Flagstar Bank (FLG) Q4 2021 earnings summary

Executive summary

• FY 2021 net income rose 17% YoY to $596 million; diluted EPS was $1.20, while operating diluted EPS reached $1.24, up 43% YoY.

• Growth in multi-family lending and core deposits, lower funding costs, and improved asset quality supported results; the pending all-stock merger remained subject to regulatory approvals.

Financial highlights

• Net interest income increased 17% to $1.289 billion; net income available to common stockholders was $563 million, up 18%, and reported diluted EPS rose from $1.02 to $1.20.

• Non-interest income was $61 million, flat YoY. Non-interest expense was $541 million, including $23 million of merger costs; excluding those costs, operating expense was $518 million, up 1%.

• Total assets reached $59.5 billion, up 6%; loans held for investment rose 7% to $45.7 billion and deposits increased 8% to $35.1 billion.

• Operating diluted EPS of $1.24 and operating net income available to common stockholders of $585 million were each up 43% YoY.

Outlook and guidance

• Management expected positive loan growth in 2022 despite higher Treasury rates; approximately $8 billion of multi-family loans were due for contractual maturity or option repricing over the following two years.

• Management expected borrower draws on unused specialty finance lines as supply-chain pressures eased and economic activity continued to grow.

• Management expected COVID-related deferrals to keep declining and remain at low levels during 2022; $479 million of loans were still deferring principal while paying interest and escrow at year-end.

• A planned digital stablecoin program was expected to launch in late Q1 2022, contingent on timely regulatory non-objections.