Flagstar Cuts 2027 EPS Forecast to $0.85–$0.95 and Pushes Targets to 2028
Key Facts
Flagstar cut its 2027 adjusted diluted earnings per share forecast to a range of $0.85 to $0.95, from a previous estimate of $1.60 to $1.70, in a revision reflecting a delay in the recovery path the company is targeting. Chief Executive Joseph Otting said full achievement of the long-term strategic goals had moved to 2028 from 2027. Otting linked the revised timeline to an environment of higher interest rates for longer. The company announced its third-quarter results ahead of an investor call scheduled for the same day.
Third-quarter results showed diluted earnings per common share falling to $0.01, compared with $0.06 in the second quarter, but above a loss of $0.11 per share in the third quarter of 2025. The bank reported net income of $12 million, down from $34 million in the previous quarter, compared with a net loss of $36 million a year earlier. The year-over-year comparison reflects the bank's move from a loss to a profit, while the quarterly comparison points to lower income during the three months ended in September. The company reported that credit loss provisions increased by $58 million in the quarter. It attributed the increase mainly to the effect of higher interest rates, including on its New York rent-regulated multifamily real estate portfolio.
By contrast, net interest income rose 5% to $460 million in the third quarter, an increase of $20 million from the second quarter, while net interest margin increased four basis points to 2.17%. Year over year, interest income rose $35 million, or 8%, and the margin improved 26 basis points compared with the third quarter of 2025. Commercial and industrial loans increased by $2.0 billion, or 11%, to $20.6 billion during the quarter. Total loans also rose by $958 million to $61.9 billion on September 30, 2026. The company said growth in commercial and industrial loans coincided with a $1.1 billion, or 3%, reduction in its multifamily and commercial real estate loan portfolio to $34.1 billion.
On commercial real estate concentration, the ratio improved to 346% in the third quarter from 350% in the second quarter, and the company recorded $1.2 billion in commercial real estate loan principal paydowns. In the New York multifamily portfolio, loans fell by $531 million, or 4%, compared with the previous quarter. However, loans classified as substandard increased by $248 million, or 4%, over the same period. These movements place contraction in some parts of the portfolio alongside an increase in nonperforming loans, as Flagstar said credit cost pressures included persistent inflation and deposit competition. The company added that New York rent regulation policies had continued to affect its multifamily real estate portfolio.
According to the company, the higher-for-longer interest rate environment, deposit competition, persistent inflation and New York rent regulation policies pressured credit costs; it cited these factors as context for its revised strategic path. At quarter-end, the common equity Tier 1 capital ratio was 12.38%. Flagstar also said it completed a $250 million share repurchase in early October. The company had scheduled a results discussion call for October 23 at 8:00 a.m. Eastern Time. An archived recording of the call remains available through the investor relations website until November 20, 2026.