“Overall, 2020 was one for the record books,” Alessandro DiNello, president and CEO of Flagstar, said in a January news release announcing the bank’s earnings for the final quarter of last year. “It was yet another outstanding quarter, capping off an exceptionally successful year for Flagstar.”

Flagstar for the full year 2020 reported total profits of $538 million, an increase of 147 percent over the previous year.

Speaking specifically about earnings for the final quarter of last year, DiNello attributed boosted profits, in part, to the bank’s mortgage lending business, but noted that each business segment contributed.
Flagstar makes for a good example of how banks early last year began putting cash away, but have since reversed course are again putting money to work.

The Troy-based lender ended the first quarter of 2020 with $14 million set aside for credit losses, but by the end of the second quarter it had increased that to $102 million, according to its balance sheet. By early fall, that number had fallen to $32 million, and Flagstar ended 2020 with just $2 million set aside for credit losses.

“We continue to believe the economic recovery will be challenged by the COVID-19 pandemic for an extended period of time and significant uncertainty remains related to distribution of the vaccines and government stimulus, especially as it affects consumer loan forbearance and the commercial real estate sector,” the bank said in its January news release.

Lastly, Detroit-based TCF Financial Corp., the largest bank headquartered in Michigan, also highlights the general trend of how banks experienced a tumultuous year.

The bank is set to complete a merger later this year with Columbus-based Huntington Bancshares Inc. that will create a new bank with about $168 billion in assets, among the 20 largest in the country.

All told, TCF ended 2020 with about $222.8 million in earnings, a 25 percent decline from 2019.

In an October earnings call with analysts, David Provost, then the bank’s executive vice chairman and now CEO, said that the pandemic created economic challenges “and the environment around us has left us shy of our target revenues,” and that “certain non-interest income categories have seen revenue pressures.”

Paynter, with the Michigan Bankers Association, said that all told, a sense of fiscal conservatism on the part of lenders in recent years helped propel them through the crisis year of 2020.

“I think that banks had been very prudent in their credit and lending policies since the Great Recession,” he said. “And as (the pandemic) began, having communication with their borrowers from the beginning and staying in close communication with them as things transpired to meet their needs, (that) made a big difference.”