Flagstar Bank (NYSE:FLG) reported a return to profitability in the final quarter of 2025, marking a critical milestone in its multi-year transformation from a rent-regulated lender to a diversified commercial regional bank.
The Hicksville, New York-based firm, which recently rebranded and simplified its corporate structure, benefited from higher lending margins and a significant reduction in troubled loans.
For the quarter ended Dec. 31, 2025, Flagstar posted net income attributable to common stockholders of $21 million, or $0.05 per diluted share.
Excluding restructuring and merger-related items, adjusted net income reached $30 million, or $0.06 per share.
The results represent a stark reversal from the $45 million net loss reported in the third quarter.
The bank’s strategic pivot toward Commercial and Industrial (C&I) lending showed significant momentum, with new commitments surging 28% to $3 billion.
At the same time, Flagstar continued to aggressively trim its legacy portfolio, materially reducing commercial real estate (CRE) exposure and high-cost brokered deposits.
Net interest margin (NIM) expanded to 2.14%, aided by a declining cost of funds.
"After two challenging years, I’m proud to share that the Bank has returned to profitability," CEO Joseph Otting said in a statement.
He emphasized that the bank's capital position has been fortified, with its Common Equity Tier 1 (CET1) ratio improving to 12.83%.
Credit quality also trended positively, as non-accrual loans fell 8% from the previous quarter.