FLAGSTAR BANK, NATIONAL ASSOCIATIONFLG
FLAGSTAR BANK, NATIONAL ASSOCIATION Fair Value Disclosure
Fair Value Measurement
The following tables present assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024, and that were included in the Consolidated Statements of Condition at those dates:
| December 31, 2025 | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3)(1) | Total Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Mortgage-related debt securities available-for-sale: | |||||||||||||||||||||||
| GSE CMOs | $ | — | $ | 11,824 | $ | — | $ | 11,824 | |||||||||||||||
| GSE certificates | — | 999 | — | 999 | |||||||||||||||||||
| Private label CMOs | — | 136 | 23 | 159 | |||||||||||||||||||
| Total mortgage-related debt securities | $ | — | $ | 12,959 | $ | 23 | $ | 12,982 | |||||||||||||||
Other debt securities available-for-sale: | |||||||||||||||||||||||
| GSE debentures | $ | — | $ | 1,296 | $ | — | $ | 1,296 | |||||||||||||||
| U. S. Treasury obligations | 1,017 | — | — | 1,017 | |||||||||||||||||||
| Asset-backed securities | — | 213 | — | 213 | |||||||||||||||||||
| Corporate bonds | — | 144 | — | 144 | |||||||||||||||||||
Municipal bonds, foreign notes, and capital trust | — | 49 | — | 49 | |||||||||||||||||||
| Total other debt securities | $ | 1,017 | $ | 1,702 | $ | — | $ | 2,719 | |||||||||||||||
Total debt securities available-for-sale | $ | 1,017 | $ | 14,661 | $ | 23 | $ | 15,701 | |||||||||||||||
| Equity securities: | |||||||||||||||||||||||
| Mutual funds and common stock | $ | 51 | $ | 14 | $ | — | $ | 65 | |||||||||||||||
| Total equity securities | $ | 51 | $ | 14 | $ | — | $ | 65 | |||||||||||||||
| Total securities | $ | 1,068 | $ | 14,675 | $ | 23 | $ | 15,766 | |||||||||||||||
Loans held for sale | |||||||||||||||||||||||
| Residential first mortgage loans | $ | — | $ | 193 | $ | — | $ | 193 | |||||||||||||||
Commercial real estate(2) | — | 48 | — | 48 | |||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||
Interest rate swaps | — | 19 | — | 19 | |||||||||||||||||||
Rate lock commitments (fallout adjustments) | — | — | 4 | 4 | |||||||||||||||||||
Interest rate caps | — | 3 | — | 3 | |||||||||||||||||||
| Total assets at fair value | $ | 1,068 | $ | 14,938 | $ | 27 | $ | 16,033 | |||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||
Interest rate swaps | $ | — | $ | 21 | $ | — | $ | 21 | |||||||||||||||
Rate lock commitments | — | — | 1 | 1 | |||||||||||||||||||
| Mortgage-backed securities forwards | — | 1 | — | 1 | |||||||||||||||||||
| Total liabilities at fair value | $ | — | $ | 22 | $ | 1 | $ | 23 | |||||||||||||||
(1)The change in the fair value due to significant unobservable inputs was immaterial.
(2)Includes ADC loans.
| December 31, 2024 | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Mortgage-related debt securities available-for-sale: | |||||||||||||||||||||||
| GSE CMOs | $ | — | $ | 7,304 | $ | — | $ | 7,304 | |||||||||||||||
| GSE certificates | — | 1,106 | — | 1,106 | |||||||||||||||||||
| Private label CMOs | — | 130 | 33 | 163 | |||||||||||||||||||
| Total mortgage-related debt securities | $ | — | $ | 8,540 | $ | 33 | $ | 8,573 | |||||||||||||||
Other debt securities available-for-sale: | |||||||||||||||||||||||
| GSE debentures | $ | — | $ | 1,203 | $ | — | $ | 1,203 | |||||||||||||||
| Corporate bonds | — | 308 | — | 308 | |||||||||||||||||||
| Asset-backed securities | — | 236 | — | 236 | |||||||||||||||||||
Municipal bonds, foreign notes, and capital trust | — | 82 | — | 82 | |||||||||||||||||||
| Total other debt securities | $ | — | $ | 1,829 | $ | — | $ | 1,829 | |||||||||||||||
Total debt securities available-for-sale | $ | — | $ | 10,369 | $ | 33 | $ | 10,402 | |||||||||||||||
| Equity securities: | |||||||||||||||||||||||
| Mutual funds and common stock | $ | — | $ | 14 | $ | — | $ | 14 | |||||||||||||||
| Total equity securities | $ | — | $ | 14 | $ | — | $ | 14 | |||||||||||||||
Loans held for sale | |||||||||||||||||||||||
| One-to-four family first mortgage | $ | — | $ | 382 | $ | — | $ | 382 | |||||||||||||||
Commercial real estate(1) | — | 182 | — | 182 | |||||||||||||||||||
| Derivative assets | |||||||||||||||||||||||
| Interest rate swaps | — | 15 | — | 15 | |||||||||||||||||||
| Mortgage-backed securities forwards | — | 7 | — | 7 | |||||||||||||||||||
Rate lock commitments (fallout adjustments) | — | — | 3 | 3 | |||||||||||||||||||
| Mortgage servicing rights | — | — | 26 | 26 | |||||||||||||||||||
| Total assets at fair value | $ | — | $ | 10,969 | $ | 62 | $ | 11,031 | |||||||||||||||
| Derivative liabilities | |||||||||||||||||||||||
| Interest rate swaps and swaptions | $ | — | $ | 30 | $ | — | $ | 30 | |||||||||||||||
| Rate lock commitments | — | — | 3 | 3 | |||||||||||||||||||
| Mortgage-backed securities forwards | — | 2 | — | 2 | |||||||||||||||||||
| Total liabilities at fair value | $ | — | $ | 32 | $ | 3 | $ | 35 | |||||||||||||||
(1)Includes ADC loans.
Fair Value Measurements Using Significant Unobservable Inputs
The following tables include a roll forward of the Consolidated Statements of Condition amounts (including the change in fair value) for financial instruments classified by us within Level 3 of the valuation hierarchy:
| Balance at Beginning of Year | Purchases / Originations | Sales | Transfers In (Out) | Balance at End of Year | |||||||||||||||||||||||||||||||
| Year Ended December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||
Mortgage servicing rights (1) | $ | 1,111 | $ | (75) | $ | 184 | $ | (1,194) | $ | — | $ | 26 | |||||||||||||||||||||||
| Private Label collateralized mortgage obligations | 32 | 1 | — | — | — | 33 | |||||||||||||||||||||||||||||
Rate lock commitments (net) (1)(2) | 9 | 5 | 57 | — | (71) | — | |||||||||||||||||||||||||||||
| Totals | $ | 1,152 | $ | (69) | $ | 241 | $ | (1,194) | $ | (71) | $ | 59 | |||||||||||||||||||||||
(1)We utilized swaptions, futures, forward agency and loan sales and interest rate swaps to manage the risk associated with mortgage servicing rights and rate lock commitments. Gains and losses for individual lines do not reflect the effect of our risk management activities related to such Level 3 instruments.
(2)Rate lock commitments are reported on a fallout-adjusted basis. Transfers out of Level 3 represent the settlement value of the commitments that are transferred to loans held for sale, which are classified as Level 2 assets.
Assets Measured at Fair Value on a Non-Recurring Basis
The following tables present assets that were measured at fair value on a non-recurring basis as of December 31, 2025 and December 31, 2024:
Fair Value Measurements as of December 31, 2025 Using | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||||||||
Loans held for investment(1) | $ | — | $ | — | $ | 2,784 | $ | 2,784 | |||||||||||||||
| Loans held for sale | — | 24 | — | 24 | |||||||||||||||||||
Other assets(2) | — | — | 31 | 31 | |||||||||||||||||||
| Total | $ | — | $ | 24 | $ | 2,815 | $ | 2,839 | |||||||||||||||
(1)Represents the fair value of impaired loans, based primarily on the value of the collateral less costs to sell.
(2)Primarily comprised of equity securities without readily determinable fair values.
Fair Value Measurements as of December 31, 2024 Using | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||||||||
Loans held for investment(1) | $ | — | $ | — | $ | 2,469 | $ | 2,469 | |||||||||||||||
| Loans held for sale | — | 335 | — | 335 | |||||||||||||||||||
Other assets(2) | — | — | 52 | 52 | |||||||||||||||||||
| Total | $ | — | $ | 335 | $ | 2,521 | $ | 2,856 | |||||||||||||||
(1)Represents the fair value of impaired loans, based primarily on the value of the collateral less costs to sell.
(2)Represents the fair value of repossessed assets, based on the appraised value of the collateral subsequent to its initial classification as repossessed assets and equity securities without readily determinable fair values. These equity securities are classified as Level 3 due to the infrequency of the observable prices and/or the restrictions on the shares.
The fair values of collateral-dependent loans are determined using various valuation techniques, including appraisal values less costs to sell or other observable market data
Other Fair Value Disclosures
For the disclosure of fair value information about our on- and off-balance sheet financial instruments, when available, quoted market prices are used as the measure of fair value. In cases where quoted market prices are not available, fair values are based on present-value estimates or other valuation techniques. Such fair values are significantly affected by the assumptions used, the timing of future cash flows, and the discount rate.
Because assumptions are inherently subjective in nature, estimated fair values cannot be substantiated by comparison to independent market quotes. Furthermore, in many cases, the estimated fair values provided would not necessarily be realized in an immediate sale or settlement of such instruments.
The following tables summarize the carrying values, estimated fair values, and fair value measurement levels of financial instruments that were not carried at fair value on the Bank’s Consolidated Statements of Condition:
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Fair Value Measurement Using | |||||||||||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 5,894 | $ | 5,894 | $ | 5,894 | $ | — | $ | — | |||||||||||||||||||||||||
FHLB and FRB stock (1) | 973 | 973 | — | 973 | — | ||||||||||||||||||||||||||||||
Loans and leases held for investment, net(2) | 59,702 | 56,605 | — | — | 56,605 | ||||||||||||||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||||||||||||||
| Deposits | $ | 66,000 | $ | 65,991 | $ | 45,157 | (3) | $ | 20,834 | (4) | $ | — | |||||||||||||||||||||||
| Borrowed funds | 12,184 | 11,972 | — | 11,972 | — | ||||||||||||||||||||||||||||||
(1)Carrying value and estimated fair value are at cost.
(2)Carrying value and estimated fair value include impaired loans held for investment.
(3)Includes interest-bearing checking and money market accounts, savings accounts, and non-interest-bearing accounts.
(4)Includes CDs.
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Fair Value Measurement Using | |||||||||||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 15,430 | $ | 15,430 | $ | 15,430 | $ | — | $ | — | |||||||||||||||||||||||||
FHLB and FRB stock (1) | 1,146 | 1,146 | — | 1,146 | — | ||||||||||||||||||||||||||||||
Loans and leases held for investment, net(2) | 67,071 | 61,831 | — | — | 61,831 | ||||||||||||||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||||||||||||||
| Deposits | $ | 75,870 | $ | 75,894 | $ | 48,546 | (3) | $ | 27,348 | (4) | $ | — | |||||||||||||||||||||||
| Borrowed funds | 14,426 | 14,217 | — | 14,217 | — | ||||||||||||||||||||||||||||||
(1)Carrying value and estimated fair value are at cost.
(2)Carrying value and estimated fair value include impaired loans held for investment.
(3)Includes interest-bearing checking and money market accounts, savings accounts, and non-interest-bearing accounts.
(4)Includes CDs.
The methods and significant assumptions used to estimate fair values for our financial instruments are described below:
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks and federal funds sold. The estimated fair values of cash and cash equivalents are assumed to equal their carrying values, as these financial instruments are either due on demand or have short-term maturities.
Federal Home Loan Bank Stock
Ownership in equity securities of the FHLB is generally restricted and there is no established liquid market for their resale; therefore the estimated fair value of the FHLB securities is assumed to equal their carrying value.
Loans and leases
We disclose the fair value of loans measured at amortized cost using an exit price notion. We determine the fair value on substantially all of our loans for disclosure purposes, on an individual loan basis. The discount rates reflect current market rates for loans with similar terms to borrowers having similar credit quality on an exit price basis.
Deposits
The fair values of deposit liabilities with no stated maturity (i.e., interest-bearing checking and money market accounts, savings accounts, and non-interest-bearing accounts) are equal to the carrying amounts payable on demand. The fair values of CDs represent contractual cash flows, discounted using interest rates currently offered on deposits with similar characteristics and remaining maturities. These estimated fair values do not include the intangible value of core deposit relationships, which comprise a portion of our deposit base.
Borrowed Funds
The estimated fair value of borrowed funds is based either on bid quotations received from securities dealers or the discounted value of contractual cash flows with interest rates currently in effect for borrowed funds with similar maturities and structures.
Fair Value Option
We elected the fair value option for certain items as discussed throughout the Notes to the Consolidated Financial Statements to more closely align the accounting method with the underlying economic exposure.
The following table reflects the change in fair value included in earnings of financial instruments for which the fair value option has been elected:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Assets | |||||||||||||||||
Loans held for sale | |||||||||||||||||
| Net gain on loan sales | $ | 26 | $ | 47 | $ | 43 | |||||||||||
The following table reflects the difference between the aggregate fair value and aggregate remaining contractual principal balance outstanding for assets and liabilities for which the fair value option has been elected:
| December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| Unpaid Principal Balance | Fair Value | Fair Value Over / (Under) UPB | Unpaid Principal Balance | Fair Value | Fair Value Over / (Under) UPB | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
Non-accrual loans: | |||||||||||||||||||||||||||||||||||
Loans held for sale | $ | 6 | $ | 7 | $ | 1 | $ | 4 | $ | 4 | $ | — | |||||||||||||||||||||||
| Total non-accrual loans | $ | 6 | $ | 7 | $ | 1 | $ | 4 | $ | 4 | $ | — | |||||||||||||||||||||||
Accrual loans: | |||||||||||||||||||||||||||||||||||
Loans held for sale | $ | 230 | $ | 234 | $ | 4 | $ | 553 | $ | 560 | $ | 7 | |||||||||||||||||||||||
| Loans held for investment | — | — | — | 67 | 66 | (1) | |||||||||||||||||||||||||||||
Total accrual loans | $ | 230 | $ | 234 | $ | 4 | $ | 620 | $ | 626 | $ | 6 | |||||||||||||||||||||||
| Total loans: | |||||||||||||||||||||||||||||||||||
Loans held for sale | $ | 236 | $ | 241 | $ | 5 | $ | 557 | $ | 564 | $ | 7 | |||||||||||||||||||||||
| Loans held for investment | — | — | — | 67 | 66 | (1) | |||||||||||||||||||||||||||||
| Total loans | $ | 236 | $ | 241 | $ | 5 | $ | 624 | $ | 630 | $ | 6 | |||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 4, 2025 | |
| 2023 | Mar 14, 2024 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.