Flagstar Bank, N.A.

Hello and thank you for standing by. My name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the Flagstar Financial first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. I would now like to turn the conference over to Sal DiMartino, Director of Investor Relations. Please go ahead.

Thank you, Regina, and good morning, everyone. Welcome to Flagstar Financial's first quarter 2025 earnings call. This morning, our Chairman, President, and CEO, Joseph Otting, along with the company's Senior Executive Vice President and Chief Financial Officer, Lee Smith, will discuss our first quarter results and outlook. During this call, we will be referring to our earnings presentation, which provides additional detail on our quarterly results and operating performance. Both the earnings presentation and the press release can be found on the investor relations section of our company website at ir.flagstart.com. Also, before we begin, I'd like to remind everyone that certain comments made today by the management team of Flagstar Financial may include forward looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Such forward looking statements we may make are subject to the safe harbor rules. Please review the forward looking disclaimer and safe harbor language in today's press release and presentation for more information about risks and uncertainties which may affect us. Also, when discussing our results, we will reference certain non-GAAP measures which exclude certain items from reported results. Please refer to today's earnings release for reconciliations of these non-GAAP measures. And with that, now I would like to turn the call over to Mr. Otting. Joseph.

Thank you, Sal. And good morning, everyone, and welcome to our first quarter earnings call. We are very pleased with this quarter's operating performance and financial results as we continue to make significant progress on our journey to profitability, executing on our strategic plan and transferring the company to a strong performing regional bank. We executed on the critical cost takeouts, credit management, CNI growth, and risk governance during the quarter. TAB, Mark McIntyre, and really align with our overall pattern that we laid out for all of you in early 2024. TAB, Mark McIntyre, Our first quarter adjusted net loss available to common shareholders was 23 cents per diluted share compared to a consensus of 27 cents per diluted share this was also 17 cents better than what we reported in the fourth quarter. In addition to our improved financial results, I'm also excited with the progress that we are making and building out our commercial lending business, where we continue to add talented bankers. These new hires now are generating strong origination volumes, which I will detail for you shortly. Also during the quarter, we announced the hiring of Mark Pizzi to lead our private bank and wealth management business. Mark's extensive expertise at various large regional and international banks will help us drive our continued growth in these two core businesses. And we're really excited because Mark is going to be a great leader. He's already brought focus to those businesses, and we look to add additional talent as we move forward as he executes on his business model. In addition, we rounded out some key product offerings in the CNI, including an interest-only jumbo AMR mortgage with a low loan to value aimed at our high net worth clients and a subscription loan product. We feel now that we have the appropriate product set in place to grow market share in the high net worth space. Turning to slide three of our presentation, in 2024, we successfully built capital, improved liquidity, and enhance the credit quality of our commercial real estate and multifamily portfolios. In 2025, our focus is on the following four areas. Improving our earnings profile through margin expansion as our cost of funds decreases, moderating credit cost and cost reductions. Lee will discuss these and outline these later on a couple slides. And we'll continue to execute on our CNI and private bank growth initiatives. And then proactively manage the CRE portfolio, including reducing our CRE concentration, which you'll also see in a couple slides. We've continued to do that virtually since we've arrived, and we continue to see that as we kind of move through the remainder of 25 and 26. And then we also see normalizing credit. I will note that both net charge-offs and the loan loss provision in the first quarter each declined by almost 50% on a quarter-over-quarter basis. TAB, Mark McIntyre, i'd like to spend the next few slides discussing the build out and increasing momentum in our CNI business which you know we've consistently communicated as one of our key targets. TAB, Mark McIntyre, is to diversify the balance sheet away from being a CRA driven balance sheet to one where we focus on consumer CNI and commercial real estate going forward. We've continued to add talent in the CNI business. We hired another 15 bankers during the first quarter and tend to hire another 80 to 90 during the remainder of the year. These additional hires are already factored into our forecast and will not impact our cost savings initiatives. Early returns from the bankers we hired in 2020 are impressive, especially in our two main focus areas, which are corporate and regional commercial banking and our specialized industry verticals. Overall, we had over $1 billion of CNI loan commitments in the quarter, with $769 million in originations, up over 40% versus the fourth quarter. Our CNI pipeline currently stands at $870 million, up over two times compared to the fourth quarter. Our expansion strategy in this is twofold. Our corporate and regional commercial banking business is focused on relationship lending in and around our branch footprint to ensure we can maximize our middle market and corporate banking lending opportunities in our backyard, specifically where we have Flagstar brand recognition. And then the second is our specialized industry business is a national model and focuses on several industry verticals, including things like sports and entertainment, energy, and energy renewables, franchise finance, healthcare, and lender finance. Slide five depicts the momentum we have in these two areas over the last several quarters. And if you recall, we really, with Rich Raffetto's hiring in June of 2024, began to organize ourselves and began to recruit talent into that space. But as you can see on slide five, importantly in our two areas of forecasts, Rich D' originations increase over 70% to 449 million on a link quarter basis, why commitments rose 40% to $656 million. Rich D' So we're we're really excited about that and it really shows as you know we've talked to people about growing out our CNI opportunities in the marketplace that those are really starting to come through as we as we forecast it. On slide six, in addition to the sale of the mortgage warehouse business, we opted to strategically reduce our exposure to several non-core, non-relationship-based C&I borrowers. As a result, over the past several quarters, the runoff in these portfolios has masked the progress we are making in growing our new focus areas. As you can see in the upper left of this slide on page six, while overall C&I loans declined again this quarter, Regional commercial banking and the specialized interest loans increased to 147 million, up 4.4% compared to the fourth quarter. Runoff is now abated in the C&I portfolios and combined with continued momentum in our focus area, we feel comfortable that the overall C&I portfolio will begin to net grow in the second quarter. With that, I will turn it over to Lee and allow Lee to kind of walk you through some of our financial data.