Flagstar narrows 4Q loss, boosts mortgage business
Flagstar Bancorp (FBC) saw its losses narrow to $44.9 million in the fourth quarter from $192.1 million a year earlier, on what its chief executive called near-record revenue in its mortgage banking unit. Losses widened, however, from $14.2 million in the third quarter, its smallest loss since 2008. The latest earnings report marked the company's 14th straight quarter of losses. The Troy, Mich.-based bank lost 8 cents a share for the fourth quarter, narrowing from a 74-cent loss a share the prior year, but missing analyst estimates of a loss of 3 cents. Mortgage originations were up 11% to $10.2 billion from $9.2 billion in the year-ago period. Mortgage originations for the entire year increased to $26.61 billion from $25.65 billion in 2010. The company sold and securitized $10.5 billion in loans during the quarter, up from $8.6 billion in the year-ago period. It charged off $19 million in bad residential loans, down sharply from $359.7 million in the year-ago quarter. Flagstar said it converted its mortgage servicing system to a "nationally recognized" platform during the fourth quarter. Flagstar said net servicing revenue, which includes loan administration and gains or losses on trading securities, increased 71.3% from the prior quarter to $29 million. "Our results for the fourth quarter and full year 2011 reflect near-record revenues from our mortgage banking business, significant growth in net interest margin, de-risking of our balance sheet through building of reserves, and the benefits of our continuing transition to a full-service commercial bank," CEO Joseph Campanelli said in a release. Loans 90 days or more past due increased to $488.4 million from at $444.9 million at the end of September and $318.4 million in 4Q 2010. The company's reserve for probable losses on representations and warranties rose to $69.3 million from $10.3 million a year ago. The bank lost $165.6 million for all of 2011, or 30 cents a share, narrowing 57.9% from a 2010 loss of $393.6 million, or a loss of $2.44 a share. Total assets declined to $13.6 billion at fourth-quarter end from $13.7 billion Sept. 30. Write to Andrew Scoggin. Follow him on Twitter @AScoggin.