Flagstar Bank, N.A.

Hello and welcome to the Flagstar Bank NA third quarter 2025 earnings 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. And if you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to Sal DiMartino, Director of Investor Relations. You may begin.

Thank you, Sarah, and good morning, everyone. Welcome to Flagstar Bank NA's third 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 results for the quarter and the outlook. During this call, we will be referring to a 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 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 refer to 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 when discussing our results we will reference certain non-gap 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, I would now like to turn it to Mr. Otting. Joseph.

Thank you, Sal, and good morning, everybody. And welcome to our first quarterly earnings as Flagstar NA. We are very pleased with the operating results this quarter. Our third quarter performance provides further tangible evidence that are successfully executing on all our strategic priorities. Our operating results improved significantly throughout the year and during the quarter as many of our key metrics continue to trend positively. From an earnings perspective, our adjusted net loss of seven cents per diluted share narrowed substantially compared to the second quarter. While our pre-provision net revenue continues to trend higher, putting us on a path to profitability. In addition to the improvement in earnings, we had several other positives during the quarter highlighted by this was a breakout quarter in our CNI business as we originated 1.7 in new loan outstandings and realized overall net loan growth of $448 million in the CNI portfolio. Our net interest margin expanded for the third consecutive quarter up 10 basis points to 1.91% compared to the second quarter. And our operating expenses remained well controlled and were down year over year 800 million on an annualized basis, significantly ahead of our plan. Criticized and classified assets continued to decline, down 600 million or 5% on a linked quarter basis. and 2.8 billion or 20% year-to-date, while non-accrual loans were relatively stable. We had another strong quarter of multifamily and CRA payoffs of $1.3 billion, and this has continued a trend over the last couple quarters where we've been above our forecast on real estate payoffs. And our provision for loan losses decreased 41% while our net charge-offs declined 38%. Now turning to slide three of the presentation, we have highlighted the key management area that we have focused on and how we have performed in each category. First, to improve our earnings, we have reported smaller net loss every quarter for the past year due to a combination of factors, including margin expansion and cost reductions. Lee has a slide later on that he'll cover this in detail, but the trend line on this lines up very well with what we've communicated about a return to profitability for the company. Second, we continue to implement our commercial lending and private banking strategy, which I will discuss in more detail shortly. And third, we proactively managed our multifamily and commercial real estate portfolio to continue to reduce our CRE concentration. And fourth, Our credit quality profile, which has resulted in net charge offs as we are starting to see signs of stabilization in the loan portfolio. The next several slides highlight the tremendous progress we've made in our CNI business. Starting on slide four, this was a breakout quarter for our CNI lending. Our strategy in the CNI space really began after the June 2024 strategy as we hired Rich Raffetto, to come in and lead our commercial private banking and commercial banking strategy. This strategy focuses on two primary businesses, specialized industries and corporate and regional commercial banking. Both of those gain momentum in the third quarter, driving CNI low growth up nearly 450 million or 3% versus the second quarter. This was the first positive growth quarter since early last year. Our two strategic focus areas led the growth with total loan growth of 1.1 billion, up 28% compared to the prior quarter. On the next slide, you will see the positive trends in new commitments and new loan originations over the past five quarters. Compared to the second quarter, new commitments increased 26% to 2.4 billion, while originations grew 41% to 1.7 billion. More importantly, you can see that the contribution to this growth was from our two strategic focus areas was quite impressive. Specialized industries and corporate and regional commercial banking experienced a 57% or almost a $750 million increase in commitments to $2.1 billion versus the prior quarter. Originations in these two areas increased 73% for nearly $600 million to $1.4 billion. Both areas have seen a consistent upward trend since the third quarter of last year, reflecting steady pipeline growth and a high success rate in converting opportunities. Just as important is our CNI pipeline, which currently stands at $1.8 billion on commitments, up 51% compared to the $1.2 billion at this time last quarter, providing strong momentum for the fourth quarter CNI loan growth. Also important is the number of new relationships we've added. Year-to-date, we've added 99 relationships to the bank, including 41 just in the third quarter. I believe these two data points reflect the industries we chose to focus on and the talented individuals we brought into the company. Most who are mid-career bankers with 25 to 35 years of experience in their respective industries and have impressive Rolodexes. So far in 2025, we have doubled the number of relationship bankers and support staff in our two main focus areas to 124 and plan to add another 20 in the fourth quarter. Turning to slide six, this provides an overview of our specialized industry business and the growth trends both in commitments and originations over the past five quarters. You can see they had strong growth in both commitments and originations during the third quarter. Slide 7 provides a similar overview of the corporate and regional banking business. This business also had a very strong quarter in both total commitments and originations. We believe it has reached an inflection point after successfully building out four new segments and reinvigorating legacy businesses, showing that our relationship-based strategy is yielding positive results. We expect to see further growth in the CNI business as existing bankers continue to deepen their banking relationship and the addition of new bankers. Additionally, we see potential opportunities from recent merger activity. Many of these are right in our core markets to selectively add talented bankers as well as winning new business relationships. The next slide lays out The roadmap we employed to solidifying the balance sheet and reposition the bank for growth. This is a little bit of a down history lane, but we have increased our CET1 capital ratio by nearly 350 basis points, ranking us among the highest best capitalized regional bank amongst our peers. We also fortified our ACL through a rigorous credit review process where we reviewed virtually every single multifamily and commercial real estate loan. We significantly enhanced our liquidity position and we reduced our reliance on wholesale funding, including flub advances and broker deposits, nearly $20 billion year over year, lowering our cost of funds and boosting our net interest margin. In addition to what the items are identified on this slide, there could be many more. Obviously our expenses, our deposit costs and our risk governance are other areas that we've heavily focused on. Now turning to slide nine, you can see the impact on our adjusted EPS from the balance sheet improvements. I just talked about on the previous slide. Our adjusted diluted loss per share has consistently and significantly narrowed over the past five quarters, including a 50% quarter over quarter reduction in the third quarter loss to seven cents. Now with that, I'd like to turn it over to Lee to review our financials.