Flagstar Bank Rating Raised to Baa3, Equity Ratio Hits Near 13%
Moody’s upgraded Flagstar Bank’s long-term deposit rating from Ba1 to Baa3, citing improved profitability, stronger capital and better operating performance. The bank’s tangible common equity to risk-weighted assets ratio rose to nearly 13%, and management is shifting toward commercial and industrial lending to cut reliance on commercial real estate.
1. Moody's Upgrade to Baa3
Moody’s upgraded Flagstar Bank’s long-term deposit rating from Ba1 to Baa3, reflecting improved profitability, stronger capital and better operating performance. The upgrade also lifted the bank’s baseline credit assessment and short-term deposit rating, underscoring enhanced financial controls.
2. Tangible Capital Strength
Flagstar’s tangible common equity to risk-weighted assets ratio increased to nearly 13%, up from previous levels, bolstering the bank’s capacity to absorb credit volatility. This improvement signals a stronger capital base relative to its risk-weighted assets.
3. Strategic Shift to C&I Lending
Management is redirecting loan growth toward commercial and industrial lending to reduce the bank’s reliance on commercial real estate exposure. This strategy aims to diversify the loan portfolio and stabilize funding sources over time.