Flagstar Delays Turnaround to 2028, Slashes 2026-2027 Guidance; Shares Fall 9%

Flagstar Bank now expects to complete its multiyear turnaround in 2028 rather than 2027, citing higher interest rates and inflation, and sharply cut its earnings outlook. Shares closed down more than 9% on Friday. The $87.4 billion-asset regional bank guided full-year 2026 net income to $85 million-$95 million, down from July's $225 million-$300 million forecast, and cut its 2027 target to $400 million-$500 million from $800 million-$900 million. It raised 2026 loss provisions to $160 million-$170 million and halted share buybacks, with resumption eyed for 2027. Third-quarter net income was $12 million, or one cent per share, missing the seven-cent consensus, with a $76 million credit-loss provision. CEO Joseph Otting called the revision "a change in timing, not in our strategy." CFO Lee Smith said deposit growth in a competitive, higher-rate environment is key to hitting targets, with the bank projecting $800 million-$1 billion in quarterly deposit growth and balance-sheet expansion to about $97 billion by end-2028.