurchases may be accomplished from time to time on the open market or otherwise, including through Rule 10b5-1 trading plans, which sets certain restrictions on the method, timing, price, and volume of share repurchases, or through privately negotiated transactions. The repurchase program does not obligate the Bank to acquire any shares.
Shares that are repurchased pursuant to the Bank’s stock-based incentive plans, are held in our Treasury account and may be used for various corporate purposes, including, but not limited to, merger transactions and the vesting of restricted stock awards.
The following table provides information relating to our repurchase of common stock for the three months ended June 30, 2026.
| Period | Total Shares of Common Stock Repurchased | Average Price Paid per Common Share | Total Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs | |||||||||||||||||
| Second Quarter 2026 | ||||||||||||||||||||
| April 1 - 30, 2026 | 18,609 | $ | 14.13 | $ | — | |||||||||||||||
| May 1 - 31, 2026 | 4,262 | 13.53 | — | |||||||||||||||||
| June 1 - 30, 2026 | 112,045 | 15.15 | — | |||||||||||||||||
| Total Second Quarter 2026 | 134,916 | $ | 14.96 | — | ||||||||||||||||
| Item 3. | Defaults Upon Senior Securities | ||||
We had no defaults on senior securities.
| Item 4. | Mine Safety Disclosures | ||||
None.
| Item 5. | Other Information | ||||
During the three months ended June 30, 2026, none of our directors or officers informed us of the adoption termination
| Item 6. | Exhibits | ||||
| Exhibit No. | ||||||||
| 2.1 | Second Amended and Restated Plan of Merger, dated as of September 22, 2025, by and between Flagstar Financial, Inc. and Flagstar Bank, N.A.(1) | |||||||
| 2.2 | Agreement for the Bulk Purchase and Sale of Mortgage Servicing Rights, dated as of July 24, 2024, by and between Nationstar Mortgage LLC and Flagstar Bank, N.A.*(2) | |||||||
| 2.3 | Asset Purchase Agreement, dated as of July 24, 2024, by and between Nationstar Mortgage LLC and Flagstar Bank, N.A.*(2) | |||||||
| 3.1 | Amended and Restated Articles of Association of Flagstar Bank, National Association (3) | |||||||
| 3.2 | Amended and Restated Bylaws of Flagstar Bank, National Association(3) | |||||||
| 4.2 | Deposit Agreement, dated as of March 16, 2017, by and among the Registrant, Computershare, Inc, and Computershare Trust Company, N.A., as joint depositary, and the holders from time to time of the depositary receipts described therein (4) | |||||||
| 4.3 | Form of Warrant Certificate for Shares of Series D Non-Voting Common Equivalent Stock (5) | |||||||
| 4.4 | Registrant will furnish, upon request, copies of all instruments defining the rights of holders of long-term debt instruments of the registrant and its consolidated subsidiaries | |||||||
| 10.1 | Amended and Restated Employment Agreement, dated as of May 18, 2026, by and between Flagstar Bank, N.A. and Joseph M. Otting**(filed herewith) | |||||||
| 31.1 | Rule 13a-14(a) Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | |||||||
| 31.2 | Rule 13a-14(a) Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) | |||||||
| 32 | Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) | |||||||
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | |||||||
*Pursuant to Item 601 (a)(5) or Item 601(b)(2) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request.
** Management plan or compensation plan arrangement.
(1)Incorporated by reference to the Definitive Additional Proxy Materials on Schedule 14A filed with the Securities and Exchange Commission on September 22, 2025 (File No. 1-31565).
(2)Incorporated by reference to Exhibits to the Form 8-K filed with the Securities and Exchange Commission on July 29, 2024 (File No. 1-31565)
(3)Incorporated by reference to Exhibits to the Form 8-K filed with the Securities and Exchange Commission on October 20, 2025 (File No. 1-31565).
(4)Incorporated herein by reference to Exhibits to the Form 8-K filed with the Securities and Exchange Commission on March 17, 2017 (File No. 1-31565).
(5)Incorporated herein by reference to Exhibits 4.17 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2026 (File No. 1-31565).
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DATE: | August 6, 2026 | Flagstar Bank, National Association | |||||||||
| (Registrant) | |||||||||||
/s/ Bryan Marx | |||||||||||
Bryan Marx | |||||||||||
Executive Vice President and Chief Accounting Officer | |||||||||||
(Principal Accounting Officer and Authorized Signatory) | |||||||||||
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