FLAGSTAR BANK, NATIONAL ASSOCIATIONFLG
FLAGSTAR BANK, NATIONAL ASSOCIATION Leases Disclosure
Leases, Premises and Equipment
Lessor Arrangements
We provide direct financing leases for equipment included in our commercial loan portfolio.
Interest income on lease financing is recorded over the lease term and recorded in Interest income - Loans and leases on the Consolidated Statements of (Loss) Income. The following table presents our interest income on lease financing:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Interest income on lease financing | $ | 93 | $ | 136 | $ | 119 | |||||||||||
The components of our gross investment in direct financing leases are shown below:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Lease payments receivable | $ | 1,534 | $ | 2,039 | |||||||
Unguaranteed residual assets (1) | 266 | 285 | |||||||||
Gross investment in direct financing leases | $ | 1,800 | $ | 2,324 | |||||||
(1)The amount of residual value insurance in place at December 31, 2025 and December 31, 2024 was insignificant.
The following table presents the remaining maturity analysis of the undiscounted lease receivables, as well as the reconciliation to the total amount of receivables recognized in the Consolidated Statements of Condition:
| December 31, 2025 | |||||
| 2026 | $ | 445 | |||
| 2027 | 441 | ||||
| 2028 | 279 | ||||
| 2029 | 220 | ||||
| 2030 | 145 | ||||
| Thereafter | 270 | ||||
| Gross investment in direct financing leases | $ | 1,800 | |||
| Plus: deferred origination costs | 27 | ||||
| Less: unearned income | (129) | ||||
| Less: purchase accounting adjustment | (28) | ||||
Less: other | (10) | ||||
| Total lease finance receivables, net | $ | 1,660 | |||
Lessee Arrangements
We have operating leases for offices, branches, equipment and other items, generally with terms of 20 years or less. Many of our leases contain options to extend or terminate early and we consider these options when evaluating the lease term to determine if they are reasonably certain to be exercised based on all relevant economic and financial factors.
At lease inception, lease liabilities are recognized in Other liabilities based on the present value of remaining lease payments, discounted using our incremental borrowing rate if no implicit rate in the lease is available. Right-of-use assets, recognized in Other assets, represent our right to use an underlying asset for the lease term and are initially equal to the lease liability, adjusted for any payments made prior to lease commencement and any lease incentives.
Variable costs such as the proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance are not included in the lease liability and are recognized in the period in which they are incurred. Operating lease costs are recorded in Occupancy and Equipment on the Consolidated Statements of (Loss) Income and costs were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Operating lease cost | $ | 77 | $ | 75 | $ | 86 | |||||||||||
Supplemental balance sheet information related to our operating lease arrangements is presented below:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating Leases: | |||||||||||
| $ | 380 | $ | 416 | ||||||||
| $ | 427 | $ | 463 | ||||||||
| Weighted average remaining lease term | 10.1 years | 10.7 years | |||||||||
| Weighted average discount rate % | 4.79 | % | 4.77 | % | |||||||
The table below presents the supplemental cash flow information related to the leases:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash flows from operating leases | $ | 76 | $ | 71 | $ | 64 | |||||||||||
The following table presents the remaining maturity analysis of our lease liabilities, as well as the reconciliation to the total present value of the lease liability recorded in Other liabilities on the Consolidated Statements of Condition:
| December 31, 2025 | |||||
| Maturities of lease liabilities: | |||||
| 2026 | $ | 70 | |||
| 2027 | 64 | ||||
| 2028 | 57 | ||||
| 2029 | 51 | ||||
| 2030 | 44 | ||||
| Thereafter | 261 | ||||
| Total lease payments | $ | 547 | |||
| Less: imputed interest | (120) | ||||
| Total present value of lease liabilities | $ | 427 | |||
Premises and Equipment
The table below presents our Premises and equipment:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Premises and equipment | $ | 1,009 | $ | 1,131 | |||||||
Less: Accumulated depreciation | (532) | (569) | |||||||||
Premises and equipment, net | $ | 477 | $ | 562 | |||||||
The table below presents our Depreciation expense:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Depreciation expense(1) | $ | 41 | $ | 48 | $ | 39 | |||||||||||
(1)Included in Occupancy and equipment expense in the Consolidated Statements of (Loss) Income.
In 2024, management approved the closure of certain PCG locations and retail branches which was a triggering event for potential impairment. We determined the value of the assets were not fully recoverable, determined the fair value and recorded an associated impairment of $46 million during the year ended 2024. Additionally, the Troy and Cleveland operational centers were classified as held for sale during 2024 and recorded at their fair value, resulting in a $31 million impairment expense included within Non-interest expense - General and administrative expenses.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 4, 2025 | |
| 2023 | Mar 14, 2024 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.