Flagstar Financial to merge holding company into bank

NEW YORK - Flagstar Financial, Inc. (NYSE:FLG), a $5 billion market cap regional bank currently trading at $12.05 per share, announced Thursday that its Board of Directors has approved a merger agreement to consolidate its corporate structure by merging the holding company into Flagstar Bank, N.A. According to InvestingPro analysis, the bank has shown strong momentum with a 27% price return over the past six months, despite facing profitability challenges.

Under the reorganization plan, the bank will be the surviving entity while maintaining the Flagstar Bank, N.A. name and continuing to trade on the New York Stock Exchange under the existing "FLG" ticker symbol.

The company cited several expected benefits from the restructuring, including cost reduction, simplified organizational structure, streamlined operations, and elimination of redundant corporate activities and duplicative regulation.

The reorganization requires both regulatory approval and shareholder consent. Flagstar plans to file a proxy statement with the Securities and Exchange Commission during the third quarter of 2025 and expects to complete the transaction before year-end, pending necessary approvals.

Joseph M. Otting, Chairman, President, and CEO, described the move as part of the company’s ongoing efforts to build "a well-capitalized, diversified, and top-performing regional bank." InvestingPro data suggests the bank faces some headwinds, with analysts revising earnings expectations downward and projecting a revenue decline for the current year. For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Flagstar Financial is the parent company of Flagstar Bank, which operates approximately 400 locations across nine states. As of March 31, 2025, the company reported $97.6 billion in assets, $67.1 billion in loans, $73.9 billion in deposits, and $8.2 billion in total stockholders’ equity. With analyst price targets ranging from $11.50 to $15.50, and the stock currently trading slightly above its InvestingPro Fair Value, investors seeking deeper insights can explore the bank’s complete financial health metrics and growth potential through InvestingPro’s extensive analysis tools.

The bank maintains a significant presence in the New York/New Jersey metropolitan region, the upper Midwest, Florida, and the West Coast, according to the press release statement.

In other recent news, Flagstar Financial has made significant leadership changes by appointing Richard Raffetto as Senior Executive Vice President and President of Commercial and Private Banking. His employment agreement, effective July 1, 2025, includes an annual base salary of $700,000 and eligibility for an annual cash bonus of the same amount. In addition, Flagstar Financial held its annual shareholder meeting, where three directors were elected for three-year terms, with notable voting results for each candidate.

Analysts have also weighed in on Flagstar Bank’s prospects. DA Davidson reiterated its Buy rating and a $14.50 price target, expressing confidence in the bank’s strategic direction following meetings with management. Jefferies initiated coverage with a Buy rating and a $15 price target, citing expected improvements in credit quality and operational efficiency. Flagstar Bank’s management has communicated a strategic shift towards expanding profit margins and growing commercial and industrial loans, while reducing exposure to the multifamily loan sector. These developments highlight Flagstar Bank’s proactive approach to navigating through challenging periods and setting the stage for future growth.

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