Flagstar Bank is seeing growth across its mortgage service lines, according to the Q1 2017 earnings report released by the bank on Wednesday. Flagstar’s commercial real estate loans jumped 11 percent from Q1 2016 and 58 from Q4 2016. The bank’s mortgage revenues are also up, rising 19 percent for the quarter.
In all, Flagstar’s mortgage revenues grew by $10 million over Q4 2016. This number includes gain on sale and return on MSR. Though interest rates were up and the bank’s warehouse loans were down, Flagstar President and CEO Alessandro DiNello said growth in other areas helped overcome those hurdles.
“We had another good quarter with solid results, despite facing the headwinds of seasonality and higher interest rates in our mortgage business," DiNello said. "Our community bank came through again as a solid contributor to net interest income where strong growth in commercial real estate, commercial, and industrial, and mortgage loans partially overcame a decline in warehouse loans. We also saw continued growth in retail deposits at an attractive funding level."
Returns on the banks mortgage servicing rights also helped keep Flagstar in the black. The bank sold $65 million fair value in MSR assets. It will sell another $200 million in assets during Q2 2017.
"We saw strong returns on the mortgage servicing rights we hold, reflecting the stronger market we are seeing in this rate environment,” DiNello said. “In the first quarter, we sold $65 million of our mortgage servicing rights. In the second quarter, we have entered into pending bulk sales of an additional $195 million of mortgage servicing rights under contract at a break-even price, including transaction costs. We have retained servicing on approximately two-thirds of the total MSR sale amount."
DiNello said the bank’s growth in the mortgage sector was also helped by two recent acquisitions: that of Stearns Lending and Opes Advisors.
"We remain committed to continuing to grow our community bank and solidifying our position as an industry leader in mortgage banking. Looking ahead, we believe we are well positioned to benefit from a stronger economy, a stronger housing market and the pivot to a stronger purchase mortgage market."