Flagstar Bank (FLG) investor relations material

Transformation progress and balance sheet strategy

• Significant improvements in capital (CET1 at 13.2%), liquidity ($27.5B), and credit quality since March 2024.

• Diversification strategy targets a 1/3 split among CRE, C&I, and consumer assets, reducing legacy concentration in multifamily and rent-regulated New York properties.

• Commercial banking group built from scratch, now generating over $2B in new loan outstandings per quarter.

• Non-performing and criticized loans have declined, with a clear path to further improvement by year-end.

• Recent rating agency upgrades have enabled deeper penetration into commercial deposit markets and accelerated core deposit growth.

CRE reduction and loan portfolio management

• CRE paydowns have exceeded initial projections, with $1.5B–$1.6B per quarter, aiding de-risking but creating near-term NII pressure.

• New CRE originations resumed in Q4 2025, focusing on high-quality, short-duration, floating-rate loans outside NYC multifamily.

• Pivoting out of low-coupon COVID-era multifamily loans to higher-yielding, market-rate assets to support NIM expansion.

• Rent-regulated NYC exposure analyzed for rent freeze scenarios; most loans can absorb stress, with reserves and charge-offs covering higher-risk segments.

• No significant divergence expected in 2027 vintage resets; criticized loans and ACL reserves have declined.

C&I growth and deposit strategy

• C&I expansion driven by geographic and industry specialization, with 300+ hires and plans for continued growth.

• C&I loan growth reached $1.4B net in Q1, targeting $2B per quarter, supported by granular deal structure and strong credit discipline.

• Deposit growth of $1.1B in Q1, with a focus on operating accounts and leveraging new C&I relationships.

• Loan-to-deposit ratio maintained at ~90%, with ongoing efforts to optimize deposit mix and fee income.

• Spreads on new C&I transactions have widened, not compressed, despite competitive landscape.