Flagstar losses narrow, unloads $80 million in troubled mortgages
Flagstar Bancorp (FBC) narrowed losses in the first quarter to $31.7 million, or 6 cents per share, from $81.9 million loss one year ago. Losses in the fourth quarter totaled $192.1 million. For the first part of the last decade, Flagstar routinely landed among the top 20 mortgage originators in the country. The housing crash pushed the bank to the brink of failure, but it has since begun turning it around by unloading troubled loans. In the first quarter, Flagstar sold $80.3 million in nonperforming mortgages. These assets totaled $546.9 million at the end of the quarter, roughly half of the $1.3 billion reported the same time last year but up from the $498 million in the previous quarter. In November, the bank sold $474 million in nonperforming loans. Flagstar decreased the amount loan-loss provisions in the first quarter to $271 million from $538 million one year ago and $274 million in the previous quarter. The bank also holds a reserve for probable losses for loans it sold on the secondary market. That account totaled $79.4 million at the end of the quarter, up from $76 million a year earlier. "As reflected in our allowance for loan losses, the increase in residential (nonperforming assets) is consistent with our expectations, as well as seasonal experience in prior years and reflects the continuing consumer credit issues facing the financial services industry," Flagstar CEO Joseph Campanelli said. However, income from the mortgage origination department remains down. Gains on loan sales totaled $50.2 million in the first quarter, down from $76.9 million a year ago and $52.6 million in the previous quarter. "This reflects the decrease in interest rate lock commitments, a decrease in loan originations and a decline in margin," Flagstar said. Write to Jon Prior. Follow him on Twitter @JonAPrior.