Flagstar Bank (FLG): Evaluating Valuation After SEC Penalty and Governance Concerns Over Ransomware Disclosure

Flagstar Bank National Association (FLG) is facing heightened scrutiny after news emerged of an SEC penalty and a major settlement related to how it disclosed a ransomware breach from 2021. This development is raising questions around governance and oversight.

See our latest analysis for Flagstar Bank National Association.

Alongside headlines about the SEC penalty and a ransomware breach settlement, Flagstar Bank’s shares have experienced a rocky stretch. Recent weeks saw the price tumble, with a 1-week return of -6.1% and a 1-month return of -8.3%. Despite this, the 2025 year-to-date share price return sits at 19.3%, while the one-year total shareholder return is up 5%. This suggests some underlying resilience even after a challenging multi-year period. Momentum appears to be fading for now, but the stock’s ability to recover from regulatory shocks will be key to watch as market sentiment evolves.

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With the recent dip in Flagstar’s share price and the stock currently trading at a meaningful discount to analyst price targets, the key question now is whether this presents a true buying opportunity or if the market has already accounted for future growth.

Price-to-Book Ratio of 0.6x: Is it justified?

Flagstar Bank’s stock is trading with a price-to-book ratio of just 0.6, well below both its industry and peer averages as of the last close at $11.02. This significant discount suggests the market is pricing in considerable uncertainty about the bank’s future prospects, especially given recent events and ongoing unprofitability.

The price-to-book ratio compares the company’s market value to its book value, providing a lens into whether shares are priced attractively relative to underlying assets. For a bank like Flagstar, this metric is particularly important as it reflects market confidence in the value of the institution’s loans, deposits, and tangible assets.

A ratio of 0.6 is striking considering the US Banks industry average is 1.0x, and Flagstar’s peers trade around 1.2x. This clear gap means the market sees more risk or less growth potential here compared to the wider banking sector. If valuations revert to industry levels, a significant re-rating could occur, although this depends on earnings recovery and risk reduction in coming quarters.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Book Ratio of 0.6x (UNDERVALUED)

However, persistent net losses and ongoing regulatory challenges could weigh further on Flagstar's outlook. These factors may potentially limit the upside from its currently discounted valuation.

Find out about the key risks to this Flagstar Bank National Association narrative.

Another View: Discounted Cash Flow Paints a Cautious Picture

While the price-to-book ratio suggests Flagstar Bank might be a bargain, our DCF model offers a starkly different perspective. According to the SWS DCF model, the current share price of $11.02 sits well above its estimated fair value of $0.91, which may indicate possible overvaluation instead of a discount. How much weight should investors put on this calculation?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Flagstar Bank National Association for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 844 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Flagstar Bank National Association Narrative

If you'd rather form your own opinion or take a closer look at the data, you can put together your own view in just a few minutes. Do it your way

A great starting point for your Flagstar Bank National Association research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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