Flagstar's Income Increases Slightly on Commercial Loan Growth

Flagstar Bancorp in Troy, Mich., reported a 2% uptick in net income during the second quarter from a year ago, thanks in part to higher commercial loan origination volume.

The $13.5 billion-asset bank's net income increased to $47 million in the second quarter from $46 million a year ago. Diluted earnings per share were 66 cents.

Noninterest income rose 1.6% year-over-year to $128 million, as an increase in the net gain on loan sales was slightly offset by a loss on the mortgage servicing asset. Net interest margin compressed 16 basis points to 2.63%.

Net interest income grew 5.4% to $77 million, but the company only recaptured $3 million from the provision for loan losses versus $13 million a year ago.

Noninterest expenses increased by less than 1% to $128 million, mainly on higher compensation and commission costs.

During the second quarter, Flagstar originated $8.3 billion in mortgage loans, compared to $8.4 billion a year earlier. The bank also originated $164 million in commercial loans, a major increase from just $40 million in 2015.

Additionally, the company sold and securitized $7.9 billion in mortgages, as compared with $7.6 billion in 2015.

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Originations Commercial lending
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