Two years after a surprise loss nearly locked Flagstar Bank into a death spiral, the Long Island-based lender returned to profitability, according to a fourth-quarter earnings report the bank issued Friday.
Flagstar reported net income of $29 million between October and December, the bank noted Friday. That compares with a $36 million loss from the third quarter and a $188 million loss from a year earlier.
The bank’s CEO, former Comptroller of the Currency Joseph Otting, called the report a “significant milestone in the Bank's turnaround” but just “one of several positive trends.”
"Over the past year, we strategically and deliberately built a significant [commercial and industrial] banking platform by adding over 250 experienced bankers and support staff, who have successfully brought in new relationships,” Otting said, citing the bank’s second consecutive quarter of growth in C&I loans.
While the bank has been growing that sector, it has shrunk its workforce overall. The bank had 5,600 employees as of Dec. 31, according to a spokesperson. That’s down almost 20% from the 6,993 employees it counted at the end of 2024.
Flagstar reported $4 million in severance costs in the fourth-quarter from layoffs that took effect in January. The bank did not disclose the number of positions eliminated in that latest round.
Perhaps more significant on the business side is the bank’s pivot away from the commercial real estate sector, which stood as the source of many of the bank’s woes in 2023 and 2024. Flagstar has seen a roughly 25% drop in CRE loans from late 2023 through 2025, the bank said Friday. That includes $5.5 billion in CRE loan payoffs last year.
Throughout Flagstar’s two-year recovery, provisions for credit losses stood as a source of quarterly speculation. That figure winnowed to $3 million in 2025’s fourth quarter – a 92% drop from the preceding three-month span, and a $142 million (or 98%) decrease from a year earlier.
Net charge-offs for the fourth quarter stood at $46 million, a 37% drop from July through September, and a 79% decrease from the end of 2024.
"I think we're now pivoting to the growth side of the story," Flagstar CFO Lee Smith said during an earnings call Friday.
The bank’s asset total appears to be shrinking – though that may be temporary.
Flagstar counted $87.5 billion in assets as of December. That’s down 13% from a year earlier. The bank, though, has targeted $93.5 billion to $95.5 billion by the end of this year and intends to re-cross the $100 billion threshold in 2027, Smith said Friday.
The bank reported $557 million in revenue for the fourth quarter. That’s down roughly $68 million from a year earlier. Meanwhile, net interest income stood at $467 million for the three-month span. Unadjusted, that’s up 1% year over year. But, factoring out loan-loss provisions, the bank has seen 47% improvement since the end of 2024.
