FLAGSTAR BANK, NATIONAL ASSOCIATION
For the period ended Jun 4, 2025. Filed Apr 25, 2025.
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Jun 4, 2025 · Filed Apr 25, 2025
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant ☒
Filed by a party other than the registrant ☐
Check the appropriate box:
| ☐ | Preliminary proxy statement |
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| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14-a6(e)(2)) |
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| ☒ | Definitive proxy statement |
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| ☐ | Definitive additional materials |
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| ☐ | Soliciting material under Rule 14a-12 |
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Flagstar Financial, Inc.
(Name of Registrant as specified in its Charter)
Payment of filing fee (Check the appropriate box):
| ☒ | No fee required. |
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| ☐ | Fee computed on table below per Exchange Act Rule 14a-6(i)(4), and 0-11. |
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| ☐ | Fee paid previously with preliminary materials. |
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| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
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Letter to Our Shareholders
April 25, 2025
DEAR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders (the “Annual Meeting”) of Flagstar Financial, Inc. (the “Company”), the holding company for Flagstar Bank, N.A. The Annual Meeting will be held in a “virtual” format through a live webcast on June 4, 2025, at 10:00 a.m. Eastern Daylight Time. You will be able to attend the Annual Meeting, vote, and submit questions by visitingwww.virtualshareholdermeeting.com/FLG2025.
Since early 2024, our Executive Leadership team and Board of Directors have focused on several strategic actions designed to return the organization to growth and profitability, including enhancing the leadership team, adding industry-leading talent, increasing capital levels, improving our liquidity and funding profile, enhancing risk management and asset quality of the commercial real estate portfolio, and enhancing the safety and soundness of our operations. We made tremendous progress in each of these areas over the past year, accomplishing a great deal in a relatively short period.
We meaningfully strengthened the Company’s credit, risk, compliance, internal audit, IT, and finance functions. In addition, as part of our strategy to diversify our business mix and reduce our reliance on commercial real estate lending, we are making substantial investments in our commercial and corporate banking business. To date, we have added 75 teammates and plan to add 80 to 90 new hires over the remainder of 2025. These new teammates have already made an impact having originated $1 billion in new commitments and funded $770 million in new loans during the first quarter of 2025.
In March 2024, we successfully completed a $1.05 billion capital raise. During the second half of 2024, we further increased our capital levels through the sale of several non-core businesses and assets – the mortgage warehouse business and the mortgage servicing/sub-servicing and third-party origination businesses and the mortgage servicing rights asset – the former also enhanced our liquidity position. Collectively, these actions increased our Common Equity Tier 1 capital ratio to 11.83%, a 280-basis point improvement compared to where we ended the prior year, ranking the Company in the top quartile among our peers. Even though we made the decision to exit these two mortgage verticals, we remain committed to the mortgage business, through our distributed retail and direct to consumer origination channels and in the Private Bank, where we recently introduced a new mortgage product for high-net worth clients.
We ended 2024 with strong liquidity of $29.9 billion. During the course of the year, we reduced wholesale borrowings by almost $7 billion or 34% and brokered CDs by nearly $3 billion. Since both of these funding sources are more expensive than traditional core deposits, the reduction should also help our net interest margin going forward.
In last year’s letter, I stated that we implemented a number of initiatives to proactively address the credit issues in our commercial real estate portfolio, including conducting a deep dive into the multi-family and office portfolios. We completed our review of these portfolios by the end of the year, proactively de-risking the multi-family and office portfolios through significant charge-offs of nearly $1 billion, $3.5 billion of par payoffs, and strategic loan sales. As a result, multi-family loans declined $3.2 billion or 9% over the course of the year while commercial real estate loans declined $1.8 billion or 17%. At the same time, we increased our total allowance for credit losses to $1.2 billion or 1.76% of total loans.
Significantly, at the end of last year, we introduced our 2025 – 2027 Strategic Plan, which at its core, articulates three Enterprise Strategic Goals:
| • | Enterprise Goal 1 – Transform Flagstar Bank into a top-tier performing, relationship-driven regional bank |
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| • | Enterprise Goal 2 – Create a customer-centric culture that prioritizes valuable relationships |
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| • | Enterprise Goal 3 – Establish an effective risk management mindset that supports safe and sound operations |
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Over the next three years as we strive to transform Flagstar Bank into a top-quartile performing regional bank, these three goals will serve as our north star. We feel that the Bank is on the right path and makes progress every quarter.
We are also on track to reach full-year profitability in 2026, and, as I said on our fourth-quarter 2024 earnings conference call, I believe that we will be profitable in the fourth-quarter of 2025. One of the lynch pins underlying our return to profitability is a $600 million or 23% annualized reduction in our operating expenses (excluding merger-related expenses and intangible amortization). These cost reductions are focused in five areas: compensation and benefits; real estate optimization; the outsourcing/offshoring of many of our back-office operations; additional vendor cost savings; and lower FDIC insurance expenses. We have already realized approximately 80% of these cost savings and expect to realize the remaining cost savings over the next several quarters.
Importantly, as we reduce costs, at the same time, we are investing across various businesses, including our corporate and commercial banking business and within risk management to ensure that risk-taking activities align with the Bank’s strategy and risk appetite. We are also investing in our IT and operations infrastructure. Recently, the Board of Directors approved a $90 million investment to modernize technology and operations in 2025. As part of this investment, we have made a strategic shift to a hybrid-managed services model. This approach leverages a combination of internal talent and the industry-leading capabilities of two global services providers to create the new Flagstar S2 Bank platform – Simple and Sophisticated. The new platform is being built to enable our market strategy, strengthen our brand, and provide faster delivery of modern products and services into our markets. Importantly, this shift creates the necessary technology and operations foundation to accelerate an improved employee and customer experience along with the development of modern capabilities to support the Strategic Plan.
Over the course of last year, I spent a great deal of time talking to our teammates and our customers, either through in-person townhalls, virtual meetings, retail branch visits, or through a number of meet and greets across the country. All the feedback received from these conversations was very valuable, but three things stood out. One, we have great teammates from three quality legacy organizations, who are dedicated and eager to serve their retail, business, and private banking customers; two, we have a loyal customer base which appreciates their relationship with the Bank; and three, we have one of the best regional banking franchises in the country, 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. These three qualities will be essential in helping the organization transform into a well-diversified, high-performing regional bank.
On behalf of our Board of Directors and Executive Leadership team, I would like to express our thanks to our teammates, customers, and shareholders for your continued trust and support.
The attached Notice and Proxy Statement describe the formal business to be transacted at the Annual Meeting, including with respect to the Company’s executive compensation, and other matters. We encourage you to cast your vote by signing, dating, and returning the proxy card promptly, or by voting online or by telephone as instructed on the proxy card. As the holders of a majority of our common stock entitled to vote must be represented, either in person or by proxy, to constitute a quorum at the Annual Meeting, we would appreciate your timely response. Directors and officers of Flagstar Financial, Inc. and Flagstar Bank, N.A., as well as representatives of KPMG LLP, the Company’s independent registered public accounting firm, will be present at the Annual Meeting and will be pleased to respond to any questions you may have.
Sincerely, Joseph M. Otting President and Chief Executive Officer
Meeting Notice
NOTICE OF 2025 ANNUAL MEETING OF SHAREHOLDERS
OF FLAGSTAR FINANCIAL, INC.
102 DUFFY AVENUE, HICKSVILLE, NEW YORK 11801
| DATE AND TIME: | June 4, 2025, at 10:00 a.m., Eastern Daylight Time. | |||
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| PLACE: | The 2025 Annual Meeting of Shareholders of Flagstar Financial, Inc. (the “Company”) will be a virtual meeting conducted exclusively via live webcast at www.virtualshareholdermeeting.com/FLG2025. | |||
| ITEMS OF BUSINESS: | 1) | The election of three directors to three-year terms; | ||
| 2) | The ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2025; | |||
| 3) | Approval, on a non-binding advisory basis, of the Company’s named executive officer compensation; | |||
| 4) | Such other matters as may properly come before the Annual Meeting or any adjournments thereof, including whether to adjourn the Annual Meeting. | |||
| WHO CAN VOTE: | You are entitled to vote if you were a shareholder of record at the close of business on April 7, 2025. | |||
| VOTING: | We urge you to participate in the meeting, either by attending and voting in person or by voting as promptly as possible by telephone, through the Internet, or by mailing your completed proxy card (or voting instruction form, if you hold your shares through a broker, bank, or other nominee). Each share is entitled to one vote on each matter to be voted upon at the Annual Meeting. Your vote is important, and we urge you to exercise your right to cast it. | |||
| MEETING ADMISSION: | To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/FLG2025, you must enter the control number found on the proxy card or voting instruction form you received. You may vote during the Annual Meeting by following the instructions available on the meeting website during the Annual Meeting. | |||
| 2024 ANNUAL REPORT: | A copy of our 2024 Annual Report to Shareholders, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, accompanies this Notice and Proxy Statement. | |||
| DATE OF DISTRIBUTION: | This Notice, the Proxy Statement, and the proxy card are first being made available or mailed to shareholders on or about April 25, 2025. | |||
By Order of the Board of Directors,
Bao Nguyen
Senior Executive Vice President, General Counsel and Chief of Staff
Hicksville, New York
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 4, 2025
The Company’s Notice of Annual Meeting, Proxy Statement, and 2024 Annual Report to Shareholders
are available, free of charge, atwww.proxyvote.com.
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