Flagstar Bank (FLG) Stock Forecast & Price Target

Flagstar Bank is viewed positively because its core earnings engine is still improving, with 3Q NII rising 4.5% sequentially to $460 million, NIM expanding to 2.17%, and loans increasing to $61.9 billion as strong C&I growth offsets legacy runoff. Its valuation remains compelling at roughly 0.64x P/TBV, while management expects ~$19 billion of low-coupon CRE and multifamily loans to reset or mature from 4Q26 through 2028, supporting higher-yielding redeployment, NII expansion, and eventual ROTCE above 10%. Although credit costs and deposit competition have delayed the turnaround, the expected decline in nonaccruals to about $2.6 billion by year-end 2026 and $2.0 billion by the end of 2027, plus excess capital for future buybacks, create an attractive risk-reward setup.

Flagstar Bank is facing a materially weaker fundamental outlook because management sharply cut FY26 diluted adjusted EPS to $0.10-$0.15 from $0.40-$0.50, lowered FY27 to $0.85-$0.95, and pushed peer-level profitability goals out to FY28. The bank also reduced FY26/FY27 NII to $1.815-$1.830 billion/$2.20-$2.30 billion, NIM to 2.15%-2.20%/2.55%-2.65%, and raised provision guidance to $160-$170 million and $175-$225 million as higher rates, slower deposit growth, and weaker mortgage activity pressure earnings. Credit risk remains elevated, with YE26 NALs now expected around $2.6 billion, criticized/classified loans rising to $12.3 billion, and a rent-freeze-driven hit to the NYC multifamily book likely to keep provisioning and return metrics under pressure.