Flagstar Bancorp in Troy, Mich., is reaping the benefits of two recent acquisitions.

The $18.1 billion-asset company said Tuesday that its net income in the second quarter climbed 22% from the same period last year to $50 million, thanks largely to assets it inherited when it acquired the warehouse lending portfolio of Santander Bank and eight California bank branches from East West Bank in Pasadena, Calif. Both deals closed late in the first quarter.

Earnings per share came in at 85 cents, beating by a penny the mean estimate of analysts polled by FactSet Research Systems.

Alessandro DiNello, CEO of Flagstar Bancorp
The acquisition of 52 Wells Fargo branches "will accelerate our banking transformation,” said Flagstar CEO Alessandro DiNello.

Flagstar’s net interest income climbed 18.6% year over year to $115 million as average loans held for investment increased by 35% to $8.4 billion and the net interest margin widened by 10 basis points, to 2.86%.

Warehouse lending loans rose 76% year over year to nearly $1.5 billion, home equity loans jumped nearly 55% to $679 million, and commercial and industrial loans increased by 34% to nearly $1.3 billion.

C&I loan growth was fueled in part by the branch acquisitions, and President and CEO Alessandro DiNello said in a news release that its pending acquisition of 52 Wells Fargo branches in Indiana, Michigan, Wisconsin and Ohio should further diversify Flagstar’s mortgage-heavy balance sheet.

“Bringing these branches on board later this year will accelerate our banking transformation,” he said.

The branch deal also contributed to a 19% increase in deposits to $10.4 billion.

Noninterest income increased climbed 6% year over year to $123 million while noninterest expenses rose nearly 15% to $177 million.

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