Walter Investment Management (WAC) first-quarter earnings fell 57%, as the company continues to integrate assets acquired via the purchase of Green Tree. Walter Investment earned $3.5 million, or 13 cents a share, for the three months ended March 31, down from $8.1 million, or 30 cents a share, a year earlier. Net interest income for the quarter rose slightly to $21 million from $20.6 million on lower interest expense. The company said noninterest income climbed to $5.7 million from $3.5 million on additional subservicing revenue from the acquisition offset by declines in insurance premium revenue and collections on insurance advances, as well as lower advisory fees. In late March, Walter Investment Management purchased Green Tree Credit Solutions for nearly $1.1 billion to expand its special servicing operations. The deal is expected to close in the third quarter. "We look forward, with great enthusiasm, to completing the transaction, which we believe will be a truly transformative event for Walter Investment, allowing us to expand our generation of revenues from recurring, fee-based streams with high operating margins and participate in the significant growth opportunities presenting themselves in the sector," said Mark O'Brien, CEO of Walter. Tampa, Fla.-based Walter Investment assumed $20 million of debt through the acquisition. Green Tree, based in St. Paul, Minn., was once a unit of insurance giant Conseco, which filed for bankruptcy in 2002. The company had some $52 billion in assets and the bankruptcy was the third-largest ever. Walter Investment said the delinquency rate of loans in its portfolio rose to 4.73% in the first quarter from 4.68% a year earlier, hurt by acquired loans. Loss severities on sales of REO properties climbed to 16.6% from 11.9% a year ago and 14.4% for the fourth quarter. President and Chief Operating Officer Charles Cauthen said continued focus on REO yielded positive results for the first quarter, decreasing the REO inventory to its lowest level since the first three months of 2009. The company had $58.7 million worth of REO properties at March 31, down from $67.7 million at Dec. 31. Total assets declined to $1.86 billion from nearly $1.9 billion over the same period. "Our field servicing organization's continued focus on REO inventory levels yielded positive results, decreasing our REO inventory to its lowest level since Q1 2009, while maintaining consistent recovery rates," said president Charles Cauthen. "Our delinquency rates were in-line with our historical performance." Write to Jason Philyaw.