Flagstar Financial Q4 Loss Narrower Than Expected, Expenses Fall Y/Y

Flagstar Financial, Inc. FLG reported fourth-quarter 2024 loss per share of 34 cents, narrower than the Zacks Consensus Estimate of a loss of 50 cents. It had incurred a loss of 80 cents in the year-ago quarter.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.For 2024, loss per share was $2.66, narrower than the Zacks Consensus Estimate of a loss of $3.02. This compares unfavorably with earnings per share of $1.92 reported in the year-ago quarter.The results were primarily affected by a decline in net interest income (NII), along with lower loan and deposit balances. However, a rise in fee income and lower expenses acted as a tailwind.The results excluded certain non-recurring items. After considering these, the net loss available to common shareholders (GAAP basis) was $168 million compared with the net loss to common shareholders of $2.7 billion reported in the prior-year quarter.For 2024, the company reported a net loss to common shareholders (GAAP basis) of $1.12 billion compared with a loss of $112 million reported in the year-ago quarter.FLG’s Quarterly Revenues & Expenses DeclineQuarterly revenues were $625 million, which declined 28% from the prior-year quarter. Nonetheless, the top line beat the Zacks Consensus Estimate of $590.5 million.Full-year revenues were $2.55 billion, which increased 56% year over year. The top line missed the Zacks Consensus Estimate of $2.58 billion. NII was $461 million, down 37.7% from the prior-year quarter. The net interest margin of 1.73% declined from 2.82% reported in the previous quarter.Non-interest income was $164 million, which increased 29.1% from the year-ago quarter. The rise stemmed from an $89 million net gain on the sale of its mortgage servicing and third-party origination business.Adjusted non-interest income was $72 million, down 47.8% year over year. Non-interest expenses of $718 million decreased 77% year over year.Adjusted non-interest expenses (excluding intangible asset amortization and merger and restructuring expenses) were $556 million, down 8% from the fourth quarter of 2023. The efficiency ratio was 108.18%, which increased from 68.99% reported in the year-ago quarter. A rise in the efficiency ratio indicates deteriorating profitability.Flagstar Financial’s Loans & Deposits DeclineTotal loans and leases held for investment declined 4% sequentially to $68.3 billion as of Dec. 31, 2024.Nonetheless, as of the same date, total deposits declined 8.6% sequentially to $745.9 billion.FLG’s Credit Quality: Mixed BagNon-performing assets were $2.6 billion, which increased significantly from $442 million as of Dec. 31, 2023. Net charge-offs were $222 million, which increased 20% from the prior-year quarter.The provision for credit losses was $108 million, which decreased 80.4% from the prior-year quarter.FLG’s Capital Ratios: Mixed BagAs of Dec. 31, 2024, the common equity tier 1 ratio was 11.86%, which increased from 9.05% as of Dec. 31, 2023. The total risk-based capital ratio was 15.17%, which increased from 11.77% in the prior-year quarter.The leverage capital ratio declined year over year to 8.08% from 8.48%.Our View on FLGFlagstar Financial’s deteriorating asset quality and geographic concentration might act as headwinds. The decline in loan and deposit balances in the fourth quarter is likely to affect its balance sheet position. However, the increase in fee income served as a positive factor.Flagstar Financial, Inc. Price, Consensus and EPS Surprise Flagstar Financial, Inc. price-consensus-eps-surprise-chart | Flagstar Financial, Inc. QuoteCurrently, FLG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other BanksValley National Bancorp’s VLY fourth-quarter 2024 adjusted earnings per share (EPS) of 13 cents missed the Zacks Consensus Estimate of 15 cents. Further, the bottom line plunged 40.9% on a year-over-year basis.A substantial rise in VLY’s provisions on year-over-year basis, lower non-interest income, higher adjusted expenses and a sequential decline in loans and deposit balance affected the results. Nonetheless, a rise in NII supported the results.BankUnited, Inc.’s BKU fourth-quarter 2024 earnings of 91 cents per share handily surpassed the Zacks Consensus Estimate of 71 cents. The bottom line compared favorably with 27 cents in the prior-year quarter.BKU’s results were aided by growth in NII and non-interest income alongside lower non-interest expenses and provisions. Stable deposits were another positive. However, a fall in loan balance and weak asset quality were the undermining factors.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BankUnited, Inc. (BKU): Free Stock Analysis Report Valley National Bancorp (VLY): Free Stock Analysis Report Flagstar Financial, Inc. (FLG): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks