Flagstar's Q3 2024 Loss Reflects Elevated Asset Quality Metrics Following a Credit Review and Transitioning Strategy

Flagstar Financial, Inc. (Flagstar or the Company), formerly New York Community Bancorp, Inc., reported another larger-than-expected quarterly loss for Q3 2024.

Key highlights:
-- For Q2 2024, Flagstar announced a net loss of $280 million for Q3 2024, down from a loss of $323 million loss in Q2 2024. The provision for credit losses has remained elevated as the Company maintains reserve levels at a higher level.

-- Both 2024 and 2025 are now expected to be transitional years with elevated, although moderating, loan loss provisioning and higher expenses as the Company embarks on a strategy to become a more highly diversified and profitable commercial bank.

-- Asset quality metrics have weakened and realized losses have remained higher than historical levels. Flagstar expects losses and provisioning needs to remain elevated, as the Company works through repositioning its loan portfolio and reducing its exposure to commercial real estate.

-- According to John Mackerey, Senior Vice President, Sector Lead, North American Financial Institution Ratings, "Earnings pressures have been more than we previously anticipated when we changed the trends to Stable in March. However, the Company's capital metrics and funding profile have improved mitigating some of the earnings concerns."