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What changed in FLAGSTAR BANK, NATIONAL ASSOCIATION's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FLAGSTAR BANK, NATIONAL ASSOCIATION's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+498 added−590 removedSource: 10-K (2026-02-27) vs 10-K (2025-03-04)

Top changes in FLAGSTAR BANK, NATIONAL ASSOCIATION's 2025 10-K

498 paragraphs added · 590 removed · 308 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

104 edited+40 added−105 removed109 unchanged
Biggest changeMany of these designated exceptions are arrangements previously addressed in advisory opinions and include: certain investment-related deposits; property management service deposits; deposits for cross-border clearing services; deposits related to real estate and mortgage servicing activities; retirement and 529 deposits; deposits related to employee benefits programs; deposits held to secure credit card loans; and deposits placed by agencies to disburse government benefits.
Biggest changeUnder the FDIC's framework for analyzing whether bank deposits obtained through third-party arrangements are brokered deposits pursuant to Section 29 of the Federal Deposit Insurance Act, a person is generally a "deposit broker" if it is "engaged in the business of placing deposits, or facilitating the placement of deposits, of third parties with insured depository institutions or the business of placing deposits with insured depository institutions for the purpose of selling interests in those deposits to third parties." The FDIC has also identified a number of common business relationships described as "designated exceptions" that meet the primary purpose exception to Section 29 of the Federal Deposit Insurance Act and include: certain investment-related deposits; property management service deposits; deposits for cross-border clearing services; deposits related to real estate and mortgage servicing activities; retirement and 529 deposits; deposits related to employee benefits programs; deposits held to secure credit card loans; and deposits placed by agencies to disburse government benefits.
Properties and facilities of a smaller scale are evaluated by qualified in-house assessors, as well as by industry experts in environmental testing and remediation. This two-pronged approach identifies potential risks associated with asbestos-containing material, above and underground storage tanks, radon, electrical transformers (which may contain PCBs), ground water flow, storm and sanitary discharge, and mold, among other environmental risks.
Properties and facilities of a smaller scale are evaluated by qualified in-house assessors, as well as by industry experts in environmental testing and remediation. This two-pronged approach identifies potential risks associated with asbestos-containing material, above ground and underground storage tanks, radon, electrical transformers (which may contain PCBs), ground water flow, storm and sanitary discharge, and mold, among other environmental risks.
Applicable consumer protection laws, and their implementing regulations, include, but may not be limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Truth in Lending Act (Regulation Z), Truth in Savings Act (Regulation DD), Equal Credit Opportunity Act (Regulation B), Electronic Funds Transfer Act (Regulation E), Fair Housing Act, Home Mortgage Disclosure Act (Regulation C), Fair Debt Collection Practices Act (Regulation F), Fair Credit Reporting Act (Regulation V), as amended by the Fair and Accurate Credit Transactions Act, Expedited Funds Availability (Regulation CC), Reserve Requirements (Regulation D), Insider Transactions (Regulation O), Privacy of Consumer Information (Regulation P), Margin Stock Loans (Regulation U), Right To Financial Privacy Act, Flood Disaster Protection Act, Homeowners Protection Act, Servicemembers Civil Relief Act, Real Estate Settlement Procedures Act (Regulation X), Telephone Consumer Protection Act, CAN-SPAM Act, Children’s Online Privacy Protection Act, the Military Lending Act, and the Homeownership Counseling Act.
Applicable federal consumer protection laws, and their implementing regulations, include, but may not be limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Truth in Lending Act (Regulation Z), Truth in Savings Act (Regulation DD), Equal Credit Opportunity Act (Regulation B), Electronic Funds Transfer Act (Regulation E), Fair Housing Act, Home Mortgage Disclosure Act (Regulation C), Fair Debt Collection Practices Act (Regulation F), Fair Credit Reporting Act (Regulation V), as amended by the Fair and Accurate Credit Transactions Act, Expedited Funds Availability (Regulation CC), Reserve Requirements (Regulation D), Insider Transactions (Regulation O), Privacy of Consumer Information (Regulation P), Margin Stock Loans (Regulation U), Right To Financial Privacy Act, Flood Disaster Protection Act, Homeowners Protection Act, Servicemembers Civil Relief Act, Real Estate Settlement Procedures Act (Regulation X), Telephone Consumer Protection Act, CAN-SPAM Act, Children’s Online Privacy Protection Act, the Military Lending Act, and the Homeownership Counseling Act.
Generally, however, they contain one or more of the following elements: (i) restrictions on trade with, or investment in, a sanctioned country, including prohibitions against direct or indirect imports from, and exports to, a sanctioned country and 22 prohibitions on “U.S. persons” engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons).
Generally, however, they contain one or more of the following elements: (i) restrictions on trade with, or investment in, a sanctioned country, including prohibitions against direct or indirect imports from, and exports to, a sanctioned country and prohibitions on “U.S. persons” engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons).
The standards also must be consistent with accompanying FDIC Guidelines, which include loan-to-value limitations for the different types of real estate loans. Institutions are also permitted to make a limited amount of loans that do not conform to the proposed loan-to-value limitations as long as such exceptions are reviewed and justified appropriately.
The standards also must be consistent with accompanying guidelines, which include loan-to-value limitations for the different types of real estate loans. Institutions are also permitted to make a limited amount of loans that do not conform to the proposed loan-to-value limitations as long as such exceptions are reviewed and justified appropriately.
Under these regulations, all insured depository institutions, such as the Bank, must adopt and maintain written policies establishing appropriate limits and standards for extensions of credit that are secured by liens or interests in real estate or are 26 made for the purpose of financing permanent improvements to real estate.
Under these regulations, all insured depository institutions, such as the Bank, must adopt and maintain written policies establishing appropriate limits and standards for extensions of credit that are secured by liens or interests in real estate or are made for the purpose of financing permanent improvements to real estate.
Among other things, the new legislation: (i) curtails rent increases from material capital improvements and Individual Apartment Improvements; (ii) all but eliminates the ability for apartments to exit rent regulation; (iii) does away with vacancy decontrol and high-income deregulation; and (iv) repealed the 20 percent vacancy bonus.
Among other things, the legislation: (i) curtails rent increases from material capital improvements and Individual Apartment Improvements; (ii) all but eliminates the ability for apartments to exit rent regulation; (iii) does away with vacancy decontrol and high-income deregulation; and (iv) repealed the 20 percent vacancy bonus.
Community Reinvestment Act Federal Regulation Under the Community Reinvestment Act, as implemented by OCC regulations, an institution has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods.
Community Reinvestment Act Federal Regulation Under the Community Reinvestment Act ("CRA"), as implemented by OCC regulations, an institution has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods.
The CCPA contemplates civil penalties of up to $2,500 for each violation and up to $7,500 for each intentional violation and includes a private right of action (permitting lawsuits to be brought by private individuals 23 instead of the state Attorney General or other government actor for certain breaches).
The CCPA contemplates civil penalties of up to $2,500 for each violation and up to $7,500 for each intentional violation and includes a private right of action (permitting lawsuits to be brought by private individuals instead of the state Attorney General or other government actor for certain breaches).
Under the Dodd-Frank Act and the QM Rule, loans meeting the definition of “qualified mortgage” are entitled to a presumption that the lender satisfied the ability-to-repay requirements. The presumption is a conclusive presumption/safe 25 harbor for loans meeting the QM requirements, and a rebuttable presumption for higher-priced loans meeting the QM requirements.
Under the Dodd-Frank Act and the QM Rule, loans meeting the definition of “qualified mortgage” are entitled to a presumption that the lender satisfied the ability-to-repay requirements. The presumption is a conclusive presumption/safe harbor for loans meeting the QM requirements, and a rebuttable presumption for higher-priced loans meeting the QM requirements.
The FDIC regulations require each institution to establish and maintain written internal real estate lending standards that are consistent with safe and sound banking practices, and appropriate to the size of the institution and the nature and scope of its real estate lending activities.
The regulations require each institution to establish and maintain written internal real estate lending standards that are consistent with safe and sound banking practices, and appropriate to the size of the institution and the nature and scope of its real estate lending activities.
Section 23B requires that covered transactions and a broad list of other specified transactions be on terms substantially the same as, or at least as favorable to, the institution or its subsidiaries as similar transactions with non-affiliates. The Sarbanes-Oxley Act of 2002 generally prohibits loans by the Company to its executive officers and directors.
Section 23B requires that covered transactions and a broad list of other specified transactions be on terms substantially the same as, or at least as favorable to, the institution or its subsidiaries as similar transactions with non-affiliates. The Sarbanes-Oxley Act of 2002 generally prohibits loans by the Bank to its executive officers and directors.
Mortgage origination activities are subject to, among others, the Equal Credit Opportunity Act, the Federal Truth-in-Lending Act, the Fair Housing Act, the Fair Credit Report Act, the National Flood Insurance Act and the Real Estate Settlement Procedures Act and related regulations that prohibit discrimination and require the disclosure of certain basic information to mortgagors concerning credit terms and settlement costs.
Mortgage origination activities are subject to federal laws that include, among others, the Equal Credit Opportunity Act, the Federal Truth-in-Lending Act, the Fair Housing Act, the Fair Credit Report Act, the National Flood Insurance Act and the Real Estate Settlement Procedures Act and related federal regulations that prohibit discrimination and require the disclosure of certain basic information to mortgagors concerning credit terms and settlement costs.
All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and all employees are required to complete annual training that focuses on preventing, identifying, reporting and stopping any type of unlawful discrimination. Federal, State, and Local Taxation The Company is subject to federal, state, and local income taxes.
All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and all employees are required to complete annual training that focuses on preventing, identifying, reporting and stopping any type of unlawful discrimination. Federal, State, and Local Taxation The Bank is subject to federal, state, and local income taxes.
A debit card issuer may recover an additional one cent per transaction for fraud prevention purposes if the issuer complies with certain fraud-related requirements prescribed by the FRB. The FRB also adopted requirements that issuers include two unaffiliated networks for routing debit transactions that are applicable to the Company and the Bank.
A debit card issuer may recover an additional one cent per transaction for fraud prevention purposes if the issuer complies with certain fraud-related requirements prescribed by the FRB. The FRB also adopted requirements that issuers include two unaffiliated networks for routing debit transactions that are applicable to the Bank.
Monetary Policy The Company and the Bank are affected by fiscal and monetary policies of the federal government, including those of the Federal Reserve Board ("FRB") which regulates the national money supply in order to mitigate recessionary and inflationary pressures. Among the techniques available to the FRB are engaging in open market transactions of U.S.
Monetary Policy The Bank is affected by fiscal and monetary policies of the federal government, including those of the Federal Reserve Board ("FRB") which regulates the national money supply in order to mitigate recessionary and inflationary pressures. Among the techniques available to the FRB are engaging in open market transactions of U.S.
Enforcement actions against the Company, the Bank and their respective officers and directors may include the issuance of a written directive, the issuance of a cease-and-desist order that can be judicially enforced, the imposition of civil money penalties, the issuance of directives to increase capital, the issuance of formal and informal agreements, the issuance of removal and prohibition orders against officers or other institution-affiliated parties, the imposition of restrictions and sanctions under prompt corrective action regulations, the termination of deposit insurance (in the case of the Bank) and the appointment of a conservator or receiver for the Bank.
Enforcement actions against the Bank and their respective officers and directors may include the issuance of a written directive, the issuance of a cease-and-desist order that can be judicially enforced, the imposition of civil money penalties, the issuance of directives to increase capital, the issuance of formal and informal agreements, the issuance of removal and prohibition orders against officers or other institution-affiliated parties, the imposition of restrictions and sanctions under prompt corrective action regulations, the termination of deposit insurance and the appointment of a conservator or receiver for the Bank.
The Gramm Leach Bliley Act requires financial institutions to periodically disclose their privacy practices and policies relating to sharing such information and enable retail customers to opt out of the Company’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers.
The Gramm Leach Bliley Act requires financial institutions to periodically disclose their privacy practices and policies relating to sharing such information and enable retail customers to opt out of the Bank’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers.
FDIC as Receiver or Conservator of the Company Upon the insolvency of an insured depository institution, such as the Bank, the FDIC may be appointed as the conservator or receiver of the institution.
FDIC as Receiver or Conservator of the Bank Upon the insolvency of an insured depository institution, such as the Bank, the FDIC may be appointed as the conservator or receiver of the institution.
The Bank would require the approval of the OCC if the dividends it declares in any calendar year were to exceed the total of its respective net profits for that year combined with its respective retained net profits for the preceding two calendar years, less any required transfer to paid-in capital.
Dividend Limitations The Bank would require the approval of the OCC if the dividends it declares in any calendar year were to exceed the total of its respective net profits for that year combined with its respective retained net profits for the preceding two calendar years, less any required transfer to paid-in capital.
Civil money penalties can be over $2 million for each day a violation continues. FDIC, OCC, and FRB Regulations The discussion that follows pertains to FDIC, OCC, and FRB regulations other than those already discussed on the preceding pages. Additional Regulations The following pertains to regulations other than those already discussed on the preceding pages.
Civil money penalties can be over $2 million for each day a violation continues. FDIC, OCC, and FRB Regulations The discussion that follows pertains to FDIC, OCC, and FRB regulations other than those already discussed on the preceding pages.
Service providers are required under the rule to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect the banking organization's customers for four or more hours. Cybersecurity and data privacy are also areas of increasing state legislative focus.
Service providers are required under the rule to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect the banking organization's customers for four or more hours. 21 Table of Contents Cybersecurity and data privacy are also areas of increasing state legislative focus.
An institution is deemed to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2 percent. “Undercapitalized” institutions are subject to growth, capital distribution (including dividend), and other limitations, and are required to submit a capital restoration plan.
An institution is deemed to be “critically 14 Table of Contents undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2 percent. “Undercapitalized” institutions are subject to growth, capital distribution (including dividend), and other limitations, and are required to submit a capital restoration plan.
The Volcker Rule regulations impose significant compliance and reporting obligations on banking entities, such as the Company. We have put in place the compliance programs required by the Volcker Rule and any holdings in illiquid covered funds are in compliance with the Volcker Rule.
The Volcker Rule regulations impose significant compliance and reporting obligations on banking entities, such as the Bank. We have put in place the compliance programs required by the Volcker Rule and any holdings in illiquid covered funds are in compliance with the Volcker Rule.
In addition to providing our customers with 24-hour access to their accounts, and information regarding our products and services, hours of service, and locations, the website provides extensive information about the Company for the investment community.
In addition to providing our customers with 24-hour access to their accounts, and information regarding our products and services, hours of service, and locations, the website provides extensive information about the Bank for the investment community.
Cybersecurity The Cybersecurity Information Sharing Act (the “CISA”) is intended to improve cybersecurity in the U.S. through sharing of information about security threats between the U.S. government and private sector organizations, including financial institutions such as the Company.
Cybersecurity The Cybersecurity Information Sharing Act (the “CISA”) is intended to improve cybersecurity in the U.S. through sharing of information about security threats between the U.S. government and private sector organizations, including financial institutions such as the Bank.
Required data includes transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data. The rule takes effect for the Bank on April 1, 2027; however, the compliance timeline is subject to change due to the outcome of pending litigation challenging the rule.
Required data includes transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data. The rule takes effect for the Bank on April 1, 2027; however, the compliance timeline is subject to change due to the outcome of pending litigation challenging the rule and ongoing rulemaking activities.
Human Capital Management The Company places great importance on having the right people in the right roles, with the right skills, and doing their best work. By focusing on the growth and development of our talented team members, we believe we are best positioned to deliver results for our customers.
Human Capital Management We place great importance on having the right people in the right roles, with the right skills, and doing their best work. By focusing on the growth and development of our talented team members, we believe we are best positioned to deliver results for our customers.
Industry organizations have challenged the final rule in court, and on March 29, 2024, the United States District Court for the Northern District of Texas granted an injunction and stay of the final rule.
However, industry organizations challenged the final rule in court, and on March 29, 2024, the United States District Court for the Northern District of Texas granted an injunction and stay of the final rule.
In July 2024, the federal banking agencies, including the Federal Reserve and OCC, proposed amendments to update the requirements for supervised institutions to establish, implement and maintain effective, risk-based and reasonably designed anti-money laundering and countering the financing of terrorism ("CFT") programs.
In July 2024, the Federal Banking A gencies, including the Federal Reserve and OCC, proposed amendments to update the requirements for supervised institutions to establish, implement and maintain effective, risk-based and reasonably designed anti-money laundering and countering the financing of terrorism ("CFT") programs.
In addition, our filings with the SEC (including our annual report on Form 10-K; our quarterly reports on Form 10-Q; and our current reports on Form 8-K), and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available without charge, and are posted to the Investor Relations portion of our website.
In addition, our securities filings with the OCC (including our annual report on Form 10-K; our quarterly reports on Form 10-Q; and our current reports on Form 8-K), and all amendments to those reports, in all cases as filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available without charge, and are posted to the Investor Relations portion of our website.
The CFPB has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks, including, among other things, the authority to prohibit acts and practices that are deemed to be unfair, deceptive, or abusive.
The CFPB has broad rulemaking authority for a wide range of consumer financial 22 Table of Contents laws that apply to all banks, including, among other things, the authority to prohibit acts and practices that are deemed to be unfair, deceptive, or abusive.
The Community Reinvestment Act requires each federal banking agency, in connection with its examination of a financial institution, to assess and assign one of four ratings to the institution’s record of meeting the credit needs of the community and to take such record into account in its evaluation of certain applications by the institution, including applications for charters, branches and other deposit facilities, relocations, mergers, consolidations, acquisitions of assets or assumptions of liabilities, and bank holding company and savings and loan holding company acquisitions.
The CRA requires each Federal Banking A gency, in connection with its examination of a financial institution, to assess and assign one of four ratings to the institution’s record of meeting the credit needs of the community and to take such record into account in its evaluation of certain applications by the institution, including applications for charters, branches and other deposit facilities, relocations, mergers, consolidations, acquisitions of assets or assumptions of liabilities, and bank holding company and savings and loan holding company acquisitions.
In December 2024, the CFPB issued a final rule that amends Regulation Z, which implements the Truth in Lending Act, to apply to overdraft credit provided by insured depository institutions with more than $10 billion in total assets.
In December 2024, the CFPB issued a final rule to amend Regulation Z, which implements the Truth in Lending Act, to apply to overdraft credit provided by insured depository institutions with more than $10 billion in total assets.
The Risk Assessment Committee of the Board has the authority to direct changes in lending practices as they deem necessary or appropriate to address credit risks and exposures, including regulatory considerations, in accordance with the Bank’s strategic objectives and risk appetites.
The RAC of the Board has the authority to direct changes in lending practices as they deem necessary or appropriate to address credit risks and exposures, including regulatory considerations, in accordance with the Bank’s strategic objectives and risk appetites.
Lending Authority We maintain internal credit limits in compliance with regulatory requirements. Under regulatory guidance, the Bank may not make a loan or extend credit to a single or related group of borrowers in excess of 15 percent of Tier 1 plus Tier 2 capital and any portion of the allowance for credit losses not included in Tier 2 capital.
Lending Authority We maintain internal credit limits in compliance with regulatory requirements. Under regulatory guidance, the Bank may not make a loan or extend credit to a single or related group of borrowers in excess of 15 percent of Tier 1 plus Tier 2 capital and any portion of the ACL not included in Tier 2 capital.
The effect of government policies on the earnings of the Company and the Bank cannot be predicted. Environmental Issues We encounter certain environmental risks in our lending activities and other operations. The existence of hazardous materials may make it unattractive for a lender to foreclose on the properties securing its loans.
The effect of government policies on the earnings of the Bank cannot be predicted. 10 Table of Contents Environmental Issues We encounter certain environmental risks in our lending activities and other operations. The existence of hazardous materials may make it unattractive for a lender to foreclose on the properties securing its loans.
The federal banking agencies adopted final regulations and Interagency Guidelines Establishing Standards for Safety and Soundness (the “Guidelines”) to implement these safety and soundness standards. The Guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired.
The Federal Banking Agencies adopted final regulations and 15 Table of Contents Interagency Guidelines Establishing Standards for Safety and Soundness (the “Guidelines”) to implement these safety and soundness standards. The Guidelines set forth the safety and soundness standards that the Federal Banking Agencies use to identify and address problems at insured depository institutions before capital becomes impaired.
We have a tracking and reporting process to monitor lending concentration levels. All new commercial credit exposure to relationships that exceed $350 million must be approved by the Risk Assessment Committee of the Board. Commercial credit exposures to relationships that exceed $75 million must be approved by the Chief Credit Officer.
We have a tracking and reporting process to monitor lending concentration levels. All new credit exposure to relationships that exceed $350 million must be approved by the Risk Assessment Committee (the "RAC") of the Board. Credit exposures to relationships that exceed $125 million must be approved by the Chief Credit Officer.
For example, under California state law, the California Consumer Privacy Act (“CCPA”) broadly defines personal information and substantially increases the rights of California residents to understand how their personal information is collected, used, and otherwise processed by commercial businesses, such as affording them the right to access and request deletion of their information and to opt out of certain sharing and sales of personal information.
For example, under California state law, the CCPA broadly defines personal information and substantially increases the rights of California residents to understand how their personal information is collected, used, and otherwise processed by commercial businesses, such as affording them the right to access and request deletion of their information and to opt out of certain sharing and sales of personal information.
Earnings releases, dividend announcements, and other press releases are posted upon issuance to the Investor Relations portion of the website, which can be found at www.flagstar.com.
Earnings releases, dividend announcements, and other press releases are posted upon issuance to the Investor Relations portion of the website, which can be found at https://.ir.flagstar.com.
The FDIC has authority to increase insurance assessments. Management cannot predict what insurance assessments rates will be in the future.
The FDIC has authority to increase insurance assessments. We cannot predict what insurance assessments rates will be in the future.
We are also subject to regulation and examination by the FDIC, which insures the deposits of the Bank to the extent permitted by law and the requirements established by the Federal Reserve.
We are also subject to regulation and examination by the FDIC, which insures the deposits of the Bank to the extent permitted by law and to certain transaction-related requirements established by the Federal Reserve.
General The Bank is a national banking association, subject to federal regulation and oversight by the Office of Comptroller of the Currency (the "OCC"). The activities of the Bank are limited to those specifically authorized under the National Bank Act and related interpretations of the OCC.
The Bank is subject to OCC regulations governing securities offerings. General The Bank is a national banking association, subject to federal regulation and oversight by the Office of Comptroller of the Currency (the "OCC"). The activities of the Bank are limited to those specifically authorized under the National Bank Act and related interpretations of the OCC.
In addition to the specific legislation and regulations described above, future legislation and regulations or changes to existing statutes, regulations or regulatory policies applicable to the Company and its subsidiaries may affect the business, financial condition and results of operations in adverse and unpredictable ways and increase reporting requirements and compliance costs.
In addition to the specific legislation and regulations described above, future legislation and regulations or changes to existing statutes, regulations or regulatory policies applicable to the Bank and its subsidiaries may affect the business, financial condition and results of operations in adverse and unpredictable ways and increase reporting requirements 24 Table of Contents and compliance costs.
The Community Reinvestment Act also requires that all institutions make public disclosure of their Community Reinvestment Act ratings. On October 24, 2023, the OCC, the FDIC and the Federal Reserve issued a final rule amending the agencies’ Community Reinvestment Act regulations.
The CRA also requires that all institutions make public disclosure of their CRA ratings. On October 24, 2023, the OCC, the FDIC and the Federal Reserve issued a final rule amending the agencies’ CRA regulations.
The CCPA gives residents of California expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used, and also provides for civil penalties for violations and private rights of action for data breaches.
The CCPA gives residents of California expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used, in addition to other rights with respect to personal information, and also provides for civil penalties for violations and private rights of action for data breaches.
Under Basel III, the Company and the Bank are required to maintain minimum capital in accordance with the following ratios: (i) a common equity tier 1 capital ratio of 4.5 percent; (ii) a tier 1 capital ratio of 6 percent (increased from 4 percent); (iii) a total capital ratio of 8 percent (unchanged from the prior rules); and (iv) a tier 1 leverage ratio of 4 percent.
Under Basel III, the Bank is 13 Table of Contents required to maintain minimum capital in accordance with the following ratios: (i) a common equity tier 1 capital ratio of 4.5 percent; (ii) a tier 1 capital ratio of 6 percent (increased from 4 percent); (iii) a total capital ratio of 8 percent (unchanged from the prior rules); and (iv) a tier 1 leverage ratio of 4 percent.
In addition, the Bank and its subsidiaries are subject to certain state laws and regulations designed to protect consumers.
In addition, the Bank and its subsidiaries may be subject to certain state laws and regulations designed to protect consumers.
Acting as a conservator or receiver, the FDIC would have broad powers to transfer any assets or liabilities of the institution without the approval of the institution’s creditors.
Acting as a conservator or receiver, the FDIC would have broad powers to transfer any assets or liabilities of the Bank without the approval of the Bank’s creditors.
Management does not know of any practice, condition, or violation that would lead to termination of the deposit insurance for the Bank.
We do not know of any practice, condition, or violation that would lead to termination of the deposit insurance for the Bank.
On December 13, 2019, the Federal Banking Agencies issued a final rule, which became effective on April 1, 2020, to modify the agencies’ capital rules for high volatility commercial real estate (“HVCRE”) exposures, as required by the EGRRCPA.
On December 13, 2019, the Federal Banking Agencies issued a final rule, which became effective on April 1, 2020, to modify the agencies’ capital rules for HVCRE exposures, as required by the EGRRCPA.
The final rule revises the definition of HVCRE exposure to make it consistent with the statutory definition of the term included in Section 214 of the EGRRCPA, which excludes any loan made before January 1, 2015. The revised HVCRE exposure definition differs from the previous definition primarily in two ways.
The final rule revised the definition of HVCRE exposure to make it consistent with the statutory definition of the term included in Section 214 of the EGRRCPA, which excludes any loan made before January 1, 2015.
The competitiveness of our deposit pricing is influenced by short-term interest rates, industry consolidation, and rates offered by other institutions, including credit unions and online banks. Additionally, we face competition from fintech companies.
Our offerings include traditional banking products, non-deposit investment products, and insurance. The competitiveness of our deposit pricing is influenced by short-term interest rates, industry consolidation, and rates offered by other institutions, including credit unions and online banks. Additionally, we face competition from fintech companies.
In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties which, for 2024, range from $7,034 per day for minor violations of federal consumer financial laws (including the CFPB’s own rules) to $35,169 per day for reckless violations and $1,406,728 per day for knowing violations.
In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties which, for 2025, range from $7,217 per day for minor violations of federal consumer financial laws (including the CFPB’s own rules) to $36,083 per day for reckless violations and $1,443,275 per day for knowing violations.
Enforcement The OCC has authority to bring an enforcement action against the Bank for unsafe or unsound banking practices, which could include limiting the Bank’s ability to conduct otherwise permissible activities or imposing corrective capital or managerial requirements on the bank. In addition, the Parent Company is subject to the enforcement authority of the Federal Reserve.
Enforcement The OCC has authority to bring an enforcement action against the Bank for unsafe or unsound banking practices, which could include limiting the Bank’s ability to conduct otherwise permissible activities or imposing corrective capital or managerial requirements on the bank.
The substance or impact of pending or future legislation or regulation, or the application thereof, cannot be predicted. 27
The substance or impact of pending or future legislation or regulation, or the application thereof, cannot be predicted. 25 Table of Contents
The interagency guidance is based, in part, on the regulators’ previously existing third-party risk management guidance from 2013 and seeks to, among other things, promote consistency in third-party risk management and provide sound risk management guidance for third-party relationships commensurate with a bank's risk profile and complexity as well as the criticality of the activity.
The interagency guidance seeks to, among other things, promote consistency in third-party risk management and provide sound risk management guidance for third-party relationships commensurate with a bank's risk profile and complexity as well as the criticality of the activity.
The capital conservation buffer is now at its fully phased-in level of 2.5 percent. An institution can be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital levels fall below these amounts. Basel III also establishes a maximum percentage of eligible retained income that can be utilized for such capital distributions.
An institution can be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital levels fall below these amounts. Basel III also establishes a maximum percentage of eligible retained income that can be utilized for such capital distributions.
The FDIC Guidelines also list a number of lending situations in which exceptions to the loan-to-value standards are justified. The FDIC, the OCC, and the FRB (collectively, the “Federal Banking Agencies”) also have issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “Commercial Real Estate 15 Guidance”).
The guidelines also list a number of lending situations in which exceptions to the loan-to-value standards are justified. The Federal Banking Agencies also have issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “Commercial Real Estate Guidance”).
Additionally, in August 2024, FinCEN, which drafts regulations implementing anti-money laundering legislation, adopted a rule extending anti-money laundering obligations, including maintenance of an anti-money laundering program and filing certain reports with FinCEN, to registered investment advisers. Compliance with these requirements is required beginning on January 1, 2026.
Additionally, in August 2024, FinCEN, which drafts regulations implementing anti-money laundering legislation, adopted a rule extending anti-money laundering obligations, including maintenance of an anti-money laundering program and filing certain reports with FinCEN, to registered investment advisers.
The timing and form of any final rule implementing the long-term debt requirements and clean holding company requirements remains uncertain. 17 On November 16, 2023, the FDIC published in the Federal Register its final rule that imposes special assessments to recover the loss to the Deposit Insurance Fund arising from the protection of uninsured depositors in connection with the systemic risk determination announced on March 12, 2023, following the closures of Silicon Valley Bank and Signature Bank.
On November 16, 2023, the FDIC published in the Federal Register its final rule that imposes special assessments to recover the loss to the Deposit Insurance Fund arising from the protection of uninsured depositors in connection with the systemic risk determination announced on March 12, 2023, following the closures of Silicon Valley Bank and Signature Bank.
The Community Reinvestment Act generally does not establish specific lending requirements or programs for financial institutions, nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the Community Reinvestment Act.
The CRA generally does not establish specific lending requirements or programs for financial institutions, nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. However, institutions are rated on their performance in meeting the needs of their communities.
The five capital tiers are described in more detail below. Under the prompt corrective action regulations, an institution that fails to remain “well capitalized” becomes subject to a series of restrictions that increase in severity as its capital condition weakens.
For such purposes, the law establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. The five capital tiers are described in more detail below. Under the prompt corrective action regulations, an institution that fails to remain “well capitalized” becomes subject to a series of restrictions that increase in severity as its capital condition weakens.
Real Estate Lending Standards The FDIC and the other federal banking agencies have adopted regulations that prescribe standards for extensions of credit that (i) are secured by real estate, or (ii) are made for the purpose of financing construction or improvements on real estate.
Real Estate Lending Standards The OCC has adopted regulations that prescribe standards for extensions of credit that (i) are secured by real estate, or (ii) are made for the purpose of financing construction or improvements on real estate.
To increase our talent pool, we work with key stakeholders in our business locations to deepen our understanding of the local labor market and better position the organization to recruit and retain exceptional talent.
Our company recognizes that the talents of a dedicated workforce are a key competitive advantage. To increase our talent pool, we work with key stakeholders in our business locations to deepen our understanding of the local labor market and better position the organization to recruit and retain exceptional talent.
For example, the vast majority of our multi-family loans are collateralized by rental apartment buildings in New York City, while the majority of the properties collateralizing our commercial real estate and acquisition, development, and construction loans are located in the Northeast and Midwest.
For example, the vast majority of our multi-family loans are collateralized by rental apartment buildings in New York City, while the majority of the properties collateralizing our commercial real estate loans are located in the Northeast and Midwest. Our commercial and industrial loans are originated nationally to middle-market and mid-sized companies.
The final rule calls for the FDIC to collect special assessments at an annual rate of approximately 13.4 basis points, over eight quarterly assessment periods.
The final rule calls for the FDIC to collect special assessments at an annual rate of approximately 13.4 basis points, over eight quarterly assessment periods, beginning with the first quarterly assessment period of 2024. On December 19 2025, the FDIC issued an interim final rule amending the special assessment.
See the discussion of "Income Taxes" in Note 2 - Summary of Significant Accounting Policies 10 Regulation and Supervision The following is a brief summary of certain statutes and regulations that significantly affect the Company and its subsidiaries. A number of other statutes and regulations may affect the Company and the Bank but are not discussed in the following paragraphs.
See the discussion of "Income Taxes" in Note 2 - Summary of Significant Accounting Policies and Note 13 - Federal, State, and Local Taxes. Regulation and Supervision The following is a brief summary of certain statutes and regulations that significantly affect the Bank and its subsidiaries.
Many states have consumer protection laws analogous to, or in addition to, the federal laws listed above, such as usury laws, state debt collection practices laws, and requirements regarding loan disclosures and terms, credit discrimination, credit reporting, money transmission, recordkeeping, and unfair or deceptive business practices. 24 Certain states have adopted laws regulating and requiring licensing, registration, notice filing, or other approval for parties that engage in certain activity regarding consumer finance transactions.
Many states have consumer protection laws analogous to, or in addition to, the federal laws listed above, such as usury laws, state debt collection practices laws, and requirements regarding loan disclosures and terms, credit discrimination, credit reporting, money transmission, recordkeeping, and unfair or deceptive business practices.
By prioritizing convenience and service, we offer products at competitive rates through our branches, banking locations and ATM network as well as mobile banking and dedicated website, which provide 24-hour access for customers. Our offerings include traditional banking products, non-deposit investment products, and insurance.
Competition We compete for deposits and customers through multiple channels, including our retail branch network and our private banking locations as well as through our mortgage offerings. By prioritizing convenience and service, we offer products at competitive rates through our branches, banking locations and ATM network as well as mobile banking and dedicated website, which provide 24-hour access for customers.
Office of Foreign Assets Control Regulation The United States has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals, and others. These are typically known as the “OFAC” rules, based on their administration by the U.S. Treasury Department Office of Foreign Assets Control. The OFAC-administered sanctions targeting countries take many different forms.
Compliance with these requirements is required beginning on January 1, 2026. 20 Table of Contents Office of Foreign Assets Control Regulation The United States has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals, and others. These are typically known as the “OFAC” rules, based on their administration by the U.S.
The federal system of regulation and supervision establishes a comprehensive framework of activities in which to operate and is primarily intended for the protection of depositors and the FDIC's Deposit Insurance Fund rather than our shareholders. As a bank holding company, we are required to comply with the rules and regulations of the Federal Reserve.
The federal system of regulation and supervision establishes a comprehensive framework of activities in which to 12 Table of Contents operate and is primarily intended for the protection of depositors and the FDIC's Deposit Insurance Fund rather than our shareholders. Our corporate affairs are primarily governed by the National Bank Act, with related regulations administered by the OCC.
Any change to laws and regulations, whether by the regulatory agencies or Congress, could have a materially adverse impact on our operations.
In addition, the banking regulatory agencies regularly promulgate new regulations or modify existing regulations, which also have a significant impact on the financial industry. Any change to laws and regulations, whether by the regulatory agencies or Congress, could have a materially adverse impact on our operations.
The website also provides information regarding our Board of Directors and management team, as well as certain Board Committee charters and our corporate governance policies. The content of our website shall not be deemed to be incorporated by reference into this Annual Report.
The website also provides information regarding Flagstar's Board of Directors (the "Board") and management team, as well as certain Board committee charters and our corporate governance policies.
In addition, the Bank has approximately 80 private banking teams located in over ten cities in the metropolitan New York City region and on the West Coast, which serve the needs of high-net worth individuals and their businesses.
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. The market for the loans we originate varies, depending on the type of loan.
The final outcome of such challenge is uncertain. 21 Community Pledge Agreement with the National Community Reinvestment Coalition On January 24, 2022, the Company and the National Community Reinvestment Coalition ("NCRC") announced the Company's commitment to provide $28.0 billion in loans, investments, and other financial support to communities and people of color, low- and moderate-income ("LMI") families and communities, and small businesses.
This effectively reinstates the CRA regulations first adopted by the agencies in 1995 and reinstated by the OCC in 2021. 19 Table of Contents Community Pledge Agreement with the National Community Reinvestment Coalition On January 24, 2022, the Bank and the National Community Reinvestment Coalition ("NCRC") announced the Bank's commitment to provide $28.0 billion in loans, investments, and other financial support to communities and people of color, low- and moderate-income ("LMI") families and communities, and small businesses.
We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations. We pay our employees competitively and offer a broad range of benefits, both of which we believe are competitive with our industry peers and with other firms in the locations in which we do business.
We pay our employees competitively and offer a broad range of benefits, both of which we believe are competitive with our industry peers and with other firms in the locations in which we do business. Our employees receive salaries that are subject to annual review and periodic benchmarking.
In 2024, dividends of $67 million were paid by the Bank to the Parent Company. 16 Investment Activities National bank investment activities are governed by the National Bank Act and OCC regulations which, consistent with safe and sound banking practices, prescribe standards under which national banks may purchase, sell, deal in, underwrite, and hold securities.
The term “net profits” is defined as net income for a given period less any dividends paid during that period. 16 Table of Contents Investment Activities National bank investment activities are governed by the National Bank Act and OCC regulations which, consistent with safe and sound banking practices, prescribe standards under which national banks may purchase, sell, deal in, underwrite, and hold securities.
We are undertaking the development of new initiatives to focus on enhancing the Company’s community-centered activities to align with our strategic transformation and better meet the credit and banking needs of LMI communities.
In 2025, we changed our intent regarding the Community Pledge Agreement as a result of the sale of our third-party mortgage origination and servicing businesses during 2024. We are undertaking the development of new initiatives to focus on enhancing the Bank’s community-centered activities to align with our strategic transformation and better meet the credit and banking needs of LMI communities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Community Reinvestment Act requires the Federal Reserve and OCC to assess our performance in meeting the credit needs of the communities we serve, including low- and moderate-income neighborhoods. If the Federal Reserve or OCC determines that we need to improve our performance or are in substantial non-compliance with Community Reinvestment Act requirements, various adverse regulatory consequences may ensue.
Biggest changeIf the OCC determines that we need to improve our performance or are in substantial non-compliance with Community Reinvestment Act requirements, various adverse regulatory consequences may ensue. In addition, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions.
Moreover, if another person or entity were deemed to own intellectual property rights that were infringed upon by our activities, we could be responsible for significant damages and forced to incur significant expenses if we sought to continue to engage in these types of activities and may also be prevented from using technology important to our business for at least some period of time .
Moreover, if another person or entity were deemed to own intellectual property rights that were infringed upon by our activities, we could be responsible for significant damages and be forced to incur significant expenses if we sought to continue to engage in these types of activities and may also be prevented from using technology important to our business for at least some period of time.
A financial institution may have a “concentration” in commercial real estate lending if, among other factors (i) total reported loans for construction, land development and other land represent 100% or more of total capital, or (ii) total reported loans secured by multi-family and non-farm non-residential properties, loans for construction, land development and other land, and loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300% or more of total capital.
A financial institution may have a “concentration” in commercial real estate lending if, among other factors, either (i) total reported loans for construction, land development and other land represent 100% or more of total capital, or (ii) total reported loans secured by multi-family and non-farm non-residential properties, loans for construction, land development and other land, and loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300% or more of total capital.
For our Series A Preferred Stock, we have no obligation to pay dividends accrued for a dividend period after the dividend payment date for that period if our Board of Directors (or any duly authorized committee thereof) has not declared a dividend before the related dividend payment date, whether or not dividends on the Series A Preferred Stock or any other series of our preferred stock or our common stock are declared for any future dividend period.
For our Series A Preferred Stock, we have no obligation to pay dividends accrued for a dividend period after the dividend payment date for that period if the Board (or any duly authorized committee thereof) has not declared a dividend before the related dividend payment date, whether or not dividends on the Series A Preferred Stock or any other series of our preferred stock or our common stock are declared for any future dividend period.
The holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds available for such payments under applicable law and regulatory guidance, and, although we have historically declared cash dividends on our common stock, we are not required to do so.
The holders of our common stock are only entitled to receive such dividends as the Board may declare out of funds available for such payments under applicable law and regulatory guidance, and, although we have historically declared cash dividends on our common stock, we are not required to do so.
In addition, such requirements could also compel us to issue additional securities, thus diluting the value of our common stock. In addition, failure to meet established capital requirements could result in the FRB and/or OCC placing limitations or conditions on our activities and further restricting the commencement of new activities.
In addition, such requirements could also compel us to issue additional securities, thus diluting the value of our common stock. In addition, failure to meet established capital requirements could result in the OCC placing limitations or conditions on our activities and further restricting the commencement of new activities.
In 2018, the Ninth Circuit Federal Court of Appeals held that California state law requiring mortgage servicers to pay interest on certain mortgage escrow accounts was not, as a matter of law, preempted by the National Bank Act ( Lusnak v. Bank of America ).
In 2018, the Ninth Circuit Federal Court of Appeals held that California state law requiring mortgage servicers to pay interest on certain mortgage escrow accounts was not, as a matter of law, preempted by the National Bank Act ("NBA") ( Lusnak v. Bank of America ).
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results 35 of operations.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations.
New legislation and regulations focused on data privacy could increase our compliance and operational risks, among others, leading to litigation or regulatory enforcement and reputational damage. Data privacy and cybersecurity risks have become a subject of heightened legislative and regulatory focus in recent years.
Legislation and regulations focused on data privacy could increase our compliance and operational risks, among others, leading to litigation or regulatory enforcement and reputational damage. Data privacy and cybersecurity risks have become a subject of heightened legislative and regulatory focus in recent years.
We may also be required to expend significant additional resources to modify our protective measures or investigate and remediate vulnerabilities or other exposures arising from operational and security risks, including expenses for third-party expert consultants or outside 38 counsel.
We may also be required to expend significant additional resources to modify our protective measures or investigate and remediate vulnerabilities or other exposures arising from operational and security risks, including expenses for third-party expert consultants or outside counsel.
We may also lose key personnel from the acquired entity as a result of an acquisition. We may not discover all known and unknown factors when examining a company 37 for acquisition or merger during the due diligence period.
We may also lose key personnel from the acquired entity as a result of an acquisition. We may not discover all known and unknown factors when examining a company for acquisition or merger during the due diligence period.
Deterioration in local economic conditions could drive the level of loan losses beyond the level we have provided for in our loan loss allowance; this, in turn, could 36 necessitate an increase in our provisions for loan losses, which would reduce our earnings and capital.
Deterioration in local economic conditions could drive the level of loan losses beyond the level we have provided for in our loan loss allowance; this, in turn, could necessitate an increase in our provisions for loan losses, which would reduce our earnings and capital.
Our Board of Directors has the authority, in many situations, to issue additional shares of authorized but unissued stock (including securities convertible or exchangeable for stock) in public or private offerings without any vote of our shareholders.
The Board has the authority, in many situations, to issue additional shares of authorized but unissued stock (including securities convertible or exchangeable for stock) in public or private offerings without any vote of our shareholders.
The unexpected loss of 39 services of one or more of our key personnel could have a material adverse impact on our business, given the specialized knowledge of such personnel and the difficulty of finding qualified replacements on a timely basis.
The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business, given the specialized knowledge of such personnel and the difficulty of finding qualified replacements on a timely basis.
These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including with respect to the imposition of restrictions on the operation of a bank or a bank holding company and its subsidiaries, the imposition of significant fines, the ability to delay or deny merger or other regulatory applications, the payment of dividends, the classification of assets by a bank, and the adequacy of a bank’s allowance for loan losses, among other matters.
These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including with respect to the imposition of restrictions on the operation of a bank and its subsidiaries, the imposition of significant fines, the ability to delay or deny merger or other regulatory applications, the payment of dividends, the classification of assets by a bank, and the adequacy of a bank’s allowance for loan losses, among other matters.
Failure to comply with OFAC regulations could result in legal and reputational risks. The United States has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals, and other potentially exposed persons. These are typically referred to as the "OFAC" rules, given their administration by the United States Treasury Department Office of Foreign Assets Control.
Failure to comply with OFAC regulations could result in legal and reputational risks. The United States has imposed economic sanctions that affect transactions with designated foreign countries, foreign nationals, and other potentially exposed persons. These are typically referred to as the "OFAC" rules, given their administration by the United States Treasury Department's Office of Foreign Assets Control.
No assurance can be given that, in the future, the Company will be able to (i) raise any required capital or (ii) raise capital on terms that are beneficial to shareholders. Strategic Risks Extensive competition for loans and deposits could adversely affect our ability to expand our business, as well as our financial condition and results of operations .
No assurance can be given that, in the future, we will be able to (i) raise any required capital or (ii) raise capital on terms that are beneficial to shareholders. Strategic Risks Extensive competition for loans and deposits could adversely affect our ability to expand our business, as well as our financial condition and results of operations.
If the underlying collateral value is below the loan amount, the Company will suffer a loss upon a default. Our New York State multi-family loan portfolio could be adversely impacted by changes in legislation or regulation which, in turn, could have a material adverse effect on our financial condition and results of operations.
If the underlying collateral value is below the loan amount, we will suffer a loss upon a default. Our New York State multi-family loan portfolio could be adversely impacted by changes in legislation or regulation which, in turn, could have a material adverse effect on our financial condition and results of operations.
Furthermore, the payment of dividends falls under federal regulations that have grown more stringent in recent years. While we pay our quarterly cash dividend in compliance with current regulations, such regulations could change in the future. We are currently paying quarterly cash dividends on shares of the Company's common stock at $0.01 per share.
Furthermore, the payment of dividends falls under federal regulations that have grown more stringent in recent years. While we pay our quarterly cash dividend in compliance with current regulations, such regulations could change in the future. We are currently paying quarterly cash dividends on shares of the Bank's common stock at $0.01 per share.
In addition, failure of the Company or the Bank to comply with such regulations could have a material adverse effect on our earnings and capital. See “Regulation and Supervision” in Part I, Item 1, “Business” earlier in this filing for a detailed description of the federal, state, and local regulations to which the Company and the Bank are subject.
In addition, failure of the Bank to comply with such regulations could have a material adverse effect on our earnings and capital. See “Regulation and Supervision” in Part I, Item 1, “Business” earlier in this filing for a detailed description of the federal, state, and local regulations to which the Bank are subject.
Our success as a competitor depends on a number of factors, including our ability to develop, maintain, and build long-term relationships with our customers by providing them with convenience, in the form of multiple branch locations, extended hours of service, and access through alternative delivery channels; a broad and diverse selection of products and services; interest rates and service fees that compare favorably with those of our competitors; and skilled and knowledgeable personnel to assist our customers by addressing their financial needs.
Our success as a competitor depends on a number of factors, including our ability to develop, maintain, and build long-term relationships with our customers by providing them with convenience, in 35 Table of Contents the form of multiple branch locations, extended hours of service, and access through alternative delivery channels; a broad and diverse selection of products and services; interest rates and service fees that compare favorably with those of our competitors; and skilled and knowledgeable personnel to assist our customers by addressing their financial needs.
We and our subsidiaries are subject to regulation, supervision, and examination by the following entities: (1) the OCC; (2) the FDIC; (3) the FRB; and (4) the CFPB, as well as FINRA regulations and state licensing restrictions and limitations regarding certain financial services, investment management and other consumer finance products.
We and our subsidiaries are subject to regulation, supervision, and examination by the following entities: (1) the OCC; (2) the FDIC; and (3) the CFPB, as well as FINRA regulations and state licensing restrictions and limitations regarding certain financial services, investment management and other consumer finance products.
If our Board of Directors (or any duly authorized committee of the Board) does not authorize and declare a dividend on (a) the Series A Preferred Stock for any dividend period, holders of the depository shares will not be entitled to receive any dividend for that dividend period, and the unpaid dividend will cease to accrue and be payable, or (b) Series B Preferred Stock, the holders thereof will not be entitled to receive any dividend for that dividend period.
If the Board (or any duly authorized committee of the Board) does not authorize and declare a dividend on (a) the Series A Preferred Stock for any dividend period, holders of the depository shares will not be entitled to receive any dividend for that dividend period, and the unpaid dividend will cease to accrue and be payable, or (b) Series B Preferred Stock, the holders thereof will not be entitled to receive any dividend for that dividend period.
Primary among these are (1) interest rate risk; (2) credit risk; (3) financial statement risk; (4) liquidity and dividend risk (5) legal and regulatory risk; (6) financial and market risk, as well as other matters that may dilute the value of our securities; (7) strategic risk, including our integration risks (8) operational risk; and (9) reputational risk and its potential negative impact on, among other things, our financial condition, results of operations and/or stockholder value.
Primary among these are (1) interest rate risk; (2) credit risk; (3) financial statement risk; (4) liquidity and dividend risk (5) legal and regulatory risk; (6) financial and market risk, as well as other matters that may dilute the value of our securities; (7) strategic risk (8) operational risk; and (9) reputational risk and its potential negative impact on, among other things, our financial condition, results of operations and/or stockholder value.
In extreme situations, withdrawals could exceed our capacity to fund the withdrawals and lead to the financial failure of the Company. The replacement of deposit funding with wholesale funding could cause our overall cost of funds to increase, which would reduce our net interest income and results of operations.
In extreme situations, withdrawals could exceed our capacity to fund the withdrawals and lead to the financial failure of the Bank. The replacement of deposit funding with wholesale funding could cause our overall cost of funds to increase, which would reduce our net interest income and results of operations.
The process of diversifying the Company’s loan portfolio will also divert management attention and resources and could have an adverse effect on the Company’s ability to operate efficiently as well as its results of operations and financial condition during the transition period and beyond.
The process of diversifying the our loan portfolio will also divert management attention and resources and could have an adverse effect on the our ability to operate efficiently as well as its results of operations and financial condition during the transition period and beyond.
Additionally, under the FRB’s capital rules, dividends on the Series A Preferred Stock and Series B Preferred Stock may only be paid out of our net income, retained earnings, or surplus related to other additional tier 1 capital instruments.
Additionally, under the OCC’s capital rules, dividends on the Series A Preferred Stock and Series B Preferred Stock may only be paid out of our net income, retained earnings, or surplus related to other additional tier 1 capital instruments.
Additionally, failure by the Company to maintain compliance with strict capital, liquidity, and other stress test requirements under banking regulations could subject us to regulatory sanctions, including limitations on our ability to pay dividends.
Additionally, failure by the Bank to maintain compliance with strict capital, liquidity, and other stress test requirements under banking regulations could subject us to regulatory sanctions, including limitations on our ability to pay dividends.
These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must interact with clients when taking deposits, making loans, collecting and servicing loans and providing other services. The CFPB, the U.S. Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.
These laws and regulations mandate certain disclosure requirements and regulate the 33 Table of Contents manner in which financial institutions must interact with clients when taking deposits, making loans, collecting and servicing loans and providing other services. The CFPB, the U.S. Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.
The extent and timing of the new Administration’s policy changes and their impact on the policies of the Federal Reserve Board, as well as our business and financial results, are uncertain at this time.
The extent and timing of the current administration’s policy changes and their impact on the policies of the Federal Reserve Board, as well as our business and financial results, are uncertain at this time.
The failure to properly identify, monitor, and mitigate any of the below referenced risks, could result in increased regulatory risk and could potentially have an adverse impact on the Company.
The failure to properly identify, monitor, and mitigate any of the below referenced risks, could result in increased regulatory risk and could potentially have an adverse impact on the Bank.
Following the satisfaction of the liquidation preference, the Series B Preferred Stock participates with our common stock on an as-converted basis in a liquidation, dissolution or winding up of the Company.
Following the satisfaction of the liquidation preference, the Series B Preferred Stock participates with our common stock on an as-converted basis in a liquidation, dissolution or winding up of the Bank.
If difficulties with diversifying the Company’s loan portfolio are encountered, the anticipated benefits may not be realized fully or at all or may take longer to realize than expected.
If difficulties with diversifying our loan portfolio are encountered, the anticipated benefits may not be realized fully or at all or may take longer to realize than expected.
As a financial institution, we are subject to a number of risks, including interest rate, credit, liquidity, legal/compliance, market, strategic, operational, and reputational. Our Risk Governance Framework is designed to manage the risks to which we are subject, as well as any losses stemming from such risks.
As a financial institution, we are subject to a number of risks, including interest rate, credit, liquidity, legal/compliance, market, strategic, operational, and reputational. Flagstar's Risk Governance Framework (the "RGF") is designed to manage the risks to which we are subject, as well as any losses stemming from such risks.
In addition, the majority of our multi-family and commercial real estate loans are non-recourse and are secured by rental apartment buildings or commercial real estate. In the event of a default by a borrower on a non-recourse loan, the Company will have recourse only to the real estate-related assets collateralizing the loan.
In addition, the majority of our multi-family and CRE loans are non-recourse and are secured by rental apartment buildings or commercial real estate. In the event of a default by a borrower on a non-recourse loan, we will have recourse only to the real estate-related assets collateralizing the loan.
Further, for any sales or divestitures of assets, the Company’s ability to effect such divestiture or sale will depend upon various factors, such as the Company’s ability to identify interested counterparties, counterparties’ willingness to negotiate and enter into transactions with the Company, the potential of required regulatory approvals associated with such divestitures, and the prices and other terms upon which any counterparty would be willing to transact with the Company.
Further, for any sales or divestitures of assets, our ability to effect such divestiture or sale will depend upon various factors, such as our ability to identify interested counterparties, counterparties’ willingness to negotiate and enter into transactions with us, the potential of required regulatory approvals associated with such divestitures, and the prices and other terms upon which any counterparty would be willing to transact with us.
The monetary policies of the Federal Reserve Board may be affected by certain policy initiatives of the new Administration, which has announced tariffs on certain U.S. trading partners (and has indicated additional tariffs and retaliatory tariffs against U.S. trading partners may be announced in the future) and has implemented stricter immigration policies.
The monetary policies of the Federal Reserve Board may be affected by certain policy initiatives of the current administration, which has enacted tariffs on certain U.S. trading partners (and has indicated additional tariffs and retaliatory tariffs against U.S. trading partners may be announced in the future) and has implemented stricter immigration policies.
For example, federal banking regulations adopted under Basel III standards require bank holding companies and banks to undertake significant activities to demonstrate compliance with higher capital requirements. Any additional requirements to increase our capital ratios or liquidity could necessitate our liquidating certain assets, perhaps on terms that are unfavorable to us or that are contrary to our business plans.
For example, federal banking regulations adopted under Basel III standards require banks to undertake significant activities to demonstrate compliance with higher capital requirements. Any additional requirements to increase our capital ratios or liquidity could necessitate our liquidating certain assets, perhaps on terms that are unfavorable to us or that are contrary to our business plans.
The Company, entities that we have acquired, and certain of our service providers have experienced information technology security breaches and may be vulnerable to future security breaches.
The Bank, entities that we have acquired, and certain of our service providers have experienced information technology security breaches and may be vulnerable to future security breaches.
In addition, breaches of security have in the past and may in the future occur through intentional or unintentional acts by those having authorized or unauthorized access to our confidential or other information, or that of our customers, clients, or counterparties.
In addition, breaches of security have in the past and may in the future occur through intentional or unintentional acts by those having authorized or unauthorized access to our 36 Table of Contents confidential or other information, or that of our customers, clients, or counterparties.
If the non-payment of dividends on Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock for any dividend period would cause the Company to fail to comply with any applicable law or regulation, or any agreement we may enter into with our regulators from time to time, then we would not be able to declare or pay a dividend for such dividend period.
If the non-payment of dividends on Series A Preferred Stock or Series B Preferred Stock for any dividend period would cause the Bank to fail to comply with any applicable law or regulation, or any agreement we may enter into with our regulators from time to time, then we would not be able to declare or pay a dividend for such dividend period.
We are subject to various legal or regulatory investigations and proceedings. At any given time, we and our subsidiaries are involved with a number of legal proceedings and regulatory investigations and examinations as a part of reviews conducted by regulators and other parties, which may involve banking, securities, consumer protection, employment, tort, and numerous other laws and regulations.
At any given time, we and our subsidiaries are involved with a number of legal proceedings and regulatory investigations and examinations as a part of reviews conducted by regulators and other parties, which may involve banking, securities, consumer protection, employment, tort, and numerous other laws and regulations.
The Company and the Bank rely on third parties to perform certain key business functions, which may expose us to further operational risk. We outsource certain key aspects of our data processing to certain third-party providers. While we have selected these third-party providers carefully, we cannot control their actions.
The Bank relies on third parties to perform certain key business functions, which may expose us to further operational risk. We outsource certain key aspects of our data processing to certain third-party providers. While we have selected these third-party providers carefully, we cannot control their actions.
For further information, see Note 20 - Commitments and Contingencies and Item 3 - Legal Proceedings. If federal, state, or local tax authorities were to determine that we did not adequately provide for our taxes, our income tax expense could be increased, adversely affecting our earnings.
For further information, see Note 20 - Commitments and Contingencies. If federal, state, or local tax authorities were to determine that we did not adequately provide for our taxes, our income tax expense could be increased, adversely affecting our earnings.
This could affect our growth, profitability, and financial condition, including our liquidity. The elimination of our quarterly cash dividend could have an adverse impact on the market price of our common stock.
This could affect our growth, profitability, and financial condition, including our liquidity. 29 Table of Contents The elimination of our quarterly cash dividend could have an adverse impact on the market price of our common stock.
On June 14, 2019, the New York State legislature passed the New York Housing Stability and Tenant Protection Act of 2019.
For example, on June 14, 2019, the New York State legislature passed the New York Housing Stability and Tenant Protection Act of 2019.
No assurances can be made that the Company will be able to enter into or complete any sale or divestiture of any assets or that the failure to do so may have a negative impact on the Company’s business, operations, liquidity and financial condition.
No assurances can be made that we will be able to enter into or complete any sale or divestiture of any assets or that the failure to do so may have a negative impact on our business, operations, liquidity and financial condition.
As such “systemic risk” may adversely affect the financial intermediaries with which we interact on a daily basis (such as clearing agencies, clearing houses, banks, and securities firms and exchanges), we could be adversely impacted as well. 40 Completing the diversification of the Company’s loan portfolio may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the plan may not be realized.
As such “systemic risk” may adversely affect the financial intermediaries with which we interact on a daily basis (such as clearing agencies, clearing houses, banks, and securities firms and exchanges), we could be adversely impacted as well. 38 Table of Contents Completing the diversification of our loan portfolio may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the plan may not be realized.
Such regulation and supervision govern the activities in which a bank holding company and its banking subsidiaries may engage and are intended primarily for the protection of the Deposit Insurance Fund, the banking system in general, and bank customers, rather than for the benefit of a company’s stockholders.
Such regulation and supervision govern the activities in which a bank and its subsidiaries may engage and are intended primarily for the protection of the Deposit Insurance Fund, the banking system in general, and bank customers, rather than for the benefit of a bank's stockholders.
The impact on the Company’s customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. In addition, the Company would face reductions in credit worthiness on the part of some customers or in the value of assets securing loans.
The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. In addition, we would face reductions in credit worthiness on the part of some customers or in the value of assets securing loans.
We are committed to ongoing investments and attention to combat fraud and enhance our security measures to protect against these risks. 41 We could be adversely affected by natural disasters, terrorist activities, international hostilities, domestic civil unrest or other extraordinary events beyond our control.
We are committed to ongoing investments and attention to combat fraud and enhance our security measures to protect against these risks. 39 Table of Contents We could be adversely affected by natural disasters, terrorist activities, international hostilities, domestic civil unrest or other extraordinary events beyond our control.
Investors could determine not to invest in the Company’s securities due to various climate change related considerations. The Company’s efforts to take these risks into account in making lending and other decisions may not be effective in protecting the Company from the negative impact of new laws and regulations or changes in investor, consumer or business behavior. Item 1B.
Investors could determine not to invest in our securities due to various climate change related considerations. Our efforts to take these risks into account in making lending and other decisions may not be effective in protecting us from the negative impact of new laws and regulations or changes in investor, consumer or business behavior.
We believe that the impact of any previously identified cyber incidents, including those subject to ongoing investigation and remediation, will not have a material financial impact. In addition, we routinely transmit and receive personal, confidential, and proprietary information by e-mail and other electronic means.
We believe that the impact of any previously identified cyber incidents, including those subject to ongoing investigation and remediation, will not have a material financial impact on our financial condition or the results of our operations. In addition, we routinely transmit and receive personal, confidential, and proprietary information by e-mail and other electronic means.
The Company and its customers will need to respond to new laws and regulations as well as investor, consumer and business preferences resulting from climate change concerns. The Company and its customers may face cost increases, asset value reductions, and operating process changes, among other impacts.
We and our customers will need to respond to new laws and regulations as well as investor, consumer and business preferences resulting from climate change concerns. We and our customers may face cost increases, asset value reductions, and operating process changes, among other impacts.
While we believe that our management has implemented policies and procedures with respect to our commercial real estate loan portfolio consistent with the joint guidance, if the Federal Reserve or OCC were to require us to implement additional policies and procedures consistent with their interpretation of the joint guidance, or impose restrictions on the amount of commercial real estate loans we can hold in our portfolio, our earnings could be adversely affected.
While we believe that our management has implemented policies and procedures with respect to our commercial real estate loan portfolio consistent with the joint guidance, if the OCC were to require us to implement additional policies and procedures consistent with their interpretation of the joint guidance, or impose restrictions on the amount of commercial real estate loans we can hold in our portfolio, our financial condition and operating results could be adversely affected.
Downgrades of the credit ratings of the Company and the Bank, such as those announced by certain credit rating agencies in February, March and May 2024, could result in an acceleration in deposit outflows and additional collateral needs.
Downgrades of the credit ratings of the Bank, such as those announced by certain credit rating agencies in 2024, could result in an acceleration in deposit outflows and additional collateral needs.
The process of effecting the runoff or sale of non-strategic or other assets of the Company could also result in substantial disruption of the Company's business and operations for similar reasons as stated above.
The process of effecting the runoff or sale of non-strategic or other assets of the Bank could also result in substantial disruption of our business and operations for similar reasons as stated above.
If, in the future, the Company is required or otherwise determines to raise additional capital (including through the issuance of additional securities), any such capital raise or issuance may dilute the percentage of ownership interest of existing shareholders, may dilute the per share book value of our common stock and may adversely affect the market price of our common stock and other securities.
If, in the future, we are required or otherwise determine to raise additional capital (including through the issuance of additional securities), any such capital raise or issuance may dilute the percentage of ownership interest of existing shareholders, may dilute the per share book value of our common stock and may adversely affect the market price of our common stock and other securities.
In addition to mitigating credit risk through our underwriting processes, we attempt to recognize such risk through the establishment of an allowance for credit losses. During 2024, the Company continued to take decisive actions to build capital, reinforce our balance sheet, strengthen our risk management processes, and better align the Company with relevant bank peers.
In addition to mitigating credit risk through our underwriting processes, we attempt to recognize such risk through the establishment of an ACL. During 2025, the Bank continued to take decisive actions to build capital, reinforce our balance sheet, strengthen our risk management processes, and better align the Bank with relevant bank peers.
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, (ii) the capital raise transaction we completed in March of 2024, (iii) the material weaknesses in internal control over financial reporting disclosed in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023, (iv) past cyber security breaches, and (v) recent events and circumstances involving the 34 Company, including disclosures regarding credit losses, provisioning and goodwill impairment, and negative news and expectations about the prospects of the Company (and associated stock price volatility and changes).
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, (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 Flagstar, including disclosures regarding credit losses, provisioning and goodwill impairment, and negative news and expectations about our prospects (and associated stock price volatility and changes).
If the Ninth Circuit’s holding is more broadly adopted by other Federal Circuits, including those covering states that currently have enacted, or in the future may enact, statutes requiring the payment of interest on escrow balances or if we would be required to retroactively credit interest on escrow funds, the Company’s earnings could be adversely affected.
If Flagstar’s appellate efforts are not successful, and the Ninth Circuit’s holding is more broadly adopted by other Federal Circuits, including those covering states that currently have enacted, or in the future may enact, statutes requiring the payment of interest on escrow balances or if we would be required to retroactively credit interest on escrow funds, our earnings could be adversely affected.
Our business depends significantly on general economic conditions in the New York City metropolitan region, where the majority of the buildings and properties securing the multi-family, commercial real estate, and acquisition, development, and 29 construction loans we originate for investment and the businesses of the customers to whom we make our other commercial and industrial loans are located.
Our business is significantly by general economic conditions in the New York City metropolitan region, where the majority of the buildings and properties securing the multi-family, and commercial real estate loans we originate for investment and the businesses of the customers to whom we make our other commercial and industrial loans are located.
In addition, growth in our loan portfolio may require us to increase the allowance for credit losses on such loans by making additional provisions, which would reduce our net income.
In addition, growth in our loan portfolio may require us to increase the ACL on such loans by making additional provisions, which would reduce our net income.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. I mpairment in the carrying value in finite lived intangible assets could negatively impact our financial condition and results of operations. At December 31, 2024, finite lived intangible assets, primarily core deposit intangibles, totaled $488 million.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition, results of operations and cash flows. Impairment in the carrying value in finite-lived intangible assets could negatively impact our financial condition and results of operations. At December 31, 2025, finite-lived intangible assets, primarily core deposit intangibles, totaled $381 million.
It is possible that the process of diversifying the Company’s loan portfolio could result in substantial disruption of the Company's business and operations, as the Company may face the unexpected loss of key employees that it relies on to assist with the transition or to work on the Company’s continuing operations, disruption of its ongoing businesses, higher than anticipated costs, adverse impacts to its relationships with its customers and employees, or a failure to achieve the anticipated benefits and/or cost savings.
It is possible that the process of diversifying the our loan portfolio could result in substantial disruption of the our business and operations, as the we may face the unexpected loss of key employees that we rely on to assist with the transition or to work on our continuing operations, the disruption of our ongoing businesses, minimizing higher than anticipated costs, the adverse impacts to relationships with our customers and employees, or on achieving the anticipated benefits and/or cost savings.
We are defending similar litigation in California and are currently appealing a federal district court judgment against us in that case to the Ninth Circuit.
We are also defending similar litigation in California and are currently appealing a federal district court judgment against us in that case.
We may incur future losses on commercial real estate loans due to declines in occupancy rates and rental rates in office buildings, which could occur as a result of less need for office space due to more people working from home or other factors.
We may incur future losses on CRE loans due to declines in occupancy rates and rental rates in office buildings, which could occur as a result of reduced market demand for office space due to more people working from home or other factors.
The failure to meet applicable capital guidelines could subject us to a variety of enforcement remedies available to the federal regulatory authorities, including limiting our ability to pay dividends; issuing a directive to increase our capital; and terminating our FDIC deposit insurance.
The failure to meet applicable capital guidelines could subject us to a variety of enforcement remedies available to the federal regulatory authorities, including limiting our ability to pay dividends; issuing a directive to increase our capital; and terminating our FDIC deposit insurance. Such enforcement activity by regulatory authorities could have a material effect on our financial statements or operations.
Liquidity and Dividend Risks Failure to maintain an adequate level of liquidity could result in an inability to fulfill our financial obligations could subject us to material reputational and compliance risk and could lead to the financial failure of the Company.
Liquidity and Dividend Risks Failure to maintain an adequate level of liquidity could result in an inability to fulfill our financial obligations could subject us to material reputational and compliance risk and could lead to the financial failure of the Bank. Our funding primary stems from a diverse combination of business activities.
State-level legislation and regulations have also been proposed or adopted, requiring notification to individuals in the event of a security breach of their personal data. Examples include the CCPA and other state-level privacy, data protection, and data security laws and regulations. We collect, maintain, and use non-public personal information of our customers, clients, employees, and others.
State-level legislation and regulations have also been proposed or adopted, requiring notification to individuals in the event of a security breach of their personal data, in addition to other requirements. Examples include the CCPA and other state-level privacy, data protection, and data security laws and regulations.
Our ability to meet the needs of our customers competitively, and in a cost-efficient manner, is dependent on our ability to keep pace with technological advances and invest in new technology as it becomes available. Many of our competitors have greater resources than we do and may be better equipped to invest in and market new technology-driven products and services.
Financial products and services have become increasingly technology driven. Our ability to meet the needs of our customers competitively, and in a cost-efficient manner, is dependent on our ability to keep pace with technological advances and invest in new technology as it becomes available.
The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny . The FDIC, the Federal Reserve and the Office of the Comptroller of the Currency have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending.
The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny . The OCC has issued guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending.
The Company is pursuing a plan to diversify its loan portfolio, which contemplates reducing its commercial real estate concentration, and allowing other non-strategic assets to be run off or sold.
We are pursuing a plan to diversify our loan portfolio, which contemplates reducing our multi-family and commercial real estate concentration, and allow other non-strategic assets to be run off or sold.
Changes in such regulation and supervision, or changes in regulation or enforcement by such authorities, whether in the form of policy, regulations, legislation, rules, orders, enforcement actions, ratings, or decisions, could have a material impact on the Company, our subsidiary bank and other affiliates, and our operations, including restrictions on the operation of a bank or a bank holding company and changes in FDIC deposit insurance premium assessments.
Changes in such regulation and supervision, or changes the interpretation or enforcement of applicable law by such authorities, whether in the form of policy, regulations, legislation, rules, orders, enforcement actions, ratings, or decisions, could have a material impact on the Bank, including restrictions on the operation of the Bank, increased costs of regulatory compliance, and 31 Table of Contents changes in FDIC deposit insurance premium assessments.
Furthermore, declines in the value of our investment securities could result in our having to record losses based on the other-than-temporary impairment of securities, which would reduce our earnings and also could reduce our capital. In addition, continued economic weakness could reduce the demand for our products and services, which would adversely impact our liquidity and the revenues we produce.
Furthermore, declines in the value of our investment securities could result in our having to record losses based on the other-than-temporary impairment of securities, which would reduce our earnings and also could reduce our capital.
These types of third-party relationships are subject to increasingly demanding regulatory requirements and oversight by federal bank regulators (such as the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation ("FDIC")) and the CFPB.
These types of third-party relationships are subject to increasingly demanding regulatory requirements and oversight by federal bank regulators (the OCC, the FDIC and the CFPB).
A decline in interest-earning assets would also lower our net interest income and results of operations. As of December 31, 2024, approximately 21.2 percent of our total deposits of $75.9 billion were not FDIC-insured.
A decline in interest-earning assets would also lower our net interest income and results of operations. As of December 31, 2025, approximately 20 percent of our total deposits were not FDIC-insured or collateralized by securities or letters of credit.
Depending on general economic conditions, changes in our capital position could have a materially adverse impact on our financial condition and risk profile and also could limit our ability to grow through acquisitions or otherwise.
Such regulation includes, among other matters, the level of leverage and risk-based capital ratios we are required to maintain. Depending on general economic conditions, changes in our capital position could have a materially adverse impact on our financial condition and risk profile and also could limit our ability to grow through acquisitions or otherwise.
We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions. The Community Reinvestment Act requires the OCC to assess our performance in meeting the credit needs of the communities we serve, including low- and moderate-income neighborhoods.
We have implemented various controls and security measures, but the failure of any of these controls could result in a failure to detect or mitigate fraud risks in a timely manner.
We bear the risk of loss associated with misrepresentations, and it can be challenging to recover any monetary losses suffered. We have implemented various controls and security measures, but the failure of any of these controls could result in a failure to detect or mitigate fraud risks in a timely manner.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

14 edited+5 added−3 removed6 unchanged
Biggest changeItem 1C. Cybersecurity 42 Risk Management and Strategy The importance of protecting against unauthorized access to or use of customer data that has been entrusted to us as part of the various services provided to our customers; as well as operational disruptions caused by cybersecurity events, is of paramount importance to us.
Biggest changeItem 1C. Cybersecurity Risk Management and Strategy Protecting customer data that has been entrusted to us as part of the various services we provide to our customers against unauthorized access to or use of same, as well as ensuring business continuity notwithstanding the occurrence of operational disruptions caused by cybersecurity events, is of paramount importance to us.
The ICP incorporates formal policies and procedures to ensure established controls are subjected to testing and independent effective challenge, to provide for appropriate due diligence and ongoing oversight of third parties who have access to our confidential information and/or systems, and to provide information and cybersecurity training to our employee population to ensure awareness of risks facing the institution and latest techniques used by malicious actors.
The IT Program incorporates formal policies and procedures to ensure established controls are subjected to testing and independent effective challenge, to provide for appropriate due diligence and ongoing oversight of third parties who have access to our confidential information and/or systems, and to provide information and cybersecurity training to our employee population to ensure awareness of risks facing the institution and latest techniques used by malicious actors.
Internal auditors and third-party security experts are relied upon to review and ensure that established controls are appropriately designed, effectively implemented, and operating as intended; with such reviews undertaken as part of the Bank’s internal audit and third-party penetration testing programs.
Internal auditors and third-party security experts are relied upon to review and ensure that established controls are appropriately designed, effectively implemented, and operating as intended; with such reviews undertaken as part of our internal audit and third-party penetration testing programs.
The response plan sets forth the Bank’s information/cybersecurity incident response framework, which has been designed to ensure a consistent, repeatable response to any actual or threatened cybersecurity incident.
The response plan sets forth our information/cybersecurity incident response framework, which has been designed to ensure a consistent, repeatable response to any actual or threatened cybersecurity incident.
The ICP has been designed to align with industry best practices, as well as Regulatory guidelines and laws; and leverages both the Secure Control and the National Institute of Standards and Technology Cybersecurity frameworks as its baselines.
The IT Program has been designed to align with industry best practices, as well as Regulatory guidelines and laws; and leverages both the Secure Control and the National Institute of Standards and Technology Cybersecurity frameworks as its baselines.
The ICP also includes subject matter expert review of third-party servicing agreements to ensure provisions adequately protect the bank in the event of a cybersecurity event whenever the relationship involves sensitive customer information.
The IT Program also includes subject matter expert review of third-party servicing agreements to ensure provisions adequately protect the bank in the event of a cybersecurity event whenever the relationship involves sensitive customer information.
A key aspect of the Risk Governance Framework is the risk and control self-assessment (“RCSA”) process, which is used to evaluate the mitigation effectiveness of implemented controls through an independent effective challenge program.
A key aspect of the RGF is the risk and control self-assessment (“RCSA”) process, which is used to evaluate the mitigation effectiveness of implemented controls through an independent effective challenge program.
The ICP is approved by the Board of Directors or a Committee thereof annually, and is designed to identify reasonably foreseeable internal and external threats, assess the likelihood and potential damage these threats could cause, and assess the appropriateness of policies, standards and procedures used to identify and mitigate risk levels to within the documented risk appetite.
The IT Program is approved by the Board or designated committee thereof annually, and is designed to identify reasonably foreseeable internal and external threats, assess the likelihood and potential damage these threats could cause, and assess the appropriateness of policies, standards and procedures used to identify and mitigate risk levels to within the documented risk appetite.
The information/cybersecurity risk management program relies upon a layered security model to protect against both internal and external threats; and is a component of the Bank’s Risk Governance Framework, which is reviewed and approved by the Board of Directors or Committee thereof at least annually.
The information/cybersecurity risk management program relies upon a layered security model to protect against both internal and external threats; and is a component of the RGF, which is reviewed and approved by the Board or a designated committee thereof at least annually.
Independent effective challenge has been embedded throughout this process and ensures that remediation efforts will and have satisfactorily addressed the identified issue. A formal incident response plan is maintained by the Information Security Department and approved by the Board of Directors or designated Committee thereof at least annually.
Independent effective 41 Table of Contents challenge has been embedded throughout this process and ensures that remediation efforts will and have satisfactorily addressed the identified issue. A formal incident response plan is maintained by the Information Security Unit within ETOS and approved by the Board or designated committee thereof at least annually.
The Risk Governance Framework sets forth enterprise-wide operational practices to ensure consistency in the Company's approach to risk identification, assessment and testing, issues management, and mitigation with all aspects of risk management documented within a centrally maintained Governance, Risk and Controls (“GRC”) risk management platform.
The RGF sets forth enterprise-wide operational practices to ensure consistency in our approach to risk identification, assessment and testing, issues management, and mitigation with all aspects of risk management documented within a centrally maintained GRC risk management platform.
The Committees meet quarterly to review and discuss overall state, current developments, management and performance metrics, risk identification and mitigation status, and new initiatives associated with both the Risk Governance 43 Framework and information/cybersecurity risk management programs. The Committees rely upon various management level committees (e.g.
The RAC and the BTOC meet quarterly to review and discuss overall state, current developments, management and performance metrics, risk identification and mitigation status, and new initiatives associated with the RGF, the IT Program, and Flagstar’s other supporting information/cybersecurity risk management programs, processes, and controls.
The Bank relies upon a formalized Information/Cybersecurity Program (“ICP”) to ensure we are protecting the confidentiality, integrity and availability of confidential information.
We rely upon a formalized Information Technology Program (“IT Program”) managed by Flagstar’s Chief Information and Operations Officer (the “CIOO”) to ensure we are protecting the confidentiality, integrity and availability of confidential information.
Governance The Board of Directors, through its Risk Assessment (“RAC”) and Technology (“TEC”) Committees, (together the “Committees”) provides direction and oversight of both the Risk Governance Framework and information/cybersecurity risk management programs.
The Board, through the RAC and the BTOC, provides direction and oversight of both the RGF and information/cybersecurity risk management programs.
Removed
Enterprise Risk Management, Operational Risk Management, and Technology Management) for oversight and direct management of the overarching Risk Governance Framework, which includes the information/cybersecurity risk management program and direct reporting by the Chief Information Security Officer (“CISO”).
Added
Flagstar's Chief Information Security Officer ("CISO"), reporting to the CIOO, is responsible for the First Line cybersecurity program and maintains a set of procedures and operations around IT Risk management, identity- and access- management, network-, application-, and endpoint- security management, data protection, vulnerability management, security operations, security -architecture and -engineering, business continuity management, third party risk management, and regulatory compliance to ensure all associated enterprise technology and operations services performed and/or facilitated or otherwise supported by Flagstar’s Enterprise Technology & Operations Services Department (“ETOS”) remain in compliance with applicable laws, regulations, policies and procedures.
Removed
The CISO reports directly to the Chief Information Officer and has over 15 years of direct experience in designing, implementing, and maturing information and cybersecurity strategies within the financial sector.
Added
First Line Risk Management for ETOS is responsible for identifying, assessing, monitoring, controlling, reporting, escalating, remediating, and mitigating risks associated with their activities and for adhering to the Company’s Board-approved risk appetite and limits established by senior management and the Board, all in accordance with and pursuant to applicable laws, regulations, policies and procedures.
Removed
Prior to joining the Bank, the CISO served as a technology examiner for one of the three Federal banking regulatory agencies, with over ten years of experience performing technology examinations of financial institutions and financial institutions service providers primarily within the New York metropolitan area.
Added
The First Line is also responsible for developing, maintaining, and implementing First Line processes, procedures, and such other internal controls (including, without limitation, establishing, refining, and testing of controls catalogued in the Bank's Governance, Risk, and Compliance ("GRC") risk management platform) as are necessary to ensure the Bank and its third-party vendors and partners, as applicable, comply with applicable laws, regulations, policies and procedures.
Added
Governance The Technology & Operations Committee (the “BTOC”) of the Board, Executive Management, Flagstar’s Enterprise Risk Management Committee (“ERMC”), its Enterprise Technology & Operations Services Management Committee (“ETOSMC”), its Technology, Cyber, and Resilience Risk Management Committee (“TCRRMC”), ETOS personnel, and all applicable Senior Officers are each responsible for oversight of various aspects of the IT Program, as respectively applicable.
Added
The RAC and the BTOC rely upon various management-level committees ( e.g. , ERMC, ETOSMC, and TCRRMC) for oversight and direct management of the RGF, which is supported by the IT Program governing, among other things, information/cybersecurity risk management processes and controls and direct reporting by the CISO.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+2 added−1 removed1 unchanged
Biggest changeThe following table provides information relating to the Company’s repurchase of common stock for the year December 31, 2024: (dollars in millions, except share data) Period Total Shares of Common Stock Repurchased Average Price Paid per Common Share Total Allocation Total Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs First Quarter 2024 300,713 $ 29.16 $ 9 — Second Quarter 2024 55,619 9.85 1 — Third Quarter 2024 99,470 10.13 1 — Fourth Quarter 2024 October 1 - 31, 2024 11,111 11.73 — — November 1 - 30, 2024 3,579 10.78 — — December 1 - 31, 2024 16,966 11.96 — — Total Fourth Quarter 2024 31,656 $ 11.75 — — 2024 Total 487,458 $ 21.94 $ 11 — Item 6.
Biggest changeThe following table provides information relating to the Bank’s repurchase of common stock for the three months ended December 31, 2025: 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 October 1 - 31, 2025 83,934 $ 11.93 — November 1 - 30, 2025 9,052 11.16 — December 1 - 31, 2025 126,925 12.94 — Total Fourth Quarter 2025 219,911 $ 12.48 — Item 6.
The performance graph is being furnished solely to accompany this report pursuant to Item 201(e) of Regulation S-K, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
The performance graph is being furnished solely to accompany this report pursuant to Item 201(e) of Regulation S-K, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Bank, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
The cumulative total returns are based on the assumption that $100.00 was invested in each of the three investments on December 31, 2019, and that all dividends paid since that date were reinvested.
The cumulative total returns are based on the assumption that $100.00 was invested in each of the three investments on December 31, 2020, and that all dividends paid since that date were reinvested.
Stock Performance Graph The following graph compares the cumulative total return on the Company’s stock in the five years ended December 31, 2024 with the cumulative total returns on a broad market index (the S&P Mid-Cap 400 Index) and a peer group index (the S&P U.S. BMI Banks Index) during the same time.
Stock Performance Graph The following graph compares the cumulative total return on the Bank’s stock in the five years ended December 31, 2025 with the cumulative total returns on a broad market index (the S&P Mid-Cap 400 Index) and a peer group index (the S&P U.S. BMI Banks Index) during the same time.
The S&P Mid-Cap 400 Index was chosen as the broad market index in connection with the Company’s trading activity on the NYSE; the S&P U.S. BMI Banks Index currently is comprised of 251 bank and thrift institutions, including the Company. S&P Global Market Intelligence provided us with the data for both indices.
The S&P Mid-Cap 400 Index was chosen as the broad market index in connection with the Bank’s trading activity on the NYSE; the S&P U.S. BMI Banks Index currently is comprised of 262 bank and thrift institutions, including the Bank. S&P Global Market Intelligence provided us with the data for both indices.
Item 5. Market For the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The common stock of Flagstar Financial, Inc. trades on the New York Stock Exchange (the “NYSE”) under the symbol “FLG.” At December 31, 2024, the number of outstanding shares was 414,934,628 and the number of registered owners was approximately 9,074.
Item 5. Market For the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The common stock of Flagstar Bank, National Association trades on the New York Stock Exchange (the “NYSE”) under the symbol “FLG.” As of December 31, 2025, the number of outstanding shares was 415,982,036 and the number of registered owners was approximately 8,619.
Shares that are withheld for this purpose are repurchased pursuant to the terms of the applicable stock-based incentive plan, rather than pursuant to the share repurchase program authorized by the Board of Directors, described below.
Shares that are withheld for this purpose are repurchased pursuant to the terms of the applicable stock-based incentive plan.
BMI Banks Index $ 100.00 $ 87.24 $ 118.61 $ 98.38 $ 107.32 $ 143.68 Share Repurchases Shares Repurchased Pursuant to the Company’s Stock-Based Incentive Plans Participants in the Company’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.
BMI Banks Index $ 100.00 $ 135.97 $ 112.77 $ 123.02 $ 164.70 $ 211.47 Share Repurchases Shares Repurchased Pursuant to the Bank’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.
Such returns are based on historical results and are not intended to suggest future performance. 46 CUMULATIVE TOTAL STOCKHOLDER RETURN COMPARED WITH PERFORMANCE OF SELECTED INDICES DECEMBER 31, 2019, THROUGH DECEMBER 31, 2024 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Flagstar Financial, Inc. $ 100.00 $ 94.13 $ 115.43 $ 87.06 $ 110.35 $ 34.08 S&P Mid-Cap 400 Index $ 100.00 $ 113.66 $ 141.80 $ 123.28 $ 143.54 $ 163.54 S&P U.S.
Such returns are based on historical results and are not intended to suggest future performance. 43 Table of Contents CUMULATIVE TOTAL STOCKHOLDER RETURN COMPARED WITH PERFORMANCE OF SELECTED INDICES DECEMBER 31, 2020, THROUGH DECEMBER 31, 2025 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Flagstar Bank, National Association $ 100.00 $ 122.62 $ 92.49 $ 117.22 $ 36.21 $ 49.02 S&P Mid-Cap 400 Index $ 100.00 $ 124.76 $ 108.47 $ 126.29 $ 143.89 $ 154.68 S&P U.S.
As of December 31, 2024 , net of related issuance costs, the Company has approximately $9 million remaining under this repurchase authorization. 47 Shares that are repurchased pursuant to the Board of Directors’ authorization, and those that are repurchased pursuant to the Company’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.
Any future share repurchases would be subject to prior approval of the OCC. 44 Table of Contents 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.
Removed
Shares Repurchased Pursuant to the Board of Directors’ Share Repurchase Authorization On October 23, 2018, the Board of Directors authorized the repurchase of up to approximately $300 million of the Company’s common stock. Under said authorization, shares may be repurchased on the open market or in privately negotiated transactions.
Added
Shares Repurchased Pursuant to the Board's Share Repurchase Authorization Prior to the completion of the Reorganization on October 17, 2025, Flagstar Financial, Inc. had been authorized under its previously announced share repurchase program to repurchase up to $300 million of outstanding common stock, of which $9 million remained as of December 31, 2025.
Added
As a result of the Reorganization, no share repurchase programs remained active as of December 31, 2025 .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+74 added−133 removed22 unchanged
Biggest changeThe following table presents information on the Company's net charge-offs: Year Ended December 31, 2024 2023 (in millions) Charge-offs: Multi-family $ 308 $ 119 Commercial real estate 462 56 One-to-four family residential 8 4 Acquisition, development and construction 4 — Commercial and industrial 136 30 Other 20 14 Total charge-offs $ 938 $ 223 Recoveries: Multi-family $ (5) $ — Commercial real estate (8) — One-to-four family residential (5) — Commercial and industrial (21) (11) Other (7) (4) Total recoveries $ (46) $ (15) Net charge-offs (recoveries) $ 892 $ 208 61 The following table presents information on the Company's net charge-offs as compared to average loans held for investment outstanding: Year Ended December 31, (in millions) 2024 2023 2022 Multi-family Net charge-offs during the period $ 303 $ 119 $ 1 Average amount outstanding $ 36,064 $ 37,839 $ 36,292 Net charge-offs as a percentage of average loans 0.84 % 0.31 % — % Commercial real estate Net charge-offs during the period $ 454 $ 56 $ — Average amount outstanding $ 9,919 $ 9,905 $ 6,964 Net charge-offs as a percentage of average loans 4.58 % 0.57 % — % One-to-Four Family first mortgage Net charge-offs during the period $ 3 $ 4 $ — Average amount outstanding $ 5,740 $ 5,907 $ 516 Net charge-offs as a percentage of average loans 0.05 % 0.06 % — % Acquisition, Development and Construction Net charge-offs during the period $ 4 $ — $ — Average amount outstanding $ 3,230 $ 2,530 $ 203 Net charge-offs as a percentage of average loans 0.12 % — % — % Commercial and Industrial Loans Net charge-offs during the period $ 115 $ 19 $ (7) Average amount outstanding $ 19,753 $ 21,460 $ — Net charge-offs as a percentage of average loans 0.58 % 0.09 % — % Other Loans Net charge-offs (recoveries) during the period $ 13 $ 10 $ (5) Average amount outstanding $ 1,902 $ 2,552 $ 5,401 Net charge-offs (recoveries) as a percentage of average loans 0.68 % 0.38 % (0.09) % Total loans held for investment Net charge-offs (recoveries) during the period $ 892 $ 208 $ (4) Average amount outstanding $ 76,608 $ 80,193 $ 49,376 Net charge-offs (recoveries) as a percentage of average loans 1.16 % 0.26 % -0.01 % Securities Total securities were $10.4 billion, or 10 percent, of total assets at December 31, 2024, compared to $9.2 billion, or 8 percent of total assets at December 31, 2023.
Biggest changeCharge-offs The following table summarizes net charge-offs as a percentage of average loans: December 31, 2025 2024 (in millions) Net Charge-offs (Recoveries) Average Balance % Net Charge-offs (Recoveries) Average Balance % Multi-family $ 235 $ 31,953 0.74 % $ 303 $ 36,064 0.84 % Commercial real estate (1) 33 10,666 0.31 458 13,149 3.48 One-to-four family residential 4 5,075 0.08 3 5,740 0.05 Commercial and industrial 59 14,616 0.40 115 19,753 0.58 Other 20 1,683 1.19 13 1,902 0.68 Total $ 351 $ 63,993 0.55 % $ 892 $ 76,608 1.16 % (1) Includes ADC loans.
Other strategies might include: • Asset restructuring, involving sales of assets having higher risk profiles, or a gradual restructuring of the asset mix over time to affect the maturity or repricing schedule of assets; • Liability restructuring, whereby product offerings and pricing are altered or wholesale borrowings are employed to affect the maturity structure or repricing of liabilities; 70 • Expansion or shrinkage of the balance sheet to correct imbalances in the repricing or maturity periods between assets and liabilities; and/or • Use or alteration of off-balance sheet positions, including interest rate swaps, caps, floors, options, and forward purchase or sales commitments.
Other strategies might include: • Asset restructuring, involving sales of assets having higher risk profiles, or a gradual restructuring of the asset mix over time to affect the maturity or repricing schedule of assets; • Liability restructuring, whereby product offerings and pricing are altered or wholesale borrowings are employed to affect the maturity structure or repricing of liabilities; • Expansion or shrinkage of the balance sheet to correct imbalances in the repricing or maturity periods between assets and liabilities; and/or • Use or alteration of off-balance sheet positions, including interest rate swaps, caps, floors, options, and forward purchase or sales commitments.
Internal controls and ongoing monitoring processes capture and address heightened risks that threaten the Company’s ability to achieve the Company’s 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.
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.
At December 31, 2024, 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.
At December 31, 2025, 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.
Interest Rate Risk is also monitored through the use of a model that generates Net Interest Income ("NII") simulations over a range of interest rate scenarios. Modeling changes in NII requires that certain assumptions be made which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.
Interest Rate Risk is also monitored through the use of a model that generates NII simulations over a range of interest rate scenarios. Modeling changes in NII requires that certain assumptions be made which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.
For the year ended 2024, 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. At December 31, 2024, we had no commitments to purchase securities.
For the year ended 2025, 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. At December 31, 2025, we had no commitments to purchase securities.
At December 31, 2024, 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.
At December 31, 2025, 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.
To reduce our exposure to changing rates, the Board of Directors and management monitor interest rate sensitivity on a regular or as needed basis so that adjustments to the asset and liability mix can be made when deemed appropriate.
To reduce our exposure to changing rates, the Board and management monitor interest rate sensitivity on a regular or as needed basis so that adjustments to the asset and liability mix can be made when deemed appropriate.
The yields on our held for-investment loans and investment securities are generally more sensitive to intermediate-term market interest rates. However, a sizable portion of our held for investment loans have fixed rates and generally reset to intermediate-term market rates when they reach repricing dates.
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.
The amount of our 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.
Net Interest Income Net interest income is our primary source of income. The amount of our 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.
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.
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 61 Table of Contents at least annually until they are sold.
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 our net interest income, and may very well differ from actual results.
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 our NII, and may very well differ from actual results.
Furthermore, the model does not take into account the benefit of any strategic actions we may take to further reduce our exposure to interest rate risk. The assumptions used in the net interest income simulation are inherently uncertain.
Furthermore, the model does not take into account the benefit of any strategic actions we may take to further reduce our exposure to interest rate risk. The assumptions used in the NII simulation are inherently uncertain.
The asset and liability management process has three primary objectives: to evaluate the interest rate risk inherent in certain balance sheet accounts; to determine the appropriate level of risk, given our business strategy, operating environment, capital and liquidity requirements, and performance objectives; and to manage that risk in a manner consistent with guidelines approved by the Boards of Directors of the Company and the Bank.
The asset and liability management process has three primary objectives: to evaluate the interest rate risk inherent in certain balance sheet accounts; to determine the appropriate level of risk, given our business strategy, operating environment, capital and liquidity requirements, and performance objectives; and to manage that risk in a manner consistent with guidelines approved by the Board.
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.
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 51 Table of Contents 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.
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 Federal Open Market Committee, and market interest rates. 48 Our interest-bearing liabilities are comprised of customer deposits and funds we borrow.
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 Federal Open Market Committee, and market interest rates.
Loans with loan-to-value ratios exceeding 80 percent are required to obtain mortgage insurance. As of December 31, 2024, excluding loans with government guarantees, loans in this portfolio had an average current FICO score of 743 and an average loan-to-value ratio of 50 percent.
Loans with loan-to-value ratios exceeding 80 percent are required to obtain mortgage insurance. As of December 31, 2025, excluding loans with government guarantees, loans in this portfolio had an average current FICO score of 744 and an average loan-to-value ratio of 51 percent.
A broad range of commercial and industrial loans, both collateralized and unsecured, 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.
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.
FHLB advances are secured by eligible collateral in the form of loans and securities, under blanket collateral agreements with the FHLB. As of December 31, 2024, $250 million of our wholesale borrowings had callable features and $2 billion had callable features at December 31, 2023.
FHLB advances are secured by eligible collateral in the form of loans and securities, under blanket collateral agreements with the FHLB. At December 31, 2025 and December 31, 2024 our wholesale borrowing had $250 million of callable features.
While each brokered certificate of deposit account has balances in excess of $250,000, the funds are fully insured by the FDIC as each of the ultimate owners of the funds maintain balances below FDIC insurance limits.
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.
In the event that our EVE and net interest income sensitivities were to breach our internal policy limits, we would undertake the following actions to ensure that appropriate remedial measures were put in place: • In formulating appropriate strategies, the Asset and Liability Management Committee would ascertain the primary causes of the variance from policy tolerances, the expected term of such conditions, and the projected effect on capital and earnings. • Our Asset and Liability Management Committee would inform the Board of Directors of the variance, and present recommendations to the Board regarding proposed courses of action to restore conditions to within-policy tolerances.
In the event that our EVE and NII sensitivities were to breach our internal policy limits, we would undertake the following actions to ensure that appropriate remedial measures were put in place: 64 Table of Contents • In formulating appropriate strategies, Flagstar's ALCO would ascertain the primary causes of the variance from policy tolerances, the expected term of such conditions, and the projected effect on capital and earnings. • Our ALCO would inform the Board of the variance, and present recommendations to the Board regarding proposed courses of action to restore conditions to within-policy tolerances.
In determining the term and structure of commercial and industrial loans, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. Commercial and industrial loans are often secured by business assets and personal guarantees of the borrower and include financial covenants to monitor the borrower’s financial stability.
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.
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. Delinquencies are addressed by our Loan Workout Unit and every effort is made to collect rather than initiate foreclosure proceedings.
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.
The Bank is subject to the Prompt Corrective Action regulatory capital framework that 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 Federal Deposit Insurance Corporation deposit insurance premium assessments.
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.
These contractual obligations are reflected in the Consolidated Statements of Condition under “Deposits” and “Borrowed funds,” respectively. At December 31, 2024, we had certificates of deposit of $27.3 billion and long-term debt (defined as borrowed funds with an original maturity one year or more) of $11.7 billion.
These contractual obligations are reflected in the Consolidated Statements of Condition under “Deposits” and “Borrowed funds,” respectively. At December 31, 2025, we had CDs of $20.8 billion and long-term debt (defined as borrowed funds with an original maturity one year or more) of $8.2 billion.
The net loss attributable to common stockholders, which includes the impact from preferred dividends, for the year ended 2024 was $1.2 billion or $3.49 per diluted share compared to the net loss attributable to common stockholders of $112 million for the year ended 2023 or $0.49 per diluted share.
The net loss attributable to common stockholders, which includes the impact from preferred dividends, for the year ended December 31, 2025 was $210 million or $0.50 per diluted share compared to the net loss attributable to common stockholders of $1.2 billion for the corresponding period in 2024 or $3.49 per diluted share.
A t December 31, 2024 , the estimated change in net interest income 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 0.65 percent and the estimated change for a 100 basis point increase in short term rates is -0.54 percent.
A t December 31, 2025 , the estimated change in net interest income 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 1.51% percent and the estimated change for a 100 basis point increase in short term rates is decrease of 1.29% percent.
Government and GSE Obligations State, County, and Municipal Other Debt Securities (2) Available-for-Sale Debt Securities: (1) Due within one year 3.51 % — % — % 3.40 % Due from one to five years 3.02 — 3.16 4.79 Due from five to ten years 2.51 1.61 — 5.48 Due after ten years 4.44 — — 5.95 Total debt securities available for sale 4.35 1.61 3.16 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.
Government and GSE Obligations Corporate and Other Bonds Asset-Backed Securities Available-for-sale Debt Securities: (1) Due within one year 2.97 % — % — % — % Due from one to five years 2.61 3.93 4.48 — Due from five to ten years 2.51 1.62 5.43 — Due after ten years 4.42 — 5.95 5.45 Total debt securities available-for-sale 4.37 2.62 4.92 5.45 (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.
Based on the information and assumptions in effect at December 31, 2024, 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 2.40% -100 shock 1.00% +100 shock (1.40)% +200 shock (3.60)% 69 The net changes in EVE presented in the preceding table are within the parameters approved by the Boards of Directors of the Company and the Bank.
Based on the information and assumptions in effect at December 31, 2025, 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 (0.74)% -100 shock (0.21)% +100 shock (0.87)% +200 shock (2.77)% The net changes in EVE presented in the preceding table are within the parameters approved by the Board.
We most often receive updated borrower financial information in 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 debt service coverage ratio.
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.
As of each of the dates indicated, our credit ratings were as follows : Year Ended December 31, 2024 2023 Long-Term Issuer Rating: Moody's B2 Baa3 Fitch BB BBB Morningstar DBRS BBB (low) BBB (high) Short-Term Deposits Rating: Moody's NP P-2 The primary mortgage loan agencies maintain standards that define the criteria that must be met for an institution to qualify as an eligible custodial depository for the deposits related to loans owned by those entities, including have an investment grade short-term issuer/deposit rating from Moody’s or S&P.
As of January 16, 2026, our credit ratings were as follows : Moody's Fitch DBRS Long-Term Issuer B1 BB BBB Long-Term Deposits Ba1 BB+ BBB Short-Term Deposits NP B The primary mortgage loan agencies maintain standards that define the criteria that must be met for an institution to qualify as an eligible custodial depository for the deposits related to loans owned by those entities, including having an 62 Table of Contents investment grade short-term issuer/deposit rating from Moody’s or S&P.
To comprehensively manage our risk exposure, we focus on several critical areas outlined below, Credit Risk, Liquidity Risk, Interest Rate Risk and Regulatory Capital. Credit Risk It is our practice to continually review the risk in our loan portfolio. The Company receives financial information from borrowers annually and in some cases more frequently.
To comprehensively manage our risk exposure, we focus on several critical areas outlined below, Credit Risk, Liquidity Risk, Interest Rate Risk and Regulatory Capital. 60 Table of Contents Credit Risk It is our practice to continually review the risk in our loan portfolio.
The level of prepayments may, in turn, be impacted by a variety of factors, including the economy in the region where the underlying mortgages were originated; seasonal factors; demographic variables; and the assumability of the underlying mortgages. However, the factors with the most significant impact on prepayments are market interest rates and the availability of refinancing opportunities.
The level of prepayments may, in turn, be impacted by a variety of factors, including the economy in the region where the underlying mortgages were originated; seasonal factors; demographic variables; and the assumability of the underlying mortgages.
Based upon our December 31, 2024 cash and cash equivalent balance of $15.4 billion and our total liquidity position of $29.9 billion, we expect that our funding will be sufficient to fulfill these cash obligations and commitments when they are due both in the short term and long term.
At December 31, 2025, our total liquidity position was $27.1 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.
These obligations are included in the Consolidated 68 Statements of Condition in other liabilities and totaled $463 million at December 31, 2024, an increase of $17 million compared to $446 million at December 31, 2023.
These obligations are included within Other liabilities within the Consolidated Statements of Condition in other liabilities and totaled $427 million at December 31, 2025, a decrease of $36 million compared to $463 million at December 31, 2024.
Loans that do not have a debt service coverage ratio 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.
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.
We have no other direct contractual relationships tied to further downgrades in our credit ratings but may suffer reputational risk that could have an adverse effect on our business should that occur. Parent Company Liquidity The Parent Company is a separate legal entity from the Bank and must provide for its own liquidity.
We have no other direct contractual relationships tied to further downgrades in our credit ratings, but may suffer reputational risk that could have an adverse effect on our business should that occur.
Year Ended December 31, 2024 2023 2022 (dollars in millions) Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost ASSETS: Interest-earning assets: Mortgage and other loans and leases, net (1) $ 78,883 $ 4,369 5.54 % $ 81,855 $ 4,509 5.51 % $ 49,376 $ 1,848 3.74 % Securities (2) (3) 12,222 559 4.57 % 10,611 444 4.18 % 7,448 200 2.69 % Reverse repurchase agreements — — — % 388 22 5.77 % 460 15 3.24 % Interest-earning cash and cash equivalents 19,478 1,024 5.26 % 10,025 516 5.14 % 1,988 29 1.47 % Total interest-earning assets $ 110,583 $ 5,952 5.38 % $ 102,879 $ 5,491 5.34 % $ 59,272 $ 2,092 3.53 % Non-interest-earning assets 5,151 7,616 5,130 Total assets $ 115,734 $ 110,495 $ 64,402 LIABILITIES AND STOCKHOLDERS' EQUITY: Interest-bearing deposits: Interest-bearing checking and money market accounts $ 23,654 $ 869 3.67 % $ 29,286 $ 943 3.22 % $ 17,910 $ 226 1.26 % Savings accounts 10,975 345 3.14 % 9,941 169 1.70 % 9,336 60 0.64 % Certificates of deposit 27,477 1,362 4.96 % 17,097 646 3.78 % 8,772 97 1.11 % Total interest-bearing deposits $ 62,106 $ 2,576 4.15 % $ 56,324 $ 1,758 3.12 % $ 36,018 $ 383 1.06 % Short term borrowed funds 5,703 221 3.89 % 7,263 305 4.20 % 2,408 56 2.32 % Other borrowed funds 18,465 1,003 5.43 % 10,671 351 3.29 % 12,982 257 1.99 % Total borrowed funds $ 24,168 $ 1,224 5.07 % $ 17,934 $ 656 3.66 % $ 15,390 $ 313 2.04 % Total interest-bearing liabilities $ 86,274 $ 3,800 4.40 % $ 74,258 $ 2,414 3.25 % $ 51,408 $ 696 1.35 % Non-interest-bearing deposits 18,140 21,583 5,124 Other liabilities 2,595 4,073 787 Total liabilities $ 107,009 $ 99,914 $ 57,319 Stockholders’ and mezzanine equity 8,725 10,581 7,083 Total liabilities and stockholders’ equity $ 115,734 $ 110,495 $ 64,402 Net interest income/interest rate spread $ 2,152 0.98 % $ 3,077 2.09 % $ 1,396 2.17 % Net interest margin 1.95 % 2.99 % 2.35 % Ratio of interest-earning assets to interest-bearing liabilities 1.28 x 1.39 x 1.15 x (1) Amounts are net of net deferred loan origination costs/(fees) and includes loans held for sale and non-accrual loans.
Year Ended December 31, 2025 2024 2023 (in millions) Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost ASSETS: Interest-earning assets: Total loans and leases (1) $ 64,822 $ 3,310 5.09 % $ 78,883 $ 4,369 5.54 % $ 81,855 $ 4,509 5.51 % Securities (2) 15,554 702 4.51 % 12,222 559 4.57 % 10,611 444 4.18 % Reverse repurchase agreements — — — % — — — % 388 22 5.77 % Interest-earning cash and cash equivalents 10,504 454 4.32 % 19,478 1,024 5.26 % 10,025 516 5.14 % Total interest-earning assets $ 90,880 $ 4,466 4.91 % $ 110,583 $ 5,952 5.38 % $ 102,879 $ 5,491 5.34 % Non-interest-earning assets 3,635 5,151 7,616 Total assets $ 94,515 $ 115,734 $ 110,495 LIABILITIES AND STOCKHOLDERS' EQUITY: Interest-bearing deposits: Interest-bearing checking and money market accounts $ 20,079 $ 612 3.05 % $ 23,654 $ 869 3.67 % $ 29,286 $ 943 3.22 % Savings accounts 14,521 442 3.04 % 10,975 345 3.14 % 9,941 169 1.70 % Certificates of deposit 24,057 1,078 4.48 % 27,477 1,362 4.96 % 17,097 646 3.78 % Total interest-bearing deposits $ 58,657 $ 2,132 3.63 % $ 62,106 $ 2,576 4.15 % $ 56,324 $ 1,758 3.12 % Total borrowed funds $ 13,620 $ 613 4.50 % $ 24,168 $ 1,224 5.07 % $ 17,934 $ 656 3.66 % Total interest-bearing liabilities $ 72,277 $ 2,745 3.80 % $ 86,274 $ 3,800 4.40 % $ 74,258 $ 2,414 3.25 % Non-interest-bearing deposits 12,548 18,140 21,583 Other liabilities 1,565 2,595 4,073 Total liabilities $ 86,390 $ 107,009 $ 99,914 Stockholders’ and mezzanine equity 8,125 8,725 10,581 Total liabilities and stockholders’ equity $ 94,515 $ 115,734 $ 110,495 Net interest income/interest rate spread $ 1,721 1.11 % $ 2,152 0.98 % $ 3,077 2.09 % Net interest margin 1.89 % 1.95 % 2.99 % Ratio of interest-earning assets to interest-bearing liabilities 1.26 x 1.28 x 1.39 x (1) Comprised of Loans and leases held for investment, net and Loans held for sale.
To mitigate our exposure to rent regulated properties, we are curtailing future originations of loans secured by rent-regulated properties. We are no longer utilizing mortgage brokers to refer loan origination opportunities to us. We are focusing originations and renewal retention on borrowers with whom we will have broader customer relationships beyond lending.
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.
The average term of our fixed rate deposits is less than twelve months, therefore 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 Federal Open Market Committee.
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 45 Table of Contents actions of the Federal Open Market Committee.
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.
It is not our policy to obtain updated appraisals for performing loans that are not showing signs of credit weakness.
Charge-offs of $770 million were recorded on commercial real estate and multi-family loans during the year ended December 31, 2024, primarily driven by appraisals received on those loans. 66 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.
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.
Non-Interest Income The following table summarizes our non-interest income for the respective periods: Year Ended December 31, (in millions) 2024 2023 2022 Fee income $ 150 $ 172 $ 27 Net gain on mortgage/servicing sale 89 — — Net return on mortgage servicing rights 73 103 6 Net gain on loan sales and securitizations 48 89 5 Bank-owned life insurance 42 43 32 Net loan administration income 2 82 3 Bargain purchase gain (121) 2,131 159 Other 117 67 15 Total non-interest income $ 400 $ 2,687 $ 247 Comparison to Prior Year For the year ended 2024, non-interest income totaled $400 million compared to $2.7 billion for the year ended 2023.
This improvement was partially offset by declining trends in macro-economic conditions, although some improvement was seen during the three months ended December 31, 2025. 47 Table of Contents Non-Interest Income The following table summarizes our non-interest income for the respective periods: Year Ended December 31, (in millions) 2025 2024 2023 $ Change (2025 vs. 2024) % Change (2025 vs. 2024) Fee income $ 89 $ 150 $ 172 $ (61) (41) % Bank-owned life insurance 49 42 43 7 17 % Net gain on investment securities 31 — — 31 NM Net return on mortgage servicing rights — 73 103 (73) NM Net gain on loan sales and securitizations 32 48 89 (16) (33) % Net gain on mortgage/servicing sale — 89 — (89) NM Net loan administration income 6 2 82 4 NM Bargain purchase gain — (121) 2,131 121 NM Other 134 117 67 17 15 % Total non-interest income $ 341 $ 400 $ 2,687 $ (59) (15) % Comparison to Prior Year For the year ended December 31, 2025, non-interest income decreased $59 million compared to the corresponding period for 2024.
Capital amounts and classifications are also subject to the regulators’ qualitative judgments about the components of capital and risk weighting assets, among other factors, and the regulators have discretion to require that institutions maintain capital in excess of minimum levels.
Capital amounts and classifications are subject to the regulators’ qualitative judgments about the components of capital and risk weighted assets, among other factors.
The following table summarizes our total liquidity from on-balance sheet and off-balance sheet funding sources: Year Ended December 31, (in billions) 2024 2023 Cash at Federal Reserve $ 15.0 $ 11.5 High-quality Liquid Assets 7.9 6.3 Total On-Balance Sheet Liquidity $ 22.9 $ 17.8 FHLB Available Capacity 6.6 8.4 Discount Window Available Capacity 0.4 1.7 Total Liquidity $ 29.9 $ 27.9 At December 31, 2024, our total liquidity (cash and cash equivalents, high-quality liquid assets and borrowing capacity), was $29.9 billion.
December 31, (in billions) 2025 2024 Cash at Federal Reserve $ 5.3 $ 15.0 High-Quality Liquid Assets 13.5 7.9 Total On-Balance Sheet Liquidity $ 18.8 $ 22.9 FHLB Available Capacity 6.5 6.6 Discount Window Available Capacity 1.8 0.4 Total Liquidity $ 27.1 $ 29.9 Credit Ratings We maintain credit ratings from three rating agencies: Moody’s, Fitch and Morningstar DBRS.
The net changes in NII presented in the preceding table are within the parameters approved by the Boards of Directors of the Company and the Bank. Future changes in our mix of assets and liabilities may result in greater changes to our EVE, and/or NII simulations.
Future changes in our mix of assets and liabilities may result in greater changes to our EVE, and/or NII simulations.
The following table presents a geographical analysis of the multi-family loans in our held for investment loan portfolio: Year Ended December 31, 2024 2023 (in millions) Amount Percent of Total Amount Percent of Total New York City: Manhattan $ 6,246 18 % $ 6,893 18 % Brooklyn 5,375 16 % 5,840 16 % Bronx 3,272 10 % 3,619 10 % Queens 2,526 7 % 2,831 8 % Staten Island 98 — % 133 — % Total New York City $ 17,517 51 % $ 19,316 52 % New Jersey 4,509 13 % 5,064 14 % Long Island 484 1 % 509 1 % Total Metro New York $ 22,510 66 % $ 24,889 67 % Other New York State 1,188 3 % 1,233 3 % Pennsylvania 3,375 10 % 3,682 10 % Florida 1,555 5 % 1,681 5 % Ohio 1,007 3 % 1,085 3 % All other states 4,458 13 % 4,695 13 % Total $ 34,093 100 % $ 37,265 100 % Commercial Real Estate At December 31, 2024, commercial real estate loans represented $8.7 billion, or 13 percent, of total loans held for investment, reflecting a $1.8 billion decrease when compared to $10.5 billion at December 31, 2023, primarily due to payoffs, as well as charge-offs and loan sales.
The following table presents a geographical analysis of the multi-family loans in our held for investment loan portfolio: December 31, 2025 2024 (in millions) Amount Percent of Total Amount Percent of Total New York City: Manhattan $ 4,901 17 % $ 6,246 18 % Brooklyn 4,559 16 5,375 16 Bronx 2,723 9 3,272 10 Queens 2,206 8 2,526 7 Staten Island 69 — 98 — Total New York City $ 14,458 50 % $ 17,517 51 % New Jersey 3,715 13 4,509 13 Long Island 426 1 484 1 Total Metro New York $ 18,599 64 % $ 22,510 66 % Other New York State 930 3 1,188 3 Pennsylvania 2,831 10 3,375 10 Florida 1,483 5 1,555 5 Ohio 968 3 1,007 3 All other states 4,172 15 4,458 13 Total $ 28,983 100 % $ 34,093 100 % Commercial Real Estate December 31, (in millions) 2025 2024 $ Change (2025 vs. 2024) % Change (2025 vs. 2024) Commercial real estate (1) $ 9,314 $ 11,836 $ (2,522) (21) % (1) Includes ADC loans.
Additionally, the Troy and Cleveland operational centers were classified as held for sale during the quarter and recorded at fair value, resulting in a $31 million impairment expense. 65 Risk Governance Framework The Risk Management Division is responsible for formalizing the Company’s Risk Appetite Statement, which reflects the Board's and Management’s tolerance for risks and is set in alignment with the budget, strategic and capital plans.
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 budget, strategic and capital plans.
Based on the information and assumptions in effect at December 31, 2024, the following table reflects the estimated percentage change in future net interest income for the next twelve months, assuming the changes in interest rates noted: Change in Interest Rates (in basis points) (1) Estimated Percentage Change in Future Net Interest Income -200 shock (3.0)% -100 shock (1.5)% +100 shock 0.4% +200 shock 0.5% (1) In general, short- and long-term rates are assumed to increase in parallel instantaneously and then remain unchanged.
The following table reflects the estimated percentage change in future NII for the next twelve months. In general, short- and long-term rates are assumed to increase in parallel instantaneously and then remain unchanged.
The following tables set forth the common equity tier 1, tier 1 risk-based, total risk-based, and leverage capital amounts and ratios for the Company on a consolidated basis and for the Bank on a stand-alone basis, as well as the respective minimum regulatory capital requirements, as of the dates shown: 71 The following table presents the Company's regulatory capital position: Risk-Based Capital December 31, 2024 Common Equity Tier 1 Tier 1 Total Leverage Capital (in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital $ 7,997 11.83 % $ 8,501 12.57 % $ 10,238 15.14 % $ 8,501 7.68 % Minimum for capital adequacy purposes 3,043 4.50 4,057 6.00 5,409 8.00 4,428 4.00 Excess $ 4,954 7.33 % $ 4,444 6.57 % $ 4,829 7.14 % $ 4,073 3.68 % December 31, 2023 Total capital $ 8,009 9.05 % $ 8,512 9.62 % $ 10,415 11.77 % $ 8,512 7.75 % Minimum for capital adequacy purposes 3,983 4.50 5,310 6.00 7,081 8.00 4,392 4.00 Excess $ 4,026 4.55 % $ 3,202 3.62 % $ 3,334 3.77 % $ 4,120 3.75 % The increase in our capital ratios from December 31, 2023 was primarily driven by a $1.05 billion capital investment in the first quarter 2024 and the sale of certain non core businesses.
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 December 31, 2025 Common Equity Tier 1 Tier 1 Total Leverage Capital (in millions) Amount Ratio Amount Ratio Amount Ratio Amount Ratio 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 % December 31, 2024 Actual capital $ 7,997 11.83 % $ 8,501 12.57 % $ 10,238 15.14 % $ 8,501 7.68 % Minimum for capital adequacy purposes 3,043 4.50 4,057 6.00 5,409 8.00 4,428 4.00 Excess $ 4,954 7.33 % $ 4,444 6.57 % $ 4,829 7.14 % $ 4,073 3.68 % The increase in our capital ratios from December 31, 2024 was primarily driven by lower risk-weighted assets, reflecting a reduction in loans and leases held for investment, particularly in multi-family and CRE exposures.
The following table presents the composition of the Company's brokered deposits for the periods presented: Year Ended December 31, 2024 2023 Brokered money market accounts $ 137 $ 1,258 Brokered interest-bearing checking accounts represented 577 1,599 Brokered certificates of deposit 9,510 6,605 Total brokered deposits (1) $ 10,224 $ 9,462 (1) Excludes reciprocal deposits. 63 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: Year Ended December 31, (in millions) 2024 2023 3 months or less $ 3,530 $ 1,675 Over 3 months through 6 months 2,637 1,623 Over 6 months through 12 months 4,329 2,325 Over 12 months 2,099 2,271 Total time deposits in excess of $250,000 per depositor (1) $ 12,595 $ 7,894 (1) Includes brokered certificate of deposit accounts of $9.7 billion and $6.2 billion at December 31, 2024 and December 31, 2023, respectively, each of which includes all funds gathered from a single issuance.
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: December 31, (in millions) 2025 2024 3 months or less $ 2,758 $ 3,530 Over 3 months through 6 months 1,933 2,637 Over 3 months through 6 months 1,175 4,329 Over 12 months 466 2,099 Total time deposits in excess of $250,000 per depositor (1) $ 6,332 $ 12,595 (1) Includes brokered certificate of deposit accounts of $2.3 billion and $9.5 billion at December 31, 2025 and December 31, 2024, respectively.
Allowance for Credit Losses The following table sets forth the allocation of the consolidated allowance for credit losses on loans and leases at each period-end: Year Ended December 31, 2024 2023 2022 (dollars 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 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 $ 639 1.87 % 49.9 % $ 307 0.82 % 44.0 % $ 178 0.47 % 55.3 % Commercial real estate loans 260 2.99 12.7 366 3.50 12.4 46 0.54 12.4 One-to-four family first mortgage loans 39 0.75 7.6 48 0.79 7.2 46 0.79 8.4 Acquisition, development, and construction loans 44 1.40 4.6 36 1.24 3.4 20 1.00 2.8 Commercial and industrial 151 0.98 22.5 132 0.52 29.9 — — Other loans 68 3.85 2.6 103 3.88 3.1 103 4.57 21.1 Total loans $ 1,201 1.76 % 100.0 % $ 992 1.17 % 100.0 % $ 393 0.57 % 100.0 % The allowance for credit losses on loans and leases increased $209 million from December 31, 2023 to December 31, 2024.
Refer to Note 2 - Summary of Significant Accounting Policies for our policy related to classifying loans as held for sale. 54 Table of Contents Allowance for Credit Losses The following table sets forth the allocation of the ACL on loans and leases at each period-end: December 31, 2025 2024 (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 $ 549 1.89 % 47.7 % $ 639 1.87 % 49.9 % Commercial real estate loans (1) 229 2.46 15.3 304 2.57 17.4 One-to-four family first mortgage loans 35 0.62 9.3 39 0.75 7.6 Commercial and industrial 150 0.99 25.1 151 0.98 22.5 Other loans 67 4.22 2.6 68 3.85 2.6 Total loans $ 1,030 1.70 % 100 % $ 1,201 1.76 % 100 % (1) Includes ADC loans.
In accordance with our charge-off policy, collateral-dependent loans are written down to their current appraised values less costs to sell. Workout specialists from our Loan Workout Unit 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.
Refer to Note 2 - Summary of Significant Accounting Policies for further information regarding our policies surrounding non-accrual loans. In accordance with our charge-off policy, collateral-dependent loans are written down to their current appraised values less costs to sell. We actively pursue borrowers who are delinquent in repaying their loans in an effort to collect payment.
Interest Rate Sensitivity Analysis Interest rate sensitivity is monitored through the use of a model that generates estimates of the change in our Economic Value of Equity ("EVE") over a range of interest rate scenarios. EVE is defined as the net present value of expected cash flows from assets, liabilities, and off-balance sheet contracts.
EVE is defined as the net present value of expected cash flows from assets, liabilities, and off-balance sheet contracts. The EVE ratio, under any interest rate scenario, is defined as the EVE in that scenario divided by the market value of assets in the same scenario.
We also are continuing our efforts to strategically reduce the concentration of this portfolio. Certain of our commercial real estate 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 debt service coverage ratio.
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.
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. Refer to Note 6 in Item 8, "Financial Statements and Supplementary Data" for additional details.
Approximately, 89 percent of the loans that repriced during 2025 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.
Based upon this appraisal the loan is evaluated to determine if an adjustment to the carrying amount is required. The largest substandard and non-accrual loans are reported and reviewed with the Risk Assessment Committee at least quarterly. During the year ended December 31, 2024, $3.0 billion of multi-family loans reached their repricing date.
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. During the year ended December 31, 2025, $3.0 billion of multi-family loans reached their repricing date.
Loans and Leases The following table summarizes the composition of our loan portfolio: Year Ended December 31, 2024 2023 (in millions) Amount Percent of Loans Held for Investment Amount Percent of Loans Held for Investment Multi-family $ 34,093 49.9 % $ 37,265 44.0 % Commercial real estate 8,685 12.7 10,470 12.4 One-to-four family first mortgage 5,201 7.6 6,061 7.2 Acquisition, development, and construction 3,151 4.6 2,912 3.4 Commercial and industrial 15,376 22.5 25,254 29.9 Other loans 1,766 2.6 2,657 3.1 Total loans and leases held for investment $ 68,272 100% $ 84,619 100% Allowance for credit losses on loans and leases (1,201) (992) Total loans and leases held for investment, net $ 67,071 $ 83,627 Loans held for sale 899 1,182 Total loans and leases, net $ 67,970 $ 84,809 53 Loan Maturity and Repricing Analysis The following table sets forth option loans by year of repricing and non-option loans by year of contractual maturity for our multi-family and commercial real estate portfolios within loans held for investment at December 31, 2024.
RESULTS OF OPERATIONS: 2024 AS COMPARED TO 2023 The results of operations comparison of 2024 compared to 2023 can be found in our previously filed Annual Report on Form 10-K for the year-ended December 31, 2024, under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. 49 Table of Contents FINANCIAL CONDITION Loans and Leases The following table summarizes the composition of our loan portfolio: December 31, 2025 2024 (in millions) Amount Percent of Loans Held for Investment Amount Percent of Loans Held for Investment Multi-family $ 28,983 47.7 % $ 34,093 49.9 % Commercial real estate (1) 9,314 15.3 11,836 17.4 One-to-four family first mortgage 5,630 9.3 5,201 7.6 Commercial and industrial 15,217 25.1 15,376 22.5 Other loans 1,588 2.6 1,766 2.6 Total loans and leases held for investment $ 60,732 100% $ 68,272 100% Allowance for credit losses on loans and leases (1,030) (1,201) Total loans and leases held for investment, net $ 59,702 $ 67,071 Loans held for sale 265 899 Total loans and leases, net $ 59,967 $ 67,970 (1) Includes ADC loans.
Mortgage-related securities accounted for $6.6 billion of the year-end balance, with other debt securities accounting for the remaining $2.6 billion. 62 The following table summarizes the weighted average yields of debt securities for the maturities indicated at December 31, 2024: Mortgage- Related Securities U.S.
Mortgage-related securities included in debt securities available-for-sale were $13.0 billion and $8.6 billion at December 31, 2025 and December 31, 2024, respectively. 57 Table of Contents The following table summarizes the weighted average yields of debt securities available-for-sale for the maturities at December 31, 2025: Mortgage- Related Securities U.S.
The Company has a program underway to develop the resolution plan and does not expect any material impact to the Company in developing the plan. • Under regulatory heightened standards, a risk governance framework (the "Risk Governance Framework") is required to be developed and maintained to manage and control the risk-taking activities of the firm.
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.
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 $12.7 billion outstanding with interest-only payments at December 31, 2024.
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.
The weighted average interest-only period remaining was 19.5 months as of December 31, 2024, with approximately 52 percent of these loans entering their amortization period by the end of 2025. We continue to monitor our loans held for investment portfolio and the related allowance for credit losses, particularly, given the economic pressures facing the commercial real estate and multi-family markets.
Our multi-family loan portfolio had $6.5 billion outstanding in the interest only period as of December 31, 2025. The weighted average interest-only period remaining was 22.8 months as of December 31, 2025, with approximately 51 percent of these loans entering their amortization period by the end of 2026.
The following table sets forth the changes in non-accrual loans for the year ended 2024: (in millions) Balance at December 31, 2023 $ 428 New non-accrual 3,574 Charge-offs (256) Transferred to repossessed assets (513) Loan payoffs, including dispositions and principal pay-downs (542) Restored to performing status (76) Balance at December 31, 2024 $ 2,615 At December 31, 2024, non-performing assets to total assets equaled 2.62 percent compared to 0.39 percent at December 31, 2023, and non-accrual loans to total loans equaled 3.83 percent compared to 0.51 percent at December 31, 2023.
The following table sets forth the changes in non-accrual loans for the year ended 2025: (in millions) Balance at December 31, 2024 $ 2,615 New non-accrual 1,994 Charge-offs (185) Transferred to held for sale (95) Loan payoffs, including dispositions and principal pay-downs (1,215) Restored to performing status (139) Balance at December 31, 2025 $ 2,975 During the year ended 2025, non accrual loans increased $360 million primarily due to the classification of $566 million in loans, primarily within our multi-family portfolio, as non-accrual during the three months ended March 31, 2025.
The bargain purchase gain reduction recorded in the first quarter 2024 represented the final measurement period adjustment related to the fair value of assets acquired and liabilities assumed in the Signature Transaction. 51 Non-Interest Expense The following table summarizes our non-interest expense for the respective periods: Year Ended December 31, (in millions) 2024 2023 2022 Operating expenses: Compensation and benefits $ 1,263 $ 1,149 $ 354 FDIC insurance 313 126 — Occupancy and equipment 211 200 92 General and administrative 809 624 158 Total operating expense $ 2,596 $ 2,099 $ 604 Intangible asset amortization 136 126 5 Merger-related and restructuring expenses 106 330 75 Goodwill impairment — 2,426 — Total non-interest expense $ 2,838 $ 4,981 $ 684 Comparison to Prior Year Total non-interest expenses for the year ended 2024 were $2.8 billion, down $2.1 billion or 43 percent compared to the year ended 2023 .
Non-Interest Expense The following table summarizes our non-interest expense for the respective periods: Year Ended December 31, (in millions) 2025 2024 2023 $ Change (2025 vs. 2024) % Change (2025 vs. 2024) Operating expenses: Compensation and benefits $ 976 $ 1,263 $ 1,149 $ (287) (23) % Occupancy and equipment 202 211 200 (9) (4) % Software expense 173 186 180 (13) (7) % FDIC insurance 169 313 126 (144) (46) % Professional services 86 110 55 (24) (22) % General and administrative 307 513 389 (206) (40) % Total operating expense $ 1,913 $ 2,596 $ 2,099 $ (683) (26) % Intangible asset amortization 107 136 126 (29) (21) % Merger-related and restructuring expenses 56 106 330 (50) (47) % Goodwill impairment — — 2,426 — NM Total non-interest expense $ 2,076 $ 2,838 $ 4,981 $ (762) (27) % 48 Table of Contents Comparison to Prior Year Total non-interest expenses for the year ended December 31, 2025 decreased $762 million compared to the corresponding period for 2024.
Provision for Credit Losses Comparison to Prior Year For the year ended 2024, the provision for credit losses totaled $1.1 billion compared to $833 million for the year ended 2023.
Provision for Credit Losses The following table summarizes our Provision for credit losses for the respective periods: Year Ended December 31, (in millions) 2025 2024 2023 $ Change (2025 vs. 2024) % Change (2025 vs. 2024) Provision for credit losses $ 184 $ 1,092 $ 833 $ (908) (83) % Comparison to Prior Year For the year ended December 31, 2025, the provision for credit losses decreased $908 million compared to the corresponding period for 2024.
The Company has established risk limits which are monitored by the Board of Directors and continues to enhance related metrics and analytics.
We have established risk limits which are monitored by the Board and are continuing to enhance related metrics and analytics. 65 Table of Contents As of December 31, 2025, our capital measures continued to exceed the minimum federal requirements.
The following table sets forth, as of December 31, 2024, the dollar amount of all loans held for investment that are due after December 31, 2025, and indicates whether such loans have fixed or adjustable rates of interest: (in millions) Fixed Adjustable (1) Total Multi-family $ 8,173 $ 20,857 $ 29,030 Commercial real estate 2,513 4,314 6,827 One-to-four family first mortgage 1,852 3,573 5,425 Acquisition, development, and construction 162 1,638 1,800 Other loans 5,902 5,226 11,128 Total loans $ 18,602 $ 35,608 $ 54,210 (1) Loans with the option for the borrower to extend through repricing into an adjustable-rate loan are included within the Adjustable column during their initial fixed rate period.
Risks associated with loan repricing are discussed in the Credit Risk section. 50 Table of Contents The following table sets forth, as of December 31, 2025, the dollar amount of all loans held for investment that are due after December 31, 2026, and indicates whether such loans have fixed or adjustable rates of interest: (in millions) Fixed Adjustable (2) Total (1) Multi-family $ 7,279 $ 16,508 $ 23,787 Commercial real estate (3) 1,997 2,485 4,482 One-to-four family first mortgage 1,902 3,915 5,817 Commercial and industrial 168 4,780 4,948 Other loans 186 1,352 1,538 Total loans $ 11,532 $ 29,040 $ 40,572 (1) Amounts presented reflect unpaid principal balance.
The EVE ratio, under any interest rate scenario, is defined as the EVE in that scenario divided by the market value of assets in the same scenario. The model assumes estimated loan and mortgage-backed securities prepayment rates, current market value spreads, and deposit decay rates and betas.
The model assumes estimated loan and MBS prepayment rates, current market value spreads, and deposit decay rates and betas.
At December 31, 2024, $19.2 billion or 56 percent of the Company’s total multi-family loan portfolio was secured by properties in New York State, many of which are subject to rent regulation laws to varying degrees. The New York Housing Stability and Tenant Protection Act of 2019 significantly limits the ability to increase rents on regulated apartments upon vacancy.
As of December 31, 2025 and December 31, 2024, $15.8 billion or 55 percent and $19.2 billion or 56 percent of our total multi-family loan portfolio was secured by properties in New York State.
Year Ended December 31, 2024 compared to Year Ended 2023 Increase/(Decrease) Due to: 2023 compared to Year Ended 2022 Increase/(Decrease) Due to: (in millions) Volume Rate Net Volume Rate Net INTEREST-EARNING ASSETS: Mortgage and other loans and leases, net $ (170) $ 30 $ (140) $ 1,503 $ 1,158 $ 2,661 Securities 73 42 115 109 135 244 Reverse repurchase agreements (22) — (22) (3) 10 7 Interest Earning cash and cash equivalents 508 — 508 266 221 487 Total interest-earnings assets $ 389 $ 72 $ 461 $ 1,875 $ 1,524 $ 3,399 INTEREST-BEARING LIABILITIES: Interest-bearing checking and money market accounts $ (290) $ 216 $ (74) $ 255 $ 462 $ 717 Savings accounts 37 139 176 7 102 109 Certificates of deposit 677 39 716 203 346 549 Short term borrowed funds (94) 10 (84) 158 91 249 Other borrowed funds 508 144 652 (61) 155 94 Total interest-bearing liabilities 838 548 1,386 562 1,156 1,718 Change in net interest income $ (449) $ (476) $ (925) $ 1,313 $ 368 $ 1,681 Comparison to Prior Year For the year ended 2024, net interest margin was 1.95 percent, down 104 basis points compared to the year ended 2023.
(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. 46 Table of Contents The following table summarizes the change in NII attributable to changes in rate and volume: Year Ended December 31, 2025 compared to Year Ended 2024 Increase/(Decrease) Due to: 2024 compared to Year Ended 2023 Increase/(Decrease) Due to: (in millions) Volume Rate Net Volume Rate Net INTEREST-EARNING ASSETS: Total loans and leases $ (360) $ (699) $ (1,059) $ (170) $ 30 $ (140) Securities 66 77 143 73 42 115 Reverse repurchase agreements — — — (22) — (22) Interest Earning cash and cash equivalents (194) (376) (570) 508 — 508 Total interest-earnings assets $ (488) $ (998) $ (1,486) $ 389 $ 72 $ 461 INTEREST-BEARING LIABILITIES: Interest-bearing checking and money market accounts $ (55) $ (202) $ (257) $ (290) $ 216 $ (74) Savings accounts 54 43 97 37 139 176 Certificates of deposit (77) (207) (284) 677 39 716 Total borrowed funds (237) (374) (611) 414 154 568 Total interest-bearing liabilities (315) (740) (1,055) 838 548 1,386 Change in net interest income $ (173) $ (258) $ (431) $ (449) $ (476) $ (925) Comparison to Prior Year For the year ended December 31, 2025, NIM decreased by 6 basis points and NII decreased $431 million compared to the corresponding period in 2024.
Additionally, a substantial number of appraisals on loans exhibiting credit weakness were received, which resulted in an increase in non-accrual loans from December 31, 2023. Approximately 56 percent of our non-accrual loans are current on their contractual payment terms.
Approximately 34 percent of our non-accrual loans are current on their contractual payment terms.
As of December 31, 2024, loans in this portfolio had an average current FICO score of 751. 57 Assets Held for Sale Loans held for sale at December 31, 2024 totaled $899 million, a decrease of $283 million compared to $1.2 billion at December 31, 2023.
As of December 31, 2025, loans in this portfolio had an average current FICO score of 758.
At December 31, 2024, we had total liquidity of $29.9 billion, which exceeded the balance of our uninsured deposits by $13.8 billion as of that date. Our uninsured deposits are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000).
Our uninsured deposits are the portion of deposit accounts that exceed the FDIC insurance limit.
We dispose of such properties as quickly and prudently as possible, given current market conditions and the property’s condition. Liquidity Risk We manage our liquidity to ensure that our cash flows are sufficient to support our operations, and to protect against temporary mismatches between sources and uses of funds caused by variable loan and deposit demand.
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.
Asset Quality Measures The following table presents the Company's asset quality measures at the respective dates: Year Ended December 31, 2024 2023 Non-accrual loans to total loans held for investment 3.83 % 0.51 % Non-performing assets to total assets 2.62 0.39 Allowance for credit losses on loans and leases to non-accrual loans 45.93 231.51 Allowance for credit losses on loans and leases to total loans held for investment 1.76 1.17 All asset quality information excludes loans with government guarantees that are insured by U.S. government agencies. 58 Non-Accrual Loans The following table presents our non-accrual loans held for investment by loan type and the changes in the respective balances: Change from December 31, 2023 to Year Ended December 31, December 31, 2024 (in millions) 2024 2023 Amount Multi-family $ 1,755 $ 138 $ 1,617 Commercial real estate 546 128 418 One-to-four family first mortgage 70 95 (25) Acquisition, development, and construction 18 2 16 Commercial and industrial 202 43 159 Other non-accrual loans (1) 24 22 2 Total non-accrual loans $ 2,615 $ 428 $ 2,187 Repossessed assets 14 14 — Total non-performing assets $ 2,629 $ 442 $ 2,187 (1) Includes home equity, consumer and other loans.
Refer to Note 2 - Summary of Significant Accounting Policies for our policy relating to the ACL. 55 Table of Contents Non-Accrual Loans The following table presents our non-accrual loans held for investment by loan type: December 31, (in millions) 2025 2024 $ Change % Change Multi-family $ 2,261 $ 1,755 $ 506 29 % Commercial real estate (1) 489 564 (75) (13) One-to-four family first mortgage 64 70 (6) (9) Commercial and industrial 130 202 (72) (36) Other non-accrual loans 31 24 7 29 Total non-accrual loans (2) $ 2,975 $ 2,615 $ 360 14 % Repossessed assets 11 14 (3) (21) Total non-performing assets $ 2,986 $ 2,629 $ 357 14 % Non-accrual loans to total loans held for investment 4.90 % 3.83 % Non-performing assets to total assets 3.41 % 2.62 % Allowance for credit losses on loans and leases to non-accrual loans 34.62 % 45.93 % (1) Includes ADC loans.
As of December 31, 2024, the net unrealized loss on securities available for sale, net of tax, was $653 million as compared to $581 million at December 31, 2023, reflecting changes in market interest rates. At December 31, 2024, available-for-sale securities had an estimated weighted average life of six years.
At December 31, 2025, 26 percent of our portfolio is comprised of floating rate securities. At December 31, 2025, debt securities available-for-sale had an estimated weighted average life of 5 years compared to 6 years at December 31, 2024.
These policies relate to: (a) the determination of our allowance for credit losses, (b) fair value measurements and (c) the acquisition method of accounting. We believe the judgment, estimates and assumptions used in the preparation of our Consolidated Financial Statements and the Notes are appropriate given the factual circumstances at the time.
We believe the judgments, estimates and assumptions used in the preparation of our consolidated financial statements are appropriate and the resulting balances are reasonable given the factual circumstances at the time, however, due to the inherent uncertainties in developing estimates, actual results could differ from our estimate, requiring adjustments in future periods.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net Income During the year ended 2024, we reported a net loss of $1.1 billion compared to a net loss of $79 million for the year ended 2023.
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 For the year ended December 31, 2025, we reported a net loss of $177 million compared to a net loss of $1.1 billion for the corresponding period in 2024.
The following table indicates the amount of custodial deposits by source: Year Ended December 31, (in billions) 2024 2023 Custodial deposits from owned servicing $ — $ 0.7 Custodial deposits from subservicing relationships 0.9 2.2 Non-servicing custodial deposits 3.7 3.7 Total Custodial Deposits $ 4.6 $ 6.6 Uninsured Deposits We manage our liquidity to ensure that our cash flows are sufficient to support our operations and to compensate for any temporary mismatches between sources and uses of funds caused by variable loan and deposit demand.
The following table indicates the amount of custodial deposits by source: December 31, (in millions) 2025 2024 Custodial deposits from subservicing relationships — 947 Non-servicing custodial deposits 2,068 3,651 Total Custodial Deposits $ 2,068 $ 4,598 Uninsured Deposits At December 31, 2025, our deposit base includes $13.5 billion of uninsured deposits that are uninsured or not collateralized by securities or letters of credit.
Removed
The 2024 results include a $37 million increase in our provision for credit losses identified subsequent to the issuance of our press release on January 30, 2025, as a result of the completion of our control procedures.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk A discussion regarding our management of market risk is included in "Interest Rate Risk" in this report in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 73
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk A discussion regarding our management of market risk is included in "Interest Rate Risk" in this report in Part II, Item 7.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations. 67 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Flagstar Bank, National Association: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of condition of Flagstar Bank, National Association and subsidiaries (the Company) as of December 31, 2025 and December 31, 2024, the related consolidated statements of (loss) income, comprehensive (loss) income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements).
Added
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and December 31, 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
Added
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 27, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Added
Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
Added
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
Added
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Added
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Added
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Added
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Added
The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Added
Allowance for credit losses on loans and leases As discussed in Notes 2 and 7 to the consolidated financial statements, the Company’s total allowance for credit losses (ACL) on loans and leases as of December 31, 2025 was $1.0 billion, a substantial portion of which is related to the one-to-four family first mortgage, multi-family, commercial and industrial, specialty finance, and commercial real estate portfolio segments measured on a collective basis when similar risk characteristics exist (collective ACL) and a portion is related to individually evaluated loans (individually evaluated ACL).
Added
Management estimates the collective ACL by projecting and multiplying together the probability-of-default (PD), loss-given-default (LGD) and exposure-at-default depending on economic parameters for each month of the remaining contractual term. The loss drivers for certain loans within the commercial and industrial portfolio are derived using credit ratings.
Added
The Company estimates the exposure-at-default using prepayment models which forecast prepayments over the life of the loans and leases. The economic forecast and the related economic parameters are developed using multiple economic forecast scenarios, including related weightings, over the reasonable and supportable 68 forecast period.
Added
After the reasonable and supportable forecast period, the Company reverts to a historical average loss rate on a straight-line basis over 12 months. Historical credit loss experience over the historical loss observation period provides the basis for the estimation of expected credit losses, with qualitative adjustments to reflect trends not captured within the models.
Added
In addition, the Company has certain individually evaluated loans that are deemed collateral dependent and the related expected credit losses are determined based on the fair value of the underlying collateral, less costs to sell as appropriate. We identified the assessment of the collective ACL and the individually evaluated ACL as a critical audit matter.
Added
A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment due to significant measurement uncertainty. For the collective ACL, the assessment encompassed the evaluation of the methodology, including the methods and models used to estimate the PD, LGD, and prepayments and their significant assumptions in the collective ACL.
Added
Such significant assumptions included portfolio segmentation, the selection of the multiple economic forecast scenarios including related weightings, economic parameters, credit ratings, the reasonable and supportable forecast period, the reversion period and the historical loss observation period. The assessment also included the evaluation of the qualitative adjustments and their significant assumptions.
Added
In addition, the assessment also included an evaluation of the conceptual soundness and performance of the PD, LGD, and prepayment models. For the individually evaluated ACL, the assessment included an evaluation of the fair value of the underlying collateral for those loans deemed collateral dependent. Auditor judgment was required to evaluate the sufficiency of audit evidence obtained.
Added
The following are the primary procedures we performed to address this critical audit matter.
Added
We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the collective ACL and the individually evaluated ACL estimate, including controls over the: • development of the collective ACL methodology • continued use and appropriateness of the PD, LGD, and prepayment models • performance monitoring of the PD, LGD, and prepayment models • identification and determination of the significant assumptions used in the PD, LGD, and prepayment models • development of the qualitative adjustments, including the significant assumptions used in their measurement • appropriateness of third-party valuation information used in determining the fair value of underlying collateral • analysis of the collective ACL results, trends, and ratios.
Added
We evaluated the Company’s process to develop the collective ACL and the individually evaluated ACL estimate by testing certain sources of data, factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors, and assumptions.
Added
In addition, we involved credit risk and valuation professionals with specialized skills and knowledge, who assisted in: For the collective ACL: • evaluating the Company’s collective ACL methodology for compliance with U.S. generally accepted accounting principles • evaluating judgments made by the Company relative to the assessment and performance testing of the PD, LGD, and prepayment models by comparing them to relevant Company-specific metrics and trends and the applicable industry and regulatory practices • assessing the conceptual soundness and performance of the PD, LGD, and prepayment models by inspecting the model documentation to determine whether the models are suitable for their intended use • evaluating the selection of the multiple economic forecast scenarios including the related weightings, and underlying economic parameters by comparing them to the Company’s business environment and relevant industry practices • evaluating the length of the reasonable and supportable forecast period, the reversion period and the historical loss observation periods by comparing them to specific portfolio risk characteristics and trends 69 • testing individual credit ratings for a selection of certain borrower relationships by evaluating the financial performance of the borrower, sources of repayment, and any relevant guarantees or underlying collateral • determining whether the loan portfolio is segmented by similar risk characteristics by comparing to the Company’s business environment and relevant industry practices • evaluating the methodology used to develop qualitative adjustments and their significant assumptions and the effect of those adjustments on the collective ACL compared with relevant credit risk factors, current collateral valuations, and consistency with credit trends and identified limitations of the underlying quantitative models.
Added
For the individually evaluated ACL: • testing the fair value of underlying collateral for a selection of borrower relationships by evaluating methods and assumptions used in determining those values, including assessing the relevance and reliability of third-party information used by management.
Added
We also assessed the sufficiency of the audit evidence obtained related to the ACL estimate by evaluating the: • determination of cumulative results of the audit procedures • qualitative aspects of the Company’s accounting practices • potential bias in the accounting estimate. /s/ KPMG LLP We have served as the Company’s auditor since 1993.
Added
New York, New York February 27, 2026 70 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Flagstar Bank, National Association: Opinion on Internal Control Over Financial Reporting We have audited Flagstar Bank, National Association and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Added
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Added
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of condition of the Company as of December 31, 2025 and December 31, 2024, the related consolidated statements of (loss) income, comprehensive (loss) income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated February 27, 2026 expressed an unqualified opinion on those consolidated financial statements.
Added
Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
Added
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB.
Added
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Added
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances.
Added
We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Added
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Added
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Added
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP New York, New York February 27, 2026 71 Table of Contents Flagstar Bank, National Association Consolidated Statements of Condition

Other FLG 10-K year-over-year comparisons