Flagstar Bancorp Reports First Quarter 2022 Net Income of $53 Million, or $0.99 Per Diluted Share

TROY, Mich., April 27, 2022

• Posted adjusted net income of $55 million, or $1.02 per diluted share, excluding merger-related costs.
• Leveraged higher interest rates to grow net interest margin by 15 basis points to 3.11 percent and deliver a $29 million net return on mortgage servicing rights.
• Grew annualized average commercial loans, excluding warehouse loans, by 28 percent.
• Expanded portfolio of loans serviced or subserviced to 1.3 million, or $0.3 trillion in UPB.
• Maintained strong asset quality with no delinquent commercial loans at quarter-end.

TROY, Mich., April 27, 2022 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, today reported first quarter 2022 net income of $53 million, or $0.99 per diluted share, compared to fourth quarter 2021 net income of $85 million, or $1.60 per diluted share, and first quarter 2021 net income of $149 million, or $2.80 per diluted share. On an adjusted basis, Flagstar reported net income of $55 million, or 1.02 per diluted share, for the first quarter 2022.

"This quarter highlighted the resilience of our business model," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp. "It's a model designed for banking and servicing to prosper when rates rise, once we are through a transitionary period so that we continue to produce best in class earnings. And that's exactly what you can see happening in Q1, which clearly was a transitionary period. While mortgage revenue declined more than expected due to an unprecedented increase in mortgage rates, our net interest margin and MSR returns have already improved significantly even though the benefits only started to come through very late in the quarter.

"On an adjusted basis, net interest margin for Q1 was 3.12 percent—the highest adjusted net interest margin we have ever reported. Even more encouraging is that our net interest margin for March rose to 3.19 percent.  MSR returns also rose significantly, mostly late in the quarter, as we began to ease our hedging position.

"As intimated, gain on sale revenue was under significant pressure throughout the quarter as the velocity of the increase in mortgage rates rose at the fastest rate this century. While our channel margins held up fairly well, we experienced lower EBO revenue and competitive factors. We responded by cutting costs, including reducing our mortgage staff by 20 percent at the end of Q1. We remain focused on reinforcing mortgage profitability, and believe we can use our market position and scale to succeed in a mortgage market with fewer players.

"The cyclicality of today's market is not new to us. We've been navigating successfully through challenging mortgage markets for many years, and while we don't yet know how this cycle will unfold, we're going into it in a stronger position than in past cycles. This is thanks to our high levels of capital and liquidity, our diversified sources of revenue, our commitment to expense discipline, and our solid credit quality. Taken together, I'm excited about the prospects for our performance for full year 2022."