Production rose for the second consecutive quarter at Flagstar Bancorp Inc. But the company warned a flattening yield curve is making things worse.
The Michigan-based bank funded $8.3 billion in residential mortgages during the third quarter, up 17% from the prior quarter and 21% from a year earlier, Flagstar said in an announcement Friday.
But the lender reported its rate lock commitments were $2.6 billion at the end of the third quarter, spiraling down $1.1 billion from three months earlier.
Additionally, Flagstar President and Chief Executive Mark Hammond said he believes the company "will not be able to meet the calendar year 2005 earnings per share estimate of $1.70 (to) $2.00" projected earlier.
"During the third quarter, we experienced market pressures affecting many financial institutions, including the further flattening of the yield curve and tighter spreads on loan sales than in the second quarter," Hammond explained. "We expect these pressures will continue during the fourth quarter of 2005."
Shares of Flagstar, which says it is the second-largest banking institution in Michigan, were trading this morning at $14.39, well below the 52-week high of $23.17.