FLAGSTAR FINANCIAL, INC.
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
FLG$10.52-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0000910073-25-000076
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0000910073-25-000110
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 189 previous paragraphs and 200 current paragraphs.
87 unchanged; 85 reworded; 24 added; 13 removed; 4 previous and 4 current paragraphs rearranged.
Tables are not compared: 32 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
GENERAL
Current report
Overview
Current report
As part of our commitment to delivering long-term shareholder value and sustained value creation, we are executing a strategic transformation plan designed to evolve into a fully diversified bank with a strong balance sheet, a robust capital position and consistent earnings power.
Current report
Our plan is guided by six strategic pillars: driving transformation and financial resilience, growing our core operations, executing a disciplined commercial banking and lending strategy, enhancing operational efficiency, developing talent and leadership and aligning regulatory and risk management.
Current report
To support these pillars, we have established strategic priorities focused on transforming the Company into a top-tier relationship-driven regional bank, creating a customer-centric culture that prioritizes valuable relationships, and building an effective risk management mindset that supports safe and sound operations.
Current report
Since initiating this plan in 2024, we have made measurable progress, including key leadership additions, reduction of non-core assets, and improved funding mix. We believe that successful execution of this plan will enhance our financial resilience, drive sustainable earnings and position us to deliver greater long-term value to shareholders.
Current report
Merger of Flagstar Financial, Inc. and Flagstar Bank N.A.
Current report
On July 24, 2025, the Company, as part of an internal reorganization to streamline its corporate structure, entered into an Agreement and Plan of Merger (the “Plan of Merger”) with its wholly-owned bank subsidiary, Flagstar Bank, N.A., a nationally chartered banking association. Under the terms of the Plan of Merger, the Company will be merged with and into the Bank (the “Merger”), with the Bank continuing as the surviving entity (the “Surviving Entity”). The Merger is expected to be completed, subject to shareholder and OCC approval, before the end of 2025.
Current report
At the effective time of the Merger, the outstanding shares of the Company’s common and Series A preferred stock will be cancelled and cease to exist, and the outstanding shares of the Company’s common and Series A preferred stock will automatically be converted into an equivalent number of shares of the Surviving Entity’s common and Series A preferred stock. The Company’s Series B and Series D preferred stock shall also be converted into common stock of the Bank, except that such conversion shall instead be into non-voting equity securities that are substantially identical to the Series B and Series D preferred stock to the extent that ownership of the additional common stock would otherwise be prohibited by law or require approval by a government entity. As a result, subject to the foregoing limitations, the shares of capital stock of the Surviving Entity will be owned directly by the Company’s shareholders in the same proportion as their ownership of the Company’s capital stock immediately prior to the Merger. Further, each warrant to purchase either Series D preferred stock or common stock of the Company will be converted automatically into a warrant to purchase common stock of the Surviving Entity.
Current report
Immediately following the Merger, the Surviving Entity will have substantially the same outstanding capital stock with substantially the same rights and privileges as the outstanding capital stock of the Company immediately prior to the Merger. Immediately after the Merger, the Surviving Entity will have substantially the same consolidated assets, liabilities and shareholders’ equity as the Company. The Surviving Entity will assume the Company’s debt obligations, equity incentive plans, equity compensation plans, and other compensation plans. As an initial step of closing the Merger, the Company will be an interim federal savings association, which will immediately merge with the Bank, with the Bank then continuing as the Surviving Entity.
Current report
Following the Merger, we expect that the Surviving Entity will be a publicly traded company on the New York Stock Exchange (NYSE) under the same ticker symbol currently used by the Company, “FLG.” The Surviving Entity’s common stock will be registered with the Surviving Entity’s primary banking regulator, the Office of the Comptroller of the Currency (“OCC”), under the Securities Exchange Act of 1934, as amended.
Current report
Total non-interest expenses for the three months ended June 30, 2025 decreased $19 million compared to the three months ended March 31, 2025, primarily due to a decrease in general and administrative expenses as we continue to focus on operating expense management.
Current report
(2)Excludes ADC loans.
Current report
Our multi-family loan portfolio decreased $2.2 billion at June 30, 2025 compared to December 31, 2024, primarily due to $1.9 billion of par payoffs since December 31, 2024, with greater than 50 percent of the payoffs from substandard loans. The reduction in our multi-family loan portfolio is consistent with our strategic decision to continue to diversify our loan portfolio by reducing our exposure to multi-family loans.
Current report
One-to-four family loans increased $244 million at June 30, 2025 compared to December 31, 2024, primarily driven by new originations.
Current report
Refer to Note 5 - Loans and Leases for our policy relating to classifying loans as held for sale.
Current report
Refer to Note 6 - Allowance for Credit Losses on Loans and Leases for our policy relating to the ACL.
Current report
Refer to Note 5 - Loans and Leases for our policy relating to non-accrual loans.
Current report
The following table summarizes net charge-offs as an annualized percentage of average loans:
Current report
(2)Three months ended presented on an annualized basis.
Current report
(2)Six months ended presented on an annualized basis.
Current report
Refer to Note 5 - Loans and Leases for further information regarding our policies surrounding non-accrual loans.
Current report
Income Tax Reform
Current report
On July 4, 2025, the United States Congress enacted the One Big Beautiful Bill Act (“the Act”), which includes a broad range of tax reform provisions. We expect that the Act will have an immaterial impact on our financial results.
Removed paragraphs (13)
Previous report
On June 27, 2024, we announced a 1 for 3 reverse stock split, effective July 11, 2024. This reverse stock split is reflected retroactively in all periods presented in this report.
Previous report
(2)Includes Lease financing.
Previous report
Our MF loan portfolio decreased $656 million at March 31, 2025 compared to December 31, 2024, primarily due to our strategic decision to continue to diversify our loan portfolio by reducing our exposure to MF loans.
Previous report
We classify loans as held for sale when we originate or purchase loans that we intend to sell and when we change our intent with regard to loans originated as held for investment. Our one-to-four family mortgage loans held for sale are carried at fair value. Other loans held for sale are carried at the lower of amortized cost or market. These loans are typically recorded based on recent appraisals less estimated disposal costs. We estimate the fair value of mortgage loans based on quoted market prices for securities backed by similar types of loans, where available, or by discounting estimated cash flows using observable inputs inclusive of interest rates, prepayment speeds and loss assumptions for similar collateral.
Previous report
Asset quality information excludes loans with repurchased government guarantees that are insured by U.S. government agencies.
Previous report
Approximately 41 percent of our non-accrual loans are current on their contractual payment terms. In determining whether to place a loan on non-accrual we have considered whether a borrower will be able to service its debt under terms expected within the next 18 months based on current collateral and net operating income. Where net operating income is below the projected debt service and the collateral value is below the loan amount, we place loans on non-accrual.
Previous report
The ACL on loans and leases to total loans held for investment ratio decreased to 1.75 percent at March 31, 2025, compared to 1.76 percent at December 31, 2024. Excluding loans with government guarantees, the allowance for credit losses was 1.76 percent at March 31, 2025, compared to 1.77 percent at December 31, 2024.
Previous report
Our ACL is determined based on quantitative modeling that incorporates various economic forecast scenarios. The key inputs to our quantitative allowance for credit losses models include borrowers' projected debt service based on the most recent financial information available and underlying collateral property values. Property values are particularly meaningful for our multi-family and commercial real estate portfolios. Our models consider the entire life of the loan, including both the interest only period of the loan, if applicable, and the amortization period, to assess the probability of default and the loss given default. For our multi-family portfolio, we obtain and utilize current and projected geography-specific market information in our forecasts. In estimating the qualitative component of our allowance for credit losses, we have adjusted key inputs used by the model on an average basis for certain loans, most notably net operating income and property values to reflect weaknesses in the underlying data, including the recency of appraisal values, and the lack of significant loss history in available data, particularly for rent-regulated multi-family loans. We have also considered our recent appraisal experience and the valuation risk present in loans with outstanding appraisals in estimating the qualitative component of our allowance for credit losses.
Previous report
The following table presents information on the Company's net charge-offs:
Previous report
As of March 31, 2025, the net unrealized loss on securities available for sale, net of tax, was $560 million, compared to $653 million at December 31, 2024, a decrease of $93 million, reflecting changes in market interest rates.
Previous report
Bank-Owned Life Insurance (BOLI)
Previous report
At March 31, 2025, BOLI increased $10 million due to an increase in the cash surrender value of the underlying policies. Bank-owned life insurance is recorded at the total cash surrender value of the policies.
Previous report
A loan generally is classified as a non-accrual loan when it is 90 days or more past due or when it is deemed to be impaired because there is significant uncertainty about whether we will be able to collect all principal and interest amounts due according to the contractual terms of the loan agreement. When a loan is in non-accrual, we cease recording interest income on the loan, previously accrued and uncollected interest is reversed against interest income, and any subsequent interest collected is recorded as a reduction in the loan carrying amount. A loan is returned to accrual status only when the loan is current (minimum of six months of payment performance), and we have reasonable assurance that all contractual principal and interest related to the loan will be fully collectible. At March 31, 2025, $1.3 billion, or approximately 41 percent, of non-accrual loans were current based on their existing payment terms.
Reworded paragraphs (85)
Previous wording
Flagstar Financial, Inc. is the parent company of Flagstar Bank, N.A., one of the largest regional banks in the country. The Company is headquartered in Hicksville, New York. At March 31, 2025, the Company had $97.6 billion of assets, $67.1 billion of loans, deposits of $73.9 billion, and total stockholders’ equity of $8.2 billion.
Current wording
Flagstar Financial, Inc. is the parent company of Flagstar Bank, N.A., one of the largest regional banks in the country. We are headquartered in Hicksville, New York. At June 30, 2025, the Company had $92.2 billion of assets, $64.4 billion of loans, $69.7 billion of deposits, and total stockholders’ equity of $8.1 billion.
Previous wording
Flagstar Bank, N.A. operates approximately 400 locations across nine states, with strong footholds in the greater New York/New Jersey metropolitan region and in the upper Midwest, along with a significant presence in fast-growing markets in Florida and the West Coast.
Current wording
The Bank operates approximately 360 locations across nine states, with strong footholds in the greater New York/New Jersey metropolitan region and in the upper Midwest, along with a significant presence in fast-growing markets in Florida and the West Coast.
Previous wording
We operate in a single reportable segment and have identified one reporting unit which is the same as our operating segment. In the future we plan to continue to assess our reportable segments and reporting units, which may result in a change to either or both in future reporting periods. Please refer to Note 18 - Segment Reporting.
Current wording
We operate in a single reportable segment and have identified one reporting unit which is the same as our operating segment. We continue to assess our reportable segments and reporting units, which may result in a change to either or both in future reporting periods. Please refer to Note 18 - Segment Reporting.
Previous wording
For the three months ended March 31, 2025, we reported a net loss of $100 million compared to a net loss of $188 million for the three months ended December 31, 2024. The net loss attributable to common stockholders, which includes the impact from preferred dividends, for the three months ended March 31, 2025 was $108 million, or $0.26 per diluted share compared to a net loss attributable to common stockholders of $196 million, or $0.47 per diluted share for the three months ended December 31, 2024 and a net loss attributable to common stockholders of $335 million, or $1.36 per diluted share for the three months ended March 31, 2024. The net loss for the three months ended December 31, 2024 included a gain on the sale of our mortgage third party origination business, and mortgage servicing business ("Mortgage Operations") of $89 million, long term asset impairment of $77 million, and severance cost of $31 million. The net loss for the three months ended March 31, 2024 included the reduction in the Signature Transaction bargain purchase gain of $121 million.
Current wording
For the six months ended June 30, 2025, we reported a net loss of $170 million compared to a net loss of $650 million for the six months ended June 30, 2024. The net loss attributable to common stockholders, which includes the impact from preferred dividends, for the six months ended June 30, 2025 was $186 million, or $0.45 per diluted share compared to a net loss attributable to common stockholders of $668 million, or $2.48 per diluted share for the six months ended June 30, 2024. The net loss for the six months ended June 30, 2024 included the reduction in the Signature Transaction bargain purchase gain of $121 million.
Previous wording
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. 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 prevailing interest rates.
Current wording
NII is our primary source of income. The amount of our NII 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. 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 FOMC, and prevailing interest rates.
Previous wording
Our interest-bearing liabilities are comprised of customer deposits and funds we borrow. 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 interest rates, the level of which is partially impacted by the actions of the Federal Open Market Committee. The yields on our held for-investment loans and investment securities are generally more sensitive to intermediate-term interest rates. However, a sizable portion of our held for investment loans have fixed rates and generally reset to the then current intermediate-term interest rates when they reach repricing dates.
Current wording
Our interest-bearing liabilities are comprised of customer deposits and funds we borrow. 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 interest rates, the level of which is partially impacted by the actions of the FOMC. The yields on our held for-investment loans and investment securities are generally more sensitive to intermediate-term interest rates. However, a sizable portion of our held for investment loans have fixed rates that generally reset to the then current intermediate-term interest rates when they reach repricing dates.
Previous wording
The following table sets forth information regarding our net interest income and average balance sheet for the periods indicated. The average balance is derived from daily calculations of average balances.
Current wording
The following table sets forth information regarding our NII and average balance sheet for the periods indicated. The average balance is derived from daily calculations of average balances.
Previous wording
(2)Comprised of Debt securities available-for-sale at amortized cost, Equity investments with readily determinable fair values, at fair value and Federal Home Loan Bank stock and Federal Reserve Bank stock, at cost.
Current wording
(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.
Previous wording
The following table summarizes the change in net interest income attributable to changes in rate and volume:
Current wording
The following table summarizes the change in NII attributable to changes in rate and volume:
Previous wording
During the three months ended March 31, 2025, Net Interest Margin (“NIM”) stabilized compared to the three months ended December 31, 2024. Additionally, net interest income decreased $51 million compared to the three months ended December 31, 2024, primarily as a result of lower average mortgage and other loans due to the strategic reduction of our Multi-Family (“MF”), Commercial Real Estate (“CRE”) and non-core Commercial and Industrial ("C&I") loans that began in early 2024, lower overall market interest rates, and lower average interest earning cash and cash equivalents primarily due to the pay down of wholesale borrowings. The decrease in net interest income was partially offset by the payoff of brokered certificates of deposit reflecting our strategy to reduce higher cost funding, a reduction in custodial deposits associated with the sale of our Mortgage Operations during the three months ended December 31, 2024, and lower overall market interest rates.
Current wording
During the three months ended June 30, 2025, NIM increased 7 basis points and NII increased $9 million compared to the three months ended March 31, 2025. This was primarily as a result of the payoff of brokered certificates of deposit reflecting our actions to reduce higher cost funding, the pay down of wholesale borrowings and improved multi-family loan yield resets, partially offset by lower average total loans and leases due to the strategic reduction in our multi-family, CRE and non-core C&I loans that began in early 2024.
Previous wording
During the three months ended March 31, 2025, NIM decreased by 54 basis points compared to the three months ended March 31, 2024. Additionally, net interest income decreased $214 million compared to the prior year, primarily as a result of lower average mortgage and other loans due to the sale of our Mortgage Operations during the three months ended December 31, 2024, and our warehouse lending portfolio during the three months ended September 30, 2024, the strategic reduction in MF, CRE, and C&I loans and lower interest rates. The decrease was partially offset by lower average borrowed funds driven by the pay down of wholesale borrowings during 2024.
Current wording
During the six months ended June 30, 2025, NIM decreased by 36 basis points and NII decreased $352 million compared to the six months ended June 30, 2024. This was primarily as a result of lower average total loans and leases due to the strategic reduction in multi-family, CRE, and C&I loans, the sale of our mortgage third party origination business and mortgage servicing business ("Mortgage Operations") during the three months ended December 31, 2024, the sale of our warehouse lending portfolio during the three months ended September 30, 2024, and lower interest rates. The decrease was partially offset by lower average borrowed funds driven by the pay down of wholesale borrowings during 2024 and the six months ended June 30, 2025.
Previous wording
For the three months ended March 31, 2025, the provision for credit losses decreased $236 million compared to the three months ended March 31, 2024. This decrease is primarily due to lower net charge-offs, our continued focus on credit reviews and the receipt of recent appraisals. Additionally, our ACL balance decreased since March 31, 2024, as result of the on-going strategic reduction of our MF, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by the negatively trending macro-economic environment.
Current wording
For the three months ended June 30, 2025, the provision for credit losses decreased $15 million compared to the three months ended March 31, 2025. This decrease is primarily due to the strategic reduction in our multi-family, CRE and non-core C&I loan portfolio, a reduction in our criticized assets, our continued focus on credit reviews and the receipt of recent appraisals. Additionally, our ACL balance decreased since March 31, 2025 as a result of the on-going strategic reduction in our multi-family, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by negatively trending macro-economic conditions.
Previous wording
For the three months ended March 31, 2025, the provision for credit losses decreased $66 million compared to the three months ended December 31, 2024. This decrease is primarily due to lower net charge-offs, our continued focus on credit reviews and the receipt of recent appraisals. Additionally, our Allowance for Credit Losses ("ACL") balance decreased since December 31, 2024, as result of the on-going strategic reduction of our MF, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by the negatively trending macro-economic environment.
Current wording
For the six months ended June 30, 2025, the provision for credit losses decreased $562 million compared to the six months ended June 30, 2024. This decrease is primarily due to improving credit trends as property values and borrower financials normalize which has resulted in a stabilization in our ACL and lower net charge-offs in our multi-family and CRE portfolios. Additionally, our ACL balance decreased since June 30, 2024 as a result of the on-going strategic reduction in our multi-family, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by negatively trending macro-economic conditions.
Previous wording
For the three months ended March 31, 2025, non-interest income decreased by $84 million compared to the three months ended December 31, 2024. The decline in non-interest income was primarily due to the non-recurrence of an $89 million gain and lower fee income as a result of the sale of our Mortgage Operations during the three months ended December 31, 2024, partially offset by net gains on MF and CRE loan sales.
Current wording
For the three months ended June 30, 2025, non-interest income decreased by $3 million compared to the three months ended March 31, 2025. The decline in non-interest income was a result of certain insignificant items.
Previous wording
For the three months ended March 31, 2025, non-interest income increased $71 million compared to the three months ended March 31, 2024. The increase in non-interest income was primarily due to the non-recurrence of the $121 million reduction in the Signature Transaction bargain purchase gain, partially offset by lower mortgage servicing rights fees, lower fee income, and lower net loan administration income as a result of the sale of our Mortgage Operations during the three months ended December 31, 2024.
Current wording
For the six months ended June 30, 2025, non-interest income increased $34 million compared to the six months ended June 30, 2024. The increase in non-interest income was primarily due to the non-recurrence of the $121 million reduction in the Signature Transaction bargain purchase gain, partially offset by lower MSRs fees, fee income, net gain on loan sales and securitizations and net loan administration income as a result of the sale of our Mortgage Operations during the three months ended December 31, 2024.
Previous wording
Total non-interest expenses decreased $186 million compared to the three months ended December 31, 2024, primarily due to a decrease in general and administrative expenses primarily due to the non-recurrence of the asset impairment charges of $77 million, lower compensation and benefits costs stemming from the actions taken to optimize costs which continued in the three months ended March 31, 2025, lower FDIC insurance costs as a result of a lower asset base and lower brokered deposits due to the sale of our Mortgage Operations during the three months ended December 31, 2024, and the continued execution of our cost savings initiatives.
Current wording
Total non-interest expenses for the six months ended June 30, 2025 decreased $359 million compared to the six months ended June 30, 2024, primarily due to lower compensation and benefits costs stemming from the actions taken to optimize costs which continued in the six months ended June 30, 2025, a decrease in general and administrative expenses primarily due to the sale of our Mortgage Operations during the three months ended December 31, 2024 and as we continue to focus on operating expense management. Additionally, we had lower FDIC insurance costs as a result of a lower asset base and lower brokered deposits due to the sale of our Mortgage Operations, and lower merger-related expenses.
Previous wording
We compute our tax benefit for interim periods by applying the estimated annual effective tax to year-to-date (Loss) before income taxes and adjust for discrete items that occur in the quarter. For the three months ended March 31, 2025, we were unable to make a reliable estimate of our estimated annual effective tax rate as a result of our expected break-even results for 2025; therefore we used our actual effective tax rate to compute our income tax benefit for the three months ended March 31, 2025.
Current wording
We compute our tax benefit for interim periods by applying the estimated annual effective tax to our year-to-date (Loss) before income taxes and adjust for discrete items that occur in the quarter. For the three and six months ended June 30, 2025, we were unable to make a reliable estimate of our estimated annual effective tax rate as a result of our expected break-even results for 2025; therefore we used our actual effective tax rate to compute our income tax benefit for the three and six months ended June 30, 2025.
Previous wording
Income tax benefit decreased $29 million compared to the three months ended December 31, 2024 primarily as a result of the reduction in our pre-tax loss.
Current wording
The income tax benefit for the three months ended June 30, 2025 decreased $10 million compared to the three months ended March 31, 2025 primarily as a result of the reduction in our pre-tax loss.
Previous wording
Income tax benefit decreased $33 million compared to the three months ended March 31, 2024 primarily as a result of the reduction in our pre-tax loss, partially offset by the tax effect of the adjustment to the bargain purchase gain recorded net of tax during the three months ended March 31, 2024.
Current wording
The income tax benefit for the six months ended June 30, 2025 decreased $123 million compared to the six months ended June 30, 2024, primarily as a result of the reduction in our pre-tax loss, partially offset by the tax impact of the adjustment to the bargain purchase gain recorded net of tax during the three months ended March 31, 2024.
Previous wording
Total loans and leases held for investment decreased $1.7 billion at March 31, 2025 compared to December 31, 2024, primarily as a result of our continued strategy of diversifying our loan portfolio by reducing our MF, CRE and non-core C&I loan exposure, partially offset by $769 million in originations within our C&I portfolio.
Current wording
Total loans and leases held for investment decreased $4.2 billion at June 30, 2025 compared to December 31, 2024, primarily as a result of our continued strategy of diversifying our loan portfolio by reducing our multi-family, CRE and non-core C&I loan exposure, partially offset by $2.0 billion in originations within our C&I portfolio.
Previous wording
(1)Excludes Specialty Finance commercial real estate loans and multi-family loans serviced-by-others totaling $454 million and $96 million respectively. Amounts presented reflect unpaid principal balance; total amortized cost adjustments were $64 million.
Current wording
(1)Excludes Specialty Finance CRE loans and multi-family loans serviced-by-others totaling $465 million and $96 million respectively. Amounts presented reflect unpaid principal balance; total amortized cost adjustments were $97 million.
Previous wording
Option loans offer the borrower the ability to reprice to a fixed rate after the initial period. If not elected, the loan defaults to variable rate. Option loans in the table are shown as being due in the period the interest rate is subject to change. Non-Option loans are beyond the option date and are reflected by maturity. Risks associated with loan repricing are discussed in the Credit Risk section.
Current wording
Option loans offer the borrower the ability to reprice to a fixed rate after the initial period. If not elected, the loan defaults to a variable rate. Option loans in the table are shown as being due in the period the interest rate is subject to change. Non-Option loans are beyond the option date and are reflected by maturity. Risks associated with loan repricing are discussed in the Credit Risk section.
Previous wording
The majority of our multi-family loans are non-recourse and are secured by rental apartment buildings. At March 31, 2025, $18.6 billion or 56 percent of the Company’s total MF 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. These limitations may reduce a borrower’s ability to generate additional revenues on those units to offset higher operating expenses due to inflation and the current interest rate environment. This could result in lower net operating income and could impact a borrower’s ability to satisfy repayment obligations during the term of the loan. In addition, the level of income generated by the property may be insufficient to qualify for refinancing at maturity.
Current wording
The majority of our multi-family loans are non-recourse and are secured by rental apartment buildings. At June 30, 2025, $17.7 billion or 55 percent of our total multi-family loan portfolio was secured by properties in New York State, $15.5 billion or 88 percent of which are subject to rent regulation laws to varying degrees, with $10.2 billion having 50 percent or more rent regulated units. The New York Housing Stability and Tenant Protection Act of 2019 significantly limits the ability to increase rents on regulated apartments upon vacancy. These limitations may reduce a borrower’s ability to generate additional revenues on those units to offset higher operating expenses due to inflation and the current interest rate environment. This could result in lower net operating income and could impact a borrower’s ability to satisfy repayment obligations during the term of the loan. In addition, the level of income generated by the property may be insufficient to qualify for refinancing at maturity.
Previous wording
To mitigate our exposure to rent regulated properties, we are curtailing future originations of such 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. Additionally, we are strategically diversifying our loan portfolio to shift from MF loans to other loan sectors.
Current wording
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. Additionally, we are strategically diversifying our loan portfolio to shift from multi-family loans to other loan sectors.
Previous wording
Historically, our MF loans may have contained an initial interest-only period; however, they were underwritten on a fully amortizing basis, including calculation of the debt service coverage ratio. 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 $11.5 billion outstanding with interest-only payments at March 31, 2025. The weighted average interest-only period remaining was 19.3 months as of March 31, 2025, with approximately 73 percent of these loans entering their amortization period by the end of 2025.
Current wording
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. Our multi-family loan portfolio had $9.9 billion outstanding with interest-only payments at June 30, 2025. The weighted average interest-only period remaining was 19.3 months as of June 30, 2025, with approximately 36 percent of these loans entering their amortization period by the end of 2025 and 68 percent by the end of 2026.
Previous wording
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. 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, by themselves, 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.
Current wording
We continue to monitor our loans held for investment portfolio and the related ACL, particularly, given the economic pressures facing the CRE and multi-family markets. 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, by themselves, 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.
Previous wording
At March 31, 2025, commercial real estate loans decreased $326 million compared to December 31, 2024, primarily due to our strategic decision to continue to diversify our loan portfolio by reducing our exposure to CRE loans.
Current wording
At June 30, 2025, CRE loans decreased $1.2 billion compared to December 31, 2024, primarily due to par payoffs. The reduction in our CRE portfolio is consistent with our strategic decision to continue to diversify our loan portfolio by reducing our exposure to CRE loans.
Previous wording
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 debt service coverage ratio. 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.
Current wording
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.
Previous wording
Substantially all CRE loans we originate are non-recourse and are secured by income-producing properties such as office buildings, retail centers, mixed-use buildings, and multi-tenanted light industrial properties. Declines in occupancy levels for office space continue to impact borrowers’ net operating income and their ability to cover debt service.
Current wording
Substantially all CRE loans we originate are non-recourse and are secured by income-producing properties such as office buildings, retail centers, mixed-use buildings, and multi-tenanted light industrial properties.
Previous wording
Our C&I loan portfolio decreased $634 million at March 31, 2025 compared to December 31, 2024, primarily due to a $1.4 billion reduction resulting from our strategic decision to continue to diversify our loan portfolio by reducing our exposure to non-core C&I loans, partially offset by new originations of $769 million.
Current wording
Our C&I loan portfolio decreased $950 million at June 30, 2025 compared to December 31, 2024, primarily due to a $2.9 billion reduction resulting from our strategic decision to continue to diversify our loan portfolio by reducing our exposure to non-core C&I loans, partially offset by new originations of $2.0 billion.
Previous wording
A broad range of C&I 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. In determining the term and structure of C&I, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. C&I loans are often secured by business assets and personal guarantees of the borrower and include financial covenants to monitor the borrower’s financial stability. We continue to add experienced commercial, corporate and specialized industries banking professionals and credit underwriting and portfolio management personnel which will impact our noninterest expense as we continue to strategically diversify our loan portfolio to shift from multi-family loans to other portfolios, most notably C&I.
Current wording
A broad range of C&I 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. In determining the term and structure of C&I loans, several factors are considered, including the purpose, the collateral, and the anticipated sources of repayment. C&I loans are often secured by business assets and personal guarantees of the borrower and include financial covenants to monitor the borrower’s financial stability. We continue to add experienced commercial, corporate and specialized industries banking professionals and credit underwriting and portfolio management personnel which will impact our noninterest expense as we continue to strategically diversify our loan portfolio to shift from multi-family loans to other portfolios, most notably C&I loans.
Previous wording
Included in our C&I portfolio at March 31, 2025, specialty finance loans and leases totaled $3.7 billion, or 5.5 percent of total loans held for investment, reflecting a decrease of $180 million or 5 percent compared to December 31, 2024. The decrease in specialty finance loans is a result of our decision to run off certain non-core loans as part of our overall loan portfolio strategy.
Current wording
Specialty finance loans and leases included within our C&I loan portfolio were $3.6 billion, or 5.5 percent of total loans held for investment, reflecting a decrease of $308 million or 8 percent compared to December 31, 2024. The decrease in specialty finance loans is a result of our decision to run off certain non-core loans as part of our overall loan portfolio strategy.
Previous wording
The specialty finance loans and leases we fund fall into three categories: asset-based loans, dealer floor-plan lending and equipment loan and lease financing. Each of these credits is secured with a perfected first security interest in, or outright ownership of, the underlying collateral, and structured as senior debt or as a non-cancelable lease. As of March 31, 2025, 86 percent of specialty finance loan commitments are structured as floating rate obligations.
Current wording
Specialty finance loans and leases are generally made to large corporate obligors, many of which are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide. These loans fall into three categories: asset-based loans, dealer floor-plan lending and equipment loan and lease financing. Each of these credits is secured with a perfected first security interest in, or outright ownership of, the underlying collateral, and structured as senior debt or as a non-cancelable lease. As of June 30, 2025, 85 percent of specialty finance loan commitments are structured as floating rate obligations.
Previous wording
One-to-four family loans include various types of conforming and non-conforming fixed and adjustable-rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties. The loan-to-value requirements on our residential first mortgage loans vary depending on occupancy, property type, loan amount, and FICO scores. Loans with loan-to-value ratios exceeding 80 percent are required to obtain mortgage insurance. As of March 31, 2025, 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.
Current wording
One-to-four family loans include various types of conforming and non-conforming fixed and adjustable-rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties. The loan-to-value requirements on our residential first mortgage loans vary depending on occupancy, property type, loan amount, and FICO scores. Loans with loan-to-value ratios exceeding 80 percent are required to obtain mortgage insurance. As of June 30, 2025, excluding LGG, loans in this portfolio had an average current FICO score of 750 and an average loan-to-value ratio of 56 percent.
Previous wording
Substantially all loans with government guarantees are insured or guaranteed by the Federal Housing Administration or the U.S. Department of Veterans Affairs. Nonperforming repurchased loans in this portfolio earn interest at a rate based upon the 10-year U.S. Treasury note rate from the time the underlying loan becomes 60 days delinquent until the loan is conveyed to the U.S. Department of Housing and Urban Development (if foreclosure timelines are met), which is not paid by the Federal Housing Administration until claimed.
Current wording
Substantially all LGG are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs. As of June 30, 2025 and December 31, 2024, LGG totaled $369 million and $360 million, respectively. Nonperforming repurchased loans in this portfolio earn interest at a rate based upon the 10-year U.S. Treasury note rate from the time the underlying loan becomes 60 days delinquent until the loan is conveyed to the U.S. Department of Housing and Urban Development (if foreclosure timelines are met), which is not paid by the FHA until claimed.
Previous wording
At March 31, 2025, other loans decreased $50 million compared to December 31, 2024, primarily driven by payoffs at par.
Current wording
At June 30, 2025, other loans decreased $84 million compared to December 31, 2024, primarily driven by payoffs at par.
Previous wording
Our home equity portfolio includes home equity loans, second mortgage loans, and home equity line of credits. As of March 31, 2025, loans in this portfolio had an average current FICO score of 751.
Current wording
Other loans primarily consist of HELOANs, second mortgage loans, and HELOCs. As of June 30, 2025, loans in this portfolio had an average current FICO score of 756.
Previous wording
Loans held for sale at March 31, 2025 decreased $368 million compared to December 31, 2024, primarily due to the continued run-off of held for sale loans following the sale of our Mortgage Operations and sales of commercial loans, partially offset by mortgage originations during the three months ended March 31, 2025.
Current wording
Loans held for sale at June 30, 2025 decreased $580 million compared to December 31, 2024, primarily due to the continued run-off of held for sale loans following the sale of our Mortgage Operations, partially offset by retail mortgage originations during the six months ended June 30, 2025.
Previous wording
The ACL on loans and leases decreased $33 million from December 31, 2024 to March 31, 2025. This decrease is primarily due to lower net charge-offs, our continued focus on credit reviews and the receipt of recent appraisals. Additionally, our ACL balance decreased since December 31, 2024, as result of the on-going strategic reduction of our MF, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by the negatively trending macro-economic environment.
Current wording
The ACL on loans and leases decreased $95 million from December 31, 2024 to June 30, 2025. This decrease is primarily due to improving credit trends as property values and borrower financials normalize, and the on-going strategic reduction in our multi-family, CRE and non-core C&I portfolios. The reduction in our ACL balance was partially offset by negatively trending macro-economic conditions.
Previous wording
The following table presents the Company's asset quality measures at the respective dates:
Current wording
The following table presents our asset quality measures at the respective dates:
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Current report — wording carried from elsewhere
For the three months ended June 30, 2025, we reported a net loss of $70 million compared to a net loss of $100 million for the three months ended March 31, 2025. The net loss attributable to common stockholders, which includes the impact from preferred dividends, for the three months ended June 30, 2025 was $78 million, or $0.19 per diluted share compared to a net loss attributable to common stockholders of $108 million, or $0.26 per diluted share for the three months ended March 31, 2025.
Current report — wording carried from elsewhere
(1)Comprised of Loans and leases held for investment, net and Loans held for sale.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
Internal Control over Financial Reporting Remediation
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Total non-interest expenses decreased $167 million compared to the three months ended March 31, 2024, primarily due to lower compensation and benefits costs stemming from the actions taken to optimize costs which continued in the three months ended March 31, 2025, a $39 million decrease in general and administrative expenses primarily due to the sale of our Mortgage Business, the continued execution of our cost saving initiatives, and lower merger-related expenses.
Previous report — wording carried elsewhere
These loans are generally made to large corporate obligors, many of which are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide.
Previous report — wording carried elsewhere
One-to-four family loans decreased $14 million at March 31, 2025 compared to December 31, 2024, primarily driven by payoffs at par.
Previous report — wording carried elsewhere
(1)In general, short- and long-term rates are assumed to increase in parallel instantaneously and then remain unchanged.