Magazine article American Banker

Flagstar Takes a Fourth-Quarter Loss Because of Tax Reform

Magazine article American Banker

Flagstar Takes a Fourth-Quarter Loss Because of Tax Reform

Article excerpt

Byline: Brad Finkelstein

Flagstar Bancorp swung to a fourth-quarter loss as the Troy, Mich., company took an $80 million noncash charge to earnings because of the tax reform bill.

For the quarter, Flagstar lost $45 million, compared with net earnings of $40 million in the third quarter and $28 million in the fourth quarter of 2016.

Flagstar had to revalue its deferred tax asset under the Tax Cuts and Jobs Act. Without the charge, the company would have earned $35 million in the quarter.

"All three of our business lines strengthened during the quarter. Our community bank drove a 9% increase in commercial loans, which helped fuel earning asset growth of $642 million -- a 4% gain," Flagstar President and CEO Alessandro DiNello said in a press release.

"Our mortgage acquisitions earlier in 2017 continued to pay dividends, producing a 14% increase in closings and a 42% increase in locks over the same quarter last year in the face of a smaller market. And our third key business line, servicing, continued to gain scale and now has a book of business that exceeds 440,000 accounts."

Flagstar purchased Opes Advisors and the correspondent origination business of Stearns Lending during 2017.

For the full year, Flagstar earned $63 million, down from $171 million a year earlier. Without the fourth-quarter charge, Flagstar would have earned $143 million this year.

The company had a net gain on sale for mortgages sold into the secondary market during the fourth quarter of $79 million, compared with $57 million one year prior. …

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