Flagstar Reports First Quarter 2017 Net Income of $27 million, or $0.46 per Diluted Share

TROY, Mich., April 25, 2017

Key Highlights - First Quarter 2017

• Strong commercial loan growth with period-end commercial and industrial and commercial real estate loans up 11 percent from prior quarter-end and up 58 percent versus same quarter-end last year.
• Mortgage revenues, including gain on sale and return on MSR, up $10 million, or 19 percent, from fourth quarter 2016, resulting from improved MSR returns; increased purchase mortgage volumes largely offset lower refinance levels.
• Noninterest expense improved $2 million, or 1 percent, versus prior quarter, on lower mortgage activity despite seasonally higher benefits costs and acquisition-related expenses.
• Sold $65 million fair value of MSR assets and entered into agreements to sell nearly $200 million additional MSRs in second quarter 2017, successfully executing MSR reduction strategy.
• Asset quality strong with nonperforming loans declining to $28 million.
• Strategic goals advanced with acquisition of Stearns' delegated correspondent business and agreement to acquire certain assets of Opes Advisors.

Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, FSB, today reported first quarter 2017 net income of $27 million, or $0.46 per diluted share, as compared to $28 million, or $0.49 per diluted share, in the fourth quarter 2016 and $39 million, or $0.54 per diluted share, in the first quarter 2016.

"We had another good quarter with solid results, despite facing the headwinds of seasonality and higher interest rates in our mortgage business," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "Our community bank came through again as a solid contributor to net interest income where strong growth in commercial real estate, commercial and industrial, and mortgage loans partially overcame a decline in warehouse loans. We also saw continued growth in retail deposits at an attractive funding level."

"We saw strong returns on the mortgage servicing rights we hold, reflecting the stronger market we are seeing in this rate environment. In the first quarter, we sold $65 million of our mortgage servicing rights. In the second quarter, we have entered into pending bulk sales of an additional $195 million of mortgage servicing rights under contract at a break-even price, including transaction costs. We have retained servicing on approximately two-thirds of the total MSR sale amount."

"We announced two acquisitions recently to support our position as a national leader in the mortgage industry. First was the purchase of the delegated correspondent business of Stearns Lending. This was an opportunistic acquisition that allows us to become a top five player in this channel. Second was our agreement to purchase certain assets of Opes Advisors, a high-quality retail mortgage originator. This acquisition dovetails nicely with our interest in growing our retail mortgage channel."

"We remain committed to continuing to grow our community bank and solidifying our position as an industry leader in mortgage banking. Looking ahead, we believe we are well positioned to benefit from a stronger economy, a stronger housing market and the pivot to a stronger purchase mortgage market."