The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Flagstar Financial (NYSE: FLG) and the rest of the thrifts & mortgage finance stocks fared in Q2.
Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.
The 20 thrifts & mortgage finance stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 26% while next quarter’s revenue guidance was 1.1% above.
Thankfully, share prices of the companies have been resilient as they are up 8.2% on average since the latest earnings results.
Flagstar Financial (NYSE: FLG)
Tracing its roots back to 1859 and rebranded from New York Community Bancorp in 2024, Flagstar Financial (NYSE: FLG) is a bank holding company that offers commercial and consumer banking services, with specialties in multi-family lending, mortgage originations, and warehouse lending.
Flagstar Financial reported revenues of $496 million, down 26.1% year on year. This print fell short of analysts’ expectations by 4.6%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ net interest income estimates and EPS in line with analysts’ estimates.
Commenting on the Company's second quarter 2025 performance, Chairman, President, and Chief Executive Officer, Joseph M. Otting stated, "I am very pleased with the progress the Company made during the second quarter across multiple fronts as we continued to execute on our successful strategy of transforming Flagstar into a top-performing, well-diversified regional bank."
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $12.10.
Read our full report on Flagstar Financial here, it’s free.
Best Q2: Ellington Financial (NYSE: EFC)
Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE: EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.
Ellington Financial reported revenues of $92.54 million, up 1.5% year on year, outperforming analysts’ expectations by 11.5%. The business had a stunning quarter with a solid beat of analysts’ tangible book value per share and EPS estimates.
The market seems content with the results as the stock is up 5% since reporting. It currently trades at $13.30.
Is now the time to buy Ellington Financial? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Franklin BSP Realty Trust (NYSE: FBRT)
Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE: FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.
Franklin BSP Realty Trust reported revenues of $50.78 million, up 171% year on year, falling short of analysts’ expectations by 8.9%. It was a disappointing quarter as it posted a significant miss of analysts’ net interest income and EPS estimates.
Interestingly, the stock is up 12.3% since the results and currently trades at $11.33.
Read our full analysis of Franklin BSP Realty Trust’s results here.
TFS Financial (NASDAQ: TFSL)
Tracing its roots back to 1938 during the Great Depression era when savings and loans were vital to homeownership, TFS Financial (NASDAQ: TFSL) is a savings and loan holding company that provides mortgage lending, deposit services, and other retail banking products primarily in Ohio and Florida.
TFS Financial reported revenues of $80.54 million, up 6% year on year. This print missed analysts’ expectations by 0.8%. It was a slower quarter as it also produced EPS in line with analysts’ estimates.
The stock is up 3.4% since reporting and currently trades at $13.06.
Read our full, actionable report on TFS Financial here, it’s free.
Walker & Dunlop (NYSE: WD)
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE: WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Walker & Dunlop reported revenues of $319.2 million, up 17.9% year on year. This number surpassed analysts’ expectations by 17.1%. Overall, it was an exceptional quarter as it also recorded an impressive beat of analysts’ net interest income and EPS estimates.
Walker & Dunlop pulled off the biggest analyst estimates beat among its peers. The stock is up 12.5% since reporting and currently trades at $84.89.
Read our full, actionable report on Walker & Dunlop here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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