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Flagstar Financial (FLG)
NYSE:FLG
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Flagstar Financial
(NYSE:FLG)
51Neutral
Positive Factors
Credit Quality
Flagstar is reaching a positive inflection point on credit quality, setting up for a more positive 2025.
Earnings
Flagstar-FLG shares reacting positively to better-than-expected 4Q results driven by lower provisions and expenses.
Stock Valuation
There is a path for the stock to narrow the gap to tangible book value, implying over 50% upside potential compared to the current price.
Negative Factors
Execution Risk
Remain EW given execution risk as strategic actions continue.
Investor Sentiment
Investor sentiment remains negative with short interest around 13% due to concerns about capital and credit issues.
Net Interest Income
Shares sold off in their release largely driven by what appeared to be lower NII guidance and increased expense outlook.
Flagstar Financial (FLG) vs. S&P 500 (SPY)
Market Cap
$5.03B
Dividend Yield1.65%
Average Volume (3M)5.95M
Price to Earnings (P/E)―
Beta (1Y)1.20
Revenue Growth-21.80%
EPS Growth-5309.94%
CountryUS
Employees6,993
SectorFinancial
Sector Strength84
IndustryBanks - Regional
Share Statistics
EPS (TTM)-3.75
Shares Outstanding414,720,200
10 Day Avg. Volume6,249,777
30 Day Avg. Volume5,950,352
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.18
Price to Cash Flow (P/CF)2.00
P/FCF Ratio0.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.29Price Target Upside10.11% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Flagstar Financial Business Overview & Revenue Model
Company DescriptionFlagstar Financial (FLG) is a leading financial services company specializing in mortgage lending and banking services. It operates across various sectors, including retail banking, commercial banking, and mortgage origination, providing a comprehensive range of financial products to individual consumers, small businesses, and large corporations. The company's core products include mortgage loans, savings accounts, and personal loans, supported by a robust network of branches and digital platforms.
How the Company Makes MoneyFlagstar Financial primarily generates revenue through interest income on loans and mortgages, as well as fees and service charges associated with its banking operations. The company earns a substantial portion of its income from the interest rate spread between what it charges borrowers and what it pays to depositors. Additionally, Flagstar Financial makes money through mortgage origination and servicing fees, where it acts as an intermediary in the home-buying process. Key partnerships with real estate companies and financial institutions enhance its market reach and contribute to its earnings. The company also benefits from cross-selling financial products to its existing customer base, further strengthening its revenue streams.
Flagstar Financial Financial Statement Overview
Summary
Flagstar Financial is facing financial challenges with declining revenues and profitability, as indicated by an income statement score of 32. However, the company shows resilience in cash flow management with a score of 58, and maintains a stable balance sheet with a score of 45, providing some liquidity cushion. Overall, the financial performance indicates a need for improvement in profitability and revenue generation.Income Statement
Flagstar Financial has experienced declining revenue and profitability in recent years. The company's gross profit margin remains steady at 100%, but it is operating at a net loss, with significant negative EBIT and EBITDA margins. Revenue decreased significantly from 2023 to 2024, indicating potential challenges in maintaining revenue streams.32
Negative
Balance Sheet
The balance sheet of Flagstar Financial shows high leverage with a debt-to-equity ratio that remains elevated. Stockholders' equity has remained relatively stable, but the equity ratio has decreased over time. The company has a substantial amount of cash and equivalents, which provides some liquidity buffer.45
Neutral
Cash Flow
Flagstar Financial's cash flow shows some resilience with positive operating and free cash flows, although they have decreased from the prior year. The company has managed to maintain positive free cash flow despite lower operating cash flow, indicating some efficiency in capital expenditure management.58
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.58B | 3.63B | 1.48B | 1.35B | 1.16B |
| Gross Profit | ||||
| 2.58B | 3.63B | 1.48B | 1.35B | 1.16B |
| EBIT | ||||
| -1.38B | -50.00M | 826.00M | 806.00M | 588.00M |
| EBITDA | ||||
| -1.27B | 115.00M | 849.00M | 827.00M | 612.00M |
| Net Income Common Stockholders | ||||
| -1.12B | -79.00M | 650.00M | 596.00M | 511.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 25.83B | 20.62B | 10.66B | 6.82B | 6.48B |
| Total Assets | ||||
| 100.16B | 114.06B | 90.14B | 59.53B | 56.31B |
| Total Debt | ||||
| 14.43B | 28.62B | 31.66B | 20.56B | 16.35B |
| Net Debt | ||||
| -1.00B | 17.14B | 29.63B | 18.35B | 14.40B |
| Total Liabilities | ||||
| 91.99B | 105.69B | 81.32B | 52.48B | 49.46B |
| Stockholders Equity | ||||
| 8.17B | 8.37B | 8.82B | 7.04B | 6.84B |
| Cash Flow | Free Cash Flow | |||
| 50.00M | 197.00M | 1.02B | 286.00M | 334.00M |
| Operating Cash Flow | ||||
| 86.00M | 263.00M | 1.03B | 290.00M | 334.00M |
| Investing Cash Flow | ||||
| 15.45B | 20.67B | -6.32B | -2.76B | -1.02B |
| Financing Cash Flow | ||||
| -11.59B | -11.41B | 5.17B | 2.73B | 1.90B |
Flagstar Financial Technical Analysis
Positive
12.07
Price Trends
11.44
Positive
10.97
Positive
10.76
Positive
Market Momentum
0.14
Negative
54.14
Neutral
75.02
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FLG, the sentiment is Positive. The current price of 12.07 is above the 20-day moving average (MA) of 11.81, above the 50-day MA of 11.44, and above the 200-day MA of 10.76, indicating a bullish trend. The MACD of 0.14 indicates Negative momentum. The RSI at 54.14 is Neutral, neither overbought nor oversold. The STOCH value of 75.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FLG.
Flagstar Financial Risk Analysis
Flagstar Financial disclosed 43 risk factors in its most recent earnings report. Flagstar Financial reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Flagstar Financial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $21.94B | 12.31 | 9.93% | 4.13% | 10.13% | -1.25% | |
71 Outperform | $69.87B | 12.64 | 11.10% | 3.66% | 7.24% | 7.51% | |
71 Outperform | $20.16B | 11.23 | 10.72% | 4.51% | 2.70% | -8.16% | |
67 Neutral | $26.38B | 12.59 | 11.92% | 3.58% | 11.21% | -2.26% | |
64 Neutral | $14.46B | 10.12 | 8.75% | 4.25% | 17.00% | -11.86% | |
54 Neutral | $18.31B | 1,663.64 | -0.99% | 5.08% | -11.11% | -133.79% | |
51 Neutral | $5.03B | ― | -13.52% | 1.65% | -21.80% | -5309.94% |
* Financial Sector Average
Performance Comparison
FLG
Flagstar Financial
12.07
2.53
26.52%
FITB
Fifth Third Bancorp
40.17
5.45
15.70%
HBAN
Huntington Bancshares
15.32
2.54
19.87%
KEY
KeyCorp
16.57
2.24
15.63%
PNC
PNC Financial
176.88
27.36
18.30%
RF
Regions Financial
22.42
3.35
17.57%
Flagstar Financial Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 25.86% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Neutral
The earnings call demonstrated significant progress in strategic initiatives such as capital improvement, cost reduction, and deposit growth. However, challenges remain in achieving profitability, managing commercial real estate exposure, and addressing loan delinquencies. The management's outlook for continued improvement in 2025 is cautiously optimistic.Highlights
Improved Capital and Liquidity Position
CET1 ratio increased to 11.9%, marking an improvement of over 280 basis points during the year. Liquidity remains strong with $32 billion in total liquidity, representing almost 250% of uninsured deposits.
Successful Strategic Actions
Proactive management led to $7 billion reduction in wholesale borrowings, completion of the sale of the mortgage warehouse, and a $6 billion liquidity boost from asset sales.
Cost Optimization Program
Operating expenses are expected to reduce by $600 million or 23% in 2025, driven by compensation, benefits, vendor spend, and real estate optimization.
Strong Deposit Gathering
Retail deposits grew by $900 million and private bank deposits by $500 million despite sale-related escrow deposit runoff.
C&I and Private Banking Growth
Added 24 bankers in Q4 with plans to hire an additional 100 in 2025. New loan commitments of $620 million in Q4, doubling Q3 figures.
Lowlights
Net Loss for Q4 and Full Year 2024
Reported a net loss available to common stockholders of $0.41 per diluted share for Q4, with notable items affecting results.
Commercial Real Estate Exposure
CRE exposure remains a concern, with a reduction of only 9% year-over-year. The multifamily portfolio decreased by 9% through payoffs and sales.
Ongoing Loan Delinquencies
An increase in delinquencies was noted, primarily in the multifamily portfolio, though partially offset by subsequent payoffs.
Company Guidance
During the Flagstar Financial Fourth Quarter 2024 Earnings Conference Call, guidance for future financial performance included several key metrics. The company's strategic priorities were highlighted, with a strong focus on profitability and transforming into a top-performing regional bank. The CET1 capital ratio improved significantly, reaching 11.9%, which places Flagstar in the top quartile among Category 4 banks. The company plans to reduce operating expenses by $600 million or 23% in 2025 compared to 2024. Deposit growth was also emphasized, with a strong liquidity profile of over $31 billion and a reduction in wholesale borrowings by almost $7 billion or 34% during the year. The loan-to-deposit ratio stands at 90%. The guidance also projected a balance sheet size of $98 billion by the end of 2025 and $104-105 billion by the end of 2026, with net interest income and expenses being key focus areas to drive operational efficiency.Flagstar Financial Corporate Events
Shareholder Meetings
Flagstar Financial Announces Virtual 2025 Shareholder Meeting
Neutral
Feb 24, 2025
On February 24, 2025, Flagstar Financial announced that its 2025 Annual Meeting of Shareholders will be held virtually on June 4, 2025. The meeting will be accessible via live webcast, with April 7, 2025, set as the record date for voting eligibility. This move to a virtual format reflects ongoing trends in shareholder engagement and may impact how stakeholders participate in the company’s governance processes.
Business Operations and Strategy
Flagstar Financial Set to Present Strategic Plans for 2025
Positive
Feb 10, 2025
Flagstar Financial announced plans to present at the Bank of America Securities 2025 Financial Services Conference on February 11, 2025, detailing strategic initiatives to reduce commercial real estate exposure, grow corporate banking, and enhance their residential mortgage segment. The company aims to reach a top quartile CET1 capital ratio of 11.9% and achieve profitability by 2026, driven by cost optimization and a strategic focus on diversified financial services.
Business Operations and StrategyFinancial Disclosures
Flagstar Financial Outlines Strong Fourth Quarter 2024 Results
Positive
Jan 30, 2025
Flagstar Financial, Inc. announced its fourth quarter 2024 results on January 30, 2025, highlighting significant progress in its strategic plan. The company achieved top quartile CET1 capital ratio, reduced operating expenses, and improved liquidity and credit management. The strategic initiatives aim to drive profitability by 2026 and include de-risking its loan portfolios and reducing wholesale borrowings. Flagstar also completed the sale of its mortgage businesses, expanded its commercial banking group, and strengthened its management and credit functions, outlining a robust future financial outlook.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.