Flagstar Bancorp (FBC) Reports In-Line Q3 EPS

Flagstar Bancorp (NYSE: FBC) reported Q3 EPS of $0.85, in-line with the analyst estimate of $0.85. Revenue for the quarter came in at $126 million versus the consensus estimate of $120.54 million.

• Adjusted net income of $49 million, or $0.85 per diluted share, excluding costs for pending Wells Fargo branch acquisition.
• Net interest income grew $9 million, or 8 percent from second quarter 2018, led by earning asset growth and net interest margin expansion.
• Average loans held-for-investment rose 6 percent while average total deposits increased 9 percent from prior quarter.
• Total serviced accounts increased 16 percent from last quarter to nearly 620,000 accounts.
• Noninterest expense dropped $4 million, or 2 percent from prior quarter, driven by prudent expense management and lower mortgage expenses.
• Pristine asset quality - minimal net charge-offs, very low delinquencies and strong allowance for loan loss coverage.

"Our third quarter results once again demonstrated the strength of our banking business," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "Solid growth in banking along with disciplined cost control, helped us deliver an adjusted ROA of 1.1 percent.

"Our banking business provided a stable and growing source of income. Net interest income grew 8 percent from last quarter, as average earning assets increased 5 percent and the net interest margin expanded 7 basis points. Also, we saw total serviced accounts increase 16 percent in the quarter and we now service nearly 620,000 accounts. We expect this total to exceed 800,000 by year-end.

"Earnings were also helped by our expense discipline. In the third quarter 2018, total noninterest expense fell 2 percent to $173 million, despite strong growth in the balance sheet and increased mortgage originations, as we continued to scale businesses with a lower level of incremental expense, along with aggressively managing our mortgage expenses.

"Mortgage revenues declined in the quarter as fallout-adjusted locks decreased 8 percent to $8.3 billion and the net gain on loan sale margin fell 20 basis points to 0.51 percent. This decline was partially offset by a stronger MSR return.

"Looking ahead, we believe we are well positioned for continued success. Our pending acquisition of 52 Midwest branches of Wells Fargo, which we expect to close at the beginning of December 2018, will bring us low cost and low beta deposits. Additionally, with the lifting of our Federal Reserve Supervisory Agreement this quarter, we now have more flexibility in managing our capital to maximize risk-adjusted returns for our shareholders."

For earnings history and earnings-related data on Flagstar Bancorp (FBC) click here.

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