Flagstar Bank: 2Q26: Buyback Timing TBD, Another NII Outlook Reduction, & Credit Keep Us Fully Comfortable At N

研报英文原文证据摘录

Flagstar Bank: 2Q26: Buyback Timing TBD, Another NII Outlook Reduction, & Credit Keep Us Fully Comfortable At N

This contributed to Flagstar (once again) reducing its 2026e/2027e EPS outlook Q1 (0.23) 0.04A 0.19

Q2 (0.14) 0.05A 0.26

ranges tied to a lower NII outlook due to higher-than-expected payoffs (both Q3 (0.07) 0.08 0.35

multifamily and CRE) which are resulting in a smaller balance sheet. Looking Q4 0.06 0.14 0.43

ahead, despite June NIM of 2.19% starting to show signs of expansion (this FY (0.38) 0.31 1.22

compares with 2Q26 NIM of 2.13%), our bias is towards a lower than expected

Style Exposure

NII/NIM and EPS through 2027e as we expect CRE payoff activity to remain

elevated. Another wrinkle that surfaced during 2Q which is making us less

optimistic on FLG shares is that credit quality trends worsened and included NPAs

increasing 5% q/q with the increase appearing to come from the NYC rent

regulated multifamily portfolio. For the many investors we have spoken to, we will

reiterate here that we tend to be more wary than our sell-side peers on rent regulated

and the quarter’s trends do nothing to ease our concerns on this asset class.

• Post the quarter, we are reducing our 2026e/2027e EPS estimates to $0.31 in

2026e and $1.22 in 2027e, which is below the company’s outlook, tied to our

expectations for NII coming in softer than management’s expectations.

Although FLG shares appear cheap on the surface, trading at ~0.7x on 2027e

TBV or a ~35% discount to our coverage universe median, we believe this is

justified given the below peer ROTE outlook. Consequently, post the quarter,

we maintain our Neutral rating.

• Key changes to 2026/2027 outlook: (1) Diluted adjusted EPS (2026/2027):

$0.40-0.50/$1.60-1.70; (2) ROATCE (2026/2027): 2.75-3.25%/10.00-