Flagstar Bank closes portfolio purchase of $1.7b warehouse loan commitments

by Francis Monfort14 Mar 2018

Flagstar Bank has announced the completion of its previously announced acquisition of the mortgage warehouse loan portfolio from Santander Bank.

With the close of the transaction, the Flagstar Bancorp wholly owned subsidiary acquired $1.7 billion in mortgage warehouse loan commitments. Terms of the transaction were not disclosed.

Flagstar Bancorp President and CEO Alessandro DiNello said that the purchase includes the transfer of Santander customers and employees to the bank.

"This transaction combines two talented warehouse teams dedicated to customer service, and the biggest winner is our new, combined customer base that will now be dealing with the fourth largest warehouse lender in the country,” DiNello said.

Flagstar Bancorp expects the acquisition to reduce its Tier One leverage ratio by approximately 40 basis points and to be moderately accretive to 2018 earnings.

"The purchase also adds volume in an attractive asset class with good spreads and very low credit risk,” DiNello said. “It's complementary to our existing business, bringing relationships that average around $40 million in commitments—four times larger than our existing book. While the pricing is slightly narrower than Flagstar's book, these loans typically have approximately 50% longer days-on-line and so enhance our net interest income. We plan to add the new business to our existing platform."

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