[Update 1: Corrects TARP investment in Flagstar to $247 million]
Flagstar Bank (FBC) plans to originate more mortgages through a chain of retail branches the long-troubled bank plans to revive.
"We're still in the formulation of a two-year plan," said Brian Vieaux, the new senior vice president of the home lending division, in an interview. "As of today, we are really looking at the percentage of the business being originated at the retail branches."
The Flagstar retail chain originates 10% of its mortgages. Vieaux said there are short-term goals to move that percentage up "a tick or two," but they are still in the early stages of planning.
The Troy, Mich. lender did its part to overheat the housing market during the bubble and limped out of the financial crisis with more than $247 million in bailouts from the Treasury Department. The bank is still under a delisting threat from the New York Stock Exchange.
Its worse year was 2009, when it lost more than $513 million. Losses narrowed each year since to $165 million in 2011, according to its financial filings.
It remains one of the largest mortgage lenders in the U.S. Flagstar originated $11.1 billion in new mortgages during the first three months of 2012, nearly three times the amount written one year before.
Mortgage revenues nearly doubled to $204.9 million in the first quarter from the previous three months and well above the $50.1 million earned one year ago.
The growth from here will be closely managed and steady, Vieaux said.
"I'm not suggesting we're going to strive to knock the largest banks off their market share," Vieaux said. "It's going to be very controlled. One of our goals is to have our retail business to be a more significant percentage of the bank."
Flagstar sold nearly 50 banking centers in Georgia and Indiana last year. Vieaux said the bank will look to expand elsewhere, but he has one regional manager dedicated solely to Michigan, which he says is showing signs of life again.
"Flagstar is really a super-community bank and our deposit customers are primarily in Michigan," Vieaux said. "One of the points of emphasis in our retail channel in Michigan is to get deeper and closer to the folks on our banking side to enhance our cross sale results between mortgage referrals from our bankers and deposit referrals from our loan officers."
The current refinance wave brings profits he said – Flagstar has a call center dedicated solely to the expanded Home Affordable Refinance Program – but Vieaux said the bank will recruit loan officers and branch managers who are developing relationships with real estate agents to get more purchase business.
"My thought, and I'm not alone in it, is we're going to see a seismic shift in the market when rates go the other way. Those loan officers who manage through the refi distraction, those will be ones standing on the other side. We're going to focus our growth in that area," Vieaux said.