Flagstar Bank N.A. "Multiple Paths to Upside - Assuming at Buy" (Buy) Braziler

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Flagstar Bank N.A. "Multiple Paths to Upside - Assuming at Buy" (Buy) Braziler

with the current

sub-TBV valuation discounting 1) capital optionality, 2) de-risked and diversified loan book, 3) rate-

agnostic NIM upside, and 4) strategic potential. Our estimates, while being below both consensus

and management guidance, provide a clear and potentially conservative path towards profitability

improvement, increasing ROTCE to 10%+, which should result in at least a 1x TBV multiple.

Additionally, we view the near-term story as being even more de-risked given a reset of earnings

expectations in 1Q, making FLG particularly attractive in the near-term off the lowered bar.

EVIDENCE In 1Q26 C&I loans grew $1.4B, core deposits increased $1.1B and interest-bearing deposit costs

declined 21bp; adj. opex fell 5% to $441MM, CET1 reached 13.2%, and nonaccrual loans declined

11%. Against this progress, CRE & multifamily loans declined $1.6B, management lowered its NII

outlook, and nonaccrual loans remain elevated at 4.43% of loans. From here, C&I production should

be aided by limited payoffs from newly entered business lines, and the cadence on CRE payoffs and

re-engaged production could carry balance sheet growth above our estimate and closer to the guide.

WHAT´S PRICED IN? FLG currently trades at ~0.8x of 1Q26 TBV and 9.8x FY2 P/E multiple. The early stages of the rebrand

and rebuild appear priced in; however, current guidance does not, with ours and consensus estimates

well below FY27 EPS and ROTCE targets of $1.80-$1.90 and 10.75-11.25%, respectively.

Upside/Downside narrative on of thisimage/chartt

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Value drivers Avg. Earning NIM Fee Expense NCOs/

ROTCE

(2027E) Asset Growth Expansion Growth Growth Avg. Loans