Firm highlights progress despite ongoing losses
Flagstar Financial, Inc. (NYSE: FLG) has reported a fourth-quarter 2024 GAAP net loss attributable to common stockholders of $0.41 per diluted share and a non-GAAP adjusted net loss of $0.34 per diluted share. Despite the losses, the company noted progress in key financial areas, including capital strength and deposit growth.
The company recorded a net loss of $160 million for the quarter, improving from a $280 million net loss in the third quarter of 2024. Compared to the fourth quarter of 2023, which saw a net loss of $2.7 billion, the results mark a significant jump. However, for the full year, Flagstar reported a net loss of $1.09 billion, compared to a net loss of $79 million in 2023.
Despite these losses, chairman, president, and CEO Joseph M. Otting highlighted 2024 as a “transitional year”, emphasizing significant progress in capital strengthening, liquidity enhancement, and commercial real estate risk reduction. The company executed a $1.05 billion capital infusion, streamlined its business through divestitures, and improved its credit quality profile.
Capital and liquidity position
Flagstar’s Common Equity Tier 1 (CET1) capital ratio increased to 11.9%, placing it in the top quartile among its peers, a news release noted. The company also reported ample liquidity of $32 billion, covering 240% of uninsured deposits.
The bank reduced its reliance on high-cost funding, with wholesale borrowings declining by $5.9 billion, now representing 13% of total assets. Meanwhile, brokered certificates of deposit (CDs) decreased by $2.5 billion, aligning with the company’s efforts to optimize its funding mix.
Loan and deposit trends
Total loans declined as part of a broader strategy to reduce commercial real estate (CRE) exposure. Multi-family loans dropped by $1.0 billion in the quarter and $3.2 billion year-to-date, while CRE loans decreased by $532 million in the quarter and $1.8 billion year-to-date.
Retail and private banking deposits continued to grow, with retail deposits increasing by 3% sequentially to $35.9 billion and private banking deposits rising by 3% to $18.2 billion. Savings accounts grew 63% year-over-year, reflecting customer interest in high-yield savings products.
Outlook and strategic focus
Otting expressed confidence in Flagstar’s ability to execute its 2025 strategic initiatives, aiming to position the company as a top-tier regional bank. Key priorities include continued risk reduction, commercial banking expansion, and further capital improvements.
“Perhaps our most important accomplishment this year is the improvement in our capital position,” Otting said. “All of these trends are positive and point to the significant momentum underpinning our growth initiatives, especially in our commercial banking business.”
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